Supreme Court New South Wales Medium Neutral Citation: Fenwick v Wambo Coal Pty Ltd (No. 2) [2011] NSWSC 353 Hearing dates: 11 to 15 April, 2011 Decision date: 15 April 2011 Jurisdiction: Equity Division Before: White J Decision: Refer to paras [37] and [38] Catchwords: EVIDENCE - client legal privilege - waiver of privilege - whether defendant knowingly and voluntarily disclosed the substance of the evidence within the meaning s 122(3) Evidence Act 1995 - disclosure of the conclusion and reasoning of advice disclosure of substance of the legal advice - whether substance disclosed under compulsion of law within the meaning of s 122(5) Evidence Act 1995 - where defendant disclosed substance of legal advice by giving discovery and producing document for inspection - defendant not under compulsion of law to disclose the substance of legal advice as could have claimed privilege - privilege waived by production for inspection on discovery Legislation Cited: Evidence Act 1995 Cases Cited: Mann v Carnell [1999] HCA 66; (1999) 201 CLR 1 Ampolex Limited v Perpetual Trustee Company Limited (Canberra) (1996) 40 NSWLR 12 Adelaide Steamship Company Ltd v Spalvins [1998] FCA 144; (1998) 81 FCR 360 BT Australasia Pty Ltd v State of New South Wales (No 7) [1998] FCA 294; (1998) 153 ALR 722 NRMA Ltd v Morgan (No 2) [1999] NSWSC 694 Southern Cross Airlines Holdings Ltd (in liq) v Arthur Andersen & Co (a firm) [1998] FCA 963; (1998) 84 FCR 472 SVI Systems Pty Ltd v Best & Less Pty Ltd [2000] FCA 1507 Singapore Airlines v Sydney Airports Corporation [2004] NSWSC 380 Osland v Secretary to the Dept of Justice [2008] HCA 37; (2008) 234 CLR 275 Bailey v Director General, Dept of Land and Water Conservation (2009) 74 NSWLR 333 Assistant Treasurer and Minister for Competition Policy and Consumer Affairs v Cathay Pacific Airways Ltd (2009) 179 FCR 323 AWB Limited v Cole [2006] FCA 571; (2006) 232 ALR 743 Green v AMP Life Ltd [2005] NSWSC 95 In the matter of Southland Coal Pty Ltd (recs and mgrs apptd) (in liq) [2006] NSWSC 899 Category: Interlocutory applications Parties: Ronald Wayne Fenwick (Plaintiff) Wambo Coal Pty Ltd (Defendant) Representation: Counsel: M J Heath (Plaintiff) A R Spencer with C O Gleeson (Defendant) Solicitors: Sneddon & Partners (Plaintiff) Maddocks Lawyers (Defendant) File Number(s): Judgment 1HIS HONOUR : The plaintiff calls for the production of the documents referred to in paras 5(b), (c), (d), (f), (g) and (h) of the affidavit of Mr Peter Meades sworn 14 April 2011. All but one of the documents in question are described as confidential legal advice provided to the defendant by one or other of two firms of solicitors. The remaining document is a surveyor's report procured at the request of one of the solicitors for the dominant purpose of that solicitor providing legal advice. 2The plaintiff does not contest the documents were the subject of client legal privilege under s 118 of the Evidence Act 1995 when they were created. He contends that privilege has been waived under subs 122(2) of the Evidence Act . Section 122 provides: " 122 Loss of client legal privilege: consent and related matters (1) This Division does not prevent the adducing of evidence given with the consent of the client or party concerned. (2) Subject to subsection (5), this Division does not prevent the adducing of evidence if the client or party concerned has acted in a way that is inconsistent with the client or party objecting to the adducing of the evidence because it would result in a disclosure of a kind referred to in section 118, 119 or 120. (3) Without limiting subsection (2), a client or party is taken to have so acted if: (a) the client or party knowingly and voluntarily disclosed the substance of the evidence to another person, or (b) the substance of the evidence has been disclosed with the express or implied consent of the client or party. (4) The reference in subsection (3) (a) to a knowing and voluntary disclosure does not include a reference to a disclosure by a person who was, at the time of the disclosure, an employee or agent of the client or party, or of a lawyer of the client or party, unless the employee or agent was authorised by the client, party or lawyer to make the disclosure. (5) A client or party is not taken to have acted in a manner inconsistent with the client or party objecting to the adducing of the evidence merely because: (a) the substance of the evidence has been disclosed: (i) in the course of making a confidential communication or preparing a confidential document, or (ii) as a result of duress or deception, or (iii) under compulsion of law, or (iv) if the client or party is a body established by, or a person holding an office under, an Australian law-to the Minister, or the Minister of the Commonwealth, the State or Territory, administering the law, or part of the law, under which the body is established or the office is held, or (b) of a disclosure by a client to another person if the disclosure concerns a matter in relation to which the same lawyer is providing, or is to provide, professional legal services to both the client and the other person, or (c) of a disclosure to a person with whom the client or party had, at the time of the disclosure, a common interest relating to the proceeding or an anticipated or pending proceeding in an Australian court or a foreign court. ..." 3The waiver is said to have come about by the defendant's having given discovery of a draft of a letter dated 11 July 2008 addressed to the plaintiff, and by the inclusion of that document in a court bundle the parties prepared for the purposes of tender. A letter in similar terms to the draft was sent on 23 October 2008, but that letter makes no reference to the defendant's legal advice and it is not contended that it waived privilege. 4The draft document which has been discovered states as follows: " Re: Claim to right of way across Wambo Coal Pty Ltd ('Wambo Coal') land Wambo Coal acknowledges receipt of your email dated 14 March 2008 regarding the right of way you are claiming over Wambo Coal land. Wambo Coal referred your email and previous correspondence to its lawyers for legal advice on this issue. The legal advice Wambo Coal received is as follows: (a) There is a registered right of way across Lot 1 in DP 110084 and Lot 2 on DP 110084. This is depicted as the 'Existing R.O.W.' on the attached plan. This is the right of way you use to access and egress your land, and Wambo Coal will continue to observe to this right of way. (b) In relation to the right of way you have claimed to cross Lot 83 on DP 548749, depicted as the 'R.O.W. in Question' on the plan, Wambo Coal has been advised that Lot 83 is not encumbered with the right of way you are claiming. A copy of the relevant title is attached. The only right of way registered over Lot 83 is in relation to Lot 82, which is also owned by Wambo Coal. Wambo Coal has also considered the following: You have free and unrestricted access to and from your land using the 'Existing R.O.W.'; Lot 83 forms part of the Wambo Coal mining operations; Wambo Coal has strict obligations to ensure the safety of all employees and other persons it permits to enter onto its mining land; Under the relevant safety laws and company policy, Wambo Coal must control access to its mining operations for safety reasons; and It would appear that you do not have a legal right of way across Lot 83. Therefore Wambo Coal cannot allow you to enter Lot 83 and you must not do so. In the circumstances, Wambo Coal does not intend to repair the crossing of South Wambo Creek situated in Lot 83. If you believe there are other matters which Wambo Coal should take into consideration then you should provide these in writing to Wambo Coal. All future communications you may wish to make in relation to this matter should be made in writing and addressed as follows: The Corporate Solicitor Wambo Coal Pty Ltd GPO Box 164 BRISBANE QLD 4001 Please do not direct any further communications to our Wambo Administration Office as it is no longer handling your claim. We trust this provides you with the information you require." 5A letter in those terms was not sent. Mr Meades deposed that the advices which formed the basis of the " conclusions " (his word) in the draft letter included the documents now called for. 6As I have said, the plaintiff relies on two grounds for contending that there has been a waiver of privilege: namely, that the document was produced on discovery and no claim for privilege was made and, secondly, that the defendant included the document in the court bundle the parties prepared for the purposes of tender. 7The second ground does not amount to a waiver of privilege. The inclusion of the document in the tender bundle was inadvertent. Nor was the inclusion of the document in the bundle inconsistent with the defendant's objecting to the tender of the legal advices for which privilege is claimed. Indeed, before the court bundle was tendered the defendant's counsel said that the defendant would not be tendering the document. Counsel has successfully objected to its tender. The inclusion of the document in the court bundle involved no further disclosure of the substance of the legal advices referred to in the letter. For these reasons the second ground for asserting a waiver of privilege fails. 8The first ground has more substance. The defendant does not say that the production of the document for inspection without a claim for privilege was inadvertent, unintentional or mistaken. The defendant through its legal representatives takes the view that the document in question is not privileged. It says that the disclosure of the conclusions of the legal advice it received is not inconsistent with its maintaining privilege over those advices. 9But for subs (3) of s 122, it would be clear that production of the draft letter on discovery without a claim for privilege being made would not be inconsistent with the defendant's objecting to the adducing of the evidence as to its legal advice. Giving discovery is not inconsistent with maintaining objection to the adducing of evidence, either the evidence in the documents discovered or communications to which the discovered documents refer. But by para 122(3)(a) the defendant is taken to have acted inconsistently with its objecting to the adducing of evidence of the privileged communications if by discovering the document and producing it for inspection, that is without claiming privilege on the document, the defendant: (a) acted knowingly and voluntarily; and (b) disclosed the substance of the privileged communication to the plaintiff. 10The amendments made to s 122 of the Evidence Act in 2007 (commencing in 2009) by the introduction of subs (2) more closely aligned s 122 to the common law principles of waiver enunciated in Mann v Carnell [1999] HCA 66; (1999) 201 CLR 1. But the Australian Law Reform Commission did not seek to make the principles identical. In its report leading to the amendment (Australian Law Reform Commission, Uniform Evidence Law, Report 102 (2006)) it reaffirmed that client legal privilege should be lost wherever there is voluntary production (see paras [14.146] and [14.147]). Section 122(3) is not merely a guideline for the application of s 122(2), but a prescription that subs (2) is taken to be satisfied if the requirements of subs (3) are met. 11In the present case the defendant made disclosure of the draft letter of 11 July 2008 knowingly. A deliberate view was taken that the draft letter was not privileged. The disclosure was also voluntary unless it was done under compulsion of law. I will return to that question later. 12The question then is whether the draft letter disclosed the substance of the legal advices. It is difficult to reconcile the various cases, most of them on the previous s 122(2), as to what will constitute disclosure of the substance of a privileged communication. The balance of authority is that at least an express or implied summary of legal advice received amounts to disclosure of the substance of the advice. 13In many cases disclosure of the conclusion of legal advice has been treated as disclosure of its substance, even though the reasoning is not disclosed. In Ampolex Limited v Perpetual Trustee Company Limited (Canberra) (1996) 40 NSWLR 12, Rolfe J rejected a submission that the substance of legal advice was something different from or greater than its effect (at 18). His Honour said that the word " substance " was not used in the then s 122(2) in contradistinction to " effect ". His Honour said: "One may say, conformably with ordinary English, that 'the substance of the advice is you will win' or 'the effect of the advice is you will win'. Each word will accommodate an expansive or restricted version of what the advice says and, significantly for present purposes, 'substance' is not used in s 122(2) of the Evidence Act 1995 in contradistinction to 'effect'. Accordingly, depending on the way in which the advice is structured, the 'effect' of the advice may also be its 'substance'." 14In that case his Honour found that the public disclosure by Ampolex that " There is a dispute about the conversion ratio. Ampolex maintains that the correct ratio is 1:1 and has legal advice supporting this position ", amounted to a waiver of privilege in that advice because the statement disclosed its substance (at 15 and 18). 15In Adelaide Steamship Company Ltd v Spalvins [1998] FCA 144; (1998) 81 FCR 360 the Full Court of the Federal Court said the test of whether there had been disclosure of the substance of the evidence was a " quantitative " one which asked whether there had been sufficient disclosure to warrant the loss of the privilege (at 371). It concluded that there was disclosure of the substance of counsel's advice where, in that case, a deponent swore that counsel had made " certain recommendations " as to whether a particular issue should be pleaded in reply or whether it should be pleaded in the statement of claim, and had discussed the possibility of pleading the issue in the statement of claim with the deponent. The deponent said that following receipt of counsel's advice the decision was made to plead the matter in the statement of claim rather than in reply. This was held to be disclosure of the substance of the advice, although counsel's reasoning was not disclosed. 16In BT Australasia Pty Ltd v State of New South Wales (No 7) [1998] FCA 294; (1998) 153 ALR 722 Sackville J held that there was a waiver by disclosure that the party had obtained an advice to the effect that the proceedings were soundly based in legal principle, had considerable strengths and had obtained a written advice that there were substantial difficulties with the State's cross-claim and good prospects of BT effectively resisting the cross-claim. This was disclosure of the conclusion of the advice, but nonetheless was found to be a disclosure of its substance. 17Similarly, in NRMA Ltd v Morgan (No 2) [1999] NSWSC 694, Giles J (as his Honour then was) held that privilege was waived by a statement that counsel had advised that a pleading might not, in certain circumstances, permit the second defendant to claim contribution, and that for more abundant caution, leave should be sought to file a further cross-claim (at [3], [6] and [16]). His Honour concluded that the deponent had disclosed, albeit in summary form, the substance of what counsel had advised. 18By contrast, in Southern Cross Airlines Holdings Ltd (in liq) v Arthur Andersen & Co (a firm) [1998] FCA 963; (1998) 84 FCR 472 Drummond J held that privilege was not waived by a liquidator's report that stated " My solicitors have advised me that the Company has potential claims against Apogee and certain members of its management pursuant to Section 205 of the Corporations Law, and in relation to the sum of US$500,000 which was paid to Apogee and its management. " That statement did not identify further the nature of those claims. His Honour disagreed with the reasoning of Rolfe J in Ampolex that there was no difference in s 122(2) between disclosure of the substance of legal advice and disclosure of its effect. 19In NRMA Ltd v Morgan (No 2) Giles J (as his Honour then was) noted that in Southern Cross Airlines Holdings Ltd (in liq) v Arthur Andersen & Co (a firm) Drummond J had said (at 479) that there was no doubt about the correctness of the decision in Ampolex . Giles J observed that as Drummond J said that the decision in Ampolex was undoubtedly correct, his Honour could not have intended that much be disclosed by way of critical steps in reasoning. It may be that when Drummond J is reported as having said that there was " no doubt about the correctness of the conclusion in Ampolex " there was a misprint or mistake, as the rest of the passage suggests his Honour did have doubts about the correctness of the conclusion. 20In SVI Systems Pty Ltd v Best & Less Pty Ltd [2000] FCA 1507 Einfeld J said (at [6]) that when s 122(2) referred to the substance of advice, it was not talking about the " bottom line " of the advice but to " what its content was and possibly even the reasoning which led to it ". His Honour, however, made limited reference to authority on this question. 21In Singapore Airlines v Sydney Airports Corporation [2004] NSWSC 380 McDougall J held that for the substance of an expert's report for which privilege was claimed, to be disclosed within the meaning of the then s 122(2), the disclosure must be not only of the conclusions of the expert, but the relevant factual bases of the report and the reasoning process from which the expert proceeded from those factual bases to the conclusions reached (at [72]). That view was obiter and in any event expressly confined to disclosure of experts' reports. 22Counsel for the defendant said that the governing authority was the decision of the High Court in Osland v Secretary to the Department of Justice [2008] HCA 37; (2008) 234 CLR 275. However, that case concerned a different question. It was concerned with principles of waiver at common law, not with s 122(3). It was there held that the public disclosure by the Government of the Government's lawyers' conclusions was not inconsistent with the Government's maintaining confidentiality in the legal opinion. The High Court did not consider s 122 and did not consider whether the press release would amount to a waiver under s 122(3). It may be inferred that had the question arisen it would have been held that s 122(2) was not satisfied if subs (3) was left out of account, but it cannot be inferred what conclusion would have been reached as to the effect of subs (3). 23Counsel also referred to Bailey v Director General, Dept of Land and Water Conservation [2009] NSWCA 100; (2009) 74 NSWLR 333. However, that case concerned a different question, relevantly whether the production of part of a document waived privilege in the balance of the document for which privilege was claimed. It is not relevant to the present issue. 24Whether disclosure amounts to disclosure of the substance of a privileged communication involves questions of degree. In the present case the draft letter of 11 July 2008 disclosed not only what is said to be the conclusions of the legal advice received by the defendant, but the reasoning. In para (b) of the letter quoted above, it is said that the legal advice the defendant received is that lot 83 is not encumbered with the right-of-way the plaintiff claims and that the only right-of-way registered over that lot is in relation to lot 82 also owned by the defendant. That appears to be the reasoning leading to the conclusion of the advice. 25The draft letter expressly stated that this was the legal advice the defendant received. The letter did not state that those were the defendant's own views informed by legal advice it had received (compare Ampolex at [14]). The disclosure was not analogous to the reference made to legal advice in Assistant Treasurer and Minister for Competition Policy and Consumer Affairs v Cathay Pacific Airways Ltd [2009] FCAFC 105; (2009) 179 FCR 323 to which the defendant referred. That decision also was concerned with waiver of privilege at common law. 26In my view the disclosure was of the substance of the legal advice referred to. 27No issue was raised concerning subs (4) of s 122. The listing of the document in schedule 1 of part 1 of the defendant's list of documents, that is, without a claim for privilege, was an act of the defendant. In any event the defendant's lawyers had implied authority to produce the document for inspection. 28I infer that the draft letter was itself a confidential document within the meaning of s 117. However, the disclosure of the substance of the legal advice was not made by the preparation of the document, but by producing it for inspection on discovery. The communication of the contents of the discovered document to the plaintiff and his lawyers was not a confidential communication. Therefore s 122(5)(a)(i) does not apply. 29The question therefore is whether disclosure was under compulsion of law (s 122(5)(a)(iii)). There is no doubt that the giving of the discovery of the document was under compulsion of law. However, the defendant was entitled to withhold the document from inspection if it was a " privileged document " (Uniform Civil Procedure Rules 2005, r 21.5 (2)). The document was a privileged document if it contained information of which evidence could not, by virtue of the operation of Div 1 of Pt 3.10 of the Evidence Act , be adduced in the proceedings over objection. At common law records made either by the lawyer or by the client of the advice sought or given are privileged, even though those records do not themselves constitute the communication of the request for advice or of the advice given ( AWB Limited v Cole [2006] FCA 571; (2006) 232 ALR 743 at [127]-[133]). 30The position is the same under s 118 of the Evidence Act . It is not only the primary record of the advice that is privileged if made for the requisite dominant purpose. Secondary material is also privileged if that material discloses the privileged confidential communication. 31In Green v AMP Life Ltd [2005] NSWSC 95 Campbell J (as his Honour then was) upheld a claim to privilege in respect of drafts of transactional documents on the ground that production of those documents would result in some information becoming available to the person who carried out the inspection about the topics upon which the firm of solicitors had been consulted and would thus result in disclosure of the confidential communication made between the client and lawyer (at [18]). 32In In the matter of Southland Coal Pty Ltd (recs and mgrs apptd) (in liq) [2006] NSWSC 899 Austin J said (at [14](e)) that s 118 would protect against disclosure evidence that revealed a confidential communication, or the contents of a confidential document, or would support an inference of fact as to the content of the confidential communication or document which had a definite and reasonable foundation. 33Adducing the evidence of the letter of 18 July 2008 would result in the disclosure of the confidential privileged communications between the defendant's lawyers and the defendant. 34It is irrelevant to the present question of waiver under s 122 that I have rejected the tender of the draft letter. Nor was it suggested in argument that the position was otherwise. 35In my view, the defendant was not under compulsion of law to disclose the substance of its legal advice. That is to say, it could have claimed privilege on the draft letter of 11 July 2008. The fact that the defendant took what I consider to be a mistaken view that it could not claim privilege on the draft letter does not affect the fact that the disclosure of the letter and therefore the substance of its legal advice, was both knowing and voluntary. 36No distinction was drawn in the course of submissions between the different documents for which privilege is claimed. These are referred to in Mr Meades' affidavit. He deposes that all of them formed the basis of the conclusions set out in the draft letter of 11 July 2008. 37For these reasons I uphold the plaintiff's contention that client legal privilege in the documents referred to in para 5(b), (c), (d), (f), (g) and (h) of Mr Meades' affidavit was waived by the production on discovery of the letter of 11 July 2008 without a claim for privilege being made in respect of that letter, and by the making of that letter available to the plaintiff for inspection. 38I order that those documents referred to in Mr Meades' affidavit be produced to the plaintiff for inspection. ********** 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: 12 May 2011