Lake Cumbeline P/L v Effem Foods P/L
[1994] FCA 837
•14 NOVEMBER 1994
LAKE CUMBELINE PTY LIMITED, IDOBOOK PTY LIMITED, PETER HORROBIN, RICHARD SANDS
AND RAYMOND PRIDMORE v EFFEM FOODS PTY LIMITED trading as UNCLE BEN'S OF
AUSTRALIA
No. NG129 of 1990
FED No. 837/94
Number of pages - 14
Privilege - Corporations
(1994) 13 ACLC 55 (extract)
COURT
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
TAMBERLIN J
CATCHWORDS
Privilege - legal professional privilege - whether privilege can be maintained in respect of documents where the privilege is held by a dissolved company.
Privilege - legal professional privilege - claim for reimbursement of legal costs in previous proceedings as damages in present proceedings - disclosure of memoranda of fees relating to previous litigation - whether unfair to maintain privilege - whether implied or imputed waiver of privilege.
Corporations - dissolution of company - whether legal professional privilege which is held by a company at the time of its dissolution vests in the Australian Securities Commission upon dissolution.
Corporations Law ss 9, 576
Bullivant v Attorney-General (Vic) (1901) AC 196
Prus-Grzybowski v Everingham (1987) 44 NTR 7
Baker v Evans (1988) 77 ALR 565
Attorney-General (N.T.) v Maurice (1986) 161 CLR 475
Goldberg and Ors v Ng and Ors (Unreported 11 July 1994 CA (NSW))
Packer v Deputy Commissioner of Taxation (1985) 1 Qd R 275
HEARING
SYDNEY, 4 November 1994
#DATE 14:11:1994
Counsel for Applicants : Mr A J Sullivan QC
Mr J B Whittle
Solicitors for Applicants : Blake Dawson Waldron
Counsel for Respondent : Mr R J Bainton QC
Mr R M Smith Ms J Deamer
Solicitors for Respondent : Sly and Weigall
ORDER
1. The respondent's application for inspection be dismissed. 2. The costs of this application be reserved.
NOTE : Settlement and entry of orders is dealt with in Order 36 of
JUDGE1
The Nature of the Proceedings
TAMBERLIN J The respondent ("UBA") seeks to have produced for inspection a large number of documents which relate to claims for damages, by the applicants in the present proceedings, comprising legal costs and disbursements and moneys lent or paid by the applicants concerning a number of legal proceedings said to arise out of or relate to investments by them in Trawl Investments Australia Pty Limited ("Trawl") in 1987 and subsequent years. Trawl went into liquidation and was dissolved in April 1994. Trawl is not a party to the present proceedings before me.
In 1989 Trawl brought proceedings for repudiation of contract against UBA in the New South Wales Supreme Court. These were heard by Cole J in the Commercial Division and were unsuccessful. An appeal was taken to the New South Wales Court of Appeal and this appeal too was unsuccessful. Trawl was held liable to pay the costs of those proceedings.
The individual applicants at all material times were directors of Trawl and guarantors of the debts and obligations of Trawl.
The applicants allege that they were induced to invest in and/or to continue their investment in Trawl by reason of deceptive and misleading conduct and fraudulent or negligent misrepresentations on the part of the respondent. The applicants say that they relied on such misrepresentations and conduct and this reliance led them to make further investments, loans and expenditures and incur further liabilities as a result of their investments in Trawl. It is further alleged that after they had invested in Trawl there was a series of additional and continuing misrepresentations and deceptive conduct which led to further losses and damages.
In addition, it is alleged that as a result of their investment they became involved in further litigation apart from the Trawl litigation arising out of guarantees and a scrip lien, and that this litigation was with, inter alia, the ANZ Bank and the National Mutual Royal Bank. The applicants seek as part of their claim in the present proceedings to recover as damages moneys borrowed, paid or lent by them in relation to the costs of such litigation, namely that of Trawl with UBA, and the other matters referred to above concerning the guarantees and the scrip lien.
The only two issues before me presently for decision are whether privilege can be maintained in respect of certain Trawl documents in the light of the fact that the company has been dissolved and whether there has been waiver of privilege in relation to any of the documents in respect of which damages in the nature of costs are claimed by the applicants.
The Documents
7. Privilege has been claimed to exist in respect of 278 documents comprised in a list referred to as the Third Supplementary List Amended Schedule 1 Part 2. These documents relate to the proceedings at first instance and on appeal between Trawl and UBA in the Supreme Court of New South Wales. The documents are claimed to attract legal professional privilege and they comprise a wide and varied range of documents including file notes of conferences, notes of telephone attendances, briefs to counsel, facsimiles, advices from counsel and correspondence with clients and counsel.
A second and related group of documents to the Trawl documents referred to in argument is that which is the subject of an Amended Notice of Motion filed on behalf of the respondent on 29 August 1994, seeking discovery inter alia of the following documents :
6. (a) All summons, amended summons, statement of claim
and/or affidavits filed in proceedings brought by any one or more of Lake Cumbeline Pty Limited, Sands, Horrobin and/or Pridmore against Atasco (Aust) Pty Limited, Bruce Thomas Fasham, Jon Dean Wilson and/or Kerry Dean Wilson in proceedings in the Supreme Court of New South Wales number 1223 of 1988.
6. (b) All documents relating to the work in respect of which the claims entitled "BDW fees re Atasco" in RJS 107 to the Statement of R J Sands dated 2 March 1994 are made.
8. All documents relating to :
(a) the work done by Blake Dawson Waldron for which the payments referred to in Annexure RJS 106 to the statement of R J Sands dated 2 March 1994 have been made; and
(b) any other fees due or paid to Blake Dawson Waldron and claimed as damages in these proceedings.
A third group of documents is that referred to, in the Supplementary Statement of Peter Robert Horrobin dated 20 October 1994, as being PRH Exhibit A to that statement. That exhibit contains copies of memoranda for legal costs in proceedings in the Supreme Courts of Victoria and New South Wales against the ANZ Bank incurred by Lake Cumbeline Pty Limited on behalf of Mr P R Horrobin, Mr Sands and Idobook Pty Limited totalling $101,104.96. These proceedings are described as :
. ANZ v Richard John Sands and Ors No. 6446 of 1992 in the Supreme Court of Victoria.
. Idobbok Pty Limited and Ors v ANZ No 4374 of 1994 in the Supreme Court of Victoria.
. ANZ v Peter Robert Horrobin and Ors No 11145 of 1994 in the Supreme Court of New South Wales.
The memoranda include accounts for professional costs from Heidtman and Co, solicitors of Sydney, referring to the ANZ claim in which the clients are stated to be Messrs Horrobin and Sands. There are also memoranda and accounts from Messrs Strongman and Crouch, solicitors of Melbourne, relating to Victorian Supreme Court proceedings concerning the applicants and National Mutual Royal Bank (ANZ) No. 4374 of 1994 in the Supreme Court of Victoria. There are also accounts and memoranda of costs relating to matter No. 6446 of 1992 between ANZ Banking Group Limited and Richard John Sands and others.
The Submissions
9. The first submission by UBA relates to the documents referred to in paragraphs 6(b) and 8 in the Amended Notice of Motion of 29 August 1994 referred to above which relate to legal fees payable to Blake Dawson Waldron ("BDW") the solicitors for Trawl who are also the solicitors for the applicants in the matter before me.
UBA says that when the Notice of Motion came before the Court counsel appearing for the applicants stated that there was no objection to producing documents in categories 6(b) and 8 and indicated that those documents would be made available.
UBA submits that the statements amounted to a waiver of privilege in relation to such of those documents as attracted legal professional privilege. The documents have not been made available and the respondent presses for inspection of all of those documents including such of them as may be subject to privilege on the ground that there has been an express waiver of the privilege.
I am informed by counsel for the applicants that the statement made on 5 September 1994 to the effect that the documents would be made available was not intended by counsel making the statement to waive any privilege in respect to such of these documents as are privileged nor was it intended to make them available to UBA. The intention, as I understand the position, was to produce and make available such of the documents as are not privileged.
I accept the explanation given by counsel for the applicants to the effect that no claim for privilege was made because of a misunderstanding as to which of the documents were intended to come within the described categories and that it was never intended that privileged documents relating to the Supreme Court proceedings would be made available. It was not sought to call or cross-examine counsel in relation to this question and I accept the statements made to me from the bar table in this respect. In these circumstances, if it were necessary for me to decide the matter, I consider that since the documents have not been made available and since the claim for privilege is presently maintained the ambiguity in the statement of counsel was not deliberate and therefore the privilege in the documents has not been waived, and the documents should not be made available. In any event, for the reasons which I set out below, I consider that counsel for the applicants did not have any authority to waive privilege in relation to documents the subject of the Trawl litigation because privilege in these documents was never vested in the applicants in the present proceedings.
The second submission which is made relates specifically to the 278 documents in respect of which privilege is claimed in the Third Supplementary List Amended Schedule 1 Part 2 referred to above.
These documents relate to the Trawl proceedings in 1988 and following years in the Supreme Court of New South Wales.
The submission made by counsel for the respondent is that because Trawl was dissolved in April 1994 there is no longer any person or entity in existence which can claim privilege in respect of the documents relating to the Trawl litigation. The only party entitled to claim such privilege is Trawl and it cannot do so because it does not exist any longer. Accordingly, in default of a competent claimant, the privilege no longer applies.
The third submission which is made is that, since the applicants are claiming damages in the nature of costs against the respondent and because the applicants have furnished memoranda of fees giving details of those costs, there has been a waiver of any privilege which may have existed in relation to the documents which are the subject of and gave rise to those memoranda in respect of which the legal work was done. In other words, it is said, for example, that if a memorandum of fees is relied on to quantify and justify a claim for costs by way of damages in the present proceedings then the production of such a memorandum of fees amounts to a waiver in respect of all documents which relate to the transactions giving rise to that memorandum.
The fourth submission by UBA is that to make a claim in these proceedings for reimbursement of the amounts paid and liabilities incurred in respect of legal fees on their behalf in other proceedings waives the privilege and entitles UBA to know what has been done so that as a matter of basic fairness UBA can properly examine and contest the claim. UBA says that if, for example, a conference is charged for then UBA is entitled to know what the conference was about; what was said at the conference; what advice was given; how long it took and whether it is a proper and reasonable claim as to quantum in that it related to the matter in respect of which it was made. To deprive UBA of this ability is to unfairly rely on the privilege. An example is given of a litigant seeking advice from counsel before proceedings are commenced and being told that the case is hopeless. The client proceeds to litigation and loses. It is then said that this is a charge which a respondent to the claim should not have to face without being properly armed with the necessary information and material to defend and test the charge.
The Dissolution of Trawl
19. The documents in question relating to the Trawl litigation include file notes of conferences between the solicitors and the applicants, facsimiles between solicitors and the applicants, correspondence, notes of conferences with counsel, correspondence and communications with counsel, briefs to counsel, and a number of other like documents.
For the purposes of the present decision I will assume that the documents are subject to legal professional privilege. This is not conceded by UBA and it is still open to UBA, if it wishes, to dispute the privilege in respect of particular specified documents.
UBA in the present proceedings seeks inspection of all of these documents on the basis that the privilege claimed in respect of the New South Wales Supreme Court proceedings was that of Trawl and not of the applicants. Trawl has been dissolved and therefore, so the submission goes, no person or entity is able to assert privilege in respect of the documents.
The applicants agree that Trawl is the entity in which the privilege in question was vested. They submit however that the documents in question are "outstanding property" of Trawl within the meaning of s 576 of the Corporations Law. The relevant parts of that section provide as follows:
"576 (1) Where, after a company has been dissolved, there remains
in this jurisdiction or elsewhere outstanding property of the company, the estate and interest in the property, at law or in equity, of the company or its liquidator at the time when the company was dissolved, together with all claims, rights and remedies that the company or its liquidator then had in respect of the property vests by force of this section in the Commission. "576 (3) Where a company is dissolved, then, notwithstanding that the books of the company vest in the Commission by reason of subsection (1), the person who was the last director of the company or the persons who were the last directors of the company before the company was dissolved shall retain the books of the company (other than any books of the company that any liquidator of the company is required to retain under subsection 542(2)) for a period of 3 years after the date on which the company was dissolved."
Books" are defined in s 9 of the Corporations Law to include "any ... record of information" and/or "a document." "Outstanding property", in relation to a body corporate that has been dissolved is defined to mean "property ... that was vested in the body ... when it was dissolved, but that neither the body nor its liquidator got in, realised on or otherwise disposed of or dealt with".
"Property" is defined to mean "any legal or equitable estate or interest ... in real or personal property of any description." It would include documents.
It is submitted on behalf of the applicants that the documents in question are "books" of Trawl within the meaning of s 9 of the Law and that they have vested in the Commission under s 576(1) of the Law.
As a result of s 576(1) it is said that the interest of the company in the books at the time when the company was dissolved together with all claims rights and remedies that the company or its liquidator then had in respect of the property vests by force of the section in the Commission. The claim for privilege in the documents is a relevant claim within s 576(1). Accordingly, it is said that any claim for privilege in the documents is now vested in the Commission.
Enquiries were made of the Commission in relation to its intention as to claiming privilege in the Trawl documents. The Commission's reply dated 4 November 1994 was to the effect that the Commission neither waived nor asserted any claim for privilege in the documents.
The Commission's letter suggested that the applicants might wish to take steps to in effect reinstate the company, if they wished, so that privilege might be claimed.
I do not for reasons set out below consider this to be necessary.
On the assumption, for the purposes of the present argument, that the 278 documents contained in the Third Supplementary List are documents which attract legal professional privilege then the privilege in those documents is that of Trawl. It is well settled law that the privilege is that of the client and not of the custodian.
It is reasonably clear from a number of cases that a client's privilege will generally enure for the benefit of his or her successors in title who are usually the client's personal representatives in the case of the death of an individual. See Bullivant v Attorney-General (Vic.) (1901) A.C.196 at 206 per Lord Lindley: Prus-Grzybowski v Everingham (1987) 44 NTR 7 at 12. See also Neoh and Eu, "The Duration of a Claim of Legal Professional Privilege" (1982) 12 Hong Kong L.J. 66 at 69-72. See also McNicol Law of Privilege, 1992 Law Book Company at 33 and 81.
In Bullivant at 206 Lord Lindley said:
"The mere fact that a testator is dead does not destroy the privilege. The privilege is founded upon the views which are taken in this country of public policy ... and unless the people concerned .... waive it, the privilege is not gone - it remains."
In the case of a corporation there is little or no direct authority as to what happens to its right to claim privilege after dissolution. In Baker v Evans (1988) 77 ALR 565 at 567 Pincus J said :
"Counsel for the first applicants argued that the dissolution of the company did not put an end to the privilege. Accepting that, it is not established that by any means the privilege was transmitted to the first applicants: cf Minet v Morgan (1873) LR 8 Ch App 361. There, in a property dispute, correspondence between predecessors in title and his solicitors was held privileged. Since, as I find, the now defunct company was the client, I can see no basis for upholding a claim of privilege, at the instance of persons who were once interested in the company. The privilege is that of the client."
The US Uniform Rules of Evidence, r 502(c) state :
"The privilege may be claimed by the client, his guardian or conservator, the personal representative of a deceased client, or the successor, trustee, or other similar representative of a corporation, association, or other organisation, whether or not in existence."
In Attorney General (N.T.) v Maurice (1986) 161 CLR 475 at 490 Deane J pointed out that legal professional privilege :
" ... is a substantive general principle of the common law and not a mere rule of evidence that, subject to defined qualifications and exceptions, a person is entitled to preserve the confidentiality of confidential statements and other materials which have been made or brought into existence for the sole purpose of his or her seeking or being furnished with legal advice by a practising lawyer or for the sole purpose of preparing for existing or contemplated judicial or quasi-judicial proceedings....."
At p 490 - 491 his Honour said :
"Indeed , the plain basis of the decision of the majority of this Court in Baker v Campbell was the acceptance of the principle as a fundamental principle of our judicial system .... Like other traditional common law rights, it is not to be abolished or cut down otherwise than by clear statutory provision. Nor should it be narrowly construed or artificially confined."
On the assumption, made for the purposes of the present argument, that the documents in the Trawl litigation satisfied the test of having been made or brought into existence for the sole purpose of seeking or being furnished with legal advice or for the sole purpose of preparing for existing or contemplated legal judicial or quasi-judicial proceedings, the Trawl documents attract legal professional privilege. Therefore, in my view as at the date of dissolution of Trawl, the documents were privileged and the privilege was that of Trawl and that privilege subsists until it is waived by a person or entity competent and able to waive.
Under the provisions of the Corporations Law this privilege passed to the Commission which is the successor to Trawl in respect of claims relating to the documents. The Commission has decided not to assert or waive the privilege.
In my opinion, once it is established that the documents are privileged then the privilege is not lost unless there is a waiver express or implied by the person entitled for the time being to that privilege. In the present case it is clear that Trawl has not waived the privilege. It is also clear in the letter from the Commission that the Commission has not waived the privilege nor does it intend to. Furthermore, the applicants in the present proceedings cannot waive the privilege because it is not their privilege. It is that of Trawl. Accordingly, nothing which they do or have done or which they say can have the effect of waiving the privilege that was originally vested in Trawl and now vests in the Commission.
I do not think that the right of confidentiality and privilege which the principle embodies has been lost as a result of the circumstance that Trawl has been dissolved. Indeed, in my opinion the right has survived and has passed to the Commission.
The question might be tested this way. Suppose the solicitor acting for Trawl in that previous litigation were asked in the present proceedings to give evidence as to the content of certain privileged advices which was given to Trawl and its directors, the applicants, in 1988. The solicitor would have no authority or power to disclose that advice unless there had been waiver by either Trawl or its successor, the Commission. Until such waiver has occurred the privilege remains and the solicitor has no authority to waive the privilege. That is the position, in substance, which has arisen here. There are privileged documents in the custody of the applicants or their agents and such privilege has not been waived. Hence the privilege continues notwithstanding the dissolution of Trawl.
The practical reality, in the present case, is that the advices, instructions, conferences, conversations, telephone calls, facsimiles and other communications with Trawl and its legal advisers taking place in 1987 and later were conducted with the individual applicants on behalf of Trawl. To now allow UBA to access, inspect, and use those confidential communications in the present proceedings is to act in a manner quite contrary to the expectations and confidences which formed the basis on which those communications were made. Disclosure of such material must inevitably open up the possible use of such confidential privileged material in the present proceedings.
For the reasons given above I am therefore of the opinion that in relation to the Trawl documents which UBA seeks to inspect, such inspection should be denied because in my view on the assumption that the documents were privileged in the first place the privilege still exists and has not been waived. This is not to say that it is not open to UBA to challenge if it wishes in relation to any particular documents as to whether they satisfy the tests of privilege. It is simply to say that on the assumption they are privileged I disagree with the submission that this privilege has been lost as a result of the dissolution of the company Trawl.
Waiver
43. This submission is made both in relation to the Trawl litigation and to the other proceedings referred to earlier. In relation to these proceedings it is argued by UBA that by producing the memoranda of fees and that by suing to recover the costs and the Trawl costs as damages privilege has been waived in relation to all documents recording work, conferences, briefs, documents, correspondence and papers in respect of which a claim has been made for damages.
The broader submission made is that for the applicants to make a claim in the present proceedings to recover costs of work done on their behalf entitles UBA to know what has been done and to inspect all documents, advices, correspondence, instructions and communications in order to know whether each claim for work done by solicitors and counsel is sustainable.
The argument is that there has been an implied waiver of privilege within the principles laid down in the Maurice case. That decision was recently applied and discussed in the decision of the New South Wales Court of Appeal in Goldberg and Ors v Ng and Ors (Unreported 11 July 1994 Nos. CA40096/93, CA40440/93).
In Maurice at 487 Mason and Brennan JJ said :
" 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...." 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... Hence, the implied waiver inquiry is at bottom focused on the fairness of imputing such a waiver. On this principle, an American court refused to imply a waiver when the person entitled to the privilege, who had been subjected by court order to an exceptional accelerated discovery process, accidentally disclosed some protected communications...."
For the purposes of these reasons, I assume that the underlying documents attract legal professional privilege and confine myself to a consideration of the question of waiver.
The question then simply is whether the disclosure of the claims, in the sense of providing memoranda of fees, backsheets to counsel and counsel's fees, amounts to an implied waiver of legal professional privilege in the underlying documents which include briefs to counsel, advice from counsel, instructions to solicitors and communications to other parties for the purpose of legal advice or legal proceedings.
In the Goldberg case the Court of Appeal, by majority, concluded that there had been a waiver of legal professional privilege because Mr Goldberg had made "a voluntary and considered disclosure" of material in its privileged form to the Law Society in the belief that such disclosure would not prevent him claiming the immunity should another person namely his clients seek to see the documents. Indeed, in that case the Law Society agreed to consider the documents on a privileged and confidential basis. As Mahoney JA points out at p 6 of his judgment, there was in the relevant sense a conscious disclosure of the documents and there was no intentional election to waive the privilege.
In that case the clients of Mr Goldberg had communications with the Law Society and their communications had been treated as a complaint. Mr Goldberg was asked by the Society for an explanation in relation to his relationship with the clients and he produced the documents and gave the information in question to the Society in confidence and on the basis it would not be further disclosed with a view to persuading the Society not to take any further action. In this sense he used the documents and information to procure a result adverse to his clients. In the event the Society decided not to take any action against Mr Goldberg.
In the subsequent proceedings in the Equity Division Mr Goldberg sought by setting up legal professional privilege to prevent the clients seeing the very documents that had been used against the clients in relation to the Law Society complaint.
In the light of the use of the documents by Mr Goldberg in relation to the Law Society both Mahoney and Clarke JJA took the view that it would be unfair to the clients of Mr Goldberg to prevent them having access to the documents in the Equity proceedings in circumstances where the documents had been used to their detriment by reason of the disclosure to the Law Society. Accordingly, the Court of Appeal decided that Mr Goldberg had so conducted himself that the law imputed to him an intention to waive the privilege by intentionally performing a deliberate act which rendered it unfair to the client that the privilege be maintained.
In the present circumstances I do not consider that disclosure of the memoranda of fees, backsheets and similar documents amounts to such a use of privileged material in a way which is unfair to UBA.
Disclosure of the memoranda of fees and other documents does not in any way disclose the nature or contents of the advice or communications between the applicants and their legal advisers. The memoranda of fees simply set out the dates and refer to the action taken in respect of which a charge is made. The memoranda of fees were brought into existence, on their face, not solely for the purpose of obtaining legal advice or for use in legal proceedings but for the purpose of recording and raising charges in respect of work which had been already completed. It is evident that the documents were made or brought into existence for a purpose different from, or beyond, the obtaining of legal advice or use in legal proceedings.
In Packer v Deputy Commissioner of Taxation (1985) 1 Qd R 275 the Full Court of the Supreme Court of Queensland held that legal professional privilege does not attach to entries in a solicitor's trust account ledger except to the extent that such entries record communications referable to the relation of solicitor and client in a professional sense. The Court pointed out that the general nature of trust account ledgers is to record movement of money and to indicate matters in respect of which the movement occurs.
The decision in that case refers to a number of earlier cases in which it has been held that bills of costs rendered by a solicitor in detailed form and which disclosed communications concerning matters that were affected by privilege were themselves privileged. The type of bills referred to in those decisions were bills which would disclose indirectly and sometimes more directly instructions given by a client to his solicitors.
In Packer a distinction is drawn between detailed bills of costs and the ledger cards there under consideration which were made simply for the purpose of recording movements of money and which did not necessarily relate to matters referable to the relationship of solicitor and client. It is pointed out for example, that a bill of costs sometimes embodies a solicitor's history of the transaction and recites the nature of the professional service in respect of which it is proposed to charge fees. In such a case, if a bill of costs shows the nature of the instructions or the advice it will be privileged and disclosure of it may waive privilege. If it does not disclose such information then it will not be privileged and production of it will not amount to waiver. In Packer, Andrews SPJ said at 282 :
" In my view there is nothing in particular to set aside a bill
of costs as forming some special category of record of privileged information. Even bills of costs may on careful scrutiny in particular cases be shown not to contain privileged information. Consideration of individual cases demonstrates that bills of costs frequently contain a history of matters in respect of which solicitors have been consulted by clients which discloses the nature of advice sought or given."
In the present case, I have perused the memoranda of costs which have been provided by the applicants and I do not consider that they disclose the nature or content of privileged material. I do not therefore consider that it can be said that disclosure of and reliance upon these memoranda amounts to a use of, or partial disclosure of, legally privileged material so as to produce an unfair advantage which would lead to an implied or imputed waiver of privilege in relation to the documents underlying those memoranda. The memoranda and the other documents are simply recording, in outline form, the work which has been undertaken by the solicitors and in respect of which the charges are raised and do not disclose the content of the communications, advices, briefs or conferences.
As a more general proposition, UBA submits that it would be unfair to allow the applicants to rely on memoranda of fees and similar documents without the respondent having the right to examine and consider the underlying documents, with a view to seeing whether the work which was being charged for was relevant to the claim by the clients; whether the clients followed the advice which had been given, or whether they ignored it; whether the amount of time spent was in fact spent or justified; or whether the advice and legal work was such as to justify the charged levied or the quantum of such charge.
When a party claiming damages in the nature of costs elects to rely on privilege there is a risk that the party may not be able to prove the amount of its claim because the Court can only decide the claim on the basis of the evidence which is placed before it. This is a matter for consideration by the party claiming the privilege. The mere fact that a series of memoranda of fees are produced which itemise work done in respect of which charges are made does not mean that privileged documents which are charged for in those memoranda are being unfairly used or that fairness requires that the underlying documents must be made available for inspection and use by the opposing party.
If reliance is placed on privilege in circumstances where the amount charged is challenged then, if no evidence is forthcoming as to the nature of the advice or the necessity for the advice, it may be, depending on the particular circumstances and evidence, that the consequence is that the claimant will fail.
If the Court were to hold that when a party makes a claim for damages in the nature of costs and provides a list of the costs and amounts in respect of which the claim is made, but does not disclose any communications, advice or instructions, such party has waived legal professional privilege in relation to all those underlying documents the result would be, in my view, to undermine the basic right to which a client is entitled. It would have the consequence that the other party in later proceedings is entitled to examine the briefs, communications, instructions, retainers and advices considered by the client and to use information originally brought into existence in legal professional confidence for any purpose it wishes in other litigation. In these circumstances the prospect of such a result would substantially impede freedom of communication between client and legal advisers, which is at the very heart of the privilege, by discouraging free and uninhibited discussion of the issues and questions in the fear that these communications could later be disclosed to the severe disadvantage of the client.
In order to warrant such a result there must be a sound case made out of unfairness to the party against whom the privilege is asserted. In the present case I do not consider that any such unfairness has been demonstrated. The applicants have not sought to use or put in evidence any of the privileged documents in the present proceedings nor have they otherwise used those documents in an attempt to gain any advantage over UBA.
Conclusions
64. I summarise my conclusions in this matter as follows :
1. In relation to the Trawl litigation I consider that there has been no waiver of that privilege by either of the parties entitled to waive it namely Trawl and/or the Commission. The applicants in the present proceedings had no power or authority at any stage to waive the privilege in relation to the Trawl proceedings.
2. The production of memoranda of fees, backsheets and other records of fees charged does not constitute a waiver of the privilege in the underlying legal documents which embody the results of that work.
3. The bringing of an action for damages based on the costs of litigation in the proceedings referred to in this decision does of itself not amount to a waiver of privilege.
Accordingly, I dismiss the application by the respondent seeking production for its inspection of the documents referred to in these reasons and I order that the costs of this application be reserved.
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