TEC Hedland Pty Ltd v The Pilbara Infrastructure Pty Ltd
[2018] WASC 300
•1 OCTOBER 2018
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: TEC HEDLAND PTY LTD -v- THE PILBARA INFRASTRUCTURE PTY LTD [2018] WASC 300
CORAM: LE MIERE J
HEARD: 13 SEPTEMBER 2018
DELIVERED : 1 OCTOBER 2018
FILE NO/S: CIV 3060 of 2017
BETWEEN: TEC HEDLAND PTY LTD
Plaintiff
AND
THE PILBARA INFRASTRUCTURE PTY LTD
Defendant
Catchwords:
Procedure - Discovery - Inspection of documents - Client legal privilege - Whether privilege has been impliedly waived
Legislation:
Nil
Result:
Application allowed in part
Category: B
Representation:
Counsel:
| Plaintiff | : | Ms K R Lendich |
| Defendant | : | Ms R Young |
Solicitors:
| Plaintiff | : | Norton Rose Fulbright Australia |
| Defendant | : | Corrs Chambers Westgarth |
Case(s) referred to in decision(s):
Bennett v Chief Executive Officer, Australian Customs Service (2004) 210 ALR 220
Kenquist Nominees Pty Ltd v Campbell [No 5] [2018] FCA 853
Mann v Carnell (1999) 201 CLR 1
LE MIERE J:
Summary
By summons of 6 July 2018 the plaintiff, TEC Hedland Pty Ltd (TECH), seeks orders restricting the access of the defendant, the Pilbara Infrastructure Pty Ltd (TPI), to certain documents produced by Black & Veatch Australia Pty Ltd in answer to a subpoena on the grounds of client legal privilege. The documents are documents of Black & Veatch Canada Company (B&V).
After the summons was issued the parties conferred and have reached agreement except in relation to eight documents which are described in sch 1 to the plaintiff's minute of proposed orders dated 12 September 2018.
For the reasons which follow the defendant will be prohibited from inspecting the draft performance test reports dated 23 June 2017 bearing the document numbers TRA.001.001.1096 and TRA.001.001.1104. The plaintiff's application will otherwise be dismissed.
The action
On 28 July 2014 TECH, TPI and certain other parties entered into an agreement entitled Power Purchase Agreement. Under that agreement TECH was to supply electricity to TPI. Also on 28 July 2014 TECH entered into a Development Deed with Horizon Power to construct and commission a power plant and associated plant at a site in the Pilbara. Certain testing was to take place under those agreements.
The law firm, Squire Patton Boggs (SPB) was, and had been since June 2013, providing advice and assistance to TECH in relation to this transaction, TECH's legal and technical obligations and later, in anticipation of and in relation to litigation.
In about March 2017 TECH engaged B&V to develop a test procedure and to perform the calculation of performance test results relevant to that testing, which is now in issue in these proceedings. As part of that engagement B&V was bound by confidentiality obligations. To assist B&V with its engagement TECH provided it with information. There were numerous exchanges between TECH and B&V and in some of those exchanges TECH provided B&V with information from and to SPB.
Communications in issue
The communications which remain in issue are as follows. The first is an email sent by Mark MacKay of TPI to Clare Pope of SPB on 13 June 2017 at 1.02 am and copied to Ali Assaf and Brian Reinhart of B&V as well as Kelvin Koay and Jamie Hodel of TECH. The email attached a draft letter from B&V to TECH. The draft letter is the second communication in issue. The third communication is an email sent by Ms Pope on 13 June 2017 at 9.32 am to Mr Mackay and copied to Mr Assaf, Mr Reinhart, Mr Koay and Mr Hodel. Attached to that email was a draft letter from B&V to TECH. That draft letter is the fourth communication in issue. The fifth and sixth communications in issue are performance test reports dated 23 June 2017. The seventh communication in issue is an email sent on 19 July 2017 at 1.02 am by Mr Reinhart to Mr Mackay and copied to Ms Pope and officers or employees of B&V. Attached to that email was a draft letter from B&V to TECH. That draft letter is the eighth communication in issue.
TECH asserts that each of the communications in issue are protected from inspection by client legal privilege. TPI does not contest that the communications are privileged. TPI says that any privilege has been waived. TPI does not claim that there has been an express waiver of privilege. The issue in relation to the communications which are in dispute is whether any privilege which protects communications to and from TECH and its lawyers was impliedly waived when TECH's officers forwarded to, or copied in, officers of B&V communications between TECH and its lawyers.
What brings about a waiver of client legal privilege is inconsistency between the conduct of the person entitled to the benefit of confidentiality of communication between lawyer and client and maintenance of the confidentiality: Mann v Carnell (1999) 201 CLR 1.
In Kenquist Nominees Pty Ltd v Campbell [No 5] [2018] FCA 853 Thawley J gave an overview of waiver of legal advice privilege at [21] ‑ [25]:
A person who would otherwise be entitled to the benefit of legal advice privilege may waive that privilege: Mann v Carnell (1999) 201 CLR 1 at [28], per Gleeson CJ, Gaudron, Gummow and Callinan JJ.
The test for waiver is whether there has been an inconsistency between what a client has done and maintenance of the privilege. It does not matter whether the client subjectively intends to waive the privilege. The High Court observed in Mann at [29]:
'Waiver may be express or implied. Disputes as to implied waiver usually arise from the need to decide whether particular conduct is inconsistent with the maintenance of the confidentiality which the privilege is intended to protect. When an affirmative answer is given to such a question, it is sometimes said that waiver is 'imputed by imputed operation of law'. This means that the law recognises the inconsistency and determines its consequences, even though such consequences may not reflect the subjective intention of the party who has lost the privilege.”
Implied waiver of privilege 'reflects a judgment that the conduct of the party entitled to the privilege is inconsistent with the maintenance of the confidentiality which the privilege is intended to protect'; that judgment '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': Osland v Secretary, Department of Justice (2008) 234 CLR 275 at [45], per Gleeson CJ, Gummow, Heydon and Kiefel JJ.
It is the challenger of the privilege who bears the onus of demonstrating waiver of privilege: Archer at [100].
A limited disclosure of the existence, and the effect, of legal advice may not be inconsistent with maintenance of confidentiality in the terms of the advice; it depends on the circumstances of the case: Mann at [30]‑[32]; Osland at [49].
It is convenient to consider the 13 June 2017 emails and the draft letters attached to them together. In early June 2017 TECH and TPI were in dispute over whether B&V's test procedures were compliant with the PTC 46 test procedure required under the Power Purchase Agreement. B&V expressed some caution over TECH's initial draft of the letter in respect of the portion which described the extent to which the proposed test procedure could be said to accord with PTC 46. Communications to and from TECH and its lawyers copied to B&V followed thereafter. I infer that the purpose of the communications between TECH and its lawyers being copied to B&V was to enable TECH to clarify with and satisfy B&V as to the correct wording of the letter using the advice from TECH's lawyers. That ultimately resulted in a letter of 14 June 2017 from B&V to TECH in which B&V stated:
We confirm that the B&V PTC 46 Performance Test Procedure is in accordance with ASME PTC 46‑1996 for Overall Plant Performance.
Whether or not the B&V PTC 46 Performance Test Procedure is in accordance ASME PTC 46‑1996 for Overall Plant Performance is a major issue in this action.
On 30 June 2017 TECH sent to TPI a letter in which it asserted that the test procedure developed by B&V was developed and executed in accordance with ASME PTC 46 and meets the requirements of the Power Purchase Agreement. TECH stated:
We attach a letter from Black & Veatch confirming that the test procedure that has been developed is in accordance with ASME PTC 46.
Accordingly, TPI submits that the purpose of copying B&V into the communications and thereby disclosing privileged communications between TECH and its lawyers was to assist TECH in obtaining B&V's written confirmation on a key issue, which was then and remains a matter in dispute between TPI and TECH. TPI says that TECH's action of copying in B&V officers into its communications with its lawyers is analogous to taking an action to provide it with a forensic advantage.
The letter and the email are not of themselves in dispute in the proceedings, nor is the preparation of the letter. What is in dispute is whether the testing was in accordance with the Power Purchase Agreement and PTC 46. TECH submitted that this will be determined by the court on the proper construction of the Power Purchase Agreement and PTC 46 and with regard to expert and lay evidence. The emails and the preparation of these letters will have no bearing on that matter. TECH submitted that there is no forensic unfairness in the maintenance of privilege in these communications.
Those matters are not determinative. The question is whether maintenance of the privilege is inconsistent with the use to which the party has put the communication. In Bennett v Chief Executive Officer, Australian Customs Service (2004) 210 ALR 220 Gyles J said, in reference to the test whether privilege in a document has been waived:
The test looks to inconsistency between the disclosure that has been made by the client on the one hand and the purpose of confidentiality that underpins legal professional privilege on the other. It is not a matter simply of applying general notions of fairness as assessed by the individual judge. The authorities to which I have referred show that it is well established that for a client to deploy the substance or effect of legal advice for forensic or commercial purposes is inconsistent with the maintenance of the confidentiality that attracts legal professional privilege [68]. (emphasis added)
Cross on Evidence (11th Aust ed, 2017) at [25010] gives the following example of a party waiving legal professional privilege by partial disclosure for forensic advantage:
An example of inconsistency may arise when one party deploys a partial disclosure for forensic advantage, while seeking unfairly to deny the other party an opportunity to seek the full text or associated material from which the disclosure was made.
TECH deployed the letter from B&V confirming that the test procedure that had been developed was in accordance with ASME PTC 46 for its advantage in its dispute with TPI. The purpose of the legal advice privilege attaching to SPB's advice about the requirements for B&V's testing procedure to be in accordance with the testing procedure required by the Power Purchase Agreement is to protect TECH from subsequent disclosure of that advice. For TECH to disclose the legal advice to B&V for B&V to draft and send a letter to TPI for the purpose of advancing TECH's contractual dispute with TPI concerning the testing procedure is inconsistent with maintaining the confidentiality that attracts the legal advice privilege. I find that TECH has waived privilege in the emails and draft letters.
Draft performance test reports
The draft performance test reports are B&V reports which were marked up by TECH's lawyer and another person or persons responding to the questions or comments of the TECH lawyer. The marked up version was then sent back to Mr Mackay of TECH to B&V.
TPI does not seek to inspect an un‑redacted copy of the report but seeks a redacted version of the draft report. TPI accepts that the mark ups by TECH's lawyers which asked questions to TECH and TECH's responses to those questions may be privileged but says there are other mark ups to the draft report which do not attract privilege.
TECH does not agree that redacted versions of the draft reports be produced. TECH maintains privilege over the whole of the drafts. Colleen Pratt, in house counsel of TECH, has affirmed an affidavit on 22 August 2018. Ms Pratt says that the draft performance test reports contain tracked or marked up changes and highlighting. She continues:
Some, but not all of that mark up, is attributed to a particular person. Many of those mark ups are, however, in square brackets and comment with the following 'SPB:'. As I read that, those are mark ups attributable to SPB. They include questions or comments about the documents, the PPA and the Development Deed with Horizon Power, among other things.
[Draft Performance Test Report] Document TRA.001.001.1104 contains additional mark ups and comments which appear to be responses to the questions or comments referred to in [Draft Performance Test Report] document TRA.001.001.1096.
By reading the documents a reader might ascertain the nature of advice sought or given.
TECH could provide a redacted copy of the reports in which only the comments attributed to 'SPB' were redacted. TECH says that by reading the documents a reader would ascertain the nature and content of advice sought or given even if the statements expressly attributed to 'SPB' were redacted.
I am not satisfied that a reader of the reports redacted in the manner proposed by TPI would not ascertain the nature and content of the legal advice sought or given as asserted by Ms Pratt. The draft performance reports are privileged. Neither the reports nor redacted versions may be inspected by TPI.
The 19 July 2017 email and letter
TECH claims privilege over an email sent by TECH to B&V on 19 July 2017 at 12.11 am (18 July 2017 11.11 am Canadian time) and an attached draft letter. The email makes observations about TECH's lawyers, PTC 46 and the drafting of the letter. The draft letter is from B&V to TECH. The final version of the letter is the letter dated 18 July 2017 from B&V to TECH. Like the final letter from B&V dated 14 June 2017 referred to above, this letter provides written confirmation that:
B&V PTC 46 Performance Test Procedure is in accordance with ASME PTC 46‑1996 for Overall Plant Performance (ASME Code).
It may be inferred, and I do infer, that the purpose for the communication was to enable TECH to clarify with and satisfy B&V as to the correct wording of the letter by which B&V would confirm the test procedure was in accordance with PTC 46. For the same reasons I have given in relation to the June emails and draft letters, TECH has impliedly waived any privilege in these communications.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
RK
ASSOCIATE TO THE HONOURABLE JUSTICE LE MIERE1 OCTOBER 2018
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