Newtronics Pty Ltd v Gjergja
[2011] VSC 594
•23 November 2011
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
MAJOR TORTS LIST
S CI 2006 06897
| NEWTRONICS PTY LTD (in liquidation) | Plaintiff |
| – and – | |
| GIORGIO SERGIO GJERGJA, RUSSELL ALLAN KENERY, DAVID JOHN BRUCE and RUSSELL KENNEDY (a firm) | Defendants |
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JUDGE: | MUKHTAR AsJ | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 31 August 2011 | |
DATE OF JUDGMENT: | 23 November 2011 | |
CASE MAY BE CITED AS: | Newtronics Pty Ltd v Gjergja and ors | |
MEDIUM NEUTRAL CITATION: | [2011] VSC 594 | Revised 22 December 2011 |
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EVIDENCE ― Client legal privilege ― Loss or waiver of privilege ― Delivery of bill of costs for party/party taxation ― Descriptions by item of charges and disbursements ― Whether description is privileged as revealing confidential communication ― Sufficiency of evidence establishing privilege in description ― Whether revelation of description and delivery of bill amounts to waiver of putative privilege ― Waiver for limited purpose ― Whether disclosure occurred by “compulsion of law “under taxation process ― Evidence Act No 47 of 2008 (Vic), s 118, 119, 122(3), (5).
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APPEARANCES: | Counsel | Solicitors |
| For the plaintiff | Mr S Waldren | Gadens Lawyers |
| For the fourth defendant | Dr A Hanak | Minter Ellison |
| For Seeley International Pty Ltd | Mr R C Macaw QC | Seeley International Pty Ltd In-house Counsel |
HIS HONOUR:
This application involves the application of legal principles of client legal privilege and the loss (or waiver) of that privilege under the Evidence Act. It arises in the peculiar context of a bill of costs produced for a party/party taxation (or more precisely, an assessment) in Federal Court commercial litigation. The plaintiff here, Newtronics Pty Ltd (in liquidation), was the party liable for costs after an adverse trial judgment in the Federal Court. The bill was discovered by Newtronics in this proceeding because, as I will expose, it has obvious relevance and importance. The dispute on this application arose when the fourth defendant, the law firm of Messrs Russell Kennedy, served Newtronics with a notice to produce that bill as discovered, and that is all. Newtronics as discovering party objected to producing that bill, at least not without “redactions” (masking or editing) saying that the bill contained contents that were privileged from disclosure; that is, privilege belonging to the non party that delivered the bill in the Federal Court litigation to Newtronics. On this application by Russell Kennedy to compel production of the document in pristine form, Newtronics took a neutral stance. The party who lodged the bill in the Federal Court, Seeley International Pty Ltd was the opponent to the application.
For the reasons that follow, I think this application must be allowed, unconditionally. I do not think, on the evidence, privilege for a description of an item in a bill of costs ― as distinct from the underlying documentation ― has been established. But in any event I think if Seeley chose, strangely I would think, to describe an item in a bill using privileged information, then the privilege has been waived voluntarily. The disclosure of putatively privileged information cannot be regarded as having made only for the specific and limited purpose of satisfying procedural requirements of a taxation of costs. That is because nothing in the procedure of taxation compels a litigant to disclose privileged information in the preparation and delivery of the bill itself, not even for a privileged event.
The unusual context calls for some analysis about the nature of a bill of costs and the taxation of costs process, but first, something has to be said briefly about the Federal Court case and the facts preceding this application.
Seeley International Pty Ltd is a manufacturer and wholesaler of evaporative air coolers. In 1995 there were three instances where house fires occurred from a source within a Seeley domestic air cooler installed on the house roof. In 1998, Seeley sued Newtronics and Cintro Pty Ltd in the Federal Court of Australia, claiming that the cause of each fire was faulty electronic componentry that was designed, manufactured and supplied by them and installed in the air coolers. For present purposes it is necessary to confine attention to Newtronics and ignore Cintro who I gather first dealt with Seeley but later sold its electronics business to Newtronics. Newtronics was represented by Messrs Russell Kennedy as their solicitors in that case. A partner of that firm, Mr Ewing, was responsible for the conduct of the case.
Seeley’s case succeeded. On 21 December 2001 O’Loughlin J gave judgment against Newtronics for about $8.9 million and later ordered interest of $5 million. Newtronics was also ordered to pay Seeley’s taxed costs in default of agreement. Receivers and managers were appointed to Newtronics on January 2002. In the following month a liquidator was appointed to Newtronics on Seeley’s application as judgment creditor.
Newtronics (in liquidation) then sued, in these proceedings, three of its directors and Messrs Russell Kennedy as fourth defendant. With the approval of the Federal Court, Seeley is funding the liquidator to conduct this litigation.[1] The directors are being sued for contravention of various directorial duties under the Corporations Act and cognate liability in equity and common law. In essence, it is alleged that the directors knew or ought to have known that Seeley’s case was likely to be proved; that the claim was in excess of $18 million; and that the costs of litigation would be substantial. Newtronics alleges its directors did not obtain an opinion on the merits of the case and how the defence might be best conducted, and should have settled the case for a figure far below the judgment sum and spared itself some legal costs. Newtronics alleges it spent about $6 million in its own legal fees.
[1]See ReStewart, In the Matter of Newtronics Pty Ltd [2007] FCA 1375.
As against Russell Kennedy, the case is that they too should have realised or advised that Seeley would succeed against their client, Newtronics. It is specifically alleged that Mr Ewing wrongfully failed to tell the Newtronics directors that Queen’s Counsel engaged in the case for Newtronics had given certain advice about the merits and the conduct of the defence, or, that he wrongfully failed to obtain comprehensive advice about those matters. The firm is also sued for accessorial liability for the directors’ breach of statutory duty. I must emphasise: I am doing no more than giving a sketch of the case as alleged, and trust I do no disservice to Mr Ewing and his well established firm, or the Newtronics directors, in not portraying their defences to the allegations; but it is not necessary to do so for present purposes.
What is the alleged loss and damage? It comes under three heads. First, it is the difference between the sum at which the Federal Court case should have been settled, and the amount of the judgment. Secondly, it is Newtronics’ legal costs which were incurred after such time as the proceeding should have been settled. Thirdly, and most pertinently for this application, there is Newtronics’ legal obligation to pay Seeley’s costs of the Federal Court case which were incurred after such time as the proceeding should have been settled. There have been various amendments to the pleadings but the salient point is that all versions seek damages for the amount of Seeley’s taxed costs of the Federal Court proceeding.
With that setting of the scene, I can now come to the facts that agitate the issue in this application. It concerns only Russell Kennedy, and I shall state it in this brief way–
(a)Seeley lodged a bill of costs in the Federal Court which was also served on Newtronics as it had to be;
(b)Newtronics (which by that time was in liquidation) did not file any objection to the bill;
(c)a District Registrar of the Federal Court in South Australia certified Seeley’s costs at $1 890 163 in an assessment procedure that differs from an adversarial taxation hearing;
(d)Russell Kennedy’s lawyers in this proceeding, asked Seeley’s lawyers for a copy of the Federal Court bill of costs. That was refused. They then asked the Federal Court but were told that as a non-party they would need the Court’s leave to see the bill. Both Seeley and the Newtronics liquidator would not consent to leave being given. The lawyers who acted for Newtronics in the Federal Court case said, mindful of their obligations not to allow improper or collateral use of documents under Home Office v Harman,[2] that the bill would form part of the ordinary discovery process in this litigation.
(e)In this proceeding, Newtronics’ liquidator swore a supplementary affidavit of documents on 4 August 2010. Discovered document no. 464 is the Seeley bill of costs in original form. The liquidator swears: “Seeley objects to the production of the bill of costs on the grounds that the information recorded in [my emphasis] the bill of costs may be subject to a claim of legal professional privilege.” This is not the plaintiff Newtronics claiming the privilege, for it cannot do so as it is only reposed in Seeley. The person claiming the privilege is the liquidator (funded by Seeley) asserting the principle on behalf of a non‑party in Seeley. Yet he is the liquidator of Newtronics looking to recover, partially at least, the costs for which Newtronics is liable to Seeley.
[2][1983] 1 AC 280.
As a proper procedural step, Russell Kennedy’s lawyers then served on Newtronics a notice to produce the discovered bill as a discovered document. That met with another objection on the ground that Seeley had advised Newtronics that it wished to assert legal professional privilege respecting parts of the document. But, Newtronics proposed that the bill in redacted form could be produced for inspection. This was unacceptable to Russell Kennedy.
This led to an affidavit being produced by Antoinetta Vozzo, a partner of Johnson Winter and Slattery, the law firm acting for Seeley for the purposes of the notice to produce.[3] She says the Seeley bill of costs contains some 9300 individual entries that detail the work undertaken during the Federal Court case “comprising” two lever arch volumes plus another two lever arch volumes containing the disbursement vouchers and invoices. She asserts that Seeley has a claim of legal professional privilege “over those entries in the bill of costs that recorded” privileged communications between solicitors and client and/or counsel and/or third parties. She also says that “There had been no general waiver of any privilege in the Seeley Bill of Costs by virtue of the filing and service of the bill in accordance with the compulsory taxation procedure under the Federal Court Rules.” She elaborates to say that the privilege is claimed “in respect of the description in individual cost items that if disclosed, would tend to reveal the existence of material that is privileged.” She cites three categories –
(a)confidential communications or documents recording a confidential communication between Seeley and its lawyers for the dominant purpose of obtaining or giving legal advice to Seeley or providing instructions in relation to the Federal Court case;
(b)confidential communications or documents recording confidential communications between Seeley’s lawyers and another person for the dominant purpose of advice or court use;
(c)confidential communications or documents recording confidential communications made between or prepared by any of the Seeley’s lawyers for the dominant purposes of the litigation or giving legal advice.
[3]Affidavit sworn 24 September 2010.
What has been discovered is a party/party bill of costs, a typical Court document, and that is all this application concerns; and certainly not any lever arch folders of supporting material. In order to assess what Ms Vozzo is saying, particularly her tendentious reference to the “compulsory” taxation procedure (to connect with the “compulsion of law” exception to waiver under the Evidence Act) and her conclusionary statement that disclosure of item descriptions in the bill could tend to reveal material that is privileged, it is necessary to expound on some features of the taxation process and how the law of privilege interacts with that process. I think this comes to illuminate the analysis of this application.
The Federal Court rule applicable at the time (similar to Supreme Court Rule 63.42) was Rule 62.40. That said unremarkably:
(1)A bill of costs shall contain particulars of
(a)work done by the solicitor, his servants and agents;
(b)costs claimed for the work done in paragraph (a) above; and
(c)disbursements made.
(2)There shall be endorsed on the bill a certificate signed by the solicitor verifying the additions in it, and there shall be attached to it or otherwise filed with it in a convenient manner originals or legible copies of receipts for disbursements, or if a disbursement has not been paid, copies of all relevant accounts.
In the ordinary case, a bill of costs, in describing work done, could not be expected to reveal confidential communications attracting the law of privilege. There is simply no need to do so, and certainly no compulsion to do so. What the so-called “compulsory” process requires relevantly of a successful litigant is no more than a description of the work done to “carry the item”.[4] This is in the context of the principle that a party/party taxation seeks costs for the work done and disbursements that was necessarily or properly incurred for the attainment of justice or the defence of the claim. By its very nature then, a description of work done is not confidential and does not call for revelation of privileged communications. The item may involve a privileged event, but that is another matter. It cannot mean the privilege therefore somehow inheres in the item description.
[4]See Quick on Costs (Thomson Lawbook, loose leaf service) at [5.130] and [5.7120].
The bill as a Court document is filed and served as a Court document and not shrouded in confidentiality. The bill would describe the work done by terminology such as “perusals” or “scanning” or “examination” or “drafting” or “attendances” or “letters” or “preparation” and state a cost. A description of disbursements could include “Counsel’s fees” for a variety of tasks. Such descriptions of themselves do not tend to reveal privileged communications and it is certainly not required. Of course, if a bill proceeds to taxation then it is a species of adversarial process and the taxing officer has to consider claims for privileged events and that may require the production and examination of privileged documents by the taxing court and the other party. But the privileged nature of the underlying document does not therefore flow back and make the description of the item confidential or privileged.
That feature of the taxing procedure arose squarely for consideration by McHugh J in Giannerelli v Wraith [No 2].[5] In the conduct of a taxation of costs the purpose of the exercise is for the party entitled to costs to prove and justify the costs and disbursements that were incurred for the conduct of litigation. To that end, as discovery is not a feature of taxation, the party liable to pay is entitled as a matter of the principles of natural justice to challenge or question certain items and can call upon the other party to produce documents in order to verify and assess the legitimacy of the particular item as claimed. Production in that situation is to resolve a factual issue, and production of the document (not the bill) is for the limited purposes of the taxation.
[5](1990) 171 CLR 592 (McHugh J).
Giannarelli[6] recites the occurrence that a party to a taxation of costs can refuse to produce the document to verify a costs item on the ground that the document is subject to the benefit of legal professional privilege. That is because the decision of Baker v Campbell[7] had established that the underlying principle of legal professional privilege and common sense informed the view that the principle is not confined to compulsory disclosure in the course of judicial or quasi judicial proceedings but extended to any other form of proceeding, including administrative proceedings, with a relevant mandate to require the provision of information.
[6]At 600-601.
[7](1983) 153 CLR 52 at 115-6 (per Deane J).
Giannarelli recognised, following English authority, that a party’s right under the principles of natural justice to see any relevant material which his opponent is placing before the taxing official must prevail over the principle of legal professional privilege. The claimant must then elect what to do. As was said by Hobhouse J in Pamplin v Express Newspapers Ltd:[8]
[8][1985] 1 WLR 689 at 695, 696-7.
In the final resort, the claimant must be put to his election whether he wishes to waive his privilege and use the material, or to assert his privilege and retain the confidentiality of the document which the respondent is asking to see.
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That is a choice for the claimant alone. The [taxing officer] then has to decide the issue of fact on the evidence. In considering whether he is satisfied by the evidence, [the taxing officer] will no doubt take into account that the claimant may have a legitimate interest in not adducing the most obvious or complete evidence, and may prefer to rely on oral evidence rather than producing privileged legal documents.
What Giannerelli decides is that in the context of a taxation a party cannot be compelled to waive is privilege in order to prove a claim and no adverse inference can be drawn from the reliance on the privilege. If a party elects to rely on the privilege, then it takes the risk of not being able to prove the claim if that is the only evidence. It is common for a party not to press that particular item because the preservation of privilege for a particularly confidential document outweighs the claim for costs.
From that exposition, comes the ancillary proposition established by the English Court of Appeal in Bourns v Raychem Corp[9] that the waiver of privilege for documents relied on in a taxation ― the underlying documents, not the bill itself ― extends only as far as the taxation. The Court followed the decision in Goldman v Hesper[10] which said that (with my emphasis)–
…once a party puts forward privileged documents as part of his case for costs some measure of their privilege is temporarily and pro hac vice relaxed. In most cases, as Hobhouse J observed, no problem would arise on taxation about privilege. However, when the problem does arise the taxing officer has the duty of being fair to both parties: on the one hand, to maintain privilege so far as possible and not disclose the contents of a privileged document to the paying party unnecessarily; on the other hand, he has to see that that party is treated fairly and given a proper opportunity to raise a bona fide challenge. The contents of documents will almost always be irrelevant to consideration of taxation, which are more concerned with time taken, the length of documents, the frequency of correspondence and other aspects reflecting on costs. … There may be instances in which taxing officers may need to disclose part, if not all, of the contents of a privileged document in striking the appropriate balance. He will no doubt use all his expertise and tact in seeking to avoid that situation wherever he can. I do not envisage it occurring, except very rarely. Of course it is always open to the claimant not to rely on privileged documents which he regards as peculiarly sensitive. … Any disclosure of privileged documents which does have to be made in the exercise of the taxing officer’s discretion would in my judgment be only for the purposes of the taxation. That it is possible to waive privilege for a specific purpose and in a specific context only is well-illustrated by the decision of this court in British Coal Corp v Dennis Rye Ltd (No 2) [citation omitted]. In that case documents which had been created for the purpose of civil proceedings were disclosed to the police for the purposes of criminal investigation. The question arose whether the waiver of privilege in favour of the police amounted to a waiver in favour of the defendant for the purposes of the civil proceedings. Neill LJ, giving the first judgment, said: “The documents had been disclosed for the limited purpose of a criminal investigation and a criminal trial, in accordance with the plaintiff’s duty to assist with criminal proceedings, and objectively that could not be constructed as either an express or implied waiver of privilege in relation to the civil action.” By the same token voluntary waiver or disclosure by a taxing officer on a taxation would not in my view prevent the owner of the document from reasserting his privilege in any subsequent context.
[9][1999] 3 All ER 154.
[10][1988] 3 All ER 97; [1998] 1 WLR 1238.
The understated fact is that Seeley never had to embark upon a taxation under a procedure where any items in its bill had to be proved or any underlying documents had to be produced. Ms Vozzo’s affidavit states that she engaged the procedure under Order 62, Rule 46(3)(b) of the Federal Court Rules. That rule permits the Registrar by discretion to decline to give an appointment to tax a bill but, in the absence of the parties and without making any determination on individual items in the bill, to make an estimate of the approximate total for which, if the bill were to be taxed, the certificate of taxation would be likely to issue. Then, if there is no objection by any interested party to the estimate, the amount of the estimate is deemed to be the amount for which a certificate may be issued. The fact is there was no objection to Seeley’s bill and a certificate of taxation was issued by the use of that expedited procedure.
Is there client legal privilege in the bill itself?
The starting point is to recognise that we are in the province of the Evidence Act. This is not limited to the adducing of evidence in the course of a hearing in Court compared to the position under the Commonwealth Act.[11] Under s 4(1), the Act applies to interlocutory proceedings or proceedings of a similar kind. Further, under s 131A an objection to a “disclosure requirement” in legal process, such as a summons to produce a document or a notice to produce compels the Court to determine the objection by applying the privileges provisions in Part 3.10 of the Act. That attracts s 118 (legal advice privilege) and s 119 (litigation privilege).
[11]See Mann v Carnell (1999) 201 CLR 1 at [19] and [25].
Those sections are consonant with the common law and I need not recite them. Legal professional privilege, as it was known, is a substantive legal right “or perhaps, more accurately, an important common law immunity”: Daniels Corp v ACCC.[12] The underlying principle 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 with a lawyer. The privilege is not confined to communications made in the course of litigation or in anticipation of litigation, but it extends generally to confidential communications of a professional nature between a person and his lawyer for the purpose of obtaining or giving legal advice: see Deane J in Baker v Campbell.[13] Once privilege attaches to a document the protection remains for all time and in all circumstances unless waived.
[12](2002) 213 CLR 543 at 553 [11].
[13](1983) 153 CLR 52 at 115-6.
The onus is on the party claiming the privilege to demonstrate its existence as a matter of fact, and not merely by the use of verbal formula: see AWB v Cole.[14] Dr Hanak’s first submission for Russel Kennedy is that Ms Vozzo’s affidavit in support of the claim for privilege is merely by way of formulaic assertion and is therefore unsatisfactory and not reliable. There is real force in this criticism.
[14](2006) 155 FCR 30.
What is being asserted by Ms Vozzo, as I comprehend her affidavit, is that the ipsissima verba, the very words, of an individual cost item itself may, if disclosed, reveal the existence of privileged material. She is not referring to privileged material in documents that underlie the item but the language used to particularise the work done or the disbursement incurred. Without seeing the bill or without a more explicative affidavit, I find it hard to accept that a description of work done in a bill of costs is privileged as containing a confidential communication either for the dominant purpose of the lawyer providing advice or providing professional services under the principle of litigation privilege and certainly under advice privilege. For example, in describing a claim for work done, an item which is described as “Advice of counsel concerning prospects of success” of itself is not privileged even though it is a privileged event. If the item read “Advice of counsel saying the case was hopeless” that might be a different matter. But it is fanciful to think it would be expressed that way, as there is no compulsion to particularise the content of the advice or the item in that way. If a compositor of the bill (presumably a costs consultant well conversant with the requirement of a bill of costs) chose inadvisably or voluntarily to reveal facts concerning the privileged event in the item description, then there truly is an issue of unlimited and unforced waiver.
Mr Macaw submits that the description of the items is self evidently privileged and once privileged, is always privileged. He submits the dispositive question is truly one of waiver and asks: did the filing and service of the bill of costs amount to a waiver or loss of privilege? His thesis based on Bourns is that there has been a waiver for a limited purpose, namely the administration or scheme of taxation.
I shall deal with waiver later, but on this the first ground, I cannot accept the submission that the item description is self evidently or by nature privileged. How is that so? I would say it is to the contrary. By its nature an item description is required to do no more than state the work done. Parts of a bill may contain a narrative but even so that is to explain the work done. If a litigant chose to depart in some radical way from that requirement under Court procedure and decide to include, within the description the very content of privileged communication, then I would require evidence of that. As it is, I would hold that it has not been demonstrated to my satisfaction how and in what way a mere description of a costs item reveals confidential information that is privileged under s 118 or s 119. It is mere assertion or formulaic. I mean no disrespect to Ms Vozzo when I say I am not willing to accept such a bald assertion. Further, I am not at all satisfied that there has not been a conflation between the item description and the underlying material to that item. That is, as I have sought to show, a vital distinction.
Accordingly, I think this first submission is sound. If that be thought to be wrong, then I turn to the second issue.
Was the bill prepared for a confidential purpose?
The law of privilege is predicated on confidential communications between client and lawyer. Dr Hanak submits the bill of costs was not prepared for a confidential purpose. As a court document he says a bill of costs is no different to a pleading or a witness statement that is filed in accordance with a Judge’s direction or procedural rules of Court. Before filing, such documents are privileged (litigation privilege), but upon filing the privilege disappears. Here, no differently Dr Hanak says, the bill was filed and served for use in legal proceedings and without any assertion of confidentiality or restriction. The only restriction, I would add, is the Harman implied undertaking not to use it for any purpose other than that for which it was given unless it is received into evidence. In Hearne v Street[15] the High Court, referring to Bourns, proceeded on the basis that the undertaking applied to documents produced for the purposes of taxation of costs. None of this affects Dr Hanak’s submission which is: if the bill ever had any quality of privilege confidentiality, then it disappeared once it was filed
[15](2008) 235 CLR 125 at 154 [96].
Mr Macaw submits the witness statement cases are inapplicable. He says those cases are instances where the litigation privilege (not advice privilege) had been waived but they are not, unlike here, situations where the document contained legal advice. He submits in the instant situation, the advice privilege (that is, in the item descriptions) was waived upon delivery of the bill but only for the limited purpose of taxation and even then, imperatively so because it was necessary in order to engage the taxation process.
The law recognises there may be disclosure of privileged communications for a limited and specific purpose. That occurred in Goldberg v Ng[16] a waiver case, in which there was limited disclosure but upon terms that the third party would treat the information disclosed as confidential. The High Court took the view that the mere fact that a person on one occasion imparts to others advice from his lawyers does not indicate an intention on his part to waive that right to refuse disclosure on other occasions to disclose in evidence what that advice was.
[16](1995) 185 CLR 83.
The principles of waiver tend to underlie the cases where Courts have held that production of affidavits and witness statements renders such documents no longer confidential and privileged even when they are sought to be used subsequently in other proceedings. Under s 122 of the Evidence Act, client legal privilege is lost “if the client or party concerned has acted in a way that is inconsistent with the client or party objecting to the adducing of the evidence because it would result in a [privileged] disclosure … “. Under s 122(5)(a)(iii), a client or party is not taken to have acted in a manner inconsistent with the preservation of the privilege if the substance of the evidence has been disclosed “under compulsion of law”. Common law principles as stated in Mann v Carnell[17] and Osland v Secretary, Department of Justice[18] inform the operation of the statutory provisions. In Osland it was said that the waiver
…reflects a judgment that the conduct of the party entitled to the privilege is inconsistent with the maintenance of the confidentiality which the privilege is intended to protect. Such a judgment is to be made in the context and circumstances of the case, and in the light of any considerations of fairness arising from that context or those circumstances.[19]
[17](1999) 201 CLR 1.
[18](2008) 234 CLR 275.
[19]At 296.
There are a number of cases in which courts have held that the filing and service of an affidavit or witness statement was a step entirely antithetical to the confidentiality that might be said to have existed in the content of the document, and the document loses its privileged quality. That was the finding of appellate federal Courts in Liberty Funding v Phoenix Capital Ltd[20] and ACCC v Cadbury-Schweppes[21]. The latter involved proofs of evidence of witnesses in a trade practices prosecution. The Full Court of the Federal held in that case that the filing and service of the proofs was a complete waiver of any such privilege as existed in those documents before their filing and service. It was an important part of that finding that there was no element of compulsion as to the nature and contents of the evidence to be adduced when an order is made for the serving and filing of witness statements, as happened in that case. That is, a party is not compelled to disclose any particular information, document or possible item of evidence. This resembles something that I think has occurred in this case, that is, no‑one has compelled Seeley to disclose within the bill of costs any privileged information.
[20](2005) 218 ALR 283.
[21](2009) 174 FCR 547.
It is hard to see why the filing and service of a bill of costs should be any different to the filing of any other court document. In State Bank of South Australia v Smoothdale,[22] another case involving witness statements, the Full Court of the Supreme Court of South Australia seemed to support the proposition that if waiver of privilege could be limited to a specific situation or purpose, then waiver should not be imputed in consequence of compliance with the court order to any greater extent than is necessary to accomplish the purposes of the order. The correctness of Smoothdale was doubted by the Full Court of the Federal Court in Cadbury-Schweppes.
[22](1995) 64 SASR 224.
I think rather than seeking to reconcile the cases and specific situations in litigation, the correct course is to return to the principle of waiver, based as it is on inconsistency and notions of fairness in the circumstances. It is clear that the contents of the bill of costs containing the putative privileged information were as stated in s 122(3), knowingly and voluntarily disclosed to Newtronics. The engagement of taxation in this case “compels” adherence to a certain procedure, but it certainly did not in any way require the revelation of confidential or privileged information in the bill or in the description of any item within the bill even if the item concerned a privileged event. The bill was self evidently served for the specific or limited purpose of taxation, but the Federal Court rules did not involve any element of compulsion to reveal privileged information in its listing of items for charges and disbursements beyond requiring Seeley to state particulars of the work done if it wanted to recover costs for those sums. If Seeley saw fit to include privileged information in its bill it has done so entirely on its own volition, and truly voluntarily and not under any compulsion of law. This conduct is inconsistent with a preservation of confidentiality and privilege. And it is manifestly unfair in the circumstances, I would say, for Seeley to have served the bill to serve its purposes; obtained an assessment without any objection; funded Newtronics to sue Russell Kennedy for damages including part of the costs payable by Newtronics to Seeley on the bill of costs; yet despite all that, say that Seeley should not have to disclose an unedited bill to Russell Kennedy. Legal professional privilege may be an ancient and substantive right, but the law should not countenance such an unconscientious position.
Orders
I shall order first, that as soon as practicable the plaintiff produce for the inspection of the fourth defendant the Bill of Costs identified as document No 464 in the plaintiff’s supplementary affidavit of documents sworn 4 August 2010.
As for costs, there is no reason why they should not follow the event. It seems appropriate that they be paid by Seeley International Pty Ltd as the contradictor, who is funding the plaintiff anyway. Unless any party notifies my Associate by 30 November 2011 of any exception to that costs order, I shall proceed to make those two orders.
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