Idoport Pty. Ltd. and Anor. v National Australia Bank Ltd.

[2001] NSWSC 196

CITATION:	Idoport Pty. Ltd. & Anor. v. National Australia Bank Ltd. & Ors. [2001] NSWSC 196
CURRENT JURISDICTION:	Equity Divsion Commercial List
FILE NUMBER(S):	SC 50113/98
HEARING DATE(S):	21st March 2001
JUDGMENT DATE:	21 March 2001
PARTIES :	Idoport Pty. Limited - 1st plaintiff Market Holdings Pty. Ltd. - 2nd plaintiff National Australia Bank Ltd. - 1st defendant National Market Group Ltd. - 2nd defendant National Australia Financial Management Ltd. - 3rd defendant Australian Market Automated Quatation (Ausmaq) System Ltd. - 4th defendant Glenn L. L. Barnes - 5th defendant Francis J. Cicutto - 6th defendant David M. Krasnostein - 7th defendant Kevin F. Courtney - 8th defendant Russell A. McKimm - 9th defendant
JUDGMENT OF:	Hodgson CJinEq at 1

COUNSEL :	Mr. R. Margo SC with Mr. M. Dicker for plaintiff Mr. T. Bathrust QC with Mr. P. Wood for defendants
SOLICITORS:	Withnell Hetherington, Sydney, for plaintiffs Freehills, Sydney, for defendants
CATCHWORDS:	EVIDENCE - Privilege - Legal professional privilege - Evidence on information and belief - Solicitor gives evidence that principal of client has informed him of certain matters - Privilege claimed for documents by which that information conveyed - Whether privilege lost.
CASES CITED:	Evidence Act ss.122, 126.
DECISION:	See end of judgment

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

CORAM: HODGSON, CJ in Eq.

Wednesday 21st March 2001

NO. 50113 OF 1998
IDOPORT PTY. LIMITED & ANOR. V. NATIONAL AUSTRALIA BANK LIMITED & ORS.

JUDGMENT

1   In paragraph 5 of his affidavit sworn 23 February 2001, Mr Hetherington has sworn that Mr Machonachie had informed him of certain matters, which were then set out in the paragraph, and that Mr Hetherington believed then to be true. This hearing is proceeding on the basis that, in my final decision of this case, I will determine whether or not that material is admissible, having regard to ss.75, 135 and 136 of the Evidence Act. Mr Hetherington is at present being cross-examined, in effect on the voir dire, in relation to that evidence of his.

2   The defendants have served on the plaintiffs a Notice to Produce requiring production of all the documents that comprise, record or relate to any instructions given by Mr John Machonachie for the purpose of Mr Stuart Hetherington preparing and swearing to the contents of his affidavit sworn 23 February 2001 in the current proceedings.

3   In response to that Notice to Produce, the plaintiffs have produced a print out of two e-mails. One is an e-mail from Mr Dicker, junior counsel for the plaintiffs, to Mr Hetherington stating the following:

Attached is the final version of the affidavit which incorporates John Machonachie's comments and my comments and has been approved by John Machonachie. Could you please have it sworn as soon as possible.

4   The other is a later e-mail, purporting to be from Mr Machonachie and to relate to this affidavit stating, "very good".

5   Mr Hetherington has given evidence that he swore the affidavit in question after receiving the earlier of those e-mails, that is, the one from Mr Dicker, but before he received or saw the later of them, that is, the one from Mr Machonachie.

6   In further answer to the Notice to Produce, the plaintiffs have produced six documents, in respect of which privilege is claimed. These are earlier e-mails between Mr Dicker and Mr Machonachie containing drafts of the affidavit, and Mr Machonachie's comments on those drafts. Mr Hetherington has given evidence that copies of those earlier e-mails were sent to him and that, to some extent at least, he relied on those documents in being able to swear that he was informed of the matters in his affidavit by Mr Machonachie, and believed them to be true. He also gave evidence that there was no relevant oral communication from Mr. Machonachie.

7   In those circumstances, Mr Bathurst QC for the defendants submits that any privilege that might otherwise attach to those documents has been lost by virtue of s.122(2) of the Evidence Act and s.126 of the Evidence Act. Those provisions are as follows:

122(2) Subject to subsection (5), this Division 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 the disclosure was not made:
(a) in the course of making a confidential communication or preparing a confidential document, or
(b) as a result of duress or deception, or
(c) under compulsion of law, or
(d) if the client or party is a body established by, or a person holding an office under, an Australian law---to the Minister, or the Minister of the Commonwealth, the State or Territory, administering the law, or the part of the law, under which the body is established or the office is held.

126. Loss of client legal privilege: related communications and documents
If, because of the application of section 121, 122, 123, 124 or 125, this Division does not prevent the adducing of evidence of a communication or the contents of a document, those sections do not prevent the adducing of evidence of another communication or document if it is reasonably necessary to enable a proper understanding of the communication or document.
Note.
Example:
A lawyer advises his client to understate her income for the previous year to evade taxation because of her potential tax liability "as set out in my previous letter to you dated 11 August 1994". In proceedings against the taxpayer for tax evasion, evidence of the contents of the letter dated 11 August 1994 may be admissible (even if that letter would otherwise be privileged) to enable a proper understanding of the second letter.

8   In effect, what is submitted is that the plaintiffs have knowingly and voluntarily disclosed that Mr Hetherington was informed certain things by Mr Machonachie and believed them to be true, that being the substance referred to in s.122(2). That disclosure, that is, the disclosure of that substance, does not fall within any of the exceptions in s.122(2). The reality lying behind that substance is the whole series of communications to which I have referred, leading up to the second last of the communications, that is, the one from Mr Dicker to Mr Hetherington.

9   Alternatively, it is put that under s.126, Mr Hetherington's evidence that he was informed certain things by Mr Machonachie was evidence of a communication within the meaning of s.126, not prevented by any of the privilege sections because it was actually tendered by the person having the privilege, and the documents in respect of which privilege is claimed are documents reasonably necessary to enable a proper understanding of the communication, that is, the information said to have been provided by Mr Machonachie to Mr Hetherington.

10   Mr Margo SC for the plaintiffs submitted that it was really only the last of the communications before the actual swearing of the affidavit, namely, the communication from Mr Dicker to Mr Hetherington, which is being adverted to and relied on by Mr Hetherington in swearing his affidavit.

11   He submitted further that privilege attaches to earlier versions of affidavits. He referred to the circumstance that there may be a number of versions of affidavits prepared by experts, and privilege attaches to the versions, other than the final versions and is not lost because of the tendering in court of the final version.

12   Certainly, he submitted, there was no intention to waive privilege in respect of these earlier communications, and indeed, it could be inferred that privilege was intended to be maintained.

13   I accept that, on the material before me, there was no actual intention to waive privilege in respect of these earlier communications. I accept what Mr Margo says about drafts of experts' affidavits. However, I think that is very different from the situation here, where there is an assertion on oath by a solicitor that he has received a specified communication from the client. The solicitor having sworn to that, it seems to me that the reality underlying that bald assertion must be made admissible and not subject to privilege, both under s.122(2) and under s.126.

14   The evidence in question is evidence of a limited class of communications between the client and the solicitor, the substance of which has been voluntarily disclosed in the affidavit. Therefore, in my opinion, s.122(2) applies. Likewise, there is, as it were, shorthand evidence of a communication, and in my opinion, s.126 removes privilege from other material reasonably necessary to enable a proper understanding of what that communication in truth was.

15   It may have been otherwise if Mr Hetherington had felt able to swear that he did not rely at all on those earlier documents, and that those earlier documents did not constitute any part of the communication about which he was swearing in his affidavit. However, he was not able to swear that and in those circumstances, in my opinion, privilege has been lost.

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Last Modified: 03/27/2001