Omar Property Pty Ltd v Amcor Flexibles (Port Melbourne) Pty Ltd
[2019] VSC 627
•16 September 2019
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
S ECI 2019 00109
| OMAR PROPERTY PTY LTD & Ors (according to the attached schedule ) | Plaintiffs |
| v | |
| AMCOR FLEXIBLES (PORT MELBOURNE) PTY LTD | Defendant |
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JUDGE: | Mukhtar AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 7 August 2019 |
DATE OF JUDGMENT: | 16 September 2019 |
CASE MAY BE CITED AS: | Omar Property Pty Ltd & Ors v Amcor Flexibles (Port Melbourne) Pty Ltd |
MEDIUM NEUTRAL CITATION: | [2019] VSC 627 |
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DISCOVERY ― Discovery of documents ― Claim for privilege from production for client legal privilege ― Onus of establishing facts from which Court can determine sustainability of claim ― Occasion for exercising of Court’s power to examine documents to ascertain purpose for which documents were brought into existence ― Evidence Act 1958 (Vic), s 118, 119.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr R Chaile | Maddocks |
| For the Defendant | Mr D Collins QC with Mr C Lum | Baker McKenzie |
HIS HONOUR:
This judgment is concerned with the sustainability of the plaintiffs’ claim that 47 documents of which they have given discovery in this proceeding are immune from production to the defendant on the ground of client legal privilege ― essentially litigation privilege under s 119 of the Evidence Act 2008 (Vic) and to a lesser or incidental extent, legal advice privilege under s 118 of that Act.
The case concerns a sale in July 2016 of a 1.7 hectare industrial site in Port Melbourne to property developers for $31,650,000. The purchasers plan to develop the land into many three‑storey townhouses. The sale was expressed to be ‘Subject to Lease’. The defendant (‘the Tenant’) has incumbent possession of the land under a lease that was made in March 2014 for a term of five years with an option to renew for a further five years and then another two years. The Tenant is a major corporation that conducts a large scale printing and flexible packaging manufacturing operation on the site. The sale of land was to be completed on the earlier of: 31 March 2019 (being the end of the first term of the lease) or 7 days before the Tenant surrendered the lease.
The sale of the land and the plans for its development has come to be affected, certainly for the purchaser, by a claim made by the Tenant in possession. The Tenant claims it is entitled to exercise its option to renew the lease which, it says, was unreasonably refused by the vendor as landlord. The vendor and the purchasers of the land, who are in company as plaintiffs in this proceeding, contend the Tenant became disentitled to exercise an option to renew because it had committed un-remedied breaches of the lease and was in default. The plaintiffs seek declaratory relief to that effect and an order for possession of the land. By counterclaim, the Tenant seeks an order compelling the execution of a renewed lease.
The documents in question on this application are e-mails or e-mail ‘chains’ that passed between the lawyers (Messrs HWL Ebsworth) that were once acting for the first plaintiff (‘the Vendor/Landlord’) and the lawyers (Messrs Maddocks) that act for the second, third and fourth plaintiffs (‘the Purchasers’). Those e-mails came into existence after the contract of sale had been made, and when litigation with the Tenant about the lease and its renewal was said to be in anticipation ― and for reasons I will come to later, I think on the objective evidence litigation was a real prospect. In this litigation, the Vendor/Landlord and the Purchasers are represented together by the Purchasers’ existing lawyers, Messrs Maddocks, showing their common interest. Thus, the claim of privilege over the exchanged e-mails is made collectively by them as plaintiffs.
The investigation of facts by the discovery process has already been energised.[1] The Court has dealt with a dispute concerning the adequacy of the Tenant’s discovery and the extent of redactions that it made to documents as discovered. In orders made on 4 July 2019, I ordered the Tenant to give particular discovery of documents as identified, and, to uncover redactions from certain documents.[2] That left two countervailing summonses filed by the Tenant. The first summons sought to set aside a subpoena filed by the plaintiffs to a third party (a commercial builder) to produce documents to the Prothonotary concerning works done at the premises allegedly in breach of the lease. By an order made on 7 August 2019, I dismissed that summons. In the second summons dated 7 June 2019, the Tenant sought orders for additional discovery of nine categories of documents, the most expansive of which was Category One which had 12 sub-parts. This application is about documents discovered under Category One.
[1]See my judgment in [2019] VSC 446.
[2]Based on my judgment in [2019] VSC 446.
A director of the Purchasers has already sworn an affidavit of 90 documents.[3] The Company Secretary of the Vendor/Landlord has sworn an affidavit of 39 documents.[4] To answer or resolve the Tenant’s application for additional discovery, the Purchasers swore a supplementary affidavit of documents that took its cumulative number of discovered documents to 107.[5] Likewise, the Vendor/Landlord filed a supplementary affidavit, taking its number of its discovered documents to 65.[6]
[3]Affidavit of Brendan Mullan sworn 23 April 2019.
[4]Affidavit of Grant Fielder sworn 23 April 2019.
[5]Affidavit of Brendan Mullan sworn 2 August 2019.
[6]Affidavit of Grant Fielder sworn 2 August 2019.
The intention of the supplementary affidavits was to satisfy the Tenant that there were no more documents to be discovered within Categories 2-4, 7 and 9 of the Tenant’s summons. The documents sought in Category 8 are no longer pressed by the Tenant.[7] As for the rest, the plaintiffs’ solicitors say there are no more documents required to be discovered. The Tenant was unconvinced. In the interests of a détente I made an order on 7 August 2019 requiring the plaintiffs to verify on oath their searches and their statement that no other documents existed also applied to the documents being sought in Category 1 of the Tenant’s summons.
[7]See Exhibit JSA-5 to the affidavit of Jacinta Simone Atkinson sworn 6 August 2019.
What then is the remaining dispute about privilege from production? It concerns Category 1 of the Tenant’s summons. That category concerns written communications between the Vendor/Landlord and the Purchaser concerning the renewal of the lease, and in particular, the Tenant’s request to the Landlord for retrospective consent to works it did at the leased premises without prior consent ― see Category 1(f). Although my previous judgment explains the pleaded cases, it becomes necessary with some unavoidable repetition to highlight one aspect of the case showing the substantive or forensic significance of such communications.
Completion of the sale of land contract was due in March 2019. The lease term expired in March 2019, subject to the exercise of the Tenant’s right of renewal for another five years. On 4 July 2018 the Vendor/Landlord served a notice of default on the Tenant because it had discovered that the Tenant had installed a 44-metre gravure printing press at the premises which involved, so the Vendor/Landlord says, substantial modification works to the premises land of a structural kind, including concrete slab work to take the added load and roofwork for additional stacks. Those works were done by the Tenant without the Vendor/Landlord’s prior consent, and without a building permit. The Tenant acknowledges that. But it says — and I shall abbreviate here — the Vendor/Landlord was entitled to give retrospective consent, and acting reasonably it should have done so because the alterations were not truly structural, did not require a building permit, and anyway, the works were not injurious to the Vendor/Landlord’s reversionary interests as landowner. All of that is disputed in this proceeding. The Vendor/Landlord maintains that the Tenant truly was in breach of the lease in the enormity of what it had done, and even if retrospective consent could be given, it was not unreasonable for the Vendor/Landlord to refuse it especially as it appeared that the Tenant had deliberately ignored it obligations under the lease.
A salient part of the Tenant’s defence is that the Vendor/Landlord withheld its retrospective consent to a renewal without reasonable grounds and that it did so ‘at the request of the Purchasers, to enable them to proceed with residential development of the [leased] land after settlement of the Contract of Sale’.[8] That appears to me to singularly underlie this privilege fight. Added to that is a Deed of Variation (‘the Deed’) that varied the contract of sale of the land.[9] The Deed was dated 23 November 2018. Its operative ‘Variation Date’ was 1 July 2018, just before the notice of default for the unauthorised works was given to the Tenant on 4 July 2018.
[8]See para 28(d) of the defence and counterclaim.
[9]See Exhibit PML-2 to the affidavit of Peter Michael Lucarelli sworn 5 August 2019.
Under the Deed, in effect, the Vendor/Landlord and Purchasers united their interests in the predicament that had been obtained. The Vendor/Landlord in effect agreed to hand over to the Purchasers the responsibility for dealing with the Tenant on the leasehold controversy that has become the subject matter of this litigation. Moreover, and what I would think animates the Tenant’s discovery pursuits, the Vendor/Landlord and the Purchaser were obliged under the Deed to communicate with and inform one another about matters concerning the lease.
The terms of the Deed are informative. The Deed added a special condition under which the Vendor/Landlord gave over ‘Purchaser Dealing Rights’ pending completion of the contract of sale. That is, the Purchasers were given the right to take actions concerning the Tenant or the lease as if they were the lessors. It must be noticed that the Deed expressly provided for the conduct of litigation with the Tenant. The Purchasers’ rights included:
(a)conducting rent reviews under the Lease, including negotiating and settling with the Tenant any market rent to apply at a market rent review date;
(b)negotiating and settling with the Tenant the dispute that is particularised in the notice of default issued by the Vendor on 4 July 2018 including issuing and enforcing any additional default notices to the Tenant, under the Lease in connection with that default or any other default;
(c)dealing with the Tenant in relation to any exercise of the option under the Lease including contesting whether the Tenant is entitled to exercise or has validly exercised the option;
(d) issuing a notice of breach or a default notice;
(e)negotiating and accepting a surrender, variation, termination or revocation of the Lease but only to the extent that such surrender, variation, termination or revocation of the Lease occurs on or after the Settlement Date ... ; and
(f)issuing and conducting proceedings against the Tenant in the name of the Vendor, and/or defending any proceedings issued by the Tenant against the Vendor in connection with any matter arising out of or relating to the Lease, including without limitation proceedings related to or connected with any exercise of the option under the Lease (including contesting whether the Tenant is entitled to exercise or has validly exercised the option).
Clause 10.6.2 gave the Purchasers this discretion:
(a)Subject to this clause, the Purchaser, at the Purchaser’s option either directly or by direction to the Vendor, will have:
(i) absolute discretion; and
(ii)the sole right, to the exclusion of the Vendor, to make any decision in relation to all Dealings (Purchaser Dealing Rights);
(b) In exercising the Purchaser Dealing Rights, the Purchaser must:
(i) promptly keep the Vendor updated and informed;
(ii)provide the Vendor with copies of all correspondence issued to and by the Tenant ... ;
(iii)meet with the Vendor, as required by the Vendor, to discuss matters associated with the Purchaser Dealing Rights;
(iv)act reasonably and act in a manner that is in accordance with the Vendor’s obligations under the Lease and at law;
(v)endeavour to maximise the rent and the other monies payable under the Lease when conducting a review of the rent payable under the Lease;
(vi)use its own solicitor rather than the Vendor’s solicitor;
(vii)not issue a notice to vacate or a termination notice when exercising the Purchaser’s Dealing Rights.
Correspondingly, the Deed said the Vendor/Landlord had the following obligations:
(c)In connection with the Purchaser Dealing Rights, the Vendor must (at the Purchaser’s cost in all respects):
(i)not waive or do any other act of thing which may affect the Purchaser’s ability to maintain, in the name of the Vendor or otherwise, that the Tenant is in default under the terms of the Lease in the manner particularised in the notice of default issued by the Vendor on 4 July 2018;
(ii)give to the Purchaser all current and future information in its possession or control relating to the Lease;
(iii)pass on, without delay and within no later than 3 business days of receipt by the Vendor, copies of any notice or any other correspondence or documents relating to the lease;
(iv)do all things reasonably required by the Purchaser to effect a full and effective authorisation of the Purchaser Dealing Rights including, without limitation, executing any necessary documents without delay and within no later than 7 days of written request from the Purchaser, notifying the Tenant of the authorisation under this special condition 10.6.2 and advising the Tenant to deal with the Purchaser in respect of the Dealings;
(v)at the Purchaser’s option:
(1)do all things necessary to enable the Purchaser to commence and conduct, in the Vendor’s name, any proceedings against the Tenant that the Purchaser wishes to commence or conduct, in the exercise of the Purchaser Dealing Rights;
(2)do all things necessary to enable the Purchaser to defend, in the Vendor’s name, any proceedings commenced by the Tenant against the Vendor;
(3)commence and conduct any proceedings against the Tenant that the Purchaser instructs the Vendor to commence or conduct and, in relation to any such proceedings, accept and act, without delay, on instructions from the Purchaser in all matters relating to such proceedings provided those instructions are not inconsistent with this special condition 10.6; and
(4)defend any proceedings commenced by the Tenant against the Vendor and, in relation to the defence of any such proceedings, accept and act, without delay, on instructions from the Purchaser in all matters relating to such proceedings provided those instructions are not inconsistent with this special condition 10.6; and
(vi)not, directly or indirectly, frustrate the Purchaser’s exercise of the Purchaser Dealing Rights that are validly exercised in accordance with the authorisation under this special condition 10.6.
What does all this mean for this application? The Tenant says the plaintiffs have between them only discovered 10 documents which record the communications between the Vendor and Purchaser in carrying out the Deed. The Tenant is still looking to the discovery process to obtain facts about the communications that occurred between the Vendor/Landlord and the Purchasers in aid of its case that the Vendor/Landlord preferred the interests of the Purchasers to those of the Tenant and that it acted under the direction of the Purchasers in refusing to give retrospective consent to the works. That is said to inform the real reason for the default notice, and, to show the unreasonableness of the Vendor/Landlord’s subsequent refusal to give retrospective consent to the Tenant’s works. Whether or not such conduct impugns the notice of default or makes the refusal to consent unreasonable (assuming the Tenant could call for retrospective consent or that the Landlord was bound to entertain it) is another legal question entirely.
The Tenant’s summons sought particular discovery under rule 29.08 of nine categories of documents. As I have said, all that remains in dispute is Category 1 which seeks these documents (noting especially the reference to ‘solicitors’ amidst the opening verbiage in paragraph 1, and noting the subject matter of retrospective consent in subparagraph (f)):
1.Any documents which record or evidence any communications between on the one hand, any of Matthew Belford, Jeff Garvey, Brendan Mullan, any agents, servants and employees or solicitors acting for the second to fourth plaintiffs [i.e., the Purchasers] and on the other hand, any of Grant Fielder, Rodney Detmold, any agents, servants and employees or solicitors acting for the first plaintiff [i.e., the Vendor/Landlord] which relate to the Defendant including but not limited to:
(a)the Lease including (without limitation):
(i)Amcor’s intentions with respect to the Lease; and
(ii)meetings with Amcor regarding a potential early surrender of the Lease;
(b)Amcor’s request to the first plaintiff for consent to update the main power supply to the Premises;
(c)inspections of the Premises during the period 1 June 2016 and 21 December 2018;
(d)the preparation of and the decision to serve on the Default Notice on the defendant, including all draft versions of the Default Notice;
(e)any letters or emails regarding the subject matter of the Default Notice;
(f)the defendant’s request for retrospective consent to the Works contained in the letter from Gilbert + Tobin to HWL Ebsworth dated 25 July 2018;
(g)the Option Notice issued by the defendant to the first plaintiff;
(h)the Further Option Notice issued by the defendant to the first plaintiff;
(i)who of the first plaintiff or the second to fourth plaintiffs would have responsibility for matters arising under the Lease prior to settlement under the Sale Contract; and,
(j)negotiation of the terms of the Sale Contract (as amended or varied from time to time) including but not limited to special condition 10.
After the Tenant’s summons was filed, the plaintiffs’ solicitors sent a letter to the Tenant’s solicitors saying this about the documents sought in Category 1:[10]
The plaintiffs do not accept that all of the documents sought in this category are relevant to the issues in the proceeding. Notwithstanding that objection, and in an effort to efficiently resolve your client’s Summons, we enclose documents falling within category 1 of your client’s Summons where those documents are not subject to legal professional privilege. The remainder of the documents in our clients’ possession falling within category 1 of your client’s Summons are properly the subject of a claim of legal professional privilege because they were prepared in anticipation of litigation or at a time when litigation was anticipated. They have not been provided to your client for that reason.
[10]Dated 26 June 2019: see Exhibit PML-9 to the affidavit of P M Lucarelli sworn 5 August 2019.
There were 32 documents enclosed with that letter. The Tenant’s solicitors subsequently required an itemised response that stated, for each sub-category in the Category 1 documents, whether there were no further documents to be discovered, or, whether there were further discoverable documents but they were being claimed to be privileged from production. A response was given the details of which do not really matter. The upshot was for the plaintiffs to file supplementary affidavits before the hearing of this summons to try to satiate the Tenant’s requests and to maintain litigation privilege.
In response to the Tenant’s summons, one of the lawyers having the day to day responsibility for the conduct of the litigation for the plaintiffs, Jacinta Simone Atkinson, swore an affidavit the day before the hearing in which she tabulated 47 documents under Category 1 over which the plaintiffs claim privilege from production.[11] She states that the affidavit was made from her own knowledge and ‘Where I depose to matters on information and belief, I believe them to be true’.
[11]Sworn 6 August 2019.
Every one of the 47 documents is by description an email passing between the lawyers acting for the Purchasers (namely, Messrs Maddocks) and the lawyers who were at that time acting only for the Vendor/Landlord (namely Messrs HWL Ebsworth). They mostly have the subject matter ‘RE: 187 Williamstown Road, Port Melbourne’.
The e-mails span the time period from July 2018 to November 2018. That corresponds with the date when the Notice of Default was given to the Tenant in July 2018 through to the refusal of the renewal in November 2018 shortly before the writ was filed. Most of the e-mails are classified by Ms Atkinson under category 1(i) of the summons; that is, ‘who of the first plaintiff or the second to fourth plaintiffs would have responsibility for matters arising under the Lease prior to settlement under the Sale Contract’. A few are classified category 1(a) and (g). None are classified under category 1(f) which looks to ‘the Defendant’s request for retrospective consent to the Works’.
In her affidavit Ms Atkinson states the basis of the litigation privilege in this way:
20.Each of the documents above are privileged on the basis that they are communications passing between the solicitors for the 1st Plaintiff and the solicitors for the 2nd to 4th Plaintiffs at a time when litigation was reasonably anticipated, being the time after the Default Notice was issued on 4 July 2018, and a response by the Defendant on 25 July 2018 (through Gilbert + Tobin) in response to the Default Notice was not satisfactory because, among other things, it did not remedy the defaults which had been notified by the Default Notice.
21.The purpose of these documents was to facilitate, record and advance the Plaintiffs’ discussions (including strategic discussions) and negotiations with respect to the conduct of the litigation that was reasonably anticipated against the Defendant. Moreover, a number of the documents record legal advice which had been provided or was being provided to the Plaintiffs.
22.Document 3, in the list above, is privileged on the basis that it was communication passing between the 1st Plaintiff and the 2nd to 4th Plaintiffs at a time when litigation was reasonably anticipated, being the time after the Default Notice was issued on 4 July 2018, and a response by the Defendant on 25 July 2018 (through Gilbert + Tobin) in response to the Default Notice was not satisfactory because, among other things, it did not remedy the defaults which had been notified by the Default Notice. It was created for the same purpose as the other documents in the table.
The affidavit does not identify which of the 47 documents are said in paragraph 21 to record legal advice which had been provided or was being provided to the plaintiffs so as to attract legal advice privilege under s 118 of the Evidence Act. However, I construe her to be saying that some of the documents that attract litigation privilege also contain communications attracting advice privilege.
The Tenant objected to the admissibility of the above paragraphs of Ms Atkinson’s affidavit evidence. Judging by the careful description of each of the 47 e-mails, the objection was that Ms Atkinson apparently did not personally have contemporaneous involvement in the creation and receipt of these e-mails and therefore could not have any personal knowledge of the matters stated in them, and no personal knowledge of the confidentiality of the communication or of the dominant purpose of a communication or a document. Nor, it was contended, could she overcome the hearsay in an interlocutory application by being taken to be stating a belief on which a Court might be willing to act without properly identifying the source of any information from which a belief had been formed.
As matter of legal principle, the objection had force. The onus is on the party claiming the privilege to make it out by evidence or argument, even though it is the other party that has applied for relief by way of an order for inspection.[12] A claim for privilege cannot be made by conclusory assertion. Authorities speak of the need for ‘focussed and specific’ evidence to identify the circumstances in which the communication took place, the matters on which the communication took place, the quality of the communication being confidential, and no less: the dominant purpose for which the communication was made.[13] However, in Grant v Downs,[14] a seminal case on privilege at common law, it was recognised that general descriptions may not necessarily be inadequate having regard to the character of the documents in question:
It is for the party claiming privilege to show that the documents for which the claim is made are privileged. He may succeed in achieving this objective by pointing to the nature of the documents or by evidence describing the circumstances in which they were brought into existence. But, it should not be thought that the privilege is necessarily or conclusively established by resort to any verbal formula or ritual. The court has power to examine the documents for itself, a power which has perhaps been exercised too sparingly in the past, springing possibly from a misplaced reluctance to go behind the formal claim of privilege. It should not be forgotten that in many instances the character of the documents the subject of the claim will illuminate the purpose for which they were brought into existence.
[12]Mitsubishi Electric Pty Ltd v Victorian WorkCover Authority (2002) 4 VR 332, 337.
[13]Barnes v Commissioner of Taxation (2007) ALR 601 [18]. See also AWB Ltd v Cole (No 5) (2006) 234 ALR 651, [44].
[14](1976) 135 CLR 674, 689.
As I see it, the claim for litigation privilege here is that each of the 47 documents was a confidential communication between a lawyer acting for the Purchaser as client, and — as s 119(a) says — ‘another person’. That other person was the lawyer that was acting for the Landlord/Vendor at that time. That would apply for the converse communication emanating from the lawyer acting for the Landlord/Vendor. In each case, the claim would be that the communication was made as s 119 says ‘for the dominant purpose of the client being provided with professional legal services relating to … an anticipated … proceeding’. Ms Atkinson is saying that the purpose of the e-mails related to the conduct of a legal proceeding against the Tenant that was in anticipation.
The case exposes the inherent tension between the need to protect the confidences of a client, and, the public interest in enabling parties to litigation to have access to any relevant evidence.[15] One can see the legitimacy of the Tenant seeking to obtain discovery and inspection of documents from the plaintiffs to find out what truly informed inter se the Vendor/Landlord’s decision to refuse to give retrospective consent to the Tenant’s works, and in turn, the refusal to allow the exercise of the option to renew. To that end, it is seeking documents passing between them through the offices of their lawyers. But they are lawyers providing the client with professional legal services.
[15]Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501.
At this juncture, I would state several conclusions about the plaintiffs’ evidence and the objective evidence on the application. Questions of purpose and confidentiality can be contextual, and in this case I think they are.
Firstly, on the objective evidence before the Court, I would accept as verifiable Ms Atkinson’s statement that the documents in question came into existence at a time when legal proceedings by or against the Tenant were anticipated. For the purposes of s 119 of the Evidence Act the applicable general test as given under the comparable common law is that ‘… there must be a real prospect of litigation, as distinct from a mere possibility, but it does not have to be more likely than not’, and, that ‘real prospect of litigation’ means something more than a mere, vague apprehension of litigation.[16]
[16]See Mitsubishi Electric Pty Ltd v Victorian Workcover Authority (2002) 4 VR 332, 341 [19].
On the pleadings and on the uncontroversial occurrence of events, the seeds of disputation were sown in July 2018 when the notice of default was given and later in that month when the Landlord declined to give retrospective consent to the unauthorised works. From then until October 2018 the Landlord was pressing the Tenant for documents and information about the unauthorised works, by which time the Tenant was pressing its position by seeking to exercise the option to renew, which was refused in November. It was in November that the Deed was made, the contents of which included who would do the suing.
Such was the nature of the dispute and the commercial interests at stake, that all parties (Tenant included) were in consultation with lawyers and communicating through lawyers. There were commercial cross currents from exposures to legal liability referable to rights and obligations under the lease of the land and under the contract for the sale of the leased land.
There is telling support from the Tenant that litigation was anticipated over this period. In an affidavit sworn on behalf of the Tenant in opposition to an earlier discovery application, a senior officer of the Tenant swore that —
To the extent that Amcor has documents created on or after that date [i.e., being the date of the receipt of the notice of default on 4 July 2018] Amcor’s position is that the documents are privileged on the basis that they were prepared for the dominant purpose of Amcor obtaining and being provided with legal advice and being provided with professional legal services at a time when this proceeding was contemplated. Amcor will object to production of the documents on that ground.[17]
[17]Affidavit of Andrew John Terry sworn 14 June 2019.
Secondly, dominant purpose is to be determined objectively, although the subjective purpose will always be relevant and often decisive.[18] I think Ms Atkinson was not purporting to give evidence of personal or subjective knowledge of the purpose of the communications by the correspondents to the e-mails that only they could give. She was not cross examined, and as one of the lawyers now in charge she was, I think, deposing to the purpose for which the documents were created as appears on the face of the documents. A person can state a conclusion about the apparent purpose of a document even though the document was prepared by someone else.
[18]See Esso Australia Resources v FCT (1999) 201 FCR 49, 107, [172] (Callinan J).
Thirdly, it can be accepted as objectively realistic or expectable that in the circumstances from July 2018 when litigation was anticipated and there is a traffic of e-mails, there were, as Ms Atkinson says, strategic discussions and negotiations between the Vendor/Landlord and the Purchasers ‘relating to’ the conduct of anticipated litigation over the lease. The Deed expressly contemplates the conduct of litigation.
Despite those matters, out of deference to the objections raised, my judgment was to accede to a request by counsel for the plaintiffs to inspect the 47 documents for the purpose of determining the dispute. The discretionary power to do so exists under s 133 of the Evidence Act. Questions have arisen on the authorities whether this power should be exercised where it appears to be sought as a substitute for admissible evidence in support of the various elements necessary to establish privilege. The state of authorities on this question was well surveyed by Derham AsJ in Mortgage Results Pty Ltd v Millsave Holdings Pty Ltd.[19] There is a school of thought in those authorities that if evidence was not focused and specific then the party claiming privilege ought not delegate to the court the laborious responsibility of seeing if the privilege exists. In this case, I acceded to the request on the basis as stated by Brereton J in Hancock v Rinehart[20] —
The preferable explanation of the court’s power to inspect the documents is that it exists not to facilitate proof by a claimant of the facts required to sustain the claim, but to provide a means of enabling a claim to be scrutinised and tested.
[19][2017] VSC 704, [14] ff.
[20][2016] NSWSC 12, aff’d in Rhinehart v Rhinehart [2016] NSWCA 58.
I have inspected all of the 47 documents. I am bound the make the following general remarks about these documents.
First, I can confirm that the e-mails are communications between the lawyers that acted for the Vendor /Landlord and those that acted for the Purchaser. None of the e-mails are between lawyer and client. Many of the documents are repetitive when reproduced in a ‘chain’ over time.
Secondly, the bulk of the e-mails concern the drafting of the Deed and revisions to the draft. The Tenant has been given discovery of the signed version of the Deed.
Thirdly, some documents concern the preliminary stages of the market rent review process.
Fourthly, I would characterise many of the documents as unremarkable or co-operative in the sense of attaching and forwarding correspondence received or proposed to be sent to the lawyers acting for the Tenant.
The fact that the putatively privileged (e-mail) documents came into existence between July and November 2018 when the prospect of litigation was present does not therefore make the 47 documents privileged from production. The true character of legal professional privilege is a substantive common law right (or more accurately, a common law immunity) founded upon a matter of public interest.[21] It is anchored to the need to protect the confidences of the client. It is based on a proper functioning of the legal system ‘…which depends upon a freedom of communication between legal advisers and their clients which would not exist if either could be compelled to disclose what passed between them for the purpose of giving or receiving advice’.[22] In the case of litigation privilege, there is an extension to communications with ‘another person’. The subject matter of the privilege is communications either oral, written or recorded and not with documents per se.[23]
[21]See recently, Glencore International AG v Commissioner of Taxation [2019] HCA 26 [15]-[29].
[22]Baker v Campbell (1983) 153 CLR 54, 128.
[23]Commissioner of Australian Federal Police v Propend Finance Pty Ltd (n 15) 552.
I do not think this application truly concerns legal advice privilege. There are references in the e-mails to ‘our instructions’ and similar verbiage, but it is by way of incidental attribution. I think this dispute predominantly concerns litigation privilege and communications with third parties. The reference in s 119 to ‘another person’ (which is absent in s 118) means that communications between the Purchaser’s lawyers and the lawyers for the Vendor/Landlord (as the other person) are only immune from disclosure where the communications are confidential and their dominant purpose is the provision of legal services (to either Vendor or Purchaser) relating to anticipated litigation.[24]
[24]See J D Heydon, Cross on Evidence (10th ed), p 917.
I think the communications in the circumstances in which they were made have the necessary quality of being confidential. The contents were private to Vendor/Landlord and Purchasers. Whilst the documents do not appear concern themselves with the merits or elements of the dispute, there is no doubt there are substantial commercial interests at stake; the Vendor/Landlord and Purchasers through their lawyers are ‘gearing up’ for litigation; and the Deed was an instrumental part of that. At the time of the e-mails, these parties were acting, expectably, in their own interests in looming litigation and I think that impresses the communications with the quality of confidentiality. By the same token the making of the communications to and from the Vendor and Purchasers necessarily involves the rendering of professional services as both parties are making decisions about the legal situation that they found themselves in. Thus, I can accept as objectively verifiable Ms Atkinson’s statement of the dominant purpose of the communications as satisfying s 119 of the Evidence Act.
That leaves or gives rise one final matter. In the course of submissions, counsel for the plaintiffs revisited the plaintiffs’ stated position in the correspondence concerning the relevance of the documents being sought in Category 1 of the summons.[25] The plaintiffs’ position was to disclaim relevance of those documents, but to discover documents anyway in the interests of avoiding disputation and to advance the proceeding. It was from that position that the documents claimed privilege over 47 of those ‘irrelevant’ documents anyway.
[25]See paragraph 17, above.
On this hearing, it was submitted for the plaintiffs that the question of relevance of these documents was re-agitated by the Tenant’s application for production of the 47 documents as were voluntarily discovered under Category 1. It was submitted that the relevance being propounded by the Tenant was on the ground that the documents went to the real reason for the Vendor/Landlord withholding its retrospective consent; that is referrable to the Tenant’s allegation that consent was withheld for reasons not attributable to the Vendor/Landlord’s interests, but for the Purchasers’ interests. That subject came under Category 1(f) of the summons. The plaintiffs submitted that none of the documents voluntarily discovered came under that Category, and therefore production was unwarranted.
This raises questions about the legal consequences of a party discovering documents said to be irrelevant, but discovering them to prevent interlocutory skirmishes. That is to be encouraged. By this judgment I have concluded that the plaintiffs’ objection to production on the ground of litigation privilege is made out on the grounds as stated by Ms Atkinson as verified by the Court’s inspection of the documents. Therefore I need not revisit the question of relevance. However, the submission as made leads me to venture to add something to that conclusion in order to complete the outcome of the scrutiny of the documents. On my examination of the 47 documents, I would also verify Ms Atkinson’s classification that none of the documents answer to Category 1(f); that is, documents between Vendor/Landlord and Purchasers that record or evidence communications relating to the Tenant’s request for retrospective consent to the unauthorised works at the leased premises.
For those reasons, I would sustain the plaintiffs’ objection to production. By reference to paragraph 5 of the Court’s order made on 7 August 2919, I propose to make an order that: The defendant’s application for production and inspection of the documents number 1 to 47 as tabulated in paragraph 18 of the affidavit of Jacinta Simone Atkinson sworn 6 August 2019 is refused.
That, I think, exhausts the Tenant’s summons dated 7 June 2019, apart from the question of costs. Unless the parties can reach consent on a costs order, I would invite written submissions (not exceeding two pages) to be sent to my Associate by 23 September next to enable that question to be decided on the papers.
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SCHEDULE OF PARTIES
| OMAR PROPERTY PTY LTD | First plaintiff |
| MB WILLIAMSTOWN ROAD PTY LTD (as trustee for the MB Williamstown Road Trust) | Second plaintiff |
| JG WILLIAMSTOWN ROAD PTY LTD (as trustee for the JG Williamstown Road Trust) | Third plaintiff |
| ID WILLIAMSTOWN ROAD PTY LTD (as trustee for the ID Williamstown Road Trust) | Fourth plaintiff |
| - and - | |
| AMCOR FLEXIBLES (PORT MELBOURNE) PTY LTD | Defendant and Plaintiff by counterclaim |
| - and - | |
| OMAR PROPERTY PTY LTD | First defendant by counterclaim |
| MB WILLIAMSTOWN ROAD PTY LTD (as trustee for the MB Williamstown Road Trust) | Second defendant by counterclaim |
| JG WILLIAMSTOWN ROAD PTY LTD (as trustee for the JG Williamstown Road Trust) | Third defendant by counterclaim |
| ID WILLIAMSTOWN ROAD PTY LTD (as trustee for the ID Williamstown Road Trust) | Fourth defendant by counterclaim |
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