Hills v Raunio, Nrma Insurance Ltd & Silvicultural Services Australia Pty Ltd t/as Newman & Associates [2001] ACTSC 63 (28 June 2001)

Last Updated: 29 January 2002

JAMES HILLS v SAM RAUNIO, NRMA INSURANCE LIMITED and SILVICULTURAL SERVICES AUSTRALIA PTY LTD t/as R L NEWMAN & ASSOCIATES [2001] ACTSC 63 (28 June 2001)

CATCHWORDS

APPEAL - evidence - legal professional privilege - when legal professional privilege attaches - waiver of written statements - imputed waiver in respect of file notes.

Supreme Court Act 1933 (ACT), s 9

Supreme Court Rules, O 61A r 5

Evidence Act 1995 (Cth), s 122, s 126

Trade Practices Commission v Sterling [1979] FCA 33; (1979) 36 FLR 244

Australian Competition and Consumer Commissioner v Australian Safeway Stores Pty Limited (1998) 81 FCR 526

Nickmar Pty Ltd & Anor v Preservatrice Skandia Insurance Ltd (1985) 3 NSWLR 44

Southern Equities Corporation Ltd & Ors v WA Government Holdings Ltd & Ors (1993) 10 WAR 1

Health & Life Care Ltd v Price Waterhouse & Ors [1997] SASC 6306; (1997) 69 SASR 362

Commissioner, Australian Federal Police v Propend Finance Pty Ltd [1997] HCA 3; (1997) 71 ALJR 327

Grant v Downs [1976] HCA 63; (1976) 135 CLR 674

Esso Australia Resources Limited v Federal Commissioner of Taxation [1999] HCA 67; (1999) 168 ALR 123 Mann v Carnell [1999] HCA 66; (1999) 168 ALR 86

National Employers' Mutual General Insurance Association Limited & Anor v Waird & Anor [1979] HCA 11; (1979) 141 CLR 648

Attorney-General (NT) v Maurice & Ors [1986] HCA 80; (1986) 161 CLR 475

Goldberg & Anor v Ng & Ors [1995] HCA 39; (1996) 185 CLR 83

General Accident Corporation v Tanter [1984] 1 WLR 100

Sevic v Roarty [1998] NSWSC 462; (1998) 44 NSWLR 287

Hoad v Nationwide News Pty Ltd (1998) 19 WAR 468

Cross on Evidence, Australian Edition [25015]

ON APPEAL FROM THE MASTER

No. SC 751 of 1996

Judge: Gray J

Supreme Court of the ACT

Date: 28 June 2001

IN THE SUPREME COURT OF THE )

) No. SC 751 of 1996

AUSTRALIAN CAPITAL TERRITORY )

ON APPEAL FROM THE MASTER

BETWEEN: JAMES HILLS

Plaintiff

AND: SAM RAUNIO

First Defendant

AND: NRMA INSURANCE LIMITED

Second Defendant

AND: SILVICULTURAL SERVICES AUSTRALIA PTY LTD t/as R L NEWMAN & ASSOCIATES

Third Defendant

ORDER

Judge: Gray J

Date: 28 June 2001

Place: Canberra

THE COURT ORDERS THAT:

1. The plaintiff's claim of privilege in respect of the file notes be upheld.

2. The appeal be upheld.

3. The defendants pay the plaintiff's costs of the appeal and the hearing before the Master.

1. This is an appeal from an interlocutory judgment of the Master made pursuant to s 9(2)(a) of the Supreme Court Act 1933 (ACT) and instituted in accordance with Supreme Court Rules O 61A r 5.

2. The judgment was given on a motion filed on 7 November 2000 whereby the first and second defendants (the respondents) sought documents comprising certain letters and file notes from the plaintiff (the appellant) concerning two signed statements that the plaintiff's solicitors had obtained from the first defendant.

3. The proceedings in this matter were instituted on 5 September 1996. The plaintiff was seriously injured in a motor cycle accident on 9 June 1995 when the motor cycle that he was riding collided with a fence post. The first defendant was the owner of the motor cycle and the allegations made against him concern the condition of the motor bike and his failure to warn.

4. On 27 and 30 November 1995, the first defendant spoke to Colquhoun Murphy, the plaintiff's solicitors, by telephone. A file note was made of those conversations and a statement prepared which the first defendant signed. On 2 May 1996 and 21 June 1996 there were two more telephone attendances in respect of which file notes were made. A further statement was prepared and signed by the first defendant.

5. After the proceedings were instituted, the signed statements were subsequently provided to the third party insurer (the second defendant) "in exchange for" their agreement to accept service on the first defendant. The matter before the Master concerned the plaintiff's objection to make available the file notes of the telephone conversations between the plaintiff's solicitors and the first defendant. The objection was made on the basis of a claim of legal professional privilege in respect of them.

6. The Master granted the relief sought on the notice of motion. The Master gave oral reasons in which he stated that he was satisfied that the signed statements would have been subject to legal professional privilege, but that privilege had been waived. He was also satisfied that:

"... the material on [the] file notes being a recording by the solicitor with the conduct of the matter both in handwritten form and later in typed transcript form, would also have been subject properly to a claim for legal professional privilege."

His reasons for the order are encapsulated in the following passage of the transcript:

"[T]here was a waiver in relation to the statements and that it is necessary in order to understand the statement fairly to have recourse to the earlier material.

I'm therefore satisfied that there is in effect an implied waiver when the statements were provided, that that waiver extends to the preparatory material, being the file notes and transcript of file notes and I therefore rule that the privilege which did attach to those file notes and transcript of file notes has been waived and the material is therefore to be produced."

7. The Master's reasons reject a submission made on behalf of the first and second defendants that documents which they sought were communications passing between a third party (the first defendant) and the plaintiff's solicitors and would only attract the privilege if they were made or prepared when litigation was anticipated. The category into which the documents fell was that identified by Lockhart J in Trade Practices Commission v Sterling [1979] FCA 33; (1979) 36 FLR 244 at 246:

"Communications and documents passing between the party's solicitor and a third party if they are made or prepared when litigation is anticipated or commenced, for the purposes of the litigation, with a view to obtaining advice as to it or evidence to be used in it or information which may result in the obtaining of such evidence. See Wheeler v Le Marchant (1881) 17 Ch D 675; Laurenson v Wellington City Corporation [1927] NZLR 510, and O'Sullivan v Morton [1911] VLR 70."

8. The first and second defendants argued that the question of whether litigation is contemplated on the occasion of a communication with a third party is an objective one citing Goldberg J's decision in Australian Competition and Consumer Commissioner v Australian Safeway Stores Pty Limited (1998) 81 FCR 526 at 558. It was said that the plaintiff had failed to make out this requirement.

9. I understood Mr Morris QC, for the first and second defendants, to be submitting that discovery had not elicited this material and it was a compelling circumstantial fact that the documents had not been brought into being for the purpose of litigation. I cannot say that was so. The affidavit of discovery claimed legal professional privilege in respect of (inter alia) "statements of witnesses of various dates" and "internal file notes and memoranda of Colquhoun Murphy". Those descriptions are sufficient to encompass the documents the subject of this application.

10. I agree that the statement of the solicitor now handling the plaintiff's file that, at the relevant time, proceedings were anticipated is not of itself determinative of this question. Nor did the Master regard it as so. I have regard to the consideration that Goldberg J gave in ACCC v Australian Safeway Stores Pty Limited (supra) to what was required to satisfy this objective criterion. He said (at 559):

"Whether legal proceedings are reasonably anticipated requires a consideration of the existing state of facts taken in conjunction with the subject-matter which gives rise to the context in which the document comes into existence or the communication is made. ... Where the legal proceedings are anticipated one needs more than speculation as to the possibility of such proceedings; one needs a probability or likelihood that such proceedings will commence. It is putting it too highly, in my view to say that a decision must have been made by the moving party or authority that such proceedings will be commenced. It is sufficient in my view, that the moving party or authority has made a decision, for example, that subject to being satisfied as to the strength of the case, proceedings be issued or that, short of such decision, it can be reasonably anticipated on the facts as known, that legal proceedings are likely. The concept of anticipated proceedings involves the notion that there is a reasonable probability or likelihood that such proceedings will be commenced - not that they will be but rather that more probably than not they will be."

11. Particularly having regard to the subject matter (the claim for personal injury) and the defendant's potential involvement in the plaintiff's accident, I have no difficulty in concluding that the solicitors acting in this matter were receiving a communication because litigation was contemplated and also that their advice was being sought by the plaintiff in respect of the matters in respect of which the communication was made. Although it would have been preferable for the plaintiff to have provided direct evidence of that state of affairs, a consideration of all the circumstances does not leave open a reasonable conclusion that this was not the position (cf Nickmar Pty Ltd & Anor v Preservatrice Skandia Insurance Ltd (1985) 3 NSWLR 44 at 55 and 56). See, too, Southern Equities Corporation Ltd & Ors v WA Government Holdings Ltd & Ors (1993) 10 WAR 1 at 4. I also add that the letter accompanying the first statement sent to the first defendant for signature referred specifically to the establishment of negligence on the part of the plaintiff and an award being made in the plaintiff's favour. The recording of a file note and the preparation of a statement on the basis of information provided by a person who had to be considered as the prospective defendant for any proceedings which might ensue in respect of the plaintiff's injury, could only have been in anticipation of proceedings.

12. It follows that the Master could be satisfied that, whilst the communication constituted by the telephone conversations themselves was known to the first defendant, its incidents, namely the file notes and any subsequently written statements derived from them, were capable of attracting a claim for privilege.

13. In this respect, I regard what Doyle CJ said in Health & Life Care Ltd v Price Waterhouse & Ors [1997] SASC 6306; (1997) 69 SASR 362 as pertinent. He said, at 364, after referring to the judgments of members of the High Court in Commissioner, Australian Federal Police v Propend Finance Pty Ltd [1997] HCA 3; (1997) 188 CLR 501 at 507-508, per Brennan CJ; (at 515) per Dawson J; (at 543) per Gaudron J; (at 5551-552) per McHugh J; (at 568) per Gummow J and (at 585) per Kirby J:

"It also appears from those portions of the judgments just referred to that the subject matter of the privilege is a communication. Or, to be a little more precise, a communication of information. Confusion can arise if one loses sight of this point and focuses attention upon a document constituting or recording a communication, when a document is in question, rather than upon the communication contained within and made by the document."

14. On circumstances put before him, the Master could properly determine that the signed statements and the file notes were subject to a claim for privilege. Prepared, as they were, by the plaintiff's solicitors, they record a communication relevant to the contemplated litigation and assist in the advice to be given in respect of it. Those communications are independent of the actual conversation that took place between the solicitor and the first defendant where it is unnecessary to determine whether the conversation occurred in a situation of confidentiality and where it is unnecessary to determine whether it may or may not have attracted a claim for privilege.

15. The Master inspected the file notes. Although this course is open, it is done so in order to establish that the documents for which the claim is made are privileged (Grant v Downs [1976] HCA 63; (1976) 135 CLR 674 at 689). In the present case, both the nature of the documents and the circumstances in which they were made sufficiently establish the existence of the privilege. I do not consider it necessary for me to inspect them as I am of the view that, on the objective facts, the documents attracted the claim and the Master was not in error in his conclusions as to the existence of the privilege. He could have been so satisfied without inspecting the documents.

16. The real issue, and the true contest between the parties, is whether the plaintiff, by waiving privilege in respect of the two statements, has waived privilege in respect of the file notes.

17. The Master was of the view that the waiver implicit in the plaintiff providing the signed statements of the first defendant extended to what he regarded as the preparatory material, namely the file notes.

18. Having regard to the High Court decisions in Esso Australia Resources Limited v Federal Commissioner of Taxation [1999] HCA 67; (1999) 168 ALR 123 and Mann v Carnell [1999] HCA 66; (1999) 168 ALR 86, the parties were agreed, both before the Master and before me, that the issue fell to be determined in light of the established common law tests relating to waiver of privilege. The extent to which those principles might affect or be relevant to s 122 and s 126 of the Evidence Act 1995 (Cth) was not addressed by the parties, nor was it suggested that the applicability of those provisions, at the stage when evidence was being adduced, should affect the consideration of the issue at this stage.

19. Waiver occurs where a party entitled to the privilege performs an act which is inconsistent with the confidence that the privilege protects (Mann v Carnell (supra)). In this case written statements, prepared presumably by reference to the file notes, were disclosed. The disclosure of the written statements is not necessarily inconsistent with the maintenance of the confidence in the file notes which were kept both for the purpose of giving advice to the client and made in respect of the contemplated litigation. It is that purpose which attracts the privilege (National Employers' Mutual General Insurance Association Limited & Anor v Waird & Anor [1979] HCA 11; (1979) 141 CLR 648 at 654).

20. The preparation of the written statements and their sending to the defendant may be for the same purpose but it is a separate privileged communication. Privilege, having been intentionally waived in respect of those statements, does not automatically give rise to the question of whether waiver should be imputed to the file notes used in the preparation of those statements. It is put that the answer to the question of imputed waiver depends upon whether it would be "unfair or misleading to allow a party to refer to or use the material and yet assert that that material, or material associated with it, is privileged from production" (see Attorney-General (NT) v Maurice & Ors [1986] HCA 80; (1986) 161 CLR 475 at 481 per Gibbs CJ). Putting that in the context of this case, it is the assertion of the claim for privilege in respect of the file notes that must make it unfair or misleading for the plaintiff to use or refer to the statements.

21. It is the reference to or use of the material that predicates the test of fairness. In Attorney-General (NT) v Maurice (supra), Mason and Brennan JJ referred to implied waiver occurring "when by reason of some conduct on the privilege holder's part, it becomes unfair to maintain the privilege" (at 487). Deane J referred to the use of privileged material:

"... in such a way that it would be unfair for him to assert that legal professional privilege rendered him immune from procedures pursuant to which he would otherwise be compellable to produce or allow access to the material which he has elected to use to his own advantage" (at 493).

Those passages were referred to with apparent approval by Deane, Dawson and Gaudron JJ in Goldberg & Anor v Ng & Ors [1995] HCA 39; (1996) 185 CLR 83 at 96-97. The written statements in this case do not purport, on their face, to represent the file notes or to represent the communications which may have given rise to them. Rather, they put forward an account of the first defendant's involvement with the incident involving the plaintiff and which was sent to him and which he was prepared to sign.

22. The first and second defendants contend that the file notes are akin to source documents. I do not so regard them. They are not referred to in the written statement and, in that regard, put at the highest, they are contemporaneous notes of a conversation made by one of the parties to it. They might be considered source notes if it was the solicitor who was deposing to the conversation. Their relevance only arises if the solicitor is to give evidence of the conversation by reference to those notes. It is put that the question of the waiver extending to those documents depends on the notions of fairness to which I have referred. Although the decision of Hobhouse J in General Accident Corporation v Tanter [1984] 1 WLR 100 is often cited for the proposition that the question of fairness only arises when the otherwise privileged documents are deployed in court, Australian courts have not followed this strict delineation. In Attorney-General (NT) v Maurice, Gibbs CJ observed at 482 and 483:

"In General Accident Corporation v Tanter, Hobhouse J considered that in this passage Mustill J used the words "deploying in court" in a strict sense, as referring to what is in evidence. After carefully reviewing the authorities, Hobhouse J held that it was only where privileged material was adduced in evidence by the party to whom privilege attached that the waiver extended to related material. He said (at 114) that "the underlying principle is one of fairness in the conduct of the trial and does not go further than that". In the United States it appears that so strict a view has not been taken. In United States v Cote (1972) 456 F (2d) 142 it was held that a taxpayer by filing income tax returns waived privilege in the working papers used in preparing the returns. In the United States, also, the principle that there is a waiver if fairness requires it appears to be well accepted: Duplan Corporation v Deering Milliken Inc (1975) 397 F Supp 1146 at pp 1161-1162; Weil v Investment/Indicators, Research and Management Inc (1981) 647 F (2d) 18 at p 24.

If Hobhouse J was correct in saying that there is no waiver of associated material until that material is adduced in evidence it follows in the present case that privilege in the source material has not been waived. In my opinion however the rule is not so inflexible; the question is whether the disclosure or use of material that has been made renders it unfair to uphold the privilege in the associated material, and although the question whether the material that has been disclosed has been used in evidence is relevant, it is not decisive."

See also Sevic v Roarty [1998] NSWSC 462; (1998) 44 NSWLR 287, 297-298 and the authorities there cited (per Scheller JA); Hoad v Nationwide News Pty Ltd (1998) 19 WAR 468; Cross on Evidence, Australian Edition [25015]. I do not confine my consideration as to whether it would be unfair to uphold the privilege simply because it has not yet become an issue in the trial.

23. Nevertheless, in this case, the only use that the plaintiff has made of the otherwise privileged material has been to disclose it in order to encourage the second defendant to accept substituted service on behalf of the first defendant. The applicant's submission as to unfairness was confined to one aspect. It was submitted "if, as is to be reasonably anticipated, the plaintiff intends at the hearing to make use of the two statements then the requirements of fairness dictate that the Applicants be given access to the subject documents being material associated with the two statements". I do not regard "reasonable anticipation" of use by the plaintiff as making it unfair for the privilege being maintained at least in the pre-trial stage. The statements have, at this stage, not been used by the plaintiff in any way that would make it unfair for the first and second defendants to be denied access to the file notes which may have been used in the preparation of those statements. That might not be so if the conversation between the first defendant and the solicitor becomes an issue but that point has not been reached. In Sevic v Roarty (supra) at 297, Scheller JA thought that, in that case, the party had concealed, by reliance on privilege, at least some of the facts upon which an opinion contained in the report in question was formed. That is not the case here. There is no analogy that can be fairly made with an expert's report which relies on facts which are kept from disclosure and a statement prepared in reliance upon but not by reference to the privileged material. I do not see that any question of unfairness arises at this stage.

24. I would uphold the plaintiff's claim of privilege in respect of the file notes. It follows that I would uphold the appeal and refuse to order that the plaintiff produce the file notes. The other documents the subject of the notice of motion, have been produced.

25. The plaintiff should have his costs of this appeal and the hearing before the Master.

I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Justice Gray.

Associate:

Date: 28 June 2001

Counsel for the Plaintiff (Appellant): Mr B Meagher

Solicitor for the Plaintiff (Appellant): Colquhoun Murphy

Counsel for the Defendants (Respondents): Mr L M Morris QC with Mr M A McDonogh

Solicitor for the Defendants (Respondents): Abbott Tout

Date of hearing: 23 February 2001

Date of judgment: 28 June 2001