Pioneer Concrete (Vic) Pty Ltd v Cacthklin Pty Ltd

[1998] FCA 475

FEDERAL COURT OF AUSTRALIA

EVIDENCE - Client legal privilege - Whether note of non-privileged conversations made for the provision of legal advice is itself privileged - Whether loss of privilege by disclosure - whether substance of the note itself, rather than what it records, must be disclosed.

Evidence Act 1995 (Cth), ss 117, 118 and 122

Adelaide Steamship Co Ltd v Spalvins (1998) 152 ALR 418 (Applied)
National Employers’ Mutual General Insurance Association Ltd v Waind (1979) 141 CLR 648 (Applied)
Commissioner, Australian Federal Police v Propend Finance Pty Ltd (1997) 141 ALR 545 (Applied)
Handley v Baddock [1987] WAR 98 (Applied)

PIONEER CONCRETE (VIC) PTY LTD (ACN 004 375 302) (Applicant) v CATCHKLIN PTY LTD (First Respondent) NEIL JOHN YOUNG, ALLAN JAMES MYERS AND JENNIFER CLAIR O’CALLAGHAN (Second Respondents) PETER MCGRATH, JULIUS COLEMAN AND ANTHONY STEWART (Cross-Respondents)

VG 368 of 1997

FINN J
CANBERRA (HEARD IN MELBOURNE)
6 MAY 1998

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VG 368  of   1997

BETWEEN:

PIONEER CONCRETE (VIC) PTY LTD (ACN 004 375 302)
APPLICANT

AND:

CATCHKLIN PTY LTD
FIRST RESPONDENT

NEIL JOHN YOUNG, ALLAN JAMES MYERS AND JENNIFER CLAIRE O'CALLAGHAN
SECOND RESPONDENTS

PETER MCGRATH, JULIUS COLEMAN AND ANTHONY STEWART
CROSS-RESPONDENTS

JUDGE:

FINN J

DATE OF ORDER:

6 MAY 1998

WHERE MADE:

CANBERRA (HEARD IN MELBOURNE)

THE RULING OF THE COURT IS THAT:

Client legal privilege attaches to the two letters and nine file notes produced by the Solicitors Liability Committee.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VG 368 of 1997

BETWEEN:

PIONEER CONCRETE (VIC) PTY LTD (ACN 004 375 302)
APPLICANT

AND:

CATCHKLIN PTY LTD
FIRST RESPONDENT

NEIL JOHN YOUNG, ALLAN JAMES MYERS AND JENNIFER CLAIRE O'CALLAGHAN
SECOND RESPONDENTS

PETER MCGRATH, JULIUS COLEMAN AND ANTHONY STEWART
CROSS-RESPONDENT

JUDGE:	FINN J
DATE:	6 MAY 1998
PLACE:	CANBERRA (HEARD IN MELBOURNE)

REASONS FOR JUDGMENT

The present motion raises yet another dimension of the difficulties in applying the common law of legal professional privilege in ancillary processes where the “Client legal privilege” provisions of the Evidence Act 1995 (Cth) govern the adducing of evidence in the proceeding in question: on which see generally Adelaide Steamship Co Ltd v Spalvins (1998) 152 ALR 418.

The question arises as if upon the return of a subpoena for inspection.  I put the matter this way as the documents in question were mistakenly included in a list of discovered documents produced by the solicitors of the applicant, Pioneer Concrete (Vic) Pty Ltd (“Pioneer”), in the principal proceeding, but for which legal professional privilege was claimed.  The mistake here is now conceded and it is accepted that the documents in question were prepared by Pioneer’s now solicitors, Minter Ellison, but while acting as solicitors for the then Solicitors Liability Committee (“the SLC”) and that it is the SLC that is entitled, if at all, to claim the privilege which attaches to them.

The background circumstances can be noted briefly.  There has already been, and there is presently on foot, litigation concerning the meaning of, and now (in rectification proceedings) the proper terms of, the rent review provisions of a lease of premises of which Pioneer is lessee and the second respondents are lessors (albeit as successors to the original landlord).

The firm of solicitors, Cornwall Stodart, were Pioneer’s solicitors at the time of drafting of the lease and during the first round of proceedings that settled the proper construction of the written terms of the rent review provisions of the lease (“the first proceeding”).  After the commencement of the first proceeding but before trial Cornwall Stodart sought, and on 11 August 1995 was provided by the SLC with, an indemnity against any claim Pioneer might have in relation to the matter.  An affidavit in the motion before me indicated that this indemnity was “subject to the terms and conditions of the SLC’s 1993 contract of indemnity and was “subject to certain arrangements regarding Cornwall Stodart’s costs and disbursements of the proceedings”.  I have been asked to infer that the matter in respect of which the indemnity was given was the drafting of the lease containing the contested rent review provisions.  That lease, I would note was executed on 1 January 1990.

The documents that remain the subject of the present motion - there were others - are two letters written by Minter Ellison to its client, the SLC, and nine file notes of communications with Cornwall Stodart.  All were written between 29 December 1995 and 27 February 1996.  The relevance of these dates is that (a) on 11 December 1995 Olney J, while refusing an application by Pioneer to amend its cross-claim in the first proceeding to include a claim for rectification of the lease because of its lack of particularity, did not foreclose the possibility of a further amendment application;  and (b) on 26 February 1996, the trial of the first proceeding commenced without any further such amendment application being made.

The documentation sought by the second respondents, the current proprietors of the leased premises, is that relating to the decision of Pioneer not to make any further application to amend its cross-claim in the first proceeding.  The eleven documents in question, as I noted earlier, were mistakenly included in a list of documents produced by way of discovery consequent upon an order of mine of 18 December 1997.

While I am now to look at these documents as if produced on a subpoena rather than on discovery, I do not consider that this difference is actually of particular moment in this case.  I have inspected the documents in question.  It is convenient to deal with the file notes and the letters separately.

The File Notes

Before noting the parties’ submissions it is appropriate to refer first to the relevant provisions of the Evidence Act (“the Act”).

Section 117(1) defines “confidential communication” and “confidential document” to mean as follows:

“ ‘confidential communication’ means a communication made in such circumstances that, when it was made:

(a)       the person who made it;  or
           (b)       the person to whom it was made;

was under an express or implied obligation not to disclose its contents, whether or not the obligation arises under law;

‘confidential document’ means a document prepared in such circumstances that, when it was prepared:

(a)       the person who prepared it;  or
           (b)       the person for whom it was prepared;

was under an express or implied obligation not to disclose its contents, whether or not the obligation arises under law.”

Section 118 for its part provides:

“Legal advice

118.     Evidence is not to be adduced if, on objection by a client, the court finds that adducing the evidence would result in disclosure of:

(a)a confidential communication made between the client and a lawyer;  or

(b)a confidential communication made between 2 or more lawyers acting for the client;  or

(c)the contents of a confidential document (whether delivered or not) prepared by the client or a lawyer;

for the dominant purpose of the lawyer, or one or more of the lawyers, providing legal advice to the client.”

The file notes all relate to communications between lawyers of Cornwall Stodart and of Minter Ellison.  Counsel who appeared for the SLC claimed client legal privilege on the basis that they were confidential documents prepared by Minter Ellison for the dominant purpose of providing legal advice to the SLC.  Given, it was submitted, that evidence could not be adduced at trial that would result in disclosure of their contents:  the Evidence Act 1995, s 118(c); so also their contents should be protected by the derivative application of the provisions of the Evidence Act, in ancillary processes:  Adelaide Steamship Co Ltd v Spalvins, above.

The second respondents’ starting point, as with that of counsel for the SLC, was that the client legal privilege provisions of the Act were to be applied derivatively. As s 118(a) would not prevent the adducing of evidence at trial of the actual discussions between the lawyers of the two firms, a file note by one of them, at least insofar as it evidenced those discussions, could not be said to be such a “confidential document” as s 118(c) contemplated. In other words, given that s 118 does not extend client legal privilege to communications between a lawyer acting for a client and a third party (even if made for the dominant purpose of the lawyer providing legal advice to the client: but cf s 119 and for the difference between the two sections see the Australian Law Reform Commission, Report No 38, Evidence, para 195), it would be anomalous that a note of such communications could be privileged both at trial and in ancillary processes.

Before expressing my own views on these submissions it is important to emphasise what are not matters in issue on this motion.

(i)It has not been suggested that the relevant communications were made, or the file notes prepared for, the dominant purpose of the SLC being provided with professional legal services relating to an actual, anticipated or pending proceeding in which the SLC was, or may be, a party: cf s 119 of the Act.

(ii)It likewise has not been suggested that the communications with Cornwall Stodart were with a party with whom, at the time they were made, the SLC had a common interest relating to an actual, anticipated or pending proceeding in an Australian court: s 122(5) of the Evidence Act.

I emphasise these matters because, notwithstanding the indemnity given in 1995 (whatever the effect of its limitations), there is no evidence at all before me to suggest any proceeding by Pioneer against Cornwall Stodart and/or the SLC was “anticipated” at the relevant time.

The final prefatory matter I should note were the instructions received by Minter Ellison in acting for the SLC.  A solicitor, of that firm, Mr Richard Murphy, has deposed that they were to:

(a)advise the SLC on its potential exposure to liability as the professional indemnity insurer of Cornwall Stodart;

(b)       maintain a ‘watching brief’ on the proceeding;
           (c)       report to the SLC from time to time as to the status of the proceeding;

(d)advise the SLC in relation to its potential liability for Cornwall Stodart’s costs and disbursements of the proceeding;  and

(e)consider and advise on what steps could or should be taken in relation to the proceeding in the SLC’s interests.

Mr Murphy further deposed that all of the file notes were prepared by him to record his discussions with Cornwall Stodart and staff of the SLC for the purpose of giving legal advice to the SLC.

Insofar as the principles embodied in s 117 and s 118 of the Act can be applied derivatively to the present matter, it is the case, as counsel for the second respondents contend, that the communications between the two law firms would not attract client legal privilege under s 118(a) of the Act in that they were not “confidential communications made between the client and a lawyer”. Nonetheless, the notes of those communications were, on the evidence before me, brought into existence for the purpose of Minter Ellison providing legal advice to the SLC: on “purpose” and document creation see National Employers’ Mutual General Insurance Association Ltd v Waind (1979) 141 CLR 648 at 654. Furthermore they fall within the definition of a “confidential document” in that, when prepared by Mr Murphy, he was under an obligation not to disclose its contents that obligation in this instance being but an aspect of the duty of confidentiality a lawyer owes his or her client: see generally Dal Pont, Lawyers’ Professional Responsibility, Ch 11. Accordingly their contents ought attract the privilege referred to in s 118(c) of the Act and I am prepared so to find.

If this produces the apparent anomaly highlighted by counsel for the second respondents that, while evidence could be adduced of the communications themselves, the notes thereof were immune from production, it is necessary to emphasise as Gummow J did in Commissioner, Australian Federal Police v Propend Finance Pty Ltd (1997) 141 ALR 545 at 598 “that the privilege is to be characterised as a bar to compulsory process for the obtaining of evidence rather than a rule of inadmissibility”. I should add that I consider that the conclusion at which I have arrived that the file notes are privileged is consistent with the principle stated in that case that privilege may apply to a copy document provided to a lawyer for the purpose of obtaining legal advice, notwithstanding it does not attach to the original: see also Handley v Baddock [1987] WAR 98; Trade Practices Commission v Sterling [1979] 36 FLR 244 at 246 para (d); and see Cross on Evidence, para 25255. 

Subject then to what I have to say below on disclosure, the file notes would be privileged from production.

The Two Letters

The letters in question - the one of 29 December 1995 the other of 25 January 1996 - were written by Minter Ellison to the SLC. They are, prima facie, entitled to privilege in accordance with s 118(c) of the Act. I do not understand it to be submitted to the contrary.

Loss of Privilege by Disclosure

Section 122 of the Act, insofar as presently relevant provides:

“Loss of client legal privilege:  consent and related matters

...

122. (2)       Subject to subsection (5), this Division does not prevent the adducing of evidence if a client or party has knowingly and voluntarily disclosed to another person the substance of the evidence and the disclosure was not made:

(a)in the course of making a confidential communication or preparing a confidential document;

...

(4)       Subject to subsection (5), this Division does not prevent the adducing of evidence if the substance of the evidence has been disclosed with the express or implied consent of the client or party to another person other than:

(a)       a lawyer acting for the client or party;

...

(5)       Subsections (2) and (4) do not apply to:

(a)a disclosure by a client to another person if the disclosure concerns a matter in relation to which the same lawyer is providing, or is to provide, professional legal services to both the client and the other person;  or

(b)a disclosure to a person with whom the client or party had, at the time of the disclosure, a common interest relating to a proceeding or an anticipated or pending proceeding in an Australian court or a foreign court.”

(a)       The file notes

On the evidence before me it is clear that neither the file notes themselves or the substance of their actual contents have been disclosed to either Cornwall Stodart or to Pioneer and no other relevant disclosure has been suggested. In this state of affairs, no basis exists for attracting the disclosure principles embodied in s 122(2) and (4) of the Act. In saying this I emphasise that the privilege - and hence disclosure - question is not concerned with the substance of the communications made between the law firms. It is with the contents of the file notes.

Accordingly I conclude that the claim of privilege has properly been made for the nine file notes.

(b)       The two letters

On 17 January 1996 Cornwall Stodart wrote to Pioneer (inter alia) as follows:

“FURTHER DISCOVERY TO ADD A POSSIBLE RECTIFICATION CLAIM

As you will recall, your application for leave to deliver an amended cross claim (adding a rectification claim to effectively rewrite the lease) was unsuccessful on the grounds that His Honour Olney J considered the proposed amended cross claim insufficiently particularised.  This lack of particularity is due to insufficiency of materials at this stage, i.e. we do not have any relevant documents if they exist.

This raises the question of the need to seek non-party discovery from Jones Lang Wootton (the relevant agents) and the solicitors acting for the present landlords on the purchase of the premises.

We canvassed the possibility of making further discovery applications in our letter of 15 December 1995 and in conference with you.  We note your views about the unlikelihood of any meaningful documents being produced as a result of such an exercise.  To some extent, we share your sentiments.

However, since meeting with you we have canvassed the question of further discovery with Minter Ellison, the solicitors for our indemnity insurer.  They have raised a serious concern about proceeding with the action without the benefit of what may prove to be invaluable information which could support the construction of the lease as pleaded on your behalf.  They are of the view, and we agree, that all avenues should be exhausted prior to trial.  The indemnity insurer is strongly urging that a non-party discovery application be made against both JLW and the solicitors prior to the trial date.

If information comes to light as a result of those applications, the trial date may need to be vacated in order for a further leave application to be made to the court with respect to your cross claim.  If the applications are not successful in producing additional evidence, then at least we know that the present material is all we could have ever obtained.  It will then become a question of convincing the Court (faced no doubt with heated opposition from the other side) that the documents we do have are relevant to the construction issue.

In light of the above, and especially in light of the insurer’s views, we think we should make non-party discovery applications to the Court without delay.  These applications will need to be made urgently so that they can be heard and determined prior to 26 February 1996”.  (Emphasis added)

It is the case that in this letter certain concerns and views of the SLC’s legal adviser have been identified. If those views and concerns were communicated to the SLC in whole or in part in documentary form then a number of issues involving possible applications of s 122 could arise. Those issues could only possibly arise, in any event, in relation to the first of the two letters (that of 29 December 1995), the second (that of 25 January 1996) post dating the relevant “disclosure” relied upon by the second respondents.

Having inspected the letter in question it is clear that its contents do not relate in any way to the concerns and views identified in the Cornwall Stodart letter of 17 January.  If Minter Ellison’s concerns and views were in whole or in part expressed in documentary form (and I do not suggest they were), those documents are not those now in contention.  It may well be the case that those concerns and views were never put in a form amenable to a subpoena, or, alternatively, if they were they could be accessed by an appropriately worded subpoena. 

Given this conclusion it is unnecessary to consider further the potential issues raised by s 122 and I refrain from so doing.

I conclude then that client legal privilege attaches to the two letters and nine file notes produced by the SLC.

I certify that this and the preceding eight (8) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn

Associate:

Dated:             6 May 1998

Counsel for the Applicant:	R Garratt QC
Solicitor for the Applicant:	Minter Ellison
Counsel for the Second Respondent:	K Hargrave QC
Solicitor for the Second Respondent:	Mahonys
Counsel for the Cross-Respondents	I Martindale
Solicitor for the Cross-Respondents	Ebsworth & Ebsworth
Counsel for the Solicitors Liability Committee	C Macaulay
Solicitor for the Solicitors Liability Committee	Minter Ellison
Date of Hearing:	30 April 1998
Date of Judgment:	6 May 1998