Malone v La Playa Nominees Pty Ltd
[2021] VSC 271
•19 May 2021
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
PROPERTY LIST
S ECI 2018 00285
| RAYMOND MCGREGOR MALONE | Plaintiff |
| v | |
| LA PLAYA NOMINEES PTY LTD (ACN 071 767 863) | First Defendant |
| and | |
| THE REGISTRAR OF TITLES | Second Defendant |
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JUDGE: | Matthews AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 8 April 2021 |
DATE OF RULING: | 19 May 2021 |
CASE MAY BE CITED AS: | Malone v La Playa Nominees Pty Ltd |
MEDIUM NEUTRAL CITATION: | [2021] VSC 271 |
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PRACTICE AND PROCEDURE – Objection to subpoena – Legal professional privilege – Litigation privilege – Common law principles – Dominant purpose – Emails and their attachments between expert and solicitor subpoenaed from expert – Where expert also a lay witness - Claim to privilege largely upheld - Waiver not established, save for a small number of documents – Asahi Holdings (Australia) Pty Ltd v Pacific Equity Partners Pty Limited (No 4) [2014] FCA 796 – Australian Securities and Investments Commission v Southcorp Ltd [2003] FCA 804 – Matthews v SPI Electricity Pty Ltd & Ors [2013] VSC 33.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr T Mitchell | T Squared Legal |
| For the First Defendant | Mr A Herskope | Kalus Kenny Intelex |
HER HONOUR:
Introduction
This decision concerns an objection by the plaintiff, Raymond McGregor Malone, to a subpoena filed on 16 November 2020 by the first defendant, La Playa Nominees Pty Ltd, addressed to Angelo Racovalis (‘Subpoena’). Mr Racovalis has provided an expert report dated 15 October 2020 to the plaintiff, which was filed on 16 October 2020 (‘Racovalis Report’). In addition, an outline of evidence which Mr Racovalis is expected to give as a lay witness, dated 16 October 2020, has also been filed (‘Racovalis Outline’).
By the Subpoena, the first defendant sought three categories of documents, only one of which it now presses. That category of documents is as follows (‘Documents’):
All correspondence including emails and attachments to such emails between solicitors at the law firm Nicholson Ryan and you from 1 November, 2017 to date relating to the property at 6 Shandford Avenue Brighton (No 6) or the property at 8 Shandford Avenue Brighton (No 8).
Mr Racovalis produced copies of the Documents to the Prothonotary. On 17 December 2020, the plaintiff lodged a notice of objection to the Subpoena with the Prothonotary, objecting to the Subpoena, primarily on the grounds of legal professional privilege. Subsequently, I made directions by consent between the parties, giving leave to the plaintiff to inspect the Documents and uplift them for copying, for the plaintiff to file and serve a list of documents over which privilege is claimed and the grounds of the claimed privilege (‘Disputed Documents List’),[1] for the plaintiff to deliver to the first defendant copies of documents which were not disputed, and for both parties to file and serve affidavits and outlines of submissions, with the Objection to be heard on 8 April 2021.[2]
[1]Each of the documents enumerated in the Disputed Documents List is defined in these reasons as a Disputed Document, and together they are referred to as the Disputed Documents.
[2]See orders made on 8 February 2021.
The plaintiff relies on the following:
(a) The Disputed Documents List dated 3 March 2021;
(b) Affidavit of Gerard Maxted affirmed 10 March 2021 (‘Maxted Affidavit’). Mr Maxted is a solicitor employed by Nicholson Ryan Lawyers (‘NRL’) which represented the plaintiff in this proceeding from its commencement until about 3 December 2020; and
(c) Written outline of submissions dated 28 March 2021 (‘Plaintiff’s Written Outline’).
The first defendant relies on the following:
(a) Affidavits of Michael Jonathan Kenny sworn 5 January and 18 March 2021. Mr Kenny is a partner of the law firm Kalus Kenny Intelex (‘KKI’), solicitors for the first defendant; and
(b) Written outline of submissions dated 6 April 2021 (‘First Defendant’s Written Outline’).
The second defendant, the Registrar of Titles, has not been playing an active role in the proceeding.[3]
[3]By letter dated 23 July 2018, the Registrar of Titles informed the Prothonotary that he did not intend to appear in the proceeding.
For the reasons which follow, the plaintiff’s objection is largely upheld and no orders for the first defendant to inspect documents contained in the Disputed Documents List, save for Disputed Documents numbered 1, 2, 6, 13, 21, 23 and 24, will be made.
Background
It is necessary to briefly describe what this proceeding is about, so that the discussion about the Subpoena can be properly understood.
The plaintiff has been the registered proprietor of the property located at 6 Shandford Avenue Brighton (‘Number 6’) since 1 December 2012. The first defendant has been the registered proprietor of the property next door, 8 Shandford Avenue Brighton (‘Number 8’) since 29 November 1995. A fence, constructed of wire mesh at the front portion and brick/concrete along the rest, has separated the two properties (the ‘Side Fence’). At various points in time, works have been conducted on the Side Fence or to replace parts of it. As I understand it, Michael Hirsch, a director of the first defendant, resides at Number 8.
In 2001, the first defendant made an application to the Registrar of Titles to amend the certificate of title for Number 8 to accord with a plan of survey. This was granted and the certificates of title for both properties, along with the relevant plan of subdivision, were amended to reflect that. In 2017, the first defendant made an application to the Registrar of Titles to amend the certificate of title for Number 8. That application has not been determined.
In February 2015, the plaintiff commenced renovations on his property, which included replacing parts of the Side Fence. It is not necessary for me to go into any detail here, other than to note that Mr Hirsch insisted that the new portions of the Side Fence be placed in a particular location and be constructed from certain materials.
Mr Racovalis and his company, Estate Building and Renovating Pty Ltd, was engaged by the plaintiff to carry out the renovations to Number 6. This included works to the Side Fence, which were carried out in around 2017-2018.
In this proceeding, the plaintiff claims that the first defendant was not entitled to become the registered proprietor of all the land the subject of its 2001 application and is not entitled to become the registered proprietor of all the land the subject of its 2017 application, amongst other things. He seeks declarations to this effect as well as declarations that he has an interest in fee simple in all of the land comprising the land on which the brick wall is located and the land to the north-east of the brick wall. These claims are denied by the first defendant, which has made a counter-claim that any claims by the plaintiff to the disputed land have been extinguished and that the first defendant is entitled to be registered as the proprietor of it.
The plaintiff intends to call Mr Racovalis as a witness at the trial of the proceeding. The plaintiff intends to adduce evidence from Mr Racovalis, primarily as to his dealings with Mr Hirsch during the renovation of Number 6. The Racovalis Outline, styled as a lay witness outline, has been filed by the plaintiff. The plaintiff also intends to rely on an expert report provided by Mr Racovalis, in which he primarily describes some of the matters he observed as to certain brickworks in the garden at Number 6 and in part of the Side Fence, and expresses an opinion as to those matters, including as to the likelihood that the brick wall and supporting grid pattern were constructed at the same time by the same contractor. The Racovalis Report has been filed in this regard.
Are the Disputed Documents privileged?
General principles
The first defendant contended, and the plaintiff accepted, that the common law principles regarding legal professional privilege apply here, rather than the Evidence Act 2008 (Vic) (‘Evidence Act’). I accept the first defendant’s submissions in this regard. The relevant sections of the Evidence Act, being ss 119, 122 and 126, apply in situations where it is the “person” who is required to produce documents under a subpoena who is the “person” who objects to them. Since it is the plaintiff’s objection which is the subject of this hearing, the Evidence Act does not apply and it is the common law which applies. Neither party made any submissions or identified the effect of this distinction on the issues under consideration.
In Asahi Holdings (Australia) Pty Ltd v Pacific Equity Partners Pty Limited (No 4),[4] Beach J of the Federal Court set out a statement of principles applicable under the common law to claims of legal professional privilege. While his Honour was considering claims made under the legal advice limb, rather than the litigation limb which the plaintiff relies on here, the principles are readily adapted to that context.[5] The following principles can be distilled from his Honour’s statement:
[4][2014] FCA 796 (‘Asahi’).
[5]Indeed, his Honour referred to these as being ‘well known principles of general application’: Asahi, [37].
(a) First, the relevant issue is whether the documents or communications were created or prepared in anticipation of or during pending litigation for the dominant purpose of the litigation (for example, with a view to obtaining legal advice or evidence for use in the litigation);[6]
[6]Asahi, [28]; See also Cadbury Schweppes Pty Ltd v Amcor Limited [2008] FCA 88, [10] (‘Cadbury v Amcor’) citing Public Transport Authority of Western Australia v Leighton Contractors Pty Ltd [2007] WASCA 151 at [12].
(b) Second, the plaintiff bears the onus of establishing the claims to privilege,
including each factual element necessary to establish the requisite dominant purpose. In that respect, focused and specific evidence is required in respect of each communication, rather than mere generalised assertion let alone opaque and repetitious verbal formulae. There should be sufficient evidence which proves directly or by inference that the dominant purpose for the communication was for [a privileged purpose];[7]
[7]Asahi, [29].
(c) Third, the relevant time for ascertaining purpose is when the communication was made. Specifically,
[if] the communication was a written communication, the relevant time is when the document came into existence. If the communication was constituted by the forwarding of a copy document, the purpose for the creation of the copy document at the time that the copy was created is what is relevant.[8];
[8]Asahi, [30].
(d) Fourth, the relevant purpose ‘may be either that of the author or initiator of the communication, or the person at whose request or under whose authority the communication was created or made. The circumstances will dictate the focus.’[9];
[9]Asahi, [31].
(e) Fifth, the purpose is to be objectively ascertained:
Evidence of the subjective intention of the author or person requesting the creation of the communication (document) is significant but not conclusive. Purpose can also be determined from the content of the document in its full context. Indeed, the latter analysis can carry greater weight, particularly over generalised hearsay or even compounded hearsay evidence from a person other than the author or person requesting the creation of the communication (document).[10]
[10]Asahi, [32].
(f) Sixth,
it is not sufficient to show a substantial purpose or that the privileged purpose is only one of two or more purposes of equal weighting. The requisite purpose must predominate. It must be the paramount or most influential purpose.[11]
[11]Asahi, [33].
(g) Seventh,
it may be that the entirety of a document may be privileged. Alternatively, it may be that only part of a document meets the dominant purpose test. A particular document may contain or consist of many communications, such as an email chain, only some of which were made for the requisite dominant purpose.[12]
(h) Eighth, a document ‘may be privileged to the extent which it records a privileged communication, even if the document itself would not satisfy the dominant purpose test’.[13]
[12]Asahi, [34].
[13]Asahi, [35].
Evidence relied upon
The plaintiff relies on the Maxted Affidavit, along with the Disputed Documents List, to establish his claim to legal professional privilege in respect of the Disputed Documents.
Mr Maxted deposes that he is a solicitor employed by NRL, who acted for the plaintiff in the proceeding until about 3 December 2020. He says that he was involved in the carriage of the proceeding from about late 2018 to 3 December 2020.[14]
[14]Maxted Affidavit, [1].
Mr Maxted deposes that Mr Racovalis is a registered domestic builder who was engaged by NRL on behalf of the plaintiff to prepare an expert report, being the Racovalis Report. In addition, a witness outline has also been filed in respect of lay evidence to be given by Mr Racovalis, being the Racovalis Outline.[15]
[15]Maxted Affidavit, [5].
Mr Maxted says that he was provided with a copy of the Disputed Documents List.[16] He says that he has reviewed the Disputed Documents and that “they are all communications related to this proceeding.”[17]
[16]Maxted Affidavit, [6].
[17]Maxted Affidavit, [7].
Further, he says that he has considered each of the Disputed Documents, and does not “believe that any of those documents influenced the substance or content of” the Racovalis Report.[18]
[18]Maxted Affidavit, [8].
As I understand it, the plaintiff’s solicitor made copies of the documents produced on subpoena by Mr Racovalis and produced a sequentially paginated list. A copy of these documents was provided to my Associate, at my request, as a single .pdf format file, containing the page numbers assigned by the plaintiff’s solicitor.
The Disputed Documents List merely gives each Disputed Document a document number; describes it in terms of type of document (eg email, report), date/date range, sender/recipient, and name of attachment; sets out the grounds of privilege claim; and gives the page number/s of the electronic file. The column ‘grounds of privilege claimed’ is simply that the communication/document “was made, or the document created, for the dominant purpose of use in, or in relation to, litigation” (‘Grounds Statement’).
The Maxted Affidavit addresses each of the Disputed Documents separately, by reference to the document number given in the Disputed Documents List. Each such paragraph in the Maxted Affidavit identifies the document number, describes the type of document, says who the email is to and from, its date/date range, says whether it is an email or a chain of emails, says what the attachment is, describes in general terms what the communication/document was about, and states that the email/attachment was created for the dominant purpose of use in or in relation to the proceeding.
By way of illustration, a sample of such descriptions is set out below:
(a) Referring to Disputed Document number 3, this “comprises a chain of emails between Racovalis and me dated 8 October 2020. These emails relate to a request for Racovalis’ final report and include the attachments for Racovalis’ final report. The communications recorded in the document were made in relation to this proceeding.”[19]
(b) Referring to Disputed Document number 10, this “is an email from Racovalis to me dated 15 June 2020 attaching Racovalis’ incomplete draft expert report which was sent to me for discussion. It was created for the dominant purpose of use in, or relation to, this proceeding.”[20]
(c) Referring to Disputed Document number 30, this is “an email from me to Racovalis dated 28 July 2020. This communication attaches a copy of Racovalis’ draft witness outline and makes enquiries in relation thereto. This communication was created for the dominant purpose of use in, or relation to, this proceeding.”[21]
[19]Maxted Affidavit, [11].
[20]Maxted Affidavit, [18].
[21]Maxted Affidavit, [38].
Submissions and analysis
The plaintiff submits that by the very description of the Documents sought on the Subpoena, it is apparent that they are likely to be privileged. This is because they are emails between Mr Racovalis and the plaintiff’s then solicitors in connection with the Property. More importantly, the plaintiff submits that it is evident from the Maxted Affidavit that the purpose of the communications between Racovalis and NRL was for this litigation, Racovalis being a possible lay witness and expert witness. The Maxted Affidavit establishes that all of the Disputed Documents came into existence for the purpose of NRL providing the plaintiff with legal services in relation to this proceeding, thus establishing legal professional privilege.
The first defendant raised a number of matters in submitting that the plaintiff had not established his claim to privilege in the Disputed Documents. It is convenient to deal with these submissions in the following groupings.
Are the descriptions of the Disputed Documents given in the Maxted Affidavit sufficient to ground the plaintiff’s claim to privilege?
The first defendant says that the plaintiff has not given sufficient evidence and/or a sufficient description of why it is said that each document is privileged. Primarily, the first defendant submits that the plaintiff has relied on generalised claims of privilege, giving formulaic descriptions before making a conclusionary statement for each Disputed Document. The first defendant submits that the Maxted Affidavit is inadequate in establishing the basis of the plaintiff’s claim to privilege, as it does no more than identify the document and make an assertion that it was created for the dominant purpose of the litigation. In oral submissions, counsel for the first defendant emphasised that the real issue here was whether the Maxted Affidavit was sufficient to establish the privilege claims.
In this regard, the first defendant relies on Asahi where “focused and specific evidence is required in respect of each communication, rather than mere generalised assertion let alone opaque and repetitious formulae”.[22] The first defendant also relies on Baron v Gilmore,[23] in which Ball J stated that:
Courts have frequently stressed the need for an affidavit in support of a claim for privilege to provide sufficient information about a document and the purpose for which it was obtained so that the Court can be satisfied that the claim for privilege is properly made.[24]
[22]Asahi, [7]; see paragraph 16(b) above.
[23][2018] NSWSC 439 (‘Baron v Gilmore’).
[24]Baron v Gilmore, [13].
In response, the plaintiff submitted that in Baron v Gilmore, the Court was dealing with a blanket claim to privilege over a number of documents, pointing out that Ball J, referring to the affidavit relied on, continued as follows (emphasis added):
Ms Harrison’s affidavit does not do that. Instead, it makes a blanket claim for privilege in respect of correspondence between Shakenovsky & Associates and certain named persons. It then attaches a list of documents which appears to include documents falling within classes in respect of which not even a blanket claim is made.
I accept that the details that need to be given in an affidavit in support of a claim for privilege may vary depending on the nature of the documents in question. So, for example, if a document records communications between the solicitors for a party in existing litigation and the party, or a person who has provided an affidavit in the proceedings, it would be reasonable to infer without more that the claim for privilege is properly made. But the same does not follow for other categories of document. That is true of many of the documents referred to in the schedule under this category in respect of which a claim for privilege is made.
In the present case, I would permit the plaintiffs to maintain a claim for privilege over documents consisting of correspondence between Shakenovsky & Associates and each of Messrs Baron, Bouwer, Ian Gilmore, Bell, Brayden Gilmore and Ball. Although only a blanket claim for privilege is made, I think that it is reasonable to infer from the nature of the documents that they were brought into existence for the dominant purpose of this litigation. However, on the evidence before me, I am not prepared to conclude that any of the other documents listed in the schedule under the heading “All correspondence – privilege” are properly the subject of a claim for privilege.[25]
[25]Baron v Gilmore, [13]-[15].
Had the plaintiff relied solely on the description given in the Disputed Documents List, being the Grounds Statement, I would have had no hesitation in accepting the first defendant’s submission that the descriptions were insufficient to establish the privilege claim.
However, we also have the Maxted Affidavit. There is always a fine line between giving a description of the document in a way that provides sufficient evidence of privilege without going so far as to effectively divulge the privileged content of the document in the way it is described. Some level of generality is unavoidable. With the Maxted Affidavit, we have a description of each document in the way that I have summarised in paragraph 24 above. Together with the general evidence given by Mr Maxted as to NRL’s dealings with Mr Racovalis,[26] it is evident that the communications between NRL and Mr Racovalis were for the purpose of this proceeding. I accept the plaintiff’s submission that the very category of documents sought by the Subpoena makes it reasonable to infer that the documents are privileged, as Ball J stated in Baron v Gilmore. I also consider that the Maxted Affidavit means that I do not need to rely on such an inference alone. In my view, the Maxted Affidavit provides sufficient evidence, and a sufficient description of each document, so as to allow me to determine whether the Disputed Documents are privileged.
[26]See paragraph 19 above.
Is Mr Maxted’s evidence sufficient where he is not the author of each of the Disputed Documents?
The first defendant submits that several of the Disputed Documents over which a claim to privilege is made were created or generated by persons other than Mr Maxted. It is said that he has no personal knowledge of the purpose for which the documents were created and nor does the Maxted Affidavit depose to any inquiries made by him of the authors of the communications so as to enable the Court to be satisfied that the communications, or which part of them in the case of chains of emails, were created for the relevant purpose.
The plaintiff submits that Mr Maxted was the solicitor at NRL with conduct of the matter and that he has inspected all of the Disputed Documents. The plaintiff relies on the principle that legal professional privilege is to be determined objectively, such that it does not matter if Mr Maxted was not the author of all of them.
In this regard, I accept the plaintiff’s submissions. Taking the fourth and fifth general principles referred to in paragraph 16(d) and (e) above, the communications all came into existence for the dominant purpose of the litigation, either by Mr Maxted himself, or Mr Racovalis in response to NRL’s requests that he prepare the Racovalis Report (and the drafts thereof) and respond to the drafts of the Racovalis Outline, or someone else at NRL working under Mr Maxted’s direction. Importantly, since the purpose is to be determined objectively, even though the subjective intention of the author or person requesting the creation of the document is significant, it is not conclusive, for the reasons expressed in Asahi. Inferences drawn from the document itself are also relevant.
Consideration in respect of particular types of documents
Documents which are ‘administrative’ in nature
The first defendant submits that the nature of some of the Disputed Documents is that they appear to be no more than administrative in nature. It contends that it is difficult to see how, in the absence of something more, those communications have the necessary quality to attract privilege. Examples of this are emails between Mr Racovalis and NRL making arrangements to meet.
The plaintiff rejects this submission, pointing out that the communication has to be assessed at the time it was made.[27] The plaintiff says that the purpose of those communications was in connection with the litigation, as NRL was communicating with Mr Racovalis for the purpose of meeting him meeting with NRL and/or counsel to discuss his expert report or his witness outline.
[27]See paragraph 16(c) above.
I accept the plaintiff’s submission: it does not matter that the communications were ‘administrative’ in nature, since their purpose was clearly in connection with the litigation.
Draft expert reports of Mr Racovalis
Aside from the question of waiver over draft reports, which will be discussed separately below, the first defendant submits that there is no evidence of the purpose for which the draft expert reports were brought into existence.
Apart from his submissions of more general application, the plaintiff did not specifically address this question.
Nonetheless, it is tolerably clear from the Maxted Affidavit and from the surrounding circumstances that the draft expert reports were prepared for use in or in connection with the litigation. Further, and subject to the discussion of Disputed Documents 6 and 56 at paragraphs [91] – [98] below, the draft expert reports were the subject of communications between counsel for the plaintiff, NRL, and Mr Racovalis.[28] There is no evidence of any other purpose for the creation of the draft expert reports. Accordingly, I am satisfied that the draft expert reports were prepared for and communicated to the plaintiff’s solicitors for the dominant purpose of the litigation and that they are privileged.
Draft witness outlines for Mr Racovalis
[28]With the exception of Disputed Document number 6, as discussed later in these reasons.
The first defendant says that the Racovalis Outline primarily refers to communications between Mr Racovalis and Mr Hirsch, with large portions of emails between them being cited verbatim. Based on this observation, the first defendant submitted that the draft outlines are not privileged, as they by and large concern communications which are not privileged. Presumably, the first defendant bases this submission on the content of the final Racovalis Outline as filed and served, since it has not had access to the drafts.
I do not accept that this is a reason why the draft witness outlines are not privileged. To say that the content of the draft outlines, much of which describes non-privileged communications, means that the draft outlines themselves are not privileged is both novel and unsupported by the authorities. The relevant communication here is the communication between NRL and Mr Racovalis, of which the draft outline formed a part, not the content of the draft outline.
The plaintiff submits that draft witness statements/outlines/affidavits are privileged, relying on Cadbury v Amcor for that proposition, where Gordon J (as her Honour then was) found that the draft witness statements in that case were privileged and not subject to production.[29]
[29]Cadbury v Amcor, [36].
In this regard, it is important to note that in the paragraph of Cadbury v Amcor relied upon by the plaintiff here, her Honour was not dealing with drafts of outlines in respect of which a final version was subsequently filed: rather, these concern draft outlines where there is nothing on the evidence in that case to suggest that final versions were filed. Rather, it is other parts of that case which clearly state that draft witness outlines are privileged, as are communications between a party and a third person for the dominant purpose of settling the contents of a witness outline to be used in litigation.[30] Further, it is clear from Attorney-General (NT) v Maurice and Others[31] that “before it emerges in its final form”, successive drafts of a witness outline may be privileged. This is because the drafts “might disclose the precise character of confidential communications with the solicitor, by showing the alterations from time to time.” The final form as filed and served is not privileged.[32]
Chains of emails
[30]Cadbury v Amcor, [42].
[31](1986) 161 CLR 475 (‘AG v Maurice’).
[32]AG v Maurice, 496 per Dawson J.
The first defendant submits that a number of the Disputed Documents are described as ‘chains of emails’ between, for example, NRL/Mr Maxted and Mr Racovalis. The first defendant says that the Maxted Affidavit does not say whether the communication comprises the whole of the chain of emails or part thereof, and then whether each part attracts privilege. Asahi was relied on in this regard, specifically the seventh general principle as described in paragraph 16(g) above. During the course of oral argument, I asked Mr Herskope, counsel for the first defendant, whether the only sensible inference available from the Maxted Affidavit is that the claim to privilege is over the whole of the chain, as the relevant descriptions of those documents is as a ‘chain of emails’. Mr Herskope submitted that it was still unclear, because it may be that only part of the chain is privileged.
Apart from his submissions of more general application, the plaintiff did not specifically address this question.
In my view, the Maxted Affidavit makes clear whether the claim to privilege is over the whole of the chain of emails, where the Disputed Document is described as a chain of emails, by virtue of it being given that description. I do not accept the first defendant’s submission that it is unclear, as the claim to privilege being over the whole is clear on the face of the description. By way of example, I refer to Disputed Document number 3, the description for which is set out in paragraph 25(a) above: the document is described as a chain of emails, the subject matter of them is described, and then it is said that the communications (not communication) recorded in the document were (not was) made in relation to the proceeding. I am satisfied by the descriptions of the chain of emails in the Maxted Affidavit that the claim to privilege over the whole of the chain is justified.
Communications with or involving Arthur Stanicic
Disputed Documents numbers 12, 13 and 15 relate to Mr Racovalis’ dealings with Arthur Stanicic, a 3D designer (‘3D Documents’). At paragraph 3.3 of the Racovalis Report, Mr Racovalis states that he engaged Mr Stanicic to generate a 3D image for illustration purposes to provide “a clearer understanding of the structure supporting the brick wall, and how this ties into the grid structure in the raised rear garden.” At paragraph 3.4 of the Racovalis Report, Mr Racovalis states “The 3D image that Stanicic prepared showing the brick wall and the red brick grid pattern structure in the rear garden supporting and tying into the brick wall is attached as attachment 1. I believe it accurately reflects what I observed on the site”.
The first defendant submits that none of the claims to privilege in respect of the 3D Documents can be maintained. This is because Mr Racovalis engaged Mr Stanicic, not the plaintiff or the plaintiff’s solicitors. Further, the first defendant submits that privilege cannot be maintained in respect of documents used by an expert to form an opinion or write a report, regardless of how they came by the documents.[33] In particular, Disputed Document number 13, described in the Maxted Affidavit as an email dated 21 April 2020 relating to the preparation of a 3D sketch is both not privileged for the reasons already expressed and privilege has been waived as a copy of it is included in attachment 2 to the Racovalis Report.
[33]In this regard, the first defendant relies on Interchase Corporation Ltd (in liq) v Grosvenor Hill (Queensland) Pty Ltd (No 1) [1999] 1 Qd R 141, 148-150, 161.
The plaintiff concedes, properly, that privilege in respect of Disputed Document number 13 cannot be maintained. However, the plaintiff disputes the first defendant’s submissions in respect of the other 3D Documents. The other 3D Documents are communications between Mr Racovalis and Mr Maxted. Those communications are privileged because they are communications between the plaintiff’s solicitor and the expert. Even if Mr Racovalis is just passing something on to Mr Maxted, that is privileged as it constitutes a privileged copy.[34]
[34]In this regard, the plaintiff relies on Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501.
I accept the plaintiff’s submissions in this regard. Privilege in respect of Disputed Documents number 12 and number 15 has been established.
Should the Court inspect the Disputed Documents?
Relying on the principles summarised by Derham AsJ in Mortgage Results Pty Ltd v Millsave Holdings Pty Ltd,[35] counsel for the first defendant emphasised that the Court should not inspect the Disputed Documents in order to ascertain whether they were in fact privileged, as it was up to the plaintiff to satisfy the Court, on his affidavit material, that the documents were privileged. It was only if satisfied as to that matter that the Court could inspect the documents. Referring to Tabcorp Holdings Ltd v State of Victoria,[36] the first defendant submits that the observation of Hansen JA that “… In declining to inspect the documents the judge took into account the insufficiency of the evidence and the possible variety of purposes of communications and documents” are entirely apposite to this case, such that the Court should reject the plaintiff’s invitation that the Court inspect the Disputed Documents.
[35][2017] VSC 704, [22]-[23].
[36][2013] VSC 302.
The plaintiff accepted that the threshold position in respect of privilege had to be established on the affidavit evidence before the Disputed Documents could be inspected. The parties differed on whether the threshold position had been reached.
As I observed in Bradford & Anor v Devlot 17 Pty Ltd,[37] at both common law and under the Evidence Act the Court has a discretion to inspect the Disputed Documents, provided that the party claiming privilege has adduced enough evidence for the claim to first be entertained.
[37][2020] VSC 246, [60].
In this instance, for the reasons set out above, I am satisfied that the plaintiff has adduced sufficient evidence for me to entertain his claim to legal professional privilege in respect of the Disputed Documents. I reject the first defendant’s submission that the threshold position has not been reached.
Accordingly, it is open to me to inspect the Disputed Documents so as, if I consider it necessary, to confirm the claim to legal professional privilege. More importantly in the circumstances of this case, it is necessary for me to inspect a large number of the Disputed Documents in order to determine the question of whether privilege in those documents has been waived. The first defendant accepted that if I accepted the claims to privilege, then it was appropriate for me to inspect the Disputed Documents so as to determine the question of waiver.
In this instance, after satisfying myself that the plaintiff had adduced sufficient evidence to support his privilege claims, I inspected the Disputed Documents. At first, I expected that it would be necessary to inspect only those which touched upon Mr Racovalis’ role as an expert witness, but given the mixed nature of his role (both as an expert and as a lay witness), I considered it prudent to inspect all of the documents in the Disputed Documents List.
Conclusion in respect of whether the plaintiff has established his claim to legal professional privilege over the Disputed Documents
It follows from the above reasons that the plaintiff has established his claim to legal professional privilege over the Disputed Documents in general terms, with the exception of Disputed Document number 13, and in respect of those which, upon inspection, I have determined are not privileged.
Remaining for consideration is the issue of waiver, followed by the application of these reasons to particular individual documents.
Has privilege been waived?
General principles regarding waiver
The touchstone in respect of waiver of legal professional privilege is the High Court in Mann v Carnell. [38] In that case, Gleeson CJ, Gaudron, Gummow and Callinan JJ stated that: [39]
What brings about the waiver is inconsistency, which the courts, where necessary informed by the consideration of fairness, perceive, between the conduct of the client and the maintenance of the confidentiality; not some overriding principle of fairness operating at large.
[38](1999) 201 CLR 1.
[39](1999) 201 CLR 1, 13 [29].
In any application of Mann v Carnell, the starting point must be an analysis of the disclosures or other acts or omissions of the party claiming privilege that are said to be inconsistent with the maintenance of confidentiality in the privileged material.[40]
[40]AWB Limited v Cole (No 5) [2006] FCA 1234, [134] per Young J.
Waiver arises in this case in the context of the plaintiff’s solicitors dealings with Mr Racovalis, an intended lay witness and expert witness. There are several authorities pertinent to this context, and the main principles are summarised below.
Expert witnesses
As noted by Derham AsJ in Matthews v SPI Electricity Pty Ltd & Ors,[41] “It is well established that a voluntary disclosure of privileged documents can result in a waiver of privilege over those documents and associated material.” His Honour went on to observe that the applicable test for determining the scope of any waiver of ‘associated material’ is “whether the material that the party has chosen to release from privilege represents the whole of the material relevant to the same issue or subject matter”.[42]
[41][2013] VSC 33 (‘Matthews v SPI’).
[42]Matthews v SPI, [39]; See also AG v Maurice, at 482 and 484 per Gibbs CJ, 488 per Mason and Brennan JJ, and 498–9 per Dawson J
Associate Justice Derham also observed that a common application of associated material waiver is where an expert report has been prepared in reliance on other documents.[43]
[43]Matthews v SPI, [44], referring to AWB Ltd v Cole(No 5) [2006] FCA 1234, [168].
In Australian Securities and Investments Commission v Southcorp Ltd,[44] Lindgren J analysed the case law in relation to waiver of privilege in the context of expert evidence and then summarised the principles, in the following terms:[45]
[44](2003) 46 ACSR 438; [2003] FCA 804 (‘ASIC v Southcorp’).
[45]ASIC v Southcorp, [21] (citations omitted).
1.Ordinarily the confidential briefing or instructing by a prospective litigant’s lawyers of an expert to provide a report of his or her opinion to be used in the anticipated litigation attracts client legal privilege.
2.Copies of documents, whether the originals are privileged or not, where the copies were made for the purpose of forming part of confidential communications between the client’s lawyers and the expert witness, ordinarily attract the privilege.
3.Documents generated unilaterally by the expert witness, such as working notes, field notes, and the witness’s own drafts of his or her report, do not attract privilege because they are not in the nature of, and would not expose, communications.
4.Ordinarily disclosure of the expert’s report for the purpose of reliance on it in the litigation will result in an implied waiver of the privilege in respect of the brief or instructions or documents referred to in (1) and (2) above, at least if the appropriate inference to be drawn is that they were used in a way that could be said to influence the content of the report, because, in these circumstances, it would be unfair for the client to rely on the report without disclosure of the brief, instructions or documents.
5.Similarly, privilege cannot be maintained in respect of documents used by an expert to form an opinion or write a report, regardless of how the expert came by the documents.
6.It may be difficult to establish at an early stage whether documents which were before an expert witness influenced the content of his or her report, in the absence of any reference to them in the report.
In New Cap Reinsurance Corp Ltd (in liq) v Renaissance Reinsurance Ltd,[46] White J said:[47]
Service of a witness statement, whether it be a statement of an expert or a witness to fact, waives privilege in that statement. As stated in the Marubeni Corp case mere reference to a document does not waive privilege in that document: there must at least be reference to the contents and reliance. In the present case there was no reference and no reliance therefore no waiver.
In Dingwall v Commonwealth of Australia (1992) 39 FCR 521, Foster J, referring to Attorney-General (NT) v Maurice, said (at 524):
I have come to the view, upon a close consideration of the judgments in Maurice’s case that it cannot be regarded as authority for a wide principle that, whenever documents are sent to a potential witness as part of material being placed before him in order that he may provide a report of an expert kind to be used as evidence in a case, that those documents, ipso facto, although they had the protection of legal professional privilege, necessarily would lose it because of the doctrine of waiver. Maurice’s case does not go as far as that. It requires, certainly, that there be an indication that the documents were used in the preparation of the evidentiary document in a way that could be said to influence the content of that document.
[46][2007] NSWSC 258 (‘New Cap’).
[47]New Cap, [45]-[46]. As White J noted at [47], the same principle was applied by Mansfield J in Tirango Nominees Pty Ltd v Dairy Vale Foods Ltd (No. 2) (1998) 83 FCR 397 at 400; 156 ALR 364 at 367, and by Nicholson J in Australian Competition and Consumer Commission v Lux Pty Ltd [2003] FCA 89 at [46].
In the same case, White J stated that:[48]
The question is not merely whether it could be said that the privileged materials were used in such a way that they could be said to influence the content of the report, but whether it could be said that they influenced the content of the report in such a way that the use or service of the report would be inconsistent with maintaining the privilege in those materials, such as, where it would be unfair for the party to rely on the report without disclosure of those materials.[49]
[48]New Cap, [53].
[49]Cited with approval in Watkins v Queensland [2008] 1 Qd R 564, [14]–[15] (Jerrard JA); Traderight (NSW) Pty Ltd v Bank of Queensland Ltd [2013] NSWSC 211, [17] (Ball J).
In AWB Ltd v Cole (No 5), Young J held that privilege will be waived over “documents and information which were taken into account, or which otherwise underpinned or influenced” the content of a document that the party chose to deploy to advance its own interests.[50]
[50][2006] FCA 1234, [198], [200]–[205].
The first defendant contended that once an expert report is filed and served, it generally follows that privilege in the draft reports is waived. When I asked Mr Herskope for any authority for this contention, he referred to paragraphs 23 and 25 of Roads Corporation v Love,[51] without descending into how those paragraphs provided the relevant support.
[51][2010] VSC 253.
At paragraph 23 of Roads Corporation v Love, Vickery J mentions that both parties in that case relied on the statements of Warren J (as her Honour then was) in Cobram Laundry Services Pty Ltd v Murray Goulburn Cooperative Co Ltd, that:[52]
As a fundamental principle, when a witness is called in order to provide expert opinion evidence all of the facts and instructions upon which that witness bases the expert opinion are admissible and subject to production: see R v Meninga (1992) 66 ACLR 199; also, Cross on Evidence, Aust ed, para 2535. Furthermore, under the doctrine of fairness that applies to the claim for legal professional privilege with respect to a document, where it is fair so that the relevant evidence may be tested, a claim for legal professional privilege ceases to apply; it is taken to have been waived: Attorney-General (Northern Territory) v Maurice (1986) 161 CLR 475; Burnell v British Transport Commission (1956) 1 QB 187 (CA). Ultimately, the effect of upholding a claim for privilege necessarily involves withholding important information from the court that may in turn be at the expense of the administration of justice to one of the parties to the proceeding. Hence there must be good cause for the existence of any privilege: see Cross on Evidence, Australian ed, para 25045; also, 8 Wigmore, para 2190.
[52][2000] VSC 353, [58] (‘Cobram Laundry Services’).
I do not read Cobram Laundry Services as saying that privilege in draft reports is waived once the final report is filed and served. Rather, it goes to the facts and instructions underpinning the report.
At paragraph 25 of Roads Corporation v Love, Vickery J sets out the same summary from ASIC v Southcorp as I have set out in paragraph 66 above, without further commentary.
In this regard, the plaintiff submits that paragraph 25 of Roads Corporation v Love does not stand for the contention propounded by the first defendant, noting that point 4 of Lindgren J’s summary makes it clear that there is only a waiver if the associated documents influenced the content of the final report.
I accept the plaintiff’s submission in this regard.
In addition, regarding draft expert reports, the plaintiff relied on Matthews v SPI Electricity Pty Ltd & Ors (No 7),[53] where Derham AsJ noted that there is a line of authority establishing that draft documents and other communications of a like nature with an expert witness proposed to be called in litigation are privileged under s 119(b) of the Evidence Act, whatever may have been the position at common law.[54]
[53][2013] VSC 553 (‘Matthews v SPI (No 7)’).
[54]See Matthews v SPI (No 7), [15] and the authorities cited therein.
Derham AsJ went on to state that in Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (No 7),[55] Heerey J quoted with approval the observations of Brereton J in ML Ubase Holdings Co Ltd v Trigem Computer Inc:[56]
In my opinion, service and tender of an expert witness’ report in proceedings does not constitute a waiver of the privilege which attaches to communications between the expert and the solicitors who instructed him or her, save to the extent that those communications are associated documents reasonably necessary to an understanding of the report. “Proper understanding” of a document or communication will sometimes, but not always require that documents to which it responds or refers be available. It may very likely be so when the primary document contains a summary or excerpt from an earlier communication, or responds to questions which are not themselves restated in it. But I do not accept that “a proper understanding of the communication or document” involves an appreciation of the manner in which the opinions contained in the document have been formed over time, or the iterations and evolutions through which they have passed. The test is concerned with the comprehensibility of the primary communication or document: if it can be completely or thoroughly understood without more, then access to the related communications or documents is not reasonably necessary.
Accordingly, for the purposes of s 126, one starts by looking at the substantive document (made admissible under s 122 or another of the applicable sections) and asking whether, in order to understand it thoroughly, it is necessary to know what is in the associated material.
[55](2008) FCA 323.
[56][2007] NSWSC 859, [45]-[46].
It must be noted that Derham AsJ was dealing with concepts of waiver and associated waiver under the Evidence Act, not under the common law. The main difference for our purposes in this case is that at common law, for a document to be privileged it must evidence a privileged communication.[57] I will return to this.
[57]Esso Australia Resources Ltd v Commissioner of Taxation (1999) CLR 49 (‘Esso’), McHugh J at 79 [80], Gleeson CJ, Gaudron and Gummow JJ at 65 [36].
I do not accept the broad and simplistic proposition that once an expert report is filed and served, privilege in respect of drafts of the expert report is waived. Rather, at common law privilege will be waived in respect of communications which influence or underpin the substance of the report, which communications may include drafts of the report where the draft report forms part of the communication. This is because to maintain privilege in such communications is inconsistent with the party relying on the expert report.
Having inspected the Disputed Documents, I am satisfied that privilege has not been waived as they do not influence or underpin the substance of the Racovalis Report, save for any specific documents mentioned later in these reasons.
Lay witnesses
The first defendant argues that as there were no restrictions placed on the use of witness outlines in the proceeding once they had been filed and served, the draft outlines were not privileged. In this regard, the first defendant relies on Cadbury v Amcor where it was stated that “there is also authority for the proposition that filing and service, without more, operates as a full or limited waiver” of privilege in a witness outline,[58] and said that this included drafts.[59] On a proper reading of that case, it cannot be said that it stands for the proposition that there has been a “full or limited waiver” of draft witness outlines. The question of waiver under consideration in that section of Cadbury v Amcor was whether witness proofs which had been filed and served in one proceeding were no longer privileged because of waiver and could be used in another proceeding, or whether the waiver was limited to use of the documents in the original proceeding.[60] That is not the question under consideration here. The question of draft witness proofs, the final versions of which were filed and served, did not arise in Cadbury v Amcor.
[58]Cadbury v Amcor, [15].
[59]Transcript, 8 April 2021, 27.19-20.
[60]See Cadbury v Amcor, [15]-[19]. The first defendant’s submission also conflates two separate sets of documents under consideration in Cadbury v Amcor: draft witness outlines which had never been filed or served (as referred to in paragraphs 44 and 45 of these reasons); and other witness proofs which had been filed and served in another proceeding.
The plaintiff conceded that there were no restrictions placed on the use of the witness outlines in the proceeding once they had been filed and served, but disputed the proposition that this worked a waiver of privilege in the draft lay witness outlines.
None of the authorities relied upon by the first defendant in respect of waiver of draft expert reports go so far as to postulate that the same principles apply to lay witness outlines. I am not aware of any authorities standing for such a proposition. Without more, filing and service of a lay witness outline does not bring about a waiver of privilege in the drafts of that outline. Apart from the issue canvassed in paragraph 86 below, there is nothing more here in respect of the drafts of the Racovalis Outline and the communications between Mr Racovalis and NRL regarding them.
Application to individual Disputed Documents
It follows from the above discussion that I do not accept the first defendant’s proposition that the mere filing and service of the Racovalis Report and the Racovalis Outline results in any privilege subsisting in the drafts of those documents, or of email communications in respect of them or the litigation, being waived.
Rather, what is required is an analysis of the evidence to determine whether, first, each of the Disputed Documents is privileged and second, whether privilege has been waived. The relevant threshold having been reached, as set out in paragraphs 56 to 58 above, this analysis can involve and be informed by an inspection of the Disputed Documents.
As mentioned above, given Mr Racovalis’ mixed role as a lay witness and as an expert witness, I considered it prudent to inspect all of the documents, including those regarding the draft lay witness outline for him. This was to assess whether any of those documents, along with those described as being about the expert report or the drafts thereof, could be said to have influenced or underpinned the substance of the Racovalis Report.
With the exception of the Disputed Documents specifically mentioned in paragraphs 88, 89, 91 and 99 below, I am satisfied that the documents enumerated in the Disputed Documents List are privileged and that where privileged, the privilege subsisting in them has not been waived.
Disputed Document number 13 has already been conceded by the plaintiff as not being privileged.
Disputed Documents numbers 1, 2, 21, and 23 are described as communications between Mr Racovalis and NRL, sometimes also referring to attachments from Hope and Co Lawyers to Mr Racovalis.[61] Upon inspection, it is apparent that these documents concern the Subpoena and Mr Racovalis’ response to it, including the engagement of solicitors in that regard (being Hope and Co Lawyers). Neither party specifically referred to these documents and therefore no submissions were made as to whether these documents were privileged and if so whether it had been waived, other than the more general submissions canvassed extensively above.
[61]Maxted Affidavit, [9], [10], [29] and [31].
I am not satisfied that the plaintiff has made out his claim to privilege in respect of these documents. They do not go to Mr Racovalis’ evidence or potential evidence, be it lay or expert, in the proceeding. I do not see that the principles referred to above extend to all communications with a potential witness and the solicitors for the party calling that witness. To the extent that Mr Racovalis has any claim to privilege in respect of the documents, particularly those attaching documents from Hope and Co Lawyers, no such claim has been made. Not being privileged, the question of waiver does not apply.
Disputed Documents numbers 6 and 56 are both described as a draft expert report of Mr Racovalis dated 9 June 2020. These are the only stand-alone copies of draft expert reports in the Disputed Documents List which are not described as being attached to emails between Mr Racovalis and NRL.[62]
[62]In contrast, Disputed Document number 10, for example, is described as an ‘Email from Racovalis to Gerard Maxted dated 15 June 2020 attaching draft expert report’.
As mentioned above, privilege at common law, as distinct from under the Evidence Act, pertains only to communications with a lawyer for the requisite dominant purpose.[63] A consideration of the authorities in respect of common law legal professional privilege regarding communications and draft expert reports is therefore required.
[63]See ASIC v Southcorp, [21], point number 3, as set out in paragraph 67 above. It has been noted in several cases that Lindgren J was referring to common law principles regarding privilege in the summary he made: see Matthews v SPI, [45]; New Cap, [41]. Also see Esso, 79, 65.
In Ryder v Frohlich,[64] Barrett J stated that the point made in ASIC v Southcorp is that:
... privilege can only attach to documents which embody communication between the expert and the litigant by whom the expert is retained (or the litigant’s lawyer). A draft report prepared by the expert is not, of its nature, such a communication. It may be that the draft report is, in fact, given or sent by the expert to the litigant or the litigant’s lawyer, but that does not change its character as something prepared by the expert which is not intended to be a means of communication with the litigant or lawyer.[65]
[64][2005] NSWSC 1342.
[65]Ryder v Frohlich, [12].
After referring to the above passage, in Natuna Pty Ltd v Cook[66] Biscoe AJ stated that “it has been accepted that if a draft expert report is brought into existence for the purpose of communication to the litigant or litigant’s lawyer then it is privileged”.[67] Further, if the draft expert reports were in fact received by the plaintiff or its legal representatives, then they are therefore confidential communications for the purposes of common law privilege.[68]
[66][2006] NSWSC 1367 (‘Natuna’).
[67]Natuna, [9], citing Brookfield v Yevad Products Pty Ltd [2006] FCA 1180.
[68]Natuna, [9].
In New Cap, after referring to the passage in Ryder v Frohlich set out above, White J acknowledged that the question whether draft reports were privileged would be fact specific and depend on the dominant purpose for which the document was created. In particular, White J said that if the document was prepared for comment by a lawyer then they would be privileged; if prepared for the purpose of the expert developing their own opinion they would not be.[69]
[69]New Cap, [30].
Applying the above principles, then, I am satisfied that Disputed Document number 56 is privileged but Disputed Document number 6 is not.
In the case of Disputed Document number 56, there is evidence that it was communicated to Mr Maxted. Mr Maxted deposes that Disputed Document number 56, described as a draft report of Mr Racovalis dated 9 June 2020, “was provided to me on or about 9 June 2020.”[70] I am therefore satisfied that it meets the common law requirements for privilege and that it is privileged. I am also satisfied, for the reasons set out in paragraph 80 above, that privilege has not been waived.
[70]Maxted Affidavit, [64].
In the case of Disputed Document number 6, there is no evidence that this particular draft of the expert report was prepared for comment by a lawyer or for communication to a lawyer, and nor is there any evidence that it was the subject of communication with NRL. The plaintiff has not discharged his onus of establishing privilege in that document. Therefore I do not accept that Disputed Documents number 6 is privileged and, not being privileged, the question of waiver does not apply.
Disputed Document number 45 is described as an email from Mr Maxted to Mr Racovalis dated 14 April 2020. It is said that it “relates to the engagement of a 3D designer and was created for the dominant purpose of use in, or in relation to, this proceeding.”[71]
[71]Maxted Affidavit, [53].
In my view upon inspection, privilege in Disputed Document number 45 has been waived, as it goes to what Mr Stanicic was asked to do, and therefore is a document that may be said to underpin or influence the Racovalis Report.
Conclusion
Accordingly, I am satisfied that the plaintiff’s objection to the first defendant inspecting the Disputed Documents should be upheld on the grounds that the documents are privileged and that privilege has not been waived, save for the documents referred to in the following paragraph.
For the reasons set out above, the plaintiff’s objection to the first defendant’s inspection of the following Disputed Documents is rejected, and orders will be made that the first defendant is able to inspect those documents:
(a) Disputed Document number 1: privilege claim is not established;
(b) Disputed Document number 2: privilege claim is not established;
(c) Disputed Document number 6: privilege claim is not established;
(d) Disputed Document number 13: conceded by plaintiff as not privileged or waiver conceded;
(e) Disputed Document number 21: privilege claim is not established;
(f) Disputed Document number 23: privilege claim is not established; and
(g) Disputed Document number 45: privileged, but privilege is waived.
The proceeding will be listed on Friday 28 May 2021 for the making of orders to give effect to and consequent upon this ruling, including as to costs. The parties are requested to confer in that regard and, if a consensus is reached as to the form of such orders, to provide my Chambers with an agreed form of orders.
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