Pegela Pty Ltd v AXA
[2003] VSC 512
•5 December 2003
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. 2026 of 2002
| PEGELA PTY LTD & ORS | Plaintiffs |
| v | |
| AXA | Defendant |
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JUDGE: | Redlich J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 6 November 2003 to 19 December 2003 (Completion of evidence only) | |
DATE OF RULING: | 5 December 2003 | |
CASE MAY BE CITED AS: | Pegela -v- AXA | |
MEDIUM NEUTRAL CITATION: | [2003] VSC 512 | |
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RULING NO. 2
Legal professional privilege – Advice by 'in house' counsel - Numerous references in evidence to obtaining such advice – Whether privilege waived – Principles as explained in British American Tobacco v Cowell applied.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr P. Hayes Q.C. with Mr I. Stewart of Counsel | Madgwicks Lawyers |
| For the Defendant | Mr R. Brett Q.C. with Mr G. Gleeson and Mr D. Bennett of Counsel | P.W. Turk & Associates |
HIS HONOUR:
Mr Hayes, on behalf of the Plaintiffs, submits that the way in which the Defendant has thus far presented and conducted its case reveals, on its face, that it has waived legal professional privilege with respect to communications made to and by its in-house solicitor, Ms Alexiou.
In a written submission with which I have been provided this morning, amplified by oral argument, the Plaintiffs submit that, as a consequence of the manner in which the Defendant's case was opened, as a result of certain evidence given by Mr Yesberg in cross-examination, and by virtue of the content of his Affidavit filed in the Federal Court proceedings in February 2001 (Exhibit WW in these proceedings), the Defendant has waived privilege with respect to communications between Mr Yesberg and Ms Alexiou.
I leave to one side the question of whether or not Ms Alexiou's communications to fellow employees of the Defendant would be the subject of legal professional privilege if they were confidential communications made in her capacity as solicitor. In Australian Hospital Care (Pindara)Pty Ltd & Anor v Duggan (No. 2)[1] Gillard J set out what needs to be established before communications between a private sector solicitor and a fellow employee will be the subject of privilege.
[1][1999] VSC 131.
The Defendant has indicated that it proposes to file material to establish that Ms Alexiou was a solicitor with a practising certificate at the time of each of the relevant communications; that she was consulted in her professional capacity in relation to a professional matter; that the communications that were made were made in confidence and arose out of the relationship of lawyer and client, and that the communications satisfy one or more of the tests laid down by the High Court in Grant v Downes.[2]
[2](1976) 135 CLR 674.
It remains to be seen whether or not the evidence filed on behalf of the Defendant will meet all of those criteria, but I shall assume for present purposes that the Defendant, in due course, will do so.
In paragraph 17 of the written submission, as expanded upon in oral argument, Counsel for the Plaintiffs have listed all the passages of Mr Yesberg's evidence upon which they rely. I propose to mark as an exhibit those written submissions so that they will be available for perusal. In addition to the transcript references, Counsel for the Plaintiffs relied upon paragraphs 22, 43, 46, 47, 55, 64 and 65 of the Affidavit of Mr Yesberg (Exhibit WW) filed in the Federal Court proceedings.
Mr Hayes submitted that, by virtue of that Affidavit, the Defendant had waived privilege in those proceedings with respect to communications made between Mr Yesberg and Ms Alexiou, and privilege having there been waived, it was therefore waived for the purpose of these proceedings.
The Plaintiffs submitted that it was, in fairness, necessary and appropriate that the plaintiffs be given access to all of this material that might have been the subject of otherwise privileged communications with Ms Alexiou, because such communications go both to the question of good faith of the Defendant – an issue raised in the pleadings of the parties – and to the question of whether or not the Defendant has, by its conduct, repudiated the agreements it made with each of the plaintiffs.
In relation to repudiation, it was submitted on behalf of the Plaintiffs that if it be established that the Defendant, with full knowledge of the rights of the Plaintiffs, determined to ignore those rights and embarked upon a different administrative arrangement which would deny the Plaintiffs those rights, evidence which may come from the privileged communications is material to the question of repudiation. As I indicated in the course of argument, I assume, without knowing, that such privileged communications may well bear upon a number of the important issues in this case.
All the parties acknowledge that the mere fact of reference to legal advice in the course of evidence would not, by itself, be sufficient to constitute a waiver of legal professional privilege. I have already made a ruling in the trial which deals with this issue (Ruling 1 dated 26 November 2003) and in which I referred to the decisions of the High Court in Attorney-General vMaurice[3]; Goldberg v Ng[4]; Mann v Carnell[5] and more recently, the decision of the Victorian Court of Appeal in British American Tobacco Australia Services Limited v Cowell[6] in which the relevant principles have been discussed.
[3](1986) 161 CLR 475.
[4](1996) 185 CLR 83.
[5](1999) 201 CLR 1.
[6][2002] VSCA 197.
I was faced with a similar question to that raised in the present application in the case of Anderson v Holding Redlich & Ors.[7] As I noted in that decision, there is a line of authority to the effect that where a party pursues an issue which directly raises that party's state of mind and, as a consequence, the legal advice that that party has received, privilege is waived in relation to such advice.
[7][2003] VSC 303.
I shall not again recite the various authorities which appear to support that proposition. The question was comprehensively reviewed by Byrne J in Liquorland (Australia) Pty Ltd & Anor v Anghie & Ors.[8] There, His Honour concluded that:
"Where a party, by its pleadings puts, its state of mind in issue, privilege may be waived with respect to legal communications which contributed to its state of mind."[9]
[8][2003] VSC 73.
[9]Supra. See Catchwords.
The circumstances in which privilege is to be regarded as waived, as clearly explained in the judgment of the Court of Appeal in British American Tobacco[10] requires me to find that nothing has occurred in the conduct of the case which constitutes waiver of the privilege which attaches to these communications.
[10]Supra.
In the British American Tobacco case, as in this case, a party had, in the course of the presentation of its case – whether it be by way of opening, Affidavit, or evidence given by its witnesses – referred on numerous occasions to the existence of legal advice which it had received, and which was relevant to issues in the case. It was, as the Court of Appeal said, "a case in which the argument advanced was waiver by issue".
In British American Tobacco, the Court of Appeal, after referring to Maurice's case, said:
"In seeking to support the ruling below, the plaintiff submits that the question of waiver in the present circumstances depended not at all upon the material exhibited to Mr Maher's Affidavit, but simply upon the matters put in issues.
The defendant, it was said, had put in issue the legitimacy of its purpose in implementing its document management strategy and the fact that such strategy was based upon legal advice.
So much may be accepted but it does not follow, as the plaintiff then submitted, that 'considerations of fairness require that a party putting in issue in a proceeding a matter which cannot be fairly assessed by the Court without examination of the material over which that party claims privilege must be taken to have either consented to the uses of the relevant privileged material or to have waived reliance on the privilege'.
As already indicated, the mere reference to legal advice may make the legal advice relevant but it says nothing as to the waiver of privilege. No doubt, if a party claiming to have acted upon legal advice then relies upon privilege to protect that advice from scrutiny, the claim will be less than persuasive: but that does not mean that the privilege has been waived by implication. Hence, the error, in our opinion, in His Honour's referring to the insight that the documents in question might provide into the 'content, circumstances and consistency of the advice which was requested and received'. That may have been so, but it does not mean, therefore, that the privilege had been waived." (emphasis mine).[11]
[11]Supra at paragraph 130.
In my view, the present circumstances fall squarely within the scope of the principle as explained by the Court of Appeal in the British American Tobacco case. At this point in the proceedings, the evidence has not taken me beyond the fact that at various times, employees of the defendant resorted to legal advice from their in-house lawyer, which may or may not have influenced the manner in which they thereafter dealt with the plaintiffs.
Without more, I do not regard privilege as having been waived. For those reasons I would refuse the application.
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