Supreme Court New South Wales Medium Neutral Citation: RinRim Pty Ltd v Deutsche Bank Australia Limited & Ors [2013] NSWSC 1654 Hearing dates: 7 November 2013 Decision date: 11 November 2013 Jurisdiction: Equity Division Before: Darke J Decision: (1) Order that, until further order of the Court, the defendants be refused access to the document entitled "Memorandum of Advice" dated 16 August 2013 which was produced by the plaintiff to the Court pursuant to Notice to Produce dated 3 October 2013. (2) Order that the defendants (other than the third defendant) pay the plaintiff's costs of the Notice of Motion filed 23 October 2013 Catchwords: EVIDENCE - client legal privilege - waiver - whether for purposes of s 122(2) Evidence Act 1995 party acted inconsistently with objecting to evidence of counsel's advice - counsel's advice formed part of basis for matters deposed to in affidavit but not mentioned in affidavit. EVIDENCE - client legal privilege - waiver - whether for purposes of s 122(3) of Evidence Act 1995 party knowingly and voluntarily disclosed the substance of counsel's advice - disclosure that counsel had recommended a course of action - no disclosure of counsel's reasoning. EVIDENCE - client legal privilege - wavier - where privilege in relation to other documents waived by voluntary disclosure - whether privilege waived pursuant to s 126 Evidence Act 1995 in relation to an advice of counsel because adducing evidence of it is reasonably necessary to enable a proper understanding of other documents. Legislation Cited: Evidence Act 1995 Evidence Act 1995 (Cth) Uniform Civil Procedure Rules 2005 Cases Cited: Adelaide Steamship Co Ltd v Spalvins (1998) 81 FCR 360 Ampolex Ltd v Perpetual Trustee Co (Canberra) Ltd (1996) 40 NSWLR 12 Attorney General (Northern Territory) v Maurice (1986) 161 CLR 475 Bennett v Australian Customs Service (2004) 140 FCR 101; [2004] FCAFC 237 BT Australasia Pty Ltd v State of New South Wales (No 7) [1998] FCA 294 Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Limited [2013] HCA 46 Fenwick v Wambo Coal Pty Ltd (No 2) [2011] NSWSC 353 Landmark Underwriting Agency Ltd v Kilborn [2006] NSWSC 1108 Mann v Carnell (1999) 201 CLR 1; [1999] HCA 66 ML Ubase Holdings Co Limited v Trigem Computer Inc (2007) 69 NSWLR 577; [2007] NSWSC 859 NRMA Ltd v Morgan (No 2) [1999] NSWSC 694 Osland v Secretary, Department of Justice (2008) 234 CLR 275; [2008] HCA 37 Towney v Minister for Land and Water Conservation (1997) 76 FCR 401 Category: Interlocutory applications Parties: RinRim Pty Ltd (Plaintiff) Deutsche Australia Ltd (First Defendant) Credit Suisse (Australia) Ltd (Second Defendant) RBS Group (Australia) Pty Ltd (Third Defendant) Deutsche Bank Aktiengesellschaft (Fourth) Defendant) CIMB Capital Markets (Australia) Ltd (Fifth Defendant) Representation: Counsel: L V Gyles SC (Plaintiff) A Shearer (First, Second, Fourth and Fifth Defendants) Solicitors: Carlisle Attorneys (Plaintiff) Allen & Overy (First, Second, Fourth and Fifth Defendants) File Number(s): SC: 2013/272326 Publication restriction: Nil Judgment 1These are proceedings for preliminary discovery pursuant to Uniform Civil Procedure Rules 2005 r 5.3. The proceedings were commenced by Summons filed on 9 September 2013. The plaintiff has since filed an Amended Summons which added a fourth and fifth defendant, and has discontinued against the third defendant. The substantive hearing has been fixed for 14 November 2013 before Hallen J. 2By Notice of Motion which was filed by the plaintiff on 23 October 2013 the plaintiff seeks an order that the defendants not be granted access to a document entitled "Memorandum of Advice" dated 16 August 2013 (which has a draft letter attached). The document has been produced by the plaintiff in answer to a Notice to Produce dated 3 October 2013. The plaintiff claims that the document is the subject of client legal privilege for the purposes of Division 1 of Part 3.10 of the Evidence Act 1995 ("the Act"). The Memorandum of Advice ("the Advice") is that of Mr L V Gyles SC and Mr H Chiu. 3The Notice of Motion was heard last Thursday in the Duty Judge list. Mr Gyles SC appeared for the plaintiff. Mr Shearer of counsel appeared for the first, second, fourth and fifth defendants. Affidavits of Peter Carlisle (22 October 2013) and Denes Blazer (30 October 2013) were read without objection. The parties provided written submissions which were elaborated upon at the hearing. 4The defendants accept that the Advice was the subject of client legal privilege as a confidential document which falls within the scope of either or both of ss 118 and 119 of the Act, but contend that there has been a loss of such privilege by reason of the operation of s 122(2) and s 122(3) of the Act, which provide: (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. 5The defendants also contend that privilege has been lost pursuant to s126 of the Act. The defendants, who accept that they have the onus of establishing that the privilege has been lost, submit that the privilege has been lost for the following three reasons. 6First, that the Advice, which was produced in answer to the Notice to Produce, must contain material which records or forms part of the basis for the evidence given on information and belief by the plaintiff's solicitor, Mr Peter Carlisle, in an affidavit sworn on 9 September 2013 in support of the Summons. It is contended that by deposing to such matters (and presumably by serving the affidavit) the plaintiff has acted in a way that is inconsistent with the plaintiff objecting to the adducing of evidence which would result in disclosure of the Advice. Reliance is thus placed upon s 122(2) of the Act. 7Secondly, that by reason of the production of other documents in answer to the Notice to Produce, the substance of the Advice has been knowingly and voluntarily disclosed by the plaintiff for the purposes of s 122(3), such that the plaintiff is taken to have acted in a way which is inconsistent with the plaintiff objecting to the adducing of evidence which would result in disclosure of the Advice. These other documents include drafts of observations to counsel in respect of the advice they were to give, and a note of a telephone conversation between Mr Carlisle and a director of the plaintiff (Dr Volfneuk) on 21 August 2013, five days after the date of the Advice. That note contains the following: He questions why we seek preliminary discovery  I say counsel recommended this course. 8Thirdly, that the production of those other documents (which had hitherto been privileged) gave rise to what has been described as a "collateral waiver" of the privilege in the Advice pursuant to s 126 of the Act. That section provides, in effect, that where there has been a loss of privilege in respect of a communication or document due to the application of ss 121 - 125 of the Act, the provisions of Division 1 of Part 3.10 of the Act do not prevent the adducing of evidence of another communication or document if it is reasonably necessary to enable a proper understanding of the first communication or document (see ML Ubase Holdings Co Limited v Trigem Computer Inc (2007) 69 NSWLR 577; [2007] NSWSC 859 at [37] per Brereton J). 9On 15 October 2013 the plaintiff's solicitor articulated the plaintiff's claim for privilege in respect of the Advice in these terms: The document comprises a memorandum of advice prepared by Mr Lachlan Gyles SC and Mr Hilbert Chiu, of counsel, dated 16 August 2013, with an attached draft letter. The document is address [sic] to Mr Peter Carlisle Attorneys. It was provided on a confidential basis. The first seven paragraphs of the document records instructions communicated by Mr Carlisle to Counsel. The balance of the document records counsel's legal advice as to the prospects of success of an application for preliminary discovery against the joint lead managers of an equity raising conducted by Primary Healthcare Limited in February 2008. The document was prepared, and the communications therein were made, for the sole purpose of providing legal advice to the plaintiff in relation to what was at that time an anticipated legal proceeding. The document and the communications therein are privileged for that reason. There has been no waiver of that privilege. The affidavit of Mr Carlisle dated 9 September 2013 refers to various instructions given by Dr Alexander Volfneuk to Mr Carlisle. Nothing in counsel's memorandum of advice records the communication of any such instructions from Dr Volfneuk to Mr Carlisle. 10The content of the submissions of the defendants makes it necessary to refer to the terms of Mr Carlisle's affidavit and the Notice to Produce issued in respect of it, as well as to certain of the documents which have been produced in answer to the notice and made available for inspection. 11Mr Carlisle's affidavit in support of the Summons contains a number of statements which are said to be based on information or instructions provided by Mr Volfneuk. Many of those statements (for example those in paragraphs 4, 8, 13, 17, 18, 19, 21, 23 and 25) concern the position of the plaintiff in relation to a capital raising for Primary Healthcare Ltd which took place in February 2008. The defendants were managers and underwriters of the capital raising, and it is their conduct as such (in particular their classification of the plaintiff as a retail investor not an institutional investor) which is the subject of the proceedings the plaintiff is contemplating bringing. 12Other statements in the affidavit (for example those in paragraphs 27-30 and 39) are said to be based on instructions or information given by Dr Volfneuk which are at least to some degree concerned with legal questions such as whether the defendants may have been negligent, or may have engaged in misleading conduct, and whether certain documents are needed for the plaintiff to be "completely advised" as to whether or not to commence proceedings. 13The Notice to Produce dated 3 October 2013 sought documents in the following categories: (1)All documents recording the information, source of information, or the basis for the evidence referred to or given in paragraphs 4, 8, 13, 17, 18, 19, 21, 23, 25, 27, 28, 29, 30, 31 and 39 of the affidavit of Peter Maxwell Carlisle sworn on 9 September 2013 (Carlisle Affidavit). (2)Without limitation to paragraph 1 above, all documents recording the instructions referred to in paragraphs 27, 28, 29 and 30 of the Carlisle Affidavit. (3)All documents comprising the terms of the Millennium Trust referred to in paragraphs 4(c) and 4(d) of the Carlisle Affidavit. 14As noted earlier, the documents produced in answer to the notice and made available to the defendants, include drafts of observations to counsel (some of which record communications between Mr Carlisle and Dr Volfneuk in relation thereto) and a file note of their telephone conversation of 21 August 2013 which refers to the recommendation of counsel in favour of seeking preliminary discovery. 15It is clear that those documents would have been the subject of client legal privilege save for their disclosure to the defendants. There appears to have been a knowing and voluntary disclosure of those documents such that privilege would be lost by the operation of s 122(3) of the Act unless that result was in some way prevented due to the operation of ss 122(4) or 122(5) of the Act. No suggestion has been made by the plaintiff that either ss 122(4) or 122(5) applies. I will therefore proceed on the basis that privilege has been lost in respect of those documents. 16The plaintiff submits, however, that privilege has not been lost in respect of the Advice. It is noted that no mention is made of the Advice in Mr Carlisle's affidavit, and the draft observations to counsel do not disclose the substance of the advice subsequently contained in the Advice. It is emphasised that there has been no attempt by the plaintiff to in any way deploy the Advice for any forensic purpose. As for the file note, it is submitted that the only relevant matter that has been disclosed is the fact that counsel recommended that the plaintiff seek preliminary discovery. Mr Gyles clearly accepted that the Advice contains such a recommendation. 17The plaintiff submits that the substance of the Advice has not been disclosed to the defendants. It is put that the file note makes no reference to the reasons for the recommendation, let alone a summary of those reasons, and says nothing about the prospects of success of an application for preliminary discovery. 18It was further put by the plaintiff that, in determining the question whether access to the Advice should be granted to the defendants, it may be appropriate for the Court to inspect the document. The Court clearly has the power to do so (see UCPR r 1.8(a)). The defendants accept that the Court has the power to inspect the Advice, but submitted that it should only do so if it was considered necessary. 19I turn now to deal with the three arguments advanced by the defendants in favour of their contention that privilege in the Advice has been lost. 20As to the first argument, it must be accepted that the Advice falls within the terms of the Notice to Produce. Moreover, Mr Gyles confirmed that it was not the case that the Advice was only caught by paragraph 3 of the notice. It is therefore appropriate to assume that the Advice records or forms the basis of at least some of the matters referred to by Mr Carlisle in the paragraphs of his affidavit which are referred to in the first two paragraphs of the notice. 21The question becomes whether the plaintiff, in deposing to such matters and serving the affidavit (thereby indicating an intention on the part of the plaintiff to rely on the affidavit), is acting in a way that is inconsistent with the plaintiff objecting to the adducing of evidence of the Advice. 22The defendants submit that the common law test for the implied waiver of privilege as stated by the High Court in Mann v Carnell (1999) 201 CLR 1; [1999] HCA 66 especially at [28] and [29] has been adopted in s 122 of the Act. However, as stated in Mann (supra) itself at [23], the provisions of s 122 as to the circumstances in which privilege may be lost are not identical to the corresponding common law principles (see also Osland v Secretary, Department of Justice (2008) 234 CLR 275; [2008] HCA 37 at [49]; Fenwick v Wambo Coal Pty Ltd (No 2) [2011] NSWSC 353 at [10] per White J). It is necessary to adhere to the language of s 122(2) which, it should be noted, was itself amended in 2009. 23It does seem to me, however, that the question whether a party has acted in a way that is relevantly inconsistent for the purposes of s 122(2) must be judged in its particular context, and may involve matters of fact and degree (see Osland (supra) at [46], [49], and [93]). 24In my view there is no such inconsistency in the circumstances of this case. There are no assertions in Mr Carlisle's affidavit which are expressly based upon any aspect of the Advice. The affidavit is silent as to the Advice. The affidavit was provided in the context of an application for preliminary discovery where the applicant, by definition, is a party contemplating the institution of proceedings against prospective defendants and it would be expected that the applicant would have obtained legal advice concerning the potential proceedings. It is true that the affidavit contains statements of the plaintiff's beliefs about the potential proceedings (for example in paragraphs 27-30 and 39) which beliefs, one might infer, are likely to have been informed to some extent by legal advice, but it seems to me that there is no inconsistency between the giving of evidence of such statements and maintaining that legal advice concerning the potential proceedings (including the Advice) should not be disclosed through the adducing of evidence. As Mr Gyles submitted, there has been no "deployment" of the Advice. The plaintiff is not, to my mind, seeking to both approbate and reprobate in relation to the Advice and, to the extent that it is relevant, I do not think seeking to maintain privilege in respect of it gives rise to any unfairness (see Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Limited [2013] HCA 46 at [31]-[32]). 25I do not think that the position is altered by the fact that the plaintiff subsequently disclosed some privileged material to the defendants (including the file note which refers to a recommendation of counsel contained in the Advice). That does not, in my view, lead to the conclusion that the plaintiff has relevantly acted in a way that is inconsistent with maintaining that the Advice itself should not be disclosed through the adducing of evidence. Again, I do not think that the plaintiff is thereby seeking to both approbate and reprobate, and I do not think that the conduct gives rise to any unfairness. 26Turning to the defendants' second argument, the relevant question is whether the plaintiff has knowingly and voluntarily disclosed the substance of the Advice such that the plaintiff, by virtue of the operation of s 122(3), is taken to have acted in way that is inconsistent with the plaintiff objecting to the adducing of evidence of the Advice. In this regard, I was referred to numerous cases which involved some disclosure of legal advice. 27These cases include, in addition to the two High Court cases earlier referred to, Ampolex Ltd v Perpetual Trustee Co (Canberra) Ltd (1996) 40 NSWLR 12, Adelaide Steamship Co Ltd v Spalvins (1998) 81 FCR 360, NRMA Ltd v Morgan (No 2) [1999] NSWSC 694, Bennett v Australian Customs Service (2004) 140 FCR 101; [2004] FCAFC 237, Fenwick v Wambo Coal Pty Ltd (No 2) (supra), and Landmark Underwriting Agency Ltd v Kilborn [2006] NSWSC 1108. 28In Ampolex (supra) Rolfe J found (at 18) that there had been a voluntary disclosure of the substance of legal advice by the statement: There is a dispute about the conversion ratio. Ampolex maintains that the correct ratio is 1:1 and has legal advice supporting this position. His Honour regarded the substance of the legal advice as being "that the correct ratio is 1:1". In reaching his conclusion, Rolfe J rejected a submission that the then s 122(2) of the Act required a distinction to be drawn between the "substance" and the "effect" of advice and that if there was a disclosure it was only of the effect, not the substance. His Honour stated (at 18) that "depending on the way in which the advice is structured, the "effect" of the advice may also be its "substance"." 29In Adelaide Steamship Co Ltd v Spalvins (supra) a Full Court of the Federal Court, in dealing with the question whether there had been a voluntary disclosure of the substance of a counsel's opinion for the purposes of the then s 122(2) of the Evidence Act 1995 (Cth) stated at 371: The test is a quantitative one, which asks whether there has been sufficient disclosure to warrant loss of the privilege. If what is disclosed falls short of the test posed by the section, there is no waiver. Importantly, the subsections are not concerned with any principle of "fairness" such as that developed by the common law and by which waiver may be imputed. It should, additionally, be said of the subsections' 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. 30In Bennett v Australian Customs Service (supra) Tamberlin J stated at [13]: The weight of the authorities, in my view, supports the conclusion that the disclosure of the conclusion reached in or course of action recommended by, an advice can amount to waiver of privilege in respect of the premises relating to the opinion which has been disclosed, notwithstanding that this reasoning is not disclosed. 31Tamberlin J continued at [14]: Disclosure of one conclusion but not others in an advice does not necessarily amount to waiver in respect of the non-disclosed conclusions. However, if the conclusions and reasoning are so interconnected that they cannot be separated or isolated then it may be that the whole of the advice on which all those conclusions are based must be considered to have been waived. 32It is necessary to bear in mind, however, that Bennett v Australian Customs Service dealt with disclosure of legal advice in a different legislative context. 33A useful survey of the cases in this area is contained in the judgment of White J in Fenwick v Wambo Coal Pty Ltd (No 2) (supra) at [12] - [22]. His Honour noted (at [12]) that it is difficult to reconcile the various cases but that 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." His Honour further noted (at [13]) that "in many cases disclosure of the conclusion of legal advice has been treated as disclosure of its substance, even though the reasoning is not disclosed." BT Australasia Pty Ltd v State of New South Wales (No 7) [1998] FCA 294 was cited as an example of such a case. There, Sackville J held that there had been a waiver by disclosure that the party had obtained an advice to the effect that certain proceedings were soundly based and had considerable strength. 34NRMA Ltd v Morgan (No 2) (supra) was cited by White J an example of a case where privilege was waived because there had been disclosure, albeit in summary form, of the substance of counsel's advice. A statement had been made that counsel had advised that a cross-claim might not permit the making of a claim for contribution, and that, for more abundant caution, leave should be sought to file a further cross-claim. 35At [24] his Honour stated that "whether disclosure amounts to disclosure of the substance of a privileged communication involves questions of degree." In the case before him a draft letter, which was held to have been voluntarily disclosed, contained not only what was said to be the conclusions of certain legal advice, but also the reasoning. His Honour held that there was a disclosure of the substance of the legal advice within the meaning to s 122(3) of the Act. 36Mr Shearer submitted that the substance of the Advice has been disclosed because the draft observations to counsel reveals the first part of the Advice (namely, the first seven paragraphs which "records instructions communicated by Mr Carlisle to Counsel"), and the file note reveals the substantive recommendation of counsel (namely, that preliminary discovery be sought). He contended that there has been disclosure of the gist or conclusion of the Advice by the giving of a summary of it. He also put that it was not possible to draw a distinction between advice given as to prospects of success, and the ultimate recommendation to seek preliminary discovery. 37Mr Gyles maintained that the only relevant disclosure was that of the recommendation of counsel, and this could be distinguished from that part of the Advice which dealt with the prospects of success of an application for preliminary discovery. He submitted that, unlike the position in Fenwick (supra), the disclosed material makes no reference to the reasons for counsel's recommendation, let alone a summary of those reasons. He further put that the disclosed material made no reference to the prospects of success of any application for preliminary discovery. Finally, Mr Gyles submitted that the case in favour of waiver was weaker in the present case than it was in Landmark Underwriting (supra) where there was disclosure of various details of a legal advice including that, on one issue, the client had a "strong case" (see at [105]). In that case, Young CJ in Eq described the case as a "borderline case" and stated that where there was doubt about the matter, the doubt should be resolved by maintaining the privilege (see at [116]). 38Mr Gyles also advanced a "fall back" submission. He submitted that if there was any waiver of the substance of the Advice, such waiver would nonetheless be restricted to certain paragraphs of the Advice, namely, paragraphs 1-14, 18 and 20-22. He maintained that the description of the Advice given in the plaintiff's claim for privilege (see [9] above) was accurate, but said that it was nonetheless possible to discern a "sub-set" within the Advice which is more closely related to the recommendation of counsel than is the rest of the Advice. 39In the light of that submission, and the fact that the issue of whether the substance of the Advice has been disclosed involves questions of degree and elements of quantitative assessment, I have decided that it is appropriate that I inspect the Advice to assist in the determination of the issue. As I will not be the judge hearing the substantive application there is no good reason for me not to adopt that course. The defendants are, of course, not in a position to make submissions based upon the actual contents of the Advice, but that situation is inherent in the nature of the present application in respect of client legal privilege. 40It may be accepted that the disclosure of the conclusion of a legal advice is capable of amounting to the disclosure of the substance of the advice. However, whether that is so depends upon the circumstances of the particular case at hand. It is necessary to consider the nature and extent of the disclosure as well as the nature and content of the advice in respect of which some disclosure has been made. 41In the present case the only actual disclosure of what is contained in the Advice occurred via Mr Carlisle's note of his statement to Mr Volfneuk that counsel had recommended seeking preliminary discovery. Whilst the drafts of observations to counsel indicate the nature of the request made to counsel for advice, and reveal some of the material counsel was to consider in giving their advice, the disclosure of those documents does not strictly disclose anything about the actual content of the Advice. Put another way, whether the Advice in fact contains such material, or does not, is not revealed by the draft observations. 42For the reasons which follow, I am not persuaded that the disclosure of the recommendation of counsel amounts to disclosure of the substance of the Advice within the meaning of s 122(3) of the Act. 43There has been no disclosure of counsel's opinion as to prospects of success. It may be inferred from the recommendation itself that the opinion of counsel was that an application for preliminary discovery had at least reasonable prospects of success. However, there is no disclosure of counsel's opinion in that respect. Assuming that counsel expressed such an opinion in the Advice, that opinion may have been that the prospects were excellent, good, fair or only reasonably arguable. Where the opinion lay on that spectrum was not disclosed. 44Moreover, there has been no disclosure of any of the reasoning which underpins the recommendation. In these circumstances, the disclosure does not, in my view, amount to a summary, whether express or implied, of the Advice. Generally, the reasoning of the lawyer forms the essence of a legal advice or opinion. The disclosure here is limited to the bare fact that the Advice contains a particular recommendation. Even if the recommendation was regarded as "the substantive recommendation of counsel", I do not think that the mere disclosure of its existence amounts to disclosure of the gist or essence of the Advice. To my mind, the extent of the disclosure falls short of disclosure of the substance of the Advice within the meaning of s 122(3) of the Act. 45I had come to that view even without having inspected the Advice. Having undertaking such inspection, I can see no reason to come to any different conclusion. 46I turn now to consider the defendants' third argument which is that privilege in respect of the Advice has been lost by reason of the operation of s 126 of the Act. Section 126 provides: If, because of the application of section 121, 122, 123, 124 or 125, this Division does not prevent the adducing of evidence of a communication or the contents of a document, those sections do not prevent the adducing of evidence of another communication or document if it is reasonably necessary to enable a proper understanding of the communication or document. 47The equivalent section of the Evidence Act 1995 (Cth) was considered by Sackville J in Towney v Minister for Land and Water Conservation (1997) 76 FCR 401 at 412 - 414. His Honour rejected a submission to the effect that the section merely restates the common law test of implied waiver as formulated in Attorney General (Northern Territory) v Maurice (1986) 161 CLR 475. At 414 his Honour stated: This is not to deny that there is likely to be considerable overlap between the considerations relevant to the common law test governing waiver of legal professional privilege and those relevant to the test for loss of client legal privilege, specified in s 126. For example, as AG (NT) v Maurice makes clear, an important factor in determining whether the privilege has been impliedly waived under the common law is whether it would be misleading for a party to refer to or use certain privileged material, yet insist that the remainder of the privileged material should remain protected. Similarly, if one party discloses a privileged document or communication, in circumstances that make the disclosure misleading unless associated privileged material is also disclosed, it would be difficult to dispute that disclosure of the associated material is "reasonably necessary to enable a proper understanding of" the document already disclosed. 48Sackville J considered that the expression "proper understanding" was by no means narrow and would seem to include a "complete or thorough" understanding. His Honour continued at 414: I think it fair to say that, if a privileged document is voluntarily disclosed for forensic purposes, and a thorough apprehension or appreciation of the character, significance or implications of that document requires disclosure of source documents, otherwise protected by client legal privilege, ordinarily the test laid down by s 126 of the Evidence Act will be satisfied. 49Section 126 is engaged in this case in the sense that various confidential documents, which would otherwise be the subject of client legal privilege, have lost that status by virtue of the operation of s 122 of the Act. However, it was not made clear by the defendants why disclosure of the Advice was reasonably necessary in order to enable a proper understanding of any of those documents. 50 It was faintly submitted that such disclosure was reasonably necessary in order to properly understand the reference in the file note to the recommendation made by counsel. In my view, there is no such necessity. The reference in the file note to the recommendation of counsel may be clearly understood on its own. The statement is to the effect that counsel had made a particular recommendation. There is nothing unclear or ambiguous about that statement. I do not think that it is reasonably necessary for further information, for example information going to the reasons behind the making of the recommendation, in order to properly understand the statement itself. This is particularly so in circumstances where the plaintiff does not seem to place any reliance upon the statement in support of its application for preliminary discovery. For these reasons, the defendant's third argument also fails. 51It follows, therefore, that the defendants have failed to establish that the client legal privilege which existed in relation to the Advice has subsequently been lost. It is appropriate to make an order in accordance with order 1 as sought in the Notice of Motion. There does not seem to be any reason why costs should not follow the event. 52The orders of the Court will be: (1)Order that, until further order of the Court, the defendants be refused access to the document entitled "Memorandum of Advice" dated 16 August 2013 which was produced by the plaintiff to the Court pursuant to Notice to Produce dated 3 October 2013. (2)Order that the defendants (other than the third defendant) pay the plaintiff's costs of the Notice of Motion filed 23 October 2013. ********** 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 November 2013