Supreme Court New South Wales Medium Neutral Citation: Loretta Craig & Ors v Anthony Johnson & Ors [2018] NSWSC 1539 Hearing dates: 1 June 2018 Date of orders: 30 October 2018 Decision date: 30 October 2018 Jurisdiction: Common Law Before: Lonergan J Decision: (1) The plaintiffs' notice of motion filed on 15 May 2018 is dismissed. (2) The plaintiffs are to pay the defendants' costs of the notice of motion. Catchwords: CIVIL PROCEDURE – client legal privilege – waiver Legislation Cited: Civil Liability Act 2002 (NSW) s 5O Evidence Act 1995 (NSW) s 118, 119, 122, 126 Uniform Civil Procedure Rules 2005 (NSW) r 1.9(4) Cases Cited: Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd (2013) 250 CLR 303; [2013] HCA 46 Grant v Downs (1976) 135 CLR 674; [1976] HCA 63 Category: Procedural and other rulings Parties: Lorretta Kistmah Craig & 4 Ors (Plaintiffs) Anthony Francis Johnson & 60 Ors (Defendants) Representation: Counsel: I Archibald (Plaintiffs) B Ness, solicitor (Defendants) Solicitors: Charles Filgate Giles & Associates (Plaintiffs) Moray & Agnew (Defendants) File Number(s): 2016/328254 Judgment 1. These are professional negligence proceedings seeking damages for negligence from the defendants, partners in Johnson Winter & Slattery. It is alleged that firm represented the plaintiffs in a commercial dispute in the Equity Division of this Court ("the Equity Proceedings") heard in 2013 and gave negligent advice in relation to an offer of settlement made to them in those proceedings. The offer was not accepted and the plaintiffs lost their case. 2. These proceedings were commenced by the filing of a statement of claim on 3 November 2016. The defendants deny liability and plead s 5O of the Civil Liability Act 2002 (NSW) in their defence. 3. On 26 February 2018, the plaintiffs' solicitor Fil Giles spoke to the solicitor who had acted for the defendants in the Equity Proceedings. On 27 February 2018, he commenced drafting an affidavit with a view to having that solicitor, Fiona Inverarity, sign it. The affidavit deposed to, amongst other things, his understanding of what she told him in that conversation to have been some of her recollections regarding the offer her clients had made in the Equity Proceedings in September 2013. 4. It appears Mr Giles made no file note at the time of this discussion. The only record of this conversation was a billing note, which for "Billing Description" included three lines covering a number of activities completed by Mr Giles on 26 February 2018, including, "t/o Fiona – will do affi … dft aaffi fr Fiona to sign re share, Ian to settle…". 5. On 1 March 2018, an email was sent by Mr Giles to Ms Inverarity attaching the draft affidavit, asking that she review the document and "add the additional dates and information required" stating, "If you are happy, we ask that you kindly sign the affidavit and have it witnessed…" 6. The draft affidavit included, amongst other things, a lengthy paragraph purporting to specify her "understanding" of the plaintiffs' claim in the Equity Proceedings and her "instructions" at the time of her clients' offer in September 2013. 7. Ms Inverarity did not reply. 8. A further email was sent by Mr Giles at 8.32am on 20 March 2018 in which he says, "When we spoke several weeks ago, you were very supportive of signing a draft affidavit confirming the value of the Silverbrook offer. Specifically, we were hoping you could address whether the 3% offer was of the whole, or was limited to 3% of the Silverbrook share. Last week we had a discussion where you indicated that you were no longer prepared to assist us with clarifying this matter. As you no doubt appreciate, this is very disappointing. We would be most appreciative if you would kindly reconsider your position…" 1. Eight minutes later, at 8:40 am, an email was sent by Ms Inverarity to Mr Giles stating as follows: "I was not supportive. I was prepared to discuss it with you. I am always keen to help a fellow solicitor. I have not looked at the exact terms of the letter, nor have I since we spoke. I assume the letter speaks for itself. I do not want to be involved in anything to do with Ms Craig." 1. Mr Giles then issued a Subpoena to Produce to Ms Inverarity's firm in April 2018 seeking production of the following: 1. File notes made by you on or about 6 September 2013 to record the instructions pursuant to which you (practising as "In Legal" solicitors) sent a letter ("Offer Letter") to Johnson Winter Slattery solicitors dated 6 September 2013 making an offer to settle proceedings numbered 2010/333159 in the Supreme Court of New South Wales ("Proceedings"). 2. The email or emails to which the Offer Letter was attached. 3. File notes made by you recording any telephone conversations which you had with Mr Andreas Piesiewicz Solicitor employed by Johnson Winter Slattery or any other person at Johnson winter Slattery in relation to the subject matter of the Offer Letter and any response thereto. 4. Any letter, email, or other documents which you received from Johnson Winter Slattery referring or referring to the Offer Letter or its content. 5. Any documents which you have which define the value or quantum of the offer made in the Offer Letter. 1. Ms Inverarity produced documents to the Court, some of which were placed into a separate envelope marked "Privileged". 2. On 18 May 2018, Ms Inverarity sent a letter to Mr Giles, as well as to the solicitor acting for the defendants in these proceedings, stating the following: "Dear Mr Filgate, I have not been able to contact my former clients regarding privilege. I cannot just waive it as I cannot get instructions. I was going to let the Court decide the privilege issue. However, as I have previously advised you, as you are seeking costs against me I will have to retain counsel to appear. As you can see from the size of the envelope and the notes I made on the subpoena, there are only a few documents. Five, in fact…" 1. The rest of the email dealt with the potential need to engage counsel if an order for costs was to be pursued against her, although later correspondence indicates that order was not to be pressed. Notice of Motion, 15 May 2018 1. The plaintiffs filed a notice of motion on 15 May 2018 seeking orders that the objection taken by Fiona Inverarity to the inspection by the plaintiffs of the documents produced be overruled, and that the plaintiffs have leave to inspect those documents. 2. The application is framed pursuant to Uniform Civil Procedure Rules 2005 (NSW) r 1.9(4), which provides as follows: 1.9 Objections to production of documents and answering of questions founded on privilege (1) This rule applies in the following circumstances: (a) if the court orders a person, by subpoena or otherwise, to produce a document to the court or to an authorised officer, (b) if a party requires another party, by notice under rule 34.1, to produce a document to the court or to an authorised officer, (c) if a question is put to a person in the course of an examination before the court or an authorised officer. (2) In subrule (1), authorised officer means: (a) any officer of the court, or (b) any examiner, referee, arbitrator or other person who is authorised by law to receive evidence. (3) A person may object to producing a document on the ground that the document is a privileged document or to answering a question on the ground that the answer would disclose privileged information. (4) A person objecting under subrule (3) may not be compelled to produce the document, or to answer the question, unless and until the objection is overruled. (5) For the purpose of ruling on the objection: (a) evidence in relation to the claim of privilege may be received from any person, by affidavit or otherwise, and (b) cross-examination may be permitted on any affidavit used, and (c) in the case of an objection to the production of a document, the person objecting may be compelled to produce the document. … The legal framework: client legal privilege 1. Sections 118 and 119 of the Evidence Act 1995 (NSW) provide as follows: 118 Legal advice Evidence is not to be adduced if, on objection by a client, the court finds that adducing the evidence would result in disclosure of: (a) a confidential communication made between the client and a lawyer, or (b) a confidential communication made between 2 or more lawyers acting for the client, or (c) the contents of a confidential document (whether delivered or not) prepared by the client, lawyer or another person, for the dominant purpose of the lawyer, or one or more of the lawyers, providing legal advice to the client. 119 Litigation Evidence is not to be adduced if, on objection by a client, the court finds that adducing the evidence would result in disclosure of: (a) a confidential communication between the client and another person, or between a lawyer acting for the client and another person, that was made, or (b) the contents of a confidential document (whether delivered or not) that was prepared, for the dominant purpose of the client being provided with professional legal services relating to an Australian or overseas proceeding (including the proceeding before the court), or an anticipated or pending Australian or overseas proceeding, in which the client is or may be, or was or might have been, a party. 1. Counsel for the plaintiffs submitted that the onus is on Ms Inverarity to persuade the Court that privilege should be upheld. He relied upon Grant v Downs (1976) 135 CLR 674; [1976] HCA 63, Stephen, Mason and Murphy JJ (Barwick CJ agreeing) at 689: 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. … The court has power to examine the documents for itself… 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. It is clear from this passage that the party claiming privilege bears the onus of proof that the relevant material is privileged. It is also clear that this onus can be discharged by production of the material to the Court for inspection and by evaluation of the character of the documents. 2. With the consent of counsel for the plaintiffs and the defendants, I have undertaken inspection of the material over which privilege is claimed, and have no doubt that the documents are confidential communications between the client and a lawyer acting for the client or confidential communications made between two or more lawyers acting for the client. Waiver or loss of client legal privilege 1. Counsel for the plaintiffs argued that privilege over the material has been waived by operation of s 122(2)-(3) of the Evidence Act 1995 (NSW). 2. Section 122 relevantly provides as follows: 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 … (iii) under compulsion of law, or … 1. Counsel for plaintiffs submitted that waiver should be found in accordance with the judgment of French CJ, Kiefel, Bell, Gageler and Keane JJ in Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd (2013) 250 CLR 303; [2013] HCA 46 at [30]: According to its strict legal connotation, waiver is an intentional act done with knowledge whereby a person abandons a right (or privilege) by acting in a manner inconsistent with that right (or privilege). It may be express or implied. In most cases concerning waiver, the area of dispute is whether it is to be implied. In some cases waiver will be imputed by the law with the consequence that a privilege is lost, even though that consequence was not intended by the party losing the privilege. The courts will impute an intention where the actions of a party are plainly inconsistent with the maintenance of the confidentiality which the privilege is intended to protect. (footnotes omitted) 1. Counsel for the plaintiffs submitted that the conversation deposed to by Mr Giles that took place on 26 February 2018, four and a half years after the offer was made, in which he says Ms Inverarity stated, "the offer was for a 3% interest in the Memjet technology as a whole", constituted a disclosure of her instructions, and therefore that she has acted in a way that is inconsistent with the retention of any privilege over the relevant material. 2. I do not accept that submission. Even if Ms Inverarity had in fact stated the words attributed to her by Mr Giles (a matter about which some doubt must attend given the absence of a file note and the refusal of Ms Inverarity to agree that is what she said, or to sign any affidavit to that effect), all that statement can amount to is her then current recollection of what the offer was. It is not a "disclosure" of her instructions. Even if it was, that does not mean that the client legal privilege that applies to the material produced, and over which privilege has properly been claimed, has been waived. 3. There is nothing in the statement attributed to Ms Inverarity that could be considered to be a "knowing and voluntary" disclosure of the substance of the material in the documents over which privilege has been claimed, nor is it the disclosure of the substance of that material with the express or implied consent of the client or party. 4. Ms Inverarity's emails of 20 March 2018 and 18 May 2018 set out in paragraphs 9 and 12 of this judgment make it abundantly clear that privilege is not waived over that material. To adopt the approach of the Court in Expense Reduction Analysts Group Pty Ltd, this is not an occasion where I should "impute an intention", because there is nothing in the actions of Ms Inverarity that are "plainly inconsistent with the maintenance of the confidentiality which the privilege is intended to protect". 5. In fact, the opposite applies. Ms Inverarity first made it clear that she was not "supportive" of completing an affidavit but was simply prepared to have a discussion with another solicitor. There is no evidence that, in doing so, she communicated the substance of any of the confidential privileged information or correspondence. Second, she refused to sign the affidavit drafted by Mr Giles. Third, there is no file note that was made contemporaneously which would give any confidence to Mr Giles' recollection of what Ms Inverarity said. Fourth, Ms Inverarity specifically stated in her email of 20 March 2018, in reply to Mr Giles affidavit 8 minutes prior which suggested that she was "very supportive of signing a draft affidavit confirming the value of the Silverbrook offer", that she was "not supportive…" and "had not looked at the exact terms of the letter" and "assume[d] the letter speaks for itself". 6. Additionally and fifthly, in her email of 18 May 2018, Ms Inverarity confirms that she has not contacted her clients and "cannot just waive it, as I cannot get instructions". 7. In all the circumstances, I reject the argument that there has been waiver of client legal privilege. 8. A supplementary argument was made by counsel for the plaintiffs to the effect that s 126 of the Evidence Act provides a basis upon which I ought to allow the plaintiffs access to the privileged material on the basis of related communications and documents. 9. Section 126 provides as follows: 126 Loss of client legal privilege: related communications and documents 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. 1. This argument is not relevant as I have found no waiver in respect of any of the documents over which privilege is claimed and so s 126 has no operation. The argument apparently advanced that service of the letter of offer waived privilege over documents that comprise documents referring to or discussing instructions in relation to the offer (to which I have found privilege apply) is also rejected as incorrect. 2. The application fails. Orders 1. I make the following orders: 1. The plaintiffs' notice of motion filed on 15 May 2018 is dismissed. 2. The plaintiffs are to pay the defendants' costs of the notice of motion. ********** Amendments 01 November 2018 - Completed case citation on coversheet 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: 01 November 2018