Supreme Court New South Wales Medium Neutral Citation: Shuvkrem Group Pty Ltd v Double Bay Law Pty Ltd [2024] NSWSC 523 Hearing dates: 1 May 2024 Date of orders: 1 May 2024 Decision date: 01 May 2024 Jurisdiction: Common Law Before: Campbell J Decision: See [18] Catchwords: CIVIL PROCEDURE – discovery – objection to inspection of documents by court – s 133 Evidence Act – court's power to inspect engaged where a question relating to a document arises under Part 10 Evidence Act – primary purpose of court's inspection is to ascertain whether privilege claim is established Legislation Cited: Evidence Act 1995 (NSW), s 133 Cases Cited: Bailey v Dept of Land and Water Conservation (2009) 74 NSWLR 333; [2009] NSWCA 100 Grant v Downs (1976) 135 CLR 674 Hancock v Rinehart (Privilege)) [2016] NSWSC 12 Komlotex Pty Limited v AMP Limited [2022] NSWSC 1525 Rinehart v Rinehart [2016] NSWCA 58 Unsworth v Tristar Steering and Suspension Australia Limited [2007] FCA 1082 Texts Cited: S Odgers, Uniform Evidence Law (18th ed, 2023, Lawbook Co.) Category: Procedural rulings Parties: Shuvkrem Group Pty Ltd (Plaintiff) Double Bay Law Pty Ltd (Defendant) Representation: Counsel: A Rogers (Plaintiff) R J May (Defendant) Solicitors: Legal One Services (Plaintiff) Sparke Helmore (Defendant) File Number(s): 2022/83511 JUDGMENT 1. HIS HONOUR: I am asked to rule upon claims for legal professional privilege in the context of discovery of documents by the plaintiff to the defendant in this solicitors' professional negligence case. The parties are to be commended for having resolved most potential disputes about document production between themselves. There remain nine documents, or perhaps nine categories of document, given that some of them consist of email threads, in dispute that require a decision by me. The basis of the plaintiff's objection to discovery is legal professional privilege. 2. I have heard argument from Mr May of learned counsel in relation to the defendant's position, as he offered to set out the issues ahead of me hearing from Mr Rogers of learned counsel for the plaintiff. 3. In the way of these things, a preliminary point arose about whether I had the power to inspect the documents in dispute, as I was invited to do by Mr Rogers under s 133 Evidence Act 1995 (NSW). More accurately, the argument was that while I had the power, as it is a discretionary power, I should not exercise the discretion to inspect the documents because the plaintiff had not read evidence sufficient to found the invoked privilege necessary to engage the exercise of the power. 4. Section 133 of the Evidence Act is in the following terms: "If a question arises under this part relating to a document, the Court may order that the document be produced to it and may inspect the document for the purpose of determining the question." 1. I was referred by Mr May to a number of relevant authorities and also to Odgers, Uniform Evidence Law (18th ed, Lawbook Co., pp 1309-1312). The question of when the power to inspect under s 133 has been engaged has generated a surprising body of case law. The position at common law or, perhaps more properly put, under former rules of court (see Hancock v Rinehart (Privilege) [2016] NSWSC 12 at [34] per Brereton J) was stated in the joint judgment of Stephen, Mason and Murphy JJ in Grant v Downs (1976) 135 CLR 674 at 688-689. Their Honours said: "It is well accepted that the Court, in allowing production and inspection of documents, exercises a judicial discretion. In doing so, it needs to scrutinise with care claims of privilege made on the ground now under consideration. It is for the party claiming privilege to show that the documents for which the claim is made are privileged. He may succeed in achieving this objective by pointing to the nature of the documents or by evidence describing the circumstances in which they were brought into existence. But it should not be thought that the privilege is necessarily or conclusively established by resort to any verbal formula or ritual. The Court has power to examine the documents for itself, a power which has perhaps been exercised too sparingly in the past, sparingly possibly from a misplaced reluctance to go behind the formal claim of privilege. It should not be forgotten that in many instances the character of the documents the subject of the claim will illuminate the purpose for which they were brought into existence." 1. Mr May's argument, as I understood it, and I hope I do no injustice to the care with which it was formulated, is that in the absence of some evidence of the facts and circumstances in which the contentious documents were brought into existence founding a claim of privilege, s 133 Evidence Act does not authorise the Court to inspect them. It is implicit in this that an inspection by the Court should not be permitted to make up some shortfall in the evidence proffered to establish the privilege because that may work to the disadvantage of the party seeking production and access, who has no opportunity to see the documents inspected by the Court to make submissions about them. The same consideration would follow if one characterised the question as whether the discretion to inspect has been properly engaged in the case at hand. To make good that contention, Mr May principally relied upon the judgment of Brereton J, in Hancock v Rinehart at [7], [18] and [34]. If I may say so, with the greatest of respect, it is a typically comprehensive, penetrating legal analysis so characteristic of his Honour's scholarship. 2. It is sufficient for me to say that (at [7]) his Honour emphasised that the party claiming privilege must prove the facts to establish that it is properly made: "A mere sworn assertion that the documents are privileged will not suffice because it is an inadmissible assertion of law." 1. His Honour (at [18]) recorded that the party claiming the privilege pressed the Court to inspect the documents over the objection of the parties seeking production, contending that no testimonial evidence was necessary to engage a favourable exercise of the discretion, referring to Grant v Downs. After the most thorough review of the authorities (including Grant v Downs), his Honour said (at[34]): "The power was not intended to detract from the requirement of the person claiming privilege to prove, by admissible evidence, the grounds of the claim. While it is clear that the Court may now require a document the subject of a claim of privilege to be produced so that it may inspect it for the purpose of ruling on the claim, that is quite a different notion from permitting a person from claiming privilege to sustain the claim by adducing no testimonial evidence but asking the Court to inspect the documents. The privilege, being a privilege against production, permits the person entitled to the privilege to refuse to produce the document to the Court. To voluntarily proffer the documents for inspection - as opposed to doing so pursuant to a requirement made by the Court under UCPR rule 1.95(c) - is inconsistent with maintaining the claim." His Honour declined to accept the invitation to inspect them. 1. The matter went on appeal: Rinehart v Rinehart [2016] NSWCA 58 where a unanimous Court (Beazley P, Leeming and Simpson JJA) said (at [22]): "The appropriate course for present purposes is to cut through these underlying issues and go to the heart of the matter. Let it be assumed, favourably to [the appellant], and contrary to what the primary judge subsequently said when granting a stay, that his Honour's rejection of her claim for privilege was based upon a lack of power to examine the documents in circumstances where she had not adduced any evidence in support of a claim. If so, then there would have been a plain case of error: the failure to exercise a discretionary power which a party has sought on the incorrect basis that the power was not available. But what follows from that conclusion?" Their Honours, however, went on to make clear that if invited to exercise a discretion to view the documents for themselves, they would decline that application. This was for a number of reasons not all of which are pertinent to the case before me. But their Honours went on to say at [31]: "The course proposed by [the appellant] gives rise to ample scope for unfairness to all parties in that course, but especially unfairness to those seeking access. If the course followed by the [the appellant] were followed, they would not be able to be heard effectively against such submissions as are put. That is not to deny that there may be occasions when it is appropriate for a court itself to inspect documents in order to resolve a contested claim of privilege, although, as the primary judge said, the unsatisfactory nature of that course has been remarked upon on many occasions. Much will depend upon whether all parties consent to that course, the nature of the documents and the magnitude of the dispute." 1. It should be re-emphasised that these decisions I have referred to, as I have indicated, are not the only relevant decisions to the nature of the discretionary power conferred on the Court by s 133 Evidence Act. 2. Amongst other authorities, Mr Rogers referred to an earlier decision of the Court of Appeal in Bailey v Department of Land and Water Conservation (2009) 74 NSWLR 365; [2009] NSWCA 100, Tobias JA (with whom Allsop P and Hodgson JA agreed) stated the principle at paragraphs [56] and [57]: "It was further submitted that s 133 only permitted an inspection that confirmed the effect of evidence otherwise filed to support a claim for privilege. Reliance was placed upon a passage from the judgment of Gyles J in Unsworth v Tristar Steering and Suspension Australia Limited [2007] FCA 1082 at [8] where his Honour said, without objection, that he had inspected documents pursuant to s 133 Evidence Act for the purpose of assessing the nature of the documents and that that inspection had confirmed the effect of the evidence which, in that case, related to issues of confidentiality. However, the decision in Unsworth is not authority for the proposition advanced by the appellants, namely, that the power under s 133 to inspect documents cannot be used as a substitute for admissible evidence to support the various elements necessary to establish privilege. So that if evidence in respect of any one of those elements is missing, the gap cannot be filled by an inspection of the documents. In my view, s 133 cannot be so construed. The Court's power to inspect is engaged under the section in any case where, "[a] question arises under this part relating to a document. A question arose in the present case under Part 3.2 as to whether the document identified in Part 1(b) of the list attracted privilege under s 118 or s 119 of the Evidence Act. The primary judge was therefore empowered to inspect the documents for the purpose of determining that very question. This he did in the exercise of his discretion. As I have concluded, under the next heading, no error has been demonstrated in his taking that course." I observe that Bailey was not cited to the Court in Rinehart v Rinehart, although it had been drawn to Brereton J's attention at first instance. 1. I am not satisfied that there is any necessary conflict between those two decisions of the Court of Appeal. It is obvious that in Rinehart v Rinehart there was no evidence whatsoever proffered from a well-resourced litigant as to the circumstances in which the documents over which she claimed a personal privilege rather than corporate privilege residing in the company which she controlled arose. The invitation to exercise s 133 power was declined for discretionary reasons in all the circumstances of that case. 2. Rees J has referred to this question in Komlotex Pty Limited v AMP Limited [2022] NSWSC 1525. Her Honour observed (on Mr Odgers' analysis; p 1312), that there is no requirement to adopt a two-stage process. Her Honour did say: "[t]he fact that a claim for privilege is devoid of supporting evidence - such that the burden of determining whether the claim for privilege is sound is, effectively, cast entirely on the Court – is certainly relevant to the exercise of discretion to inspect the document" and that the powers of the Court to inspect the documents are "wide and should not be unduly circumscribed". 3. Although the evidence advancing the claim for privilege in the case at hand may be regarded as somewhat sparse, it is not a case where there is no evidence at all supporting a claim for legal professional privilege. It is true, with no disrespect, that the affidavit of the plaintiff's solicitor, Alison Michael Eid, sworn on 26 April 2024, has rather formulated the claim in the opaque manner formerly utilised for the purpose of preparing a formal verified list of documents taking objection to discovery. That is to say that Mrs Eid asserts that the documents are privileged as having come into existence for the dominant purpose of the provision of legal advice without further exposure of the facts pertaining to their creation. However, she also annexes a schedule which identifies the nine documents, or categories of document, over which the claim for privilege is maintained. She indicates the persons between whom the email communications passed, the date of their passage and the claim in relation to the category of privilege covering them. It is obvious from that material that these are communications passing between directors of the plaintiff company and legal practitioners principally, but not always, around the time during which the impugned purchase the subject of these proceedings was undertaken. 4. In the case of three documents, or categories of documents, being 6, 7 and 8, the email passes between a legal advisor and a third party, and it is accepted by Mr May on the basis of other evidence produced, and indeed exhibited to the affidavit of his instructing solicitor Mr Cameron, that the third party is an accountant acting on behalf of the company seeking legal advice in relation to taxation matters concerning the purchase from a lawyer expert in the law of taxation. 5. Now, I repeat that evidence may be somewhat sparse, but it is not "no evidence at all" from which an inference could not be drawn that the documents identified fall into a category which may attract legal professional privilege. For that reason, I am of the view that it is a proper exercise of my discretion under s 133 Evidence Act for me to inspect the documents, and I propose to exercise that power. 6. When exercising the power, I will bear in mind that the primary purpose of inspection is for me to scrutinise the documents to see whether the claim for privilege is established in the context of Mrs Eid's affidavit, bearing in mind the disadvantages to which the defendant is subject. 7. I should also say that the forensic exercise I am engaged in today does not turn solely upon the question of whether privilege does or does not inure. There are substantial arguments as to waiver falling into different categories upon which Mr May has also addressed me which I will decide separately. For those reasons, I direct that the documents be produced to the Court to enable me to inspect them under s 133. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 03 May 2024