Stewart v State of Victoria (No 2)
[2015] VSC 373
•30 July 2015
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
PERSONAL INJURY LIST
S CI 2014 00307
| YVONNE STEWART | Plaintiff |
| v | |
| STATE OF VICTORIA and ORS according to the attached Schedule | Defendants |
| ZURICH AUSTRALIA INSURANCE LIMITED | Third Party |
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JUDGE: | Lansdowne AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 19 March 2015; further written submissions received 17 April 2015; application to reopen 27 July 2015 |
DATE OF JUDGMENT: | 30 July 2015 |
CASE MAY BE CITED AS: | Stewart v State of Victoria and ors (No 2) |
MEDIUM NEUTRAL CITATION: | [2015] VSC 373 |
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PRACTICE AND PROCEDURE – alleged breach of an overarching obligation under the Civil Procedure Act 2010(Vic) – alleged breach of a discovery obligation – breach of the discovery obligation of reasonable search established – breach of the overarching obligations to narrow the issues and minimise delay established – breach of obligation not to mislead or deceive not established - breaches at the lower end – costs as the appropriate sanction – Civil Procedure Act 2010 (Vic) ss 21, 23, 25, 26, 28, 29, 54, 56 – Supreme Court (General Civil Procedure) Rules 2005 rr 29.01(2), 29.01.1(3), and 29.08.
PRACTICE AND PROCEDURE – Inspection of discovered documents – waiver of privilege – alleged inconsistency in maintaining privilege in subsequently created documents which discuss an advice in which privilege has been waived – alleged inconsistency in maintaining privilege in communications between the same individuals and at a time proximate to non-privileged communications - inconsistency not shown- Evidence Act 2008 (Vic) s 122.
PRACTICE AND PROCEDURE – application to reopen – no fresh evidence in relation to issue that was argued – application refused.
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APPEARANCES: | Counsel | Solicitors |
| For the Fourth Defendant | Mr D McWilliams | Piper Alderman |
| For the Third Party | 19 March 2015: Mr J Richardson 27 July 2015: Mr D Masel of Senior Counsel | Wotton + Kearney |
TABLE OF CONTENTS
Introduction......................................................................................................................................... 1
Actions taken following the orders of 12 December 2014.......................................................... 4
Actions taken or disclosed following the relisting...................................................................... 8
First Discovery Dispute: notes of the meeting with Mr Salveson........................................... 12
Relevant obligations under the Civil Procedure Act and Rules............................................. 14
Submissions on breach............................................................................................................... 15
Analysis of conduct.................................................................................................................... 18
Discussion on breach.................................................................................................................. 21
Authorities.......................................................................................................................... 21
Identification of the conduct said to be in breach......................................................... 24
Section 56: breach of discovery obligations................................................................... 25
Section 21: obligation not to mislead or deceive.......................................................... 30
Section 23: obligation to narrow the issues in dispute................................................ 34
Section 25: obligation to minimise delay....................................................................... 36
Appropriate sanction.................................................................................................................. 37
Second Discovery Dispute............................................................................................................. 41
Proposed order 2(a)........................................................................................................... 42
Proposed order 2(b).......................................................................................................... 44
Proposed orders 2(c) and 2(d)......................................................................................... 47
Proposed orders 2(e) and 2(f): waiver of privilege in subsequently created documents 47
Third Discovery Dispute................................................................................................................ 50
Waiver arising from previous disclosure of a Magro document........................................ 52
Waiver of privileged documents arising from disclosure of the McFee advice............... 54
Inconsistency arising from identity of issue.................................................................. 54
Inconsistency arising from change of position.............................................................. 55
Application to reopen...................................................................................................................... 58
Orders................................................................................................................................................. 61
HER HONOUR:
Introduction
These reasons concern a discovery dispute between the fourth defendant and the third party, which was relisted before me pursuant to liberty to apply reserved in orders made by me on 12 December 2014. Those orders relevantly provided as follows:
1.The third party file and serve a further affidavit of documents on the fourth defendant on or before 19 December 2014 that complies with the reasons for judgment delivered 2 December 2014 and makes discovery of:
(a)Documents contained within the solicitors’ files that relate to the question as to whether or not there was a relevant public liability policy. For the avoidance of doubt, the solicitor files are the files in relation to the Magro, Weismantel, Palmer, Dewick, Ling and Hayes claims;
(b)the third party’s files for each claim made under policy no. 332968923LIA including but not limited to the plaintiffs described above;
(c)in relation to the witness Max Salveson;
(i)any handwritten notes taken by employees of Zurich or solicitors engaged by Zurich (external or in-house) during the meeting with Mr Salveson in January 2014 or such other time that such meeting was held;
(ii)any letter of instruction provided to Mr Salveson for the purposes of the meeting including any enclosed documents relating to his brief.
2.If any of the documents ordered to be discovered in paragraph 1 above are the subject of a claim of professional privilege, then the ground of privilege is to be specified by the third party and particulars of such document sufficient to establish the proper character of the document for such claim are to be provided in the relevant part of such affidavit of documents.
3.The fourth defendant be at liberty to inspect the discovered documents on or before 23 January 2015;
4.Each of the parties be at liberty to pursue any application in respect of the affidavit of documents by 30 January 2015;
As recited in those orders, they were made to give effect to reasons I delivered on 2 December 2014, relating to an application for further discovery made by the fourth defendant which was argued before me on 17 September 2014.[1] I set out the factual background to the proceeding in those reasons in some detail. I will summarise it here.
[1]Stewart v State of Victoria and ors [2014] VSC 601.
The plaintiff alleged that she was exposed over a number of years to asbestos by way of secondary exposure arising from the exposure of her father and then her husband. She subsequently contracted malignant pleural mesothelioma. Her claim against the defendants was settled, and the fourth defendant (‘OGP’) contributed to the settlement. By third party notice, OGP claims indemnity from the third party (‘Zurich’), on the basis that Zurich has acquired the obligations of an insurer with whom OGP contends it held a public liability policy at the relevant time, commencing in the 1960s. Both OGP and Zurich say that they have been unable to locate a copy of such a policy, although it is common ground that notwithstanding that no such policy has been located, Zurich has indemnified OGP for similar claims in the past.
In this proceeding, Zurich puts OGP to proof of the policy. Accordingly, the principal issue between the parties is whether or not OGP held such a policy with the precursor to Zurich. Mr Max Salveson is a former employee of that precursor insurer, and is regarded by both parties as a key witness on this issue.
By affidavit sworn by the solicitor for OGP, Mr Ian Nathaniel, on 16 March 2015, OGP seeks to ventilate before me on the relisting three matters said to arise from failure by Zurich to comply with the orders of 12 December 2014. These matters are as follows.
The first matter concerns Zurich’s conduct in relation to discovery of notes of a meeting held between the then solicitors for Zurich, Rankin Ellison, counsel Ms Lorna McFee, and Mr Salveson, in March 2014 (‘First Discovery Dispute’). As I will shortly record, notes of the meeting apparently taken by a solicitor from Rankin Ellison were eventually provided to OGP the day before hearing, on 18 March 2015. Despite this eventual supply, OGP still contend that Zurich and its solicitors have been in breach of their obligations under the Civil Procedure Act 2010(Vic) (‘CPA’ or ‘the Act’) in relation to discovery of the notes, and seek that they be sanctioned in that regard. OGP says that one of the orders sought in respect of the meeting is also by way of further discovery.
The second matter concerns the provision of policy documents apparently relied upon by Ms McFee in her advice to Rankin Ellison dated 21 February 2014 (‘Second Discovery Dispute’). Zurich concedes that privilege had been waived in respect of the advice itself, because it was provided to Mr Salveson by Rankin Ellison prior to the meeting. OGP seeks discovery of the policies apparently relied upon by Ms McFee in giving her advice on the basis that privilege in them had also been waived. OGP also seeks sanction for the conduct of Zurich and its solicitors to date.
The third matter is the assertion by OGP that privilege has been waived by Zurich in respect of various documents on earlier claim files and solicitors’ files now discovered (‘Third Discovery Dispute’).
For the reasons that follow, in relation to the First Discovery Dispute I consider that OGP has established a breach by Zurich and its current solicitors of the discovery obligation of reasonable search in relation to the notes taken by the solicitor from Rankin Ellison of the conference with Mr Salveson. I also find that Zurich and its current solicitors acted in breach of the overarching obligations imposed by s 23 (to narrow the issues in dispute) and by s 25 (to minimise delay) of the CPA in relation to the provision of the notes. I do not consider a breach by them of the overarching obligation imposed by s 21 of the Act (not to mislead or deceive) to be established.
Zurich agreed at the hearing to give certain discovery in relation to the Second Discovery Dispute, with the exception of documents created after the McFee advice that consider it. In the light of that concession, I do not consider that the further orders that OGP sought at the hearing are required, provided that the proffered further discovery (if still sought) complies with the requirements I set out in these reasons.
I do not consider that OGP has established that privilege has been waived in respect of the documents the subject of the Third Discovery Dispute, or documents created after the McFee advice that consider that advice. OGP fails entirely in respect of these aspects of the relisted application.
The final matter with which these reasons are concerned, is an application to re-open that was made by Zurich and heard on 27 July 2015. I refused that application, giving very brief oral reasons. These reasons now contain a fuller statement of the reasons for the refusal.
Before turning to consideration of these matters, it is helpful to set out in chronological form the actions taken by the parties following the orders, and then their actions following relisting of the dispute. In this regard I rely on the two supplementary affidavits of documents filed by Zurich, which are each stated to be in compliance with the orders of 12 December 2014; the correspondence between the solicitors for OGP, Piper Alderman, and the solicitors for Zurich, Wotton + Kearney, which is exhibited as IAN-1 to Mr Nathaniel’s affidavit; and the confidential exhibit NS-1 to the affidavit of Ms Natasha Sung of Wotton + Kearney sworn 18 March 2015. That exhibit contains privileged correspondence between Wotton + Kearney and Rankin Ellison, and was provided to the solicitors for OGP on their undertaking not to construe that provision, for the purposes of the relisted application only, as otherwise a waiver of privilege.
Actions taken following the orders of 12 December 2014
In stated compliance with the orders made 12 December 2014, Zurich filed a Supplementary Affidavit of Documents, sworn by a Mr Scott Catling of Zurich, who gave his job description as Personal Injury Claims Advisor. The Supplementary Affidavit of Documents was served on 19 December 2014. The solicitors for OGP responded immediately, by letter dated 22 December 2014, raising three concerns, and seeking reply by 12 January 2015.
The first concern was that the claim for privilege made in the Supplementary Affidavit of Documents was in the usual generic terms, and so did not comply with order 2 made 12 December 2014. OGP invited Zurich to file a further supplementary affidavit of documents complying with the order in this respect.
The second expressed concern was that the Supplementary Affidavit of Documents did not discover any notes of the meeting with Mr Salveson, although discovery of any such notes had been resisted at the hearing in September 2014. The solicitors for OGP expressed the view that resisting the claim ‘would suggest such documents in fact exist and yet no notes have been discovered’ and sought urgent clarification.
The third expressed concern was that the solicitor files for Palmer, Ling and Hayes had not been discovered in accordance with the order.
Piper Alderman flagged in this letter that if these concerns were not appropriately addressed, and the matter was required to be relisted, then an application pursuant to s 56 of the CPA may be made. I will return to discussion of that, and other sections of the CPA, later.
The solicitors for OGP inspected the discovered documents on 8 January 2015. By letter dated 9 January 2015 following that inspection, the solicitors for OGP notified Zurich of three concerns, two of which had already been raised in their letter of 22 December 2014, together with a new concern.
The first concern reiterated the concern that no notes of the meeting with Mr Salveson had been discovered, notwithstanding the order and that a discovered document did disclose that a meeting had taken place between Mr Paul Manion of Rankin Ellison, solicitors, who were at that time the solicitors for Zurich, Ms McFee of counsel and Mr Salveson on 3 March 2014. When discovery in respect of the notes of the meeting was argued before me in September 2014 both parties proceeded on the basis that the meeting had taken place in January 2014, and thus prior not just to service of the third party claim but also prior to notification of the claim. I regarded that timing as material in my reasons.[2] Zurich does not now seek to raise any issue arising from the actual timing of the meeting.
[2]Ibid, at [60].
The second matter raised in the letter of 9 January 2015 was new. It related to the provision of Ms McFee’s advice dated 21 February 2014 to Mr Salveson in advance of that meeting. The advice itself was discovered, although OGP contend that it was not expressly acknowledged by Zurich until a later point in time that once the advice had been provided to a lay witness it was no longer privileged. OGP sought by their letter of 9 January 2015 associated documents, being the letter of instruction to Ms McFee with its supporting documents, all documents in which the contents of the advice were discussed, and the letter of instruction from Rankin Ellison to Wotton + Kearney in which Wotton + Kearney were instructed to act for Zurich and deny indemnity. Wotton + Kearney were initially instructed by Rankin Ellison as agents (on 5 March 2014) but on 14 March 2014 took over from Rankin Ellison as principals.[3]
[3]Affidavit of Natasha Sung sworn 18 March 2015 at [4] and [6].
The third aspect of the letter of 9 January 2015 reiterated the concern that the claim for privilege did not comply with order 2 made 12 December 2014. It sought that this be corrected, and flagged that a claim for waiver may then be made.
Zurich responded to this letter by letter dated 12 January 2015, which sought further time for compliance, for reasons including that the responsible partner Mr Andrew Seiter was on leave and that they had sought the Palmer, Hayes and Ling files some time ago (it transpires from Rankin Ellison) and had now been advised that they would be provided shortly. Significantly, however, despite the overarching request for more time, the letter of 12 January 2015 did respond in substance to the request for notes of the meeting with Mr Salveson by positively asserting that ‘(n)o notes were taken at the meeting with Max Salveson’.
The solicitors for OGP responded by letter dated 19 January 2015 querying, in strong terms, this assertion. OGP expressed concern that although the notes were first sought on 7 August 2014; were the subject of argument in the discovery application heard on 17 September 2014; and were ordered to be discovered in the judgment delivered on 2 December 2014 and orders made 12 December 2014, in response to which an affidavit of documents was served on 19 December 2014, it was only by the letter dated 9 January 2015 that Zurich advised that there were no such notes. OGP also queried whether this was in fact the case, given that as a matter of professional prudence notes would ordinarily be taken at a meeting with such a critical witness, and Mr Salveson had told the solicitors for OGP that there were three people in attendance in addition to him, and the meeting went for a ‘long time’. OGP sought a response by 21 January 2015, and again flagged a possible application pursuant to s 56 of the CPA.
Wotton + Kearney responded to the concerns raised in all the correspondence from the solicitors for OGP following the orders made 12 December 2014 by letter dated 21 January 2015. This was after the scheduled return of the responsible partner. By that letter, Zurich served a further, at that time unsworn, Further Supplementary Affidavit of Documents by letter dated 21 January 2015. That Further Supplementary Affidavit of Documents was subsequently sworn by Mr Catling on 5 February 2015, although not reserved in sworn form until 10 March 2015. The Further Supplementary Affidavit of Documents gives particulars of the documents asserted to be privileged, in apparent acceptance of the third concern raised by OGP in its letter of 9 January 2015 recited above. It also discovers the solicitor files for Palmer, Ling and Hayes.
In relation to the OGP’s concern in relation to the notes of the meeting with Mr Salveson, the Wotton + Kearney letter of 21 January 2015 reiterated that they were instructed that notes were not taken, and disputed that putting arguments as to relevance and privilege at the hearing in September 2014 necessarily implied that there were any such notes.
In relation to OGP’s request for documents associated with the advice of Ms McFee, the letter of 21 January 2015 responded only that ‘ (t)he provision of that advice by way of discovery …does not lead to the consequences that you suggest’.
OGP did not accept the position asserted by Zurich in relation to these matters, or the claim for privilege over certain documents, and caused the question of compliance with the orders of 14 December 2014 to be relisted by request made 27 January 2015.
Actions taken or disclosed following the relisting
Wotton + Kearney served the sworn Further Supplementary Affidavit of Documents by letter dated 10 March 2015. It was said this had not been attended to earlier by reason of administrative oversight.
By letter from Wotton + Kearney dated 11 March 2015, Zurich responded to the relisted concerns as follows. In relation to the assertion that it would be expected that Rankin Ellison would have taken notes of the meeting with Mr Salveson, Wotton + Kearney reiterated that after making ‘various enquiries’ they had been ‘assured (by the former solicitors) that no notes were taken’.
In relation to the documents associated with the advice from counsel, Zurich provided a copy of the brief to Ms McFee, which provision was said to be for the purposes of avoiding argument i.e. not by way of concession that it was no longer privileged. Zurich contended that the other documents sought, on the basis that privilege had been waived by supply of the advice to Mr Salveson, remained privileged.
Piper Alderman responded in detail by letter dated 12 March 2015. In relation to the notes, they raised two concerns. First, that if there were in truth no notes, then argument in relation to discovery of them in September had been unnecessary. Secondly, doubt was expressed as to the veracity of the contention that there were in truth no notes. OGP expressed the view that insufficient information had been provided as to enquiries made in this regard, and proposed a remedy said to be ‘pragmatic’.
In relation to the brief to counsel, OGP noted that the brief did not include any observations to counsel or the policy documents that Ms McFee referred to in her advice. OGP sought the whole of the material that Ms McFee had before her in order to prepare the advice. OGP reiterated the assertion that by providing the advice to Mr Salveson, Zurich had also waived privilege in subsequently created documents in which the contents of the advice were discussed, and in the letter of instruction to Wotton + Kearney from Rankin Ellison.
Mr Nathaniel’s affidavit was sworn on 16 March 2015. It exhibits the correspondence referred to above.
Ms Sung’s affidavit was sworn, filed and served on 18 March 2015, the day before the hearing. The covering letter for service of her affidavit states that the affidavit ‘has been prepared to address the allegations that have been made against this firm and our client’, and on that basis invited OGP to withdraw the allegations in relation to the First Discovery Dispute. Under the heading ‘Other issues’ the letter enclosed the documents received from Mr Manion on 13 March 2015, which of course included the notes of the meeting with Mr Salveson taken by Mr Manion i.e. the very notes that Wotton + Kearney had repeatedly, and as recently as 11 March 2015, said did not exist. The provision of the notes is said to be ‘in accordance with our client’s obligation to make ongoing discovery’.
On its face, this way of describing the provision of the notes is startling. In my view, what OGP might fairly have expected would have been an acknowledgment of what had gone before, including the positive assertions that there were no notes; a detailed explanation as to how those assertions came about, and how they have now proved to be incorrect; and an apology for the error. Ms Sung’s affidavit and the confidential exhibit to it do, in fairness, give some explanation for the late provision of the notes despite the earlier denials that they existed. Zurich has, however, stoutly resisted any acknowledgement of error, other than contained in Mr Manion’s letter, and any apology. Indeed, Zurich’s position in the letter and at hearing was that OGP should have withdrawn its relisting entirely in relation to the provision of the notes.
What emerges from that confidential exhibit, and so is made known to OGP for the first time the day before the hearing, is that Mr Seiter sought from Rankin Ellison any notes of the Salveson meeting by email sent 11 August 2014 to Rankin Ellison. This email was consequent on the service of OGP’s summons for further discovery, which was ultimately heard in September. At that time the meeting was thought to have been in January 2014, and is so described in the email. Mr Manion of Rankin Ellison replied by letter dated 21 August 2014, noting that the meeting between him, Ms McFee and Mr Salveson in fact took place on 3 March 2014 and stating that neither he nor Ms McFee have any notes of this meeting. Mr Manion suggested that Wotton + Kearney contact the other attendee, Mr Lai of Zurich, directly to see if he had any notes. Mr Manion said that there was no letter of instruction to Mr Salveson.
Mr Seiter sent Mr Manion a further email dated 8 September 2014 relating to the application by OGP, which copied in Mr Catling of Zurich. In relation to the corrected date of the meeting, Mr Seiter flagged that a claim for privilege may be made and asked for information as to the purpose of the meeting on the assumption that, although the Third Party Notice was dated after the meeting, it was clear that the issue of coverage and indemnity was live before that date. After a response from Mr Manion the next day, referring Mr Seiter to Mr Manion’s letter of 21 August 2014, Mr Seiter sent a further email on 9 September 2014 noting that he was aware that Mr Manion had advised that no notes had been taken of the conference, but that this was not the practice in Victoria and that to assert that no file note was kept ‘will raise eyebrows’.
I depart from the confidential exhibit to note that on 11 September 2014 Wotton + Kearney wrote to the solicitors for OGP in response to the summons. That letter was not exhibited to any affidavit before me at the hearing, but was attached to the further submissions by Zurich dated 17 April 2015. In that letter, Wotton + Kearney stated in response to the summons as a whole that there were no documents ‘that relate to the existence of a policy of insurance or the terms of such a policy’ other than those that had already been discovered. In relation to the application for notes of a conference with Mr Salveson in January, Wotton + Kearney stated that there was no conference in January, but there was in March 2014. Wotton + Kearney stated specifically in relation to the notes that Zurich had already discovered documents over which it claimed privilege, which were not individually enumerated as was the usual practice in Victoria. The letter stated ‘(a)ny document created in the course of conference with counsel (if any) would fall within Part 2 of Schedule 1’.
I now return to the confidential exhibit. Ms Sung sent Rankin Ellison on 18 December 2014 a copy of the orders made by me on 12 December 2014, which specifically refer to notes of a meeting with Mr Salveson. The content of the email is principally directed to other aspects of the orders, however, in particular a request for the Rankin Ellison files for Palmer, Ling and Hayes. This request was followed up by email on 5 January 2015. Those files were eventually supplied by Rankin Ellison by letter dated 12 January 2015. There is, accordingly, no further correspondence between Wotton + Kearney and Rankin Ellison that is disclosed and expressly addresses the question of the notes between 9 September 2014, just before the hearing of the first application, and letter dated 11 March 2015 from Wotton + Kearney to Mr Manion, precipitated by the relisting of the issue.
By their letter dated 11 March 2015, Wotton + Kearney explicitly sought confirmation that no notes had been taken by Mr Manion or any other solicitor from Rankin Ellison at the Salveson conference, or, if notes were taken, copies of same or an explanation if they could not now be located. The letter is in strong terms. This letter elicited a response dated 13 March 2015 from Mr Manion which encloses various documents, said to have been located after ‘a further search’ and to have been ‘filed in another matter in error’. Those documents are emails from and to Mr Salveson prior to the meeting; handwritten notes on Rankin Ellison letterhead apparently relating to three conferences between the writer and various other persons on 3 March 2014, one conference being at 8.30am apparently between Mr Manion and Ms McFee; one at 11am apparently between Mr Manion, Ms McFee, Mr Lai of Zurich and Mr Salveson; and one between 1 and 2pm apparently between Mr Manion and Mr Lai; an email from Mr Salveson to Mr Manion sent 4 March 2013 i.e. the day after the meeting and apparently commenting on or seeking to clarify matters discussed; and Mr Salveson’s tax invoice directed to Mr Manion.
In addition to what is shown in the correspondence in the confidential exhibit, Ms Sung’s affidavit adds an assertion that relates to the provision of the notes. She deposes in paragraph 13 that she (presumably in addition to the named author of the email of 9 September 2014, Mr Seiter) was surprised by the assertion by Rankin Ellison that they had not taken notes at the Salveson meeting.
In summary, Zurich did not discover until the day before the relisted hearing on 19 March 2015 notes of the meeting with Mr Salveson. OGP had sought these notes from its application made 7 August 2014 and served 11 August 2014. Zurich had been ordered to supply them on 12 December 2014. It now appears that both the partner and the solicitor responsible for the conduct of the proceeding for Zurich doubted from September 2014 the assertion of the former lawyers that there were no such notes. Despite this doubt, however, they on behalf of Zurich explicitly contended on two occasions, 12 January 2015 and 11 March 2015, that there were no such notes. Further, they did not explicitly pursue provision of the notes from Zurich’s former solicitors until 11 March 2015. I will consider this conduct in more detail shortly.
I turn now to consideration of each of the disputes as identified by Mr Nathaniel in his affidavit.
First Discovery Dispute: notes of the meeting with Mr Salveson
Zurich through its counsel indicates that it will provide a second further supplementary affidavit of documents swearing to the notes and associated documents now provided by Rankin Ellison together with other material to which I will refer shortly. Zurich submits that that should be the end of the matter, save for questions of costs. Indeed, Zurich goes further and asserts that the conduct of Zurich and/or its solicitors should not have been impugned in Mr Nathaniel’s affidavit.
OGP submits that that is not the end of the matter and seeks orders in relation to the provision of the notes as follows:
1(a) Zurich be ordered to pay the costs of and incidental to the summons dated 7 August 2014 immediately as opposed to at the conclusion of the proceeding (as ordered on 12/12/14);
(b) Zurich to make, file and serve an affidavit or affidavits of those present at the conference with Mr Salveson on 3 March 2014 about the matters discussed and whether notes were taken at that conference and, if so, by whom; and
(c) Zurich to make, file and serve an affidavit explaining the delay in providing the notes at conference with Ms McFee on 3 March 2014 and the extent of the enquiries made to locate these notes.
At the hearing I expressed doubt as to whether I had power to make proposed order 1(a), even if otherwise a basis is established for it. My doubt arose because the order made 12 December 2014 has been authenticated, and it seemed to me that it followed that the question of the costs there ordered could not be re-opened, in the absence of one of the limited exceptions that permit variation of a perfected i.e. authenticated order. As I indicated that I would deal with all questions of costs after the delivery of reasons, I will not in these reasons finally determine whether or not there is power to make proposed order 1(a) and, if so, whether it should be made. I will hear the parties further in relation to these matters if either wishes. In that regard it may of assistance to the parties to consider my decision in another matter, heard after this, in which I refused such an application.[4]
[4]Shen v Ozbaby Dairy Pty Ltd and others [2015] VSC 207 at [60].
I will deal in these reasons with proposed orders 1 (b) and 1(c). OGP submits that proposed order 1(b) is appropriate both by way of sanction for breach of obligations imposed by the CPA and also by way of further discovery. Proposed order 1(c) is said by OGP to be justifiable as a sanction for breach of obligations imposed by the CPA.
Relevant obligations under the Civil Procedure Act and Rules
The obligations that OGP contends may have been breached are those imposed by ss 21, 23 and 25 of the CPA. These sections impose a number of overarching obligations on parties to civil litigation and their lawyers. They are here said to have been breached by Zurich and Wotton + Kearney by their non-disclosure of the assertion from Rankin Ellison that there were no notes. OGP also makes application for sanction pursuant to s 56 of the CPA. That section relates specifically to discovery obligations, and is here said to arise both because of this non-disclosure, and the assertion that there were no notes.
Those sections provide as follows:
21Overarching obligation not to mislead or deceive
A person to whom the overarching obligations apply must not, in respect of a civil proceeding, engage in conduct which is—
(a) misleading or deceptive; or
(b) likely to mislead or deceive.
23Overarching obligation to narrow the issues in dispute
If a person to whom the overarching obligations apply cannot resolve a dispute wholly by agreement, the person must use reasonable endeavours to—
(a) resolve by agreement any issues in dispute which can be resolved in that way; and
(b) narrow the scope of the remaining issues in dispute—
unless—
(c) it is not in the interests of justice to do so; or narrow the scope of the remaining issues in dispute—
(d) the dispute is of such a nature that only judicial determination is appropriate.
25Overarching obligation to minimise delay
For the purpose of ensuring the prompt conduct of a civil proceeding, a person to whom the overarching obligations apply must use reasonable endeavours in connection with the civil proceeding to—
(a) act promptly; and
(b) minimise delay.
56Court may order sanctions
(1) A court may make any order or give any direction it considers appropriate if the court finds that there has been—
(a) a failure to comply with discovery obligations; or
(b) a failure to comply with any order or direction of the court in relation to discovery; or
(c) conduct intended to delay, frustrate or avoid discovery of discoverable documents.
(2) Without limiting subsection (1), a court may make an order or give directions—
(a) that proceedings for contempt of court be initiated;
(b) adjourning the civil proceeding, with costs of that adjournment to be borne by the person responsible for the need to adjourn the proceeding;
(c) in respect of costs in the civil proceeding, including indemnity cost orders against any party or a legal practitioner who is responsible for, or who aids and abets, any conduct referred to in subsection (1);
(d) preventing a party from taking any step in the civil proceeding;
(e) prohibiting or limiting the use of documents in evidence;
(f) in respect of facts taken as established for the purposes of the civil proceeding;
(g) awarding compensation for financial or other loss arising out of any conduct referred to in subsection (1);
(h) in respect of any adverse inference arising from any conduct referred to in subsection (1);
(i) compelling any person to give evidence in connection with any conduct referred to in subsection (1), including by way of affidavit;
(j) dismissing any part of the claim or defence of a party who is responsible for any conduct referred to in subsection (1);
(k) in relation to the referral to an appropriate disciplinary authority for disciplinary action to be taken against any legal practitioner who is responsible for, or who aids and abets, any conduct referred to in subsection (1).
Submissions on breach
The written submissions for OGP for the hearing had been prepared prior to receipt of Ms Sung’s affidavit, and the late supply of the notes, with consequent limited time for development of the argument as it applied given that supply. Accordingly, I required OGP to confirm after the hearing the extent to which its written submissions continued to apply, and invited further submissions from the parties on the claimed breaches. In response, OGP confirmed that it asserted that Zurich and its solicitors had acted in breach of its and their obligations under the CPA in relation to the First Discovery Dispute. Both parties provided further written submissions in respect of those claimed breaches on 17 April 2015.
The first matter to be determined is the precise conduct said by OGP to constitute breach of a section of the CPA. In its written submissions prior to the hearing, OGP submitted that the conduct of Zurich and/or its solicitors ‘before, during and after the hearing on 17 September 2014’[5] (emphasis added) may constitute breaches of the overarching obligations imposed by ss 21, 23, 25 or 56(1) of the CPA. OGP confirmed after the hearing in answer to my enquiry that it still relies on the paragraphs that immediately follow that assertion, paragraphs 6-18 inclusive, notwithstanding the eventual supply of the notes. Those paragraphs are not limited to the period prior to and during the hearing.
[5]Submissions of Fourth Defendant for Use at Hearing on 19 March 2015 at [5].
OGP’s Further Submission, however, emphasises the conduct of Zurich before and at the hearing, rather than after. The Further Submission states that Zurich ‘proceeded to argument on 17 September 2014 and resisted disclosure of notes of a meeting that it had known from 21 August 2014 did not exist.’[6]. It is then stated that ‘(i)t is this conduct (emphasis added) that OGP submit on the balance of probabilities comprises a breach of the overarching obligations set out in paragraphs 21, 23 or 25 of the Act (sic).’[7] There is also in the Further Submission reference to the failure by Zurich to explain its conduct from 12 January 2015 to 18 March 2015, but that is not separately said to constitute any breach.[8] OGP however does also assert in its Further Submission that its chronology of events (which includes events after the September hearing) supports a finding of breach of s 56(1) of the CPA.[9]
[6]Further Submission on Breaches of Civil Procedure Act dated 16 April 2015 at [3] (‘OGP Further Submission’).
[7]Ibid.
[8]Ibid, at [5].
[9]Ibid, at [6].
OGP submits that the reason Zurich and its lawyers did not reveal at or before the hearing on 17 September 2014 that no notes were kept was that it would ‘raise eyebrows’.[10] OGP states in its Further Submission that Zurich ‘could have and should have made that disclosure but failed to do so seemingly for reasons of perception’.[11]
[10]Ibid, at [2], [4(c)], and [12].
[11]Ibid, at [2].
OGP submits that the conduct of Zurich in failing to disclose that, to its knowledge, no notes existed and arguing at the hearing that such notes were privileged was misleading and deceptive in breach of s 21 of the CPA because it ‘created an assumption that the documents were in fact in existence when the information that Zurich was armed with at that time was that no documents existed’.[12]
[12]Ibid, at [12].
In relation to s 23, OGP submits that disclosure that there were no notes prior to argument on 17 September 2014 could have narrowed argument on that day. In relation to s 25, OGP asserts that it was incumbent on Zurich to disclose in a timely manner its instructions that the notes that were sought did not exist.[13]
[13]Ibid, at [13] and [14].
Zurich correctly identifies in its further submissions that OGP’s application is limited to the period from the request by summons for the documents up to and including the hearing.[14] It does make some brief observation about the later period.[15] Zurich’s submissions, in summary, are as follows:
[14]Zurich’s submissions on the application made by Olympic General Products Pty Ltd (“OGP”) alleging breach of the Civil Procedure Act and seeking a new costs order dated 17 April 2015 (‘Zurich’s Further Submissions’) at [25] and [28].
[15]Ibid, at [28].
· OGP had no entitlement prior to or at the hearing to disclosure as to whether any such notes existed;
· the obligation to discover does not require a categorical statement as to whether or not a document exists, rather to state after reasonable search whether such a document, to the best of the deponent’s knowledge, information or belief, existed;
· Zurich made no positive statement that there were any such notes prior to the hearing, and indeed the wording it used in its letter responding to the summons ‘flagged’ the possibility that there were no such notes;
· Zurich was not obliged to disclose whether or not such documents existed until discovery was ordered and a time for reasonable search thereafter had concluded;
· OGP (and implicitly, the Court) were not mislead at the hearing, because Zurich conducted its opposition to the order on an expressly ‘abstract’ basis; and
· it could not be misleading or deceptive to fail to disclose at the hearing that no notes existed, when, as later events showed, they did in fact exist, and were eventually discovered.
In relation to the period after the hearing, Zurich submits that:
· it was reasonable to believe that Rankin Ellison would read the detail of the order as sent to them;
· by 19 December 2014, the date by which discovery was ordered, the period of reasonable search had concluded and the Supplementary Affidavit of Documents sworn that day sufficiently disclosed that no notes existed, to the best of the deponent’s then knowledge, information and belief;
· they made further enquiry as to any notes on 11 March 2015 as it had been raised again by OGP; and
· the notes were then provided within days of receipt by Zurich.
Analysis of conduct
For the purpose of considering the application made by OGP for a finding of breach of the CPA, I will first consider the position from a broader perspective.
It would have been very surprising if a solicitor did not take notes of a meeting between a prospective significant witness and counsel. OGP expressed this doubt immediately they were expressly told (which was not until January 2015) that there were no notes. Critically, both the responsible partner and solicitor with the day to day conduct of the matter at Wotton + Kearney regarded the assertion made by Mr Manion of Rankin Ellison on 21 August 2014 that he took no notes to be unusual. It now transpires that both OGP and Wotton + Kearney were correct to question that assertion. Despite expressing this view in their email of 9 September 2014 to Rankin Ellison, however, Zurich:
· did not through its solicitors Wotton + Kearney explicitly ask Rankin Ellison to check at that time;
· did not tell the solicitors for OGP that they had been told there were no notes, although they doubted it, in their letter of response to the summons dated 11 September 2014, which was otherwise quite detailed;
· went to hearing in September 2014 where it opposed discovery and production of the notes on the grounds of relevance and privilege, allowed judgment to be reserved on the issue, and went to orders in December 2014 without advising either OGP or the Court that there may be no notes, or making further enquiry in that regard;
· left it to OGP to query the absence of notes from the Supplementary Affidavit of Documents without explicitly advising them one way or another in that affidavit or otherwise;
· when, after query from OGP, Zurich did give an express answer, it stated positively through its solicitors on two occasions that there were no notes despite the doubt those solicitors held in that regard and without making further enquiry of Rankin Ellison in light of that doubt;
· on the material before me did not through its solicitors seek a further response from Rankin Ellison as to the doubt expressed in the email of 9 September 2014 or ask Rankin Ellison to check, until 11 March 2015 after the question had been relisted;
· made its second positive assertion that Zurich had no such notes on the same day it sought further clarification from the former solicitors, without notifying OGP that it was making further enquiry; and
· did not tell OGP the revealed situation or provide the notes until the day before this hearing, although the solicitors for Zurich knew the true position from the Friday before.
In my view, it is plain that from the point of view of professional courtesy and candour it would have been preferable for Zurich to have acted differently in all these respects.
In my view, Zurich through its solicitors should have disclosed to OGP and the Court no later than the hearing on 17 September 2014 that Rankin Ellison had said there were no notes, and should have pursued the issue with Rankin Ellison in a timely fashion and certainly prior to March 2015. It was unwise of Zurich through its solicitors to notify OGP in January 2015 that there were no notes without following up on the doubt those solicitors clearly held as to whether the information was correct. It was both unwise and discourteous to repeat this assertion, although with the explanation that the source was the former solicitors, on the very day, 11 March 2015, that the current solicitors were making further enquiry of the former solicitors, without advising OGP that they were making that enquiry.
Finally, supply of the documents on the very eve of the hearing could have been anticipated to cause significant, and justifiable, aggravation. I accept that Zurich may have reasonably needed a period of time after Friday 13 March 2015 to properly consider its position, once the notes had been provided. It is hard to see, however, on the current material why it could not have alerted OGP to the supply at an earlier point in time than the eve of the hearing. Such a late supply of the new information and documents to OGP could have been anticipated to reasonably aggravate the already justifiable concern held by OGP, and make it difficult to minimise the costs of the hearing.
It is also surprising that the parties allowed the argument on discovery of notes of the conference with Mr Salveson to proceed on 17 September 2014 on the basis that the conference had been held in January 2014, and so before notification of the claim, which occurred in February 2014. The solicitors for Zurich were told before that hearing by Rankin Ellison that the conference was held in March, and so after the notification of the claim, and they told the solicitors for OGP of the correct date by their letter of 11 September 2014, attached to Zurich’s Further Submissions. The date of the conference was plainly relevant to questions of litigation privilege, and was identified to be so during the hearing itself. There may have been a different result, and subsequent events in relation to the notes not been necessary, had the correct date been identified.
The question before me is not whether Zurich could have acted with more courtesy and frankness, however, but whether identified aspects of its conduct were in breach of any of the obligations imposed on it by the CPA. OGP extends its complaint to the solicitors for Zurich, Wotton + Kearney, but explicitly stated at the hearing that it made no complaint that the conduct of counsel appearing for Zurich on 17 September 2014 may have been in breach of those obligations.
Discussion on breach
Authorities
The parties have referred me to some decisions of this Court which touch on the obligations imposed by the CPA, and a decision of the High Court arising from the New South Wales equivalent Act.
Zurich submits in its Further Submissions that in Expense Reduction Analysts Group Pty Ltd and ors v Armstrong Strategic Management and Marketing Pty Limited and ors[16] (‘Armstrong’) the High Court ‘admonished the behaviour of litigants who use the provisions of (the New South Wales Civil Procedure Act) in a manner that in itself is contrary to the obligations under it’.[17]
[16](2013) 250 CLR 303.
[17]Zurich’s Further Submissions at [66].
In my view, this is a misreading of that case. Certainly the Court was there critical of the extent and cost of the litigation that had been occasioned by an endeavour to compel the return of privileged documents which had been provided by mistake. The party seeking return had sought equitable relief; was successful at first instance; unsuccessful on appeal to the Court of Appeal and eventually successful in the High Court.
Zurich relies on the comment by the Court that ‘It could hardly be suggested that the pursuit of satellite interlocutory proceedings of the kind here in question in any way fulfils the overriding purpose of the CPA.’[18] In my view, to the extent that criticism applied to the party seeking relief at all, it was principally directed to the making of a distinct application for equitable relief, as had occurred in that case. In this case, OGP has made its allegations of breach in the course of a relisted discovery application, in which other issues also fall to be determined. The High Court in Armstrong in fact endorsed the principles underpinning the CPA and held that the court at first instance should promptly have made a direction permitting amendment of the list of documents.[19] The Court also directed particular criticism at the party that refused to return the privileged documents, and so gave rise to the dispute.[20] The comments that the Court made about the obligations of a solicitor to implement the purposes of the CPA were not directed, as Zurich implies, to the party seeking the relief, but to the party who refused to return the documents.[21]
[18]Armstrong, at [59].
[19]Armstrong, at [51] -[58].
[20]Armstrong, at [49], [60]-[63].
[21]Armstrong, at [64]-[67].
Counsel for OGP relies on the Court of Appeal decision Yara Australia Pty Ltd v Oswal[22](‘Oswal’). In that case, the overarching obligation under consideration was the obligation to ensure that costs were reasonable and proportionate. The enquiry as to whether or not that obligation had been breached was generated by the Court of Appeal, of its own motion. The Court gave extensive consideration to the scheme of the CPA, the overarching obligations, and enforcement of those obligations. In relation to enforcement, the Court noted that s 29 of the CPA, which confers power to make orders by way of sanction, is ‘a unique provision, conferring powers broader than those in any other jurisdiction in Australia, to sanction legal practitioners and parties who fail to meet their overarching obligations’.[23] By way of example, the Court of Appeal contrasted the Victorian Act with the equivalent Act in New South Wales. The Court described the New South Wales provisions as ‘more aspirational than obligatory’, and noted that in New South Wales the court’s powers as to costs are still governed by the rules of court and there are no broad powers to issue sanctions for contravention of the obligations. There should then perhaps be caution in applying authorities arising from the New South Wales Act, such as Armstrong, to Victoria.
[22][2013] VSCA 337.
[23]Oswal, at [17].
The Court noted that s 29 provides the Court with ‘broader and more flexible powers’ than under the Supreme Court (General Civil Procedure) Rules 2005 (‘the Rules’) or under its inherent jurisdiction.[24] It rejected what it described as ‘a false perception’ that the sanction provisions of the CPA and the overarching obligations do not affect any material change to the Rules and the inherent jurisdiction of the Court, and affirmatively stated that ‘(t)he Act creates obligations which extend beyond those in the Rules and confers upon the courts a panoply of powers not found in the Rules’. [25] I will return to the Court’s comments in relation to sanctions later in these reasons.
[24]Oswal, at [18].
[25]Oswal, at [25].
The Court stressed the importance of adherence to the overarching obligations. The Court stated that:
The Act prescribes that parties to a civil proceeding are under a strict, positive duty to ensure that they comply with each of the overarching obligations and the court is obliged to enforce these duties. The statutory sanctions provide a valuable tool for improving case management, reducing waste and delay and enhancing the accessibility and proportionality of civil litigation. Judicial officers must actively hold the parties to account.[26]
[26]Oswal, at [26].
Indeed, the Court went so far as to say that a judge should be prepared to instigate an enquiry as to whether an obligation had been breached of his or her own motion i.e. even if no party has invited the Court to make that determination. Here, a party has sought that the Court make such a determination. I am required to determine it.
Both parties have also made comment, at my invitation, on Hudspeth v Scholastic Cleaning and Consulting Services (No 8)[27] (‘Hudspeth’). In that case, Dixon J discussed in detail the obligation imposed by s 21 not to engage in conduct that is misleading or deceptive, or likely to mislead or deceive. I will return to that case in my discussion of s 21. Finally, OGP has referred me to the discussion of s 23 of the CPA by Zammit J in Naumovski & Ors v Ugrinovski & Ors[28] (‘Naumovski’). I will return to that in my discussion of that section.
[27]Hudspeth v Scholastic Cleaning and Consulting Services (No 8) [2014] VSC 567.
[28][2015] VSC 49.
Identification of the conduct said to be in breach
As noted, the first matter to be determined is the identification of the conduct that is said by OGP to have been in breach of the CPA. The obligation is on the party asserting breach to identify that conduct. Given that OGP in its Further Submission submits that it is the conduct of Zurich and its solicitors prior to and at the hearing on 17 September 2014 that may constitute breach of ss 21, 23 or 25, I will limit my consideration of possible breach of those sections to that period. I will consider whether s 56 has been breached in respect of the whole chronology of events. I commence this discussion with s 56.
Section 56: breach of discovery obligations
Given that what is contended is a breach of discovery obligations, it is necessary to identify the source and content of those obligations. Zurich in its Further Submissions refers me to s 54 of the CPA. Section 54 provides that unless a court otherwise orders, discovery is to be in accordance with the rules of that court. Zurich contends that as no order to the contrary was here made, its obligations in relation to discovery are to be found in the Supreme Court Rules. I consider that correct in part. The other source of discovery obligations is the overarching obligation of disclosure in relation to documents contained within s 26 of the CPA itself. That section provides as follows:
26Overarching obligation to disclose existence of documents
(1) Subject to subsection (3), a person to whom the overarching obligations apply must disclose to each party the existence of all documents that are, or have been, in that person's possession, custody or control—
(a) of which the person is aware; and
(b) which the person considers, or ought reasonably consider, are critical to the resolution of the dispute.
(2) Disclosure under subsection (1) must occur at—
(a) the earliest reasonable time after the person becomes aware of the existence of the document; or
(b) such other time as a court may direct.
(3) Subsection (1) does not apply to any document which is protected from disclosure—
(a) on the grounds of privilege which has not been expressly or impliedly waived; or
(b) under any Act (including any Commonwealth Act) or other law.
(4) The overarching obligation imposed by this section—
(a) is an ongoing obligation for the duration of the civil proceeding; and
(b) does not limit or affect a party's obligations in relation to discovery.
OGP does not contend that Zurich has breached this overarching obligation, but given its place in the very Act that permits sanction for breach of a discovery obligation, I consider it significant to consider the obligations it imposes in relation to OGP’s contention that Zurich or its solicitors may have breached an obligation referred to in s 56(1).
Neither party addressed any argument to me in relation to s 26 but my tentative view is that the obligation imposed by s 26 to discover documents of which the person under the obligation is ‘aware’ and that are within the ‘possession, custody or control’ of that person is the same as the corresponding obligation to discover documents under the Rules. The Rules require documents to be discovered that are or were in the ‘possession’ of the party, and r 29.01(2) defines ‘possession’ to mean ‘possession, custody or power’. I take ‘power’ as used in that rule to mean the same as ‘control’ as used in s 26. Similarly, r 29.01.1(3) of the Rules confines the documents required to be discovered to those of which the party is ‘aware’, which is to be determined at the time discovery is given.
The obligation under s 26 extends only to documents in the ‘possession, custody or control’ of Zurich or its current solicitors of which Zurich or those solicitors are ‘aware’. In its Further Submissions, Zurich contends that unless and until the notes were provided by Rankin Ellison, they were not in Zurich’s ‘personal possession’ or in ‘the possession’ of Wotton + Kearney.[29] It is not entirely clear whether by this submission, Zurich uses the word ‘possession’ in the extended sense of r 29.01(2) to mean ‘possession, custody or power’. The qualification ‘personal possession’ suggests otherwise. If that is correct, then Zurich does not contend that notes in the possession of its former solicitor were not still in its power. It is not necessary to determine whether the notes were still in Zurich’s power or control i.e. it could require its former solicitors to provide them to its current solicitors, but in what follows I assume they were.
[29]Ibid.
The requirement of s 26 that a person subject to it is required to disclose a document of which he or she is ‘aware’ was considered by Dixon J in Hudspeth. The parties did not make submissions on this aspect, as opposed to others, of Hudspeth. The consideration in that case was in relation to disclosure of an expert report, not discovery, and counsel had actual knowledge that the report existed. In that case, Dixon J rejected a submission put on behalf of the instructing solicitor that she was not in breach of s 26 by failing to disclose the report, because she did not have actual knowledge of it. He extended the requirement of knowledge to imputed knowledge of the instructing solicitor, by reason of the nature of the solicitor/counsel relationship, and the actual knowledge of counsel whom the solicitor had allowed to directly commission the report.[30]
[30]Hudspeth, at [223]- [227].
Here, Zurich contends in its Further Submissions, that until advised by Rankin Ellison that the notes did exist, it ‘expected, but did not know, that such notes existed’.[31] I accept that this was the case. Although the requirement of knowledge in s 26 was extended in the particular circumstances of Hudspeth, that extension was in relation to a document that did exist, and was known by counsel to exist. I do not consider that it follows that a party becomes ‘aware’ of a document for the purposes of s 26 merely because that party, through its solicitors, suspects that it may exist. I find that the current solicitors for Zurich were not ‘aware’ of the notes taken by the solicitor from Rankin Ellison until 13 March 2015, when Mr Manion supplied them after further search. This is because he had previously told them that no notes had been taken.
[31]Zurich’s Further Submissions at [2(b)].
Section 26(4)(b) provides that the overarching obligation imposed by that section ‘does not limit or affect a party’s obligations in relation to discovery’. I turn now to consideration of any further obligations in relation to discovery imposed by the Rules.
Rule 29.01.1(3) requires a party to undertake a ‘reasonable search’ before making that discovery. The same test applies to an order for particular discovery, pursuant to r 29.08 of the Rules, such as that made by me in relation to the notes on 12 December 2014. Zurich concedes that this was the obligation imposed on it, and that its solicitors were under a separate obligation to comply with the overarching obligations in the CPA and to assist it to understand and fulfil its discovery obligations.[32] Zurich contends that OGP had no entitlement to disclosure prior to or at the hearing as to whether or not any particular document sought to be discovered existed, and Zurich was under no obligation to undertake a search for such a document prior to the hearing. To express it in terms of discovery obligations, in Zurich’s submission, the obligation to disclose after reasonable search only arises after the order is made and the time for ‘reasonable search’ has concluded. I accept these submissions. As noted earlier, it may have been wise or courteous of Zurich to disclose prior to the hearing that it had been informed by its prior solicitors that there were no notes, but it was under no discovery obligation to do so.
[32]Ibid, at [58]-[61].
The order required discovery by 19 December 2014. Reasons had been delivered on 2 December 2014 and so this time was short, but it was ordered after enquiry of the parties as to the time required. Thus the time for reasonable search in relation to the existence or otherwise of notes expired on 19 December 2014, although Zurich retained a continuing obligation to discover documents that came to its attention thereafter.
Zurich contends that it, and its solicitors, had conducted a ‘reasonable search’ by the time discovery was given in response to the orders on 19 December 2014.[33] I disagree. In my view, given that the current solicitors for Zurich always considered the initial contention by Mr Manion that there were no solicitor notes of the meeting to be at least unusual, if not unlikely, then a ‘reasonable search’ after the order was made required them to ask him to check that what he said was correct before making discovery in accordance with the order. If more time was required for this further search than the week allowed by the order, it could and should have been sought.
[33]Zurich’s Further Submissions at [13].
Zurich also submits that the obligation to discover does not require a categorical statement as to whether or not a document exists, but merely disclosure after reasonable search as to whether or not, to the best of the deponent’s knowledge, information or belief, such a document exists or did exist. I accept that this is correct. However, it turns on whether or not a ‘reasonable search’ has been conducted and so what informs the deponent’s state of knowledge, information and belief.
Two supplementary affidavits of documents were sworn in purported compliance with the orders of 12 December 2014, both by Mr Catling. The first was sworn on 19 December 2014 and contained only the conventional statement in relation to documents not discovered that ‘to the best of my knowledge, information and belief’ Zurich, its solicitors, and no other person on its behalf did not have, and had never had any other documents in its possession, custody or power required to be discovered.
The Further Supplementary Affidavit of Documents sworn by Mr Catling on 5 February 2015 contains a more explicit statement in paragraph 6 that to the best of his knowledge, information and belief, neither Zurich nor its solicitors have or ever had notes as required by the order. On what is now shown by the confidential exhibit, the enquiry in relation to any solicitor’s notes before these two affidavits was limited to the exchanges in August and September, and provision of the order to Rankin Ellison.
Zurich asserts that it was reasonable to assume that Rankin Ellison would read the order and understand its requirements. I agree that this was reasonable. On the particular facts of this case, however, mere provision of the order did not discharge the obligation of Zurich through its current solicitors to conduct a ‘reasonable search’ given that those solicitors thought the earlier information from Rankin Ellison that there were no notes to be unusual. I consider the attention of Rankin Ellison should have been specifically drawn to the notes portion of the order, as it was to other requirements of the order, and a specific request made to conduct a further search. In the absence of such a specific request, as was eventually made, it was likely that Rankin Ellison would merely adhere to its former position without any further search.
It follows that I do not consider that Zurich conducted a ‘reasonable search’ after the order and prior to making further discovery by the affidavits sworn 19 December 2014 and 5 February 2015. This was a breach of its discovery obligations.
Zurich appears to imply by its Further Submissions that it was only because the solicitors for OGP pursued the question of the existence of the notes, that Wotton + Kearney made the further enquiry of Rankin Ellison on 11 March 2015 that eventually resulted in the notes being found and disclosed.[34] If the implication is that Zurich was under no obligation to make further enquiry of Rankin Ellison after sending that firm the order, I consider it incorrect for the reasons already stated. That further enquiry would best have been made in September 2014 prior to the hearing, or as soon as possible thereafter. An obvious opportunity to make it arose again immediately after the delivery of the reasons on 2 December 2014. It was required to be made no later than the making of the orders on 12 December 2014.
[34]Zurich’s Further Submissions at [18].
Zurich described the eventual provision of the notes on 18 March 2015 as being in accordance with its continuing obligation of discovery. To the extent that this description assumes or implies that there had been no earlier breach of discovery obligations, it was incorrect, for the reasons stated. Although otherwise technically correct, the description of the provision of the notes in this way, on the very eve of the hearing, and without acknowledging all that had gone before, was in my view very unfortunate. The late supply was not, however, in my view a breach of a discovery obligation, although it may be it should sound in the orders to be made as to costs.
Section 21: obligation not to mislead or deceive
The leading authority on the construction and application of s 21 is Hudspeth.[35] In that case, Dixon J discussed the authorities in respect of the prohibition on misleading and deceptive conduct in s 18 of the Australian Consumer Law and applied them to s 21 of the CPA. He noted that it is well settled that intention is irrelevant to breach of s 18 and that conduct is misleading or deceptive if it induces or is capable of inducing error. [36]
[35]Hudspeth v Scholastic Cleaning and Consulting Services (No 8) [2014] VSC 567.
[36]Hudspeth at [177].
In that case, there was no issue that error had been occasioned, but there was argument as to whether or not s 21 required a ‘knowing’ element. Dixon J held that it did not. He held that the purpose of s 21 is establish a norm of conduct ‘that persons by whom overarching obligations are owed shall not engage in misleading or deceptive conduct, whether or not that was their intention’.[37] In that case, Dixon J held that senior counsel and an expert witness had breached s 21 in respectively, leading, and giving, expert evidence without disclosing the existence, known to them, of a further unserved expert report.
[37]Ibid, at [194]
The parties in this case are in agreement that it is not necessary to prove that Zurich intended to mislead or deceive to establish breach of s 21. Zurich submits that this case differs from Hudspeth in a number of ways. First, it contends that it made no representation as to whether or not there were notes. Secondly, if it is found to have represented that there were notes in existence, despite what it had been told by the date of the hearing, Zurich submits that that representation did not cause error and was not capable of doing so. This is because it was in fact the case that there were notes, although that was not known at that time.
In relation to the first contention, Zurich submits that it made no representation that there were no notes, and no representation that there were. It submits that its conduct and that of its lawyers was consistent with not knowing whether or not there were, or were not, notes.[38]
[38]Zurich Further Submissions at [38].
In this regard, Zurich relies first in time on the wording of the letter of 11 September 2014 from Wotton + Kearney to the solicitors for OGP in response to the summons, in particular the use of the word ‘any’ to describe documents created in the course of conference with counsel. Certainly the use of this word does not represent that there were or were not any such documents created. In my view, however, the force that the use of this word might otherwise have had was undermined by its use also in the phrase ‘conference with counsel (if any)’ when in the immediately preceding paragraph the letter writer had confirmed that a conference with counsel had taken place. In this circumstance, it is not surprising that OGP did not seek further clarification of the meaning of ‘any’ as it applied to documents created at the conference.[39]
[39]See Zurich Further Submissions at [2(g)].
Zurich also relies on the fact that submissions put at the hearing in relation to relevance and privilege were expressly said to be put ‘in the abstract’.[40] It is correct that the submissions were so described at the hearing.[41] Counsel for OGP also described the application in this respect as being for ‘any note’ taken at the conference.[42] I accept that there was no express representation by Zurich that there were, or were not, any such notes, and that counsel for Zurich sought by the use of the description ‘abstract’ to make it explicit that Zurich made no representation either way. In the hurly burly of argument, however, I doubt that the subtlety of Zurich expressing its arguments ‘in the abstract’ was appreciated by opposing counsel. I certainly did not understand at that time the significance of the use of the words ‘any’ and ‘abstract’ in relation to solicitor’s notes. In my view, the shared understanding of the Court and the other party was likely to have been that a solicitor would have made notes of an important conference, as indeed turned out to be the case. Zurich’s lawyers shared this understanding. To that extent, I consider it arguable that by failing to make it more plain that there may be no notes, Zurich did misrepresent the position. For the reasons that now follow, however, it is not necessary to consider further if any representation was made.
[40]Zurich Further Submissions at [8].
[41]Transcript of hearing on 17 September 2014 at T 2.26-29 and T 3.12-13.
[42]Ibid, at T 28.15.
That is because, even if this was a misrepresentation by omission, there are difficulties for OGP in relying on it. First, OGP expressly disavows criticism of counsel for Zurich, as opposed to the conduct of Zurich and its solicitors before and at that hearing. I do not see how this distinction can sensibly be made. This is not to invite or make criticism of that counsel- it is to say that Zurich at the hearing acted principally through counsel, and may have done so on counsel’s advice prior to the hearing. If there was a misrepresentation, then criticism cannot be made of Zurich and its solicitors without analysis of the role of all players. A similar situation, although in the reverse, arose for consideration in Hudspeth. In that case, it was counsel not his instructor who had commissioned the third unserved report, but Dixon J attributed the actual knowledge of counsel of the report, for the purposes of disclosure pursuant to s 26, to his instructor. Dixon J noted that the barrister is to be regarded as the alter ego of the solicitor for the purposes of s 26 of the CPA.[43]
[43]Hudspeth, at [227].
Secondly, and critically, a misrepresentation to the effect that there may be no notes is not how OGP defines the conduct it impugns. The complaint of OGP is that Zurich and its solicitors (but not its counsel) did not disclose that there were no notes, in the knowledge that no notes existed.[44] In other words, OGP’s complaint is that Zurich represented that there were notes, when they did not exist. Later events showed that notes did in fact exist. Accordingly, as the representation of which complaint is made is that there were notes in existence, then it was not a misrepresentation. How then could it be misleading or deceptive, or likely to mislead or deceive?
[44]OGP Further Submission at [3] and [12].
Zurich takes this point. It submits that even if it did represent that there were notes, when at that time it had been told there were not, its conduct did not lead OGP or the Court into error, because that was in fact always the true position. In Hudspeth, by contrast, there was in fact an unserved report, and Dixon J held that the Court and the other party were misled into believing that there was not. They were so misled because counsel did not seek leave under r 44.03(3) of the Rules to use the expert report at trial.[45] Thus, in Hudspeth, the offending conduct was misleading precisely because it was in breach of an obligation under the Rules. Here, I have found that there is no obligation to disclose whether or not documents the substance of an application for discovery exist prior to the order being made.
[45]Hudspeth at [198].
Given the way that OGP has defined the impugned conduct, the fact that the notes did exist is fatal to its contention that Zurich misled it or the Court, or engaged in conduct likely to do so.
None of this should detract from my earlier expressed view that it would have been far better if Zurich through its current solicitors had been frank about the true situation in relation to the notes prior to or at the September 2014 hearing. As a matter of frankness and courtesy, although not discovery obligation, Zurich should have disclosed that it had been told that there were no solicitor notes, although it doubted that assertion, to OGP and the Court at least by the hearing. Much time and expense has been occasioned in relation to the discovery of these notes, and some or all of this may not have been necessary had Zurich disclosed what Wotton + Kearney had been told in a timely way.
For completeness, I note that OGP proffers a reason for Zurich failing to disclose that there were no notes. It submits that the reason Zurich did not disclose what it had been told was because it would ‘raise eyebrows’. In my view, it is entirely speculative to attribute this motive to Zurich. In particular, to use the phrase Mr Seiter used in his email in this way may be inappropriate.
I conclude that OGP has not established a breach of s 21 by Zurich or Wotton + Kearney.
Section 23: obligation to narrow the issues in dispute
The parties have not referred me to any case in which the Court has expressly found breach of this overarching obligation, and nor have I found any from my own researches. In Naumovski [46] Zammit J expressly found that a party had breached the overarching obligations imposed by s 19 (to only take steps to resolve or determine a dispute) and s 20 (overarching obligation to cooperate) in relation to the issue of various subpoenas. She made an indemnity costs order payable immediately by way of sanction. She did not expressly find a breach of s 23, but on a fair reading of her reasons, she considered the impugned conduct to also be in breach of that section, because the solicitors for the party found in breach had not taken the opportunity afforded by correspondence from the other party to engage in discussions to narrow the dispute or issue amended subpoenas.[47]
[46][2015] VSC 49.
[47]Ibid, at [55]-[56].
As noted, I consider that as a matter of fairness and courtesy, Zurich through its current solicitors should have disclosed prior to the hearing that Mr Manion of its former solicitors had said that he took no notes of the conference. I consider that the failure to do so was also a breach of s 23.
Zurich submits that the obligation to use ‘reasonable endeavours’ in s 23 corresponds on the facts of this case with the obligation to undertake ‘reasonable search’ in relation to discovery.[48] As discussed earlier, Zurich contends it complied with that obligation, and I disagree. Further, I am not persuaded that the two concepts are entirely co-extensive. I consider that ‘reasonable endeavours’ in the context of s 23 also encompasses reasonable disclosure to the other party of salient matters, that may affect the scope of a dispute, even if the time for ‘reasonable search’ for discovery had not yet, as I have found, formally commenced until discovery was ordered.
[48]Zurich Further Submissions at [47].
It would have been reasonable and so required of Zurich to disclose prior to or at the hearing what it had been told by Rankin Ellison because it was reasonably possible that that information may have affected the attitude that OGP would then take. I accept the submission of Zurich that such disclosure may not ultimately have eliminated the need for argument on relevance and privilege in respect of the notes, and also that the hearing on 17 September 2014 concerned other disputed categories of documents. It may then be correct to say that failing to disclose what Mr Manion had said did not lengthen the hearing on 17 September 2014.[49] However, it is possible that solicitors acting reasonably would have agreed in the discussion following such a disclosure that further search be requested at that time. In that sense, an agreement as to how to proceed may have achieved, and the dispute at that time may have been narrowed.
[49]Zurich Further Submissions at [51].
I find that Zurich and its solicitors breached the obligation imposed by s 23 in failing to disclose prior to or at the hearing in September 2014 that they had been told by Rankin Ellison in August 2014 that no solicitor notes had been taken of the conference with Mr Salveson. I would also have found a similar breach in respect of the period after the hearing until 18 March 2015, had a breach in respect of that time period been asserted by OGP.
Section 25: obligation to minimise delay
I accept that discovery of the advice and underlying documents has been given only in tranches, and without immediate express acknowledgement that it was required. I was informed in oral submissions that the full brief was only provided on 11 March 2015.[59] Further, the explanations as to what Ms McFee was referring, and how she obtained it, have been second or third hand and not detailed. It would have been preferable for Zurich to be more frank, detailed and immediately forthcoming in all these respects. However, the discovery will now be provided in a formal way. Further, it is plain that the change in solicitors after the conference and associated waiver of privilege has introduced complication into the discovery process. It may be that the delay and obscurity to date should be reflected in costs orders against Zurich, but no further order is in my view required.
[59]T 13.27-28
I do consider, however, that the discovery that is now to be given must comply with the following requirements. First, discovery and inspection of all documents underlying the advice (from any source) must now be given in full. Secondly, the affidavit must detail the searches and enquiries undertaken to provide the discovery. The usual bald statement that there are no other documents, which conventionally does not set out the searches undertaken to reach that conclusion, will not be sufficient. I do not consider it appropriate to require an affidavit directly from Ms McFee in this regard, but if the further discovery is to be sworn to by an officer of Zurich, then an affidavit will be required from a solicitor who has personally spoken to Ms McFee again ( i.e. after preparation of the draft affidavit which will give the further discovery) and obtained her assurance that there are no other documents (from any source) that she considered in the preparation of the advice. Thirdly, the discovery must extend to the policies or standard wording to which Mr Salveson referred in his email of 4 March 2014 to Mr Manion, to which I referred earlier in this judgment, and generally any policy documents or wording, whether standard across the industry at the time or particular to OGP, that Mr Salveson supplied to Zurich in anticipation of the meeting.
OGP also asserts that proposed order 2(b) is appropriate as a result of waiver of privilege in the advice. Zurich does not dispute that the waiver of privilege in the advice means that documents of whatever origin utilised by Ms McFee for the Stewart advice are no longer privileged in this claim.[60] However, I do not consider that further enquiries as to when she obtained those documents, from whom, for what purpose, and whether they have been used in other similar claims are justified as a result of that waiver. In particular, documents utilised for other claims may be privileged in those claims. The enquiries that OGP seeks to make would expose the use of those documents in other claims. Privilege in respect of the use of documents by Ms McFee in other claims is not waived by her use of them in her advice in this claim, although the documents themselves are no longer privileged in this claim.
[60]Although strictly Zurich submits that the test is whether the advice can be understood without them- T 88.4-18.
Proposed orders 2(c) and 2(d)
I consider that the further discovery to be provided by Zurich will in all likelihood be sufficient to address the question to which proposed orders 2(c) and 2(d) are directed, if this is not already sufficiently answered by discovery to date. I appreciate that OGP would prefer to have it made explicit to what now discovered document Ms McFee was referring at each reference to a policy or policy wording in her advice. However, I accept the submission from counsel for Zurich that this amounts to requiring Ms McFee to annotate her own advice.[61] OGP has the advice, and Zurich will formalise its discovery of all the documents considered in the preparation of that advice. I do not think that Zurich should be required to seek further clarification of the advice for the benefit of the opposing party.
[61]T 85.2-86.16.
Proposed orders 2(e) and 2(f): waiver of privilege in subsequently created documents
Proposed order 2(e) seeks all documents created after the creation of the advice, in which the contents of the advice are discussed. OGP submits that the advice may have been provided to other persons other than the legal representatives of Zurich, as it was to Mr Salveson. That is of course possible, but OGP has no information on which to positively assert that that has occurred. If it has occurred, and the documents thereby created are otherwise discoverable i.e. they relate to an issue in the proceeding, they should be discovered pursuant to the ongoing obligation of discovery. Any proper objection to production on the grounds of privilege may then be made.
The real issue is the submission by OGP that even if such documents would otherwise be privileged, for example subsequent communications between solicitor and counsel for a the purposes of advice or communications in relation to the litigation, that privilege has been waived by the waiver of privilege in the advice itself by its provision to Mr Salveson.
It is common ground that the test for waiver of privilege is as stated in s 122 of the Evidence Act 2008. That section relevantly provides as follows:
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.
The section adopts the common law test for waiver as set out by the High Court in Mann v Carnell[62] and Osland v Secretary to the Department of Justice (‘Osland’).[63] In Mann v Carnell, Gleeson CJ, Gaudron, Gummow and Callinan JJ expressed it thus:
What brings about the waiver is the inconsistency, which the courts, where necessary informed by the consideration of fairness, perceive, between the conduct of the client and the maintenance of the confidentiality; not some overriding principle of fairness operating at large.[64]
[62](1999) 201 CLR 1.
[63](2008) 234 CLR 275.
[64](1999) 201 CLR 1, at [29].
This implied waiver may arise even if the party who has lost the privilege did not intend it to arise.[65] In Osland, the Court confirmed that the determination as to whether there is such inconsistency is to be made in the context and circumstances of the case, and in the light of any considerations of fairness arising from that context or circumstances.[66]
[65](1999) 201 CLR 1, at [29].
[66](2008) 234 CLR 275, at [45] and [49].
It would seem likely that the advice has been the subject of further discussion between the legal representatives for Zurich, or in the context of this litigation. Ordinarily any documents so produced would be privileged. The thrust of the submission by OGP in relation to documents created after the advice, which discuss it, is that it would be inconsistent to keep those documents confidential, assuming they would otherwise be privileged, when the advice is no longer confidential.
OGP has not directed me to any authority that extends waiver to subsequently created documents in this way, and neither party has located an authority that discusses the proposition. Counsel for Zurich has referred me to Matthews v SPI Electricity Pty Ltd and ors[67] in which Derham AsJ helpfully discusses the authorities on associated materials waiver. All the authorities there discussed, and that case itself, all relate to documents underpinning a document in which privilege has been waived, in most cases an expert report. By definition, the associated materials waiver there discussed relates to documents created prior to the document in which privilege has been waived. There is no discussion of any waiver that might arise in relation to a subsequently created document, which discusses the document in which privilege has been waived.
[67][2013] VSC 33
This is for good reason in my view. I do not consider that the principle of implied waiver that OGP seeks to assert in relation to subsequently created documents can be correct, at least as an absolute proposition. There does not seem to me to be any necessary inconsistency in maintaining confidentiality in subsequently documents that are created for the purpose of obtaining legal advice or in the context of litigation which discuss an earlier advice, just because that earlier advice is no longer privileged. By definition, the subsequently created documents will contain further information, opinion and advice, and may not necessarily be confined to the earlier advice in which privilege has been waived. Even if they are so confined, further analysis or discussion of that advice goes beyond the advice in which privilege has been waived, and so there is no inconsistency in maintaining confidentiality in that further analysis or discussion.
For these reasons, I do not consider that proposed order 2(e) is justified.
Proposed order 2(f) is also said to be justified solely by the waiver of privilege in the advice. In my view this is not correct. The submission by OGP assumes that the instructions went no further than to merely recite the McFee advice and instruct Wotton + Kearney to implement it. If that was the case, then OGP now has the advice. If the instructions went any further, and it would seem entirely possible that they did contain other confidential information or instruction for the purpose of this proceeding, then, for the same reasons as set out earlier in relation to proposed order 2(e), I do not consider it inconsistent with the waiver of privilege in the advice, to maintain the confidentiality of that new or additional material.
Third Discovery Dispute
In this dispute, OGP contends that Zurich has waived privilege in some of the documents discovered by Zurich in compliance with the orders of 12 December 2014 in its Further Supplementary Affidavit of Documents sworn by Mr Catling on 5 February 2015, and there claimed to be privileged. Those documents fall within the following groups (identified by description and item number in Part 2 of Schedule 1 of that affidavit):
· documents described as being ‘contained within the Magro solicitor file which may relate to whether or not there was a relevant public liability policy’ (item 4);
· certain documents described as being ‘contained within the Ling solicitor file which may relate to whether or not there was a relevant public liability policy’ (item 6A);
· certain documents described as being ‘contained within the Hayes solicitor file which may relate to whether or not there was a relevant public liability policy’ (item 6B);
· listed documents contained within the Ling Zurich file (item 8);
· listed documents contained within the Magro Zurich file (item 10); and
· listed documents contained within the Hayes Zurich file (item 14).
OGP does not dispute that the documents the subject of this Dispute are privileged.
Order 2 made 12 December 2014 required sufficient particulars to be given of any document claimed to be privileged in order to establish its proper character. Zurich did not comply with this order in the first affidavit of documents sworn in purported compliance with those orders, the Supplementary Affidavit of Documents sworn by Mr Catling on 19 December 2014. Elaborated descriptions of the documents claimed to be privileged have now been given in the Further Supplementary Affidavit of Documents sworn by Mr Catling on 5 February 2015. The documents in question have now been identified by their nature (for example, email, tax invoice, letter etc), by the parties to the communication, by date, and, where required, by issue, in addition to the conventional description of privileged purpose. The recited purposes assert creation to obtain legal advice or for the purposes of this litigation. OGP appears to accept that the elaborated descriptions now given are sufficient compliance with the orders. Needless to say, it should not have been necessary for Zurich to require two attempts to comply with the orders in this respect.
I say that the issue to which the document relates is given ‘where required’, to reflect the fact that by order 1(a) made 12 December 2014 Zurich was only required to give further discovery of documents within the solicitors’ files for various claims where the documents ‘relate to the question as to whether or not there was a relevant public liability policy’. In other words, documents relating to other matters on the solicitor files were not required to be discovered. Zurich has discovered documents from the solicitors’ files accordingly, claiming privilege in respect of some, but not all. Indeed, in diligent compliance, Zurich has in fact extended the category to also discover documents which ‘may’ fall within this description.
There was no such limitation in relation to the discovery of Zurich’s own files for various claims that was ordered by order 1(b) made 12 December 2014. Zurich has not, by description in the affidavits, limited the discovered documents in respect of these files by issue.
OGP relies on claimed inconsistency between partial disclosure of documents in the Magro claim and disclosure of the McFee advice in this claim on the one hand, and the claim for privilege over other documents in the Magro claim and in the Ling and Hayes claims on the other.
Counsel for Zurich submits that it is critical to the claim of implied waiver by reason of inconsistency for OGP to identify the issue to which the disclosed document or documents go, then to show that the disclosed documents were privileged, and why there is an inconsistency between their disclosure and maintenance of confidentiality in the subject documents. It submits that mere commonality of parties to the communication and a temporal connection is not enough.
I will first deal with the Magro documents, as there are additional arguments in relation to them, arising from earlier disclosure of Magro documents.
Waiver arising from previous disclosure of a Magro document
OGP asserts that privilege in the Magro documents, whether on the Zurich file or on the solicitor’s file, has been waived by earlier waiver of privilege in the email from Ms Siobhan Newton of Zurich to Mr Joe Naccarata of Zurich’s then solicitors dated 25 May 2007 and sent at 3.43 pm in that same claim. That email (‘the disclosed email’) was discovered by Zurich some time ago, and no privilege was claimed. I made the following comment in relation to it in my earlier reasons (emphasis added):
In relation to the contention by Zurich that the files for the other claims are privileged, if there are communications within those files as between Zurich and its solicitors or others that fall within s 118 or s 119 of the Evidence Act 2008, those documents should be specifically identified in any claim for privilege once those files are discovered so as to enable any contested issue of privilege to be properly determined. I note, however, that at least one of the documents discovered by Zurich already, being Ms Newton’s email to Zurich’s solicitors of 25 May 2007 relating to Mr Magro’s claim, could arguably have fallen within s 118 of the Evidence Act 2008 as she seeks the solicitor’s advice in relation to the creation of a new policy. Nevertheless, the communication was discovered and no claim for privilege made in respect of it. [68]
[68]Stewart v State of Victoria and ors [2014] VSC 601 at [55].
OGP relies on the fact that the documents on the solicitor’s file relating to the Magro claim in respect of which privilege is claimed include other emails between those same two persons, or file notes created by Mr Naccarata on that same date or within the same date range as the disclosed email, in respect of which no privilege was claimed. Counsel’s submission is that this degree of connection shows that it is inconsistent to assert that confidentiality must be maintained in these documents, when it has not been maintained in a discovered document where no privilege was claimed.
That submission assumes that the disclosed email in which no privilege was claimed was in fact privileged. I noted in the comments quoted above that it was arguably privileged. I did so without argument on the point, and without any necessity to determine it. The comments were obiter, and were intended only to encourage a strict approach to claims of privilege.
I have now heard argument from both parties as to the issue to which the disclosed email relates, and whether or not it was privileged. In relation to issue, I accept the submission of OGP that the email can be said to relate to the question of whether or not there was a relevant public liability policy i.e. the same issue to which the privileged documents (and also non-privileged documents) on the solicitors’ files relate.
The question of privilege turns, however, not on the issue to which the email relates, but its purpose i.e. on whether or not its dominant purpose was to obtain legal advice. I accept the submission of Zurich that litigation privilege was not then relevant.[69] The email contains a request by an officer of Zurich for the solicitor’s opinion, but I accept the submission of counsel for Zurich that the matter with which the disclosed email predominantly deals is the creation of a policy number (in the absence of an actual identified policy for that time period) to which claims made in respect of that time period could be attached, for administrative convenience. In other words, the dominant purpose of that email was not to obtain legal advice and, accordingly, it is properly characterised as not privileged. There was no privilege in it to waive. It follows that disclosure of it cannot create inconsistency with the maintenance of confidentiality in respect of other communications between the same persons or by one of those persons if those communications are properly characterised as privileged i.e. their dominant purpose was to obtain legal advice or for the purposes of actual or anticipated legal proceedings.
[69]T 115.8-22.
Waiver of privileged documents arising from disclosure of the McFee advice
Inconsistency arising from identity of issue
OGP says that the description of the privileged documents on the solicitors’ files as being those ‘which may relate to whether or not there was a relevant public liability policy’ shows that that is the issue to which they relate. Other documents have been disclosed which also relate to this issue, including the privileged document being Ms McFee’s advice. Accordingly, OGP submits that there is an inconsistency between that waiver of privilege and maintenance of confidentiality in the subject documents, because they both relate to the same issue.
In my view, the discussion in relation to the disclosed Magro email above shows that identity of issue alone is not enough. This is because the test for privilege is a purpose test, not an issue test. Documents may be created in relation to the same issue, here whether or not there was a relevant public liability policy, for different purposes- for example, administrative purposes (such as the disclosed Magro email, which was not privileged); fact finding purposes (for example, to ask if a policy has been found, which may or may not be privileged) and for privileged purposes, such as obtaining legal advice (as in the McFee advice).
This analysis is also demonstrated in the Further Supplementary Affidavit of Documents itself. Zurich has discovered documents on the solicitors’ files by issue (i.e. which may relate to whether or not there was a relevant public liability policy) in both Part 1 (not privileged) and Part 2 (privileged) of Schedule 1. In respect of the Magro solicitor file, for example, some documents created by Mr Naccarata (solicitor) relating to this issue are not claimed to be privileged[70] and some are claimed to be privileged.[71] The privileged documents relating to this issue are said to be privileged because they are confidential documents created for the dominant purpose of obtaining legal advice or providing professional legal services relating to that proceeding i.e. because of purpose, and that claim for privilege is not challenged.
[70]Item 22 of Schedule 1 Part 1 of the Supplementary Affidavit of Documents sworn 19 December 2014.
[71]Item 4 of Schedule 1 Part 2 of the Further Supplementary Affidavit of Documents sworn 5 February 2015.
Inconsistency arising from change of position
OGP constructs an elaborate argument to contend that the disclosure of the privileged McFee advice and the disclosed Magro email in this claim means that privilege in documents in other claims is waived.[72] The argument rests on a number of contentions, which I summarise as follows.
[72]Submissions of Fourth Defendant for Use at Hearing on 19 March 2015 at [29].
First, that ‘the nature of the documents over which privilege has been waived in the present proceedings are similar to the documents over which privilege has been claimed in the Ling and Hayes claims…’[73].
[73]Ibid, at [29(c)].
Secondly, it is said to be significant that indemnity was eventually granted in the Ling and Hayes claims, yet denied here, although Ms McFee advised in all three.[74] In other words, the inconsistency is said to arise from this change in position.
[74]Ibid, at [29(a)-(d)] and oral submissions at T 50.24-T 53.3.
Finally, it is asserted that ‘Zurich’s state of mind in relation to granting indemnity in previous claims (Ling and Hayes) and refusing it in this proceeding…is relevant in exposing the inconsistency in Zurich’s position now with its position to grant indemnity previously’[75].
[75]Ibid, at [29(d)] and T 53.10-26.
I do not accept this argument. In relation to the first contention, the only two documents identified over which it is said that privilege has been waived in this proceeding are the disclosed email (not privileged) and Ms McFee’s advice. In relation to the email, as discussed earlier, I do not consider that the mere facts that the same parties were involved in communications over the same time range and in relation to the same claim means that those other communications are necessarily ‘similar’ in content or purpose. The simplest example to refute this suggestion is the common practice of a solicitor for a party to litigation sending to the solicitor for the other party two distinct communications, sent at the same time- one relating to an offer of settlement (without prejudice) and the other relating to an open offer or being a letter to be used in relation to costs. The content and purpose of the communications are different, and so is the status of each communication as privileged, or not.
If communications between the same persons within the one claim may differ as to purpose, and so whether or not they are privileged, the submission that documents in another claim are so similar as to make it inconsistent to maintain their confidentiality is much more tenuous. How can it be said that waiver of privilege in one document in this claim means that the privilege in documents in other claims is as a consequence waived? In the simplest terms, there would ordinarily be no sufficient link between them to establish the necessary inconsistency in Zurich’s conduct.
In fairness to OGP’s submission, it is clear that Rankin Ellison acted, and Ms McFee advised, in the Ling and Hayes claims as well, and while privilege was waived in her advice in this proceeding, it is claimed in her advices in the Ling and Hayes matters. Thus there is both an identity of parties and counsel in all three matters, and a likely overlap of at least some issues, given that in no claim could an actual policy be located. There may well, however, have been significantly different factual or strategic differences as between the various claims that are also addressed in the opinions and other privileged documents.
Even if the privileged documents are relevantly ‘similar’ however, to the disclosed documents or documents in which privilege has been waived, I do not consider similarity of content or purpose to be enough to show inconsistency in the conduct of Zurich. The onus is on OGP to show this inconsistency. There is no evidence that Zurich or its then solicitors did otherwise than to treat the privileged documents in the Ling and Hayes claims as confidential. In particular, there is no evidence that any of the privileged documents were disclosed to third parties. The then solicitors for Zurich chose to disclose an advice to a potential witness in this claim, which is later in time than Ling and Hayes. That is not inconsistent in my view with maintaining the confidentiality in the earlier created documents in Ling and Hayes.
Finally, I do not consider that the claimed ‘inconsistency in Zurich’s position’ (on indemnity) is the relevant inconsistency. The inconsistency that OGP must show is an inconsistency of conduct in waiving the confidentiality of one document and seeking to maintain it in other documents, not an inconsistency in position on indemnity. It may seem unfair to OGP that Zurich has changed its earlier position on indemnity, but unfairness is no longer the test for waiver, just a consideration in some cases. For perceived unfairness in a change in position to be relevant as a consideration informing inconsistency, there would need to be, in my view, some legal barrier to a change in position. OGP’s submission continues to assume that Zurich’s state of mind as to indemnity in the various claims is legally relevant. I dealt with this contention in my earlier reasons and rejected it. As I there stated:
It is not suggested on the pleadings that Zurich would be estopped by its prior acceptance of liability in other claims from denying it in this. Accordingly, the reasons why another claim was accepted but not this are not relevant, unless the reasons for that decision evidence a policy.[76]
[76]Stewart v State of Victoria and ors [2014] VSC 601 at [36].
For these reasons, I will refuse the relief sought in respect of the Third Discovery Dispute. For completeness, I record that Zurich offered to make the documents in question available to me to inspect for the purpose of resolving this Dispute. I did not consider it necessary to look at the documents, and have not done so.
Application to reopen
The trial of this proceeding is currently listed for 12 August 2015, and a final directions hearing was scheduled for 17 July 2015. On 14 July 2015, I adjourned that directions hearing of my own motion to 31 July 2015 and caused the parties to be informed of the adjournment, and that it was my intention to deliver judgment by 31 July 2015. Both parties have now informed me that they will jointly seek that the current trial date be vacated as the matter is not ready for trial in any event.
On 17 July 2015, apparently in response to that communication from the Court, the solicitors for Zurich sought that its case be reopened prior to judgment being handed down. This was said to be on the basis of a recently arisen matter, which occurred after the hearing, but was said to impact on a submission made by OGP at the hearing.
I heard that application to reopen on Monday 27 July 2015. It was supported by two affidavits of Ms Sung. The application was opposed, and OGP relied on an affidavit in opposition sworn by Mr Nathaniel. I had directed both parties to file and exchange written submissions prior to the hearing, and both did so. After hearing from the parties, I refused the application giving brief oral reasons. I indicated that I would elaborate my reasons in this judgment. I now do so.
Zurich sought to reopen its case in opposition to the application by OGP for sanction under the CPA. It sought to present evidence of events that had occurred since the hearing and to submit that by reason of those events OGP’s submission that the conduct of Zurich and its lawyers had delayed the progress of the proceeding should not be accepted. In short, the proposed fresh evidence would show that OGP made further discovery after the hearing, which discovery suggested further lines of enquiry as to possible relevant insurance in the mid 1960s. In response to a request from OGP to undertake those enquiries, Zurich did so, which took some time in view of the antiquity of the documents sought. Zurich asserts that those enquiries did not in the result identify any further discoverable documents.
Although these events occurred after the hearing, Zurich submitted that they were relevant to the allegation of delay to the progression of the proceeding, because ‘(t)he progress of the claim is limited by the net delay in discovery by both parties’. This is because the parties had agreed to complete discovery before OGP be required to properly plead its third party claim. The ‘net delay’ is determined by the timing of the latest discovery, and the proposed new evidence would show that that latest discovery was by OGP.[77]
[77]Zurich’s submission on its application to reopen its case in opposition to OGP’s application for sanction against Zurich and its lawyers dated 24 July 2015 (‘Zurich’s Submission on Reopening’) at [12]-[13].
Zurich submitted that the overall test as to whether or not leave to reopen should be given is, as identified in Spotlight Pty Ltd v NCON Australia Ltd[78] (‘Spotlight’), whether, taken as a whole, the justice of the case favours the grant of leave to re-open. Here, so Zurich submits, the justice of the case favours reopening because the fresh evidence may affect determination of the submission that Zurich caused delay in the disposition of the dispute; the fresh evidence relates to events which occurred after the hearing, and so could not have been led at the hearing; its admission would cause no prejudice to OGP; the evidence is short and non-contentious; and a more liberal approach to reopening should be applied to an interlocutory application and one that involves the Court’s inquiry into the conduct of parties and practitioners.[79]
[78][2012] VSCA 232 at [26].
[79]Zurich’s Submission on Reopening at [6], [16]-[22].
The application to reopen was opposed. OGP does not dispute that it made further discovery on 4 May 2015. It submitted that that discovery is ‘entirely separate and distinct from the matters that were argued during the hearing’, and accordingly the fresh evidence was not in the category of fresh evidence contemplated in Spotlight.[80] In addition, OGP said that Zurich had caused further unexplained delay in responding to this further discovery.
[80]Submissions in opposition to the Third Party having leave to re-open its case dated 24 July 2015, at [2(b)] and [4].
I refused the application principally because I accepted the submission by OGP that the fresh evidence is not relevant to the matters argued at the hearing. In Spotlight the Court of Appeal adopted the reasoning of Kenny J in Inspector-General in Bankruptcy v Bradshaw (‘Bradshaw’)[81] that there are four recognised classes of case in which a court may grant leave to reopen.[82] These are (i) where fresh evidence, unavailable or not reasonably discoverable before, becomes known and available; (ii) where there has been inadvertent error; (iii) where there has been a mistaken apprehension of the facts; and (iv) where there has been a mistaken apprehension of the law. Kenny J added in Bradshaw that: ‘In every case the overriding principle to be applied is whether the interests of justice are better served by allowing or rejecting the application for leave to re-open’.[83]
[81][2006] FCA 22.
[82]Spotlight, at [25].
[83]Bradshaw, at [26].
Neither the Court of Appeal in Spotlight or Kenny J in Bradshaw elaborated what it, or she, meant by ‘fresh evidence’. In my view, that phrase is to be interpreted as further evidence on an issue previously argued, being evidence that was not then obtainable by reasonable diligence. The relevant issue previously argued here concerned delay in the delivery of the notes of the conference. The evidence now sought to be admitted does not relate to delay in the delivery of the notes. It relates to an entirely separate issue- whether there has been delay in the progression of the proceeding due to subsequent late discovery by OGP.
True it is that the evidence about that issue touches on delay in the proceeding as a whole. Had I otherwise been minded to find that delay in the delivery of the notes caused delay in the progression of the proceeding as a whole, the justice of the case may have required the issue of overall delay to be reopened, at least in relation to sanction. I am not, however, so minded and I had already reached that conclusion by the time the application was argued.
I would add that any further allegation by either party of delay at the hands of the other in the taking of interlocutory steps may be best dealt with after the conclusion of all interlocutory steps, and possibly at trial. This is because it will only be after the conclusion of all interlocutory steps, and may only be at trial, that the significance of delay in any particular step to the overall progression of the proceeding can be ascertained.
Orders
I will ask the parties to confer in relation to the orders to be made to give effect to these reasons, including orders as to costs, and costs orders by way of sanction. If they do not agree, I will hear them further.
SCHEDULE OF PARTIES
| YVONNE STEWART | Plaintiff |
| STATE OF VICTORIA | First Defendant |
| AMCOR LTD | Second Defendant |
| ESSO AUSTRALIA PTY LTD | Third Defendant |
| OLYMPIC GENERAL PRODUCTS PROPRIETARY LIMITED | Fourth Defendant |
| ZURICH AUSTRALIAN INSURANCE LTD | Third Party |
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