O'KANE v Freelancer International Pty Ltd & Anor (No.2)
[2018] FCCA 3021
•19 October 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| O'KANE v FREELANCER INTERNATIONAL PTY LTD & ANOR (No.2) | [2018] FCCA 3021 |
| Catchwords: INDUSTRIAL LAW – EVIDENCE – Legal professional privilege – whether fee notes issued by lawyers to clients privileged – assuming fee notes privilege whether such privilege waived by expert costs assessor referring to and assessing costs by reference to invoices or by the delivery of the invoices to opposing counsel in answer to a call without privilege being claimed. |
| Legislation: Evidence Act 1995 (Cth), ss.118, 119 |
| Cases cited: Australian Securities and Investment Commission v Southcorp Limited [2003] FCA 804 |
| Applicant: | MATTHEW O'KANE |
| First Respondent: | FREELANCER INTERNATIONAL PTY LTD (ACN 134 845 748) |
| Second Respondent: | ROBERT MATTHEW BARRIE |
| File Number: | SYG 3488 of 2016 |
| Judgment of: | Judge Manousaridis |
| Hearing date: | 17 October 2018 |
| Date of Last Submission: | 17 October 2018 |
| Delivered at: | Sydney |
| Delivered on: | 19 October 2018 |
REPRESENTATION
| Solicitors for the Applicant: | Mr K Kutasi of Solve Legal Pty Ltd |
| Counsel for the First Respondent: | Mr A Guy |
| Solicitors for the First Respondent: | Longton Legal |
ORDERS
The claim for legal professional privilege made by the first respondent in relation to the documents contained in the folder marked “MFI1” is disallowed.
The first respondent forthwith grant the applicant and his lawyers access to the documents contained in the folder marked “MFI1”.
The costs of the hearing on the claim for privilege are reserved.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 3488 of 2016
| MATTHEW O'KANE |
Applicant
And
| FREELANCER INTERNATIONAL PTY LTD (ACN 134 845 748) |
First Respondent
| ROBERT MATTHEW BARRIE |
Second Respondent
REASONS FOR JUDGMENT
(Revised from transcript)
These reasons for judgment deal with a claim for privilege made by the first respondent in the proceeding (Freelancer). I begin by identifying the procedural context in which Freelancer claims privilege.
The starting point is the orders I pronounced on 27 April 2018. By those orders I dismissed an application the applicant, Mr O’Kane, brought against Freelancer and the second respondent, Mr Barrie, and I granted the parties liberty to apply in relation to costs. Freelancer took advantage of that liberty and filed an application in a case for an order that Mr O’Kane pay Freelancer’s costs of the proceeding. That claim was later modified to be restricted to particular costs Freelancer incurred as a result of what it claims was unreasonable conduct by Mr O’Kane in the proceeding.
Freelancer’s application for costs came on for hearing before me on 5 October 2018. Freelancer read three affidavits of Ms Drew, one made on 21 August 2018, another on 24 August 2018, and the third on 21 September 2018. Ms Drew is a solicitor and costs consultant. Ms Drew’s three affidavits deal with the assessment of the costs Freelancer incurred in the proceeding and, separately, costs Freelancer incurred as a consequence of what Freelancer claims are seven unreasonable acts or omissions by Mr O’Kane in the course of the proceeding.
It is particularly relevant that I draw attention to Ms Drew’s affidavit of 21 August 2018. In that affidavit Ms Drew deposes to having been provided with copies of tax invoices from Piper Alderman, being the lawyers who acted for Freelancer in the proceeding up to the day I pronounced my orders on 27 April 2018. Ms Drew deposes she has reviewed the tax invoices from Piper Alderman and she “assessed the costs for the entire proceeding from the date of commencement in December 2016 to judgment on 27 April 2018 in accordance with schedule 1 of the Federal Circuit Court Rules 2001.” Ms Drew assessed those costs to be $75,232. Ms Drew then deposes she had been instructed to assess Freelancer’s costs “in respect of seven grounds of unreasonable acts or omissions which caused Freelancer to incur costs which are detailed in the submissions provided to me”.
At a directions hearing before me on 22 August 2018, Mr Kutasi, the solicitor for Mr O’Kane, sought an order that I direct Freelancer file and serve an affidavit annexing all tax invoices and fee notes issued to Freelancer by its former lawyers, and all costs agreements and fee estimates. I declined to make such order, but simply ordered that Freelancer may file further evidence. In the event, although Freelancer filed and served further affidavits, none of the affidavits has annexed to it any invoices from Piper Alderman.[1]
[1] When reviewing the transcript of these reasons which I delivered orally, I discovered that this statement is incorrect. In one of the affidavits Ms Drew annexed redacted invoices.
At the hearing on 5 October 2018, counsel for Mr O’Kane, Mr Boyce, called for the production of documents that had been described in correspondence that had passed between the lawyers for the parties before the hearing. In response to the call, Mr Waterstreet, counsel for Freelancer, was given by those instructing him two lever arch folders which contained documents, and Mr Waterstreet provided those documents either to Mr Boyce or to Mr Kutasi. I adjourned the matter for a short period during which Mr Boyce, Mr Kutasi, and Mr O’Kane read through the folders of documents. The point was reached when documents Mr O’Kane wanted to be uplifted and copied were identified, and a request to that effect was made to those representing Freelancer. In the course of that request being fulfilled, Freelancer claimed privilege over documents contained in the folders. I was informed of these matters when I returned to the bench.
At that stage Mr Boyce indicated that, contrary to his previously having stated he did not wish to cross-examine Ms Drew, he now did wish to cross-examine her. Ms Drew was not, however, available for cross-examination. In those circumstances, I ordered that argument on Freelancer’s claim for privilege be set down for hearing on 17 October 2018, and I adjourned the hearing of Freelancer’s application for costs to 23 October 2018.
This, then, leads to me identify the documents over which Freelancer claims privilege. The documents are contained in the folder of documents that I have marked “MFI1”. Freelancer does not claim that all of the documents contained in “MFI1” are privileged. The only documents over which Freelancer claims privilege are invoices issued by Piper Alderman and by counsel retained by Freelancer.
Before I consider the basis on which Freelancer claims privilege, it is necessary to identify the relevant law by reference to which I must consider and determine the claim for privilege. The claim for privilege has not been made in the course of the adducing of evidence; it was made in the course of Freelancer’s answer of a call for production of documents. On their face, therefore, s.118 and s.119 of the Evidence Act1995 (Cth) do not apply because those sections only apply at the point when evidence is sought to be adduced.[2] The question of privilege, therefore, is to be determined by applying the common law principles that apply to legal professional privilege.
[2] See Esso Australia Resources Limited v Commissioner of Taxation of the Commonwealth of Australia [1999] HCA 67
A convenient statement of the rule that falls under the name of “legal professional privilege” at common law is that given by Cross on Evidence:[3]
In civil and criminal cases, confidential communications passing between a client and a legal adviser need not be given in evidence or otherwise disclosed by the client and, without the client's consent, may not be given in evidence or otherwise disclosed by the legal adviser if made either (1) to enable the client to obtain, or the adviser to give, legal advice, or assistance, or (2) with reference to litigation that is actually taking place or was in the contemplation of the client.
[3] Cross on Evidence,
The circumstances in which legal professional privilege may attach to fee notes or bills of costs, or to the contents of such fee notes or bills of costs, were reviewed in some detail by Edelman J in Carey v Korda and Winterbottom (No.2), when his Honour was a judge of the Supreme Court of Western Australia. His Honour said:[4]
Matters which do not usually attract the privilege include solicitors’ time sheets (see R v Manchester Crown Court; Ex parte Rogers [1999] 4 All ER 35 (Court of Appeal)), solicitors’ memoranda of fees (Lake Cumbeline Pty Ltd v Effem Foods Pty Ltd (t/as Uncle Ben's of Australia) (1994) 126 ALR 58), and costs agreements (Cook v Pasminco Ltd (No 2) [2000] FCA 1819; (2000) 107 FCR 44, 53 [47] (Lindgren J)). The reason why these documents do not usually permit a person to maintain privilege over their contents is because the communication contained is not usually brought into existence for the dominant purpose of giving or obtaining legal advice or for use in existing or anticipated litigation. A bill of costs, for example, is brought into existence for the purpose of obtaining payment. Further, those documents do not usually reveal, directly or indirectly, the content of privileged communications.
However, the situation is different where a bill of costs or Recharge Schedule goes beyond merely recording the costs incurred and ‘recites the nature of the professional service in respect of which it is proposed to charge fees’: Lake Cumbeline v Effem Foods (68) (Tamberlin J).
Because a bill of costs in detailed form will ordinarily disclose, directly or indirectly, the instructions given by a client to a solicitor or counsel, these bills of costs have sometimes been described as ‘prima facie’ or ‘generally’ attracting privilege: Ainsworth v Wilding [1900] 2 Ch 315, 322 (Stirling J); Packer v Deputy Commissioner of Taxation (Qld) [1985] 1 Qd R 275, 287 (McPherson J), 295 (Shepherdson J).
[4] Carey v Korda and Winterbottom (No.2) [2011] WASC 220 at [64]-[69]
The effect of the principles his Honour considered is that lawyers’ bills of costs ordinarily will not attract legal professional privilege because bills of costs themselves are not usually created for the purposes of giving or receiving legal advice, or for the dominant purpose of litigation. Information contained in bills of costs, however, will attract legal professional privilege if that information reveals confidential communications between lawyer and client made for the dominant purpose of giving or receiving legal advice, or for the dominant purpose of legal proceedings, actual or contemplated.
Mr Waterstreet submitted that the invoices over which Freelancer claimed privilege reveal privileged communications. That submission, however, was made in general terms without any attempt to identify particular items of information contained in any of the invoices over which privilege was claimed which revealed privileged communications. In submissions in reply Mr Waterstreet asked that he be given an opportunity to identify items that disclosed such confidential communications. Mr Waterstreet made that request after I identified randomly from the invoices in “MFI1” particular items which could not conceivably constitute confidential communications which attracted legal professional privilege. I refused Mr Waterstreet’s request because the request was made in submissions in reply, and I formed the view that Freelancer has had a fair opportunity to identify from the invoices information Freelancer claimed disclosed confidential communications between Freelancer and its lawyers made for the dominant purpose of receiving or requesting legal advice, or for the dominant purpose of the proceeding.
Given, therefore, the invoices themselves are not confidential communications between Freelancer and its lawyers made for the dominant purpose of requesting or being given legal advice, or for the dominant purpose of the proceeding, and Freelancer has not identified particular items in any of the invoices that constitute disclosure of such confidential communications, I cannot be satisfied the invoices or any part of the invoices attract legal professional privilege.
I next turn to the question which occupied most of the argument on privilege before me, and that is whether, assuming the invoices are privileged, he privilege has been waived. Mr Boyce submitted that whatever privilege may once have attached to the invoices has been waived, and he relied on the principles stated in the following passage from the judgment of Lindgren J in Australian Securities and Investment Commission v Southcorp Limited [2003] FCA 804 at [21]:
I will apply the following principles which I did not understand to be in dispute:
1.Ordinarily the confidential briefing or instructing by a prospective litigant’s lawyers of an expert to provide a report of his or her opinion to be used in the anticipated litigation attracts client legal privilege: cf Wheeler v Le Marchant (1881) 17 ChD 675; Trade Practices Commission v Sterling (1979) 36 FLR 244 at 246; Interchase Corporation Ltd (in liq) v Grosvenor Hill (Queensland) Pty Ltd (No 1) [1999] 1 Qd R 141 (“Interchase”) at 151 per Pincus JA, at 160 per Thomas J.
2.Copies of documents, whether the originals are privileged or not, where the copies were made for the purpose of forming part of confidential communications between the client’s lawyers and the expert witness, ordinarily attract the privilege: Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501 (“Propend”); Interchase, per Pincus JA; Spassked Pty Ltd v Commissioner of Taxation (No 4) (2002) 50 ATR 70 at [17].
3.Documents generated unilaterally by the expert witness, such as working notes, field notes, and the witness’s own drafts of his or her report, do not attract privilege because they are not in the nature of, and would not expose, communications: cf Interchase at 161—162 per Thomas J.
4.Ordinarily disclosure of the expert’s report for the purpose of reliance on it in the litigation will result in an implied waiver of the privilege in respect of the brief or instructions or documents referred to in (1) and (2) above, at least if the appropriate inference to be drawn is that they were used in a way that could be said to influence the content of the report, because, in these circumstances, it would be unfair for the client to rely on the report without disclosure of the brief, instructions or documents; cf Attorney-General (NT) v Maurice (1986) 161 CLR 475 at 481 per Gibbs CJ, 487—488 per Mason and Brennan JJ, 492-493 per Deane J, 497—498 per Dawson J; Goldberg v Ng (1995) 185 CLR 83 at 98 per Deane, Dawson and Gaudron JJ, 109 per Toohey J; Instant Colour Pty Ltd v Canon Australia Pty Ltd [1995] FCA 870; Australian Competition and Consumer Commission v Lux Pty Ltd [2003] FCA 89 (“ACCC v Lux”) at [46].
5.Similarly, privilege cannot be maintained in respect of documents used by an expert to form an opinion or write a report, regardless of how the expert came by the documents; Interchase at 148—150 per Pincus JA, at 161 per Thomas J.
6.It may be difficult to establish at an early stage whether documents which were before an expert witness influenced the content of his or her report, in the absence of any reference to them in the report; cf Dingwall v Commonwealth of Australia (1992) 39 FCR 521; Tirango Nominees Pty Ltd v Dairy Vale Foods Ltd (No 2) (1998) 83 FCR 397 at 400; ACCC v Lux at [46].
Mr Boyce submitted that the principle stated in paragraph 4 of this passage from his Honour’s reasons applies because it is plain that Ms Drew relied on the invoices to express the opinions contained in her affidavits. I agree. As I have already noted, in her affidavit of 21 August 2018 Ms Drew deposes to her having been provided with copies of tax invoices from Piper Alderman; she reviewed the tax invoices from Piper Alderman and she “assessed the costs of the entire proceeding from the date of commencement in December 2016 to judgment on 27 April 2018 in accordance with schedule 1 of the Federal Circuit Court Rules 2001.” There is no question that Ms Drew relied on the invoices to make the assessment of those costs; and for that reason alone Freelancer cannot maintain whatever privilege may have once attached to the invoices or to any part of those invoices.
Mr Boyce relied on additional grounds for submitting Freelancer waived privilege over the invoices. I need only refer to one of those additional grounds, and that is that Mr Waterstreet’s handing over the folders to Mr O’Kane’s legal representatives before my very eyes on 5 October 2018 itself constituted waiver.
Mr Waterstreet in effect submitted that this was done by mistake and through naiveté. The difficulty with that submission is Freelancer has adduced no evidence from those who are in a position to know that the invoices were included in the two folders because of some mistake. The absence of such evidence is not, of course, necessarily fatal to my finding that the folders were handed over by mistake; for it may be conceivable in a given case to infer from the nature of the documents over which privilege is claimed, and the circumstances in which such documents have been handed over, that their handing over was the product of some mistake. In the circumstances of the case before me, however, I am not prepared to infer that it is because of some mistake that privileged documents came to be included in the two folders that were handed over to Mr O’Kane’s lawyers during the hearing of 5 October 2018. First, the documents had been copied and included in the folder specifically in answer to a call for documents that had been made before the hearing on 5 October 2018. Second, the invoices themselves, as opposed to individual items they may contain are not documents of the sort that obviously or ordinarily would attract privilege. Third, the large number of the invoices would suggest to reasonable persons in the position of Mr O’Kane’s lawyers that the inclusion of the invoices was the product of a considered and deliberate decision by Freelancer and those advising it.
For these reasons, even if the invoices themselves had been privileged, or contained items that revealed confidential communications to which privilege might attach, Freelancer waived that privilege over the invoices and items revealing confidential communications, by reading an affidavit of an expert, Ms Drew, who referred to and relied on the invoices, and also by handing the invoices to Mr O’Kane’s lawyers at the hearing before me on 5 October 2018.
For these reasons, therefore, I propose to order that Freelancer’s claim for privilege be disallowed, and to order that Freelancer give Mr O’Kane and his lawyers access to those documents forthwith.
I certify that the preceding twenty (20) paragraphs are a true copy of the reasons for judgment of Judge Manousaridis
Associate:
Date: 13 November 2018
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