Reardon v Hall & Wilcox (No 2)
[2016] VSC 719
•2 December 2016
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
S CI 2015 05259
| ROSEMARY REARDON | Plaintiff |
| v | |
| HALL & WILCOX | Defendant |
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JUDGE: | McDonald J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 18 April 2016 |
DATE OF JUDGMENT: | 2 December 2016 |
CASE MAY BE CITED AS: | Reardon v Hall & Wilcox (No 2) |
MEDIUM NEUTRAL CITATION: | [2016] VSC 719 |
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COSTS – Plaintiff sought declaration that redacted invoices provided by the defendant did not constitute sufficient information for the purposes of s 3.4.38(7) of the Legal Profession Act 2004 – Application dismissed – 18 entries in invoices redacted on grounds of legal professional privilege – Court inspected unredacted invoices – Claims for legal professional privilege in respect of 13 entries rejected – Plaintiff and defendant ordered to bear their own costs of proceeding.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr C R Brown | Aitken Partners |
| For the Defendant | Mr H N G Austin SC | Hall & Wilcox |
HIS HONOUR:
On 3 May 2016 the Court delivered judgment in respect of the plaintiff’s application for a declaration that redacted invoices provided to her by the defendant did not constitute sufficient information to allow her to consider making, and if thought fit, to make an application for a costs review under s 3.4.38(7) of the Legal Profession Act2004. The plaintiff’s application for declaratory relief was dismissed.[1] I acceded to a request by the plaintiff to refrain from making any orders as to costs pending the hearing and determination of a costs review application in the Costs Court. I adopted this course because I accepted that the Costs Court would have an opportunity to rule on the claims for legal professional privilege which were the basis of the redacted invoices. In particular, I accepted the plaintiff’s submission that if the Costs Court ruled that the claims for legal professional privilege were not upheld, this might bear upon any costs order in the proceedings in respect of the judgment delivered on 3 May 2016.[2]
[1]See Reardon v Hall & Wilcox [2016] VSC 188.
[2]Transcript of Proceedings, Reardon v Hall & Wilcox (Supreme Court of Victoria, S CI 2015 05259, McDonald J, 3 May 2016) T96 L27 – T97 L5; T108 L12 – T109 L9.
The plaintiff did commence proceedings in the Costs Court post 3 May 2016. However, those proceedings were subsequently settled. It is therefore necessary for me to determine the costs of the proceedings which gave rise to the judgment on 3 May 2016, unaided by any consideration of the Costs Court of the claims for legal professional privilege.
Both parties filed written submissions on the question of costs. The defendant submitted that as it was successful in resisting the plaintiff’s claim for declaratory relief, an order for costs should be made in its favour.[3] It further submitted that the plaintiff should pay costs on an indemnity basis.[4] First, it submitted that the plaintiff had contravened s 24 of the Civil Procedure Act 2010 by failing to ensure that the costs of the litigation were reasonable and proportionate to the complexity and importance of the issues in dispute.[5] Second, the defendant submitted that the plaintiff acted unreasonably by rejecting the defendant’s offer to provide unredacted versions of the relevant invoices to her costs consultant.[6]
[3]‘Defendant’s Submissions on Costs’ dated 5 October 2016, [1], [4].
[4]Ibid [5].
[5]Ibid [10].
[6]Ibid [23].
Following receipt of the parties’ written submissions, the Court directed the defendant to file unredacted versions of the 12 invoices in respect of which 18 claims for legal professional privilege had been made. I considered it appropriate to inspect unredacted versions of the invoices to determine whether the nature and content of the previously redacted entries supported the claims for legal professional privilege. I considered this to be appropriate, particularly in circumstances where the defendant was seeking an order for indemnity costs based upon the plaintiff’s conduct in the litigation.
A solicitor’s bill of costs may attract legal professional privilege if the document expressly reveals the privileged communication, or where the nature or content of the privileged communication may be inferred from the document.[7] The defendant’s written submissions contended that there was ‘room for argument as to whether the privileged nature of the redacted material is to be determined by reference to common law principles or the Evidence Act 2008 (Vic)’.[8] The defendant submitted that the outcome was likely to be the same regardless of whether the assessment was made by reference to common law principles or the provisions of the Evidence Act 2008.[9] The defendant’s submissions focussed on the position at common law. As neither party suggested that there would be any difference if the provisions of the Evidence Act 2008 were applied, I have approached the matter by reference to common law principles.
[7]Carey v Korda (2012) 45 WAR 181, [62]–[63]; Strategic Financial & Project Services Pty Ltd v Bank of China [2012] FCA 327, [11].
[8]‘Defendant’s Submissions’ dated 13 April 2016, [37].
[9]Ibid. Cf Hodgson v Amcor Ltd (No 2) [2011] VSC 204, [62]–[65] where Vickery J held that a memorandum of fees was privileged applying s 119 of the Evidence Act2008.
The defendant submitted that the Western Australian Court of Appeal decision in Carey v Korda[10] is authority for the proposition that:
[10](2012) 45 WAR 181.
(a) a solicitor’s bill of costs may attract privilege, including on the basis that it may allow the nature and content of legal advice to be inferred from the document;
(b) whether, and to what extent a bill of costs is privileged, will depend upon a consideration of the circumstances in which the claim for privilege occurs, and the nature and details of the entries made in the bill in question;
(c) it is also conceivable that while none of several entries in a bill of costs might itself reveal, directly or by implication, the content or nature of legal advice given or received, the entries might, when read together and in sequence, enable an inference to be drawn as to the nature or content of some privileged communication; and
(d) it is the content or nature of a confidential communication, rather than just the ‘subject matter’ of advice or litigation which the privilege is designed to protect.[11]
[11]‘Defendant’s Submissions’ dated 13 April 2016, [43] (citations omitted) (emphasis altered).
I accept the submission set out above. There is authority for the proposition, in addition to the Court of Appeal decision in Carey v Korda, that a solicitor’s bill of costs may be subject to a claim for legal professional privilege on the ground that the nature of the advice sought or given might be expressly disclosed or might be inferred from the contents of the bill of costs.[12] In Carey v Korda, Murphy JA stated:
… a useful guide in determining whether the bill of costs would reveal privileged communications, will often be whether disclosure of the bill would be tantamount to waiving privilege in the underlying communications with which the bill expressly or implicitly deals.[13]
[12]Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501, 569 (Gummow J); Hodgson v Amcor Ltd (No 2) [2011] VSC 204, [59]–[64]; Lake Cumbeline Pty Ltd v Effem Foods Pty Ltd (1994) 126 ALR 58, 68 (‘Lake Cumbeline’).
[13]Carey v Korda (2012) 45 WAR 181, [66].
The approach of testing the claim for legal professional privilege by reference to whether the disclosure of the bill would be tantamount to a waiver of privilege in the underlying communications was adopted by Tamberlin J in Lake Cumbeline Pty Ltd v Effem Foods Pty Ltd.[14]In Lake Cumbeline, the applicants sued the respondents for misrepresentation. Part of the damages claim included costs incurred by the applicants in other litigation. Tamberlin J had to determine whether the applicants, by providing memoranda of fees in support of their damages claim, impliedly waived legal professional privilege in the underlying documents to which the memoranda of fees referred. He concluded there had been no waiver:
In the present case, I have perused the memoranda of costs which have been provided by the applicants and I do not consider that they disclose the nature or content of privileged material. I do not therefore consider that it can be said that the disclosure of and reliance upon these memoranda amounts to a use of, or partial disclosure of, legally privileged material so as to produce an unfair advantage which would lead to an implied or imputed waiver of privilege in relation to the documents underlying those memoranda. The memoranda and the other documents are simply recording, in outline form, the work which has been undertaken by the solicitors and in respect of which the charges are raised and do not disclose the content of the communications, advices, briefs or conferences.[15]
[14](1994) 126 ALR 58.
[15]Ibid 68 (emphasis in original).
In Mann v Carnell,[16] the plurality stated:
Waiver may be express or implied. Disputes as to implied waiver usually arise from the need to decide whether particular conduct is inconsistent with the maintenance of the confidentiality which the privilege is intended to protect. When an affirmative answer is given to such a question, it is sometimes said that waiver is ‘imputed by operation of law’. This means that the law recognises the inconsistency and determines its consequences, even though such consequences may not reflect the subjective intention of the party who has lost the privilege… What brings about the waiver is the inconsistency, which the courts, where necessary informed by considerations of fairness, perceive, between the conduct of the client and maintenance of the confidentiality; not some overriding principle of fairness operating at large.[17]
[16](1999) 201 CLR 1.
[17]Ibid [29] (citations omitted).
In Goldberg v Ng,[18] the plurality stated:
The circumstances in which a waiver of legal professional privilege will be imputed by operation of law cannot be precisely defined in advance. The most that can be done is to identify a number of general propositions. Necessarily, the basis of such an imputed waiver will be some act or omission of the persons entitled to the benefit of the privilege. Ordinarily, that act or omission will involve or relate to a limited actual or purported disclosure of the contents of the privileged material. When some such act or omission of the person entitled to the benefit of the privilege gives rise to a question of imputed waiver, the governing consideration is whether ‘fairness requires that his privilege shall cease whether he intended that result or not’. That does not mean, however, that an imputed waiver must completely destroy the privilege. Like an express waiver, it can be limited so that it applies only in relation to particular persons, materials or purposes.[19]
[18](1995) 185 CLR 83.
[19]Ibid 95–6. See also Osland v Secretary, Department of Justice (2008) 234 CLR 275, [45]; Macquarie Bank Ltd v Arup Pty Ltd [2016] FCAFC 117, [24]–[32].
In AWB Ltd v Cole,[20] Young J considered the circumstances in which protection against disclosure has been extended to documents that record confidential legal advice or confidential legal work. His Honour stated:
The principles that emerge from these cases operate to protect privileged communications against the risk that they will be disclosed by secondary evidence: see Tomlinson J in Three Rivers (No 5) at [3]. The question whether privileged communications will be disclosed by virtue of the disclosure of another document, such as a draft pleading, draft agreement or draft witness statement, raises a question of objective fact that depends on what the other document actually states or conveys, either explicitly or as a matter of reasonable inference. To adapt the language used by Gummow J in Propend and Anderson J in Dalleagles, the question is whether the disclosure of the document in question will directly reveal, or allow its reader to infer, the actual content or substance of a privileged communication.
There is, of course, a difference between explicit disclosure and disclosure by inference. Inferences are rarely certain. In my opinion, what Gummow J and Anderson J each had in mind was that the document in question would support an inference of fact as to the content or substance of a privileged communication; but the inference of fact must have a definite and reasonable foundation in the contents of the document. It would not be sufficient that the document as a whole, or particular statements within it, cause a reader to wonder or speculate whether legal advice had been obtained and what was the substance of that advice. I do not think that this is the kind of tendency that Anderson J had in mind in Dalleagles when his Honour said that the true basis for extending privilege to this class of documents was not so much that they were themselves advice or communications, but because they will, if disclosed, reveal or tend to reveal, the content of privileged communications.[21]
[20](2006) 152 FCR 382 (‘AWB’).
[21]Ibid [132]–[133].
I have carefully read each of the unredacted entries the subject of the bank’s claim for legal professional privilege in light of the principles set out above. In each instance, the basis for the privilege claim includes a statement that disclosure of the redacted part of the narration would ‘tend to reveal the nature of confidential communications’. Consistent with the approach of Young J in AWB, I have approached the question of whether each claim for legal professional privilege is valid on the basis of whether the invoice actually states or conveys, either explicitly or as a matter of reasonable inference, a privileged communication.
I shall address each of the redacted entries in the same order in which they appear in Annexure A to this judgment:
(i) 10/07/2013 The redacted entry consists of four words. It identifies work which has been undertaken. It does not directly reveal or allow an inference as to the actual content or substance of a privileged communication. The claim for legal professional privilege is rejected.
(ii) 14/08/2013 The redacted entry consists of two words. It identifies subject matter. It does not directly reveal or allow an inference as to the actual content or substance of a privileged communication. The claim for legal professional privilege is rejected.
(iii) 29/08/2013 The redacted entry consists of 17 words. The entry outlines the nature of work undertaken in the context of the drafting and amending of the written statement of claim. The redacted entry does not directly reveal or allow an inference as to the actual content or substance of a privileged communication. The claim for legal professional privilege is rejected.
(iv) 20/09/2013 The redacted entry consists of four words. It identifies the subject matter of work which has been undertaken. It does not directly reveal or allow an inference as to the actual content or substance of a privileged communication. The claim for legal professional privilege is rejected.
(v) 12/11/2013 The redacted entry consists of three words. The redacted entry does not directly reveal or allow an inference as to the actual content or substance of a privileged communication. The claim for legal professional privilege is rejected.
(vi) 12/11/2013 The redacted entry consists of two words. The disclosure of the entry would not directly reveal or allow an inference as to the actual content or substance of a privileged communication. The claim for legal professional privilege is rejected.
(vii) 12/11/2013 The redacted entry consists of two words. It identifies the subject matter of the telephone call between the defendant and the bank. The redacted entry does not directly reveal or allow an inference as to the actual content or substance of a privileged communication. The claim for legal professional privilege is rejected.
(viii) 28/11/2013; These four redacted entries deal with the same subject matter. The cumulative effect of the four redacted entries allows for an inference as to the actual substance of a privileged communication between the defendant and the bank. The claim for legal professional privilege in respect of these four entries is upheld. (ix) 30/01/2014; (x) 04/02/2014; (xi) 04/02/2014
(xii) 12/02/2014 The redacted entry consists of two words. Disclosure of the entry does not directly reveal or allow for an inference as to the actual content or substance of a privileged communication. The claim for legal professional privilege is rejected.
(xiii) 19/02/2014 The redacted entry consists of three words. Disclosure of the entry would not directly reveal, or allow for an inference as to the actual content or substance of a privileged communication. The claim for legal professional privilege is rejected.
(xiv) 05/03/2014 The redacted entry consists of nine words. The entry identifies the subject matter of work undertaken by the defendant. It does not directly reveal or allow for an inference as to the actual content or substance of a privileged communication. The claim for legal professional privilege is rejected.
(xv) 24/03/2014 The redacted entry consists of four words. The entry identifies the subject matter of work undertaken by the defendant. Disclosure of the entry would not directly reveal or allow for an inference as to the actual content or substance of a privileged communication. The claim for legal professional privilege is rejected.
(xvi) 19/03/2014 The redacted entry consists of 17 words. Disclosure of the entry would directly reveal the substance of a privileged communication. The claim for privilege is upheld.
(xvii) 20/05/2014 The redacted entry consists of nine words. The entry identifies the subject matter of work undertaken by the defendant. Disclosure of the entry would not directly reveal or allow for an inference as to the actual content or substance of a privileged communication. The claim for legal professional privilege is rejected.
(xviii) 27/05/2014 The redacted entry consists of nine words. The entry identifies the subject matter of work undertaken by the defendant. Disclosure of the entry would not directly reveal or allow for an inference as to the actual content or substance of a privileged communication. The claim for legal professional privilege is rejected.
In rejecting the claim for legal professional privilege in respect of 13 redacted entries, I have addressed the question of whether disclosure would directly reveal, or allow its reader to infer, the actual content or substance of a privileged communication. The same conclusion is arrived at by adopting the approach endorsed by Murphy JA in Carey v Korda, and Tamberlin J in Lake Cumbeline, of inquiring whether disclosure would be tantamount to the bank waiving privilege in the underlying communications with which each invoice expressly or implicitly deals. No aspect of the bank’s conduct supports the conclusion that disclosure of the redacted invoices requires, as a matter of fairness, that privilege in respect of the underlying communications is waived.
The findings set out above have a direct bearing on the question of costs of the current proceedings. On 3 May 2016, I rejected the plaintiff’s claim for declaratory relief without the need to consider the claims for legal profession privilege.[22] I concluded that notwithstanding the redactions in the invoices, the plaintiff had been provided with sufficient information for the purposes of s 3.4.38(7) of the Legal Profession Act 2004 to allow her to consider making, and if thought fit to make, an application for a costs review.
[22]See Reardon v Hall & Wilcox [2016] VSC 188.
Notwithstanding the fact that the defendants successfully resisted the plaintiff’s claim for declaratory relief, the current proceedings do not fall into the category of proceeding where costs should follow the event. I have concluded that 13 of the claims for legal professional privilege have not been made out. Had those claims not been made, it is possible that the plaintiff would not have needed to make any application based on s 3.4.38(7) of the Legal Profession Act 2004. Further, the rejection of 13 of the claims for legal professional privilege undermines the defendant’s claim for indemnity costs. The defendant contends that the plaintiff acted unreasonably by not accepting its offer to provide unredacted invoices to her costs consultant. In light of my conclusion that 13 of the claims for legal professional privilege have not been made out, no criticism can be levelled at the plaintiff for rejecting the defendant’s offer.
In the circumstances set out above, I have concluded that the appropriate outcome in the current proceedings is that each party should bear their own costs.
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Annexure A
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