Samios Plumbing Pty Ltd v John R Keith (NSW) Pty Ltd

[2020] NSWSC 1128

Supreme Court

New South Wales

Medium Neutral Citation:	Samios Plumbing Pty Ltd v John R Keith (NSW) Pty Ltd [2020] NSWSC 1128
Hearing dates:	17 August 2020
Decision date:	25 August 2020
Jurisdiction:	Equity - Technology and Construction List
Before:	Hammerschlag J
Decision:	Second Cross-Defendant’s notice of motion of 20 March 2020 is dismissed with costs
Catchwords:	PRIVILEGE – Claim for legal professional privilege or settlement negotiation privilege – Where joint report was commissioned and prepared by second cross-defendant and a third party for the purposes ascertaining factual position in relation to allegedly defective pipes – HELD – Document not privileged – Not prepared for the dominant purpose of the second cross-defendant being provided with professional legal services relating to a proceeding or an anticipated proceedings – Document disclosed to third party in the absence of common interest.
Legislation Cited:	Evidence Act 1995 (NSW), ss 119, 122(5)(c),
Category:	Procedural and other rulings
Parties:	Samios Plumbing Pty Ltd - Plaintiff / First Cross- Defendant John R Keith (NSW) Pty Limited - Defendant / First Cross Claimant Forza Global Pty Ltd - Second Cross-Defendant
Representation:	Counsel: Ms Goudarzi - Plaintiff / First Cross-Defendant D. Weinberger - Defendant / First Cross-Claimant T. March - Applicant / Second Cross-Defendant Solicitors: HWL Ebsworth - Plaintiff / First Cross-Defendant Bradbury Legal - Defendant / First Cross-Claimant CCSG Legal - Applicant / Second Cross-Defendant
File Number(s):	2017/356791

JUDGMENT

1. HIS HONOUR:   This is a contest about disclosure of a single document, over which the second cross-defendant (Forza) claims legal professional (and common interest) privilege (Evidence Act 1995 (NSW) ss 119 [1] and 122(5)(c) [2] ), or settlement negotiation privilege (Evidence Act 1995 (NSW) s 131(1)(b) [3] ).

   1. 119 Litigation

   2. 122 Loss of client legal privilege: consent and related matters

   3. 131 Exclusion of evidence of settlement negotiations

2. The document is described as Test Report No. 126752/17 dated 20 July 2017, issued by SKZ Testing GmbH (the Report).

3. The parties agreed that the Court should rule on the papers and they provided written submissions. Forza did not originally assert settlement negotiation privilege and sought leave to adduce an additional submission in writing, which the defendant (Keith) opposed. I took the step of convening a hearing and heard the additional submission orally.

4. The claim for privilege fails.

5. The contestants informed me that they would be content with brief reasons. They follow.

6. The principal proceedings concern the supply by Forza to the plaintiff (Samios) of high-density polyethylene (or PE-XA) pipes which Samios on-supplied to the Keith, which in turn supplied them to Lendlease Building Pty Limited (Lendlease) for use in the Palmerston Regional Hospital Project, which was being undertaken for the Northern Territory government.

7. In July 2017, Lendlease raised concerns with Forza about the pipes. Forza’s general manager, Paul Hanson, says that at that point he became concerned about the prospect of litigation against Forza and he took steps to engage lawyers (CCSG Legal) to advise on the matter.

8. He says that he then attended a meeting with a representative of Lendlease, Tony Orazio, and recommended that they obtain a joint report together from a lab. Hanson says he had the following conversation on 8 July 2017:

Tony said:   “Paul, if the results aren’t what we want them to be, it is going to be a costly exercise for Forza. We are going to have to have a commercial settlement or this is going to go to Court.”

I said:   “I understand your position and let’s hope the results are what we need them to be.”

9. Hanson says that his understanding was that the purpose of jointly attaining a report was to assist with resolving the dispute with Lendlease and he took from what Lendlease said that it had the same view. Lendlease identified a German laboratory, SKZ Testing GmbH.

10. Forza and Lendlease then prepared a Letter of Engagement which was headed “Confidential and Privileged” and included the following privilege notification:

This document is protected by legal privilege. To ensure privilege is not waived please keep this document confidential in a safe and secure place. This document should not be distributed, nor any reference to it made, to any person or organisation not directly involved in making decisions on the subject matter of this document. If this document is requested by a government officer, Lend Lease Building Pty Ltd and Forza Global Pty Ltd should be contacted immediately to ensure that privilege is claimed over the document and it should not be shown to, nor the contents discussed with, the government officer.

11. Hanson says that from Forza’s perspective, SKZ Testing GmbH was engaged for the purpose of Forza obtaining a report which may have been used by Forza and CCSG Legal for the purpose of Forza obtaining legal advice from CCSG Legal in respect of the dispute and anticipated legal proceeding with Lendlease and that Forza provided the Report to CCSG Legal in order to obtain legal advice in respect of the dispute and anticipated legal proceeding with Lendlease.

12. The claim for privilege fails.

13. First, the evidence does not establish that the Report was commissioned and prepared for the dominant purpose of Forza being provided with professional legal services relating to a proceeding or an anticipated proceeding in which Forza was or might have been a party. Rather, the Report was prepared to ascertain the factual position with respect to the pipes so that litigation would be avoided. If the Report revealed that there was no problem with the pipes, no dispute at all was foreshadowed. If the Report showed that the pipes were defective, there is no suggestion on the evidence that Forza intended to defend its position in Court against Lendlease. Both were trying to avoid litigation. I do not think it can fairly be said that proceedings were anticipated.

14. It is to be observed that there is no suggestion that lawyers were involved in the process. The heading to the Report is ineffective to create privilege if none existed. Additionally, it seems to be directed to withholding the Report from a “government officer”, presumably from the Northern Territory authorities.

15. Second, even if the Report had been prepared for the asserted dominant purpose, it was voluntarily disclosed to Lendlease inconsistently with Forza maintaining privilege in circumstances where it could not be said that those two parties had a common interest in the sense in which that term is used in s 122(1)(c). Forza and Lendlease were potential adversaries. Their interests were not common but adverse.

16. Forza has also not established that the Report was prepared in connection with an attempt to negotiate a settlement of the dispute. There was not yet a dispute. The parties were cooperating with a view to avoiding one.

17. Forza’s notice of motion of 20 March 2020 is dismissed with costs. Keith is entitled to access to the Report.

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Endnotes

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 between the client and another person, or between a lawyer acting for the client and another person, that was made, or

(b) the contents of a confidential document (whether delivered or not) that was prepared,

for the dominant purpose of the client being provided with professional legal services relating to an Australian or overseas proceeding (including the proceeding before the court), or an anticipated or pending Australian or overseas proceeding, in which the client is or may be, or was or might have been, a party.

…

(5) A client or party is not taken to have acted in a manner inconsistent with the client or party objecting to the adducing of the evidence merely because—

…

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

(1) Evidence is not to be adduced of—

…

(b) a document (whether delivered or not) that has been prepared in connection with an attempt to negotiate a settlement of a dispute.

Decision last updated: 25 August 2020