Schmuelly v Elrob Construction Group Pty Ltd (waiver of privilege)

[2025] NSWSC 25

Supreme Court

New South Wales

Medium Neutral Citation:

Schmuelly v Elrob Construction Group Pty Ltd (waiver of privilege) [2025] NSWSC 25

Hearing dates:

3 February 2025

Date of orders:

3 February 2025

Decision date:

03 February 2025

Jurisdiction:

Equity - Technology and Construction List

Before:

Rees J

Decision:

Documents admitted

Catchwords:

EVIDENCE – client legal privilege – waiver – principles at [6]-[8] – defendant seeks to vacate hearing and adduce further evidence – blames former solicitor for predicament – whether defendant thereby waived privilege over communications with former solicitor – maintenance of privilege unfair in the circumstances.

Legislation Cited:

Evidence Act 1995 (NSW) s 122

Cases Cited:

Mann v Carnell (1999) 201 CLR 1; [1999] HCA 66

Expense Reduction Analysts Group Pty Limited v Armstrong Strategic Management and Marketing Pty Limited (2013) 250 CLR 303; [2013] HCA 46

Category:

Procedural rulings

Parties:

Dror Schmuelly (Plaintiff)
Elrob Construction Group Pty Ltd (First Defendant)
Elia Boujaoude (Second Defendant)

Representation:

Counsel:
M Pesman SC (Plaintiff)

Solicitors:
Collins Biggers & Paisley (Plaintiff)

Elia Boujaoude (Second Defendant in Person, also appearing with leave for the First Defendant)

File Number(s):

2022/254588

EX TEMPORE JUDGMENT

1. HER HONOUR: The plaintiff seeks to tender a bundle of documents produced by the defendants' former solicitor in answer to subpoena. The subpoena called for inter alia:

10   a copy of all correspondence (including attachments to emails) between [the solicitor and defendants] after 1 June 2024 in relation to the preparation of these proceedings for hearing;

11.   a copy of all Documents recording, evidencing, relating to [the solicitor]'s intention to withdraw from the Proceedings, the Notice of Intention of Ceasing to Act, the Notice of Ceasing to Act and the cause and / or reason for ceasing to act as the solicitor for [the defendants], including, without limitation:

(a)   a copy of any correspondence between [the solicitor and defendants];

(b)   a copy of any file notes, memoranda or minutes of meetings produced by [the solicitor]; and

(c)    a copy of [the solicitor]'s Termination of Retainer.

2. The defendants object to the tender of the material on the basis of client legal privilege. The plaintiff submits that any client legal privilege has been lost by an affidavit made by the second defendant, Mr Boujaoude, filed in support of a motion to vacate the hearing today.

3. In that affidavit, Mr Boujaoude said that the defendants retained solicitor Mark Smith of Brander Smith McKnight on 20 June 2024 and, on 24 June 2024, paid the solicitor $20,000 on account of costs. Mr Boujaoude attributed the defendants’ failure to file any lay or expert evidence in support of their defence and cross-claim on Mr Smith, "despite being paid in advance". Mr Boujaoude further deposed, "Despite assurances by Mr Mark Smith he failed to file my lay and expert evidence or seek leave to file out of time by the Court deadline of 5 July 2024, thereby prejudicing my case."

4. In addition, Mr Boujaoude said that Mr Smith failed to notify him in a timely manner that he had ceased to act for the defendants. Mr Boujaoude said that he only discovered this recently via an email from the plaintiff's solicitor on 20 January 2025. Mr Boujaoude deposed, "As a result of this late notification, I was left without legal representation just two weeks before the hearing … this has significantly impaired my ability to prepare for the hearing and secure new counsel."

5. Section 122 of the Evidence Act 1995 (NSW) provides that client legal privilege may be waived in a number of circumstances, including:

122    Loss of client legal privilege: consent and related matters

…

(2)   Subject to subsection (5), this Division does not prevent the adducing of evidence if the client or party concerned has acted in a way that is inconsistent with the client or party objecting to the adducing of the evidence because it would result in a disclosure of a kind referred to in section 118, 119 or 120.

(3)   Without limiting subsection (2), a client or party is taken to have so acted if—

(a)   the client or party knowingly and voluntarily disclosed the substance of the evidence to another person, or

(b)   the substance of the evidence has been disclosed with the express or implied consent of the client or party.

6. In short, “It is inconsistency between the conduct of the client and maintenance of the confidentiality which effects waiver of the privilege”: Mann v Carnell (1999) 201 CLR 1; [1999] HCA 66 at [28]. And further, at [29]:

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.

7. The principles in Mann v Carnell “apply with equal force” to the statutory criteria: Expense Reduction Analysts Group Pty Limited v Armstrong Strategic Management and Marketing Pty Limited (2013) 250 CLR 303; [2013] HCA 46 at [32] per French CJ, Kiefel, Bell, Gagelar and Keane JJ.

8. Having regard to Mr Boujaoude’s affidavit, I consider that the defendants have waived privilege over communications with Mr Smith in relation to the instructions given and steps taken to prepare lay and expert evidence in this matter and why that evidence was not filed. In addition, privilege has also been waived over communications with Mr Smith in relation to whether or not the defendants were notified in a timely manner that he was ceasing to act for the defendants. It would be inconsistent for the defendants to assert that the solicitor failed to attend to these tasks and to also maintain privilege over communications with the solicitor in respect of those tasks. That is, it would be unfair in the relevant sense for the defendants to maintain privilege in the circumstances.

9. Assuming that the documents produced by the solicitor and now tendered fall within the schedule to the subpoena, then I consider that privilege has been waived and the documents are admissible, and I admit the documents. If, on closer review, any of the documents fall outside the schedule to the subpoena, then I will reject those documents in due course, as privilege over any such material may not have been waived.

**********

Decision last updated: 07 February 2025