Moustapha v Nelson

[2019] NSWSC 1573

Supreme Court

New South Wales

Medium Neutral Citation:	Moustapha v Nelson [2019] NSWSC 1573
Hearing dates:	4 November 2019
Date of orders:	04 November 2019
Decision date:	04 November 2019
Jurisdiction:	Equity
Before:	Ward CJ in Eq
Decision:	1.   Allow the notice to produce in its entirety. 2.   Allow the subpoena, however, limiting the documents to which the defendant should be permitted access to: (a)   all letters of instruction or variations thereof issued to Mr Barry Morris concerning a report to be prepared by him for use in these proceedings; (b)   all communications between Mr Morris and the plaintiffs’ solicitors or other persons on behalf of the plaintiffs and the plaintiffs’ solicitors attaching any draft report prepared Mr Morris; and any correspondence in relation to that draft report including any correspondence in relation to a dispute as to costs or as to the performance of the proposed expert’s report. 3.   Direct that the plaintiffs have first access to the documents produced under subpoena in order to put into a separate bundle those documents responding to category 3 of the subpoena and any responding to category 2 but not forwarded to the plaintiffs’ solicitors. 4.   Direct that after seven days from today’s date, the defendant is to have access to documents in categories 1 and 2 of the subpoena as read down. 5.   Order that the defendant have access to documents produced under the notice to produce without further limitation 6.   Note that the purpose for which the documents have been sought is for the challenge that is anticipated to the application for leave to adduce expert evidence which will before Slattery J on 14 November 2019 and any application to limit use of the documents to which the defendants will now have access to beyond that use for the purposes of that application is an application that can be made to Slattery J on that occasion. 7.   Order that costs of notice of motion filed 16 October 2019 be the defendant’s costs in the cause.
Catchwords:	CIVIL PROCEDURE — Subpoenas — Application to set aside and a notice to produce – whether or not there has been an implied waiver of legal professional privilege in the documents sought to be produced under the subpoena and the notice to produce – notice to produce allowed in its entirety – access to subpoena documents allowed but limited
Legislation Cited:	Civil Procedure Act 2005 (NSW), s 56 Evidence Act 1995 (NSW), ss 118, 122(2)
Cases Cited:	ASIC v Rich [2004] NSWSC 923 Banksia Mortgages Ltd v Croker [2010] NSWSC 535 Commissioner of Taxation v Rio Tinto Ltd (2006) 151 FCR 341; [2006] FCAFC 86 DSE (Holdings) Pty Ltd v Intertan Inc (2003) 127 FCR 499; [2003] FCA 384 DSE (Holdings) Pty Ltd v Intertan Inc (2003) 127 FCR 499; [2003] FCA 384 Ford Motor Company of Australia Limited v Tallevine Pty Ltd (as trustee for the Thornleigh Trading Trust) [2018] NSWSC 136 Hastie Group Ltd (in liq) v Moore [2016] NSWCA 305 Hunter Quarries Pty Limited v Morrison; Badior v Morrison [2017] NSWCCA 326 Makita (Aust) Pty Ltd v Sprowles (2001) 52 NSWLR 705; [2001] NSWCA 305 Mann v Carnell (1999) 201 CLR 1; [1999] HCA 6 New Cap Reinsurance Corporation Ltd (In Liq) v Renaissance Reinsurance Ltd [2007] NSWSC 258 Rinehart v Rinehart [2018] NSWSC 1102 Traderight (NSW) Pty Ltd (ACN 108 880 968) v Bank of Queensland Limited (ACN 009 656 740) (No 14) and 13 related matters [2013] NSWSC 211
Category:	Procedural and other rulings
Parties:	Fouad Ahmad Moustapha (First Plaintiff) Overlook Tiles Pty Ltd (Second Plaintiff) Katie Nelson (Third Defendant)
Representation:	Counsel: N Obrart (Plaintiffs) S Hartford Davis (Defendant)   Solicitors: Harper James Law Group (Plaintiffs) David Legal (Defendant)
File Number(s):	2017/00067704
Publication restriction:	Nil

Judgment

1. HER HONOUR: This is an application by notice of motion filed 16 October 2019 by the first plaintiff (Mr Fouad Ahmad) and the second plaintiff (Overlook Tiles Pty Ltd) (collectively, the plaintiffs) seeking orders setting aside a subpoena filed 18 September 2019 issued to Mr Barry Morris and a notice to produce dated 18 September 2019 and filed on 2 October 2019 issued by the defendant to the first and second plaintiffs. The notice of motion seeks those orders setting aside the subpoena and the notice to produce respectively on the basis that each constitutes a fishing expedition, seeks production of documents which are subject to legal professional privilege and seeks documents which are not relevant to any fact in issue between the parties. The motion also seeks the costs of the motion on an indemnity basis or, alternatively, on a party/party basis.

2. In support of the notice of motion, the plaintiffs have read two affidavits affirmed by the plaintiffs' solicitor Ms Mona Youssef – an affidavit affirmed 2 September 2019, and an affidavit affirmed 16 October 2019.

3. The defendant resists the application and has, on this application, read an affidavit sworn 20 September 2019 variously described as affirmed or sworn by the defendant/cross-claimant's solicitor, Mr Fred David, on 20 September 2019. The defendant has tendered, not for the truth of its contents but for the fact that the document has deposed to the matters contained therein, an affidavit sworn 11 July 2019 of Ms Mona Youssef (see Exhibit 1 in these proceedings).

4. At the hearing of the application to set aside the subpoena and the notice to produce, the plaintiffs did not raise any issue in relation to the suggestion that the subpoena and notice to produce constitute respectively a fishing expedition and, as I understand, it that basis for seeking the setting aside of those compulsory processes is not pursued.

5. The issue before the court on the present application was confined to the question of whether or not there has been an implied waiver of legal professional privilege in the documents sought to be produced under the subpoena and the notice to produce.

6. I say that is the sole issue because, although the written submissions filed by the defendant on this application did make complaint as to whether or not the plaintiffs had adequately established or identified the documents which are subject to the claim of legal professional privilege, ultimately, the defendant sought to resist the application solely on the basis of implied waiver and, therefore, it is not necessary to explore issues such as whether, for example, working drafts of documents held by the expert or proposed experts would be the subject of legal professional privilege in the current case (see New Cap Reinsurance Corporation Ltd (In Liq) v Renaissance Reinsurance Ltd [2007] NSWSC 258 at [29]-[30] per White J and Hunter Quarries Pty Limited v Morrison; Badior v Morrison [2017] NSWCCA 326 at [301]).

7. The background to the present application is that these proceedings were commenced by a statement of claim filed on 3 March 2017. The substance of the claim is for restitution for works carried out or services provided or a share of the profit made by the defendant as a result of the resale of property owned by the defendant in Lindfield.

8. The plaintiffs’ pleading, as I understand it, has included, since it was filed, a claim for restitution based upon a quantum meruit.

9. It does not appear to be disputed that the pleading has been amended a number of times (including, for example, on 1 November 2017).

10. On 7 August 2017, Rein J ordered that the plaintiffs file and serve their evidence by 13 November 2017 and that the defendant file and serve its evidence by 16 February 2018. The plaintiffs’ lay evidence was not served within that period of time. Ultimately, as I understand it, extensions were granted for the time for the filing by the plaintiffs’ evidence to, on successive occasions, 23 March 2018 and then to 9 May 2018.

11. On 13 April 2018, the plaintiffs’ solicitor sought a further extension of the time for service of the plaintiffs’ evidence and attached a request for expert evidence directions in relation to the matter. That request sought directions granting leave for the plaintiffs to engage, as an expert, Mr Barry Morris, who was there described as a building and construction consultant and quantity surveyor, to provide an expert report as to the value of the plaintiffs’ quantum meruit and claim for damages. The form of request for expert evidence directions required certification, amongst other things, that there has been proper consideration as to what expert is required in order that the proceedings can be dealt with justly, cheaply and expeditiously.

12. On 18 April 2018 the matter came before Registrar Walton for directions. On that occasion, when the time for service of the plaintiffs’/cross-defendants’ evidence was extended to 9 May 2018, Registrar Walton made what is commonly referred to as a guillotine order; namely, that the plaintiffs/cross-defendants not rely on any evidence served after 9 May 2018 without the leave of the court. The transcript on that occasion records Counsel for the plaintiffs informing Registrar Walton that the expert had already been retained in anticipation, and directions were made by Registrar Walton to serve any expert report from Mr Morris by 6 June 2018.

13. In her affidavit affirmed 2 September 2019 in support of the current application, Ms Youssef has deposed that the plaintiffs’ original expert, Mr Barry Morris, was retained on 11 May 2018 (at [2]). (This is one of the inconsistencies or “oddities” to which the defendant’s Counsel has pointed to and which the defendant’s Counsel has indicated the defendant wishes to test in cross-examination in due course on the application for leave to rely out of time on an expert’s report by a Mr Sims.)

14. In evidence there is before me a copy of an email sent on 20 June 2018 by the plaintiffs’ solicitor to the defendant’s solicitor indicating that the plaintiff would be seeking relief from the court to explain the delay pertaining to the service of the plaintiffs’ expert report through a supporting affidavit.

15. On 6 July 2018, the plaintiffs’ solicitor sent an email to the defendant’s solicitor advising, amongst other things, “that the expert report of Mr Morris will be finalised and served on or before 18 July 2018”.

16. In her affidavit affirmed 2 September 2019 Ms Youssef deposes that Mr Morris, “proffered a draft report” on 16 July 2018 which was received in her office on 20 July 2018 (at [3]). In that affidavit, Ms Youssef said (at [4] to [6]):

On 20 July 2019 the Plaintiff reviewed the report in detail and considered that the draft report did not sufficiently comply with the principles in Makita (Aust) Pty Ltd v Sprowles (2001) 52 NSWLR 705 as to the proper explanation by the expert of his rationale and methodology.

The Plaintiffs representatives then commenced a series of communications with this expert concerning his report which took place between 14 May 2018 and early September 2018 as to requirements for the expert report and whether he would meet those requirements. By early September 2018 the expert was still not able to provide an amended report seeking to meet the Makita v Sprowles requirements and addressing some other aspects of his report which appeared incomprehensible.

As a result of those discussions with the expert the Plaintiff’s representatives formed the view by about mid-September 2018 that all possible efforts had been exhausted to retain this expert and obtain a complying report from him to avoid the time and cost that would be involved in retaining a new expert. The Plaintiff’s representatives formed the view that the expert was not able to adequately follow his instructions as to the preparation of a report which complied with Makita v Sprowles and that he was not sufficient for these proceedings even though from reviewing his Curriculum Vitae he initially appeared to be suitable expert and sufficiently capable.

17. On 25 July 2018, the plaintiffs’ solicitor forwarded an email to the defendant’s solicitor which included the statement, “[f]urther, we will be serving the Expert Report early next week”. The defendant notes that this email was sent five days after the time at which Ms Youssef deposed to in her 2 September 2019 affidavit (at [4]) that the plaintiffs reviewed the report in detail and considered that the draft report did not sufficiently comply with the principles in Makita (Aust) Pty Ltd v Sprowles (2001) 52 NSWLR 705; [2001] NSWCA 305 as to the proper explanation of the expert as to his rationale and methodology. It is, thus, submitted, given that the 25 July 2018 email was sent after the review which apparently occurred on 20 July 2018, that this correspondence must reflect an estimate which had then been made of the amount of time it would take to rectify Mr Morris’s report.

18. In her affidavit sworn 11 July 2019 (Exhibit 1 in this application), Ms Youssef swore (at [6]):

The report of Barry Morrison [sic] was not finalised due to a dispute as to his instructions and the Plaintiff was required to seek a new expert with the relevant qualifications”.

19. The defendant points to a perceived inconsistency in the explanation given in the 2 September 2019 affidavit (at [5]-[6]) and submits this is difficult to reconcile with the communication on 25 July 2018.

20. Ms Youssef has annexed to her 2 September 2019 affidavit a copy of a letter that she caused to be sent to Mr Morris on 19 September 2018. That letter includes, relevantly, the following:

On 20 July 2018 you provided a report dated 16 July 2018 to our office that did not answer any of the questions we asked you to address in our letter of instruction. We provided an undertaking to your office based on the premise that what you would be providing our office was a compliant report that would be admissible in Court. We provided this undertaking before you realised the report would be compliant.

The undertaking was conditional that what you would be providing our office was a report that is compliant with the rules stipulated in Makita (Australia) Pty Ltd v Sprowles [2001].

On 4 September 2018, you sent an email to our office after the teleconference between yourself, our firm and Ms. Obrart, counsel with further costs to amend the report. With all due respect, this is extortion. Your initial report was not compliant and is not admissible in Court.

Your report does not comply with the key requirement in Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305. During the teleconference with Ms. Obrart and our firm you have confirmed that you understood the key requirements in the above case. However, the report you have provided does not comply.

…

In our view your report does not qualify as a report and does not comply with what was requested as follows:

1.   It does not meet the fundamental requirements for expert’s reports being the setting out of reasons and methodology;

2.   Your report relied on oral information and information not included in the evidence. It substantially misconstrues the questions and includes extraneous information[;]

3.   It does not answer the questions posed, and the writer apparently did not read the questions with care;

4.   It contains typographic and other errors;

5.   It does not attach all of the material relied upon[;]

6.   It presents as a confused and unstructured document.

In short, what was provided was not a document which is of any utility to the Plaintiff[s] and the document would not be admissible in Court. What was requested was an expert’s report for use in the proceedings, in a form that would be admitted in evidence and which responded to the questions posed.

The document provided is not what was requested and in our view does not constitute an expert[’]s report, namely a document which responds to the questions asked and which would be admitted into evidence and which could be utilised in the proceedings.

The report cannot be used, and our client will not be liable for any further costs. We have a duty to act in our client’s best interests. We also request you refund the $5,500.00 we initially paid your office.

Your failure to provide a report that is not of any use to our client, responds to the questions requested in our letter of instruction and as otherwise was contracted for will no cause the client to retain a further expert. This will cause further costs and prejudice to the conduct of our proceedings.

If you choose to refer this matter to the Legal Services Commissioner, we will tender this letter in support of your failure to provide a proper and adequate report as stipulated above. We have not engaged in any sort of unsatisfactory or professional misconduct, but are only seeking to protect our client’s interests.

21. (Pausing here, I note that the defendant has pointed out that while this correspondence with the proposed expert has been annexed, other correspondence with the proposed expert has not been annexed.)

22. Ms Youssef has deposed that, on 25 September 2018, the plaintiff commenced to search for a replacement expert and refers in her 2 September 2019 affidavit to the 11 July 2019 affidavit at [7], where she has deposed that:

On or about 5 October 2018 the first and second plaintiff[s] instructed me to seek a report from a different expert due to the issues that are referred to in paragraph 7 [sic; 6] above.

23. Paragraph 6 states that the report of Mr Morris was not finalised due to a “dispute as to his instructions” (as adverted to above).

24. In her 2 September 2019 affidavit, Ms Youssef deposed that on 5 October 2018, the plaintiff located its current expert, Mr Glen Sims, and states (at [10]):

… The Plaintiff[s] took time to speak to and qualify its replacement expert to ensure that the same problem did not arise again and that the expert would be sufficiently capable to prepare an adequate report in addition to have [sic] adequate qualifications on his Curriculum Vitae.

25. From [11]-[16], Ms Youssef deposes to: the sending of a letter of instruction, including supporting material, to Mr Sims on 5 October 2018; to correspondence with Mr Sims including in relation to a request on 1 November 2018 for further material by Mr Sims; to the sending of the further request for documents to Mr Sims on 5 November 2018; Mr Sims’ confirmation of 16 November 2018 that he would require up to four weeks to complete the report due to deadlines and to his request for a copy of the structural and architectural plans; and Ms Youssef’s contact with the plaintiffs in relation thereto on 16 November 2018.

26. On 9 October 2018, the matter came before Parker J. On that occasion his Honour was informed by Counsel appearing for the plaintiffs that the subject of the expert evidence (which was not yet served) was to quantify the quantum meruit claim and that Counsel did not have instructions about the new expert as yet. It was said that, given what had fallen from his Honour, Counsel intended to have the expert evidence on the next occasion so that that could be revealed and also a timetable for the supplementary lay evidence as well, to the extent that there was going to be some. What his Honour had raised there was for a timetable or a time limit to complete the interlocutory matters so the matter could proceed to a hearing in the ordinary course.

27. On 25 October 2018, the matter came back before Parker J and his Honour on that occasion indicated that he was going to treat the matter “as if the guillotine had already been formed”. His Honour said (at T3.42):

… What your client ought to do is your client needs further evidence, to put that evidence together and then when we have the evidence then you can make an application to bring it in. I’m not going to make an order which grants your client leave to change the case again. I don’t want somebody else to be back here with Mr Hartford-Davis saying “There’s new evidence and that hasn’t been pleaded” and all of that sort of thing.

28. His Honour also said (at T.3.48):

I take the view that your client needs leave now and that the Court will consider an application for leave but the application for leave should be in a concrete form, that is, you ought to be able to see any evidence.”

29. On that occasion, his Honour was informed that an application in relation to that evidence (the expert evidence) would probably be made in six weeks’ time when that evidence was prepared (see T 4.33).

30. Ms Youssef’s affidavit of 2 September 2019 then deposed to certain communications with Mr Sims and annexed some copies of those communications (see [17], [19] and [20]) but not all. In particular, there is a reference at [18] of her affidavit to confirmation from Mr Sims on 27 November 2018 that he had received full payment for the report. That communication, if in writing, has not been annexed to the affidavit, and at [21] Ms Youssef deposes that on 24 January 2019 Mr Sims sent her an email attaching the expert report. That is not annexed to the affidavit. Ms Youssef deposes:

[22]    On 26 January 2019, after reviewing the expert report thoroughly, I caused an email to be sent to Mr. Sims advised him that there were further questions that he had not addressed. …

[23]   From 28 January to 19 February 2019 I followed up with the expert thoroughly chasing the revised expert report. I was continually advised by his office that he was engaged in other matters and was not available.

[24]   On 20 February 2019, the Plaintiff[s] had a conference with Mr. Sims in    respect of the Expert Report in relation to some items his report had    not quantified because he stated that there was insufficient detail.

[25]    On 13 March 2019, Mr. Sims responded and advised that he believed that he had sent the revised report, however he found that it was still present in his email outbox and had not been sent through to our office. Mr. Sims then sent through a copy of the electronic revised report dated 11 February 2019. …

[26]   I refer to paragraph 10 of my affidavit dated 11 July 2019.

[27]   The report of Mr. Sims was not able to quantify some of the items in the clients [sic] claim because there was insufficient detail in the documents provided to him as stated by Mr. Sims in his report.

[28]   On 13 March 2019 I had a conference with the client who is an experience builder who read Mr. Sims amended report, informed me on or about April 2019 that he would seek out additional documents in an endeavour to provide Mr. Sims the further detail that he required in respect of the items that Mr. Sims had not been able to quantify.

[29]    On 7 April 2019, I caused an email to be sent to the client following up the additional information.

[30]   The Plaintiff[s] sourced and provided me with the additional documents relating to the unqualified items in Mr. Sims report between April 9-14, 2019 and I provided them to Mr. Sims.

[31]   On May 26, 2019 the Plaintiff[s] sent further material which was forwarded to Mr. Sims.

[32]   After I provided the additional documents to Mr. Sims, he had to consider them.

[33]   On 20 June 2019 I was informed by Mr. Sims that those documents provided by the Plaintiff[s] did not provide the further detail that he would require to be able to quantify the unquantified items.

[34]   Once Mr. Sims responded that the additional documents were still not sufficient the client then had to give consideration to and to make attempts to locate any further detail as to those items and ultimately was not successful in doing so.

[35]   Once it was ascertained that further detail and documents would not be able to be sourced to provide Mr. Sims the detail he required to quantify the remaining unquantified items, the Plaintiff[s] served its report on the Defendant on July 5 2019 even though there are some items of his claim that remain unquantified. The large balance of the Plaintiff’s claim has been quantified by Mr. Sims.

31. Pausing here, one of the matters raised by the defendant in submissions is the fact that some of the correspondence, but not all of the correspondence, with Mr Sims as to the time of the completion of his expert report has been deployed on the current application.

32. It is noted that on 27 February 2019, the plaintiffs submitted an online request for an order that the expert report be served on the defendant by 15 March 2019. The reasons for submitting that request included that, “[o]ur expert report is near finalisation and as our client is overseas we will require extra time to obtain instructions”.

33. On 4 March 2019, the matter came back before the registrar and Counsel appearing for the plaintiffs sought until 29 March 2019 to put on a further notice of motion in the matter.

34. As extracted above, at [26] of her 2 September 2019 affidavit, Ms Youssef refers to a [10] of her 11 July 2019 affidavit (see Exhibit 1). In her earlier affidavit, [9]-[10] provide:

On or around 11 February 2019 Glen Sims provided a report dated 11 February 2019 to me on behalf of the first and second plaintiffs a copy of which is exhibited hereto and marked “MY1” (‘Report’).

The first Plaintiff instructed me that additional documentary material was available for the expert to review and due to delays, I was instructed that the first Plaintiff was travelling overseas, I did not received those documents until early

35. When the report of Mr Sims was served on 5 July 2019 it was a report dated 11 February 2019.

36. On 15 July 2019, the plaintiffs filed a notice of motion seeking leave to rely upon the 11 February 2019 report. That notice of motion has been listed for hearing on 14 November 2019 before Slattery J for that day with an estimate of half a day.

37. The notice to produce was issued on 18 September 2019 and the subpoena was issued on the same date.

38. The defendant’s submission is that the documents sought in the notice to produce and the subpoena are required for the purpose of testing the evidence Ms Youssef will seek to be rely upon at the hearing on 14 November 2019, hence the listing in advance of that motion and the present application to set aside a notice to produce and the subpoena.

39. The subpoena issued to Mr Morris seeks the following documents:

1.    All communications with Mona Youssef of Harper James Law Group (formerly known as Mona Youssef & Associates) (Plaintiffs’ Solicitors) (or other persons on behalf of the Plaintiffs and the Plaintiff’s Solicitors) concerning a report to be prepared by you for use in NSW Supreme Court proceedings 2017/67704 Fouad Ahmad Moustapha & Overlook Tiles Pty Limited.

2.   All drafts of a report prepared by you on behalf of the Plaintiffs for use in NSW Supreme Court proceedings 2017/67704 Fouad Ahmad Moustapha & Overlook Titles Pty Limited.

3   All documents containing workings such as working notes, field notes, and all drafts of a report prepared by you on behalf of the Plaintiffs for use in NSW Supreme Court proceedings 2017/67704 Fouad Ahmad Moustapha & Overlook Titles Pty Limited.

40. The notice to produce issued to the defendant/cross claimant requires the following items:

1.    Draft report of Mr Barry Morris, referred to at paragraphs 3-4 of the Affidavit of Mona Youssef dated 2 September 2019 (Youssef).

2.   Communications with Mr Morris referred to at paragraph 5 of Youssef.

3.   Email from Barry Morris to Mona Youssef dated 4 September 2018 (as described in Annexure “A” to Youssef, at the top of p. 7)[.]

4.   Communications with Mr Sim referred to at paragraphs 11-16, 23, 30-31, and 33 of Youssef.

41. The defendant submits that the plaintiffs seek to explain their delay in serving the expert report of Mr Sim broadly on the grounds that: first, as to the period prior to mid-September 2018, Mr Morris was unable, through no fault of the plaintiffs, to serve a compliant expert report properly explaining his reasoning; second, as to the period between October 2018 and March 2019, that Mr Sims, through no fault of the plaintiffs, was late in producing his draft report; and third, as to the period between March and July 2019, that the plaintiffs attempted to locate documents sought by Mr Sims but were unable to provide the documents he required.; and that the plaintiffs’ written submissions dated 1 November 2019 rely upon the two affidavits of Ms Youssef, read by the plaintiffs, as seeking to explain the reasons for the delay “so as to dispel any notion that the Plaintiffs were not taking reasonable steps to progress the preparation of their evidence”. The defendant submits that the two affidavits of Ms Youssef of 2 September 2019 and 11 July 2019 contain sometimes “contradictory assertions, the accuracy and validity of which the defendant is entitled to test”.

42. The plaintiffs submit that the documents in question, being communications with expert witnesses or proposed expert witnesses or notes prepared by expert witnesses for the sole purpose of preparation of their expert evidence in these proceedings are clearly the subject of legal professional privilege pursuant to s 118 of the Evidence Act 1995 (NSW) (Evidence Act) and the common law doctrine of privilege, and in this regard what is said in Mann v Carnell (1999) 201 CLR 1; [1999] HCA 6 at [17]-[24]:

[17]   The Evidence Act applies in relation to all proceedings in the Supreme Court of the Australian Capital Territory, including the subject proceedings (ss 2, 4). However, the provisions of the Act which concern what is called client legal privilege, in accordance with the general scheme of the Act, are expressed in terms which relate to the adducing of evidence. The reason for this was explained in the report of the Australian Law Reform Commission which proposed the legislation, and which said: "The Terms of Reference limit the Commission to considering the application of the privilege in the courtroom where evidence is sought to be given."

[18] The relevant provisions are s 118 and s 122. They are as follows:

"118.   Evidence is not to be adduced if, on objection by a client, the court finds that adducing the evidence would result in disclosure of:

(a)   a confidential communication made between the client and a lawyer; or

(b)   a confidential communication made between 2 or more lawyers acting for the client; or

(c)   the contents of a confidential document (whether delivered or not) prepared by the client or a lawyer;

for the dominant purpose of the lawyer, or one or more of the lawyers, providing legal advice to the client.

…

122. (1)   This Division does not prevent the adducing of evidence given with the consent of the client or party concerned.

(2)   Subject to subsection (5), this Division does not prevent the adducing of evidence if a client or party has knowingly and voluntarily disclosed to another person the substance of the evidence and the disclosure was not made:

(a)   in the course of making a confidential communication or preparing a confidential document; or

(b)   as a result of duress or deception; or

(c)   under compulsion of law; or

(d)   if the client or party is a body established by, or a person holding office under, an Australian law – to the Minister, or the Minister of the State or Territory, administering the law, or the part of the law, under which the body is established or the office is held.

(3)   Subsection (2) does not apply to a disclosure by a person who was, at the time, an employee or agent of a client or party or of a lawyer unless the employee or agent was authorised to make the disclosure.

(4)   Subject to subsection (5), this Division does not prevent the adducing of evidence if the substance of the evidence has been disclosed with the express or implied consent of the client or party to another person other than:

(a)   a lawyer acting for the client or party; or

(b)   if the client or party is a body established by, or a person holding an office under, an Australian law – the Minister, or the Minister of the State or Territory, administering the law, or the part of the law, under which the body is established or the office is held.

(5)   Subsections (2) and (4) do not apply to:

(a)   a disclosure by a client to another person if the disclosure concerns a matter in relation to which the same lawyer is providing, or is to provide, professional legal services to both the client and the other person; or

(b)   a disclosure to a person with whom the client or party had, at the time of the disclosure, a common interest relating to a proceeding or an anticipated or pending proceeding in an Australian court or a foreign court.

(6)   This Division does not prevent the adducing of evidence of a document that a witness has used to try to revive the witness's memory about a fact or opinion or has used as mentioned in section 32 (attempts to revive memory in court) or 33 (evidence given by police officers)."

[19]   The circumstances in which legal professional privilege may apply are not limited to the adducing of evidence in the course of a hearing in a court. The privilege may be invoked, and its application may be of importance, in pre-trial proceedings such as the discovery and inspection of documents. Documents may be discoverable even though they may not be admissible in evidence. Their importance may be, for example, that they indicate a useful line of investigation, or that they contain information which could affect the manner in which a party may decide to conduct proceedings. Furthermore, in Baker v Campbell this Court held that the application of legal professional privilege is not confined to judicial or quasi-judicial proceedings. Deane J said :

"Once one recognizes that the principle underlying legal professional privilege is that a person should be entitled to seek and obtain legal advice without the apprehension of being prejudiced by subsequent disclosure of confidential communications and that the privilege is not confined to such communications as are made in the course of or in anticipation of litigation but extends generally to confidential communications of a professional nature between a person and his lawyer made for the purpose of obtaining or giving legal advice, common sense points to a conclusion that the principle should not be seen as restricted to compulsory disclosure in the course of such proceedings."

[20] Thus, the ambit of the common law doctrine of legal professional privilege exceeds that of ss 118 and 122 of the Evidence Act.

[21]   This gives rise to two difficulties, one of which is not material in the present case, but the other of which is.

[22] The first difficulty is that the definition in s 118 of the circumstances which attract the privilege, based upon the concept of dominant purpose, differs in a significant respect from what was decided by this Court in Grant v Downs as to what was necessary to attract the privilege at common law. That is not presently material, as it is common ground that, on either test, the communications in question were originally the subject of legal professional privilege.

[23] The second difficulty is that the provisions of s 122 as to the circumstances in which privilege may be lost are not identical to the corresponding common law principles.

[24]   The difficulties are compounded by the fact that the parliaments of the Commonwealth and of New South Wales are the only Australian legislatures which, to date, have enacted legislation in the form of the Evidence Act. The New South Wales provisions are substantially the same as those quoted above.

[footnotes omitted]

43. As noted earlier, the defendant does not now press the complaint as to the inadequacy of the affidavit proffered in respect of the privilege claim. The defendant maintains that privilege was waived when the plaintiffs served the 2 September 2019 affidavit submitting that what has occurred in this case is a species of what has been called “disclosure waived” and rely upon, amongst other things, the articulation of that principle in Attorney-General for the Northern Territory v Maurice (1986) 161 CLR 475 at 488; [1986] HCA 80 where Mason and Brennan JJ said:

The holder of the privilege should not be able to abuse it by using it to create an inaccurate perception of the protected communication.

Professor Wigmore explains:

"[W]hen his conduct touches a certain point of disclosure, fairness requires that his privilege shall cease whether he intended that result or not. He cannot be allowed, after disclosing as much as he pleases, to withhold the remainder." (Wigmore, Evidence in Trials at Common Law (1961), vol. 8, par. 2327, p. 636.)

In order to ensure that the opposing litigant is not misled by an inaccurate perception of the disclosed communication, fairness will usually require that waiver as to one part of a protected communication should result in waiver as to the rest of the communication on that subject-matter: see Great Atlantic Insurance Co. v. Home Insurance Co..

[footnotes omitted]

44. Reference has been made to s 122(2) of the Evidence Act which provides that the privilege does not apply if the plaintiffs have acted in a way which is “inconsistent with the client or party objecting to the adducing of evidence”, and reference is made to the discussion of authorities in relation to disclosure waiver in Ford Motor Company of Australia Limited v Tallevine Pty Ltd (as trustee for the Thornleigh Trading Trust) [2018] NSWSC 136 at [5]-[13].

45. In DSE (Holdings) Pty Ltd v Intertan Inc (2003) 127 FCR 499; [2003] FCA 384, Allsop J (as the Chief Justice then was) referred to the situation where (at [58]):

… the party entitled to the privilege makes an assertion (express or implied), or brings a case, which is either about the contents of the confidential communication or which necessarily lays open the confidential communication to scrutiny and, by such conduct, an inconsistency arises between the act and the maintenance of the confidence, informed partly by the forensic unfairness of allowing the claim to proceed without disclosure of the communication. …

46. See also Traderight (NSW) Pty Ltd (ACN 108 880 968) v Bank of Queensland Limited (ACN 009 656 740) (No 14) and 13 related matters [2013] NSWSC 211 per Ball J at [10] and [12]:

47. In Commissioner of Taxation v Rio Tinto Ltd (2006) 151 FCR 341; [2006] FCAFC 86, the Full Court of the Federal Court, after reviewing a number of authorities, said (at [52]):

These authorities show that, where issue or implied waiver is made out, the privilege holder has expressly or impliedly made an assertion about the contents of an otherwise privileged communication for the purpose of mounting a case or substantiating a defence. Where the privilege holder has put the contents of the otherwise privileged communication in issue, such an act can be regarded as inconsistent with the confidentiality that would otherwise pertain to the communication.

48. The defendant maintains that in the present case there is an analogy with the situation in Banksia Mortgages Ltd v Croker [2010] NSWSC 535 where an affidavit sworn by the defendant’s lawyer referred to privileged emails and the content (see as set out at [29] and [30] of the decision of Schmidt J). In that case, Schmidt J considered what had been said by Austin J in ASIC v Rich [2004] NSWSC 923 in relation to the question of waiver (see [32] and [33]) and then said (at [34]-[35]):

In this case the disclosure occurred at an earlier point in the proceedings. Not only did Mr Mitry then disclose by his affidavit that he had received instructions from Mrs Croker and that they were contained in the emails which he identified, he also disclosed the contents of the emails, or at least parts of them. It was not contended that the emails dealt with anything other than factual matters, but clearly, given the resistance to their production they must contain other matters not disclosed in Mr Mitry’s affidavit. This disclosure of factual matters about which instructions had been received is not surprising. The affidavit was used in order that the plaintiff's claim for summary judgment could be defended. That exercise, undoubtedly, required evidence to be put on.

The necessary consequence of the disclosure of part of the communications received from Mrs Croker by email, is that the maintenance of a claim for privilege in the emails at this stage of the proceedings, is inconsistent with that earlier disclosure. The result of the course taken is that as well as what is contained in the affidavit being disclosed, the privilege which attached to Mrs Croker’s email communications with her solicitor as to those matters was also waived by the filing and service of Mr Mitry’s affidavit. While the emails were confidential communications which were privileged and to which s 119 of the Evidence Act attached, once their contents were disclosed, or partially disclosed as they were, that privilege was lost.

49. At [36], her Honour noted an argument put by the defendants in that case that it was relevant that the affidavit was not to be further relied on in the proceedings and said that that was not determinative of the question which laid between the parties. Her Honour noted (at [37]-[38]):

At common law, the question of waiver of legal professional privilege is concerned with notions of fairness between the conduct of the client and the maintenance of the privilege (see Mann v Carnell [1999] HCA 66; (1999) 201 CLR 1). Where there is conduct which is inconsistent with the maintenance of the privilege, it does not matter that the privilege holder did not subjectively intend to lose the benefit of the privilege (see Federal Commissioner of Taxation v Rio Tinto Ltd [2006] FCAFC 86; (2006) 151 FCR 341 at [p 343]).

Here there was voluntary disclosure of parts of Mrs Croker’s communications, in the course of the proceedings. It was not claimed that there was any mistaken belief that the there would be no loss of privilege in the emails by which those communications were conveyed. There was no suggestion that any mistake had been made in the disclosure of the communications, or that the disclosure had been inadvertent. Even in such a case, in Divall v Mifsud [2005] NSWCA 447, the Court of Appeal took the view that a privileged statement revealed in an answer given by a witness in cross examination, when counsel had failed to object, meant that there had been knowing and voluntary disclosure and that privilege was thereby lost. Here, there was no such failure. There was here not even a suggestion that this was a situation such as that considered by Austin J in Sovereign v Bevillesta [2000] NSWSC 521 at [23] of a:

"case where everything indicates an intention to claim privilege in respect of the document and what has gone wrong is attributable to sheer inadvertence or carelessness.”

50. Her Honour concluded that the disclosure there in question had been made by affidavit on which the defendants relied to their advantage in order to resist summary judgment, but that was a voluntary disclosure, and that there could be no question that it was known to be a voluntary disclosure of the communication. In the circumstances, her Honour was persuaded that fairness could not permit the defendants to have partially revealed the relevant communication to their advantage and made a claim for privilege in relation to the balance of the communication.

51. The plaintiffs rely upon what was said in Hastie Group Ltd (in liq) v Moore [2016] NSWCA 305 as to legal principles relating to legal professional privilege from [48] to [60], and the statements made at [53]-[58] by Beazley P, as her Excellency then was, and Macfarlan JA:

These, and other, authorities indicate that waiver ordinarily only occurs where the contents of privileged documents are relied upon (see in particular Council of the NSW Bar Association v Archer (2008) 72 NSWLR 236; [2008] NSWCA 164 at [47] and [48] per Hodgson JA, with Campbell JA and Handley AJA concurring; Bailey v Director General Department of Land and Water Conservation (2009) 74 NSWLR 333; [2009] NSWCA 100 at [4] per Allsop P (as his Honour then was) with the concurrence of Hodgson JA). Mere reference to the existence of a document will not suffice. Nor, as Hodgson JA made clear in Archer at [48], is it sufficient that “the content of the privileged communications could, as a reasonable possibility, be relevant and of assistance to the other party”. His Honour added a caveat about cases in which the client’s state of mind is in issue but the present is not such a case.

The respondents, however, submitted that when determining whether issue or implied waiver had been made out, the party claiming privilege could implicitly waive privilege by putting in issue documents of a particular kind, in the absence of a specific reference to the contents of a particular document. The respondents frankly conceded that there were no express assertions in Hastie Group’s affidavit evidence about the Report other than reference being made to the Report having been sought in the context of saying that substantial progress in securing funding has been made. The respondents submitted that at issue in the applications for extensions of time for service of the statement of claim were the dealings with prospective funders. They contended that the Report was a document “of that kind”.

The respondents’ submission, in summary, was that it was sufficient, for it to have waived privilege, that Hastie Group, in the course of seeking extensions of time for service of its statement of claim, had relied, in explanation of its delay, upon the fact that it had been seeking litigation funding, including from CFA, and that privilege in any document which related to dealings with prospective funders was thereby waived.

The underlying thesis of this submission was that the test for express waiver, which requires there to be a disclosure of the contents of a privileged communication, was different from implied waiver, in that, for the purposes of implied waiver, there did not need to have been any disclosure of the contents of the privileged document.

In our opinion, this submission is not consonant with the authorities to which we have referred above which make it plain that neither relevance to the other party’s claim nor reference by that party to a privileged document, without more, gives rise to waiver. Ordinarily there will need to be reliance on the contents of such a document. That has not occurred in the present case.

Whilst the authorities to which we have referred give guidance as to the application of the inconsistency test, ultimately it is a matter for the Court to decide on the facts of the case whether relevant inconsistency has been established. For the reasons we have given, we do not consider that it has been.

52. The submission for the plaintiffs is, in the present case, that Ms Youssef’s 2 September 2019 affidavit was filed to explain a delay in case preparation. It is submitted that the reference to the communications with the former expert, Mr Morris, and the current expert, Mr Sims, was for the purpose of indicating the fact that those communications were taking place and not their disclosure. It is submitted that disclosure of the fact of those communications was not inconsistent with the maintenance of privilege.

53. It is said that the plaintiffs obviously had to explain the delay in the preparation or production of the expert evidence and the relevant explanations made in the 2 September 2019 affidavit. It is said that such explanation was for a particular purpose and that the affidavit was for the sole purpose of showing diligence by the plaintiffs. It was said that the reason for the affidavit informs an understanding of whether or not the references in the affidavit to the communications to the expert are inconsistent with maintenance of the privilege.

54. In particular, it is submitted that the affidavit is not “angled” to the substance of communications with the expert but is clearly to show that the communications were in fact taking place and that is the import or intent of the affidavit, including in the context of the assertion that the affidavit was put on in order to seek leave to rely upon Mr Sims’ report. It is said that the fact of the communications is what is being put into evidence and not their content.

55. It is said that, combined with the purpose of the affidavit being proffered for the purpose of this application, reference to that material is not inconsistent with the maintenance of privilege, that the plaintiffs are merely seeking to comply with the “procedural position” of the court to require leave, which position the parties have adopted, although there has not been a guillotine order made as such.

56. The position of the defendant is that there are a number of "oddities" in relation to the communications or the contemporaneous correspondence which raise genuine questions which the defendant wishes to explore at the hearing of the motion on 14 November 2019 before Slattery J. In particular, the defendant wishes to explore the proposition that Mr Morris could not produce an expert report in compliance with the Makita principles through no fault of the plaintiffs and that, Mr Sims was “slow in producing his report” and needed further documents to produce it.

57. It is said that the explanations put forward by Ms Youssef are not entirely consistent with the contemporaneous communications and with the earlier explanations proffered.

58. The oddities of the chronology have been identified. The issues that the defendant seeks to explore, and says that this material will be relevant, relate to the terms of the proposed retainer, the letter of instruction or versions of it, whether Mr Morris was able to produce a compliant report, and whether and when the plaintiffs' representatives formed the view that all possible efforts had been exhausted to obtain a compliant report from him.

59. As to Mr Sims' report, what is sought to be tested is the explanation for the delay in the provision of that report and the need for further documents.

60. It is submitted that if there is a distinction between disclosure of the fact of communication and disclosure of the substance of the communication, as submitted by the plaintiffs, that the position here is of no or very little difference from that which happened in Banksia MortgagesLtd v Croker [2010] NSWSC 535 where there had been disclosure of some of the communications and not all.

61. In response, the plaintiffs submit that there needs to be some s 56 of the Civil Procedure Act 2005 (NSW) element involved here. It is submitted that the question that arises on the present application is "what is all this about” and “to what end” the defendant is seeking the documents.

62. It is submitted that it is not consistent with the just, quick and cheap resolution of the real issues in the dispute to have a lengthy cross-examination of Ms Youssef in relation to her explanations of delay or any "oddities" in the evidence.

63. It is submitted, further, that the defendant is more than capable of opposing the application without any of the documents now being sought. Emphasis is placed on the rationale for the implied waiver rule being as to fairness, and it is submitted that that should narrow the issue.

64. It is also submitted that seeking documents that are prima facie privileged may cause prejudice to the plaintiff.

65. It was submitted that if I were minded not to allow the application to set aside the subpoena and notice to produce, I should stay the order in relation to production until after there had been a determination on 14 November 2019 as to whether or not there could be leave for cross-examination of Ms Youssef on her affidavits.

66. That, however, would subvert the purpose of the listing of the application today in advance of that notice of motion, since the defendant wishes to have access to the documents in order to prepare for such a cross-examination, and it would seem to be a rather circular argument to stay it until determination of whether there can be cross-examination, which would then of itself lead to further delay if the application for cross-examination is permitted.

67. As against that, it is submitted by Counsel for the plaintiffs that it would subvert the question whether or not cross-examination should be permitted in order to make the documents available at this stage.

68. It is submitted that if the documents are to be made available at this stage, then only a redacted version of the documents should be produced, which would evidence the fact of communication on particular dates and not the content of the communication. And it is said that the defendant would be able to then access the documents as a matter of fairness and utility for the purposes that have been sought, but not the documents that go beyond that.

69. It is submitted that the "minutiae of the documents" are not at the heart of the application on 14 November 2019 and there is no nexus or utility in the defendant obtaining access to all of the documents.

70. I am of the opinion that the reference to the communications and the annexing of some but not all of the communications has put in issue the following matters which are relevant or may be relevant to questions of delay, and therefore relevant to questions of whether or not leave should be granted for the plaintiffs now to rely upon Mr Sims' expert report.

71. Firstly, as to the date of retainer of Mr Morris and, equally, of Mr Sims, that that could be dealt with by provision of a letter of instruction, or versions of it, but also as to whether or not Mr Morris was able to produce a compliant report, and whether and when the plaintiffs formed the view that all possible efforts had been exhausted to obtain it.

72. It seems to me that as it is inconsistent with the maintenance of a claim for privilege for the plaintiffs to seek to rely on those communications in order to explain the delay and therefore explain the basis on which leave is sought to rely upon the expert report, in particular issues such as whether the delay was referable to a dispute as to costs or as to the form of the report or as to the contents of the report and the instructions to the expert, as well as the drafts provided to the solicitors for the plaintiffs, will inform the issues sought to be relied upon by the plaintiffs in relation to the plaintiffs' application for leave.

73. I do, however, consider that the subpoena in its terms goes beyond what can be said to be the subject of an implied waiver.

74. I am not prepared to allow the provision of redacted documents in respect of which I find that there has been an implied waiver, and I am not prepared to stay the orders pending the determination of an application for leave to cross-examine Ms Youssef on 14 November 2019, because I do not consider, for the reasons that I have adverted to already, that that would be consistent with the just, quick and cheap resolution of the real issues in dispute.

75. As to whether or not there is utility in reliance on these documents, at the end of the day I am not determining today the application that it will be before the court on 14 November 2019.

76. The plaintiffs have chosen to rely upon certain material in support of an application for leave to adduce Mr Sims' expert report out of time. They have voluntarily chosen to do so, and in circumstances where there has been an implied waiver of certain documents in respect of which legal professional privilege would otherwise subsist as a result. That is their choice.

77. I therefore am not prepared to make the orders sought in the notice of motion filed 16 October 2019, but I am prepared to limit the documents to which the defendant may have access under the subpoena issued to Mr Morris.

78. In my opinion, the subpoenaed documents to which the defendant should be permitted access will be as follows: all letters of instruction, or variations thereof, issued to Mr Barry Morris concerning a report to be prepared by him for use in these proceedings, or communications between Mr Morris and the plaintiffs' solicitors attaching any draft report prepared by Mr Morris and correspondence in relation to that draft report, including any correspondence in relation to a dispute as to costs or as to the form of the proposed expert's report.

79. As far as the notice to produce is concerned, I consider that that is limited to the matters in respect of which there has been an implied waiver of privilege, and I would not read down that notice to produce.

80. So far as the subpoena is concerned, I outlined in Rinehart v Rinehart [2018] NSWSC 1102, the relevant legal principles in relation to whether or not a subpoena should be set aside or can be read down (at [43]-[54]):

It is well recognised that a subpoena may be set aside as an abuse of process where it is used as a substitute for discovery or discovery against a third party (see Associated Dominions Assurance; Commissioner for Railways v Small (1938) 38 SR (NSW) 564; (1938) 55 WN (NSW) 215; National Employers’ Mutual General Association Ltd v Waind [1978] 1 NSWLR 372 at 382 (Moffitt P, with whom Hutley and Glass JJA agreed))

81. Thus, for the reasons above, I make the following orders:

1. Allow the notice to produce in its entirety.

2. Allow the subpoena, however, limiting the documents to which the defendant should be permitted access to:

1. all letters of instruction or variations thereof issued to Mr Barry Morris concerning a report to be prepared by him for use in these proceedings;

2. all communications between Mr Morris and the plaintiffs’ solicitors or other persons on behalf of the plaintiffs and the plaintiffs’ solicitors attaching any draft report prepared Mr Morris; and any correspondence in relation to that draft report including any correspondence in relation to a dispute as to costs or as to the performance of the proposed expert’s report.

3. Direct that the plaintiffs have first access to the documents produced under subpoena in order to put into a separate bundle those documents responding to category 3 of the subpoena and any responding to category 2 but not forwarded to the plaintiffs’ solicitors.

4. Direct that after seven days from today’s date, the defendant is to have access to documents in categories 1 and 2 of the subpoena as read down.

5. Order that the defendant have access to documents produced under the notice to produce without further limitation

6. Note that the purpose for which the documents have been sought is for the challenge that is anticipated to the application for leave to adduce expert evidence which will before Slattery J on 14 November 2019 and any application to limit use of the documents to which the defendants will now have access to beyond that use for the purposes of that application is an application that can be made to Slattery J on that occasion.

7. Order that costs of notice of motion filed 16 October 2019 be the defendant’s costs in the cause.

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Decision last updated: 13 November 2019