FEDERAL COURT OF AUSTRALIA EVIDENCE – Evidence Act 1995 (Cth) - client legal privilege – loss of privilege – circumstances in which consent to disclosure of confidential communications can be implied. Evidence Act 1995 (Cth), s 122 Adelaide Steamship Co Ltd v Spalvins (1998) 152 ALR 418, cited Attorney-General for the Northern Territory v Maurice (1986) 161 CLR 475, applied Goldberg v Ng (1995) 185 CLR 83, applied Leaders Shoes (Aust) Pty Ltd v National Insurance Co of NZ Ltd [1968] 1 NSWR 344, cited Hooker Corp. Ltd v Darling Harbour Authority (1987) 9 NSWLR 538, cited Transamerica Computer Co. Inc. v IBM Corp. (1978) 573 F (2d) 646, cited STATE OF NEW SOUTH WALES v BT AUSTRALASIA PTY LIMITED AND BRITISH TELECOMMUNICATIONS PLC NG 298 of 1998 BEAUMONT, BRANSON AND LEHANE JJ SYDNEY 24 JULY 1998 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NG 298 of 1998 BETWEEN: STATE OF NEW SOUTH WALES AppELlant AND: BT AUSTRALASIA PTY LIMITED First Respondent BRITISH TELECOMMUNICATIONS PLC Second Respondent JUDGES: BEAUMONT, BRANSON AND LEHANE JJ DATE OF ORDER: 24 JULY 1998 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The appeal be dismissed with costs. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NG 298 of 1998 ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA BETWEEN: STATE OF NEW SOUTH WALES AppELLant AND: BT AUSTRALASIA PTY LIMITED First Respondent BRITISH TELECOMMUNICATIONS PLC Second Respondent JUDGES: BEAUMONT, BRANSON AND LEHANE JJ. DATE: 24 JULY 1998 PLACE: SYDNEY REASONS FOR JUDGMENT BEAUMONT J: INTRODUCTION This interlocutory appeal, brought by leave of the managing Judge (Sackville J), was heard at the same time as a related appeal between these parties, and Telstra Corporation Limited ("Telstra"), in which judgment is also given today. These reasons should be read together with the reasons in the other appeal. Although the ultimate issues in the appeals are different, some of the background to this appeal appears in my other reasons and need not be restated. His Honour's reasons in this matter are now reported (see BT Australasia Pty Ltd v State of NSW (1998) 154 ALR 202). His Honour dealt with a motion by British Telecommunications plc ("BT") seeking an order that the State of New South Wales ("the State") produce certain documents for BT's inspection. The State had claimed client legal privilege, a claim disputed by BT. However, for the limited purposes of the argument on the motion, BT asked the Court to assume that the privilege could be claimed. BT then submitted that the privilege was lost, for several reasons. Sackville J upheld BT's submission for one of the reasons advanced by BT and ordered that the State produce the documents for inspection by BT. The State now appeals from this order. BACKGROUND The documents the subject of the motion were referred to in a statement of evidence of Paul Bernard Lopert filed and served by the State in the principal proceedings. The trial is fixed to commence next year so that Mr Lopert's statement has not been tendered nor have its contents been otherwise adduced in evidence. The statement explained the State's process of evaluation of the responses (including BT's) to the Request for Tender for Design Implementation and Operation ("RFT"). Relevantly, the statement contained, in para 24, the following: "Based on the reports to the [State's] Steering Committee by the evaluation teams…: [Several reports, eleven in all, were then identified by number only. They included the two disputed documents] and by a reading of BTA's Best and Final Offer:…, it was my understanding and belief that: [In short, that the State did not make any material misrepresentation and that BTA understood the true position]…" Previously, in its list of discovered documents, the State had made a claim of client legal privilege in respect of the two disputed reports. Soon after BT's motion was filed, the State Crown Solicitor wrote to BT's solicitors, informing them that Mr Lopert had re-executed his statement (which was then enclosed) "because of inadvertent mention in his earlier statement of privileged documents". In the amended statement, which was then filed and served, the earlier reference in para 24 to the two disputed reports was omitted. Ms Grant, a solicitor employed by the State Crown Solicitor's Office with the conduct of the matter, gave the following explanation of the circumstances in which the disclosure of the two reports occurred: After Mr Lopert's first statement was filed and served, the Crown Solicitor's Office ("CSO") received a request from BT's solicitors for copies of all documents referred to in a number of statements filed on behalf of the State. While those documents were being collated, inquiries revealed that para 24 of Mr Lopert's first statement included references to documents for which a claim for client legal privilege had previously been made by the State. The CSO's practice in preparing statements had been to exclude any reference to privileged documents, except where instructions have been obtained expressly to waive privilege. The CSO had not received any instructions in the proceedings from the State to waive client legal privilege. All privileged documents contained within the State's discovery were isolated within the CSO from the general discovery documents. There was, however, no distinguishing discovery number pattern for privileged documents. It appears that during the course of preparation of Mr Lopert's statement, original and copy documents were collated by paralegals for discussion between counsel and Mr Lopert. It was not clear how the two references to privileged documents came to be included in Mr Lopert's first statement. Ms Grant believed that the document references would have been in counsel's draft statement and final form of statement. No one associated with the statement's preparation had authority to disclose privileged documents. So far as she was aware, one, if not more, paralegals were responsible for the final assembling of the documents referred to in the statement. Ms Grant was not cross-examined. No other witness was called by either side on the motion. BT'S CASE FOR AN ORDER FOR INSPECTION In support of its motion, BT submitted that the State had lost client legal privilege on at least one of these grounds: (1) By referring to the privileged documents in para 24 of his first statement, Mr Lopert had used the documents to revive his memory about a fact or opinion (Evidence Act, s 122(6)); or (2) By serving Mr Lopert's first statement, which includes an express reference to the disputed documents, the State must be taken to have given its consent to the disclosure of the documents (Evidence Act s 122(1)); or (3) Mr Lopert's first statement amounted to a knowing and voluntary disclosure by the State of the substance of the documents (Evidence Act s 122(2)); or (4) The disputed documents "affect the rights" of BT (Evidence Act s 121(3)); or (5) Inspection of the disputed documents was reasonably necessary to enable a proper understanding of documents recording deliberations of the steering committee (Evidence Act s 126); or (6) If the common law applies, the State's privilege in the disputed documents has been waived by the principles settled by the High Court in Attorney-General for the Northern Territory v Maurice (1986) 161 CLR 475 and Goldberg v Ng (1995) 185 CLR 83. THE REASONING AT FIRST INSTANCE (a) Disclosure His Honour accepted that the test for the purposes of s 122(2) and (4) is (as was held in Adelaide Steamship Co Ltd v Spalvins (1998) 152 ALR 418 (at 426)) "a quantitative one, which asks whether there has been a sufficient disclosure to warrant loss of the privilege". Sackville J held (at 207-8) that Mr Lopert's statement did not rise above a statement of his understanding and belief: it did not purport to state the substance or effect of the two disputed documents; it was impossible to discern from the statement the topic or topics with which these documents were concerned. Accordingly, his Honour held, there was no loss of privilege by disclosure. (b) Consent Sackville J referred to the distinction, considered in the other related appeals, between situations where a privileged communication may be relevant to an issue in the proceedings, and situations where a party relies on material by specifically referring to such a communication in order to advance its claim in the proceedings. His Honour said (at 208): "Unless the State can make out its claim that the reference to the disputed documents in Mr Lopert's statement was inadvertent, I think that by filing and serving Mr Lopert's statement it must be taken to have impliedly consented to the disclosure of the contents of those documents. Mr Lopert's statement specifically identifies the disputed documents as providing one of the sources for his belief on issues critical to the outcome of the litigation. The reference to the document is plainly designed to support his evidence and to bolster the State's case. While, as I have held, the reference in Mr Lopert's statement to the documents does not disclose their contents, in my view a party to litigation can consent to disclosure of confidential communications in a manner other than disclosure of the substance of the communications. His Honour accepted (at 208) that, at common law, inadvertent disclosure of a privileged document in the course of discovery did not, ordinarily, waive privilege; and that the present issue involved the application of common law principles, in so far as they had been modified by the "derivative" effect of the Evidence Act 1995, as Adelaide Steamship decided. Sackville J said (at 209): "In my opinion, the evidence of Ms Grant does not rebut the inference that the State had impliedly consented to the disclosure of the two disputed documents. This case is different from the inadvertent disclosure cases to which I have referred. Ms Grant frankly acknowledges that she does not know how the privileged documents came to be included in Mr Lopert's statement. Her evidence indicates, however, that Mr Lopert's statement was prepared with the assistance of counsel. I infer, in the absence of other evidence, that counsel approved the statement, including the reference to the disputed documents, for filing and service in the proceedings. There is no suggestion that Mr Lopert (who did not give evidence on the motion) was mistaken or misinformed when he referred to para 24 of his statement to the disputed documents. At best, Ms Grant's evidence suggests that there was a failure in communication within the CSO or between the CSO and counsel. Consequently, counsel (and perhaps the solicitor directly involved in the preparation of the statement) may not have been aware of the practice to which Ms Grant refers in relation to privileged documents. But the evidence is consistent with counsel having formed the view that, even if the documents were privileged, it was appropriate from the State's forensic perspective for Mr Lopert to refer to them in his statement. In any event, the evidence does not show that either counsel or Mr Lopert referred to the disputed documents inadvertently or by mistake. Nor does it show that the statement was filed and served under any misapprehension or error as to the privileged status of the disputed documents." THE STATE'S GROUNDS OF APPEAL By its notice of appeal, the State now challenges his Honour's decision that by filing and serving the original statement, it had expressly or impliedly consented to the disclosure of the contents of the two disputed documents. The State contends, inter alia, that it should have been held that the evidence of Ms Grant rebutted the inference that it had impliedly consented; and that the disputed documents had been inadvertently and mistakenly referred to in the original statement. CONCLUSIONS ON THE APPEAL I propose, in this appeal also, to consider first the position under the general law, and then to examine the impact, if any, of the provisions of the Evidence Act, assuming that they apply here indirectly. (a) The position at common law In accordance with the principles of waiver of the privilege explained in Attorney-General for the Northern Territory v Maurice (1986) 161 CLR 475and in Goldberg v Ng (1995) 185 CLR 83, the present inquiry is a broad one, depending upon the particular circumstances. The question is whether "fairness requires that [the State's] privilege shall cease whether [the State] intended that result or not" (Maurice at 481, 488; Ng at 96). In the present case, the circumstances include the fact that, in the absence of an undertaking, express or implied, to read or tender a witness statement, there was no obligation upon the State at the trial to read or tender the original statement, notwithstanding that BT might tender or read it (see Leaders Shoes v National Insurance Co. of NZ (1968) 1 NSWLR 344 per Macfarlan J at 346). At the same time, as Gibbs CJ observed in Maurice (at 483), the fact that the material that has been disclosed has been used in evidence ("deployed") by the client is, although relevant, not decisive. Another material circumstance is the fact that previously, in the formal discovery process, the State had claimed privilege in the two documents. As has been seen, the circumstances in which the disclosure came to be made were not completely explained, and remain the subject of speculation to some degree. But a special feature in the case of this disclosure is its substantive aspect. That is, the disclosure occurred when the State's witness referred to the contents of the disputed documents for the purpose of corroborating his own evidence of his process of reasoning on a central issue in the proceeding. In other words, this is not a case of mere procedural inadvertence, where, for instance, a document is erroneously included in a discovery list (see Hooker Corp. Ltd v Darling Harbour Authority (1987) 9 NSWLR 538). In such cases of "accidental" disclosure, the Court may refuse to imply a waiver (see Transamerica Computer Co. Inc. v IBM Corp. (1978) 573 F (2d) 646, discussed in Maurice at 488). Taking all the foregoing considerations into account, and applying a test of fairness and consistency, I would conclude that the law should impute a waiver here. I do not think this is a case of a merely accidental disclosure. Notwithstanding (a) the prior claim of privilege; and (b) the absence of any obligation on the State to read Mr Lopert's original statement, the substantive nature of the disclosure is, I think, a significant consideration in favour of refusing to allow the privilege to be claimed now. If the privilege were to be upheld, an artificial situation could arise at the trial in which a substantial part of the disclosed process of reasoning of an important witness on a central issue would be treated, in law, but not in reality, as if that process had not occurred. This would unfairly restrict BT in the scope of its cross-examination of Mr Lopert. It will be recalled that in Maurice, Deane J (at 493) noted as potentially unfair a situation where "a party… asserts… reliance upon a particular identified document…". It is also, I think, material that although the State offered some explanation of its procedures in this connection, his Honour was not given the benefit of a complete explication. It follows that, if looked at under the general law, I would not uphold the privilege claim. (b) The impact, if any, of the Evidence Act Assuming that this Act indirectly applies pre-trial, the first question that arises is whether, within the meaning of s 122(1), the State gave its consent to the disclosure by filing and serving the original statement. I agree with his Honour, for the reasons he gave, that consent should be implied. It may be that this is a case of express or actual consent in any event, but I need not pursue that. I concur with the opinion of Sackville J that consent should be inferred from the circumstances (a) that Mr Lopert's statement specifically identifies the disputed documents as providing one of the sources of his belief on critical issues; and (b) that these references were plainly designed to support this evidence, and to bolster the State's case. I further agree with his Honour that, for the purposes of s 122(1), common law notions of fairness (including inadvertent or accidental disclosure) do not arise. In the circumstances, I need not consider other questions, including whether there was a knowing and voluntary disclosure of the substance of the evidence for the purposes of s 122(2). ORDERS PROPOSED Since I am of the view that the privilege was lost, whether considered at common law or under the statute, I propose that the appeal be dismissed, with costs. I certify that this and the preceding seven (7) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Beaumont Associate: Dated: 24 July 1998 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NG 298 of 1998 BETWEEN: STATE OF NEW SOUTH WALES AppELlant AND: BT AUSTRALASIA PTY LIMITED First Respondent BRITISH TELECOMMUNICATIONS PLC Second Respondent JUDGES: BEAUMONT, BRANSON AND LEHANE JJ DATE: 24 JULY 1998 PLACE: SYDNEY REASONS FOR JUDGMENT BRANSON J INTRODUCTION This interlocutory appeal arises out of the same dispute as the related appeals in Appeals Nos NG 280 and 299 of 1998. These reasons for judgment should be read with the joint reasons for judgment of Lehane J and myself in the other appeals. The same abbreviations as are there used, will be used here. THE PLEADINGS By paragraph 26 of its Second Amended First Cross-Claim the State pleads that BT, in the course of submitting its Tendered Solution in response to the RFT, represented certain matters to the State ("the alleged Representations"). By paragraph 27 of the same pleading the State asserts that: "In reliance on [such] Representations and induced thereby, on or about 20 November 1992, the Government gave BTA written notification that BTA was the successful tenderer under the RFT." The State further pleads that in making the alleged Representations BT engaged in misleading or deceptive conduct and that as a consequence the State suffered damage. In addition the State pleads that by reason of matters, including those referred to in paragraphs 26 and 27, BTA is estopped from making the claims made by it in its Second Amended Statement of Claim, including its claim for relief. THE LOPERT STATEMENT In accordance with the usual practice of this Court, statements of evidence proposed to be led at hearing have been filed and served. One such statement filed on behalf of the State is that of Paul Bernard Lopert ("Mr Lopert") dated 28 November 1997. Mr Lopert was at the relevant time the General Manager, Commercial Services, of the Commercial Services Group of the State. He was the chairman of the Steering Committee charged with making the final recommendation to the New South Wales State Contracts Review Board in relation to a contract or contracts for the State's telecommunications network. The Steering Committee received evaluation reports from evaluated teams comprised of appropriately qualified persons. Mr Lopert's statement dated 28 November 1997 sets out his understanding and belief on the subject matter of the alleged Representations. By his statement Mr Lopert asserts that his understanding and belief was based on certain reports to the Steering Committee by the evaluation teams (including consultants engaged by them) and on his reading of BTA's Best and Final Offer. The reports to the Steering Committee by the evaluation teams referred to by Mr Lopert are identified in his statement by their respective discovery numbers. Following the filing by BT of a notice of motion seeking production for inspection by BT of the reports referred to in Mr Lopert's statement, the State filed and served a second statement of Mr Lopert which differs from his statement of 28 November 1997 only in respect of the reports upon which his understanding and belief was said to be based. In the second statement, no reference is made to two reports ("the Reports") referred to in the statement of 28 November 1997, which are claimed by the State to attract legal professional privilege, or to use the language of the Evidence Act 1995 (Cth) ("the Act"), client legal privilege. It has not been suggested that Mr Lopert referred to the Reports in his statement of 28 November 1997 in error in the sense that they formed no part of the material upon which his relevant understanding and belief was based. Rather evidence was placed before the judge at first instance that no person had actual authority to disclose in Mr Lopert's statement, or elsewhere, privileged documents. CONSIDERATION It is not disputed that the State's pleading that it relied upon the alleged Representations, and was induced by them to give written notification to BTA that its tender was successful, is intended to be supported at trial by the evidence of Mr Lopert. It would seem that, by reason of his position as Chairman of the Steering Committee, Mr Lopert's relevant understanding and belief in those regards was effectively that of the State. That being the case, it is my view that the result of this appeal is dictated by the result of the related appeals. That is, having placed in issue, as an element of its cause of action in the cross-claim, Mr Lopert's understanding of, and belief in, the alleged Representations, the State has impliedly waived its privilege, if any, in the reports to the Steering Committee upon which his understanding and belief was based. For the purpose of s 122(1) of the Act, in my view, the State is to be taken to have consented to the Reports being available for inspection by BT so as to give it a fair opportunity of testing the pleaded case of the State. In my view, this appeal should be dismissed. I certify that this and the preceding two (2) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Branson. Associate: Dated: 24 July 1998 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NG 298 of 1998 on appeal from a judge of the federal court of australia BETWEEN: state of new south wales Appellant AND: bt australasia pty limited First Respondent british telecommunications plc Second Respondent JUDGES: BEAUMONT, BRANSON AND LEHANE JJ DATE: 24 july 1998 PLACE: SYDNEY REASONS FOR JUDGMENT LEHANE J I agree, for the reasons given by Branson J, that the reasoning of the majority in the related appeals (numbers NG280 and 299 of 1998) requires that this appeal be dismissed. I certify that this page is a true copy of the Reasons for Judgment herein of the Honourable Justice Lehane Associate: Dated: 24 July 1998