Rawson v National Jet Systems Pty Ltd & Ors [2005] ACTSC 129 (9 December 2005)

Last Updated: 7 February 2006

SUSAN RAWSON v NATIONAL JET SYSTEMS PTY LTD & ORS

[2005] ACTSC 129 (9 December 2005)

PROCEDURE - non-party production - client legal privilege - imputed waiver.

Evidence Act 1995, s118, s122

Supreme Court Rules 1937, O34, O34B

Rawson v National Jet Systems Pty Ltd [2005] ACTSC 101 (13 October 2005)

Attorney General for the Northern Territory v Maurice (1986) 161 CLR 475

Goldberg v Ng (1995) 185 CLR 83

Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (1998) 153 ALR 393

Mann v Carnell (1999) 201 CLR 1

Esso Australia Resources Limited v Commissioner of Taxation (1999) 201 CLR 49

Bennett v Chief Executive Officer, Australian Customs Service (2004) 210 ALR 220

No. SC 509 of 2001

Judge: Master Harper

Supreme Court of the ACT

Date: 9 December 2005

IN THE SUPREME COURT OF THE )

) No. SC 509 of 2001

AUSTRALIAN CAPITAL TERRITORY )

BETWEEN: SUSAN RAWSON

Plaintiff

AND: NATIONAL JET SYSTEMS PTY LTD

First Defendant

AND: BAE SYSTEMS PLC

Second Defendant

AND: BAE SYSTEMS AUSTRALIA LIMITED

Third Defendant

ORDER

Judge: Master Harper

Date: 9 December 2005

Place: Canberra

THE COURT ORDERS THAT:

1. Stacks Goudkamp within fourteen days produce to the solicitors for the second defendant all documents in their possession or control, including documents produced to them by Maurice Blackburn Cashman, referred to directly or indirectly in paragraphs 210, 217, 219, 228, 237, 238 and 240 of the affidavit of the plaintiff affirmed on 20 May 2005.

2. The plaintiff's solicitors retain the documents produced by Maurice Blackburn Cashman until further order.

3. All parties and all respondents to notices for non-party production have liberty to apply on two days' notice.

4. The costs of the application be costs in the cause.1. This is an application by a defendant for production of documents for inspection. It raises issues of waiver of client legal privilege which would normally arise during the course of discovery between the parties. In the present case, the solicitors for the second defendant have chosen to file and serve notices for non-party production upon the plaintiff's present solicitors and three other firms who earlier acted for her in relation to the subject matter of the present action. One of those firms, Maurice Blackburn Cashman, has, in accordance with the Rules, produced documents to the plaintiff's solicitors. The plaintiff now claims privilege in respect of both the documents produced by Maurice Blackburn Cashman and the documents sought to be produced by her present solicitors, Stacks Goudkamp. The other firms served with notices have not produced documents and no orders are sought against them in the present application.

2. The action is one in which the plaintiff claims damages for personal injury in somewhat unusual circumstances. The plaintiff was employed between September 1994 and July 1997 by the first defendant as a pilot. She flew the same aeroplane, which was based at Canberra Airport and regularly flew over New South Wales air space to destinations in Queensland. The second defendant was the manufacturer of the aircraft. The plaintiff's case is that toxic fumes were permitted to enter the aircraft cabin during flight, causing her physical injury. Although the action was commenced in 2001, the pleadings are not yet sufficiently advanced for the issues to be defined with precision. In August 2005, Stone J refused an application by the plaintiff to file an amended statement of claim in the form of a draft before the Court, but granted leave to the plaintiff to re-plead the original statement of claim. A draft amended statement of claim has been filed, followed by objections which have yet to be determined. My brief summary of the nature of the action should be seen with that background.

3. There is likely to be an issue to be determined as to where any breach by the defendants of any duty of care to the plaintiff took place. During each flight, it seems that the plaintiff flew the aircraft through the air space of the Australian Capital Territory and the States of New South Wales and Queensland. Stone J referred in her reasons for decision to a degree of ambiguity as to the nature of the plaintiff's claims having regard to the issue of jurisdiction. Her Honour observed that a claim involving the operation of aircraft in multiple jurisdictions would seem to give rise to questions as to the place of the tort: Rawson v National Jet Systems Pty Ltd [2005] ACTSC 101 (13 October 2005, unreported). One significant factor is that the limitation periods differ. The period applicable to the plaintiff's claim in this Territory is six years; in both New South Wales and Queensland it is three years. This action was commenced on 1 August 2001, so that a claim for any breach in the ACT prior to 1 August 1995 would be barred. As the plaintiff ceased flying with the first defendant in July 1997, any claim for a breach in New South Wales or Queensland would already have been statute-barred prior to the commencement of proceedings.

4. Cognisant of these difficulties, the plaintiff's solicitors made application by notice of motion in June 2005 for extensions of time, and for a declaration that the law of this Territory is applicable to the whole of the plaintiff's claim. Although the application has been before the Court on a few occasions, it has not yet been dealt with and no date has been fixed for it to be heard.

5. The plaintiff affirmed a 62-page affidavit in support of the application. It is in this affidavit that the second defendant argues that she has waived privilege in respect of the documents sought in the notices for production. Threatened with the present application, the plaintiff's solicitors wrote on 18 October 2005 to the solicitors for the second defendant in the following terms:

Please be advised that we withdraw the affidavit of Susan Michaelis (formerly Rawson) sworn 20 May 2005. Should our motion filed 13 May 2005 proceed, we will provide a further affidavit in support on or before 1 November 2005.

No substitute affidavit has yet been filed, and no formal steps have been taken to have the plaintiff's affidavit removed from the Court file. Counsel for the plaintiff submits that the affidavit has never been read or relied upon, and that his instructions are that it will never be relied upon. He offered an undertaking to that effect if required.

6. The notices for non-party production required the respondents to produce the following:

All documents, records, file notes or other material relating to advice given to Susan Rawson nee Michaelis, prior to her affidavit dated 20 May 2005, from her former solicitors relating to any claim she may have, or she [sic] thought to have, against National Jet Systems Pty Limited and/or BAE Systems PLC and/or BAE Systems Australia Limited.

7. There is no real argument that in the normal course such documents would be protected by client legal privilege. Such documents would generally be inadmissible by virtue of section 118 of the Evidence Act 1995, which is in the following terms:

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 the disclosure of:

(a) a confidential communication made between the client and a lawyer; o

(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 or a lawyer;

for the dominant purpose of the lawyer, or one or more of the lawyers, providing legal advice to the client.

8. Non-party production is governed by Order 34B. The relevant rule for the present application is rule 7:

7 Privilege or objection

(1) If the respondent to a notice for non-party production or any other party to the action -

(a) claims that a document specified in the notice is privileged from production; or

(b) otherwise objects to its production;

the respondent need not produce the document and the applicant for the notice, the respondent or that other party may apply to the court for a determination in relation to the claim or objection.

(2) If the respondent to a notice for non-party production fails to produce a document specified in the notice, the applicant for the notice may apply to the court for a determination in relation to the failure.

(3) On an application under subrule (1) or (2), the court may make such orders as the court thinks fit.

9. Order 34B does not include any guidance as to privilege, unlike Order 34 (Discovery) which contains detailed definitions of "document", "discoverable document" and "privileged from production". As to the last, Order 34 Rule 2 relevantly provides:

2 Meaning of privileged from production for O34

For this order, a document is privileged from production only if -

a) it is a document of which evidence could not be adduced, or could not be adduced over the objection of a person, because of the Commonwealth Evidence Act, part 3.10 (Privileges), other than section 128 or section 130; ...

Section 118 of the Evidence Act is included within Part 3.10.

10. Order 34B was introduced in 1997 and has been little amended since. Order 34 was completely re-written in 2003. It does not seem to me that the Rules should be interpreted so as to impose any different test for client legal privilege in the case of non-party production then applies in relation to discovery. Thus, although section 118 of the Evidence Act applies in its terms only to admissibility of evidence, it seems to me that I should adopt that section as correctly setting out the test of privilege for non-party production. Neither counsel submits otherwise.

11. Equally, it seems to me that the test for waiver of client legal privilege for the purpose of non-party discovery is that set out in section 122 of the Evidence Act which permits "the adducing of evidence if a client or party has knowingly and voluntarily disclosed to another person the substance of the evidence" (subs 2) or where "the substance of the evidence has been disclosed with the express or implied consent of the client or party to another person ..." (subs 4).

12. The question for determination on the present application is whether the plaintiff should be taken to have knowingly and voluntarily disclosed the substance of advice given to her by her solicitors, or alternatively, whether the substance of the advice has been disclosed with her express or implied consent to another person. Consideration of this question requires me to set out the paragraphs in which the plaintiff is said to have, by implication, waived her client legal privilege in relation to certain advice:

203 As I had not been able to get back to work within a year, in June 1998, I consulted a firm of solicitors in Melbourne by the name of Slater & Gordon about what rights I might have. I chose that firm because I understood that my health problems were not straightforward and Slater & Gordon handled complex claims such as mine.

...

210 I was informed by Slater & Gordon that I may have entitlements to workers' compensation payments but my claim involved complex issues of fact and law, especially in connecting my illness with my employment, and that it would be necessary for strong medical evidence to be obtained before any such claim could be proceeded with.

...

212 In June 1999, Slater & Gordon obtained reports from both Professor Wakefield and Professor Phoon dated 2 June 1999 and 15 September 1999 respectively which were addressed to Slater & Gordon and which dealt with the issue of the connection between my employment and my condition and the permanency of my problems. Exhibited herewith and marked SJM-32 and SJM-33 are true copies of the said reports dated 2 June 1999 and 15 September 1999.

...

217 I discussed this view with Slater & Gordon but they seemed focused on my workers' compensation rights. As such, I decided to change solicitors. Up until this time, I was not aware from my own knowledge, nor had Slater & Gordon told me, that there was any time limit in relation to me making either a workers' compensation claim or a negligence claim.

218 In early October 1999, I consulted with Niall Connolly at Maurice Blackburn Cashman and instructed him to take over my file and to bring a negligence claim against my employer. That firm took my file over on a conditional basis as well.

219 Niall Connolly advised me that I had six years from the date I ceased work to bring a claim in the ACT.

220 At that time, the Senate Inquiry was under way and Niall Connolly insisted that the decision to commence proceedings for negligence be put off until the Senate Committee released its report, given the complexities of the issues in any negligence claim I might bring. These complexities were explained to me as including:

(a) Whether fumes did enter the aircraft air system?

(b) If so, from what source or sources?

(c) Whether such fumes were harmful?

(d) Whether NJS or the manufacturer knew or ought to have known that the fumes were entering the aircraft air system?

(e) If so, whether NJS or the manufacturer knew or ought to have known the source of the fumes that were entering the aircraft air system?

(f) Whether NJS or the manufacturer knew or ought to have known that the fumes entering the aircraft air system were harmful?

(g) By what mechanism were the fumes harmful to humans?

(h) What damage the fumes caused to humans, including me?

221 Niall explained to me that if a negligence case was to be run, I would need to establish the facts that addressed each of the above issues. At that time, I believed that there was evidence to support those facts but my solicitor wanted to await the outcome of the Senate Inquiry.

...

224 At that time, I was not aware from my own knowledge, nor had anyone from Maurice Blackburn Cashman told me that there was any time limit in relation to me making either a workers' compensation claim or a negligence claim other than within six years of the date I ceased work.

...

228 I consulted with Niall Connolly to discuss commencing proceedings for negligence against both my employer and the manufacturer of the aircraft. He told me that the above facts amounted to facts constituting a breach of duty of care and thus could give rise to a claim for damages at common law. But he recommended that I wait until the Government had had the opportunity to respond to the Senate's findings.

229 I again accepted that course of action. At that time, I was not aware from my own knowledge, nor had anyone at Maurice Blackburn Cashman told me, that there was any time limit in relation to me making either a workers' compensation claim or a negligence claim other than within six years of the date I ceased work.

...

232 At that time, I was not aware from my own knowledge, nor had anyone at Maurice Blackburn Cashman told me, that there was any time limit in relation to me making either a workers' compensation claim or a negligence claim other than six years from the date I ceased work.

...

237 After receiving my file, my current solicitors pointed out to me in early May 2005 that there was a complex legal argument in relation to the time limits sought to be imposed by the defendants in their motions as it was being alleged that my claim was governed by the laws of the ACT, NSW and Queensland, the last two of which had three year time limits which would mean that if either the law of NSW or Queensland was found to apply to any part of my claim, the time limit for commencing proceedings had expired before the proceedings were commenced.

238 In addition, I was advised that the time limit in the ACT was six years from the date of injury and that as each fume event might be seen as a separate injury by the court on one interpretation of the law rather then the time starting when I was forced to stop flying by my condition, I could be restricted to recovering damages for the period between August 1995 and July 1997 if the law of the ACT was held to apply to my claim or any part of it.

239 I had not previously been informed of either of those effects by my former solicitors and I had in fact been acting under the misapprehension that the motions related only to some legal arguments about pleadings.

240 My solicitors recommended that it would be in my best interest to file a motion seeking a declaration that the applicable law for my claim was the law of the ACT and requesting an extension of the relevant limitation periods to the time I commenced proceedings and I instructed them to do so.

13. I was referred by counsel to a number of authorities, from which I shall endeavour to set out the applicable principles of law. In Attorney General for the Northern Territory v Maurice (1986) 161 CLR 475, the High Court, dealing with a pre-Mabo Aboriginal land claim, held that privilege had not been waived in source materials which had been used in preparing a claims book, by filing the book and providing copies to the other parties. In such a case, where there had been no intentional waiver of privilege, the test was whether it would be unfair or misleading to allow a party to refer to or use material while maintaining privilege from production in respect of it. In Goldberg v Ng (1995) 185 CLR 83, the majority said that, in considering whether there had been an imputed waiver of legal professional privilege, the governing consideration was whether fairness required that the privilege should cease, irrespective of the intention of the holder of the privilege. In that case, a solicitor was found to have unintentionally waived privilege by providing a statement to the NSW Law Society in response to a complaint about his conduct, so that opposing parties in civil litigation against the solicitor were entitled to production of those documents by the Society.

14. Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (1998) 153 ALR 393 is a decision of a single judge of the Federal Court of Australia as to implied waiver in the context of proceedings for civil penalties under the Trade Practices Act 1974. In the course of pressing its claim for privilege in respect of certain documents, an officer of the ACCC swore an affidavit annexing documents, which were subsequently tendered in evidence. The ACCC argued that the documents had been disclosed for the limited purpose of supporting the claim for privilege in respect of other documents. Goldberg J took the view that the documents had not been put into evidence pursuant to any coercive power of the Court. They had not been tendered on any limited or restricted basis. His Honour held that privilege had been waived by implication in relation to a number of the documents.

15. On 21 December 1999 the High Court handed down two significant decisions on privilege and waiver: Mann v Carnell (1999) 201 CLR 1 and Esso Australia Resources Limited v Commissioner of Taxation (1999) 201 CLR 49. In Mann, the Court held that the operation of sections 118 and 122 of the Evidence Act was confined to the adducing of evidence in the course of a hearing in a court, and that the law applicable to discovery could not be found by derivation in those provisions. It is common ground that notwithstanding that statement of the law, there is no relevant difference in this case between the test for admissibility in a court hearing and the test applicable in discovery or non-party production.

16. The majority in Mann went on to explain that what brings about a waiver of legal professional privilege is inconsistency between the conduct of the person entitled to the benefit of confidentiality of communication between lawyer and client, and maintenance of the confidentiality.

17. In the second case, Esso v Commissioner of Taxation, the Court by majority held that the common law test for legal professional privilege in relation to documents is the dominant purpose test rather then the sole purpose test, and that the test applies to discovery as well as to admissibility.

18. Finally, the Federal Court held in Bennett v Chief Executive Officer, Australian Customs Service (2004) 210 ALR 220 that voluntary disclosure of the gist or conclusion of legal advice in the circumstances of the case amounted to waiver in respect of the whole of the advice including the reasons for the conclusion. In the words of Gyles J at 239:

Each of the tribunal and the primary judge correctly identified the decision in Mann v Carnell as providing appropriate guidance as to the law to be applied. However, in my respectful opinion, the test has been misunderstood at least in part. The test looks to inconsistency between the disclosure that has made by the client on the one hand and the purpose of confidentiality that underpins legal professional privilege on the other. It is not a matter simply of applying general notions of fairness as assessed by the individual judge. The authorities......... show that it is well established that for a client to deploy the substance or effect of legal advice for forensic or commercial purposes is inconsistent with the maintenance of the confidentiality that attracts legal professional privilege.

19. In Bennett, the Australian Government Solicitor, acting for the respondent, had included in a letter a statement setting out the effect of advice the AGS had given to Customs. The letter included a proposal for settlement of the litigation. The statement of the advice was clearly included for what Gyles J described as a forensic purpose.

20. Having set out the principles emerging from the authorities, I proceed to deal with their application to the facts presently before the Court. Firstly, I shall deal with the argument on behalf of the plaintiff that her affidavit has not been read in support of the application in relation to which it was filed, and is no longer relied upon. Assuming for a moment that the affidavit contained material which on a proper construction resulted in a waiver of client legal privilege, it seems to me that once the affidavit was affirmed, filed and served, the privilege had been waived, and that it was thereafter too late to seek to retract it. Counsel for the plaintiff has not been able to direct me to any decided case which would support his submission that the waiver does not take effect until the affidavit is formally read, or that a waiver of privilege once made can be retracted.

21. Further, it seems to me that once client legal privilege is waived for the purpose of a particular application, it is waived for all purposes. Thus, a party cannot argue that any waiver which flows from the plaintiff's affidavit should be limited or restricted to the issue of the extension of the limitation period or of the law properly applicable to the claim. If the plaintiff has waived privilege in her affidavit, then she has, it seems to me, waived it for all purposes, including the purposes of the substantive action.

22. I proceed to examine the paragraphs of the affidavit said to result in the loss of privilege. Paragraph 203 says nothing about any advice given to the plaintiff by Slater & Gordon. Paragraph 210 sets out some advice and would at least waive privilege in any correspondence between Slater & Gordon and the plaintiff in which that advice is set out, and probably any internal record of a conference with the plaintiff in the course of which the advice was given. It would be necessary for me to see the documents in order to decide whether the waiver extended any further.

23. Paragraph 212 refers to annexed expert reports which have already been disclosed. It does not seem to me that that paragraph discloses anything more, and in particular anything in the nature of advice by Slater & Gordon.

24. Paragraph 217 probably waived privilege in respect of any file note as to the plaintiff's discussion or discussions referred to.

25. Paragraph 218 does not refer to any advice and hence does not give rise to any waiver.

26. Paragraph 219 in my view waives privilege in any correspondence between the plaintiff and Mr Connolly of Maurice Blackburn Cashman, and also any files note relating to the advice referred to. Likewise paragraphs 220 and 221.

27. Paragraph 224 is expressed in the negative and does not, it seems to me, give rise to a waiver in respect of all advice, or indeed any advice, given to the plaintiff by Maurice Blackburn Cashman.

28. Paragraph 228, it seems to me, waives privilege in respect of any file note of the consultation with Mr Connolly referred to.

29. Paragraphs 229 and 232 are in the same category as 224 and give rise to no waiver for the same reason.

30. Paragraph 237 in my view waives privilege in respect of any correspondence or file note referring to the advice described, as do paragraphs 238 and 240. Paragraph 239 is in the same category as paragraphs 224, 229 and 232.

31. I am not satisfied that the cumulative effect of the paragraphs or of the entire affidavit is to waive client legal privilege beyond the issues I have mentioned in relation to the specific paragraphs, and specifically I find that privilege has not been waived generally in relation to "all documents, records, file notes or other material relating to advice given to (the plaintiff) prior to her affidavit dated 20 May 2005 relating to any claim" against the defendants.

32. Although the notice directed to Slater & Gordon is not pursued, it seems to me likely that the relevant portion of Slater & Gordon's file was delivered by them to Maurice Blackburn Cashman, so that any relevant Slater & Gordon material is likely to be with the Maurice Blackburn Cashman file. This being so, all of the material to be produced will now be in the possession of the plaintiff's present solicitors Stacks Goudkamp. They should extract any documentation which falls within the categories I have identified as discoverable, and deliver such documentation to the solicitors for the second defendant. As the material to be produced is in such a small compass, it seems to me that fourteen days would be an adequate period to identify and produce it. In case there is an appeal or further argument, the plaintiff's solicitors should retain the Maurice Blackburn Cashman documents until further order. I grant liberty to apply on two day's notice.

33. The second defendant has succeeded on the application but only to a limited degree. Similarly, the plaintiff has had some success but has failed in relation to at least one major argument mounted on her behalf. It seems to me that the interests of justice will best be served by ordering that the costs of the application be costs in the cause, and by making no order about the costs of the notices for non-party production.

I certify that the preceding thirty-three (33) numbered paragraphs are

a true copy of the Reasons for Judgment herein of the Master.

Associate:

Date: 9 December 2005

Counsel for the plaintiff: Mr S Hausfeld

Solicitor for the plaintiff: Stacks with Sneddon Hall & Gallop

Counsel for the second defendant: Mr I J Nicol

Solicitor for the second defendant: Williams Love & Nicol

Date of hearing: 28 October 2005

Date of judgment: 9 December 2005