Supreme Court New South Wales Medium Neutral Citation: Secure Logic Pty Limited v Paul William Noble [2019] NSWSC 991 Hearing dates: 29, 30, 31 July, 1, 2, 5 & 6 August 2019 Date of orders: 06 August 2019 Decision date: 06 August 2019 Jurisdiction: Equity Before: Slattery J Decision: See paragraph [34] Catchwords: EVIDENCE — Privileges — Client legal privilege — Legal advice – plaintiffs seek access to documents and parts of documents over which the first and second defendants claim client legal privilege – first and second defendants resist disclosure of the documents and parts of the documents – first and second defendants have waived privilege over some documents containing legal advice to promote their defence to a claim for breach of confidence – whether privilege has been waived in respect of remaining parts of those documents and over other related documents, where privilege is claimed – application of Evidence Act, s 122 – HELD: wider waiver of the documents has occurred – extent of waiver of the documents in question Legislation Cited: Evidence Act 1995 Cases Cited: Benecke v National Australia Bank (1993) 35 NSWLR 110 Mann v Carnell (1999) 201 CLR 1 Category: Procedural and other rulings Parties: First Plaintiff/Cross Defendant: Secure Logic Pty Limited (ACN 154 505 030) Second Plaintiff/ Cross Defendant: Secure Logic Technologies Pty Ltd Third Plaintiff/ Cross Defendant: Secure Logic Pte Ltd Fourth Plaintiff/ Cross Defendant: Plush Hosting Pty Ltd First Defendant/Cross Claimant: Paul William Noble Second Defendant/Cross Claimant: Peach Tree Bay Pty Limited (ACN 132 097 647) Third Defendant/Cross Claimant: John Russell Pankhurst Representation: Counsel: Plaintiffs: M.R. Elliott SC; S. J. Hallahan First & Second Defendants: B. DeBuse Solicitors: Plaintiffs: Andrew Lacey, McCabes Lawyers Pty Ltd First & Second Defendants: John Mark Laxon, Laxon Lex Lawyers Third Defendant: John Russell Pankhurst – in person File Number(s): 2016/182584 Publication restriction: No EX TEMPORE Judgment 1. The plaintiffs seek access to three groups of documents over which the first and second defendants claim client privilege. They contend that the first and second defendants' waiver of privilege over other certain otherwise privileged documents now lead to waiver of privilege over these three groups of documents. The first and second defendants resist disclosure of the three groups of documents, or the parts of them, over which client privilege is claimed. 2. The circumstances that lead to this contest may be briefly stated. The Court is yet to make findings in these proceedings. But much of what is alleged that is relevant to the present dispute appears not to be in contest. The plaintiffs seek permanent injunctions against the defendants for alleged misuse of their confidential information. The first and second defendants admit they held the plaintiffs' confidential information, when these proceedings were commenced, but deny that it has ever been misused. 3. The plaintiffs commenced these proceedings in mid-June 2016. The first and second defendants then had some of the plaintiffs', admittedly, confidential information on a work laptop and a personal laptop. 4. After these proceedings were commenced, they were heard in the duty list before Bergin CJ in Eq, on 15 and 17 June 2016. The solicitors then acting for the first and second defendants were Messrs Carroll & O'Dea. Mr Peter Doughman was the principal solicitor in that firm with carriage of the proceedings for the first and second defendants. 5. On 16 June 2016, Messrs Carroll & O'Dea advised the first defendant, Mr Noble, not to delete information on his personal laptop; but by Friday 17 June, the first and second defendants' case, as presented, is that the first defendant had obtained alternative legal advice from a Mr John Giorgiutti. The legal advice that Mr Giorgiutti gave apparently was that Mr Noble was advised to destroy the contents of the personal computer. 6. It appears from evidence that, on the morning of 17 June 2016, Mr Noble caused a third party contractor not only to delete the material on his personal computer, but to destroy it by shredding the hard drive, with the result that its contents can never be retrieved. A forensic image of the contents of that laptop computer was taken by Mr Noble almost three weeks before the date of its destruction, but not on the date of destruction. 7. The matter proceeded on 17 June, before Bergin CJ in Eq. Mr Noble did not come to Court. Orders were made that day. There is a dispute between Mr Noble and Messrs Carroll & O'Dea, as to whether the firm was authorised to give undertakings to the Court on that day about the preservation of the personal computer, personal laptop, or any other undertakings. By Thursday, 23 June (that is, the following Thursday) Messrs Carroll & O'Dea had ceased to act for Mr Noble. 8. The issue before the Court now concerns three groups of documents. The first group is a group of text messages that were sent during the day on 17 June 2016, between Mr Noble and Mr Doughman. Privilege has been waived in respect of one of these text messages, sent at 10.23am on that day; a text message which is referred to in an affidavit read in the first and second defendants' case. The decision is whether privilege is waived in respect of the other text messages in that group. 9. The second group of documents is a set of emails between Mr Noble and Mr John Giorgiutti on 17 June 2016. The first and second defendants have read an affidavit of Mr Giorgiutti in the proceedings, but have declined to waive privilege on these emails passing between Mr Giorgiutti and Mr Noble. 10. The third group of documents comprise a single but lengthy "debriefing memorandum" from Messrs Carroll & O'Dea for their own file, dated 23 June 2016. A significant part of that debriefing memorandum records and considers the events of 17 June, the previous Friday. 11. Whether or not privilege is waived in these documents must be examined in light of the major issues in the case. An important contest between the parties is whether or not Mr Noble and the other defendants had any intention to misuse confidential information in their possession as at June 2016. It is not in contest, now at least, that some of the information in their possession was indeed confidential. 12. In order to obtain a permanent injunction against the first and second defendants, the plaintiffs seek to establish that there is a danger of misuse of their confidential information by those defendants. The plaintiffs will argue the destruction of a repository of confidential information (such as a laptop) in the face of imminent orders for the delivery up of that item is a basis to infer that the defendants have hidden, or were attempting to hide, their actual misuse of any confidential information which misuse might have been evidenced on the destroyed laptop hard drive. 13. I am not making any findings at this stage. I am merely recording the allegations that are made. These allegations are strongly contested. The defendants say that, to the extent that there was any confidential information of the plaintiffs' on the computer in question: that it had not been misused; that the first and second defendants had no intention to misuse it; and that the act of destruction is explained in a way that does not lead to an inference that they were attempting to hide evidence of their misuse of the plaintiffs' confidential information. 14. The first and second defendants say that in addition to engaging Messrs Carroll & O'Dea, they engaged the solicitor, Mr Giorgiutti, to advise them as to what should happen to the contents of the personal laptop. Mr Giorgiutti's advice is deliberately revealed in the first and second defendants' case, partly in documents that would otherwise be privileged and partly in Mr Giorgiutti's and Mr Noble's oral evidence. The first and second defendants have waived privilege over his advice for the purposes of showing that he expressly advised and authorised the destruction of the computer's hard drive. Mr Giorgiutti's advice appears to have been given orally to Mr Noble late on 16 June 2016. 15. By adducing that evidence, the first and second defendants seek to deflect any inference of the misuse of information that might otherwise arise from their destruction of the computer drive. The waiver of privilege over that legal advice is to bolster their defence against that damaging inference. The first and second defendants' case is a close contest with the plaintiffs' case about the first and second defendants' real motive for the hard drive destruction. Despite the waiver of some of their legal advice, the first and second defendants seek to maintain privilege over the three classes of material described above. 16. The common law and statutory principles that apply in situations such as this are well established. I need look no further for guidance to the common law on this subject than two decisions of Gleeson CJ. The first was given when he was Chief Justice of the Supreme Court of New South Wales, Benecke v National Australia Bank (1993) 35 NSWLR 110 ("Benecke"). His Honour stated in Benecke the applicable principles relevantly as follow, at p 111 - 112: "The rule that prevents an unauthorised disclosure of confidential communications between a client and a legal adviser, when such communications are for the purpose of obtaining legal advice, or for use in existing or anticipated litigation, constitutes a restriction upon the capacity of courts to ascertain the truth in certain circumstances. That restriction, however, is regarded as acceptable on the ground that it promotes the public interest, and assists the administration of justice, by facilitating the representation of clients by legal advisers. It does this by encouraging uninhibited communication. Thus, in cases where the rule operates, one aspect of the public interest is preferred against another (discovering the truth). It would be inconsistent with the reason for the existence of the privilege to permit it to operate in the manner for which the appellant contends. But for her own actions, the privilege would have enabled the appellant to insist that nobody should be able to give evidence of the confidential communications between the appellant and her senior counsel about the settlement of the first proceedings, without the consent of the appellant. However, it did not enable the appellant to make public her version of those communications and, at the same time, to enforce silence on the part of others who disagreed with that version. The law permits the search for the truth in legal proceedings to yield, in certain circumstances, to the public interest in preserving the secrecy of communications between lawyer and client. In the present case, however, the appellant herself lifted the veil of secrecy by giving her version of the communications. Thereafter, there was no reason in principle why the pursuit of the truth should not take its course, or why the court should be inhibited in seeking to ascertain the true facts concerning those communications." 1. Later as Chief Justice of the High Court, his Honour returned to the same subject matter in Mann v Carnell (1999) 201 CLR 1; [1999] HCA 66 ("Carnell"). His Honour, citing in footnotes what he said in Benecke, elaborated upon the principles underpinning the waiver of privilege at common law: "At common law, a person who would otherwise be entitled to the benefit of legal professional privilege may waive the privilege. It has been observed that "waiver" is a vague term, used in many senses, and that it often requires further definition according to the context. Legal professional privilege exists to protect the confidentiality of communications between lawyer and client. It is the client who is entitled to the benefit of such confidentiality, and who may relinquish that entitlement. It is inconsistency between the conduct of the client and maintenance of the confidentiality which effects a waiver of the privilege. Examples include disclosure by a client of the client's version of a communication with a lawyer, which entitles the lawyer to give his or her account of the communication, or the institution of proceedings for professional negligence against a lawyer, in which the lawyer's evidence as to advice given to the client will be received. Waiver may be express or implied. Disputes as to implied waiver usually arise from the need to decide whether particular conduct is inconsistent with the maintenance of the confidentiality which the privilege is intended to protect. When an affirmative answer is given to such a question, it is sometimes said that waiver is "imputed by operation of law". This means that the law recognises the inconsistency and determines its consequences, even though such consequences may not reflect the subjective intention of the party who has lost the privilege. Thus, in Benecke v National Australia Bank, the client was held to have waived privilege by giving evidence, in legal proceedings, concerning her instructions to a barrister in related proceedings, even though she apparently believed she could prevent the barrister from giving the barrister's version of those instructions. She did not subjectively intend to abandon the privilege. She may not even have turned her mind to the question. However, her intentional act was inconsistent with the maintenance of the confidentiality of the communication. What brings about the waiver is the inconsistency, which the courts, where necessary informed by considerations of fairness, perceive, between the conduct of the client and maintenance of the confidentiality; not some overriding principle of fairness operating at large." 1. The statements of common law principle that emerge from these authorities are clear. They are also reflected in the statutory provisions of the Evidence Act 1995, s 122(2), which enacts the principle stated in Carnell and restates in statutory language that the maintenance of client privilege under Evidence Act, Part 3.10 "does not prevent the presenting of evidence if the client or party has acted in a way that is inconsistent with the client or party objecting to the presenting of the evidence because it will result in a disclosure [of otherwise privileged communications]". 2. And Evidence Act, s 122(3), and s 126, also have potential relevance here. The former identifies knowing and voluntary disclosure of the substance of the evidence as one example of the inconsistency contemplated by s 122(2). And the latter provides that Part 3.10 does not prevent the adducing of evidence of other privileged communication or documents if "it is reasonably necessary to enable a proper understanding of the communication or document" in respect of which a waiver has occurred. But as will be seen, Evidence Act, s 126 need not be deployed to decide this application. 3. The applicable principle is that client privilege is waived where a party conducts itself in a manner inconsistent with the maintenance of the claim for client privilege. This is not a principle that operates as an overall general rule of fairness, but one based upon the inconsistency itself. Where there has been inconsistent conduct, it has to be determined case by case and looking at the issues raised by the parties and the likelihood that the contents of the documents in issue bear upon those issues. It is for that reason that I have outlined, at least in skeleton form, the relevant issues earlier in this judgment. 4. I now turn to the particular conduct here. As I have said in the general introduction, Mr Noble alleges in his pleadings and has adduced evidence that he has relied upon legal advice to destroy the personal laptop. He has read the affidavit of Mr Giorgiutti, given affidavit evidence himself about having received advice encouraging the destruction and has disclosed various of his own emails, which record aspects of Mr Giorgiutti's advice. 5. One such email dated 17 June 2016 between Mr Noble and Mr Doughman records the advice Mr Noble had been given by Mr Giurgiutti: "As discussed I asked for an opinion from another lawyers and I would like to provide the following instructions. He has advised that I am best shredding the hard drive of my personal computer and the backup device that held company data – I have booked that in for 9am tomorrow in North Sydney and will receive certificates of destruction. That should mean that by 10am you can state that I have destroyed all company data in my possession and that certification proving this will be provided. The only way to be 100% sure that the data has been destroyed is this method any other method may be seen to possibly lead to a recovery opportunity in the future. I am advised that the approach should be that you turn up (I should also make it by 10am) – no need for a barrister at this point. We should appear ready to be there and state that agreement on the short minutes could not be reached as we are unwilling to release the copy of the personal computer taken by our forensic team to anyone other than the Federal Police as it is evidence of a crime. At this stage our client is well aware that his personal laptop has been 'hacked' and has a genuine concern that the 'hacker' was in fact attempting to 'hack' into the NSW Government data centre. If that has already occurred then there is both criminal activity in relation to the personal laptop and criminal activity in relation to the NSW data centre. As you are no doubt aware, our client has an obligation to refer the matter to the police pursuant to section 316 of the Crimes Act 1900. At this stage our client proposes to undertake further forensic investigation to establish the extent and identity of the 'hacker'. In the circumstances our client is not prepared to risk the chain of continuity in relation to the personal laptop." 1. It can be anticipated already from the way the parties' cases have been deployed that, in answer to Mr Noble's claim of taking Mr Giorgiutti's advice, the plaintiffs may well counter attack in a number of ways. They may say that Mr Giorgiutti's advice was either taken as a matter of convenience, or was used as a cover to destroy material that Mr Noble knew was likely to indicate there may have been some misuse of confidential information. 2. The partial waiver that has occurred, and the use of Mr Giorgiutti's advice in contrast with the advice from Carroll & O'Dea, raises a number of sub issues that are in contest. These questions are: to what extent the advice already given by Carroll & O'Dea was being respected; how it was being reacted to, why and in what circumstances was the alternative advice obtained; and the timing of obtaining, and acting on, this alternative advice. These are all matters that seem to me to be enmeshed with the primary issue raised by Mr Noble: that he had no questionable intentions at the time of deleting material on the laptop. 3. It seems to me that were Mr Noble able to partially reveal Mr Giorgiutti's advice and some of his dealings with Carroll & O'Dea, but otherwise to maintain confidentiality about the underlying transactions between himself and Mr Giorgiutti and between himself and Carroll & O'Dea, the plaintiffs would be put in a position where they would be hampered in testing the central matter raised by the deliberate disclosure of Mr Giorgiutti's advice, namely Mr Noble's motivation in destroying the hard drive. There is, in my view, a direct inconsistency raised by Mr Noble's conduct in disclosing part of Mr Giorgiutti's and Carroll & O'Dea's advice, with the maintenance of client privilege over a range of related materials. He and the second defendant have waived privilege on an important part of the relevant conduct that defends them against the inference of misuse of confidential information: the advice from Mr Giorgiutti. But that limited waiver would, unless taken further, prevent any other party realistically testing whether or not he actually relied upon that advice in his decision to destroy the computer hard drive or whether he was motivated by other considerations at the time of receiving that advice. 4. It seems to me that the defence raised of taking that advice, once raised, creates an inconsistency with maintaining the privilege. Fairness in the proceedings requires that this defence be able to be tested. To that extent, in my view, there needs to be a wider disclosure of relevant materials on that subject matter and with those lawyers to avoid that inconsistency, and the Court will so rule. In short, it is inconsistent for Mr Noble to maintain client privilege where he is able to raise this defence based upon a limited account of the advice of Mr Giorgiutti. Once raised, this defence should be open to a fair challenge, rather than just to become the say so of one party, in this case Mr Noble. 5. So, the Court will rule there has been a waiver of privilege by conduct and there should now be wider disclosure. But the extent of the waiver and the consequent requirement for disclosure varies depending on the documents in question. 6. I will go first to the briefing memorandum. The redacted material in this document is of different classes. In my view, privilege has been waived in respect of some but not all of it. The essential difference between what the Court now rules is waived, and what is not waived is this: in the areas where privilege has not been waived, the underlying material is of the character of Mr Doughman either giving personal reflections about his opinion on strategy, or on the client or on the overall circumstances, or of his exchanges with counsel. None of this appears to have been, on the face of the material, communicated to Mr Noble at any time. 7. It seems to me that those matters are matters which Mr Noble never heard and could not now rely upon to defend himself, because they do not appear to have been communicated to him. They mostly consist of the lawyer's musing about the circumstances. That is a sufficiently general description of the material, without revealing its contents, for me to make the following more detailed rulings. I have numbered the redacted sectors of the Carroll & O'Dea 23 June 2016 debriefing memorandum to identify each redacted sector in issue separately, as 1 to 6. 8. In relation to the file note of Mr Peter Doughman dated 23 June 2016, with its six redacted and numbered sectors, the Court rules in respect of each numbered redacted sector as follows: 1. 1. Privilege waived. 2. 2. Privilege not waived. 3. 3. Privilege waived. 4. 4. Privileged not waived. 5. 5. Privilege not waived. 6. 6. Privilege waived. 1. I now move to the text messages exchanged between Mr Noble and Mr Doughman on 17 June. In my view, all privilege is waived over these messages. They all relate to circumstances where Mr Noble was away from the Supreme Court courtroom on 17 June and in communication with Mr Doughman inside or near the courtroom. There is a basis, in my view, for the waiver of privilege over these text messages which show the complete advice on the same continuous subject matter throughout 17 June 2016. 2. I now go to the last category of documents, which is the numbered materials in packet S9. They are all communications between Mr Giorgiutti and Mr Noble, directly or indirectly, on 16 or 17 June. As I understand the position taken by the parties in the end, after various other waivers have occurred, the only remaining items of this group that are in contest are 6, 7, 9, 10, 11, 12 and 13. These particular documents very much go to the issues which the Court has examined above, and in my view, privilege has been waived in respect of all of them. 3. The Court has made this determination the way it was argued, upon waiver of privilege. In the background to these proceedings, there are suggestions in both directions of parties having been involved in conduct that may attract the attention of criminal investigation authorities of this State. Some of the conduct of the parties in this case is alleged to amount to breaches of the criminal law of this State. Arguments for access to these documents may therefore have been deployable under Evidence Act, s 125. But I am not deciding this case on this ground; I have not heard the full contest about those matters. It is being decided merely upon the basis of traditional doctrines of waiver of privilege. Conclusion and Orders 1. Accordingly, the Court makes the following orders and directions: 1. All parts of documents in respect of which client privilege has been claimed by the first and second defendants, but where by the orders below that privilege has been held to be waived shall be disclosed to the other parties to the proceedings by 1.00pm today. 2. In relation to the file note of Mr Peter Doughman dated 23 June 2016 with its six redacted and numbered sectors, the Court rules in respect of each numbered redacted sector as follows: 1. Privilege waived. 2. Privilege not waived. 3. Privilege waived. 4. Privilege not waived. 5. Privilege not waived. 6. Privilege waived. 1. In relation to the text messages exchanged between Mr Paul Noble and Mr Peter Doughman on 17 June 2016 all privilege is waived over such messages. 2. In relation to the numbered materials in Packet S9 on subpoena from Mr John Giorgiutti in respect of which a contested claim for client privilege is made over items 6, 7, 9, 10, 11, 12 and 13, the Court rules that privilege has been waived in respect of all these items in contest. 3. Direct that the parties provide a copy of these orders to Mr Peter Doughman. ********** 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 August 2019