Minister for Education v Lovegrove Turf Services Pty Ltd - [2004] WASCA 305

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE FULL COURT (WA)

CITATION: MINISTER FOR EDUCATION -v- LOVEGROVE TURF SERVICES PTY LTD & ANOR [2004] WASCA 305

CORAM: MCLURE J
PULLIN J

HEARD: 15 NOVEMBER 2004

DELIVERED : 20 DECEMBER 2004

FILE NO/S: FUL 171 of 2003

BETWEEN: MINISTER FOR EDUCATION
Applicant
AND
LOVEGROVE TURF SERVICES PTY LTD
First Respondent
D & E PARKER PTY LTD
Second Respondent

ON APPEAL FROM:
Jurisdiction              :  SUPREME COURT OF WESTERN AUSTRALIA
Coram  :JOHNSON J
Citation  :LOVEGROVE TURF SERVICES PTY LTD & ANOR -v- MINISTER FOR EDUCATION [2003] WASC 213
File No  :CIV 1181 of 2003
Result  :Appeal allowed

Catchwords:

Legal professional privilege - Whether waived by the pleadings - Turns on own facts

Legislation:

Rules of the Supreme Court, O 26 r 12

State Supply Commission Act 1991 (WA)

Result:

Application for leave to appeal granted
Appeal allowed

Category: B

Representation:

Counsel:

Applicant:     Mr B P King
First Respondent           :     Mr C G Colvin SC
Second Respondent      :     Mr C G Colvin SC

Solicitors:

Applicant:     State Solicitor
First Respondent           :     Hotchkin Hanly
Second Respondent      :     Hotchkin Hanly

Case(s) referred to in judgment(s):

Brambles Holdings Ltd v WMC Engineering Services Pty Ltd (1994) 14 WAR 239
Commissioner Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501
DSE (Holdings) Pty Ltd v Intertan Inc [2003] FCA 384
Mann v Carnell (1999) 201 CLR 1
VAW (Kurri Kurri) Pty Ltd v Scientific Committee [2001] NSWLEC 182
Western Australia v Bond Corp Holdings Ltd (1991) 5 WAR 40

Case(s) also cited:

Ampolex Ltd v Perpetual Trustee Company (Canberra) Ltd (1996) 137 ALR 28
Australian Unity Health Ltd v Private Health Insurance Administration Council [1999] FCA 1770
British American Tobacco Australia Services Ltd v Cowell [2002] VSCA 197
Commonwealth of Australia v Temwood Holdings Pty Ltd [2002] WASC 107
Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543
DirectorGeneral of the Department of Land and Water Conservation v Prime Grain Pty Ltd (2002) 124 LGERA 233
Eltran Pty Ltd v Westpac Banking Corporation (1988) 32 FCR 195
Equuscorp Pty Ltd v Kamisha Corp Ltd (1999) ATPR 41697
Grant v Downs (1976) 135 CLR 674
Jingellic Minerals NL v Abigroup Ltd (1992) 7 WAR 566
John Tanner Holdings Pty Ltd v Mortgage Management Ltd [2001] FCA 194
Liquorland (Australia) Pty Ltd v Anghie [2003] VSC 73
Perpetual Trustees (WA) Ltd v Equuscorp Pty Ltd [1999] FCA 925
Pickering & Pickering v Edmunds, Edmunds & Smoothpool Nominees (1994) 63 SASR 357
Randell v Rockcliffe (1999) 9 Tas R 85
Telstra Corp Ltd v BT Australasia Pty Ltd (1998) 156 ALR 634
Temwood Holdings Pty Ltd v Western Australian Planning Commission [2003] WASCA 112
Waterford v Commonwealth (1987) 163 CLR 54

MCLURE J: I have had the advantage of reading in draft form the reasons of Pullin J. I agree with the orders he proposes generally for the reasons he gives. I wish to provide some additional comments. This is the applicant's application for leave to appeal and, if leave is granted, its appeal from interlocutory orders made by Johnson J. There is no dispute as to the test to apply on such an application (see Western Australia v Bond Corp Holdings Ltd (1991) 5 WAR 40).
Johnson J made interlocutory orders for particulars, discovery and inspection of documents in relation to legal advice referred to in the applicant's defence. She did so on the basis that the applicant had impliedly waived legal professional privilege in relation to that advice.
At the hearing of the application, it was accepted that on a proper construction of the defence the applicant had not thereby, expressly or impliedly, waived legal professional privilege in relation to the legal advice. However, Johnson J did not rely on the applicant's conduct by way of its pleading as constituting an implied waiver of legal professional privilege. She relied on the applicant's alleged conduct at the time it made the decision to recall the tenders to supply gardening services to schools, which decision is the subject of the respondents' claim for judicial review. Johnson J said at [27]:
"… I am persuaded by the submission made on behalf of the plaintiffs that incorporating legal advice into an administrative decision is inconsistent with maintaining the confidentiality of that advice. … in the context of a judicial review of an administrative decision, maintaining the privilege creates a level of unfairness which serves to highlight the inconsistency which is the cornerstone of the relevant test of waiver. The result is an unintentional and implied waiver of legal professional privilege over the legal advice referred to in … the … defence."
At the hearing, the respondents' counsel clarified the scope of the submission advanced on behalf of the respondents. It is not contended that a decision‑maker who takes into account, or relies on, legal advice in the course of making a decision amenable to judicial review thereby waives legal professional privilege. The alleged conduct said to be inconsistent with maintaining a claim to legal professional privilege is the incorporation, or making the content, of the legal advice part of the basis for a "within jurisdiction" decision (by which I take to mean the decision on the merits) which is amenable to judicial review. The respondents accept that any such waiver occurs at the time the legal advice is so used in the decision‑making process.
Leaving to one side the correctness of the substantive proposition for which the respondents contend, there are a number of impediments to be overcome. Firstly, there must be some evidence of waiver. I leave to another time the questions of who bears what onus and the extent of the evidence required (as to which, see Brambles Holdings Ltd v WMC Engineering Services Pty Ltd (1994) 14 WAR 239; Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501; O 26 r 12(1) of the Rules of the Supreme Court). In this case the respondents relied on the applicant's alleged admission in the defence which they now accept is inadequate for that purpose. No other evidence is relied on.
Secondly, on the respondents' formulation, waiver only arises if the decision is amenable to judicial review. However, whether the decision is amenable to judicial review is an issue that arises for determination in the action. The applicant contends that Johnson J "predetermined" that issue in the interlocutory application. The respondents contend she did not. It is apparent from her Honour's reasons set out above that she either assumed or, alternatively, found that the decision was amenable to judicial review. The issue was not the subject of an application for a preliminary determination, no evidence was presented nor submissions made with respect to the issue and the Judge made no express determination and gave no reasons to explain why the decision was amenable to judicial review. If her Honour had intended to determine the question, it is to be expected that there would have been evidence or at least submissions from the parties and an express determination with associated reasons for the finding from the Judge. None of this occurred.
I am satisfied that her Honour did not determine the question but rather assumed or relied on the premise that the decision was amenable to judicial review. It is an error to act on an unsupported assumption to that effect in circumstances where it is a necessary element of the claim of waiver and it is denied by the applicant in the action. For the sake of completeness, I should note that different considerations apply if what is at issue is whether the appellant has waived legal professional privilege by virtue of the nature or extent of its pleading of an alternative plea (even whilst maintaining its denial) that the decision is amenable to judicial review.

As there was no evidentiary foundation to support the waiver claim, the respondents' application for particulars, discovery and inspection should have been dismissed. In the circumstances, it is unnecessary to address the correctness of the legal proposition for which the respondents contend. That is best undertaken if and when there is a proper evidentiary foundation against which to test the proposition.
PULLIN J: This is an application for leave to appeal against the decision of Johnson J, who made an interlocutory order that the appellant give discovery of documents referred to in par 28(c)(iii) of the defence.
The statement of claim alleges that the appellant invited tenders for the supply of lawn mowing services at government schools managed by the appellant. The respondents tendered, and by doing so entered into a contract called the "process contract".
A tender evaluation committee recommended that the contracts be awarded to each of the plaintiffs and an entity called the State Supply Commission, evidently operating under the State Supply Commission Act 1991 which establishes policies to promote fair, open and accessible competition when seeking or renewing contracts, endorsed the recommendation that such contracts be awarded to the plaintiffs. However, in the month following the endorsement of the recommendation, the State Supply Commission appointed a Dr Ken Michael to undertake a review of the process by which tenders submitted had been evaluated by the appellant. Dr Michael prepared a report recommending that tenders should be recalled by reason of lack of consistency between the tender evaluation process outlined in the request for tenders and the process actually applied by the appellant in the assessment of the tenders. The respondents complain that one tenderer was given the opportunity to make submissions but that the respondents were not asked to do so. The appellant accepted the recommendation of Dr Michael and decided to terminate the tender process. The respondents allege that the appellant is threatening to award contracts otherwise than in accordance with the recommendation of the tender valuation committee. In par 32 of the statement of claim, the respondents allege that the decision to terminate the tender process was an administrative decision amenable to judicial review. In par 28 of the statement of claim it was pleaded by the respondents that on 23 August 2002 the applicant accepted the recommendation of Dr Michael and "proceeding on the basis of" the finding that there was a lack of consistency between the tender evaluation process and the process actually applied, decided to terminate the tender process. It is conceded by the respondents that par 28 should

be read as an allegation by the respondents that the applicant acted solely on the recommendation in making the decision.

It is only necessary to refer to two paragraphs in the defence. Paragraph 32 denies par 32 of the statement of claim. The defendant thereby pleads that the decision to terminate the tender process was a decision made under and in accordance with the process contract, and that it was not an administrative decision amenable to judicial review.
In par 28(c) of the defence, the appellant responded to par 28 of the statement of claim and pleaded that the decision to terminate was made by the appellant taking into account not only the recommendation in Dr Michael's report but also:
"(ii)a recommendation by the State Supply Commission
(iii)legal advice
(iv)the fact that approximately 12 months had elapsed since the closing date for the submitting of tenders for Round 2
(v)fairness to all tenderers."
In par 28(d) the defendant pleaded that "in referring to legal advice in paragraph 28(c)(iii) of [the] … Defence, the defendant does not, expressly or by implication, waive legal professional privilege in respect of the substance or effect of that legal advice".
After the filing of that defence the respondents sought further and better particulars of the legal advice referred to in par 28(c)(iii) of the amended defence and sought an order that the defendant give discovery of the legal advice.
Johnson J heard the application and in her reasons for decision noted that the respondents sought "what is, in effect, a judicial review of the exercise of the power to recall the tender". Her Honour noted that the respondents asserted "that the decision of the Minister to recall tenders was made in respect of the exercise of a statutory power which attracts a duty to act fairly and is reviewable". Her Honour also noted the plea in par 32 of the statement of claim which I have referred to already.
Her Honour did not refer to the provision in the defence that expressly denied that the decision to terminate was an administrative decision amenable to judicial review.
Her Honour concluded at [27]:
"I am mindful that legal professional privilege is a fundamental common law right which should not lightly be interfered with. However, having considered the respective submissions, I am persuaded by the submission made on behalf of the plaintiffs that incorporating legal advice into an administrative decision is inconsistent with maintaining the confidentiality of that advice. The situation is akin to that which arises when privileged material is relied upon by an expert witness and influences the opinion expressed. The weight of authority in such cases favours a finding of waiver of privilege. In my view, in the context of a judicial review of an administrative decision, maintaining the privilege creates a level of unfairness which serves to highlight the inconsistency which is the cornerstone of the relevant test of waiver. The result is an unintentional and implied waiver of legal professional privilege over the legal advice referred to in par 28(c)(iii) of the amended defence."
As a result, orders for particulars and discovery were made. The applicant appeals against the orders.
The respondents, through counsel, informed this Court that the respondents had misunderstood the plea in par 28(c)(iii) of the defence. Counsel said that the pleading was understood by the respondents to mean that the applicant would rely on the content of the legal advice at the trial of the action. It is clear, however, that by par 28(c)(iii) the applicant does not evince any intention to rely on the content of the legal advice. Counsel for the respondent now agrees that that is so, and also agrees that if the respondents had understood this before the application for discovery and particulars was made, the application would not have been pursued. The respondents would not actually go so far as to concede that the appeal should be allowed. Hence it is necessary to consider whether her Honour erred in her reasons for decision.
Her Honour correctly identified Mann v Carnell (1999) 201 CLR 1 as stating the circumstances in which privilege will be impliedly waived in the conduct of litigation. At [29] Gleeson CJ, Gaudron, Gummow and Callinan JJ said:
"What brings about [implied] waiver is the inconsistency, which the courts, where necessary informed by considerations of fairness, perceive, between the conduct of the client and maintenance of the confidentiality; not some overriding principle of fairness operating at large."
This is a statement of principle at a high level of generality.
Other authorities provide more particular guidance. They make it clear that where a party to litigation, who claims privilege over a document, directly or indirectly puts in issue the substance of the privileged communication, then privilege is lost insofar as it is necessary to do justice between the parties. See the authorities referred to in DSE (Holdings) Pty Ltd v Intertan Inc [2003] FCA 384 at [63], [64], [65] and [72]. Issues about whether or not there has been waiver of privilege depend upon the facts of each case. The close examination of the facts in the cases referred to in DSE (Holdings) is unnecessary because as Allsop J said in that case, the examination, too closely, of other cases runs the risk of transforming factual questions of judgment into statements of principle.
In VAW (Kurri Kurri) Pty Ltd v Scientific Committee [2001] NSWLEC 182, Bignold J expressed the view that the authorities are firm that the voluntary and intentional disclosure of a mere reference to the existence of legal advice does not by itself constitute waiver of the privilege by the client. I agree with that statement.
In my view it is clear beyond question that the defence only makes reference to the existence of legal advice.
In my opinion her Honour erred when she concluded at [27] that the applicant had incorporated legal advice "… into an administrative decision …" and that this was "… inconsistent with maintaining the confidentiality of that advice." The defence does not say, expressly or by implication, that the legal advice was incorporated into the applicants' decision. Furthermore, it had not been, and could not have been resolved at that interlocutory stage whether there was an administrative decision amenable to judicial review. That remained a live issue to be resolved at trial.
In my opinion, leave to appeal should be granted and the appeal should be allowed. The order for discovery and particulars should be set aside and the application for those orders dismissed.