Todd v Novotny - [2003] WASC 202

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: TODD -v- NOVOTNY & ANOR [2003] WASC 202

CORAM: EM HEENAN J

HEARD: 21 OCTOBER 2003

DELIVERED : 21 OCTOBER 2003

FILE NO/S: CIV 2281 of 1996

BETWEEN: ROBERT JOSEPH TORRANCE TODD
Plaintiff
AND
MICHAEL NOVOTNY
First Defendant
BACKLOAD PTY LTD (ACN 009 451 192)
Second Defendant

Catchwords:

Discovery - Claim of privilege - Claim for relief for mistaken disclosure of privileged materials - Failure to establish privilege - Unsustainable claims for privilege of document showing existence of material non discovered documents - Relief refused

Legislation:

Nil

Result:

Application for return of copy of discovered document dismissed

Category: B

Representation:

Counsel:

Plaintiff:     Mr P A Tottle
First Defendant             :     Mr D H Solomon
Second Defendant         :     Mr D H Solomon

Solicitors:

Plaintiff:     Tottle Partners
First Defendant             :     Solomon Brothers
Second Defendant         :     Solomon Brothers

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

Key International Drilling Co Ltd v TNT Bulkships Operations Pty Ltd [1989] WAR 280

Case(s) also cited:

Attorney General for the Northern Territory v Kearney (1985) 158 CLR 500
Clements, Dunne & Bell Pty Ltd v Commissioner of Australian Federal Police (2001) 188 ALR 515
R v Bell; Ex parte Lees (1980) 146 CLR 141

EM HEENAN J: This is an application by the first defendant by chamber summons for an order that the plaintiff should return a particular document which the first defendant says was inadvertently delivered during the process of inspection of discovered documents in these proceedings because the document so mistakenly delivered is privileged. Additional relief in the form of orders to strike out references in subsequent affidavits of the plaintiff referring to the alleged privileged material is also sought together with orders requiring delivery up of all copies of the alleged privileged document. Finally, the first defendant also seeks an injunction to prevent use by the plaintiff of the document in any way which might exploit the mistaken disclosure of privileged material.
Framed in that way, the first defendant's application invokes a well‑established jurisdiction of this Court to grant relief when there has been an inadvertent disclosure of privileged material by mistake. The jurisdiction is long established. It has been submitted to me that it has its origins in equity to prevent the unconscientious exploitation of a unilateral mistake of an adversary or the adversary's agent, and I accept that that is one way in which the matter may be put. The origins of the doctrine and its application cannot be disputed and are exemplified in a decision of this Court in Key International Drilling Co Ltd v TNT Bulkships Operations Pty Ltd [1989] WAR 280, a decision of Kennedy J.
For the doctrine to be successfully invoked and relief to be granted, it is necessary for the applicant to establish that there was a mistaken disclosure of material and, necessarily, that the material mistakenly disclosed was of a character for which a claim for privilege could be sustained.
In the present case the document which it is said was mistakenly disclosed is a yellow post‑it note containing several lines of manuscript by the first defendant which is attached to a copy of a letter from the National Australia Bank Ltd, Singapore, to the first defendant and his wife relating to a particular account maintained by that bank in Singapore from at least 2001 to 2002.
The copy of the letter from the National Australia Bank Singapore to the defendant was part of a bundle of documents handed over for inspection by the first defendant's solicitors to the plaintiff's solicitors in the course of a procedure for giving continuing discovery in this action. The adhering post‑it note was not noticed when the document was handed over and it is the adhering post‑it note in respect of which the claim for privilege is asserted and which it is said is the subject of the mistaken disclosure.
There has been no evidence by the plaintiff that the delivery of the letter of 20 February 2002 with the adhering post‑it note, was anything other than a mistake by the solicitors acting for the first defendant. I accept therefore that at the time inspection of these documents was offered by providing the copies as I have described, an honest mistake or oversight occurred by the first defendant's solicitors in failing to notice the adhering post‑it note and that, consequently, the disclosure of the post‑it note was inadvertent and mistaken.
On that basis the first defendant submits that he is entitled to relief of the nature which I have just described. However, in my view there is more that needs to be shown by the first defendant than the mere making of a mistake. It follows from the manner in which I have described the principle that it is necessary for the first defendant to establish that there has been the mistaken disclosure of material which is in fact privileged. If there is no privilege, then there is no reason to grant relief arising from the disclosure.
So it is to the question of whether or not there are grounds for relief against the mistaken disclosure in this case that I must now turn. The claim for privilege which is made by the first defendant in support of this application is put on the basis that the post‑it note, and I stress only the post‑it note, is a note written by the first defendant, Mr Novotny, of a confidential character to his solicitors not intended to be communicated to the plaintiff's solicitors. The manner in which the post‑it note was received is described in the affidavit of Mr Atkinson, one of the solicitors for the first defendant, sworn 7 August 2003 at pars 4 and 5. I unreservedly accept the explanation given by Mr Atkinson of how the post‑it note came to be received.
The question of whether the post‑it note is confidential, as asserted by Mr Atkinson and by the first defendant's counsel in the course of submissions, however is another matter, the determination of which does not in any way reflect upon Mr Atkinson. The question of confidentiality in this setting has to be determined, in my view, in the light of the processes which were being undertaken by the client and the solicitor at the time and having regard to the disclosure which was intended, or taken to be intended, by the solicitor and client acting on that occasion. A fair inference arising from the documents and the affidavit material is that at the time the post‑it note was received by Mr Atkinson, the first defendant's solicitors were undertaking part of an extensive course of giving discovery of documents in this action for the first defendant and that the delivery of the materials to which the post‑it note adhered was done by the client in the course of seeking advice and giving instructions for the completion of the obligation to give discovery.
I pause at this moment to say a little about the background to this very complicated litigation. This summary, which will be very brief, is no doubt inadequate for a full description of this litigation as a whole but is sufficient for the purposes required by this occasion. In the action the plaintiff is asserting that the first defendant and the second defendant were in breach of a variety of obligations, which are evidently disputed by the first defendant, in relation to dealings with mining tenements in Indonesia and elsewhere, and that as a consequence of these alleged breaches, the first defendant received payments or otherwise profited in a manner giving rise to an obligation to account to the plaintiff, and also to pay compensation in equity or damages at law.
It is unnecessary to go into the details of how those allegations are advanced, the duties upon which it is said they depend or the responses put forward by the defendants in the action to refute the allegations. It is enough, however, to indicate that, as part of this process, the plaintiff has for some time been seeking discovery and disclosure by the first defendant of all bank accounts in Australia or elsewhere operated or controlled by the first defendant into which the money proceeds of these alleged unlawful transactions may have been paid.
The history of the applications for discovery and the successive applications for additional discovery are long and complicated and have not been fully canvassed today. But it is common ground that, as a result of an application for specific discovery brought by the plaintiff, the first defendant agreed to provide voluntary discovery of materials relating to the existence and records of all bank accounts held or controlled by him covering the period May 1995 to March 2000. It was submitted to me that there is evidence in the affidavit confirming that those are the dates for the beginning and end of the designated period and that this was, otherwise, a matter of record arising from the discovery process. That statement was questioned by counsel for the first defendant, so counsel for the plaintiff offered to demonstrate this by reference to the record. That was not ultimately done because the controversy subsided and the matter was not further challenged by the counsel for the first defendant in reply. I proceed, therefore, on the basis that there was an agreement by the first defendant to give discovery of records relating to bank accounts maintained or controlled by him covering a period before 2002 and, apparently, from in or about May 1995 to in or about March 2000.
In the process of discovery and inspection of documents which I have described a copy of the letter from the National Australia Bank, Singapore, was handed over by the solicitors for the first defendant referring to an account number 1108582506 held by the bank in Singapore stating, so far as can be read, that this account had a nil balance "and has been inactive for the past 1 year". That letter was dated 20 February 2002, indicating that the earliest date for the nil balance was February 2001. The letter contains other content which might be regarded as offering terms upon which further details of the account would be provided, but this is not significant for present purposes. The post‑it note, said to be privileged, contains the words "Alex," being a reference to the name of the first defendant's solicitor and continues: "As can be seen, the account has been inactive for several years, the last entry being zero amount 5 April 1999, see attached statement." Counsel for the plaintiff submits, and I accept, that this note gives rise to a strong inference that this particular account was open in April 1999, that is within the period covered by the agreement by the first defendant to provide discovery of bank records.
The combination of the post‑it note and the letter itself appears to be significant prima facie evidence to indicate the existence of a bank account at the National Australia Bank Ltd, Singapore branch, which was in existence during the period for which the first defendant accepted the obligation to give discovery. It is not disputed by the first defendant that discovery of the existence of that account and the statements for transactions upon it have not been discovered except to the extent disclosed by the production for inspection of the copy letter of 20 February 2002 itself.
The plaintiff relies upon this inference from the documents as indicating that there has been a failure by the first defendant to give discovery which he agreed to do and that the letter, but more significantly the post‑it note by referring to the existence of an attached statement, discloses the existence of documents which prima facie come within the scope of the obligation to give discovery accepted by the first defendant. I agree that the documents bear, at least at prima facie level, that interpretation.
The reaction of the first defendant to this course of submissions by the plaintiff is to assert that no explanation of the existence of this account or of the attached statement to which the post‑it note refers is required because otherwise, if it were to be required, that would be a form of exploitation of the mistake by the solicitors in disclosing the post‑it note in the innocent fashion that I have already described. The first defendant submits that that would be to impose an obligation allowing the plaintiff to take a benefit from the disclosure of privileged material.
With all respect, I cannot accept this submission because to me it begs the question of whether the materials are actually privileged or not, or in other words, whether the first defendant has an equity which would justify relief being granted against the alleged exploitation feared. In my view the materials raise a prima facie case that there are in existence statements relating to a bank account at the National Australia Bank, Singapore, during the period which is the subject of the accepted obligation by the first defendant to give discovery and that those have not been discovered.
That being the case, any relief which is sought by the first defendant on the present application could only protect the nondisclosure of the material which is prima facie discoverable and as such would be seen to be a frustration of the obligation of the first defendant to give discovery. Accordingly, I do not see that any basis has been established for demonstrating that the material to which the post‑it note refers is privileged; nor do I consider that the post‑it note itself is privileged because it does no more than identify for the first defendant's solicitors, material which either has been discovered, namely, the letter of 20 February 2002, or material related to this which, on the prima facie view that I have taken, appears to be discoverable.
During the course of argument I pointed out to the solicitors for both parties, but particularly to the first defendant, that no express claim for privilege in relation to "attached statement" referred to in the post‑it note had been put forward by the first defendant. That is, there has been no affidavit filed by the first defendant identifying the existence of the document or documents referred to in the post‑it note, and describing them sufficiently to enable any ensuing claim for privilege to be identified and evaluated.
I offered counsel for the first defendant an opportunity to file such an affidavit, but this was declined on the basis, so it was submitted, as I understand, that this would require the first defendant to take a step which would allow the plaintiff to exploit the original mistake. However, for reasons which I have already attempted to explain, I consider that that submission does not meet the position because it fails to deal with the question of whether or not the materials are truly privileged.
In the course of submissions by counsel for the first defendant other grounds were put forward, perhaps peripherally, as potentially justifying nondisclosure of these documents and consequent invocation of relief to protect against the mistaken disclosure of the post‑it note. It was asserted that disclosure of the statement might, no more than might, tend to incriminate the first defendant by demonstrating that he had sworn falsely in the past that no such documents existed. As to that, I can only say that if privilege from production on the grounds of self‑incrimination were being asserted, then it should be specifically claimed and sworn to. That has not been done.
Secondly, counsel for the first defendant asserted that the particular documents relating to any account with the National Australia Bank, Singapore, to which the post‑it note and the letter of 20 February 2002 apparently referred were not material because they related to events many years after the alleged cause of action had arisen and that it was for the solicitors for the party giving discovery, namely, the first defendant, to make a judgment as to whether or not they were material, and that that judgment once made and formally asserted by the client, would not require disclosure of the documents. Again, with respect, only part of those submissions can be accepted. It is true that a party and his solicitors, when giving discovery, are entitled to examine the documents to determine materiality and if satisfied that documents are not material, need not disclose them or make them available for inspection. I hasten to add that in those circumstances it is still necessary for the party giving discovery to go on oath in terms which state that there are no documents, other than those specifically disclosed, which are material which have ever been in the possession, custody or power of the party giving discovery, and that in the circumstances of this elongated process of discovery no such final assertion has been made by the first defendant, at least in relation to the banking records.
It is also the case that even such a conclusive statement as to the absence of other material documents is capable of being traversed in an application for specific discovery by an adversary if the adversary can show a prima facie case as to the existence of other documents. If so, the Court will consider whether or not specific discovery of the additional documents is warranted.
In this setting, although not perhaps as formally or completely as one would wish, an application for specific discovery was made and it produced the undertaking, self‑imposed by the first defendant, to give voluntary discovery of the banking records and that obligation stands.
Accordingly, in my view, the disclosure of the post‑it note in this case gives rise to an inference that there are or may be additional documents which should be discovered and which have not been discovered pursuant to the obligations of the first defendant in the action. Because of this, if relief against the mistake were to be granted, it would indirectly impede the interlocutory processes of this Court in ensuring that full discovery is given by the parties including the first defendant. That being the case, I decline to grant any relief to prevent the use of the post‑it note in further interlocutory proceedings in this Court or to grant any of the ancillary relief sought by this chamber summons. In reaching that conclusion I should not be understood as determining that the records, if any, of the National Australia Bank Ltd, Singapore, relating to account 1108 582 506 include records covering the period May 1995 to March 2000, or that if they do, those records may not be the subject of a claim for privilege properly claimed and demonstrated. Those are matters which have not been addressed. As there has been no finalisation of the processes of discovery in this case, it is possible that they may require attention in the future. However, for the present I am satisfied that I should refuse the relief sought by the first defendant.