Actew Corporation Limited v Mihaljevic & Ors [2007] ACTSC 39 (22 June 2007)

Last Updated: 8 May 2008

ACTEW CORPORATION LIMITED v JOHN IVAN MIHALJEVIC & ORS

[2007] ACTSC 39 (22 June 2007)

PRACTICE AND PROCEDURE - discovery of documents - waiver of privilege - whether disclosure of privileged documents inadvertent - whether obvious mistake - whether waiver of summary of advice by employee of party extends to waiver of original letter of advice by external solicitors

PRACTICE AND PROCEDURE - discovery of documents - privilege - whether documents prepared by in-house solicitor who is also a senior managerial executive of a corporation privileged

Court Procedures Rules 2006 (ACT), r 601, r 606

Evidence Act 1995 (Cth), s 117, s 118, s 119, s 122

ACTEW Corporation Ltd v Mihaljevic [2004] ACTSC 59

Sovereign Motor Inns Pty Ltd v Bevillesta Pty Ltd [2000] NSWSC 521

Meltend Pty Ltd v Restoration Clinics of Australia Pty Ltd (1997) 145 ALR 391

Guiness Peat Properties Ltd v Fitzroy Robinson Partnership [1987] 1 WLR 1027

Citicorp Australia Ltd v Cirillo (unreported, Supreme Court of South Australia, Duggan J, 6 July 2000)

LMI Australasia Pty Ltd v Baulderstone Hornibrook Pty Ltd [2000] NSWSC 1066

Secretary, Department of Justice v Osland [2007] VSCA 96

The Commonwealth of Australia v Vance (2005) 158 ACTR 47

R v Shirose (1999) 133 CCC (3d) 257 (Canada)

Lake Cumbeline Pty Ltd v Effem Foods Pty Ltd (1994) 126 ALR 58

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

No. SC 58 of 2004

Judge: Master Harper

Supreme Court of the ACT

Date: 22 June 2007

IN THE SUPREME COURT OF THE )

) No. SC 58 of 2004

AUSTRALIAN CAPITAL TERRITORY )

BETWEEN: ACTEW CORPORATION LIMITED ACN 069 381 960

Plaintiff

AND: JOHN IVAN MIHALJEVIC

First Defendant

AND: STRONACH BUILDING GROUP ACN 066 801 465

Second Defendant

AND: BARRY RIAD STRONACH

Third Defendant

AND: THE AUSTRALIAN CAPITAL TERRITORY

Third Party

ORDER

Judge: Master Harper

Date: 22 June 2007

Place: Canberra

THE COURT ORDERS THAT:

1. The affidavits of Ian Henry Laird Macara affirmed 27 November 2006 and 26 March 2007 and of Christine Plevey sworn 26 March 2007 may be used in determining the application.

2. The plaintiff and the first defendant have liberty to apply on two days notice.

1. The plaintiff brings this application to resolve a dispute with the first defendant about two issues which have arisen in the course of discovery. The first relates to a letter dated 23 October 2001 from Mr Robert Pearce, then Manager, Network Operations (Water), of ActewAGL, to Mr Paul Perkins, then Chief Executive Officer of ACTEW. The letter was listed by the solicitors for the plaintiff in the first part of the plaintiff's list of documents, that is the list of discoverable documents not claimed to be privileged. On the third page of the four-page letter, the author sets out two options available to the plaintiff in the light of legal advice obtained by Mr Ian Macara. Mr Macara is legal counsel and board secretary of ActewAGL, a joint venture between the plaintiff, AGL Energy Limited and Alinta Limited. At all relevant times Mr Macara's name was on the roll of legal practitioners of this court, and he held an unrestricted practising certificate issued by the Law Society of the Australian Capital Territory, for the purposes of which he had undertaken to the Society to practise as a solicitor only in the course of his employment, and on behalf of his employer and its related entities.

2. It is common ground that the summary of the options contained in Mr Pearce's letter disclosed the substance of legal advice provided to the plaintiff by its solicitors through Mr Macara, and that to that extent the letter, or at least the portion of it in question, is privileged within part 3.10 of the Evidence Act 1995.

3. The plaintiff's case is that the letter was disclosed inadvertently. The plaintiff seeks a declaration that the privileged portion of the letter is protected by client legal privilege, and an order that the first defendant deliver up to the plaintiff any copies it has made of the third page of the letter.

4. The first defendant submits that privilege has been waived, and that the effect of the waiver is that the plaintiff is also taken to have waived privilege in respect of the original advice. The plaintiff acknowledges that the advice was contained in a letter dated 8 October 2001 from Minter Ellison to Mr Macara. I have read the Minter Ellison letter but the first defendant and his solicitors and counsel have not.

5. The second dispute relates to a number of internal memoranda, correspondence, file notes and other documents identified in a second affidavit of documents on behalf of the plaintiff, which are said by the plaintiff to be privileged. The privilege is said to arise from Mr Macara's status as a lawyer. The documents are said to be confidential communications between the plaintiff and Mr Macara, or confidential documents prepared by Mr Macara or by other ACTEW staff for communication to him, for the dominant purpose of either legal advice (Evidence Act, s 118) or the present litigation (s 119). The first defendant submits that client legal privilege is not available in relation to the documents in question because Mr Macara was acting not in his capacity as a lawyer, but rather as a managerial executive of the plaintiff.

6. Rule 601 of the Court Procedures Rules 2006 provides that a document is privileged from production if evidence of it could not be adduced over objection because of the Evidence Act. Under r 606 the Court has power to order a party to disclose discoverable documents; to make an order for disclosure, or non-disclosure, by a party of any discoverable document in the party's possession; and to make any other order about disclosure, or non-disclosure, of documents that the Court considers appropriate. The Court may inspect a document to decide whether it ought to be disclosed. Rule 606(6) provides that an affidavit must not be used for an application for an order under the rule unless the Court otherwise orders. The present application has been one where, in my view, it was necessary for affidavit evidence to be adduced, and I propose to make a formal order that the affidavits which were read on the hearing of the application may be used in determining the application.

The action

7. The plaintiff asserts in the amended statement of claim that it is the owner of a sewerage main running through a block of land at Campbell. The plaintiff's case is that early in 2001 the owners of the block contracted with the second and third defendants to build an extension to their house. The plans for the extension did not show or refer to the sewerage main. The extension was built in accordance with the plan. It was built, the plaintiff says, directly over the sewerage main, and so as to encroach on an unregistered easement. The first defendant is a registered building surveyor. The plaintiff alleges that the owners retained him to certify the plans and proposed works under the Building Act 1972. The plaintiff says that the first defendant approved the plans and subsequently certified the work as having been completed pursuant to the plans.

8. When the situation became known to the plaintiff, its senior managerial staff gave consideration to requiring the owners, by notice under the Utilities Act 2000, to remove the extension or to re-site the main. The decision was taken not to proceed along that path: among relevant factors were that the male owner was dying of cancer and that no fault attached to the owners. There was also some concern that the course being considered might lead to adverse publicity for the plaintiff. The decision was taken, instead, for the plaintiff to move the sewer main, and to bring the present action for recovery of the cost of doing so from the surveyor and the builder, for negligence and breach of statutory duty arising under the Building Act. The action is thus for pure economic loss rather than for damage to property, and the claim is something of a novel one. Three years ago I refused an application by the first defendant to strike out the originating application and statement of claim for failing to disclose a cause of action: ACTEW Corporation Ltd v Mihaljevic [2004] ACTSC 59.

The Pearce - Perkins Letter

9. Document 231 is a clean copy of Mr Pearce's letter to Mr Perkins. Document 235 is another copy of it with handwritten notations.

10. It is unnecessary for me to set out the whole of Mr Pearce's letter. The letter is headed "Block 16, Section 63 Campbell - 29 White Street". It commences by informing Mr Perkins that the purpose of the letter is to advise him of two things: firstly, that it is impracticable to relocate the sewer pipe under the boundary fence without strengthening the foundations of the extension and modifying the existing carport; and secondly, that the most practicable alternative is to resume a 2.5-metre-wide easement on the neighbouring property. This will limit the future options for extension to the house on the neighbouring block, effectively transferring to the neighbour the restriction which has previously confronted the owners of block 16. The letter goes on to set out a number of options which have been explored. The author then sets out the portion of the letter that has given rise to this dispute, which reads as follows:

It has now become apparent that legal channels will have to be employed if ActewAGL is to protect its assets, avoid dispute and additional costs in the future. To this end, Ian Macara has taken legal advice to determine the most viable course of action. Options are:

1. Issue a notice to the property owners under s 125 of the Utilities Act to protect the pipe. In this action ActewAGL would require the owner to make the building extension comply with ActewAGL standards. If the owner removes the building extension the case can be closed by simply adjusting the deposited plan to show the precise location of the sewer main. Alternatively the owner may underpin the building structure and then bear the cost for ActewAGL to relocate the sewer to a position ActewAGL would be willing to permit. If action was not taken ActewAGL could undertake it as regards the pipe, but before working on the foundations of the building it is Ian Macara's view that either the agreement of the owners, or a court order, would be required. There is a strong likelihood that ActewAGL would win this case if court action proved necessary. The owners would have the right to join the building certifier and the builder/designer. It is Ian Macara's assessment that one or the other, or both, would be held liable to indemnify the owners.

2. Sue the certifier/builder/designer (together or separately) under tort law for having interfered with an ACTEW asset. In this action ActewAGL would require the court to order that the certifier/builder/designer pay for one of a number of options acceptable to the owner and ActewAGL. Legal opinion suggests that this route would require ActewAGL to prove that the sewer was at high risk of early failure and that ACTEW would be encumbered with additional costs and difficulty in the future. The risks and difficulties are credible, but may be subject to interpretation by a judge who may favour the little certifier/builder/designer rather than the large corporation.

11. Mr Pearce in the letter went on to point out some additional perceived drawbacks to the first option, and concluded by asking that the plaintiff give a direction to ActewAGL as to how to proceed.

12. It is clear from a reading of the contentious passage that it is more than a mere summary of the advice from Minter Ellison. It includes views expressed by Mr Macara. They are expressed as views about the legal position rather than strategic or tactical views put forward by a senior manager. As I have said, I have read Minter Ellison's letter of advice for the purpose of deciding the application. The advice was addressed by Minter Ellison to Mr Macara, who forwarded a copy of the letter of advice to Mr Perkins and Mr Pearce, and to other senior ACTEW and ActewAGL staff, on 10 October 2001. Mr Pearce's letter to Mr Perkins must therefore be seen in the context that Mr Perkins had already read the Minter Ellison letter of advice, and that Mr Pearce was aware of this. The Minter Ellison advice was expressed in a three-page letter. Mr Pearce did not purport to set out or even summarise every aspect of the advice. Rather, he summarised the two options which the solicitors had advised were available.

13. The initial letter of advice was signed by Mr Alan Bradbury, a partner with Minter Ellison. The matter was subsequently assigned to Ms Christine Plevey, held out by Minter Ellison as "special counsel", but actually an employed solicitor with the firm. Ms Plevey is a solicitor of considerable experience in civil litigation. Her carriage of the matter was supervised by Ms Alice McCormick, a Minter Ellison partner who countersigned some of Ms Plevey's correspondence. Ms Plevey prepared the plaintiff's first list of documents during January and February 2006. Her affidavit evidence as to the crucial matter is as follows:

In the course of preparing the list of documents, I inspected the documents identified in the list, including documents numbered 231 and 235 referred to in Part A of that list. Document 231 is the same as document 235 except that document 235 is annotated. However, I did not pick up that the numbered paragraphs on page 3 of each summarised confidential legal advice. If I had done so, I would have included those paragraphs of the documents in Part B of the plaintiff's list of documents dated 10 February 2006.

14. Loss of client legal privilege is governed by s 122 of the Evidence Act. The section effectively provides that the privilege is lost if a client or party has knowingly and voluntarily disclosed the substance of the evidence to another person. "Client" is defined in s 117 to include an agent of the client; this has been held to include a lawyer acting with the authority of the client: Sovereign Motor Inns Pty Ltd v Bevillesta Pty Ltd [2000] NSWSC 521 at [24] per Austin J. I am satisfied that Ms Plevey had general authority from the plaintiff to prepare the list of documents and to decide whether or not to claim privilege in respect of each document required to be listed. She was in a position to make a disclosure for the purpose of s 122, and to waive privilege if the disclosure was knowing and voluntary.

15. Whether or not a disclosure is to be described as knowing and voluntary depends on the facts of the case. In Sovereign v Bevillesta, the dispute related to a letter of advice from the plaintiff's solicitor to the managing director of the plaintiff company, written, as in the present case, some time before the commencement of proceedings. In the course of discovery, a verified list of documents was prepared on behalf of the plaintiff. Part 1 of the list specified numerous individual documents. Part 2 described by category about 370 documents claimed to be privileged. These documents were not individually specified. The first category included correspondence between the plaintiff and its solicitors. The alleged disclosure did not occur in the list of documents itself, but on production for inspection. The solicitor for the defendant attended at the office of the plaintiff's solicitor to inspect the discovered documents, and was given access to various boxes and binders. The documents were not individually numbered, and the solicitor found it difficult to identify the listed documents. The inspection nevertheless took place and the solicitor tagged various documents for copying, including the letter of advice. The tagged documents were photocopied in the office of the plaintiff's solicitor and the copies were provided to the defendant's solicitor, including the letter of advice. There was no covering letter listing the documents supplied, nor was there any further claim to privilege. The copying was found to have been done as a purely administrative task by an employee of the plaintiff's solicitor, and not to have been reviewed by the solicitor before release. The plaintiff's solicitor subsequently said that the letter of advice had been left inadvertently in one of the ring binders produced for inspection. If he had known it was there, he would have removed it. The subsequent copying and release of the letter was simply a continuation of the initial inadvertent mistake.

16. Austin J came to the conclusion that there had been an intention to claim privilege by and on behalf of the plaintiff in respect of the document at all relevant times, and that the intention had not been effectuated due to simple inadvertence. In his Honour's view, the defendant's solicitor, when reading the letter, must have realised that it was a letter of a privileged kind and therefore that it had been made available for inspection by mistake. In those circumstances the plaintiff's solicitor had not knowingly and voluntarily disclosed the letter to the defendant. Privilege had not been lost and the letter was inadmissible.

17. Goldberg J was required to resolve a comparable dispute in Meltend Pty Ltd v Restoration Clinics of Australia Pty Ltd (1997) 145 ALR 391. The document at issue was a letter from a firm of accountants to the respondent. The solicitors for the respondent listed the letter in the first (non-privileged) section of the list of documents, describing it simply by date, sender and receiver. The list was verified, filed and served. An employed solicitor with the applicant's solicitors attended the office of the respondent's solicitors to inspect the documents. She was left to herself in a conference room with several boxes of documents, and spent the better part of a day inspecting them. As she proceeded, she dictated notes. She inspected the letter in question, and dictated a note summarising its contents and commenting on its significance for the purposes of the case. After returning to her own office, she wrote to the respondent's solicitors asking for copies of certain of the documents, including the letter in question. Most of the documents were provided, but the respondent's solicitors declined to provide the letter, saying:

Document 8.017, a copy of which has been requested by you, is privileged. A copy was included in our client's list of documents and the documents which you inspected by mistake. Our clients now claim privilege over this document, which was produced for the sole purpose of these proceedings and to facilitate the provision of legal advice.

18. An employed solicitor in the office of the respondent's solicitors gave affidavit evidence as to how the mistake had been made. He said that the list of documents had initially been compiled by a paralegal. It had been prepared under the solicitor's supervision. He had considered each document described, and settled the list of documents. In particular, he considered whether each document was relevant and whether it was privileged. He said:

In my opinion, the document . . . is privileged. It should not have been discovered. The document probably falls within the heads of privilege claimed in Schedule 2 to the respondent's list of documents . . . . At the time I settled the content of the respondent's list of documents I did not appreciate that document 8.017 was a privileged document. Documents . . . were subsequently inspected . . . . The solicitors for the applicants requested copies of documents . . . . During the course of compiling copied documents in response to that request, I realised that a claim for privilege ought probably to have been made in respect of document 8.017 . . . Including the document . . . was a mistake.

19. Goldberg J accepted that the document had come into existence for the purpose of the proceedings and had been privileged. However, the facts did not compel an inference that the applicant's solicitors must have known or realised that the letter had been included in the open part of the list by mistake. The document on its face was not patently privileged, as, for example, an advice from counsel might be. It emanated from a non-legal source and was directed to a non-legal person. Its contents would not necessarily have made the solicitor conducting the inspection realise that a claim for privilege would arise. His Honour did not accept that the inspecting solicitor had sought to take advantage of an obvious error or mistake. His Honour concluded from the affidavit evidence that the solicitor who had prepared the list of documents had turned his attention to the issue of whether or not the letter was relevant and whether or not it was privileged. The solicitor had determined that it was relevant and that it was not privileged. His intention was accordingly to disclose the contents of the letter. The critical issue was whether an intention had been established on the part of the respondents to waive any privilege attaching to the letter. His Honour noted that privilege could be lost by inadvertence: Guiness Peat Properties Ltd v Fitzroy Robinson Partnership [1987] 1 WLR 1027 at 1045 per Slade LJ.

20. In Guiness Peat, Slade LJ had expressed the general proposition that a party to litigation who sees a particular document referred to in the other side's list, without privilege being claimed, and subsequently inspects the document, is entitled to assume that any privilege which might have been claimed has been waived. The general rule is that once the other party has inspected the document, it is too late for the party claiming privilege to correct its mistake. There are exceptions in the case of fraud and of obvious mistake.

21. Goldberg J in Meltend was satisfied that there had not been an obvious mistake, in the sense of a mistake obvious to the inspecting solicitor. His Honour concluded that there had been a waiver of privilege in relation to the letter. The solicitor who had prepared the list of documents had effectively changed his mind about privilege because he had initially failed to understand the nature of the document when he directed his mind to the issues of relevance and privilege.

22. His Honour went on to say that if he was wrong about express waiver, waiver should be imputed by operation of law. Once documents were disclosed to an opposite party as part of the formal process of discovery and inspection, in circumstances involving no criticism of that party, fairness required that that party be not disadvantaged in the use it could make of the documents. If parties were able to change their minds about the privilege attaching to a document after it had been inspected, the process of discovery had the potential to become unworkable. In the absence of obvious mistake apparent to an inspecting party, or fraud, the appropriate principle to apply was that once inspection had taken place, any privilege attaching to the document should be regarded as waived.

23. I should make reference to two other single-judge decisions of state Supreme Courts. In Citicorp Australia Ltd v Cirillo (unreported, Supreme Court of South Australia, 6 July 2000), Duggan J dismissed an appeal from a Master who had found that there had been no waiver of privilege, despite inspection having taken place, in a letter from two of the plaintiffs (receivers appointed under a debenture trust deed) to another plaintiff (the debenture creditor). The Master had found, and his Honour was satisfied, that the letter was privileged. The question was whether privilege had been waived. Privilege had been claimed in respect of the letter in two earlier affidavits of documents, but not in a third affidavit. The solicitor for the defendant was aware of the earlier claims to privilege. The Master held, and his Honour agreed, that in the circumstances privilege had not been waived. I consider that this is distinguished from the present application because it must have been obvious to the inspecting solicitor that a mistake had been made.

24. In LMI Australasia Pty Ltd v Baulderstone Hornibrook Pty Ltd [2000] NSWSC 1066, Hunter J decided that privilege had not been waived in material included in a CD-ROM. His Honour accepted that the material had been included inadvertently. The mistake had been picked up immediately after production of the CD-ROM to the other side, and before inspection.

25. For the purposes of the present application, the first defendant accepts that the portion of Mr Pearce's letter in dispute was privileged before its disclosure. Both parties accept that part of a letter may be privileged whilst the balance of the letter is not, and that in these circumstances the requirements of discovery can be met by providing a copy of the letter with the privileged portion removed or rendered illegible. Thus the only issue for me to determine is whether the inclusion of the letter in the non-privileged portion of the list of documents, and its subsequent production and inspection, have given rise to a waiver of the privilege.

26. It is clear that Ms Plevey did not make a conscious decision to waive privilege, or to disclose the contentious portion of the letter in the knowledge that it was privileged. I accept that she did not, to use her words, `pick up' that the portion contained a summary of legal advice protected by privilege, and I accept that if she had realised this, she would not have included that portion in the open part of the list of documents. The letter was not one which was on its face obviously privileged. To detect the privileged material would have required a detailed reading of the letter, and it should be remembered that the letter was one of some hundreds of documents Ms Plevey was required to identify and to characterise correctly. Rule 607 allows only 28 days for preparation and filing of a list of documents verified by affidavit. A solicitor working in a busy litigation practice has many current matters, and incessant demands on her time.

27. The other side of the coin is that the letter would not have been seen by the solicitor for the first defendant as obviously containing privileged matter. It would certainly not have been obvious that it had been included by mistake. It is in quite a different category to Goldberg J's example in Meltend of a patently privileged document such as an advice from counsel. One might place in the latter category the solicitor's letter of advice to the client in Sovereign v Bevillesta, and indeed the Minter Ellison letter of advice to Mr Macara which preceded Mr Pearce's letter. This is not a case of a solicitor taking unfair advantage of an obvious mistake by another solicitor.

28. The evidence about Ms Plevey's mental processes in preparing the list of documents seems to me comparable to that of the solicitor in Meltend. Her responsibility was to make a decision about each document, firstly as to whether it was relevant and secondly as to whether it was privileged. I have no doubt that she undertook the task to the best of her ability subject to the pressures of a busy professional practice. If she could have the time over again, no doubt she would wish to spend more time reading and considering the Pearce letter than she did. But she performed her task, making the necessary decisions in the course of doing so, and devoting, I have no doubt, what she saw as a proper amount of time for the task. It should not be overlooked that clients pay for the time spent by their solicitors on the various tasks involved in litigation, and are motivated to keep the expense within reasonable bounds. Indeed, Mr Macara had earlier queried an account from Minter Ellison for the advice prepared by Mr Bradbury, and had successfully negotiated a reduction in the charge. Solicitors do not have the luxury of spending as long as they might like on each task entrusted to them, and must do the best they can in the time available.

29. It seems to me that this Court should adopt the principle stated by Slade LJ in Guiness Peat Properties, and quoted by Goldberg J in Meltend: where solicitors for a party have mistakenly included a document in respect of which privilege could properly have been claimed, the court will ordinarily permit the solicitors to amend the list of documents at any time before inspection; but once inspection has taken place, the general rule is that it is too late to correct the mistake: unless inspection has been procured by fraud, or the inspecting solicitor realises on inspection that the document has been produced only by reason of an obvious mistake.

30. In the present case, it also seems to me relevant that what has been done cannot be undone: the solicitor for the first defendant is aware of the contents of the contentious passage in the Pearce letter. He cannot be expected to put it out of his mind, and in the circumstances it would be impractical and unreasonable to expect him to do so.

31. Accordingly I find that there has been a waiver by the plaintiff of the privilege in the entire letter from Mr Pearce to Mr Perkins of 23 October 2001.

32. Although the plaintiff has not sought a specific declaration about it, I am mindful of the assertion by the solicitors for the first defendant in their letter of 8 May 2006 that the effect of disclosure of the Pearce letter is to waive privilege in the Minter Ellison advice of 8 October 2001. This does not follow as a matter of course, but depends on the individual circumstances of each case: Secretary, Department of Justice v Osland [2007] VSCA 96 per Maxwell P at [49]. The Minter Ellison advice has not been inspected by the first defendant. It would be highly artificial to impute to Ms Plevey, or through her to the plaintiff, an intention to waive privilege in that letter. It is clearly privileged. If it had been inadvertently made available to the solicitors for the first defendant, they would have realised immediately that it was a privileged document, and that its production must be due to a mistake. It is, in other words, in the same position as the letter of advice in Sovereign v Bevillesta. I would, if it became necessary, make a declaration that privilege in that letter had not been waived, and I would refuse any application on behalf of the first defendant for its production.

The Macara documents

33. The other area of dispute between the plaintiff and the first defendant relates to the status of a number of documents in respect of which the plaintiff has claimed privilege. These, with their item numbers in the plaintiff's list of documents, are:

627 - Internal memoranda from Ian Macara, Legal Counsel Actew AGL, to ACTEW and/or ActewAGL executives and/or employees dated 25 October 2000, 10 October 2001, 14 November 2001, 1 February 2005.

631 - Internal draft documents annotated by legal advisors of ActewAGL

632 - Original and copy internal correspondence between in-house legal advisers of ActewAGL and Ian Macara, Legal Counsel ActewAGL

645 - ACTEW file note entitled "White Street Campbell, Outlining Litigation Strategy", undated

34. Mr Macara has affirmed two affidavits for the purpose of the application. He commenced employment with the plaintiff's predecessor, a statutory authority, in 1990, as in-house counsel and commercial adviser. When the plaintiff company was established in 1995 he was appointed secretary and corporate counsel. Upon the establishment of the joint venture between the plaintiff and AGL Limited in 2000, he commenced his current role as legal counsel and board secretary of ActewAGL.

35. In that capacity, he heads the legal and secretariat division of ActewAGL. Its responsibilities include legal, legal compliance, insurance, risk management, secretariat, annual reports and environmental coordination. He is responsible for appointing and instructing external lawyers. He reports to the Chief Executive Officer of ActewAGL. He attends board meetings of ActewAGL, edits minutes of those meetings, and oversees the preparation of board papers and the implementation of board decisions.

36. As legal counsel, he is required to provide legal advice to ActewAGL, to the plaintiff company and to their related entities. He is not subject to direction as to the content of the advice. He estimates that he spends about half his time on providing legal advice.

37. Mr Macara explains in a little more detail the somewhat complex structure of the ACTEW entities. He describes ActewAGL as a joint venture involving two partnerships, ActewAGL Retail and ActewAGL Distribution. ActewAGL Retail is owned equally by the plaintiff and AGL Energy Limited. ActewAGL Distribution is owned equally by the plaintiff and Alinta Limited. Mr Macara is employed by ActewAGL Distribution. I take it from this explanation that ActewAGL is itself a partnership between ActewAGL Retail and ActewAGL Distribution, and is not itself a legal entity. If I have not understood this correctly, it is probably not important insofar as the determination of the present application is concerned.

38. Mr Macara goes on to explain that the plaintiff is the owner of the water and sewerage network in the Australian Capital Territory, and that ActewAGL manages and operates the network pursuant to a contract with the plaintiff. ActewAGL provides services to the plaintiff, including legal services, and the plaintiff has appointed ActewAGL as its agent to exercise its rights under its individual contracts with customers for the provision of water and sewerage services. Before October 2000, the plaintiff had its own in-house legal division, of which Mr Macara, as secretary and corporate counsel, was the head. After October 2000, the plaintiff no longer had its own legal division. The existing division was transferred to ActewAGL, and Mr Macara commenced in his present role. He says that in his capacity as legal counsel of ActewAGL, pursuant to the agreement between ActewAGL and the plaintiff, he provides legal advice to the plaintiff, including advice about the ownership and operation of the water and sewerage network. He has provided legal advice to ActewAGL about the circumstances giving rise to the present litigation since those circumstances came to light in July 2001. He instructed Minter Ellison in October 2001 to provide legal advice to the plaintiff about the problem.

39. With this background, Mr Macara in his affidavit explains the background within which the documents in contention came into being. He deals with fifteen documents. I have had the opportunity to read each of the documents, though counsel for the first defendant has not had that benefit.

40. It is apparent from a reading of the documents, as one would expect from Mr Macara's description of his duties, that some of those duties involve the provision of professional legal services to entities associated with his employment, including the plaintiff; whilst others are better categorised as administrative and managerial functions not principally involving the giving of legal advice or the application of legal training and skills.

41. The principles relating to legal professional privilege in respect of internal communications between an in-house lawyer and other staff of a corporate or similar entity were summarised by the Court of Appeal in The Commonwealth of Australia v Vance (2005) 158 ACTR 47. The Court quoted with approval a passage from a decision of the Supreme Court of Canada, R v Shirose (1999) 133 CCC (3d) 257 at 288-9:

It is, of course, not everything done by a government (or other) lawyer that attracts solicitor-client privilege. While some of what government lawyers do is indistinguishable from the work of private practitioners, they may and frequently do have multiple responsibilities including, for example, participation in various operating committees of their respective departments. Government lawyers who have spent years with a particular client department may be called upon to offer policy advice that has nothing to do with their legal training or expertise, but draws on departmental know-how. Advice given by lawyers on matters outside the solicitor-client relationship is not protected. A comparable range of functions is exhibited by salaried corporate counsel employed by business organisations. Solicitor-client communications by corporate employees with in-house counsel enjoy the privilege, although (as in government) the corporate context creates special problems . . . . In private practice some lawyers are valued as much (or more) for raw business sense as for legal acumen. No solicitor-client privilege attaches to advice on purely business matters even where it is provided by a lawyer . . . . Whether or not solicitor-client privilege attaches in any of these situations depends on the nature of the relationship, the subject matter of the advice and the circumstances in which it is sought and rendered.

42. Bearing this principle in mind, I propose to describe each of the documents briefly and to express my conclusion as to whether it falls within the category of confidential communications or confidential documents prepared for the dominant purpose of either legal advice or the provision of professional legal services relating to a current or pending proceeding, within s 118 and s 119 of the Evidence Act.

Document 627

a) ActewAGL internal memorandum dated 25 October 2000 from Mr Macara to Messrs John Dimkey and Gary Voss in relation to clause 8 of the Public Safety Regulations.

I am satisfied that Mr Macara brought this memorandum into existence for the dominant purpose of providing legal advice. Privilege accordingly attaches to it.

b) ActewAGL internal memorandum dated 10 October 2001 from Mr Macara to Mr Paul Perkins with copies to other senior ACTEW and ActewAGL staff relating to 29 White Street, Campbell.

This memorandum attaches a copy of the Minter Ellison letter of advice of 8 October 2001 and sets out Mr Macara's opinion as to the practical considerations arising from the advice. I am satisfied that Mr Macara brought it into existence for the joint dominant purposes of legal advice to the plaintiff and proposed litigation. The memorandum is accordingly privileged.

c) ActewAGL file note by Mr Macara dated 14 November 2001 in relation to legal costs.

This note refers to a letter querying Minter Ellison's account for the advice of 8 October 2001 and a subsequent telephone conversation between Mr Macara and Mr Treffers of Minter Ellison, in the course of which Mr Treffers agreed to reduce the account. Relevantly to a consideration I took into account earlier, in the context of the preparation by Ms Plevey of the list of documents, Mr Macara noted that "It was useful to send a message that ActewAGL although a fairly large corporate client is sensitive to value for money over charges for legal services". In Lake Cumbeline Pty Ltd v Effem Foods Pty Ltd (1994) 126 ALR 58, Tamberlin J at 67-8 held that the disclosure of memoranda of fees, backsheets to counsel and counsel's fee slips did not amount to an implied waiver of privilege in the underlying documents. This was because they did not disclose the nature and content of privileged material, but simply recorded in outline form the work which had been undertaken, without disclosing the content of privileged communications, advices, briefs or conferences. It seems to me that this memorandum is in the same category; it relates purely to legal fees and not to the substance of the advice. It does not seem to me that it is protected by privilege, and it should be disclosed to the defendants.

d) ActewAGL internal memorandum dated 1 February 2005 from Mr Macara to Mr Pearce and other senior managerial staff relating to the protection of sewer lines at Canberra Airport.

I have had some difficulty with this memorandum. It does not appear to bear any relationship to the White Street, Campbell dispute, though I must take Ms Plevey by listing it, albeit as a privileged document, in the second affidavit of documents, to have arrived at the considered view that it is relevant to the present proceedings. It has been necessary for me to consider it without the benefit of any other background material. The memorandum attaches a draft letter apparently prepared by Mr Pearce, with some minor changes suggested by Mr Macara. Although the memorandum contains reference to legislation, and some portions which might be able to be categorised as legal advice, it seems to me far removed from the kind of memorandum which might have been sought from external solicitors. I would categorise it as containing substantially strategic or tactical advice rather than legal advice. I am not satisfied that it was brought into existence for the dominant purpose of giving legal advice. Hence the memorandum does not attract privilege and should be made available to the defendants.

Document 631

a) ACTEW Corporation Limited information paper dated 19 December 2001 regarding 29 White Street, Campbell.

This document was prepared as an information paper for a board meeting of the plaintiff company. It does not seem to have been prepared by Mr Macara or under his supervision. Privilege is claimed in respect of two portions of the document only. One states that ActewAGL has received legal advice on the matter and that the advice suggests that certain courses are open to the plaintiff. Those courses are described briefly and some potential negative consequences of each course are pointed out. In a subsequent portion of the information paper, headed "Available Options", the two main options are identified. A paper prepared by a staff member which summarises a privileged communication may itself be privileged: Trade Practices Commission v Sterling [1979] FCA 33; (1979) 36 FLR 244 per Lockhart J at 246, where his Honour refers to a number of earlier authorities to the same effect. I am satisfied that the earlier portion was prepared as a summary to the Board of the Minter Ellison advice, and is privileged. The later portion, setting out the available options, seems to be in a different category. It is not a summary of the legal advice, but rather a crystallisation for the Board of the two alternatives between which it was to choose when making its policy decision at the Board meeting. The second portion of the information paper, setting out the available options under that heading, is not privileged. The first portion of the information paper should be excised or made illegible, and the balance of the paper should be disclosed to the defendants.

b) This is an almost identical document to (a), with minor changes. The summary of the legal advice is identical. The legal advice is privileged but the balance of the paper is not. The legal advice should be excised or made illegible and the balance of the paper provided to the defendants.

Document 632

a) Emails dated 10 August 2001 between Mr Macara, Mr Pearce and other senior staff headed "Building over a sewer".

This email correspondence relates to preparation for a meeting with some of the other parties to the action. The purpose of the proposed meeting was to reach agreement, if possible, on the matters at issue in the litigation. It seems to me that this correspondence was brought into the existence for the dominant purpose of the litigation. It is thus privileged.

b) Email from Mr Macara to Ms Michele Norris, the secretary of the plaintiff then company, with copies to other senior staff headed "Asset Protection. Ministerial Declaration".

This email does not seem to me to communicate legal advice, but rather to reinforce an earlier recommendation that ACTEW should ask the relevant minister to make a declaration under the Utilities Act. It is not privileged and should be disclosed to the defendants.

c) Email from Mr Macara to Mr John Mackay, Chief Executive Officer, ActewAGL, regarding Stronach Building Group (the second defendant).

Whilst this email does not contain legal advice, it sets out a brief summary of the then position in the present litigation. I infer that it came into existence because of a question from an ACT shadow minister who had been making enquiries of the plaintiff through ActewAGL, on the instigation of the second and third defendants. That being so, it does not seem to me that it was brought into existence for the purposes of the present litigation, although it is undoubtedly related indirectly to the litigation and would not have been brought into existence if it had not been for the litigation. It does not contain legal advice. It does not meet the test under s 119 of the Evidence Act, which would require it to have been communicated or prepared for the dominant purpose of the plaintiff being provided with professional legal services relating to the action. It is therefore not covered by privilege and should be produced to the defendants.

d) Email from Mr Macara to Mr Mackay and other senior ACTEW and ActewAGL personnel dated 17 June 2004 headed "*I* Lesson - do not be too kind".

In this email, Mr Macara provides some background about the present proceedings. He summarises briefly the earlier application to strike out the statement of claim as failing to disclose a cause of action (at the time of the email my decision was reserved), informs the addressees of two subsequent incidents of building work over sewer lines, and tells the addressees what he, Mr Macara, proposes to do about those fresh matters unless directed otherwise. The email does not contain legal advice or disclose earlier protected legal advice; nor was it brought into existence for the purpose of the provision of professional legal services relating to the present action. In those circumstances, the email is not privileged and should be disclosed to the defendants.

e) Email messages between Mr Macara and Mr Pearce dated 14 August 2001.

This email exchange relates to a proposed meeting between the parties, or representatives of the parties, to the present action which may have led to resolution of the entire action or at least some of the issues. It is privileged under s 119 of the Evidence Act.

f) Email from Mr Macara to Mr Peter Carrigy-Ryan, Secretary of ACTEW, dated 13 August 2001, headed "29 White Street, Campbell".

This email was generated soon after the problem at White Street, Campbell became known and before any detailed legal advice had been given about it by Mr Macara or Minter Ellison. It was, however, in the nature of a preliminary internal communication from Mr Macara in his capacity as a solicitor, and can be seen with hindsight as probably coming within s 119 of the Evidence Act. Whilst it is borderline, on balance it seems to me that privilege does extend to this email.

g) Email from Mr Macara to Mr Perkins dated 6 September 2002 regarding easements in gross.

It is clear from a reading of this email that it is in the nature of a formal legal advice. It is privileged under s 118 of the Evidence Act.

h) Email from Mr Macara to Mr Mackay dated 8 October 2001 headed "Roles - ACTEW's and Ours".

This email attaches an extract from the Minter Ellison advice. The latter is undoubtedly privileged. It is, however, severable from the substantive email, the subject of which seems to be whether the then Chief Executive Officer of the plaintiff had exceeded his authority having regard to the agency or management agreement between the plaintiff and ActewAGL. But in the course of the email, Mr Macara refers to legal advice that he had earlier given to the plaintiff. It might be possible to excise the portions of the email which disclose the legal advice, but to do so would render the balance of the email unintelligible. It seems to me that this is a case where it would not be appropriate to attempt to split the email into privileged and non-privileged portions. In the circumstances, the whole of the email should be treated as privileged.

Document 645

a) This document is a draft headed "ACTEW Corporation Limited: Litigation Strategy and Action Plan No. 1".

Mr Macara deposes that the document was prepared by Minter Ellison in May 2002. Having read the document, I am satisfied that it was brought into existence for the dominant purpose of the plaintiff being provided with professional legal services by Minter Ellison in relation to the present proceedings. It is therefore privileged under s 119 of the Evidence Act.

43. In the event, the plaintiff has been unsuccessful in obtaining the declaration it seeks in relation to documents 231 and 235. At the same time, the first defendant has failed to persuade me that the plaintiff has waived privilege in the Minter Ellison advice, so that its apparent victory in relation to documents 231 and 235 is a hollow one. In relation to documents 627, 631, 632 and 645, the plaintiff has had some successes and some failures.

44. I invite the parties to prepare in draft form the orders which they submit should be made to effectuate these reasons. It may be that the parties will be able to deal with the issues without the need for formal orders.

45. My provisional view is that the costs of the application should be costs in the cause. I shall defer making that order immediately in case either party wishes to submit that I should make some other order. In the absence of any submissions within 14 days, I shall order that the costs of the application be costs in the cause, to avoid putting the parties to the expense of returning to Court unnecessarily. The only formal orders I make are that the affidavits of Ian Henry Laird Macara affirmed 27 November 2006 and 26 March 2007 and of Christine Plevey sworn 26 March 2007 may be used in determining this application, and that the plaintiff and the first defendant have liberty to apply on two days notice.

I certify that the preceding forty-five (45) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Master.

Associate:

Date: 22 June 2007

Counsel for the plaintiff: Mr R L Crowe SC

Solicitors for the plaintiff: Minter Ellison

Counsel for the first defendant: Mr W L Sharwood

Solicitors for the first defendant: Howes Kaye Halpin

Date of hearing: 30 March 2007

Date of judgment: 22 June 2007