Goldamere Pty Ltd v Metso Minerals Industries Inc & Ors

[2009] TASSC 52

[2009] TASSC 52

CITATION:Goldamere Pty Ltd v Metso Minerals Industries Inc & Ors

[2009] TASSC 52

PARTIES:  GOLDAMERE PTY LIMITED
  t/as AUSTRALIAN BULK MINERALS
  and
  METSO MINERALS INDUSTRIES INC
  METSO MINERALS (AUSTRALIA) LIMITED
  RCR HEAT TREATMENT PTY LIMITED
  THE ENGINEERING COMPANY PTY LIMITED
  ACN  009 483 694 PTY LTD t/as HAYWARDS

TITLE OF COURT:  SUPREME COURT OF TASMANIA
FILE NO:  611/2007
DELIVERED ON:  24 July 2009
DELIVERED AT:  Hobart
HEARING DATE:  15 July 2009
JUDGMENT OF:  Holt AsJ

CATCHWORDS:

Procedure – Discovery and interrogation – Production and inspection – Grounds for resisting production – Legal professional privilege – Waiver of privilege.

Mann v Carnell (1999) 201 CLR 1 applied.

Aust Dig Procedure [449]

REPRESENTATION:

Counsel:
           First and second defendants:       P W Tree SC
             Third defendant:  D J Barclay

Solicitors:
             First and second defendants:       Simmons Wolfhagen
             Third defendant:  Page Seager
Judgment Number:  [2009] TASSC 52
Number of paragraphs:  13

Serial No 52/2009
  File No 611/2007

GOLDAMERE PTY LIMITED t/as AUSTRALIAN BULK MINERALS v
METSO MINERALS INDUSTRIES INC & ORS

REASONS FOR JUDGMENT  HOLT AsJ
  24 July 2009

1. This is an application by the first and second defendants (Metso) against the third defendant (RCR) for an order for production for inspection of a witness statement and an investigator's report.  It was common ground that the documents, at the time of their creation, were protected by legal professional privilege.  There has been partial disclosure of the contents of the documents in some emails.  The question is whether this disclosure has resulted in an imputed waiver of the privilege. 

1. The principle to be applied is set out in Mann v Carnell (1999) 201 CLR 1. There Gleeson CJ, Gaudron, Gummow and Callinan JJ said at par29:

"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" eg, Goldberg v Ng (1995) 185 CLR 83 at 95. 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 (1993) 35 NSWLR 110, 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.

1. The background is as follows.  The plaintiff was the owner and operator of a mine.  On 21 June 206 there was a fire which caused extensive damage to equipment used in the mining operation.  According to the statement of claim, the fire started in the course of repair work being carried out under the supervision of Metso.  The repairs involved welding work.  The methodology included the use of heat mats.  RCR had been engaged to supply, install and operate the heat mats.  The fourth and fifth defendants were welding contractors.  One of the possible causes of the fire, alleged by the plaintiff, was that the heat mats overheated leading to the ignition of nearby combustible material.  The plaintiff alleges that Metso and RCR were negligent "by failing to ensure the removal of the flammable rubber lining and associated adhesive from in and around AM1 prior to any welding, earthing or use of the heat mats".  There are contribution proceedings between Metso and RCR in which Metso relies on the plaintiff's negligence allegations against RCR. 

1. In anticipation of litigation, the in-house lawyer for RCR instructed Malcolm Nelson to conduct an investigation and prepare a report.  In June 2006 Mr Nelson spoke by telephone to a witness Mr Doug Fullarton.  Mr Nelson made notes of that conversation in the form of a witness statement.  In December 2006 Mr Nelson provided his report to RCR.  In its list of documents RCR has claimed privilege in respect of the Fullarton statement and the Nelson report.  Although initially there was a claim for privilege in respect of the emails referring to these documents that claim has been abandoned. 

1. Two emails were relied upon by counsel for Metso.  The first concerns Mr Nelson's notes of the telephone conversation he had with Mr Fullarton.  Mr Nelson sent his notes to Mr Fullarton who forwarded them to Mr Warren Arthur of RCR with a request for comment.  In the first email Mr Arthur responded to Mr Fullarton with his comments.  The second email concerns the investigator's report.  The email was sent from Mr Greg Harris of RCR to Mr Arthur and contains comments about the report. 

1. The emails are as follows:

"From:  Warren Arthur

Sent:  Friday, 30 June 2006 11:48 AM

To:  Doug Fullarton

Cc:  John Linden;  John Noordhoek;  Legal Counsel

Subject:                   RE:  Savage River Fire

OK but I would also make the point in the appropriate section that 'at this point ABM were directing our personal [sic] on site.  They were controlling the job, scope, work method, set up and preparation etc and your personal [sic] were simply following instructions from ABM whilst at all times working within the OH & S & E procedures set up for the job as far as they had control to do so.

The fact that we were not on site at the time of the incident confirms that ABM were not following these guidelines for the job themselves as there were no problems when we were there and if there were, we simply addressed them at the time, refer your own example of this.  We had no control over the project process and we were not informed by the client of the changes to scope, method and pending fire or safety issues.  Your tech's simply followed clients instructions and were there to provide a service of heat treatment to their job and 'not take responsibility of the entire work method, safety or risk elements on behalf of the client.  It is their job, their site, their equipment and their responsibility to ensure all jobs and people are safe at their site.  We were even told to leave site to save costs.

Your job was to provide a service whilst working within the guidelines and the procedures at all times we were on the site which we did without question at all times.  This is the crutch [sic] of the matter and we need to make this point loud and clear where and when ever possible in reports and right through the investigation process.

If you feel you need to raise this again with MN, then please do so, but make sure you make this point in the appropriate manner in your report.  MN can assist you.

Regards,

Warren
[original emphasis]

From:  Greg Harris

Sent:  Wednesday, 6 December 2006 3:33 PM

To:  Warren Arthur

Subject:                   RE:  Savage River Fire Report

Warren,

This report tells us very little.

It is basically a summary of the witness statements given by the guys with a free safety audit for Savage River. However, as per the report, he was hampered with access issues and provision of information.

The report on the general safety level at the mine could have been useful if we had been saddled with the blame.  As for the $800.00 bill for writing the report??

Recommendation 9.0 is impractical unless we wish to give away 30% of our business.  Today, for instance, we have our jobs running in WA unattended.  If we refuse to offer that service then our competitors will jump in very quickly.  However, we need to assess each job carefully to ascertain possible risks involved with leaving the job unattended.

Regards

Greg Harris
Operations Manager

RCR Heat Treatment"

1. The emails show that the Fullarton statement and the Nelson report were concerned, at least in part, with the question of whether RCR was at fault by not providing its own supervision for the use of its heat mats.  The question is whether the degree of disclosure in the emails is such and that it is now inconsistent to maintain the confidentiality of the statement and report. 

1. This being a case of partial disclosure of the content of privileged documents the question of inconsistency is informed by considerations of fairness.  This was pointed out by McHugh J in Mann where he said at par128:

"To use an 'unfairness' test for determining waiver after disclosure to a third party also changes the fundamental nature of privilege. It changes privilege from something which inheres in communications as a matter of law to a state of affairs which exists between the parties as a kind of equitable estoppel. This difficulty does not arise in relation to applying the unfairness test to situations of partial disclosure such as Attorney-General (NT) v Maurice (1986) 161 CLR 475. In such cases, 'unfairness' arises from the characteristics of the communication itself - ie whether partial disclosure of its contents is misleading - rather than from general concepts of 'unfairness' as between the parties in dispute."

1. Similarly in Goldberg v Ng (1995) 185 CLR 83, Toohey J observed at 109 – 110:

"Implied or imputed waiver will ordinarily arise when partial disclosure of privileged documents is made in the proceedings in which the privilege is asserted. That was the situation in Maurice in the context of the hearing of a claim under the Aboriginal Land Rights (Northern Territory) Act 1976 (Cth) and, in my view, the judgments in that case must be read accordingly. It was also the situation in Great Atlantic Insurance Co v Home Insurance Co [1981] 1 WLR 529; [1981] 2 All ER 485, where part of a document was read to the court by counsel. Where that sort of thing occurs, it is appropriate for the court or tribunal to consider whether it is fair that the party making the partial disclosure should otherwise maintain the privilege or whether fairness, in particular fairness to the other party, demands that the privilege be foregone. That question will usually be answered by seeing whether the party making the disclosure gained some advantage in the proceedings or, obversely, whether the other party suffered a disadvantage thereby."

1. In Attorney-General (NT) v Maurice (1986) 161 CLR 475, in their joint judgment, Mason and Brennan JJ said at 488:

"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, par2327, at 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 v Home Insurance (1981) 1 WLR 529; (1981) 2 All ER 485."

1. Counsel did not submit that the limited disclosure in the emails of the privileged material confers an advantage on RCR or might cause Metso to suffer a disadvantage.  He did not submit that it gave rise to a risk that Metso would be misled by an inaccurate perception of the disclosed material.  I do not think these features exist.  Accordingly, informed by considerations of fairness, I do not think that the disclosure of the contents of the emails is inconsistent with the maintenance of the confidentiality of the Fullarton statement and the Nelson report.

1. Counsel for Metso submitted that there would be no unfairness to RCR in compelling disclosure now, because production of the documents will, in any event, be compelled at trial because of the operation of the Evidence Act 2001, s126. The provision is not concerned with discovery. It is concerned with the evidence which may be adduced at trial. The effect of the provision is that if a related communication or document is reasonably necessary to enable a proper understanding of another communication or document legal professional privilege may be lost. The assessment of what is reasonably necessary must be undertaken in the context of the other information available at the trial. Sugden v Sugden (2007) NSWCA 312 at par107. It is impossible to predict at this stage of the proceedings whether or not production of the documents sought in this application could be compelled at trial.

1. The application will be dismissed.