Oxair Gases Pty Ltd v Atlas Copco Australia Pty Ltd

[2012] WASC 167

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   OXAIR GASES PTY LTD -v- ATLAS COPCO AUSTRALIA PTY LTD [2012] WASC 167

CORAM:   MASTER SANDERSON

HEARD:   2 MAY 2012

DELIVERED          :   24 MAY 2012

FILE NO/S:   CIV 2984 of 2009

BETWEEN:   OXAIR GASES PTY LTD

Plaintiff

AND

ATLAS COPCO AUSTRALIA PTY LTD
Defendant

Catchwords:

Practice and procedure - Claim for privilege over certain documents - Turns on own facts

Legislation:

Nil

Result:

Claim for privilege upheld in part

Category:    B

Representation:

Counsel:

Plaintiff:     Mr L A Tsaknis

Defendant:     Mr J M Healy

Solicitors:

Plaintiff:     Murfett Legal

Defendant:     Corrs Chambers Westgarth

Case(s) referred to in judgment(s):

Gunns Ltd v Marr [2008] VSC 464

1. MASTER SANDERSON:  By application to the case management registrar made 16 September 2011, the defendant in this action sought inspection of certain documents which had been discovered by the plaintiff but over which privilege had been claimed.  To understand the nature of the application then made it is necessary to consider the statement of claim as it stood at that stage.

2. The plaintiff alleged that at various dates in May 2004 the parties entered into a partly‑oral, partly‑written agreement pursuant to which the defendant would manufacture, supply and commission a compressor and a dryer for use in the mining industry.  Various terms are pleaded.  The plaintiff then says in breach of the agreement the compressor and the dryer would not perform as they were supposed to.  The plaintiff says as a consequence it has suffered loss and damage.  The compressor and the dryer were to form part of an oxygen purification plant supplied by the plaintiff to Carpentaria Gold Pty Ltd (Carpentaria).  The statement of claim defines the equipment supplied by the plaintiff to Carpentaria as 'the Plant'. 

3. By par 12 of the further amended statement of claim, the plaintiff claimed loss and damage.  Particulars were provided.  Relevantly, those particulars were as follows:

   (a)reimbursement of monies withheld by Carpentaria pursuant to its contract with the plaintiff dated 27 August 2004 by reason of the failure to properly commission the Compressor and Dryer $111,818.18;

   (b)an order that the defendant do indemnify the plaintiff for any liability of the plaintiff to Carpentaria Gold Pty Ltd pursuant to the contract between the plaintiff and Carpentaria Gold Pty Ltd dated 27 August 2004.

4. When the plaintiff produced its list of discoverable documents, it claimed privilege over documents to do with its discussions with Carpentaria relating to the settlement of a claim made by Carpentaria against the plaintiff.  It said these documents covered without prejudice negotiations and, consequently, should not be available for inspection by the defendant.  The defendant objected.  They said they were being called upon to meet a liability arising out of settlement negotiations between Carpentaria and the plaintiff.  They said, in effect, the plaintiff had waived privilege by the way it had pleaded it case.

5. During the course of the special appointment, I indicated to counsel for the defendant I had difficulty seeing how the claim for privilege could be maintained given the way the pleading then stood.  Counsel then sought to adjourn the hearing so the statement of claim could be amended.  I granted the adjournment and relisted the matter for 27 March 2012.

6. By that date, the statement of claim had indeed been amended.  Relevantly, par 12 had been amended by deleting subpar (b) of the particulars.  Counsel for the defendant pointed out the removal of that subparagraph required some adjustment to the list of discoverable documents - some of the documents which had been discovered now no longer related to a matter in issue between the parties.  Further, counsel indicated the plaintiff was considering its position with respect to some of the documents over which privilege had been claimed with a view to including those in the list of documents available for inspection.  Accordingly, the matter was adjourned again, and was eventually heard on 2 May 2012. 

7. By that date, the plaintiff had filed an affidavit of James Rodney Newell sworn 10 April 2012 verifying a list of documents.  The amended list included under a heading 'Supplementary' certain documents which, it would appear, formally appeared in the list of documents over which privilege was claimed.  In any event, there were some 25 extra documents in the list and these will be available for inspection.

8. In 'Part 3', privilege was claimed over 55 documents (the documents are listed 1 ‑ 53, but there is a document numbered 14A and one numbered 17A).  The amended list deletes 10 of these documents.  Nine of those documents now appear in the discovery list and will be available for inspection.  Document number 48, which is described as 'Copy letter from Murfett Legal to Carpentaria Gold Pty Ltd dated 13 December 2007', also appears in the available for inspection list, but in a redacted form.  I will have more to say about this document in due course.

9. Part 3 of the first schedule to the amended list of documents sets out the basis upon which privilege is claimed over these documents.  The defendant accepts privilege would attach to some of the documents over which privilege is claimed.  For instance, there is no dispute the class of documents described in par 1, as professional communications between the plaintiff and its solicitors would be privileged.  It is still the documents that relate to the dealings between the plaintiff and Carpentaria in relation to the claim which the defendant wishes to inspect.  So far as these documents are concerned, the basis of the claim for privilege is set out in par 4 of Part 3 of the first schedule.  It is in the following terms:

   Correspondence and file notes of without prejudice communications which have passed between the defendant and the Plaintiff and/or its solicitors and bundle of documents [sic] whose sole effect is to disclose the Plaintiff's own case, which bundle includes the following.

   It is thereafter that the 55 documents are listed. 

10. With respect to the solicitor who drafted par 4, it is somewhat cryptic.  Counsel for the defendant remarked in his submissions in reply, it was only after counsel for the plaintiff had explained the position he understood the basis upon which privilege was claimed.  As I understand it, it is now said the dominant purpose of the production of these documents was this litigation and it is on that basis the claim is maintained.  Counsel for the defendant also disputed the plaintiff's redaction of document 48.  That meant then that two issues remained live:  could the plaintiff claim privilege of the listed documents on the basis of so‑called litigation privilege, and was document 48 properly redacted? 

11. Counsel for the plaintiff suggested copies of all documents over which privilege was claimed be supplied to me for consideration.  Counsel for the defendant agreed.  Accordingly, I have had the benefit of inspecting all of the relevant material. 

12. Because of the way this matter developed, neither party made any submissions dealing specifically with what is known as litigation privilege.  However, both parties appeared to accept documents which are produced for the dominant purpose of litigation between parties are subject to legal professional privilege. 

13. The letter from Murfett Legal to Carpentaria of 13 December 2007, even in its redacted form, indicates by that date the plaintiff anticipated Carpentaria would issue proceedings against it and it would join the defendant as a third party.  Of course, that is not what occurred.  But it is reasonable to suggest documents produced after 13 December 2007 could be seen as documents prepared for the dominant purpose of legal proceedings.  Only five documents were produced after that date.  The question then is whether any of the documents produced earlier can satisfy the test. 

14. Having examined all of the documents, I am satisfied they can.  The first document in the list is dated 6 January 2005.  It is a letter from the plaintiff to Carpentaria and, given it has been discovered, it relates to a matter in issue between the parties.  It sets the tone for what follows.  It is clear, even at that stage, litigation was contemplated.  It satisfies the dominant purpose test and so do all of the other documents.  I am satisfied the claim for privilege in relation to these documents is properly maintained.

15. That leaves the question of the redacted document.  It was accepted by counsel for both parties, a document could, in appropriate circumstances, be redacted.  The basis upon which this can be done was considered by Kaye J in Gunns Ltd v Marr [2008] VSC 464. At [28] ‑ [36] his Honour sets out the principles. I would adopt that analysis of the position without repeating everything his Honour has said. It is a matter of applying those principles to this case.

16. I am not satisfied the plaintiff has properly redacted the document.  The material which has been redacted could not be the subject of privilege.  This is not a case where a document is said to contain some material which is not privileged and some which is.  There is no basis for suggesting the parts of the document redacted have been prepared for the dominant purpose of litigation. 

17. Nor is the material irrelevant.  I would accept it is commercially sensitive, but that is a different question.  In my view, it relates to a matter in issue between the parties, as it goes to the matrix of facts relating to the plaintiff's dealings with Carpentaria.  On that basis, the document, in its entirety, ought be available for inspection.

18. Counsel for the parties were at pains to say after four attendances they would prefer not to attend again and to have the costs determined based upon the outcome of the proceedings.  So far as the orders are concerned, the plaintiff ought bring in a short minute of orders which reflects the conclusions I have reached.

19. As to costs, the various hearings have been occasioned by the shifting position of the plaintiff.  Even at the last hearing, argument was required because the basis of the plaintiff's claim for privilege was not entirely clear from the affidavit of Mr Newell.  That being so, I am satisfied that the plaintiff ought pay the costs of this application, including all reserved costs.  However, I will give the plaintiff the opportunity to make written submissions on this issue.  Those submissions should be filed and served within seven days of the date of these reasons.  If, after considering those submissions, I take a different view with respect to costs, I will allow the defendant the opportunity to provide answering submissions.