O'Dell v CBFC Ltd
[1999] VSC 362
•10 September 1999
SUPREME COURT OF VICTORIA
CAUSES JURISDICTION
Do not Send for Reporting
Not Restricted
No. 6772 of 1997
| STEPHEN DAVID O'DELL AND LORRAINE ROSLYN O'DELL | Plaintiffs |
| v | |
| CBFC LTD (ACN 008 519 462) | Defendant |
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JUDGE: | Warren J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 10 September 1999 | |
DATE OF JUDGMENT: | 10 September 1999 | |
MEDIA NEUTRAL CITATION: | [1999] VSC 362 | |
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Legal professional privilege – fraud – security for costs - injunction
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APPEARANCES: | Counsel | Solicitors |
For the Plaintiffs | Mr P. Bingham | Maurice Blackburn & Co |
For the Defendants | Mr S.R. Horgan | Norton Gledhill |
HER HONOUR:
The substantive proceedings in this matter revolve around a hire purchase agreement entered into between the plaintiffs and the first defendant concerning a prime mover truck. The agreement was entered into on 30 January 1994. There are allegations brought by the plaintiffs against the defendants concerning inter alia misleading and deceptive conduct under the Trade Practices Act 1974.
By way of interlocutory applications I have before me the return of three summonses.
The first summons is a summons dated 11 August 1999 issued by the second defendant against the plaintiffs seeking security for costs.
The second application is a summons issued by the plaintiffs dated 18 August 1999 whereby the plaintiffs seek injunctive relief restraining the second defendant from relying upon particular documents for the purposes of the previous summons concerning the security for costs application. I will refer to the summons hereafter as the plaintiff's first summons.
There is a second summons issued by the plaintiffs also dated 18 August 1999 returnable before a Master whereby orders are sought against the second defendant seeking delivery up of what are hereafter referred to as the sensitive documents and also seeking further relief restraining the second defendant from using the said sensitive documents.
The first summons of the plaintiffs was the subject of orders by consent made by Beach, J. on 19 August 1999 whereby his Honour restrained the second defendant until the determination of the plaintiffs' second summons made returnable this day from disclosing the sensitive documents.
There are other related orders that were made on that day by Beach, J. The orders hence made by his Honour are returnable also before me this day.
Essentially the facts of the matter are concerned with the disclosure to the former solicitors for the second defendant Corrs Chambers Westgarth of a diary note of a discussion said to have been made between a partner of that firm at that time providing advice to the plaintiffs, in particular the second-named plaintiff Ms Lorraine O'Dell.
The document that is the subject of the dispute concerns a diary note of a conversation between the partner of that firm and Ms O'Dell said to have occurred in about August 1996. The substantive proceedings in this matter commenced in August 1997.
The substance of the allegation is that the diary note records advice provided by the said solicitor as to the ways in which the plaintiffs may be able to dispose of assets for the purpose of frustrating the defendants' attempts to recover monies from the plaintiffs.
It is said on affidavit that the diary note came to the attention of one Ms Sarah Turner of Corrs Chambers Westgarth who at that time was the solicitor acting for the second defendant. Subsequently, as a result of protest from the plaintiffs' then solicitor, Lewis Hutchinson, Corrs Chambers Westgarth ceased to act and other solicitors came to act on behalf of the second defendant.
It is said on affidavit that the diary note came to the attention of Ms Turner during the course of inspecting discovered documents produced by the plaintiffs in the ordinary course of the litigation. It is said that the diary note divulged the matters as outlined previously. It is said that Ms Turner made a note of the broad contents of the document and scribbled or noted such note on the back of a document, being a further supplementary affidavit of documents.
As a result of these matters the second defendant sought to pursue proceedings by its summons for security for costs against the plaintiffs, ostensibly on the basis that the plaintiffs had engaged in a fraud for the purpose of depriving the second defendant of the benefit of any judgment it may ultimately achieve, or alternatively, for the general purpose of frustrating the second defendant in the execution of such judgment.
It is also said on behalf of the second defendant in the course of submissions in support of its application that the second defendant has demonstrated satisfactorily to the court that there either was an actual fraud, or an intent to perpetrate a fraud, but whatever be the case it is sufficient to satisfy the court on the authorities that an order for security for costs ought be made against the plaintiffs.
Against the application, it is said on behalf of the plaintiffs, that the disclosure of the document was inadvertent. So much is deposed to, by implication, by an affidavit sworn by one Malcolm Stroud Langford, a solicitor for the plaintiffs, in particular his affidavit of 18 August 1999, and the affidavit of the second plaintiff Lorraine O'Dell, sworn 6 September 1999. In order to put the matter beyond doubt the plaintiffs have filed a further affidavit of Mr Langford sworn this day 10 September 1999 in which he deposes that inspection was given as a result of error.
The second defendant, having launched its application on 11 August 1999, was the subject of a cross application, as already described, by the plaintiffs, to head off or prevent the second defendant having the benefit of its application for security for costs by relying on the sensitive documents. It was sought to deprive the second defendant of the opportunity of relying upon all references to the diary note or sensitive documents so that the second defendant did not have a basis to bring the security for costs application.
It is a well stated principle of law that communications are not privileged where they may be contrary to the public interest or seek to defeat the better administration of justice. Indeed, it has been held by the High Court that to allow legal professional privilege to be used for that purpose constitutes an abuse of process or power - see The Attorney-General for the Northern Territory v. Kearney (1985) 158 CLR 500.
Moving aside from the general principle, it is also a well established principle of law that where discovery or inspection of a document occurs inadvertently or by mistake, then the opposing party ought not have the benefit of that mistake - see Guinness Peat Properties Ltd & Ors v. Fitzroy Robinson Partnership (a firm) (1987)
2 All ER 716 at 731.
The principle has been well considered in Australia - see Kabwand Pty Ltd & Ors v. National Australia Bank Limited (1987) 16 FCR 85 a judgment of Pincus, J. Of the Federal Court. His Honour in that case conveniently stated that the question whether production by a mistake waives a claim for privilege will depend on the circumstances. His Honour went on to observe the privilege will not be protected if such complete knowledge has been obtained as to make it futile to attempt to preserve it.
Similar observations were made by Rogers, J. In Hooker Corporation Limited v. Darling Harbour Authority & Ors. (1987) 9 NSWLR 538. In that case his Honour observed that where a copy of a discovered document has been obtained by the opposing litigant, the document will still be protected provided that proceedings have been taken to have the document and copies of it delivered up before the document is used in the proceedings.
In the present matter the document has not been used save that the second defendant seeks to rely upon the diary note and other sensitive aspects of that document for the purpose of its security for costs application. In my view the document was clearly produced on inspection by way of error and inadvertence on the part of the plaintiffs. Be that as it may, the issue then arises as to whether legal professional privilege is set aside. Mere inadvertence and mistake of itself is not enough.
In this matter it has been deposed by the second plaintiff Ms O'Dell that the matters recorded in the diary note were recorded as a result of a telephone conversation between a member of the firm Corrs Chambers Westgarth Solicitors. There are aspects of her affidavit that are objected to by Mr Horgan, who appears on behalf of the second defendant. He objects on the basis that the document has not been produced, and the question is asked how can the second defendant possibly respond to the allegations contained in the affidavit if the second defendant is deprived of the opportunity to consider the primary document itself.
Notwithstanding that this matter has been before the Master, and has also been before Beach, J. and has been the subject of argument for some hours before me, the plaintiffs have not taken the opportunity to release or make available the diary note to the second defendant's counsel, subject to any undertaking that may be given to the court. Rather, the plaintiffs have taken the view that the document is privileged and that to do otherwise would enable the second defendant to obtain access to the document by way of alternative means or what has been described as "a back door".
The diary note itself has been produced to me and I have had the advantage of being able to read that document. Be that as it may, and notwithstanding that I am in a position of some advantage compared with the second defendant and its advisers, I cannot be satisfied that the second defendant has any more than a mere suspicion of fraud. The suspicion of itself is insufficient. In any event, there is no evidence of fraud as such and there is no evidence by way of circumstantial evidence or otherwise to indicate that any fraud was perpetrated by the plaintiffs. Rather, and as deposed to by Ms O'Dell in her affidavit, she did receive legal advice but such advice has not been acted upon. Furthermore, Ms O'Dell goes on in her affidavit to depose that the plaintiffs have not sought to divest themselves of any assets. These matters have not been challenged in any way by the second defendant. Furthermore, whilst it does not necessarily behove the second defendant to do so, the second defendant has not sought to put evidence before the court to support the proposition or the suggestion that the plaintiffs have attempted to carry out the advice that they are said to have been given by a member of Corrs Chambers Westgarth in August 1996.
In all the circumstances of this matter, and weighing up the matters set out in the affidavits, I am satisfied that at this point in time legal professional privilege did and continues to attach to the diary note.
There then arises the issue as to what happens to the diary note and references to it hereafter. I turn now to the second summons issued by the plaintiffs.
The second summons seeks relief by way of requiring the second defendant to surrender or yield up documents that contain references to the diary note. It does appear in the circumstances of this matter, and given that I have found that legal professional privilege continues to attach to the diary note, that it is appropriate that such documents be yielded up as contemplated by the second summons of the plaintiffs.
The nature of the orders I would propose to make in this matter, subject to further submissions from counsel, are that the application by the second defendant for security for costs is dismissed. In so doing I am not satisfied that the second defendant has demonstrated that the plaintiffs have behaved in such a way as to improperly seek to free themselves from the consequences of unsuccessful litigation (see Lines v. Tana P/L (1987) VR 641, 642).
Secondly, that the relief sought by the plaintiffs in the second summons dated 18 August 1999 be granted.
Thirdly, that the injunction granted by Beach, J. On 19 August 1999 be continued until further order.
I make the last observation for the specific reason that it may be that further matters come to the attention of the second defendant or further information comes to light that may require or warrant the second defendant revisiting the application. Indeed, such may occur as late as the trial itself. In those circumstances it would be appropriate for the second defendant to have the opportunity to revisit the matter and seek to have the injunctive relief I propose to continue, varied or dissolved as may be the case.
(Discussion re costs.).
In this matter the plaintiff seeks an order for costs against the second defendant, being the costs of the day, presumably being the costs of all three applications before me.
This is a matter, in my view, in which it is inappropriate for costs to follow the event, which would ordinarily be the course. It is a matter in which there are complex issues of fact that are interwoven between the three applications. There is the further fact that the plaintiffs have not availed the second defendant of the opportunity, through its counsel, of inspecting the sensitive document, namely the diary note. In all these circumstances, and given that it is a matter that potentially may be revisited, and given, furthermore, that it may be a matter that becomes an issue at trial, I consider that it is appropriate to reserve the costs. Accordingly I will order that costs be reserved.
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CERTIFICATE
I certify that this and the 6 preceding pages are a true copy of the reasons for judgment of Warren J of the Supreme Court of Victoria delivered on 10 September 1999.
DATED: this tenth day of September 1999.
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