Westgold Resources NL v St Barbara Mines Ltd - [2007] WASC 47

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION: WESTGOLD RESOURCES NL -v- ST BARBARA MINES LTD & ANOR [2007] WASC 47

CORAM: EM HEENAN J

HEARD:
6 - 10, 13 - 17 NOVEMBER 2006 &

5 - 9, 12 - 16 FEBRUARY 2007

DELIVERED : 15 FEBRUARY 2007

FILE NO/S: CIV 2427 of 2000

BETWEEN: WESTGOLD RESOURCES NL (ACN 009 260 306)
Plaintiff
AND
ST BARBARA MINES LTD (ACN 009 165 066)
First Defendant
RONALD WARREN WOSS
Second Defendant
NORMAN THOMAS BEVAN
First Third Party
PETER VERNON JONES
Second Third Party
ROBIN STEPHEN DEAN
Third Third Party
COLIN ROSS ATKINS
Fourth Third Party

Catchwords:

Evidence - Privilege - Legal professional privilege - Documents obtained for litigation - Privileged in hands of client and solicitors - Copies of correspondence from solicitors in hands of independent witness - No relationship of confidentiality - Subpoena for production - No privilege

Legislation:

Nil

Result:

No privilege attaches to documents held by the independent witness

Category: A

Representation:

Counsel:

Plaintiff:     Mr C L Zelestis QC & Mr R W Douglas
First Defendant              :     No appearance
Second Defendant         :     Mr M J McCusker QC & Mr S J Penglis
First Third Party            :     No appearance
Second Third Party       :     Mr P G McGowan
Third Third Party           :     No appearance
Fourth Third Party         :     No appearance

Solicitors:

Plaintiff:     Corrs Chambers Westgarth
First Defendant              :     No appearance
Second Defendant         :     Freehills
First Third Party            :     No appearance
Second Third Party       :     Arthur Metaxas & Co
Third Third Party           :     No appearance
Fourth Third Party         :     No appearance

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

Australian Hospital Care (Pindara) Pty Ltd v Duggan [1999] VSC 96
Goldberg v Ng (1995) 185 CLR 83
Mann v Carnell (1999) 201 CLR 1
National Employers' Mutual General Insurance Association Ltd v Waind (1979) 141 CLR 648
Pratt Holdings Pty Ltd v Commissioner of Taxation [2004] FCAFC 122; (2004) 136 FCR 357
Ritz Hotel Ltd v Charles of the Ritz Ltd (No 22) (1988) 14 NSWLR 132
Southern Equities Corporation Ltd v West Australian Government Holdings Ltd (1993) 10 WAR 1

EM HEENAN J: I am required to rule on a claim made by the plaintiff for privilege in respect of certain documents in the possession of Mr Mladen Ninkov, which Mr Ninkov has produced in court, and in respect of which he personally claims no privilege. The origin of this application appears from the evidence taken yesterday and the limited ruling which I made in respect of one of the documents in the course of proceedings yesterday. (That is, that an original letter in the possession of the plaintiff's solicitors and written to them by Mr Ninkov's solicitors was privileged in the plaintiff's hands.)
Counsel for the second defendant, Mr Woss, submits that there is no privilege which the plaintiff may maintain in respect of any of the present documents and seeks access to them, and inspection of them, with a view to considering whether or not they may be used in further cross‑examination of Mr Ninkov. The documents were itemised in the course of evidence this morning and it is unnecessary for me to particularise them beyond the following brief description.
They comprise letters, beginning on 3 October 2000, from McLernon Group Ltd to Mr Ninkov seeking comments, statements and other information or explanations from Mr Ninkov concerning the purchase of the Woss shares in May of 1997, at a time when Mr Ninkov was chairman of directors of Westgold Resources NL. That initial letter of 3 October 2000 from McLernon Group Ltd to Mr Ninkov enclosed a number of annexures being correspondence, copies of affidavits, a draft statement, letters between Westgold Resources NL and Mr Ninkov, ASX announcements, press cuttings, and other documents which have been mentioned already.
The next document in the chain is a reply from Mr Ninkov's solicitors, Clayton Utz, with Mr Ninkov's comments and explanation of substance, dated 16 November 2000. There then followed further exchanges, dating from 20 November 2000 to 20 March 2001, being letters and, perhaps, other memoranda from McLernon Group Ltd to Mr Ninkov's solicitors and from Mr Ninkov's solicitors to McLernon Group Ltd.
Yesterday I held that the original of the letter written by Mr Ninkov's solicitors to McLernon Group Ltd, dated 16 November 2000, was privileged in the hands of the plaintiff and that the plaintiff could not be compelled to produce that letter on the basis that it was information obtained by the plaintiff's agent for the purposes of litigation then in prospect or commenced.
There has been no submission by the second defendant that that ruling should be reconsidered. Furthermore, the document, presently one of those already enumerated, dated 16 November 2000, is Mr Ninkov's copy of that letter which was retained by his own solicitors and in respect of which he asserts no claim for privilege nor any other reason to inhibit inspection or production.
The substance of the submissions by the plaintiff asserting privilege over these documents is that the documents themselves comprise, and perhaps more significantly reflect, a process of communication, between the plaintiff's agent and a potential witness in this litigation, designed to obtain information for the plaintiff's advisers to use in this litigation and that it therefore comes within the ruling of legal professional privilege, sometimes referred to as litigation or work product privilege.
The ruling which I made yesterday acknowledges that this is the case in relation to the original letter of 16 November 2000 in the hands of the plaintiff's solicitors. The point of difference with the material presently being examined is whether the same principles apply in relation to documents in the hands of the third party, Mr Ninkov, in respect of which he makes no objection to production.
The plaintiff's submissions rely heavily on the proposition that it is not merely the documents or the materials which have been exchanged which are the subject of the privilege, but it is the communications. Consequently, if these are communications which are within the rubric of the privilege, then not only are the materials which have been assembled by the solicitors privileged, but other copies of those materials in the possession of the third party would likewise be privileged because, it was argued, if this were not so, the benefit of the privilege might be readily circumvented. The plaintiff also submits, emphatically, that recent decisions, and in particular decisions of the High Court of Australia, including Mann v Carnell (1999) 201 CLR 1, emphasise that the communications rather than the individual documents are the subject of the privilege.
As to that, it seems to me that the true position is rather more complicated. The scope of legal professional privilege covers a number of areas. The paradigm example is legal professional privilege involving legal advice being sought or given between a solicitor and client. The present communications are not within that category. They belong to a subcategory of this species of privilege.
In Ligertwood A, "Australian Evidence" 4th ed Butterworths, 2004, there is a discussion about the scope of this privilege which I am satisfied is consistent with the analysis in other leading texts, namely "Cross on Evidence", 7th Australian ed Butterworths, 2004, edited by the Honourable Justice Heydon, and in Britain, "Phipson on Evidence", 16th ed Sweet and Maxwell, 2005. Ligertwood makes the following observation at 275:
"[I]t is generally accepted that there is another narrower aspect of legal professional privilege at common law, one which protects materials collected by lawyers (personally or through their clients) for the purposes of pursuing adversary litigation."
This is discussed further, and at 276 the learned author writes:
"It appears then, that at common law the notion of legal professional privilege embraces two privileges, a communications privilege, and a litigation privilege. These are separate privileges with separate rationales [for their existence], although they may overlap when clients and lawyers communicate about litigation. [footnotes omitted]"
Dealing with material collected for litigation, that same author writes at 288:
"This separate common law privilege is recognised in a series of Australian decisions. [footnotes omitted] "
The decision of the Full Court of this State in Southern Equities Corporation Ltd v West Australian Government Holdings Ltd (1993) 10 WAR 1 is but one example. The author then states that:
"The privilege exists only to encourage the pursuit of adversary litigation through lawyers, so a litigant in person has no such common law privilege. [footnotes omitted]"
The authority for that proposition can be found in National Employers' Mutual General Insurance Association Ltd v Waind (1979) 141 CLR 648 per Mason J at 654. At 291 ‑ 292 Ligertwood continues:
"The ambit of the litigation privilege is contentious. A statement taken from a witness for the purposes of litigation is privileged in the hands of the lawyer or client. But it seems that a copy of that statement in the hands of the witness will only be privileged if the witness owes a duty of confidentiality to the party taking the statement. [footnotes omitted]"
For the latter proposition the author cites Ritz Hotel Ltd v Charles of the Ritz Ltd (No 22) (1988) 14 NSWLR 132 as authority, a decision referred to me yesterday and which I relied upon and applied.
This then directs attention to whether or not it can be said that there was a duty of confidentiality between Mr Ninkov and either McLernon Group Ltd or its principal, the plaintiff, in relation to the communications which gave rise to the series of documents which I have already described. Notwithstanding the fact that Mr Ninkov was formerly a managing director of Westgold Resources NL, there is nothing before me to suggest, let alone establish, that the communications were made to him on the basis that it was asserted, or that he accepted, that there was a continuing obligation of confidentiality obliging him to provide this information and that he accepted such a limitation on this occasion.
In my reasons for decision yesterday I adverted to the evidence, such as it was, (emerging from Mr Ninkov's evidence‑in‑chief in these proceedings, from his cross‑examination, from Exhibit 18, and from the McLernon Group Ltd retainer agreement) which plainly indicated that Mr Ninkov was potentially a defendant at the suit of Westgold Resources NL and that in these communications, having retained his own solicitors, all the indications are that he was dealing at arm's length and in his own interest with McLernon Group Ltd and its principal, the plaintiff. That is the basis upon which I proceed.
One then turns to the question of whether copies of documents retained by Mr Ninkov, being his side of the correspondence which his solicitors sent to McLernon Group Ltd, are privileged solely because the originals are privileged in the hands of the plaintiff. I have been referred to a series of cases by counsel for the plaintiff, including - Australian Hospital Care (Pindara) Pty Ltd v Duggan [1999] VSC 96; Pratt Holdings Pty Ltd v Commissioner of Taxation [2004] FCAFC 122; (2004) 136 FCR 357; and indeed Mann v Carnell (supra); dealing with privilege attaching to copies of documents or the use of copies of privileged documents for limited purposes.
I accept without question that in those cases claims for privilege in respect of copies were upheld and that the reason for this was that the use of the copies was essentially the use of the privileged material for purposes connected with or reasonably incidental to the rationale for the conferral of the privilege. There was not any unqualified disclosure to a third party in any of those examples and although each of those decisions, and unquestionably Mann v Carnell (supra), contain helpful, indeed binding, discussions of principle, I do not consider that any of them is conclusive of the issue to be decided in this case.
Turning now to some characteristics of this narrower scope of work product privilege, I return to Ligertwood (supra), where at 302 the writer says:
"The rationale protects communications given in confidence and the work‑product of lawyers. Two aspects of this require emphasis. In the first place, a lawyer is only forbidden from disclosing communications seeking and giving professional advice, the contents of those communications, and work‑product created for litigation. [footnotes omitted]"
Then at 303:
"In the second place, if the information contained in a privileged communication or material created for litigation can be proved through other sources, then so be it. It is not the information contained within the communication or work‑product which is privileged, it is the communication and work‑product itself (and hence its contents) which cannot be disclosed. Therefore, a party's proof of a witness may be privileged, but if an opponent calls that witness to testify the witness cannot refuse to divulge his or her observations of the events because they are also recorded in the privileged proof. [original emphasis] [footnotes omitted]"
This seems to me to be an important limitation on the work product privilege and it is consistent with the rationale for the privilege. There are examples, of which the Southern Equities Corporation Ltd v West Australian Government Holdings Ltd (supra) case is conspicuous, where the original material which had been assembled and embodied in the affidavit held by the solicitors could not itself be said to be privileged, yet its collection and assimilation into an affidavit intended for use in the proceedings did create a privileged document. So it is the use to which the information is to be put and the assembly and collection of materials for litigation which is the subject of the privilege.
If materials exist which have not been assembled by the lawyers for litigation, even though they may closely parallel or indeed reciprocate the information gathered by the lawyers, there does not seem to me to be any reason in principle or authority for them to be subject to a similar privilege.
Accordingly, I am not satisfied that any of the materials referred to by Mr Ninkov, and which he is willing to produce, are subject to privilege which allows the plaintiff to prevent them from being used, notwithstanding that copies or originals of those documents in the possession of the plaintiff are themselves privileged. It is the disclosure of the information (for example, the attachments to the letter from McLernon Group Ltd to Mr Ninkov dated 3 October 2000) to a third party which constitutes, in my view, a waiver of any privilege which might otherwise have attached to those documents.
I do not consider it necessary to support this decision by an analysis of the principles of waiver of privilege, yet so much as can be distilled from those principles suggests the same conclusion. One case of relevance, although coming from the area of waiver, is Goldberg v Ng (1995) 185 CLR 83.
What had happened in that case, as counsel will no doubt remember, is that a solicitor who was in dispute with a former client had obtained legal advice about his position. As a result of a complaint made by the client to the Law Society of New South Wales, which exercised a statutory jurisdiction to investigate complaints against solicitors, the Law Society sought an explanation from the solicitor as to his position. The solicitor dealt with the Law Society and indicated that, if the society was prepared to accept an obligation of confidence, he would disclose to the Law Society for a limited purpose the legal advice which he himself had obtained in connection with his position in the dispute with the complaining client. The Law Society agreed and the documents were produced and considered by the Law Society, which evidently accepted them, together with other information, as an adequate explanation of the solicitor's conduct and discontinued its investigation. In subsequent proceedings the disaffected client brought an action against the solicitor and, in the course of those proceedings, issued a subpoena to the Law Society demanding production of the documents which were delivered under this arrangement of confidentiality. The question which then arose was whether or not there had been a waiver of the privilege.
The decision of the court, by majority, was that there had been no express waiver, but that there had been an imputed waiver because the information had been disclosed voluntarily in circumstances where it could have been withheld or where the Law Society could have used coercive powers to require its production.
The application of the decision is affected by considerations of fairness, having regard to the similarity of issues raised in the second set of proceedings by the client, but it is nevertheless indicative of the situation where a voluntary disclosure to a third party of privileged materials will, without more, usually be imputed as a waiver of the privilege. That proposition underlines the consequences of McLernon Group Ltd's disclosure of these materials to Mr Ninkov.
The same principles, in my view, can readily be discerned from the judgment of McHugh J in Mann v Carnell (supra), particularly at pages 32 to 35. I appreciate that in that case McHugh J was dissenting, but what occurred in Mann v Carnell (supra) was not an examination of the legal professional work product privilege. It was rather an examination of the privilege relating to legal advice and for reasons which I have already given, the scope of privilege in the setting presently examined is, in my view, more limited. Accordingly, I consider that these documents should be produced and made available for inspection.