The Owners - Strata Plan No. 74602 v Eastmark Holdings Pty Limited

The Owners - Strata Plan No. 74602 (the Owners Corporation) appealed to the Court of Appeal of New South Wales against a decision of the primary judge concerning the inspection of documents. The dispute arose when a lot owner, Eastmark Holdings Pty Limited, sought to inspect documents held by the Owners Corporation, asserting a common or joint interest in them. The Owners Corporation resisted this claim, asserting legal professional privilege over the documents.

The central legal issue before the Court of Appeal was whether legal professional privilege could be asserted by the Owners Corporation against a lot owner, Eastmark, in circumstances where the documents related to proceedings that Eastmark pursued ostensibly for the benefit of the Owners Corporation, but also in relation to other proceedings where the Owners Corporation and Eastmark were adversaries. The court was required to determine the extent to which statutory rights of inspection under the Management Act abrogated common law rights such as legal professional privilege, and whether the doctrine of common or joint interest applied to defeat the privilege claim in this specific context.

The Court of Appeal reasoned that while statutory provisions granting lot owners inspection rights are not to be construed as abrogating common law rights like legal professional privilege without clear words or necessary implication, the primary judge erred in his application of the common interest principle. The court distinguished between different litigation contexts. In the proceeding where Eastmark sought to bring a derivative action on behalf of the Owners Corporation, their interests were aligned, and Eastmark was entitled to access materials to aid in those claims. However, in other existing or prospective disputes between Eastmark and the Owners Corporation concerning the subject matter of an agreement, their interests diverged, and the Owners Corporation was entitled to assert legal professional privilege.

The Court of Appeal ordered that leave to appeal be granted and the appeal be allowed. The matter was remitted to the primary judge with a direction that documents or parts of documents not relating to obtaining or giving advice in connection with a specific agreement should not be made available for inspection by Eastmark. There were no orders as to the costs of the application or the appeal.