H M and O Investments Pty Limited v Ingram (No.1)
[2011] NSWSC 550
•10 June 2011
Supreme Court
New South Wales
Medium Neutral Citation: H M & O Investments Pty Limited v Ingram (No.1) [2011] NSWSC 550 Hearing dates: 07/06/2011 Decision date: 10 June 2011 Jurisdiction: Equity Division - Commercial List Before: McDougall J Decision: Objection over-ruled; question allowed.
Catchwords: EVIDENCE - client legal privilege - disclosure of confidential communication made between the client and a lawyer - meaning of 'communication' - meaning of 'disclosure' - balance between competing interests. Legislation Cited: Evidence Act 1995 (NSW) Cases Cited: AWB Ltd v Cole [2006] FCA 571
Baker v Campbell (1983) 153 CLR 52
Green v AMP Life [2005] NSWSC 95
Re Southland Coal Pty Ltd (Receivers and Managers Appointed) (in liq) [2006] NSWSC 899
Waterford v The Commonwealth (1987) 163 CLR 54Texts Cited: Australian Oxford Dictionary (2nd Edition, 2004) Category: Procedural and other rulings Parties: H M & O Investments Pty Limited (First Plaintiff)
Teach & Play Pty Limited (Second Plaintiff)
Bradley Phillip Ingram (First Defendant)
Glenda Louise Ingram (Second Defendant)Representation: Counsel:
S A Gregory (Plaintiffs)
G Curtin SC / J A English (Defendants)
Solicitors:
Owen Hodge Lawyers (Plaintiffs)
TressCox Lawyers (Defendants)
File Number(s): 2009/297464
JUDGMENT - on claim for privilege
In these proceedings the plaintiffs claim damages for alleged misleading or deceptive conduct on the part of the defendants in connection with the sale of a business by the defendants to the plaintiffs. In brief, the plaintiffs allege that:
(1) the defendants made representations, orally and in writing, to the effect that their products complied with (indeed, exceeded) the requirements of an applicable Australian Standard;
(2) the plaintiffs relied on those representations in deciding to enter into the contract whereby they purchased the defendants' business;
(3) the representations were wrong, and misleading or deceptive; and
(4) the plaintiffs have suffered substantial loss as a result.
The defendants accept that some representations, generally of the kind alleged by the plaintiffs, were made, although there is a dispute as to whether they were made both in writing and orally (as the plaintiffs allege) or in writing only (as, to some extent, the defendants concede). The defendants dispute that the plaintiffs relied on such representations as are found to have been made.
One of the persons to whom, it is said, the representations were made is a Mr Christopher Salmon. He was one of those who decided that the plaintiffs would enter into the contract for purchase. He said, in no uncertain terms, that in deciding that the plaintiffs should so act, he relied upon the representations alleged. That aspect of Mr Salmon's evidence was challenged by Mr Curtin of Senior Counsel, who appeared with Ms English of Counsel for the defendants.
In the course of cross-examination on the topic of reliance, Mr Salmon agreed that, on behalf of the plaintiffs, he had instructed Mr Andrew Miller, a solicitor, to advise and act for the plaintiffs on the purchase.
Mr Curtin asked the following question (T101.41-.43):
Q. If you turn over to page 75 A one of the things Mr Miller did for you was explain to you in layman's terms the legal nature and effect of different clauses in the contract, correct?
Mr Gregory of counsel, who appeared for the plaintiffs, objected, on the ground of privilege. I allowed the question, which Mr Curtin put again, in a slightly different form (T103.31-.33):
Q. Mr Salmon in a yes or no type answer Mr Miller gave you legal advice about the terms of this contract, correct?
A. Yes.
Mr Curtin then asked this question (T103.35-.36):
Q. That is he explained to you to the best of his ability in layman's language what each and every one of the terms of this contract meant?
Mr Gregory objected, again on the ground of privilege. I said that I would disallow the question because of the reference to "to the best of his ability", but would allow a question shorn of that reference. I said that I would give my reasons for doing so at a later time. These are my reasons.
After I so ruled, and pursuant to that ruling, Mr Curtin asked the following question (T105.43-.45):
Q. Mr Salmon, in a yes or no sense Mr Miller advised you about clause 12 of the contract that you see on page 75 A, correct?
A. I can't recall.
Mr Greogry submitted that evidence given in answer to the question would result in disclosure of a confidential communication made between his clients to their solicitor Mr Miller. He relied on s 118 of the Evidence Act 1995 (NSW).
Mr Curtin submitted that a statement of the subject or topics on which advice was sought would not result in disclosure contrary to s 118.
Section 118 reads as follows:
Evidence is not to be adduced if, on objection by a client, the court finds that adducing the evidence would result in disclosure of:
(a) a confidential communication made between the client and a lawyer, or
(b) a confidential communication made between 2 or more lawyers acting for the client, or
(c) the contents of a confidential document (whether delivered or not) prepared by the client, lawyer or another person,
for the dominant purpose of the lawyer, or one or more of the lawyers, providing legal advice to the client.
For present purposes it may be accepted (because the argument proceeded on that basis) that any communication made by Mr Miller to Mr Salmon, advising on the terms of the draft contract for purchase, was "a confidential communication" for the purposes of para (a). Thus, the key question is whether an answer "yes" or "no" to the question that I indicated that I would allow (and the question that was asked following my ruling did reflect what I had said I would allow) would result in disclosure of a confidential communication.
The primary meaning of the verb "to disclose" may be taken as "to make known; reveal" (see, for example, the Australian Oxford Dictionary (2 nd Edition, 2004)). The noun "disclosure" has a corresponding meaning:
"The act or an instance of disclosing; ... something disclosed" (ibid).
In Green v AMP Life [2005] NSWSC 95, Campbell J said at [18] that disclosure "involves something becoming revealed which was previously hidden, or known which was not previously known". His Honour added that there could be disclosure of a matter even though the disclosure was incomplete.
The noun "communication" may be defined to include "the act of imparting", an instance of what is so imparted, or "the information etc. communicated" (see, again, the Australian Oxford Dictionary , (2 nd Edition)).
The dictionary to the Evidence Act does not define "communication". If one takes the definitions suggested by the Australian Oxford Dictionary , it may refer either to the act of communicating, or imparting, information; or it may refer to the information so communicated.
The "advice" privilege created by s 118 of the Evidence Act may be traced back to the common law doctrine of legal professional privilege. As Dawson J said in Baker v Campbell (1983) 153 CLR 52 at 128, legal professional privilege at common law is founded upon the proposition that the proper functioning of the legal system depended on freedom of communication between legal advisors and their clients. That freedom would not exist, his Honour said, "if either could be compelled to disclose what passed between them for the purpose of giving or receiving advice". It is implicit, in his Honour's statement of the justification for legal professional privilege at common law, that what is protected is the terms or substance of the communications between lawyer and client.
In the same case, Deane J said at 112 that the privilege "protects a person from disclosure of oral or written confidential communications, between himself and his solicitor or barrister" made for the requisite purpose. It is I think clear that his Honour was talking of disclosure of the terms or substance of those communications. Thus, his Honour noted that "[t]he privilege may be lost by waiver and, arguably, by the content of the communication ceasing to be confidential".
If the common law is to be taken as a safe guide, it would suggest that the word "communication" in s 118(a) of the Evidence Act should refer to the terms or substance of what was communicated, and not to the mere act of communicating it. That conclusion finds support in the reason of Austin J in Re Southland Coal Pty Ltd (Receivers and Managers Appointed) (in liq) [2006] NSWSC 899 at [14(a)]. His Honour there said that the question raised by s 118 was "whether what is disclosed by adducing the evidence explicitly reveals the confidential communication or the contents of the confidential document, or supports an inference of fact as to the content of the confidential communication or document, which has a definite and reasonable foundation". Disclosure of the fact of making a communication does not disclose the content or substance of what was communicated, nor does it lead to any inference as to the content of what was communicated.
Austin J added that there is no disclosure "if what is adduced in evidence merely causes the reader to "wonder or speculate whether legal advice has been obtained and what was the substance of that advice"". (The quotation in this sentence of his Honour's reasons was taken from the decision of Young J in AWB Ltd v Cole [2006] FCA 571 at [133]).
In light of the common law history of legal professional privilege, and on the basis that the justification for the existence of privilege at common law underpins the privilege now afforded by s 118 of the Evidence Act , I conclude that what is intended to be prohibited, by s 118(a), is disclosure of the content or substance of a confidential communication or confidential document. To limit the privilege thus accords with the rationale for its existence, and strikes some balance between the legitimate interest that is protected by the privilege on the one hand and, on the other, the public interest and, in any given case the concomitant private interest) in the availability of information for the purposes of litigation.
As Mason and Wilson JJ said in Waterford v The Commonwealth (1987) 163 CLR 54 at 64-65, legal professional privilege "is...the product of a balancing exercise between competing public interests". Identification of the ambit of protection as extending to the terms or substance of legal advice, but not to the fact that legal advice on a particular topic was sought and given, seems to me to be consistent with the balancing exercise to which their Honours referred.
An answer which was no more than responsive to the questions that I permitted to be asked would have revealed whether or not advice on a particular topic had been given. Even if Mr Salmon had answered both questions affirmatively, that answer would not have revealed the terms or substance of any advice that Mr Miller had given on the terms of the draft contract. Accordingly, in my view, an answer limited to the terms of the question would not have resulted in a disclosure of the kind prohibited of s 118(a) of the Evidence Act .
I note that there were documents in evidence, referred to without objection in cross-examination, which clearly supported the inference (if they did not in terms prove) that Mr Miller had indeed given legal advice to the plaintiffs on the terms of the draft contract for purchase. That may well have given rise to a question under s 122(2) of the Evidence Act . It is not necessary to pursue this point.
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Decision last updated: 15 June 2011
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