Taylor v Santos Limited & Ors No. Scgrg-96-2015 Judgment No. S317

TAYLOR V SANTOS LIMITED & ORS

[1999] SASC 317

JUDGE BURLEY. By application dated 23 April 1999 (Document 118) the plaintiff seeks the following order:
“That the first defendant do produce to the plaintiff for the purpose of inspection and copying a two page letter from M G Roberts, Group General Counsel of the Santos Group, to Mr C F Woodhouse, Farrer & Co dated 27 September 1996 ...”
The letter has been discovered by the first defendant who has refused to produce the document for inspection on the ground of legal professional privilege. The application has been brought within the plaintiff’s action against the defendants in respect of, inter alia, alleged wrongful dismissal.
It is common ground that the two page letter was sent by facsimile transmission by the first defendant in conjunction with a letter, subsequently handed to the plaintiff, terminating the plaintiff’s employment with the first defendant. The facsimile transmission was directed to a Mr Woodhouse, who is and was a partner of Farrer and Co, solicitors. It is apparent from the correspondence exhibited to the affidavit of Mr Dugan, sworn on 23 April 1999, that the plaintiff did not accept the first defendant’s contention that legal professional privilege applied to the letter.
The first defendant filed the affidavit of Mr Feary sworn on 12 May 1999 in opposition to the application. In that affidavit Mr Feary disclosed that prior to the termination of the plaintiff’s employment, the plaintiff had given notice to the first defendant that he intended to commence proceedings against the first defendant if the dispute between them was not otherwise resolved by 23 September 1996. Paragraphs 6 and 7 of Mr Feary’s affidavit are as follows:
“6..... I am informed by Mr M G Roberts, Group General Counsel of Santos Ltd and verily believe that following the receipt of the letter dated 16 September 1996 being Exhibit “GKF 1.1” above Santos Ltd sought legal advice from external solicitors in relation to that letter and the subsequent letters dated 20 September 1996 and 23 September 1996 being Exhibits “GKF 1.3” and “GKF 1.4” above.
7...... I am further informed by Mr Roberts and verily believe that the document over which privilege is claimed:
-....... is a letter to Mr C F Woodhouse of Farrer & Co, the solicitors for Santos Ltd in the United Kingdom;
-....... was brought into existence for the sole purpose of preparing for contemplated legal proceedings namely those threatened by the plaintiff in Exhibits “GKF 1.1”, “GKF 1.3”, and “GKF 1.4”;
-....... was consequent upon advice from external Australian solicitors; and
-....... sought information for submission to legal advisers in regard to the plaintiff’s threat of litigation contained in Exhibits “GKF 1.1”, “GKF 1.3” and “GKF 1.4”.
If the statements made by Mr Feary in paragraphs 6 and 7 are accepted by me in an unqualified manner, it seems to me that the first defendant should not be required to produce the letter for inspection by the plaintiff because the letter is privileged. However, Mr Wells QC, counsel for the plaintiff, submitted that I should not accept Mr Feary’s affidavit. Whilst he accepted, as I do, that Mr Feary in his affidavit faithfully recorded the instructions given to him by Mr Roberts, that was not sufficient on an application such as this. Mr Wells argued that Mr Roberts should be required to file an affidavit so that, if doubt were cast about the legitimacy of the claim for privilege, Mr Roberts could be, with the leave of the Court, cross-examined on his affidavit.
Mr Gray QC, counsel for the first defendant, submitted that this was an interlocutory application and hearsay affidavits were permitted. He contended that I should accept paragraphs 6 and 7 of Mr Feary’s affidavit without qualification and, if I did so, that constituted a complete answer to the plaintiff’s application for production of the letter.
Mr Feary is one of the defendants’ solicitors. I infer, therefore, that he has read the letter of 27 September 1996. Thus, in paragraph 7 of his affidavit, the statement that Mr Woodhouse was the addressee must be of his own knowledge as is his statement that the letter “sought information for submission to legal advisers in regard to the plaintiff’s threat of litigation”. To that extent the plaintiff cannot be heard to complain that paragraphs 6 and 7 of Mr Feary’s affidavit consist of hearsay material.
As to the balance of the contents of paragraphs 6 and 7, because it is an interlocutory application, and because hearsay evidence is admissible on such applications, I do not consider my task to be one of ruling as to whether or not the affidavit is admissible. Rather, my task is to decide whether or not the factual substratum said to give rise to the claim for privilege as disclosed in paragraphs 6 and 7 of Mr Feary’s affidavit, is sufficient. Nor do I think, that if the affidavit proves to be insufficient, I should direct the plaintiff to file an affidavit of Mr Roberts. It is not for me to tell the first defendant how it is to oppose an application for production of the document. If it is necessary, I may give the first defendant the opportunity of filing Mr Roberts’ affidavit if it chooses to do so.
The plaintiff contends that the matters deposed to in paragraphs 6 and 7 of Mr Feary’s affidavit should not be accepted at face value. That submission must be examined in the context that I accept that Mr Feary, to the extent that he has related facts supplied to him by Mr Roberts, has faithfully done so. In addition, I accept Mr Feary’s direct evidence that the letter is one to Mr Woodhouse of Farrer and Co, and that the letter sought information for submission to legal advisers in regard to the plaintiff’s threat of litigation. I think the statement made by Mr Feary that Woodhouse and Co were the solicitors for Santos Limited in the United Kingdom must be taken as a hearsay statement because Mr Feary would not necessarily know that of his own knowledge.
It is common ground that Mr Woodhouse, as well as being a partner of the firm of Farrer and Co, was at the material time a member of the Board of Santos Europe Limited (SEL). He was a non-executive director. On earlier discovery applications, Mr Woodhouse has been described as an independent director, ie independent from the first defendant in the sense that he is not a member of the Board of the first defendant. As I understand it, the fact that Mr Woodhouse was an “independent director” of SEL, was evidence which, if taken in conjunction with affidavit evidence of the plaintiff, indicated, for the purposes of this application, that Mr Woodhouse could not be said to be in a solicitor/client relationship with the first defendant.
In his affidavit sworn on 13 May 1999, the plaintiff deposed as to his relationship with Mr Woodhouse and as to the circumstances relating to Mr Woodhouse handing to the plaintiff the letter of termination of the plaintiff’s employment with the first defendant. The plaintiff said in his affidavit:-
“3..... During the period of my employment with the first defendant all of my business dealings with Charles Woodhouse were in his capacity as a director of Santos Europe Ltd. I did not at any time have any business dealings with him in his capacity as a legal practitioner.
4...... During the period of my employment with the first defendant and while I was residing in the United Kingdom I interacted with Charles Woodhouse on a number of occasions in a social context. I recall that Mr Woodhouse invited my family and me to his house for a Sunday evening dinner with his wife and adult children. My family and I also hosted a Sunday lunch for Mr Woodhouse and his wife in our home. Mr Woodhouse invited my family and me to attend a Christmas Eve drinks party held in his home in 1995. Mr Woodhouse explained to me at the time that it was a tradition in his family to hold such a party for friends and relatives every Christmas. Mr Woodhouse also suggested to me and my wife (in my presence) on several occasions that we consider utilising his daughter as a babysitter for our young children.
5...... On the evening of 30 September 1996 Mr Woodhouse telephoned me at my home (when I was still resident in the United Kingdom) and said that he would like to visit me the following evening. He did not at any time during that conversation suggest or in any way indicate that he intended to visit me in the capacity of a solicitor acting on behalf of any of the defendants or any other party.
6...... Mr Woodhouse subsequently visited me at my home on the evening of 1 October 1996. At the outset of the meeting Mr Woodhouse stated that the purpose of his visit was to see if he might be able to persuade me to resign from my employment with the first defendant. Both I and my wife (who was present at the meeting) indicated to Mr Woodhouse that, for legal reasons, I would not be prepared to resign. I have an actual and distinct recollection that in response to such statements from me and my wife Mr Woodhouse said ‘... I am not here as a lawyer’. Mr Woodhouse expressed to me that he did not wish to discuss any legal issues and did not in fact discuss any such issues during the course of our meeting. At no stage during our meeting did Mr Woodhouse suggest or in any way indicate that his attendance upon me that evening was in his capacity as a solicitor acting on behalf of the defendants or any other party.
7...... At the conclusion of our meeting, when Mr Woodhouse had been unable to persuade me to submit my resignation from my employment with the first defendant, Mr Woodhouse handed to me the letter or termination of my employment from the first defendant to me dated 27 September 1996, being the letter referred to in paragraph 8 of my affidavit sworn on 30 July 1997 and filed in these proceedings.”
A comparison of the evidence respectively relied upon by the parties reveals that, on the one hand, the first defendant say that the letter was sent to Mr Woodhouse solely for the purpose of preparing for contemplated legal proceedings and that it sought information for submission to legal advisers in relation to that contemplated litigation. As against this, the plaintiff said that Mr Woodhouse was an independent director of SEL, that he had never dealt with Mr Woodhouse as the solicitor for the first defendant, that on 1 October 1996 Mr Woodhouse said that he was not in attendance “as a lawyer”, that the issues in dispute between the plaintiff and the defendants as at 1 October 1996 were not discussed, and that it was not until the conclusion of their meeting that the letter of termination was handed by Mr Woodhouse to the plaintiff.
In the circumstances referred to by Mr Dugan and the plaintiff in their respective affidavits, it is difficult to see how a relationship of solicitor and client might have existed between the first defendant and Mr Woodhouse. If, by the letter, Mr Woodhouse was instructed to speak to the plaintiff about resigning from the first defendant’s employment but if that were unsuccessful to hand him the letter of termination, I cannot see that that would be covered by legal professional privilege. I refer to the judgment of the majority in Grant v Downs (1976) 135 CLR 674 where their Honours said at 686:-
“With the advent of large corporations, documents necessarily proliferate; the knowledge of servants of the corporation is, in legal theory, the knowledge of the corporation itself but will only become so in fact when communicated to that corporation. It is in the course of converting legal theory into fact that corporations require their servants to furnish to management reports of activities known only, in the first instance, to the servants. Hence the proliferation of documents.
An individual seeking legal advice cannot be required to disclose the information he communicated to his legal adviser nor the nature of the advice received; nor may the legal adviser disclose it. However, a litigant is, of course, bound to disclose his own knowledge of relevant facts. It would be curious if, because the litigant happens to be a corporation, the rule was for that reason different. Yet it is said that a corporation, necessarily having recourse to documents in the form of reports for the purpose of informing its management of the knowledge of its agents, may claim privilege if one of the purposes of management was to make available such reports to its legal advisers should litigation ensue, the probability or possibility of litigation being anticipated at the time. The Court of Appeal made this point in Anderson v. Bank of British Columbia (1876) 2 Ch.D. 644. James L.J. contrasted the position of an individual and a company and said of the latter that ‘a communication between a principal and his agent in the matter of the agency, giving information of the facts and circumstances of the very transaction which is the subject-matter of the litigation’ should not be the subject of privilege but should be available on discovery [at 657]. The principal ought to know what the agent knows since ‘the matter of the agency is, or ought to be, the knowledge of the principal’. Mellish L.J. said [at 658]:
‘In point of law, the principal is to be deemed to have known the facts before he has actually got personal information about them. I cannot but think that, as you are entitled to ask the principal what he knows respecting those facts, you must necessarily be entitled to the information which his agent has sent respecting them.’
Baggallay J.A. pointed out that had the bank been an individual, not a corporation, the fullest particulars of the transaction in question would have had to be supplied and it would have been no answer for the individual to say ‘I did not attend to this matter personally. I sat upstairs, and the business was managed by my clerks here or by my clerks in Oregon’ [at 662]. As his Lordship said, he would, for the purpose of making discovery, have been obliged to ascertain the details from his clerks or manager.”
Their Honours said later in their judgment (at 688):-
“It is to be observed that in Jones v. Great Central Railway Co. [1910] A.C. 4, their Lordships specifically approved of Anderson v. Bank of British Columbia ..., Lord Loreburn saying [at 6]:
‘Both client and solicitor may act through an agent, and therefore communications to or through the agent are within the privilege. But if communications are made to him as a person who has himself to consider and act upon them, then the privilege is gone; and this is because the principle which protects communications only between solicitor and client no longer applies. Here documents are in existence relating to the matter in dispute which were communicated to some one who was not a solicitor, nor the mere alter ego of a solicitor.
Disclosure is constantly required of letters between partners or between a firm and its agents. It is rare in litigation when communications are confined to letters passing between solicitor and client. And every large concern, whether a railway company or a trade union or whatever it be, that must needs conduct its business by correspondence is amenable to the same rule - a rule in itself wholesome, for it favours the placing before a Court of justice of all material circumstances that may lead to a just decision.’ ”
The passage quoted from the speech of Lord Loreburn seems to me to be potentially applicable to the circumstances of this application. The plaintiff says that the communication to Mr Woodhouse must be taken as no more than an instruction by a principal to its agent to have a conversation with the plaintiff and depending upon the result of that conversation, to deliver a letter of termination of employment. In other words, it was merely a principal acting through an agent and the communication between the two could not be the subject of privilege. As against this, the first defendant filed an affidavit of its solicitor in which the claim for privilege is articulated. It has not been suggested that Mr Feary was the solicitor consulted in relation to any advice sought by the first defendant in respect of the anticipated litigation (as at 1 October 1996).
In those circumstances I have some hesitation in refusing the application because the facts and submissions advanced by the plaintiff have cast some doubt on the question of the sufficiency of the hearsay material in Mr Feary’s affidavit. On the other hand, I have some hesitation in granting the application because of the clear statement made by Mr Feary in paragraph 7 of his affidavit that the document sought information for submission to legal advisers in regards to the plaintiff’s threat of litigation. If the document were confined to material of that nature, there is no doubt in my mind that the claim for privilege has been properly made. If the letter goes beyond that description, different considerations may apply.
I bear in mind that the document may be inspected by the Court. It is clear from Grant v Downs that the Court is entitled to inspect the document if that is necessary. Normally that power is only exercised where there is some doubt as to whether or not privilege has been correctly claimed. In view of my state of uncertainty, I think it appropriate to direct that a copy of the letter be produced to me so that I may inspect it before making a ruling on the application.

[1999] SASC 317

5 August 1999