Linfox Transport (Aust) Pty Ltd v Arthur Yates & Co Ltd [2003] NSWSC 932

New South Wales Supreme Court

CITATION : Linfox Transport (Aust) Pty Ltd v Arthur Yates & Co Ltd [2003] NSWSC 932 HEARING DATE(S) : 15 October 2003 JUDGMENT DATE : 15 October 2003

JUDGMENT OF : Brownie AJ at 1 DECISION : Refer paras 21-23.

CATCHWORDS : Client legal privilege LEGISLATION CITED : Evidence Act 1995, s 122 Ampolex Ltd v Perpetual Trustee Canberra Limited (1996) 137 ALR 28 and 35 CASES CITED : Garratt's v Thanga Thangathurai (2002) NSWSC 39 Perpetual Trustees (WA) Ltd v Equus Corp Pty Ltd (1999) FCA 925 Wayne Lawrence v Hunt, unreported, 19 October 1999 PARTIES : Linfox Transport (Aust) Pty Ltd - Plaintiff/ Cross defendant Arthur Yates & Co Ltd - Defendant/ Cross claimant FILE NUMBER(S) : SC 50125/00 COUNSEL : SK Wilson QC/ GL Meehan - Plaintiff/Cross defendant RM Smith SC/ NJ Kidd - Defendant/ Cross claimant SOLICITORS : Corrs Chambers Westgarth - Plaintiff/ Cross defendant Coudert Brothers - Defendant/ Cross claimant

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST

BROWNIE AJ

Wednesday 15 October 2003

50125/00 Linfox Transport (Aust) Pty Ltd v Arthur Yates & Co Ltd JUDGMENT 1 HIS HONOUR: The question has arisen as to whether Linfox has lost client legal privilege in respect of some communication or communications between the present witness, Mr Pearce, and one or more lawyers engaged on behalf of Linfox. 2 Mr Pearce swore an affidavit dated 13 August 2001. In paragraph 39 of that affidavit he set out examples of the role he played in what he called the "Mt Druitt fitout issues". That is to say, issues concerning the fitting out of the Mt Druitt warehouse. He said that instances when his advice was accepted and when it was not accepted were as follows: in (c) he said that power requirements for Mt Druitt were discussed in meetings as early as 15 October 1998. He annexed a copy of some notes of a meeting on that day and said: "I believe that upon being questioned regarding the power requirements that would be necessary I said to those assembled at the meeting allowance will need to be made for the power requirements of five reach trucks and eight pallet pickers." 3 At the time that affidavit was sworn, Mr Pearce was, I infer for the moment, probably directing his evidence to the claim which Linfox was then making against Yates and not to the cross-claim which Yates is now prosecuting against Linfox. 4 In a further affidavit sworn on 19 November 2002, Mr Pearce was dealing with the cross-claim brought by Yates against Linfox. He referred in paragraph 5(e) to his earlier affidavit. He said: "To the extent that paragraph 39 of my affidavit of 4 April 2002 suggests that I did provide any advice as to the power requirements at Mt Druitt, it is in error. Which error arose I believe as a result of a drafter relying upon the Maincon minute of the meeting." 5 I interpolate two matters. The affidavit of 4 April 2002 was, in substance, a re-swearing of the affidavit of 13 August 2001 and Maincon was the builder of the Mt Druitt premises. 6 When Linfox read the affidavits of Mr Pearce objection was taken to the passage in paragraph 5(e) of the affidavit of 19 November 2002 reading: "which error arose I believe as a result of the drafter of the affidavit relying upon the Maincon minute of the meeting." 7 After hearing argument I admitted that passage. 8 Subsequently Mr Pearce was called and he attested to the truth of what was set out in his various affidavits. Counsel for Yates has commenced to cross-examine Mr Pearce concerning the statement made by Mr Pearce that he believed the error, as he called it in his first affidavit, arose as a result of the drafter of the first affidavit relying upon the minute mentioned. It is, I think, common ground that client legal privilege attached to whatever passed between Mr Pearce and Linfox's lawyers at the time of the drafting of each of the affidavits. 9 The question is whether, within the meaning of section 122 of the Evidence Act 1995, either the consent of Linfox has been given to be adducing the evidence in question pursuant to subsection (1), or whether, within the meaning of subsection (2), Linfox has knowingly and voluntarily disclosed the substance of the evidence in contention. 10 If one goes back to analyse the relevant issues in the case, Yates asserts in its cross-claim against Linfox, that in breach of contract and otherwise, Linfox acted in such a way as to cause a disruption to the business of Yates with the result that Yates lost money. Linfox defends that assertion by Yates in part by saying that one of the causes of the disruption or disorganization of Yates' business was a set of circumstances summarised shortly by saying there were insufficient power supplies at the Mt Druitt warehouse with the result that Yates had insufficient materials handling equipment. Linfox says that that matter contributed significantly to whatever loss it was that Yates might have suffered. 11 In response to that part of the case of Linfox, Yates advanced the case that Linfox, through Mr Pearce, advised both Yates and Maincon as to what power supply was appropriate. That issue of itself is certainly not the most significant issue in the case but it is not by any means an insignificant one. 12 It needs to be considered now in the context that significant other issues are likely to turn in part upon the credibility of Mr Pearce. Yates has started cross-examination of Mr Pearce with the fairly obvious proposition that there is a significant inconsistency between the two fragments of his two affidavits that I have quoted. It wishes to cross-examine him upon his assertion that what he said in the first affidavit was an error and his further assertion that that error arose as a result of a drafter of the affidavit relying upon the Maincon minute of the relevant meeting. 13 If the privilege in question has been lost, it has been lost under subsection (1) or subsection (2) of section 122 by reason of what was said in paragraph 5(e) of the affidavit of 19 November 2002. 14 If one analyses what has occurred in the two affidavits, Mr Pearce said in the first affidavit that one matter was the fact and in the second affidavit that that matter was not the fact, that his earlier assertion was an error, and that the error arose as a result of the drafter relying upon another document. Focussing first then on subsection (1) of section 122, Yates submits that there is an imputed consent given by Linfox. 15 A similar matter was examined by Bergin J in Garratt's v Thanga Thangathurai (2002) NSWSC 39. Commencing at [51], Her Honour traced through a number of cases in which different Judges expressed different views. As a matter of judicial comity I consider that I should follow Her Honour's reasons for judgment, but in any event, I see no reason at all for thinking that what Her Honour concluded was in error. At [62] she quoted from the decision of the Full Court of the Federal Court in Perpetual Trustees (WA) Limited v Equus Corp Pty Ltd (1999) FCA 925: "The authorities show that the underlying principle for imputed waiver is that there has been some conduct on the privilege holder's part whereby it becomes unfair to maintain the privilege." 16 Her Honour also referred, with evident approval, to the decision of Hodgson J, then Chief Judge in Equity, in Wayne Lawrence v Hunt, 19 October 1999, unreported, in which His Honour referred to factors that might be considered relevant in concluding whether or not privilege had been taken to have been waived in circumstances where a party's case depended upon that party having a particular state of mind. Quoting from what Justice Bergin has already quoted, that seems to me to be a generally helpful approach to take in a case such as the present one which is of course different in some respects. 17 The issue here is not one raised on the pleadings as to the state of mind or belief of a party. It is rather, whether in circumstances where Mr Pearce, called as a witness by Linfox when Linfox is one of the parties, swears to one set of facts and then later swears to a second set of facts, says that the first explanation was made in error and that the error was not his but, by inference, that of a lawyer acting for Linfox. 18 Counsel for Linfox has submitted that a cross-examiner is entitled to probe the circumstances discussed in paragraph 5(e) of the latter affidavit but not in such a way as to inquire what passed between Mr Pearce and the lawyer or lawyers in question. That is perhaps reminiscent of the old simile of saying that someone may conduct delicate surgery but only while wearing boxing gloves. As I see it at the moment, fairness requires a cross-examiner of Mr Pearce to be able to explore in a real and not a purely theoretical way what it was that he says was an error and how it is he says he believed that error arose. 19 Mr Pearce's belief as to those matters goes, it seems to me, in a significant way not just to the question which really does arise out of the pleadings, as developed so far during the course of trial, as to whether any part and, if so what part, of Yates' supposed loss is the result of some breach of contract or other conduct on the part of Linfox with particular reference to the question of power supply, but also to the credibility of Mr Pearce generally. 20 I repeat that, as I see the issues at the moment, Mr Pearce's credibility is likely to be quite important in relation to a number of issues being decided. I bear in mind the principles mentioned by Kirby J in Ampolex Ltd v Perpetual Trustee Canberra Limited (1996) 137 ALR 28 and 35: "The courts will protect a client's legal professional privilege to the full extent possible, and subject in this case only to the extent of any waiver that is established." 21 I hold that, within the meaning of section 122(1), Linfox has consented to evidence being adduced as to what it was that was said to or by Mr Pearce or to the drafter or drafters of the affidavit of 13 August 2001 that led to Mr Pearce having the belief to which he deposes at the moment.