Tipperary Developments Pty Ltd v The State of Western Australia

[2005] WASC 75

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   TIPPERARY DEVELOPMENTS PTY LTD -v- THE STATE OF WESTERN AUSTRALIA [2005] WASC 75

CORAM:   MURRAY J

HEARD:   30 AUGUST 2004, 22 SEPTEMBER 2004

DELIVERED          :   3 MAY 2005

FILE NO/S:   CIV 2490 of 1992

CIV 1473 of 1994
CIV 1878 of 1994

BETWEEN:   TIPPERARY DEVELOPMENTS PTY LTD

Plaintiff

AND

THE STATE OF WESTERN AUSTRALIA
Defendant

ROBINSON COX (a firm)
Proposed Third Party

Catchwords:

Practice and procedure - Application to inspect privileged documents - Waiver - Application for leave to issue third party notice - Exercise of discretion - Turns on own facts

Legislation:

Nil

Result:

Application to inspect documents allowed in part
Leave to issue third party notice refused

Category:    B

Representation:

Counsel:

Plaintiff:     Mr J C Giles

Defendant:     Mr K M Pettit SC & Mr P J Hannan

Proposed Third Party     :     Mr W S Martin QC & Mr G D Robertson

Solicitors:

Plaintiff:     Solomon Brothers

Defendant:     State Solicitor

Proposed Third Party     :     Freehills

Case(s) referred to in judgment(s):

Ampolex Ltd v Perpetual Trustee Co (Canberra) Ltd (1995) 37 NSWLR 405

Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501

Commonwealth v Temwood Holdings Pty Ltd [2002] WASC 107

Consolidated Exploration Ltd v Ord Minnett Ltd, unreported; SCt of Vic; Ormiston J, 15 April 1993

Esso Australia Resources Ltd v Plowman (1995) 183 CLR 10

Hamersley Iron Pty Ltd v Lovell (1998) 19 WAR 316

Hoad v Nationwide News Pty Ltd (1998) 19 WAR 468

Mander Pty Ltd v Clements [2005] WASCA 67

Mann v Carnell (1999) 201 CLR 1

Melros Developments Pty Ltd v Ribble Pty Ltd (1996) 16 SR(WA) 143

Sofilas v Cable Sands (WA) Pty Ltd (1993) 9 WAR 196

Southern Equities Corporation Ltd (in liq) v Arthur Andersen & Co (1997) 70 SASR 166

State of Western Australia v Wardley Australia Ltd & Ors WAG 115, 116 and 118 of 1990

Tipperary Developments Pty Ltd v Western Australia [2004] WASCA 15

Case(s) also cited:

163 Clarence St Pty Ltd v New World Oil & Developments Pty Ltd (1994) 16 ATPR 41

ACCC v Emerald Ocean Distributors Pty Ltd [2002] FCA 401

AMP Fire & General Insurance Co Ltd v Dixon [1982] VR 833

Andrews v Nominal Defendant [1963] SR (NSW) 110

Australian Iron & Steel Pty Ltd v Jumbo Scheepvaart Maatschappij (Curacao) NV (1988) 14 NSWLR 507

Australian Securities Commission v Ampolex Ltd (1995) 38 NSWLR 504

Barclays Bank v Tom [1923] 1 KB 221

Bayliss v Cassidy (No 2) [2000] 1 Qd R 464

Benecke v Frost (1876) 1 QBD 419

Bristile v The Buddhist Society of Western Australia Inc & Anor [2003] WASC 30

Cattanach v Melchior (2003) 215 CLR 1

Dwyer v Goldamere Pty Ltd [2004] TASSC 78

Edingbay Pty Ltd v Aroni Colman (1999) VConvR 54

Edwards v Edwards [1913] VLR 30

Esanda Finance Corporation Ltd v Putnin, unreported; SCt of WA; Library No 940532; 28 September 1994

Esso Australia Resources Ltd v Commissioner of Taxation (1999) 201 CLR 49

Fort Dodge Australia Pty Ltd v Nature Vet Pty Ltd [2002] FCA 501

Geneva Finance Ltd v Boys [2001] WASC 348

Godfrey v Nominal Defendant [1963] SR (NSW) 412

Insurance Exchange of Australasia Group v Dooley (2000) 50 NSWLR 222

Just GI Pty Ltd v Nomoheath Pty Ltd [2000] QSC 163

Lillicrap v Nalder & Son (a firm) [1993] 1 WLR 94

Liquorland (Australia) Ltd v Anghie (2003) 7 VR 27

Maher v Millennium Markets Pty Ltd [2004] VSC 82

Myers v Sherick Ltd [1974] 1 All ER 81

Paragon Finance plc v Freshfields (a firm) [1999] 1 WLR 1183

Patrick v Capital Finance Pty Ltd (No 4) [2003] FCA 436

Perpetual Trustees (WA) Ltd v Equuscorp Pty Ltd [1999] FCA 925

Pioneer Concrete (NT) Pty Ltd v Walkins Ltd (1983) 48 ALR 365

Pioneer Shipping Ltd v BTP Tioxide Ltd [1982] AC 724

Pourzand v Home Building Society Ltd [2004] WASC 127

Pratt Holdings Pty Ltd v Commissioner of Taxation (2004) 207 ALR 217

Re Burford [1932] 2 Ch 122

Singapore Airlines v Sydney Airport Corporation [2004] NSWSC 380

St George Bank Ltd v MJK Pty Ltd [1999] FCA 1752

Standard Chartered Bank of Australia Ltd v Antico (1993) 36 NSWLR 87

Telstra Corporation Ltd v BT Australasia Pty Ltd (1998) 85 FCR 152

Thomason v Campbelltown Municipal Council (1939) 39 SR (NSW) 347

Thompson v Jewiss [2004] QCA 144

Tipperary Developments Pty Ltd v State of Western Australia [2004] WASC 179

USP Needham Australia Pty Ltd v The Victorian Arts Centre Building Committee [1983] 1 VR 79

Wasley v Frost (1974) 7 SASR 506

1. MURRAY J:  There are two substantive applications before the Court in respect of which, after hearing full argument, I reserved my decision.

2. The first application is that of the plaintiff that the defendant produce for inspection a number of specified discovered documents.  They are identified in the application.  They are documents which the defendant objects to produce. 

3. The first group of such documents are documents for which privilege from production has been claimed in the list of discovered documents given by the defendant in litigation in the Federal Court:  State of Western Australia v Wardley Australia Ltd & Ors WAG 115, 116 and 118 of 1990.  The documents comprise correspondence between the State Government Insurance Commission, the SGIC, and the defendant, respectively, and their solicitors, Messrs Clayton Utz (formerly Robinson Cox), together with notes, memoranda, documents and instructions to and advice from counsel, all of which, it is asserted, came into existence for the sole purpose of Clayton Utz providing confidential legal advice to the SGIC and the defendant respectively.

4. The second group of documents the subject of the application came into the possession of the defendant through the discovery and inspection process in the identified litigation in the Federal Court, although generated by others.  In respect of those documents it is claimed that their use "is restricted to that litigation".  For the purpose of these reasons, the documents in question need not be more particularly identified.  They are all documents in the possession, custody or power of the defendant and discovered as such.

5. As to those documents in respect of which legal professional privilege is claimed, for the purposes of this argument the plaintiff accepts the validity of that claim, but it is argued on its behalf that the circumstances are such that the privilege has been waived.  The waiver is said to arise in the following manner.  By its defence and counterclaim the defendant asserts that the plaintiff is estopped from bringing its action because on 30 December 1988 a deed of release was executed by the plaintiff and Mr Anderson releasing the defendant from all claims, including claims of the type made by the plaintiff.  It is pleaded that the deed was entered into in circumstances related to the preparedness of the defendant to procure the SGIC and the Government Employees' Superannuation Board, the GESB, to purchase from a company associated with the plaintiff a particular piece of land in the city of Perth, together with a building to be constructed on the land, which became stage 1 of Westralia Square. 

6. The defendant counterclaims, pleading more particularly the oral agreement and the deed of release.  If it should be found that by reason of the terms of the deed the plaintiff is not barred from pursuing its claims and the defendant is not released from liability from all claims, then rectification is sought to make the deed reflect the common intention of the parties that the defendant should be released from all claims and liability.

7. A claim for rectification of this type was recently discussed by the Full Court in Mander Pty Ltd v Clements [2005] WASCA 67. Reference may be made to the cases discussed therein. It is sufficient for present purposes to note that such a claim for rectification is based essentially upon establishing a disconformity between the common intention of the parties and the terms of the written instrument. Generally it will be the case that the claim will depend upon proof of the actual intention of the parties, held in common at the relevant time, whether reflected in an antecedent agreement or not, and that by mutual mistake the written instrument did not give effect to that intention.

8. It is asserted that the documents in respect of which legal professional privilege is claimed relate to this pleaded issue.  The privilege will be taken to have been waived if the defendant asserting the privilege acts or adopts a position in the litigation which is inconsistent with the maintenance of the privilege and the confidentiality of the documents in question.  In that context it is not an express waiver with which the law is concerned, but a waiver implied from the conduct of the party entitled otherwise to maintain the claim of legal professional privilege.  It was put succinctly by the majority of the High Court in Mann v Carnell (1999) 201 CLR 1, at 13[29], when their Honours said:

   "What brings about the waiver is the inconsistency, which the courts, where necessary informed by considerations of fairness, perceive, between the conduct of the client and maintenance of the confidentiality; not some overriding principle of fairness operating at large."

9. The same point was made in rather more expanded form related to the circumstances of that case by their Honours at 15[34]:

   "Disclosure by a client of confidential legal advice received by the client, which may be for the purpose of explaining or justifying the client's actions, or for some other purpose, will waive privilege if such disclosure is inconsistent with the confidentiality which the privilege serves to protect. Depending upon the circumstances of the case, considerations of fairness may be relevant to a determination of whether there is such inconsistency."

10. In this case, reliance is placed on the pleaded claim of rectification as necessarily involving disclosure of the state of mind of the defendant (or those acting for it) and its intention that the defendant should be released by the deed from all claims and liability.  The question is whether by so pleading its case the defendant has acted in a way or made a disclosure of its imputed state of mind which is necessarily inconsistent with the confidentiality which the privilege is designed for good reason to secure:  see generally DSE (Holding) Pty Ltd v Intertan Inc (2003) 127 FCR 499, a decision of Allsop J wherein is to be found a very useful and extensive discussion of the decided authorities.

11. In relation to a case of this kind, his Honour, at 520[61], concluded that waiver of the privilege would arise upon:

    " … the laying open of the confidential communication to necessary scrutiny, and by so doing (that is by expressly or impliedly making an assertion about the contents of the communication or laying the communication open to scrutiny) the inconsistency enunciated by Mann v Carnell is brought about.  But it is the existence of that inconsistency that is important."

12. See also Ampolex Ltd v Perpetual Trustee Co (Canberra) Ltd (1995) 37 NSWLR 405, 411; Southern Equities Corporation Ltd (in liq) v Arthur Andersen & Co (1997) 70 SASR 166, 193; Hoad v Nationwide News Pty Ltd (1998) 19 WAR 468, and Commonwealth v Temwood Holdings Pty Ltd [2002] WASC 107, a decision of Wheeler J.

13. In relation to the privileged communications presently under discussion they undoubtedly relate to the deed and its subject matter.  It may be accepted that the advice was concerned with that matter.  The claim for rectification is based on a particular state of mind of the defendant, an intention asserted to be common to both parties in the terms to which I have referred above.  It does not matter, in my opinion, having regard to the authorities concerning the plea of rectification, that the claim is based upon a common intention manifested by the concluded antecedent agreement pleaded in par 52 of the counterclaim.  That is simply the means by which the common intention was formed.  The question will then be whether, properly construed, the deed does not conform to that common intention. 

14. In my opinion, the defendant's reliance upon that plea is inconsistent with the maintenance of the confidentiality of communications between SGIC, the defendant and its solicitors concerning the circumstances in which the deed was prepared and executed.  It is fair in those circumstances that the plaintiff should have access to the correspondence because it may bear upon or illuminate the state of mind of the defendant relative to the terms of the deed.  The plaintiff's application to inspect the documents described in subparagraph 2.1 and 2.2 of the chamber summons is granted. 

15. The remaining category of documents the subject of this application are those which came into the defendant's possession pursuant to the discovery and inspection process in other litigation.  The law is clear.  For me it was authoritatively stated by the Full Court in Hamersley Iron Pty Ltd v Lovell (1998) 19 WAR 316. The discovery and inspection of documents is subject to an implied undertaking to the Court that the party who obtains that facility will not make the contents of discovered documents public, communicate their contents to any stranger to the suit, such as the plaintiff in this case, or use the documents for any purpose collateral to the purpose which the discovery process is intended to serve in the litigation in which it occurs.

16. The implied undertaking is given not only to the party from whom the discovery was obtained (not before the Court in this case) but to the Court.  It is an undertaking concerned to protect and confine the discovery process.  Of course, the Court may regard it as proper to relieve the party subject to the undertaking from its continued application upon application for that purpose:  Sofilas v Cable Sands (WA) Pty Ltd (1993) 9 WAR 196. Apart from cases where the documents have otherwise been put into the public domain, which is not this case, it is unclear to what extent there may be a relaxation of the privilege imported by the implied undertaking. As I held in Sofilas, at 204‑5, it might be the case on the decided authorities that the Court will act in special circumstances where the interests of justice demand that the undertaking be released or modified, provided, in that case, the Court is assured that to do so would not occasion injustice to the person giving discovery. The circumstances in which that course will be taken, I thought, would be rare indeed: Sofilas, at 204‑5.

17. For the plaintiff, reliance is placed simply upon the proposition that the implied undertaking given on discovery in one action must yield to the requirement to give discovery in a second action, relying upon an obiter observation to that effect by Mason CJ in Esso Australia Resources Ltd v Plowman (1995) 183 CLR 10, at 33. I can understand that proposition in a case, to which his Honour also referred, where "the implied obligation must yield to inconsistent statutory provisions", but it is less clear to me that his Honour was intending that in every case where the documents are properly the subject of discovery in other litigation, inspection should be permitted to the destruction of the implied undertaking and the privilege afforded thereby.

18. The defendant drew my attention to an observation by Gaudron J in Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501, at 544, where, in the context of a discussion of the proper ambit of legal professional privilege, but equally applicable to a case where inspection is sought contrary to the implied undertaking under discussion here, her Honour made the point that an unprivileged document would be "susceptible to whatever compulsory processes are available to secure its production" rather than by seeking to obtain it from a person in possession of a copy by an inspection process in privileged circumstances.

19. In my opinion, it is important to maintain the privilege from production provided by the implied undertaking under discussion.  If I have the power to abrogate that privilege by the order sought, I am of the opinion that it should only be exercised in exceptional circumstances beyond the mere fact of discovery subject to an objection to production in this litigation.  No circumstance of compelling injustice, if that objection is upheld, has been demonstrated to me and I would refuse the application that the documents listed in par 2.3 of the summons be produced to the plaintiff for inspection.

20. The second of the applications before the Court is one by the defendant for leave to issue a third party notice against Robinson Cox (a firm).  Of course, the time when that might be done (before defence) without leave has long passed. 

21. Of course, a third party notice is a process by which, among other things, a defendant may join, in an action, an issue related to or connected with the original subject matter of the action which is of such a nature that the question at issue should not only be resolved as between plaintiff, but should properly also be determined as between the defendant and the third party.

22. The grant or refusal of leave, of course, involves the discretionary judgment of the Court and much depends upon the convenience of having all related issues tried at the same time, as opposed to any inconvenience or prejudice which may be occasioned to the parties, having regard to the stage which the action has reached and having regard to other relevant matters.  The proper approach is put succinctly in Seaman, "Civil Procedure WA", at [19.2.1], where the learned author says:

    "Prejudice to the defendant will not necessarily predominate over prejudice to the plaintiff or to the public interest on belated applications to issue third party proceedings, which will be considered in the light of the principles of positive case flow management referred to in O 1 r 4A and 4B.  A significant consideration is that they are extremely disruptive of and delay greatly the course of the proceedings between the plaintiff and the defendant in the event that the usual third party directions are given."

23. As I have intimated above, it seems to me that the defendant, pursuing its application for leave to issue a third party notice directed to the firm of solicitors, must in this case rely on the jurisdiction conferred by the Rules of the Supreme Court 1971 (WA), O 19 r 1(c). The rules are predicated upon the proposition that where, in the various ways described, issues as between the parties or one or other party and a third party are relevantly linked, the interests of justice will ordinarily be served by joining third party proceedings to the trial of the principal litigation. As the defendant notes, the Supreme Court Act 1935 (WA), s 24(7), imposes upon the Court the duty to so determine litigation that:

    "so far as possible, all matters so in controversy between the parties may be completely and finally determined, and all multiplicity of legal proceedings concerning any of such matters avoided."

24. It is clearly desirable, in general terms, that where there are overlapping factual issues and common bodies of evidence, where the same sort of remedies are sought as between the different parties and where there is a significant possibility of inconsistent findings on the same or different evidence, joinder in the trial of the main action of the trial of third party issues will be desirable, from the point of view of convenience to all parties, saving of costs and avoidance of the injustice of inconsistent outcomes.  On the other hand, the prospect of delay and prejudice in the principal litigation will be significant countervailing considerations, particularly where an immediacy of connection between issues arising as between plaintiff and defendant and as between defendant and third party is lacking. 

25. A large number of authorities were cited by the parties and the proposed third party.  Having read the bulk of them I think I am not assisted substantially by them and I do not propose to cite them.  The parties are in agreement as to the approach the Court should take to the exercise of its discretion.  Most of the cases to which I was referred are simply examples of the application in particular cases of the general approach to the exercise of the discretion which I have endeavoured to summarise above.  I note in passing that as an example of an application of the kind before the Court in similar circumstances, the decision Muller DCJ in Melros Developments Pty Ltd v Ribble Pty Ltd (1996) 16 SR(WA) 143 usefully reflects the application of general principles to a case such as this.

1. The proposed third party proceedings arise in connection with the deed of release and the antecedent agreement between the parties to which I have referred briefly at the outset of these reasons.  However, the proposed third party action does not involve the decision of an issue in the principal litigation, the efficacy of the deed to protect the defendant from the plaintiff's claims.  The proposed third party action takes as its starting point the decision of the Court, if made, that the defendant is liable to the plaintiff and the deed, as a matter of construction and without the availability of rectification, does not protect the defendant from that liability.

2. In that event, the defendant proposes to claim an indemnity from the firm it alleges were its solicitors against the damages and costs awarded, or alternatively, there is a claim for damages equal to any amount of costs by which it may be out of pocket if it succeeds in its counterclaim for rectification and specific performance of the deed when there is a final tally in relation to costs incurred in the principal litigation as between the plaintiff and defendant.

3. Although pleaded at great length and with substantial particularity, the proposition upon which the defendant proposes to rely in the third party action is essentially a simple one.  It says that the third party was instructed in late 1988 to act for it generally and, in particular, in relation to the events which led to the pleaded agreement between the plaintiff and the defendant being entered into in late December 1988, by which the plaintiff promised not to sue the defendant in respect of any alleged liability in relation to the advance of moneys by the plaintiff to Rothwells Ltd and to confirm that undertaking in writing.  In return, the defendant was to procure the SGIC and the GESB to purchase, from companies associated with the plaintiff, the land and the building to be constructed on it, to which I have referred as stage 1 of Westralia Square.  It was, so it is proposed to plead, arising out of that that the deed of release executed by the plaintiff and Mr Anderson on 30 December 1988 was prepared by the proposed third party for the purpose of achieving the release of the defendant from all liability. 

4. The plaintiff having now sued the defendant in respect of liability alleged to arise out of the advance of $50M it made to Rothwells Ltd, the defendant proposes to plead that if found liable, and therefore if the deed of release is found to be ineffective and not to be capable of rectification, then the third party will be liable to indemnify the defendant against the loss sustained by reason of its breach of the alleged retainer agreement as the defendant's solicitors, breach of fiduciary duty arising out of that relationship, and negligence.

5. The defendant has been on notice in relation to the principal litigation since 1990 and 1992.  The writ was issued in 1994.  It is unnecessary in these reasons to discuss the progress of the litigation or the extent to which the respective parties have been responsible for the massive delays which have occurred.  Suffice it to say that the litigation appears finally to be approaching readiness for trial.  As I understand it, it has been entered for trial.  The parties have been told, unofficially and informally, that it could be tried by the Court following resumption of business on 18 July 2005.  If leave was granted to issue the third party notice and, as the defendant proposes, the third party directions in common form should be made, it will, I am satisfied, cause further delay in the trial of the principal litigation. 

6. If the third party proceedings were permitted I am satisfied that it would not be appropriate to allow the trial of the principal action to proceed and to conduct the trial of the third party claim later:  cf Consolidated Exploration Ltd v Ord Minnett Ltd, unreported; SCt of Vic; Ormiston J, 15 April 1993.  To take that course would deny the capacity of the third party to participate in the trial of the principal litigation to the extent that it was thought desirable to do so.

7. The defendant's application for leave to issue the third party notice was made in August 2004, but an affidavit of Mr Lyon, the Deputy State Solicitor in the office of the defendant's solicitor, shows that consideration was given to the proposed third party claim prior to the filing of the defence and counterclaim in November 1994.  The decision was made not to issue a third party notice against Robinson Cox prior to filing the defence.  It appears that the defendant's solicitors appreciated that the question whether Robinson Cox was retained by the defendant would be in issue in any such proceedings and it seems to be clear from Mr Lyon's affidavit that the decision taken was to wait and see what happened in relation to the principal litigation, once the defendant's solicitors took the view, which Mr Lyon said they did in about 1996, that the plaintiff "was not diligently pursuing the action and that a trial was unlikely." 

8. It is said that the defendant's solicitors did not take a different view until an appeal against the decision of a master to strike out the plaintiff's claim for want of prosecution was successful:  Tipperary Developments Pty Ltd v Western Australia [2004] WASCA 15. That decision was made on 5 November 2003. Even then, as Mr Lyon deposes, it was not until July 2004 that the defendant's solicitors sought and obtained instructions for the defendant to make a claim against Robinson Cox.

9. I infer that the defendant's solicitors decided that they would not launch what they thought would inevitably be contested third party proceedings until it was clear that the plaintiff would pursue its claim.  While no comment is made in the defendant's affidavits as to the likely prospects of success in those claims, in the view of the defendant' solicitors, it is clear from Mr Lyon's affidavit that they took the view that they could afford to wait and see what the outcome was or might be because, having regard to the Limitation Act 1935 (WA), s 48, no limitation of action in respect of such a claim against the solicitors would apply to the defendant, which could issue a writ against Robinson Cox seeking damages for professional negligence at any time, even if the defendant settled the principal litigation with the plaintiff. In my opinion, that is not a good foundation upon which to now, very belatedly, pursue an application for leave to issue the third party proceedings.

10. I have determined that I should not grant the application.  While there will certainly be some overlapping of evidence and factual issues between the principal litigation and the proposed third party proceedings in respect of the involvement of the solicitors in the negotiations leading up to the execution of the deed of release and the formation of the agreement pleaded, antecedent to that deed, there will be no issue in the principal litigation concerned with how the defendant instructed Robinson Cox, if it did, the advice it received or did not receive, and the way in which the solicitors behaved.  So the point of factual nexus is limited.  Nor will the proposed third party have any contribution to make in relation to the terms of the anterior agreement, the construction of the deed, and the issue of possible rectification of the deed. 

11. While I think it would be true that the joinder of the proposed third party proceedings in the trial of the action between the plaintiff and defendant would not substantially lengthen that trial, it would, I am satisfied, substantially delay its commencement and thus, in that way, prejudice would be encountered by both the plaintiff and the defendant.

12. Given the slim possibility of inconsistent findings if the proceedings are tried separately, it seems to me that the balance of convenience and prejudice lies with the plaintiff, who opposes the grant of leave in the circumstances outlined particularly in Mr Lyon's affidavit.  I think that the delay and inconvenience to the defendant involved in requiring it to sue its alleged former solicitors separately (if necessary) are not weighty considerations in favour of the grant of leave.  The application is dismissed.