Pisano and Anor - v - Owners Corporation No.2 PS 506960X
[2013] VCC 479
•3 May 2013
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE CIVIL DIVISION | Revised Not Restricted |
COMMERCIAL LIST
EXPEDITED CASES DIVISION
Case No. CI-12-02426
| SAM PISANO | Plaintiff |
| - and - | |
| KATHY BERENTE | Second Plaintiff |
| - v - | |
| OWNERS CORPORATION NO.2 PS 506960X | Defendant |
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JUDGE: | HER HONOUR JUDGE KENNEDY | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 26 April 2013 | |
DATE OF JUDGMENT: | 3 May 2013 | |
CASE MAY BE CITED AS: | Pisano & Anor - v - Owners Corporation No.2 PS 506960X | |
MEDIUM NEUTRAL CITATION: | [2013] VCC 479 | |
REASONS FOR JUDGMENT
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Catchwords: Practice and Procedure - client legal privilege - “issue waiver” - reasonableness of opinions put in issue - legal advice forming foundation for opinions waived.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr T. Best | Plaza Legal |
| For the Defendant | Mr N. Jones | HWL Ebsworth Lawyers |
HER HONOUR:
1 This is the return of the plaintiffs’ Summons dated 10 April 2013 wherein, inter alia, the plaintiffs seek discovery of legal advice referred to in item 8 of the minutes of the Defendant’s Committee Meeting dated 3 April 2012 as referred to in a Termination Notice dated 11 April, 2012.
2 The legal privilege in such advice is said to have been waived on the basis of issue waiver.
Nature of proceeding
3 The plaintiffs’ assignees claim damages against an owners corporation following the alleged wrongful termination of a caretaker agreement (and associated letting agreement).
4 In their Statement of Claim dated 22 May 2012 the plaintiffs plead terms of the caretaker agreement which included, (at paragraph 3(i)) the following:
The Defendant was permitted to terminate the Caretaker Agreement by giving the Caretaker written notice if (inter alia) the Caretaker:
(i) Breached an obligation under the Caretaker Agreement and in the Defendant’s reasonable opinion the non-observance was substantial and could not be remedied or compensated for; or
(ii) Persistently and repeatedly breached the Caretaker Agreement to an extent that, in the Defendant’s reasonable opinion, the Caretaker repudiated its obligation under the Caretaker Agreement, despite the fact that individual breaches may from time to time have been remedied (emphasis added).
5 In paragraph 14 the plaintiffs plead that a written Termination Notice was served on them or about 11 April 2012.
6 This notice will be described further, below.
7 At paragraph 19, the plaintiffs further plead that, prior to issuing this termination notice, the defendant did not reasonably:
(a) Form the opinion that the Plaintiffs had breached the Caretaker Agreement in a manner that was substantial and incapable of remedy or compensation, or
(b) Form the opinion that the Plaintiffs had repudiated their obligations under the Caretaker Agreement.
8 The plaintiffs thereby allege that the defendant repudiated the Caretaker Agreement as and from the service of the Termination Notice which repudiation they accepted. They further allege that the termination of the associated letting agreement also constituted a repudiation in circumstances where the caretaker agreement was still, in reality, extant.
9 The Termination Notice dated 11 April 2012 (referred to in paragraph 14 of the Statement of Claim) reads as follows:
Your Owners Corporation Committee has today terminated the Caretaking Agreement with Sam Pisano and Kathy Berente. This termination will take effect immediately…
…
Attached to this letter you will find the Minutes of the recent Committee Meeting held on Tuesday 3rd April 2012. You will note that whilst the Minutes make reference to the performance of the Caretaking Agreement they do not make mention of the termination. The decision to terminate the Agreement was taken by a Postal Ballot of the Committee late last week and was predicated on further legal advice provided by the Owners Corporation’s lawyer (emphasis added).
10 item 8 of the attached Minutes referred to was entitled ‘Concerns with the Performance of the Caretaking Agreement.’ The item referred to ‘consistent non-performance by the caretaker’ together with ‘persistent breaches’ as well as inappropriate behaviours in relation to works to a pool. The item reads that “the Committee felt it appropriate to seek legal advice as to the options available to the Committee to ensure the best interests of all Affinity lot owners is protected.’ Further, that it was resolved that legal advice be sought with the Committee awaiting further legal advice ‘before the next course of action.’
11 In its Defence dated 13 July 2012, the defendant admits entry into the caretaker agreement as well each of the terms alleged in paragraph 3 subject to production of the caretaker agreement.
12 It challenges the validity of the assignments but admits the service of the termination notice (in paragraph 14).
13 However, in paragraph 16(b), the defendant alleges that the plaintiff breached their obligations under the Caretaker Agreement … ‘and in the Defendant’s reasonable opinion the non observance was substantial and could not be remedied or compensated for … (emphasis added).’
14 The defendant further alleges that the plaintiff persistently and repeatedly breached the caretaker agreement to an extent that, ‘in the Defendant’s reasonable opinion the Plaintiffs repudiated the Caretaker Agreement despite the fact that individual breaches may from time to time be remedied…’ (paragraph 16(f)).
15 The defendant therefore says that it was entitled to terminate the caretaker agreement.
16 The defendant further says that it was entitled to terminate the letting agreement because the plaintiffs failed to obtain licenses under the Estate Agents Act 1980 (Vic).
Principles
17 The test for a waiver is whether the party entitled to the privilege performs an act which is inconsistent with the maintenance of the confidentiality.[1] The assessment of inconsistency is informed, where necessary, by considerations of fairness, although the assessment is not by reference to some overriding principle of fairness operating at large.[2]
[1]Mann v Carnell (1999) 201 CLR 1.
[2]Mann v Carnell (1999) 201 CLR 1 [29]
18 Both Counsel suggested that the provisions of the Evidence Act2008 (Vic) do not apply in this particular context which was not concerned with the adducing of evidence at trial.[3] There may be an issue with this approach given the existence of section 131A.[4] However, for present purposes, there appears to be no relevant difference between the common law and the ‘inconsistency’ test contained in s122 (2) of the Evidence Act in any event.
[3]See Esso Australia Resources Ltd v Commissioner of Taxation (1999) 201 CLR 49
[4]Although it appears that the issue arises at the inspection stage subsequent to the provision of documents pursuant to the court ordered discovery “disclosure requirement” : see Great Southern Managers v Clarke [2012] VSCA 207 at [34]
19 The concept of ‘issue waiver’ was also considered in Commissioner of Taxation v Rio Tinto Limited[5], wherein the Court stated that such a waiver may arise where an assertion made by a party in litigation puts the content of a privileged document in issue or necessarily lays the document open to scrutiny with the consequence that an inconsistency arises between the making of the assertion and the maintenance of the privilege.
[5](2006) 151 FCR 341.
Application of the principles
20 A central relevant issue in this proceeding is whether or not the Committee formed ‘reasonable opinions’ about the requisite matters, with the defendant positively asserting that its opinions were reasonable ones.
21 It is difficult to see how the question of reasonableness could be determined without regard to the content of the legal advice on which such opinions were based. In such circumstances, I consider that the defendant has opened up all of the circumstances leading to the formation of its opinions, including the contents of the legal advice received, and on which those opinions were ‘predicated.’
22 Counsel for the defendant, Mr Jones, citing Rio,[6] suggested that the defendant had not put the advice in issue by saying that the advice was relevant or contributed to the decision.
[6] (2006) 151 FCR 341 [67]
23 However, an examination of the Minutes suggests that the opinions were centrally dependant on obtaining the advice, with a decision only taken after the contents of such advice was received. In such circumstances, to withhold disclosure would be inconsistent with the defendant’s contentions in their defence. Those contentions open up the foundation for their opinions to scrutiny, including the contents of the legal advice taken.
Conclusion
24 I am satisfied that the defendant has waived privilege in respect of the advice referred to in the Termination Notice.
25 I will hear from the parties as to the precise form of final orders and as to the further carriage of this matter.
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