Meadon P/L & Anor v Nommack (No. 247) P/L & Ors

[1994] FCA 804

809 J 9 ~ -

JUDGMENT No. ..... ,,.. ....... , .... . . ....

cATCHW0RD;S

PRIVILEGE - legal professional privilege - documents produced by third parties

pursuant to subpoenae - whether respondents entitled to claim legal professional

privilege - whether privilege waived.

. .

nudePtacaiccrCommcssrosr v Stcr*ng (1978) 36 FLR 244

Gmnt v Domu	(1976) 135	674
Attomy-Gmarrl (MT.)	v Mu&	(1986) 161 CLR 475

~ v C d o n i o l M u t u a l F t c I . C o . L i m i t a d ( 1 9 2 0 ) 2 8 ~ 3 0 5

Wodhhm MC v W- Banking Corpomtion (1994) 33 NSWLR 529

Llqd v Mauyn (1842) 10 M. & W. 478

Galauft v Gucrt (1898) 1 QB 759

MEADON PTY J-IMlTED (ACN. 003 613 661) & ORS v

NOMMACK (NO 247) PTY LIMITED

(RECEIVER '& MASJAGER APPOINTED)(IN PROVISIONAL LIQUIDATION)	(ACN. 003 309 171) & ANOR
No. NG 658 of 1993
Tamberlin J Sydney
3 November 1994

REGISTRY

FEDERAL COURT OF

AUSTRALIA PRINCIPAL

IN THE FEDERAL COURT OF AUSlXALM	)
NEW SOUTH WALES DISl'RICl" REGISIRY	1 No. NG 658 of 1993
GENERAL DIVISION	)

BETWEEN :	MEADON PTY LIMITED (A.C.N. 003 613 661) First Applicant
PETER KENNEDY & FIONA KENNEDY Second Applicants
AND :	NOMMACK (NO 247) PTY LIMITED (RECEIVER & MANAGER APPOINTED)(IN PROVISIONAL LIQUIDATION) (A.C.N. 003 309 171) Flrst Respondent
JOHN P SMITH Second Respondent

CORAM :	TAMBERLIN J
PLACE! :	SYDNEY
DATED :	3 NOVEMBER 1994

OF ORDER

THE COURT ORDERS THAT: 

1. With the exception of Document 3, the apphcants' claim to inspect the

   documents is dismissed and the respondents' claim of privilege is upheld.

2.	The appl~cants are to pay the costs of the hearing of 27 October 1994.
NOTE	:  Settlement and entry of orders IS dealt wth in Order 36 of the Federal Court Rules

IN THE FEDERAL COURT OF AUfXRAIJA	1
NEW SOUTH WALES DElRICT REGEIRY	1 No. NG 658 of 1993
GENERAL DIVISION	1

BETWEEN :	MEADON PTY LIMITED (A.C.N. 003 613 661) First Applicant
PETER KENNEDY & FIONA KENNEDY Second Applicants
AND :	NOMMACK (NO 247) PTY LIMI'IED (RECEIVER & MANAGER APPOINTED)(IN PROVISIONAL LIQUIDATION) (A.C.N. 003 309 171) First Respondent
JOHN P SMITH Second Respondent

CORAM :  TAMBERLIN J

PLACE : SYDNEY

DATED :  3 NOVEMBER 1994

m N S FOR JUDGMENT

claim legal professional priwlege in respect of certaln documents produced on	The two issues ralsed in this matter are first : whether the respondents are entitled to
subpoenae by real estate agents, F~nch-Freeman Pty Limited ("Finch") and Knight Frank Hooker (NSW) Pty Lmited ("Knight") and second : if the documents are privileged whether privilege m these documents or any of them has been walved by
the respondents.
The underlying dispute between the applicants and the respondents concerns alleged
representations in relation to a shopplng complex in the Ramada Hotel at Bond]. The present legal proceedings in this matter commenced on 26 August 1993 when the
Application and Statement of Clalm were filed.
The privilege 1s claimed by the respondents on the basis that some of the documents
came into existence solely for the purpose of obtaining legal advlce from Gadens R~dgeway ("Gadens") the solicitors for the first respondent Nommack (No 247) Pty
hmited (Receiver and Manager Appointed) (in Provisional Liquidation)
("Nommack") and also that some of the documents came into existence solely for the
purpose of the present legal proceedings.
The claim IS made in respect of documents which are referred to in an affidavit of
David Andrew McKean sworn on 26 October 1994. He 1s a solicitor employed by Gadens, the solicitors for Nommack and for Mr John Smith, the second respondent,
who is a partner of the accountancy firm Horwath and Horwath ("Horwath") and who was appointed Receiver and Manager of Nommack.
With the consent of counsel for both partles I have inspected the documents in
question as I considered this was both desirable and necessary to understand the
nature and extent of the claim.
Finch and Knlght are described as being involved in the marketing of the space within
the Bond1 shopping complex. In these reasons I will for greater convenience refer to the numbers appearing on the
top right hand corner of each document.
The documents produced by F~nch in respect of which privilege is claimed by the
respondents are briefly described below:
Document 1 is a facsimile transmission dated 17 July 1991 to Gadens from Finch
attaching an agency agreement asking Gadens "to discuss any comments you may have so that this agreement may be sent". Attached to this facsimile is a leasing agreement
with certain statements noted thereon by the solicitors in pencil. This latter document
in effect contains legal advice in the form of notations and the facsimile is a request
for legal advice.
These documents are said in the affidavit to be included in the description "copies of
letters between the respondents and its agents and Gadens Ridgeway brought into
existence solely for the purpose of providing or recording legal advice for the respondents."
Document 2 1s a progress report on leasing at Bondi, dated 20 February 1992
compiled by MS R Forrest of Gadens. It 1s said in the affidavit that this is a report made solely for the purpose of providing or record~ng legal advice for the respondents. Attached to the report is a page in which a number of substitutions, amendments and deletions appear relatlng to the drafting of a lease.
Document 3 is a letter from Finch dated 29 August 1991 to Gadens enclosing partially completed Epltome of Lease forms for two shops. The letter seeks "assistance" m preparing Deeds of Vanation.
Document 4 is a letter from Finch to MS R Forrest of Gadens, dated 11 June 1991
setting up a proposed agenda for discussion on a number of legal matters relating to leases, together with a cover sheet facslmile transmission of 11 June 1991. This is
stated to be a communication for the sole purpose of seeking legal advlce.
The relevant documents produced by Knight m respect of which priwlege is clalmed
are set out below :
Document 5 is a facslmile from Gadens to Horwath seeking instructions in relation to
suggested amendments to a lease.
Document 6 IS a draft letter from Mr Smlth to the applicants dated 18 March 1993,
stated to have been brought into existence solely for the purpose of providing or recording legal advice. The affidavit states that it was a draft letter submitted by Mr Smith to Gadens to be settled and approved prlor to being sent.
Document 7 is a draft "W~thout Prejudice" letter, dated 16 August 1993 prepared by
Gadens to send to the solicitors for the applicants Webeck Farland Pender and the
affidavit states that it was prepared in anticlpation of the present legal proceedmgs.
Document 8 is a letter from Gadens to Honvath dated 19 August 1993 enclosing a
draft form of response and seeking specific legal mstructions. The affidavit states that
it was brought into existence solely for the purpose of prepanng for, or in anticipation
of, these legal proceedings.
Document 9 is a file note by the Centre Manager of the shopping complex, dated 21
September 1993 and the affidavit states that it was brought into existence solely for
the purpose of preparing for, or in anticipation of, these legal proceedmgs.
The principles relating to claims for legal professional privilege are conveniently set
out in nade hctices Commkswn v Sterling (1978) 36 FLR 244 by Lockhart J at pp
245-247.
The relevant principles for present purposes from that judgment are as follows :

Any communlcatlon between a party and hls profess~onal legal adwer if it is

"(a)	confident~al and made to or by the professional advlser m h ~ s pmfessronal capaclty and with a vlew to obtalnlng or glvlng legal advlce or assistance; nohmthstand~ng that the communicat~on is made through agents of the party
and the sol~ntor or the agent of elther them ..
(b)	Any document prepared mth a view to lts being used as a communlcatlon of thu class although not m fact so used ..
(d)	Notes, memoranda, mlnutes or other documents made by the cllent or office^^ of the cllent or the legal adviser of the cllent of communicatiow which are themselves pnnleged, or mntainlng a record of those communicatrons, or relate to lnformat~on sought by the cllent's legal advlser to enable hlm to
advise the cllent or to conduct htigat~on on his behalf.. .
(e)	Communications and documents passing between the party's solicitor and a third party if they are made or prepared when litigation IS anticipated or commenced, for the purposes of the l~tigat~on, wth a new to obtainrng adnce as to it or evidence to be used in it or information which may result m the obtalnlng of such ewdence.. ..
(0	agent of the solicitor to recelve the communacatlon from the party) f they are
Communications passing between the party and a thlrd person (who s not the
made with reference to lltlgatlon e~ther antlapated or commenced, and at the
request or suggestlon of the party's sol~c~tor; or, even without any such
rquest or suggestlon, they are made for the purpose of be~ng put before the
sol~ator with the object of obtalning his adnce or enabllng him to prosecute
or defend an action....
(g)	Knowledge, lnformat~on or bel~ef of the cllent derlved from prlvdeged
communrcations made to h ~ m by hu sollator or h s agent."

In Grant v Downs (1976) 135 CLR 674 it was held that legal professional prlvilege

attaches to documents which are brought into existence for the sole purpose of obtalning or p i n g advice by legal advlsers or for use in legal proceedmgs. See the judgment of Stephen, Mason and Murphy JJ at 688. Thls class of prlvilege then turns

out in the affidavit in support of the clalm for prlvilege 1 am satisfied that, with the	on the purpose for which the document came into being. Having examined the documents m the present case in the context of the evldence set
exception of document 3 which 1s the letter to Gadens enclosing the two Epitomes of Lease the documents attract privilege from lnspectlon by the apphcants. In relation to the two Epitomes of Lease, it 1s clear on their face that at least one of
the purposes for which they were brought into existence was to record and summarise the terms of the two leases. They cannot therefore be said to have been drafted solely for the purpose of seeking legal advice. They had at least a dual purpose. The letter
enclosing them of 29 August 1991 was simply a covering letter sending them to the solicitor for which the respondents have no claim to privilege. Accordingly document
3 does not attract privilege.
The second issue which arises in the present case in respect of those documents which
I have held to be privileged is whether the privilege can stand when it depends upon
a relationship of confidence and the documents are produced by the two real estate agents without any claim by them of any obligation of confidence or claim for privilege. The argument put forward is that the privilege has been waived. The basis
on which this is submitted is that all the documents produced are held by third parties and that the third parties have not clalmed privilege. Furthermore it is sald that once
the documents pass into the possession of the real estate agents then the confidence
in the advice-seeking process or commun~cations with the solicitors is lost and so is
the privilege. It is further submitted that if the documents have not been given to them under some obligation of confidence then privilege can no longer be claimed.
The first matter whlch must be noted is that the privilege is that of the respondents
and not of the persons for the time belng holdlng the documents. It is always open to the respondents to claim the privilege and in the present case they have claimed that pnvilege on the application presently before me.
In Attorney-General (N.X) v Maurice (1986) 161 CLR 475 at 487, Mason and Brennan
JJ said :

"Sucnnctly stated, the privilege protects from daclosure "convnuntcahons m&

cmfidcnnalQ between a c l m and hrs legal advuer for the pwpose of obtawwg or grvrng legal o d v ~ e or assutance* ..... The ralson d'etre of legal professlonal pnnlege is the

furtherance of the admlnistratlon of justice through the fostenng of trust and candour
m the relatlonsbp between lawyer and client. The privilege is based on :

".... the netd of laymen for p ro f~~smal assutance w the pmtechon, enfwccment or oranon of rhcv legal nghts. Tlrey should have the benep of that assistance fnc of any mb'awt whrch fear of the drsclosure of rhev communtcari0~ wuh those a d v m would

impose". ...

The llmitlng effect of legal professlonal pnvilege on the availab~lily of evidence othenvlse relevant is confined, Inter a lu by the doctnne of walver. A lltigant can of coune waive his pnnlege directly through ~ntent~onally disclosmg protened matenaL He can also lose that protection through a waiver by ~mpllcation. An implied waiver

occurs when, by reason of some conduct on the prlnlege holder's part, 11 bemmes

unfalr to maintain the pnvllege. The holder of the pnwlege should not be able to abuse it by uslng 11 to create an Inaccurate perception of the protected communrcation." (emphasa added)

The fundamental importance of the principles underlying the doctrine of professional

privilege 1s further underlined and emphasised by Deane J in the Maurice case at 490.

In the present case there is in my oplnion no evidence or indication of any intentional

waiver of privilege by the respondents in relation to the documents. If the right to assert the privilege has been walved it must be by implication or by imputation of law in the circumstances of the case.

In Wigmore on Ewdence, 3rd ed, v01 m para 2327 in relat~on	to the question as to
what constitutes waiver by imphcation, it IS sa~d	:

"Judmal declsion gives no clear answer to thrs question In deadlng it, regard must be had to the double elements that are predrcated m evely walver, le not only the element of implred mtentron, but also the element of fairness and consistency. A pr~nleged penon would seldom be found to walve, if h s rntention not to abandon could alone control the srtuatlon. There s always also the object~ve cons~deration that when h e conduct touches a certaln point of disclosure, farmess requrres that his immunrly shall cease, whether he intended that result or not. He cannot be allowed, after disclosing as much as he pleases, to mthhold the remainder. He may also elect to withhold or to disclose, but after a certain pomt, h s electlon must remarn final."

McNicol in the Law of Privilege (1992) at p 21 dealing with the subject matter of loss

of privilege and waiver states:

"The abrlity to walve prlvrlege a a central drstrngurshrng characterisuc of prinlege. Warver is

an "act of conduct" which amounts to the foregoing of a nght to keep certain ~nformat~on
confidential. The immediate result of walver is the release or disclosure of informatron whrch

was formerly protected. The only person who can warve the pnnlege is the "holder" of the

privilege. The holder of the prrnlege S , however, not necessarily the person who clarms,

invokes, operates or exercises the privilege".

The holder of the privilege of course has the power to waive the privilege by

consenting to the release or disclosure of the protected mformation.

In the present case there has clearly been no actual walver of the r~ght to assert legal

professional privilege in relation to the documents in question as a matter of

subjective mtent. See Craine v Colonial Mutual Fire Imurarzce CO Limited (1920) 28
CLR 305 at 326. If there has been any walver of the pnwlege in the present case it

must be by Imputation of law or by implication from the conduct of the persons entitled to the pr~wlege, namely the respondents. As Giles J, points out in Woollahra M C v Westpac Banking Corporation (1994) 33 NSWLR 529 at 541, it is necessary to consider the particular circumstances to see whether the person entitled to the privilege has so acted that the confident~ality essential to the claim has been

abandoned.

In the present case the persons or bodies from whose possession the documents are

produced are real estate agents involved in the marketing of the space within the shopp~ng complex on behalf of the respondents m the proceedings. While it is true that there 1s no explanation as to the basls on which the documents came into the possession of the companies producing the documents it does appear from the

documents which I have examined that they were actlng as agents on behalf of the

respondents in relation to the premlses the subject of the legal proceedings. In that sense they are not in substance thud parties or strangers to the privilege. The fact that legal communications which are pnvileged have been made available to agents of the persons entitled to the privilege engaged m the marketing of shops m the hotel complex does not in my view mean that the confidentiality or privilege in the documents has been walved by implication or imputation of law as against the

respondents in these proceedings. The documents (with the excephon of Document

3) attract legal professional privilege and the fact that they came Into the possession	of agents of the respondents does not of ~tself mean that they have lost their
confidentiality. This is not a case where an opposlng party has galned access to copies of a privileged document or 1s otherwise in a position to give secondary evidence of the contents of such document. Therefore, it does not fall wthin the line of
authorities which has developed from the decisions in Lloyd v Mostyn (1842) 10 M. & W. 478 and Calcrafi v Guest (1898) 1 QB 759, whlch in certain circumstances permit

secondary evidence to be given of privileged documents where copies have fallen into the hands of another party to the proceedings. The conduct of the respondents in permitting these documents to pass into the possession of the agents does not disclose

an intention to walve privilege nor does such a llmited disclosure evldence conduct waiving that privilege. In the case of the documents produced by Finch it is clear that they have been produced by that company which has acted as agent for Nommack since at least June 1991. In the case of Knight it appears from the draft letter of 16 August 1993 from Gadens to the solicitors for the applicants, that Knight was acting

as agent for Nommack.

In these circumstances having regard to the fact that there is no evidence to the effect

that the privileged material has been disclosed to persons other than agents acting for and on behalf of the respondents, 1 do not consider that there has been waiver of the privilege nor do I consider that it can be inferred from the sparse material before me

and the bare fact that the respondents' agents have possession of the documents, that the conduct of the respondents has reached a polnt of disclosure such that the immunity should cease.

Accordmgly, with the exception of Document 3, I dismiss the claim by the applicants

to inspect the documents and I uphold the respondents' claim of privilege. I do not conslder there has been any waiver of privilege. Because the respondents have been

substantially successful I order that the applicants should pay the respondents' costs in

relation to the hearing before me on 27 October 1994.

Assodate :

Date :	3 November 1994
Counsel for Applicants :	Mr N A Cotman
Solinton for Applrcants :	Webeck Farland Pender Sol~c~ton
Counsel for Respondents :	Mr J V Nicholas
Solicitors for Respondents :	Gadens Ridgeway Solicitors
Date of Hearing :	27 October 1994
Date Judgment Delivered :	3 November 1994