New South Wales District Court CITATION: Suttram Pty Limited v Michelin Australia Pty Limited (No 4) [2008] NSWDC 316 JUDGMENT DATE: 14 November 2008 JURISDICTION: District Court of New South Wales JUDGMENT OF: Cogswell SC DCJ DECISION: Claim of legal professional privilege is defeated (in respect of one document) by a voluntary disclosure of substance. CATCHWORDS: LEGAL PROFESSIONAL PRIVILEGE - Voluntary disclosure of substance - Legitimate forensic purpose Evidence Act 1995 LEGISLATION CITED: Legal Profession Act 2004 Trade Practices Act 1974 (Cth) Adelaide Steamship Co Limited v Spalvins (1997) 152 ALR 418 CASES CITED: BT Australasia Pty Ltd v State of New South Wales (1998) 153 ALR 722 Makus v Provincial Insurance Company Limited (1983) 25 NSWCCR 1 PARTIES: Suttram Pty Limited Michelin Australia Pty Limited FILE NUMBER(S): 4530/06 COUNSEL: J L Sharpe (Plaintiff) A R Vincent (Second Defendant) SOLICITORS: Fraser Clancy (Plaintiff) Deacons (Second Defendant) JUDGMENT 1. The second defendant in these proceedings issued various subpoenas and notices to produce. Some of those were directed to the plaintiff Suttram Pty Limited, some to the plaintiff's insurer NTI Limited and some to the plaintiff's solicitors. Two were issued to persons at Unisearch Ltd at the University of New South Wales and a Mr Colin Wingrove. Six subpoenas and notices to produce were issued in all. They were admitted and marked exhibits 1 to 6. 2. The documents have been produced by the solicitors for the plaintiff. However, in an affidavit of Tony James Bates sworn on 29 October 2008 legal professional privilege is claimed in respect of a number of those documents. The claim is made under s119 of the Evidence Act 1995 as that is made applicable to the process of producing documents. 3. The second defendant responds to the plaintiff's claim for privilege by arguing under s122 of the Evidence Act that legal professional privilege does not apply in respect of a number of the documents because of a knowing and voluntary disclosure of the substance of the advice which is said to be privileged. 4. I heard argument on 30 October 2008 from Mr Vincent, of counsel, representing the second defendant and Mr Sharpe, of counsel, representing the plaintiff. 5. Mr Sharpe resisted Mr Vincent's argument of a voluntary disclosure with a number of submissions. First, however, he pointed out that under s142, the Evidence Act provides for the standard of proof on any matter of which I must be satisfied. That standard must be on the balance of probabilities. Mr Sharpe pointed out that I must take into account the importance of the evidence in the proceeding and the gravity of the matters alleged in relation to the question. 6. Mr Sharpe put forward four arguments to meet Mr Vincent's argument. His first argument was to refer to a legal practitioner's obligation under s347 of the Legal Profession Act 2004 . His second argument concerned the purpose for issuing the subpoenas and notices to produce. He argued that there was no legitimate forensic purpose. His third argument was based upon a judgment of Clarke J, as his Honour then was, in the Commercial List of the Common Law Division in Markus v Provincial Insurance Company Limited (1983) 25 NSWCCR 1. It is fair to say that those three arguments were his principal arguments. His final argument was to submit that s 122 of the Evidence Act did not apply to defeat the claim for privilege. 7. In order to rule on this matter it is important to understand just what Mr Vincent says was the disclosure. He relies upon an affidavit of Chris Clancy sworn 25 September 2008. That affidavit was tendered on the interlocutory proceedings relating to these subpoenas and notices to produce and marked exhibit S7. Mr Vincent refers to particular paragraphs in that affidavit which he says amount to a disclosure of documents in respect of which privilege is claimed. Two of the paragraphs he relies upon can be dealt with quickly. They are paragraphs 9 and 15. 8. Before turning to those two paragraphs I observe that the purpose of the affidavit is apparently to deal with a defence by the second defendant to a claim by the plaintiff under the Trade Practices Act 1974 that the claim is out of time. Relevant to that question is the question of when the plaintiff had knowledge of particular matters. 9. Returning to the two paragraphs of Mr Clancy's affidavit which can be dealt with quickly paragraph 9 is short and says as follows: "It was not until receiving Mr Veen's report dated 5 October 2005 that I was satisfied that I could comply with my obligations under s 347 of the Legal Profession Act." In paragraph 15 Mr Clancy says before advising his plaintiff client and its insurer about any cause of action he had to be satisfied that it could be established that not only was the tyre defective and that the defects were manufacturing defects, "but also that there were reasonable prospects of establishing that the manufacturing defects, caused or contributed to this accident." To my mind both paragraphs 9 and 15 of Mr Clancy's affidavit deal only with his obligation under s347 of the Legal Profession Act . If there was any disclosure of the substance of any legal advice in those paragraphs it would not amount to a disclosure which must lead to a provision of documents to other parties because the paragraphs related to his obligation under the Legal Profession Act and therefore the disclosure was, in my opinion, made in accordance with s 122(2)(c) under compulsion of law. 10. Mr Vincent's principal argument is directed to paragraph 10 of Mr Clancy's affidavit. Once again that is a short paragraph and reads as follows: "I then advised the plaintiff and the plaintiff's insurer that they had a possible cause of action against Michelin in negligence and under the Trade Practices Act." Mr Vincent argues that what is disclosed there is more than the assertion by a legal practitioner that there are reasonable prospects of success for the purposes of the Legal Profession Act , but the disclosure of advice from the solicitor to the client that there was a possible cause of action against the second defendant under particular heads, namely, negligence and the Trade Practices Act . 11. Returning to Mr Sharpe's arguments I accept his first argument concerning the impact of s347 of the Legal Profession Act. His third argument concerning Markus v Provincial Insurance Company Limited is linked to his second argument concerning legitimate forensic purpose and I propose to deal with both at the same time. Mr Sharpe argued that in some way the attempt to get hold of the documents was an attempt to vilify a solicitor and also an attempt to get hold of various documents relating to steps taken by Mr Sharpe's instructing solicitor. He argued that there was no legitimate forensic purpose, asking rhetorically, "Where it's going to get anyone?" In support of his argument he submitted that even if the documents were produced they would not end up in evidence because they would be excluded under s135 of the Evidence Act . 12. The associated argument relied upon Markus v Provincial Insurance Company Limited . That was an interlocutory application determined at first instance by Clarke J. A plaintiff had sought from a defendant, before the hearing of the proceedings had commenced, certain reports of investigations undertaken by that defendant. The report evidently contained notes of discussions between the investigator and police officers together with hypotheses based on those discussions. His Honour concluded that the material was "... of such a nature that its material would not enable the plaintiffs to be in a better position from the point of view of presentation of the case at trial. " His Honour went further and determined: " It is clear that the only purpose, in my view, to be served by letting the plaintiff see this documentation would be to put them on notice of the allegedly suspicious circumstances. " His Honour decided that it was in the interests of justice not to require that the documents be produced. His Honour considered the submission advanced on behalf of the plaintiff in that case that one purpose of obtaining the documents would be the facilitation of settlement. His Honour concluded that that factor " to the extent to which it is entitled to consideration, is outweighed by the greater interest of ensuring that the court gives justice between the parties. " 13. In my view, Markus is distinguishable on its own facts. This is not a case - unlike that one - where Mr Vincent's client could use any documents obtained to put on evidence concerning, as Mr Vincent said, when the plaintiff acquired knowledge about the relevant matters. I accept his argument in that respect. This is quite a different sort of case. This case is part heard. We are in the defendant's case or at least the second defendant's case, Markus' case concerned the plaintiff wanting to get hold, before the plaintiff himself or herself went into the witness box, of documents relevant to the proceedings obtained by the defendant or brought into existence by the defendant. The basis upon which Clarke J regarded the interests of justice as not being served does not exist, in my opinion, in this case. 14. The argument that the documents sought by the second defendant may not end up in evidence is not, in my opinion, a matter which is relevant to resisting production. The test is whether it is on the cards that the documents sought by the second defendant may be of assistance to it or put it in a better position. Clearly in litigation it would be of assistance to one party to obtain advice tendered by the solicitors for the other party. It may expose perceived weaknesses in the case of the other party which would be of assistance to the party seeking the documents. For that reason alone I regard the documents being sought as being sought for a legitimate forensic purpose. I add that an additional purpose, in my view, is the one referred to by Clarke J in Markus and that is it could assist in settlement. I do not know whether this will in fact be the case because I have not seen the documents nor am I privy to any settlement negotiations between the parties. It may be of some assistance or of no assistance but it is on the cards - because the documents may expose frank views assessing the strength of one party's case that - it may promote settlement discussions. Once that legitimate forensic purpose has been established the fact that there are other possible purposes referred to by Mr Sharpe no longer assists his argument. It may be that he advances such arguments during the course of the case when and if the documents are sought to be used but, in my opinion, the second defendant has established a legitimate forensic purpose for seeking the documents which it seeks. 15. Finally, there is the question of disclosure under s122. Mr Sharpe's arguments in this regard referred to s347 of the Legal Profession Act and, as I have already said, I uphold his argument in that regard. I reject his argument under this ground that the documents may not eventually go into evidence. I take into account what he argued about the standard of proof. Advice given by a solicitor to their client is clearly of importance in the proceeding. The question in this case turns very much upon expert evidence and I take into account that the advice may well concern comment upon the expert evidence provided. 16. There has been some discussion in the authorities about s122 of the Evidence Act . The leading authority would appear to be a judgment of the Full Court of the Federal Court of Australia in Adelaide Steamship Co Limited v Spalvins (1997) 152 ALR 418. In a joint judgment Olney, Kiefel and Finn JJ said of the disclosure provision that: "The test is a quantitative one, which asks whether there has been sufficient disclosure to warrant loss of privilege. If what is disclosed falls short of the test posed by the section, there is no waiver." A little later in the same paragraph their Honours said: " It should, additionally, be said of the subsection's quantitative test that its application may result in privilege being lost in respect of a discrete part or aspect of a confidential communication or confidential document where the matter disclosed only relates to, or else relates sufficiently to, that part or aspect. " (See 426) At 430 their Honours said that "the question posed by s122(2), which needs to be addressed, is whether the substance of the evidence, namely the confidential communication or contents of a confidential document providing the legal advice, has been disclosed. In the context of the subpoenas here, the question is simply as to whether, and how much of, the legal advice contained in or noted in documents...has been made apparent." 17. In BT Australasia Pty Ltd v State of New South Wales (1998) 153 ALR 722 Sackville J, referred to the Adelaide Steamship case and added at 743: " A distinction has also been drawn between an expression of view as to the likely outcome of litigation (whether or not coupled with reference to the fact that legal advice has been obtained) and a statement of the substance or effect of legal advice… " 18. That last passage referred to of Sackville J's, judgment reinforces my view that the statement by Mr Clancy, in compliance with his obligations under the Legal Profession Act , about the likely outcome of the proceedings is not one which should force a disclosure of any advice relied upon or given by him. However, in my opinion the assertion contained in paragraph 10 is in a different category. I accept Mr Vincent's argument that it exposes not only a reference to the fact that Mr Clancy advised the plaintiff and its insurer but the substance of the advice namely "that they had a possible cause of action against Michelin in negligence and under the Trade Practices Act". That paragraph constitutes, in my opinion, a disclosure of the substance of the advice given by Mr Clancy to the plaintiff and its insurer which is referred to in paragraph 10. I infer that the advice referred to in paragraph 11 and the letter, also referred to, followed on from the substance of the advice referred to in paragraph 10. I therefore propose to overrule the plaintiff's objection to producing any documents which are encompassed by paragraphs 10 and 11 of the affidavit of Mr Clancy sworn on 25 September 2008. 19. I turn now to the question of the notices to produce and subpoenas directed to the plaintiff's solicitors, to Unisearch Ltd and to Mr Colin Wingrove which are exhibits 4, 5 and 6. I can find no evidence of any disclosure by or on behalf of the plaintiff of any matters which would defeat a claim by the plaintiff to legal professional privilege in respect of documents sought by those processes. I will allow the second defendant leave to argue that point further if need be. 20. Turning to exhibits 1, 2 and 3 my specific rulings based upon the reasons I have given in respect of the paragraphs in exhibit S1 as to whether or not documents should be produced are these: paragraph 1.2, no; paragraph 2, yes; paragraph 3, yes; paragraph 4, no; paragraph 5, no. In exhibit S2 paragraph 1, yes. In exhibit S3 paragraph 1.2, no; paragraph 2, paragraph 3, yes; paragraph 4, no and paragraph 5, no. 21. This matter is part heard and listed for further hearing from 23 February until 27 February 2009. It is to be hoped that the proceedings will conclude during that week. In the event that there are any matters outstanding from the rulings which I have just given in respect of the subpoenas and notices to produce I list this matter for mention only on Tuesday 20 January 2009 at 9.30am with a view to ascertaining whether there are any further matters which need to be argued on the question of the notices to produce and the subpoenas and to hopefully listing such argument either during that same week or the following week commencing Tuesday 27 January 2009. Mr Bates, Miss Bruce, is there anything arising? I do not expect there to be? BRUCE: No your Honour. BATES: No your Honour. HIS HONOUR: There is an envelope here which I have got on the bench Suttram v Michelin "Privilege Documentation" written in red, I am just not sure what that is. It may not be necessary, I mean by what that is, I do not mean what is in, I mean are the documents contained within that envelope the subject of the ruling that I have just made or are they unrelated and the subject of another ruling which I have made or a ruling which I am yet to make? BATES: They were in relation-- HIS HONOUR: Or you don't know? BATES: They're in relation to one of the notices to produce the subject of these rulings. HIS HONOUR: Okay. BATES: I can't recall which one in particular. HIS HONOUR: No that's all right; and they're produced by you or on behalf of your client Mr Bates? BATES: Yes your Honour. HIS HONOUR: In that case I think I should return them to you should I not. BATES: Yes your Honour. HIS HONOUR: Because you should sort out after my ruling what documents fall within the ruling and what do not and produce those. If there's any problem then you can come back on 20 January. Does that make sense? BATES: It does your Honour, yes. HIS HONOUR: All right, because I do not think I should try and sort it out because I have made differential rulings. So this white envelope with the name of the plaintiff and the second defendant and the case number and "Privilege Documentation" written on the front and back I now return to Mr Bates, the solicitor for the plaintiff. And I've listed it for mention on the 20th so there needs to be an appearance on that day but it's for mention only. I do not expect to be arguing points but if there's anything left outstanding - and the purpose of it is to avoid using up time in February on this subpoena point. I want to use the time in February to finish the case. So if there is anything outstanding on the subpoenas we should try to argue it in that fortnight that I am in Sydney, then I go into the bush and I am everywhere and it is not going to be helpful. So that is the idea of the mention to see whether during that fortnight there are any matters outstanding - to do with those subpoenas and notices to produce - which I need to rule on, does that make sense? BRUCE: Yes your Honour. BATES: Yes your Honour. HIS HONOUR: I don't need Mr Vincent or Mr Sharpe on the 20th, if they're there fine, but if they're not. It's for mention only so the parties - but if there is to be an argument during that fortnight then I obviously need to list it on a day that suits whoever is going to be arguing it on your behalf. Does that all make sense? BATES: Yes your Honour. BRUCE: Yes your Honour. ADJOURNED FOR MENTION ONLY TO TUESDAY 20 JANUARY 2009 oOo DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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