The Owners - Strata Plan No 76902 v Roads and Maritime Services

[2017] NSWSC 528

Supreme Court

New South Wales

Medium Neutral Citation:

The Owners – Strata Plan No 76902 v Roads and Maritime Services ABN 76 236 371 [2017] NSWSC 528

Hearing dates:

24 April 2017

Decision date:

05 May 2017

Jurisdiction:

Equity - Technology and Construction List

Before:

Ball J

Decision:

1.   The second cross defendant to the second cross-claim, Taylor Thomson Whitting (NSW) Pty Ltd (TTW), be granted access to the documents produced in answer to the subpoena dated 20 May 2016 addressed to Pell Sullivan Meynink Pty Limited.

 

2.   The cross claimants to the second cross-claim provide disclosure of documents falling within categories 10 and 23 in the document annexed to the amended notice of motion filed on 24 April 2017.

 

3.   TTW’s application for disclosure of documents falling within categories 1, 13 and 14 in the document annexed to the amended notice of motion filed on 24 April 2017 be stood over until 26 May 2017;

 4.   The costs of the motion filed on 11 April 2016 and amended motion filed on 24 April 2017 are reserved.

Catchwords:

EVIDENCE – subpoena for production of documents – whether subpoena should be set aside – whether documents subject of subpoena are privileged – whether privilege lost because of knowing and voluntary disclosure – whether party claiming privilege acted in a way inconsistent with the maintenance of the privilege
PRACTICE AND PROCEDURE – discovery and interrogatories – disclosure of documents – access to documents produced on subpoena

Legislation Cited:

Evidence Act 1995 (NSW) ss 119, 122, 126
Law Reform (Miscellaneous Provisions) Act 1946 (NSW) s 5(1)(c)
Uniform Civil Procedure Rules 2005 (NSW) r 33.11(1)

Cases Cited:

Commissioner for Railways v Small (1938) 38 SR (NSW) 564; (1938) 55 WN (NSW) 215
Mann v Carnell (1999) 201 CLR 1; [1999] HCA 66
National Employers’ Mutual General Insurance Association Ltd v Waind & Hill [1978] 1 NSWLR 372
New Price Retail Services Pty Ltd v Hanna [2012] NSWSC 422
Osland v Secretary to the Department of Justice (2008) 234 CLR 275; [2008] HCA 37
Unity Insurance Brokers Pty Ltd v Rocco Pezzano Pty Ltd (1998) 192 CLR 603; [1998] HCA 38

Texts Cited:

Supreme Court Practice Note Eq11

Category:

Procedural and other rulings

Parties:

Taylor Thomson Whitting (NSW) Pty Ltd (Seventh Defendant | Second Cross Defendant to Second Cross Claim)
Walsh Bay Finance Pty Ltd (Second Defendant | First Cross Claimant to Second Cross Claim)
Mirvac (Walsh Bay) Pty Ltd (Third Defendant | Second Cross Claimant to Second Cross Claim)
Transfield (Walsh Bay) Pty Ltd (Fourth Defendant | Third Cross Claimant to Second Cross Claim)
Mirvac Design Pty Ltd (Sixth Defendant | Fourth Cross Claimant to Second Cross Claim)

Representation:

Counsel:
M Ashhurst SC with D Macfarlane (Seventh Defendant | Second Cross Defendant to Second Cross Claim)
DT Miller SC with BA Jacobs (Second to Fourth Defendant and Sixth Defendant | First to Fourth Cross Claimants to Second Cross Claim)

  Solicitors:
Wotton + Kearney (Seventh Defendant | Second Cross Defendant to Second Cross Claim)
Minter Ellison (Second to Fourth Defendant and Sixth Defendant | First to Fourth Cross Claimants to Second Cross Claim)

File Number(s):

2012/397108

Publication restriction:

Nil

Judgment

Introduction

1. By a notice of motion filed on 11 April 2016, Taylor Thompson Whitting (NSW) Pty Limited (TTW) sought from the respondents to the motion, Walsh Bay Finance Pty Limited, Mirvac (Walsh Bay) Pty Limited, Transfield (Walsh Bay) Pty Limited and Mirvac Design Pty Limited (together, the WBF Parties), disclosure in advance of evidence of 23 categories of documents. The motion has had a long and complicated history resulting in the filing of an amended motion in court on 24 April 2017 by which TTW relevantly sought:

1. disclosure of documents falling within categories 10 and 23;

2. access to documents produced on subpoena by Pell Sullivan Meynink Pty Limited (PSM), a firm of geotechnical and hydraulic engineers;

3. an adjournment of the application for disclosure in respect of categories 1, 13 and 14 pending inspection by TTW of the documents produced on subpoena by PSM, Boral Resources Pty Limited (Boral) and Corrosion Control Engineering Pty Ltd (CCE). The documents subpoenaed from PSM essentially correspond to disclosure category 1, and the documents subpoenaed from Boral and CCE essentially correspond to disclosure categories 13 and 14 respectively.

2. On 24 April 2017, the court made orders granting general access to the documents produced by Boral and CCE. It was common ground that in those circumstances it was appropriate to adjourn the application for disclosure in respect of categories 13 and 14 until inspection of those documents had occurred.

3. As a result, three issues remain to be determined:

1. whether TTW should be granted access to the documents produced on subpoena by PSM. If it is, it is common ground that the application for disclosure of category 1 documents should be adjourned pending inspection of those documents by TTW;

2. whether the WBF Parties should be ordered to disclose documents falling within category 10;

3. whether the WBF Parties should be ordered to disclose documents falling within category 23.

Background

4. These proceedings concern the construction of a five level underground carpark which forms part of a mixed use residential and commercial development on land owned by Road and Maritime Services at Walsh Bay, adjacent to Sydney Harbour. The leasehold interest in the carpark is owned by the Owners Corporation of Strata Plan 76902 (the Owners Corporation) and Millers Point Parking Pty Limited (MPP).

5. The construction of the development was managed by TM Management Services Pty Ltd (TMMS), which engaged TTW as the structural engineers for the project.

6. Following completion of the development, an issue arose concerning water ingress into the carpark through the basement wall fronting the harbour and the damage that that was causing to the slabs and other structural elements of the carpark. That issue was brought to the attention of the WBF Parties who, through their solicitors (originally Corrs Chambers Westgarth and then Minter Ellison), retained a number of experts, including PSM. PSM was retained on 6 July 2011. As part of its retainer, PSM conducted monitoring of water ingress into the carpark and prepared a report dated 9 February 2012 entitled “Basement Car Park Investigation” (the PSM Report).

7. On 8 September 2011, MPP commenced proceedings against the WBF Parties and others, including TTW, claiming damages in respect of defects in the carpark. The Owners Corporation commenced similar proceedings on 21 December 2012. The two proceedings were consolidated and the claim against the WBF Parties was subsequently settled on the basis that the WBF Parties agreed to undertake certain rectification work in accordance with the scope of work prepared by Mr Nickolaos Dalamagas, an employee of Mirvac Constructions Pty Ltd, a company related to several of the WBF Parties. The rectification work consisted of the following:

1. the cleaning and reinstatement of working drains;

2. the localised repair of anchor holes in the wall;

3. the localised repair of damaged basement floor slabs and basement floor edge drains; and

4. the undertaking of works to provide cathodic protection to the basement slab, walls, beams and columns.

8. On 19 December 2013, the day before the proceedings against the WBF Parties were settled, the WBF Parties filed a second cross claim against TMMS and TTW. The current version of that claim is contained in a Further Amended Technology and Construction List Second Cross-Claim Statement (FASCC), which was filed on 23 February 2015. In that document, the WBF Parties contend that TTW owed the WBF Parties a duty to exercise reasonable care and skill in preparing the structural design of the carpark and that it breached that duty by failing to provide a design for the carpark that was suitable given its proximity to the harbour. The WBF Parties also claim that TTW is liable to contribution or an indemnity under s 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) in respect of the WBF Parties’ liability to the Owners Corporation and MPP. The amount claimed by the WBF Parties is the total of the amounts paid or payable by them to the Owners Corporation and MPP pursuant to the settlement, which is said to be in the order of $8.6 million. In support of that claim, the WBF Parties plead in para 16 of the FASCC that “The settlement of the claims brought by the Owners Corporation and MPP on the terms set out in the Settlement Documents is reasonable”.

9. In response to a request for particulars, on 7 July 2015, the WBF Parties gave the following particulars of the allegation that the settlement embodied in the Settlement Documents was reasonable:

1.   An assessment of our client’s prospects of defending the claims brought by the Owner’s Corporation and MPP was poor.

2.   The expert advice obtained on the claims made by Owners Corporation and MPP was that:

(a)   the corrosion of the reinforcement in the concrete was caused by defects in the design of the structure – refer to paragraph 29 of the Second Cross Claim;

(b)   the issues raised in defence of the claims made were not the cause of the need for cathodic protection; and

(c)   the structure was unlikely to meet the design life of 50 years unless the Rectification Works detailed in the Settlement Documents, including cathodic protection, was carried out.

3.   The claims made by the Owners Corporation and MPP had been ongoing for a number of years and were giving rise to losses incurred by our clients in legal fees, expert fees and the cost of internal resources as well as reputational issues.

4.   The future legal costs of defending the claims were likely to be significant.

5.   The continued defence of the claims raised ongoing reputational issues for our clients.

6.   The legal costs incurred by the Owners Corporation and MPP were significant and these costs would increase and were likely to be payable by our clients if the claims proceeded and our clients’ defence was unsuccessful.

10. In response to the allegation in para 16 of the FASCC, TTW pleaded in its list response the following:

18.   If, which is denied by TTW, the presence of water in the basement has caused damage to the concrete in the basement, the Owners Corporation and MPP are at least partly responsible for that damage as a consequence of not properly maintaining the drainage system on and from about 2006 such that the settlement is not reasonable because it did not take this matter into account properly or at all.

19.   Instead of entering into the Settlement Documents, the WBF Parties ought to have taken the following steps or ought to have agreed with the Owners Corporation and MPP to have the following steps taken:

a.   the anchor holes ought to have been properly grouted to prevent water ingress;

b.   the perimeter dish drains ought to have been properly installed with appropriate falls;

c.   the perimeter dish drains ought to have been painted with a waterproof membrane;

d.   the strip drains to walls ought to have been installed and connected to the horizontal core drains and/or the subsoil drainage system;

e.   the strip drains to walls ought to have been installed so that they convey water to the dish drains;

f.   the drainage system ought to have been properly cleaned; and

g.   instructions ought to have been provided to the Owners Corporation and MPP to ensure the proper continued maintenance of the drainage system.

20.   Had the measures pleaded in paragraph 19 been undertaken the water ingress to the basement would have been reduced to an extent that the remaining water ingress would be received and dealt with by the drainage system without causing any damage to the Building.

21.   Instead of undertaking the measures in paragraph 19, the WBF Parties entered into the Settlement Documents on the incorrect assumption that rectification over and above that referred to in paragraph 19 was necessary including provision for cathodic protection to concrete.

22.   In the premises, the settlement is not reasonable.

11. On 17 December 2014, there was an unsuccessful mediation of the dispute between TTW and the WBF Parties. In connection with that mediation, the WBF Parties supplied TTW with a copy of the PSM Report on a strictly confidential and without prejudice basis.

12. On 20 May 2016, TTW issued a subpoena to PSM which, as I have said, is in substantially the same terms as disclosure category 1. The subpoena sought a copy of the PSM Report together with documents recording or referring to:

1. observations and/or monitoring of water ingress to the premises;

2. observations as to sources of water ingress to the premises;

3. influence of tide levels on water ingress to the premises; and

4. advice as to the remediation works (either proposed, undertaken or being undertaken) to address water ingress.

13. The position originally taken by TTW was that disclosure of documents sought in the subpoena and disclosure category 1, and in particular the water ingress monitoring data collected by PSM, was necessary to enable its experts to complete their expert reports in reply. That was said to amount to “exceptional circumstances necessitating disclosure” within the meaning of para 4 of Practice Note SC Eq 11 Disclosure in the Equity Division (SC Eq 11), with the result that TTW was entitled to obtain disclosure of that material before putting on its evidence. That contention was supported by evidence filed by experts engaged by TTW. So, for example, Dr James Aldred, a concrete and material expert engaged by TTW, said in an affidavit sworn on 10 May 2016 that he required the water monitoring records for the site “to determine the potential source of water ingress at high tides”.

14. Subsequently, the WBF Parties agreed to provide the water ingress monitoring data, but not the PSM Report or other documents falling within the scope of disclosure category 1.

The subpoena

15. The subpoena raises three issues:

1. whether it should be set aside;

2. whether the documents it seeks are privileged;

3. if the documents are privileged, whether the WBF Parties have waived that privilege.

Should the subpoena be set aside?

16. The WBF Parties contend that, in determining whether the subpoena should be set aside, the court should apply similar principles to those that it would apply to the question of disclosure. Under para 5 of SC Eq 11, disclosure would only be ordered if the disclosure was “necessary for the resolution of the real issues in dispute in the proceedings”. It is submitted that production of the documents the subject of the subpoena is not necessary for the resolution of the real issues in the proceedings. Relevantly, the real issue in the proceedings is whether the settlement entered into by the WBF Parties was objectively reasonable. The answer to that question will turn on the expert evidence filed by the parties. The experts retained by TTW have had access to the water ingress data and have been able to prepare their reports using that data. No further disclosure is necessary.

17. In my opinion, there are a number of difficulties with this submission.

18. First, no motion has been filed by the WBF Parties, and it appears that the question of setting aside the subpoena was not raised until the WBF Parties served submissions in reply on 19 April 2017. If the WBF Parties had wanted to set aside the subpoena, they should have filed a motion and done so well before now.

19. Second, the subpoena was served and the documents produced almost a year ago. The only remaining question is whether TTW should be entitled to have access to those documents. It is difficult to see why, if the only objection to access is one of necessity, access should not be granted, leaving it to the trial judge to determine the question whether any of the documents should be admitted into evidence assuming that TTW seeks to tender any of them. The requirement of necessity before disclosure will be ordered is directed largely at curtailing the costs of disclosure. In the present case, the costs of production have already been incurred.

20. Third, in my opinion, it is not accurate to say that the question of access should be determined by applying similar principles to those that apply to disclosure. The general principle is that a subpoena may be set aside where it is an abuse of process. A subpoena will be an abuse of process where, among other circumstances, it is used as a substitute for discovery or discovery against a third party: Commissioner for Railways v Small (1938) 38 SR (NSW) 564; (1938) 55 WN (NSW) 215; National Employers Mutual General Insurance Association Ltd v Waind& Hill [1978] 1 NSWLR 372 at 382 (Glass JA, with whom Moffitt P and Hutley JA agreed). It will also be an abuse of process where the subpoena is used as a means of obtaining disclosure of documents which, in accordance with para 4 of SC Eq 11, could only be obtained before the service of evidence in exceptional circumstances necessitating disclosure: see New Price Retail Services Pty Ltd v Hanna [2012] NSWSC 422 at [19]. In the present case, the subpoena is not being used as a substitute for discovery. It seeks specific categories of documents from an entity that is known to have them. Nor is it being used to undermine the purposes of SC Eq 11. Evidence has now been served. Paragraph 5 of SC Eq 11 is concerned to reduce the costs of discovery following the service of evidence. But here, as I have said, the documents have already been produced. Moreover, different considerations apply to the costs of producing documents in response to a subpoena because the court has power to order “the issuing party to pay the amount of any reasonable loss or expense incurred in complying with the subpoena”: see Uniform Civil Procedure Rules 2005 (NSW) r 33.11(1).

21. Fourth, I am satisfied that the documents that are the subject of the subpoena are likely to be relevant. The documents are likely to contain information relevant to the causes of the water ingress, which may be relevant to the question whether TTW was negligent and whether the settlement was reasonable.

Were the documents subject to a claim for client legal privilege?

22. Section 119 of the Evidence Act 1995 (NSW) provides:

Evidence is not to be adduced if, on objection by a client, the court finds that adducing the evidence would result in disclosure of:

(a)   a confidential communication between the client and another person, or between a lawyer acting for the client and another person, that was made, or

(b)   the contents of a confidential document (whether delivered or not) that was prepared,

for the dominant purpose of the client being provided with professional legal services relating to an Australian or overseas proceeding (including the proceeding before the court), or an anticipated or pending Australian or overseas proceeding, in which the client is or may be, or was or might have been, a party.

23. PSM was retained by the solicitors acting for the WBF Parties on behalf of the WBF Parties at a time when litigation was anticipated. Problems with water ingress had been identified and there were already in existence reports that suggested that the water ingress was causing structural damage that needed to be rectified. Ms Pini, who is the senior legal counsel for the Mirvac Group, gave evidence that the WBF Parties were put on notice of potential court proceedings by those reports. I accept that evidence. It seems apparent that PSM was originally retained to provide advice relevant to the question of the causes of the water ingress and the damage that it was causing to enable the WBF Parties’ solicitors to advise the WBF Parties on their own liability and on the potential liability of other parties who worked on the project.

24. However, it appears that PSM’s role changed over time. Mr Dalamagas gives the following evidence:

25   I was advised [in March 2011] that WBF was investigating these issues [that is, issues concerning water ingress into the carpark] with assistance from:

(a)   BG&E Pty Limited (BG&E), structural engineers;

(b)   Building and Construction Research and Consulting Pty Ltd (BCRC), construction materials experts; and

(c)   Pells Sullivan Meynink Pty Limited (PSM), hydraulic engineers.

26.   The role of BG&E, BCRC and PSM was to investigate the issues and options for remedial solutions to achieve the design life of the Development. The remedial solution that was recommended included cathodic protection works. I discuss this recommendation further at paragraph 33 below.

27.   After the remedial solution had been identified, I was tasked with preparing a scope of work, a program and a budget for the rectification works.

Early Involvement

28.   In order to prepare a rectification works proposal, I required a significant amount of input from BG&E, BCRC and PSM and a number of specialist and non-specialist contractors. The process that I followed to develop a rectification works proposal and to engage subcontractors to carry out the rectification works was as follows.

…

33.   The process for developing the rectification proposal was ongoing between 2011 and 2013. BCRC marked up the areas on BG&E’s drawings that required cathodic protection, based on the chloride test results, and crack repair work following the identification of cracks during site inspections. BG&E then produced revised drawings that identified where:

(a)   cathodic protection was required to the slabs in the residential and commercial car parks in yellow:

(b)   cathodic protection was required to the walls, beams and columns in the residential and commercial car parks in blue;

(c)   patch and crack repair works were advised labelled on the drawings as ‘P’ cracks and marked in red;

(d)   micro cracks were to be repaired with cement grout injections labelled on the drawings as ‘M’ cracks and marked in green;

(e)   wash and vacuum of the slabs was to be carried out to prevent further penetration of chlorides, followed by further chloride testing marked in purple; and

(f)   wash and vacuum of the slabs was to be carried out to prevent further penetration of chlorides with green hatching.

…

36.   PSM had been engaged to monitor the inflow of water into the car park, to provide WBF with the water flow rates on a monthly basis and to provide advice as required on the drainage system. A water inflow monitor was installed by PSM inside the collection pit on B5.

25. It is apparent from these paragraphs that PSM provided advice that was used to formulate a scope of works for rectification work so that the carpark met the contractual specifications. It could not be said that the communications with PSM and the documents it produced in connection with that advice were for the dominant purpose of the WBF Parties being provided with professional legal services relating to the proceedings commenced by the Owners Corporation and MPP. It appears that a substantial purpose of the communications and documents was to enable the WBF Parties to formulate a scope of works that enabled them to meet their contractual obligations.

26. Moreover, according to evidence given by Mr Dalamagas, PSM was retained by TMMS on 18 March 2014 to provide hydraulic services as part of the rectification works. It could not be said that the dominant purpose of that retainer was to enable the WBF Parties to obtain professional legal services relating to proceedings that, by then, had been partially settled. Rather, the purpose of the retainer was to enable TMMS and the WBF Parties to discharge their obligations under the settlement agreements. Consequently, communications that occurred and documents that were produced in connection with that retainer do not attract the privilege.

27. The WBF Parties did not prepare a list of documents in respect of which the claim for privilege is made. In the absence of a list, and evidence concerning the purpose for which documents on the list were prepared, it is not possible to say with any confidence which documents that have been produced by PSM are the subject of a proper claim for privilege by the WBF Parties. For the reasons I have given, many of them will not be. The WBF Parties bear the onus of establishing the claim for privilege. In my opinion, they have not discharged that onus. It follows that the claim for privilege must fail.

Waiver

28. Having regard to the conclusions I have reached in relation to the WBF Parties’ claim for privilege, it is not strictly necessary to deal with TTW’s claim of waiver. However, I do so in the event that I am wrong concerning the claim for privilege.

29. Sections 122 and 126 of the Evidence Act relevantly provide:

122   Loss of client legal privilege: consent and related matters

(1)   …

(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.

(4)   The reference in subsection (3) (a) to a knowing and voluntary disclosure does not include a reference to a disclosure by a person who was, at the time of the disclosure, an employee or agent of the client or party, or of a lawyer of the client or party, unless the employee or agent was authorised by the client, party or lawyer to make the disclosure.

…

126   Loss of client legal privilege: related communications and documents

If, because of the application of section 121, 122, 123, 124 or 125, this Division does not prevent the adducing of evidence of a communication or the contents of a document, those sections do not prevent the adducing of evidence of another communication or document if it is reasonably necessary to enable a proper understanding of the communication or document.

Subsection 122(5) is not relevant to the current dispute.

30. TTW puts its case in relation to waiver in two ways. First, it submits that, even if the documents produced by PSM were properly the subject of a claim for privilege, that privilege has been lost because the WBF Parties have knowingly and voluntarily disclosed the substance of the evidence by serving Mr Dalamagas’s affidavit. Mr Dalamagas states in his affidavit that the role of PSM “was to investigate the issues and options for remedial solutions to achieve the design life of the Development” (which is 50 years) and that “[t]he remedial solution that was recommended included cathodic protection works”. TTW submits that that statement is a sufficient disclosure by the WBF Parties of the substance of the advice that they obtained from PSM and that the privilege that may exist in relation to the other documents produced by PSM has been lost under s 126 of the Evidence Act.

31. Second, TTW submits that, even if there was not a knowing and voluntary disclosure of the privileged material, the WBF Parties have still acted in a way which is inconsistent with the maintenance of the privilege by claiming that the settlement it reached was reasonable and by claiming the costs it incurred in connection with the settlement.

32. In my opinion, the first way in which TTW puts its waiver argument has considerable force, at least in relation to documents that consist of advice given by PSM on the rectification work that needed to be undertaken and documents that are reasonably necessary to enable a proper understanding of that advice. However, it is not necessary to reach a final view of that question, since in my opinion TTW must succeed on the second way in which it puts its waiver argument.

33. In Unity Insurance Brokers Pty Ltd v Rocco Pezzano Pty Ltd (1998) 192 CLR 603; [1998] HCA 38, a majority of the High Court accepted that a defendant who reaches a reasonable settlement of a claim against it, arising from a breach of duty owed to the defendant by a third party, is entitled to recover from that third party the amount of the settlement as damages for the breach of duty. It is not necessary for the defendant to prove the existence of an actual liability to the claimant arising from the breach of duty which is independent of the settlement. It follows that, in the present case, if the WBF Parties can prove that the settlement they reached with the Owners Corporation and MPP was a reasonable settlement of a claim arising from a breach of duty TTW owed to the WBF Parties, then the amount of that settlement is the appropriate measure of the WBF Parties’ loss for the purposes of their claim for damages for breach of duty. The question is whether the settlement was objectively reasonable, not whether the WBF Parties acted reasonably in reaching a settlement. However, relevant to the objective reasonableness of the settlement is the material that was actually available to the WBF Parties at the time, and the party seeking to prove that the settlement was reasonable may rely on advice it received at the time for that purpose. As Hayne J explained in Unity Insurance Brokers (at [135]):

It may be that calling legal advisers to give evidence about the settlement may present some question about legal professional privilege but I do not accept that the evidence of the advisers would be irrelevant or inadmissible. Often it is the advisers who will be best placed to give evidence about the matters that were taken into account in deciding to settle the case and it is they who may well be able to deal with such matters as what investigations had been made or why particular investigations had not been pursued. Sometimes there may be questions about the course of negotiations: why was this offer accepted; why was no counter offer made? Sometimes that course of negotiations may reveal why a settlement was reached when it was reached and that, in turn, may bear upon whether it was reasonable. Again, it will be those who conducted the negotiations, often the legal advisers, who will be able to speak of these matters.

34. A party, of course, is not obliged to rely on the advice that it obtained at the time to prove the reasonableness of the settlement; and if it does not do so, no question of waiver can arise. However, it is not open for a party to rely on advice it received at the time and seek to maintain a claim for privilege in respect of the advice or the communications and documents that occurred or were produced in connection with that advice. It would be inconsistent for a party both to maintain that a settlement was reasonable having regard to the advice that it obtained and to maintain a claim for privilege over the advice that it received. The test of inconsistency is one of fact and degree informed where necessary by questions of fairness: see Mann v Carnell (1999) 201 CLR 1; [1999] HCA 66 at [29] per Gleeson CJ, Gaudron, Gummow and Callinan JJ; Osland v Secretary to the Department of Justice (2008) 234 CLR 275; [2008] HCA 37 at [49] per Gleeson CJ, Gummow, Heydon and Kiefel JJ.

35. In the present case, the WBF Parties pleaded that the settlement was reasonable and gave particulars of that allegation. Those particulars included the fact that they had obtained expert advice that the carpark was unlikely to meet its design life of 50 years unless the rectification work detailed in the settlement agreements, including cathodic protection, was carried out. TTW contends that by those particulars the WBF Parties have waived privilege in respect of the advice the WBF Parties obtained in relation to the rectification work, which included the advice given by PSM. It would be inconsistent for the WBF Parties both to rely on the advice that it obtained and to maintain a claim for privilege in respect of that advice.

36. The WBF Parties resist that conclusion on two bases.

37. First, they point to the fact that in its response, TTW sets out why it claims that the settlement was not reasonable. The WBF Parties submit that, properly understood, TTW accepts in its response that some of the work undertaken pursuant to the settlement agreements was necessary and that the only real dispute between the parties was whether cathodic protection work was necessary. The PSM documents are not relevant to that dispute and consequently there can be no waiver of the privilege attaching to them. Second, the WBF Parties submit that they have not sought to rely on the PSM documents to prove the settlement was reasonable. Rather, they have relied on expert evidence to prove that the settlement was objectively reasonable; and none of the relevant experts have had regard to the PSM documents in expressing the opinions that they do.

38. I do not accept either of these submissions.

39. It is difficult to see how the question of waiver by the WBF Parties can turn on the response served by TTW to the WBF Parties’ claim. The WBF Parties bear the onus of proving that the settlement was reasonable. In support of their allegation that it was, they gave particulars which included the fact that they had obtained expert advice on which they acted by reaching the settlement that they did. In my opinion, that was sufficient to amount to a waiver of any privilege. That waiver could not be undone because the response served by TTW narrowed the dispute between the parties (assuming that that was the effect of the response). The logical consequence of the WBF Parties’ submission is that they could have lost their claim for privilege through waiver because of the way in which they put their case but regained it because of the way in which TTW put its defence. That cannot be right. It may be that, having regard to the issues between the parties, the expert advice obtained by the WBF Parties, or parts of it, are irrelevant to the issues in dispute. If that is the case, the relevant documents will not be admissible for that reason. But it does not follow from that that the WBF Parties did not waive privilege in the expert advice by relying on it in the particulars they gave of the reasonableness of the settlement.

40. Nor is the position changed by the fact that the WBF Parties have served expert evidence through which they seek to prove that the settlement they reached was objectively reasonable. The particulars served by the WBF Parties are not limited to that material. Nor is the evidence relied on by the WBF Parties. The WBF Parties have served an extensive affidavit from Mr Dalamagas setting out the work that he did to prepare the scope of work and the costing of that work which forms the basis of the settlement. The WBF Parties rely on that affidavit as relevant to the question of the reasonableness of their settlement; and Mr Dalamagas states that he required a significant amount of input from PSM, among others, in developing a scope of work, program and budget. The WBF Parties cannot put forward the affidavit prepared by Mr Dalamagas and yet claim privilege over the material he relied on for the purpose of preparing that affidavit.

41. As I have said, the WBF Parties have made no attempt to separate out the work done by PSM and to identify the precise basis on which the claim for privilege is made in respect of documents held by PSM relevant to that work. In those circumstances, it seems to me that any waiver must apply to all of the documents the subject of the subpoena.

Category 10

42. Disclosure category 10 is in the following terms:

Any documents and construction records relating to remedial grouting of anchor holes, including specifications, design details, work method statements, details of installation (including as-constructed drawings), nature of work carried out and timing of the work, inspections by consultants and any advice given.

43. The WBF Parties object to production of documents falling within this category on the basis that disclosure of them is not necessary because the experts retained by TTW were able to produce their reports without access to those documents and TTW concedes that remedial grouting of anchor holes needed to be undertaken to address the water ingress problem.

44. Accepting that what the WBF Parties say is correct, it does not follow that the disclosure of the documents is not necessary in the relevant sense. The costs of conducting the remedial grouting work forms part of the WBF Parties’ claim. The scope of the work actually undertaken is peculiarly within the knowledge of the WBF Parties. The scope of the work actually undertaken and the costs of that work are directly relevant to the WBF Parties’ damages claim.

45. Moreover, although it is correct to say that the experts retained by TTW were able to produce their reports without the information sought in category 10, Dr Broune, the expert consulting structural engineer engaged by TTW, says in an affidavit sworn on 9 May 2016 that he requires the documents falling within category 10 to respond to the WBF Parties’ lay and expert evidence and, in particular, expert evidence given by Dr Baweja and Dr Marosszeky. In relation to Dr Baweja, Dr Broune says this:

Dr Baweja opines on a number of possible means by which water entered the basement. However, for me to properly assess the significance of each of these means and opine for myself the cause or causes (and significance or contribution) of the water ingress, it is necessary to have proper regard to information in the documents sought in Item 10.

And he says the following in relation to Dr Marosszeky:

In substance, Dr Marosszeky opines that there are a number of possible means of water ingress and whilst referring to 1 anchor hole (at paragraph 4.1.103) which was leaking after a high tide event, he does not include anchor holes in his analysis of sources of water ingress at section 4.2 of the Marosszeky Report. For the same reasons I require those documents to respond to Dr Baweja, I also require those documents to respond to Dr Marosszeky.

There is no reason to doubt Dr Broune’s evidence. The fact that Dr Broune was able to prepare his own report without having the documents in category 10 does not undermine his evidence that he needs those documents to respond to the expert evidence given for the WBF Parties. That response may be made, for example, as part of the preparation of a joint report.

46. There is evidence suggesting that the cost of disclosure of all 23 categories of documents, as originally formulated, would be very expensive. However, there is no evidence of the costs of producing the documents falling within category 10 alone. In the absence of that evidence, I do not think that the costs of disclosure can form a basis for rejecting the category.

47. Having regard to those matters, I am satisfied that production of the documents falling within category 10 is necessary for the resolution of the real issues in dispute in the proceedings.

Category 23

48. Disclosure category 23 is in the following terms:

Any documents, photographs and records showing the results of the investigations of the as-built support details for the slab edges where stainless steel angles have been installed.

49. Similar issues arise in relation to this category as arise in relation to category 10. The documents are not necessary to enable the experts retained by TTW to complete their reports, since they have already done so. However, Dr Broune says that he needs the documents to respond to the evidence given by the experts retained by the WBF Parties. In relation to category 23, he says “[t]he reason why I require this material is that I need to know what it is about the as-built condition of the basement structure that led the experts engaged by the WBF Parties to determine that it was necessary to install stainless steel angles to support some of the basement floor slab edges”. There is no reason to doubt that evidence. There is no evidence concerning the costs of disclosure of documents falling within category 23. Taking those matters into account, I am satisfied that disclosure of documents falling within category 23 is necessary for the resolution of the real issues in dispute in the proceedings.

Orders and Costs

50. It will be necessary to stand the balance of the amended motion over until TTW has inspected the documents produced on subpoena. In addition, the WBF Parties foreshadowed that, whatever the outcome of the amended motion, they wished to make an application for costs incurred by them in relation to the original motion. It seems to me that those costs are best dealt with either at the time the motion is finally disposed of or at the time of the hearing. For those reasons, it would be appropriate to reserve the question of costs.

51. The orders of the court are:

1. The second cross defendant to the second cross-claim, Taylor Thomson Whitting (NSW) Pty Ltd (TTW), be granted access to the documents produced in answer to the subpoena dated 20 May 2016 addressed to Pell Sullivan Meynink Pty Limited;

2. The cross claimants to the second cross-claim provide disclosure of documents falling within categories 10 and 23 in the document annexed to the amended notice of motion filed on 24 April 2017;

3. TTW’s application for disclosure of documents falling within categories 1, 13 and 14 in the document annexed to the amended notice of motion filed on 24 April 2017 be stood over until 26 May 2017;

4. The costs of the motion filed on 11 April 2016 and amended motion filed on 24 April 2017 are reserved.

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Decision last updated: 08 May 2017