FEDERAL COURT OF AUSTRALIA

Shea v TruEnergy Services Pty Ltd (No 4) [2013] FCA 936

REASONS FOR JUDGMENT

(REVISED FROM TRANSCRIPT)

introduction

1    The applicant, Kate Shea, was dismissed by her employer, the respondent, EnergyAustralia Services Pty Ltd, on 6 February 2012 on the ground that her position had become redundant. In this proceeding, the applicant alleges that, to the contrary, she was dismissed because she exercised a workplace right by having made five successive complaints (or for reasons including such reason or reasons), that her dismissal was adverse action within the meaning of s 342(1) item 1(a) of the Fair Work Act 2009 (Cth) (“the Fair Work Act”) and that the respondent contravened s 340(1) of the Fair Work Act.

2    After making a number of the alleged complaints, the applicant took sick leave from 15 June 2011 until 10 October 2011. During her sick leave, a number of meetings occurred between the applicant and representatives of the respondent (with and without legal representatives) to attempt to negotiate a settlement.

3    On 4 September 2013, which was the eighth day of trial, in the course of cross-examining Richard McIndoe, the respondent’s managing director, senior counsel for the applicant applied to cross-examine on the entire contents of a memorandum dated 29 June 2011 which was prepared by Freehills, the respondent’s solicitors at that time (“the memorandum”) and subsequently sent to Mr McIndoe and Mr Brandler, of the respondent’s ultimate parent company, CLP Holdings Limited (“CLP”). The memorandum set out a summary of a meeting which took place on 29 June 2011 between Kate Jenkins of Freehills, Roy Massey of CLP and the applicant and her lawyer, Mr Butler, for which without prejudice privilege was initially asserted. The memorandum also contained blanked out sections for which the respondent claimed legal professional or legal client privilege.

consideration

4    The applicant asserted an entitlement to cross-examine in relation to the whole document on the grounds that it was not clear from its face that it contained legal advice. The applicant submitted that I should inspect the blanked out sections of the memorandum in order to determine:

(a)    whether it did, in fact, contain legal advice properly the subject of the relevant privilege; and if so:

(b)    whether the privilege was lost pursuant to s 125 of the Evidence Act (1995) (Cth) (“the Evidence Act”), because the memorandum was prepared in furtherance of the commission of a fraud, offence, or commission of an act which would render a person liable to a civil penalty.

5    Section 125 of the Evidence Act provides:

125    Loss of client legal privilege: misconduct

(1)    This Division does not prevent the adducing of evidence of:

(a)    a communication made or the contents of a document prepared by a client or lawyer (or both), or a party who is not represented in the proceeding by a lawyer, in furtherance of the commission of a fraud or an offence or the commission of an act that renders a person liable to a civil penalty; or

(b)    a communication or the contents of a document that the client or lawyer (or both), or the party, knew or ought reasonably to have known was made or prepared in furtherance of a deliberate abuse of a power.

(2)    For the purposes of this section, if the commission of the fraud, offence or act, or the abuse of power, is a fact in issue and there are reasonable grounds for finding that:

(a)    the fraud, offence or act, or the abuse of power, was committed; and

(b)    a communication was made or document prepared in furtherance of the commission of the fraud, offence or act or the abuse of power;

the court may find that the communication was so made or the document so prepared.

(3)    In this section:

power means a power conferred by or under an Australian law.

6    The respondent primarily submitted that the challenge to privilege should not now be entertained, as the memorandum was subject to a longstanding claim of legal professional privilege, and to the extent that doubt existed, undertook to provide an affidavit to that effect. The file revealed that, on 13 March 2013, the respondent filed a list of documents upon which it proposed to rely at trial dated 12 March 2013, item 45 of which corresponded to the memorandum in dispute. It stated:

7    A second further list of documents annexed to the affidavit of David Lambert, the respondent’s general counsel and company secretary, sworn on 20 March 2013, was handed up. Item number 116 in the list of documents described the memorandum in question as:

8    As the respondent submitted, it appeared clear from the memorandum itself that it contained legal advice as claimed. The memorandum was marked at the beginning, “CONFIDENTIAL AND SUBJECT TO LEGAL PROFESSIONAL PRIVILEGE”. The structure of the memorandum was consistent with the inclusion of legal advice. The memorandum, at its commencement, referred to what the memorandum set out. It first described a summary of the meeting with Ms Shea, and then, by inference, stated another subject matter of the memorandum, which was blanked out.

9    The memorandum then set out a summary of the meeting with Ms Shea. Thereafter, it contained a large blanked out section, which was consistent with the existence of the legal advice as claimed, for which legal professional privilege had been asserted from at least March 2013.

10    The respondent submitted that the challenge to privilege was unsupported by an affidavit or other evidence in the context of a trial where time was limited and any perusal of legal advice might unfairly influence, or be otherwise inappropriate for, the trial judge. Accordingly, the question should, if at all, be determined by another judge, and the diversion of time entailed would be inappropriate at the advanced stage of the proceeding.

11    The background to the challenge to client legal privilege was the respondent’s earlier attempt to tender, over the applicant’s objection, a number of documents (including the memorandum) which were prima facie subject to “without prejudice” privilege, because they related to settlement negotiations between the applicant and the respondent. The respondent put its entitlement to tender such documents on various bases.

12    First, the respondent submitted that certain contents of some of the documents were not in fact subject to without prejudice privilege, either because they dealt with external facts and issues or did not constitute admissions in respect of the relevant potential litigation, but rather, were assertions. The respondent further submitted that tender was necessary in order to address:

(a)    the applicant’s allegation that there had been a hiatus between the applicant’s email and letter of 21 June 2011 and her meeting with Mr McIndoe on 4 October 2011; and

(b)    the allegedly atypical circumstances of the termination of the applicant’s employment, including the presence of security guards.

13    The respondent submitted that the contents of the memorandum dealing with the meeting on 21 June 2011 went to Mr McIndoe’s state of mind in relation to those matters.

14    The respondent also submitted that, as many “without prejudice” privileged documents had already been put in evidence, reference to the memorandum of 29 June 2011 was required in order to provide the full picture.

15    Ultimately, however, the respondent did not press the tender of the various “without prejudice” documents, including the memorandum. Nor did the respondent object to cross-examination on the aspects of the memorandum arguably subject to without prejudice privilege. The applicant justified her subsequent challenge to client legal privilege by reference to a change of mind, or reappraisal of the relevance of the memorandum. Having reversed her objection to the tender of the memorandum, the applicant prayed in aid the respondent’s previous submissions as to its relevance, adding that the entirety should be admitted.

conclusion

16    In my view, it was inappropriate to entertain the challenge of client legal privilege for the memorandum, given the stage of the trial. The respondent had asserted privilege for the memorandum since March 2013 without any actual or foreshadowed challenge. It was apparent on the face of the memorandum that that the privilege was claimed and it could readily be inferred from its structure that the blanked out sections contained legal advice.

17    While it was a serious matter to suggest that the respondent’s lawyers had groundlessly claimed client legal privilege, no cogent basis for such an apprehension, whether in the form of an affidavit or other evidence, was advanced. The grave imputation that the respondent’s former lawyers may have provided legal advice in furtherance of an act which would incur a civil penalty, appeared to rest only on a theoretical possibility and was equally unpersuasive. In the circumstances, I refused to permit cross-examination in relation to the blanked out matters in the memorandum and declined to hear further challenge to the asserted client legal privilege.

Associate:

Dated:    19 September 2013