FEDERAL COURT OF AUSTRALIA

Anbu v Vulcanite Pty Limited [2015] FCA 283

THE COURT ORDERS THAT:

1.    The respondents’ application for access to documents in the applicant’s schedules of privileged documents is dismissed.

2.    The respondents should pay the costs of and associated with this pre-trial application.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

1    Mr Colin Anbu has commenced proceedings against Vulcanite Pty Limited (Vulcanite) and a number of other respondents. He claims that the respondents engaged in, or were involved in, conduct that was misleading or deceptive, unconscionable, oppressive and unfairly prejudicial or unfairly discriminatory. He seeks statutory relief, including damages and pecuniary penalties.

2    A pre-trial issue has arisen in relation to access to documents produced in answer to two notices to produce served on Mr Anbu by the respondents. Mr Anbu has claimed legal professional privilege in respect of those documents. He objects to the respondents having access to the documents on that basis. The respondents accept that the documents are prima facie privileged, but maintain that Mr Anbu has waived the privilege that would otherwise attach to the documents. The waiver is said to be implied, in the case of all of the privileged documents, and express in the case of a small sub-set of documents.

3    The respondents seek an order that they be given access to the otherwise privileged documents. For the following reasons, there has been no waiver of privilege and the respondents are denied access to the documents.

background

4    Mr Anbu is a qualified engineer with expertise in the design and production of rubber products. In about February 2007, he was employed by Vulcanite, initially as engineering manager and later as the general manager of operations.

5    In 2011, the shares in Vulcanite were owned by Chess Industries Limited (Chess). In early 2011, Allegro Funds Pty Limited (Allegro), a private equity firm, entered into negotiations with Chess with a view to purchasing all the Vulcanite shares held by Chess. The negotiations were fruitful. In September 2011, the Vulcanite shares held by Chess were acquired by a new company which had been incorporated specifically to hold the shares. The directors of that company, Vulcanite Holdings Pty Limited (Vulcanite Holdings), were senior employees of Allegro.

6    It would appear that, at much the same time as Allegro was negotiating with Chess in relation to the acquisition of its Vulcanite shares, Allegro was also in discussion with senior management of Vulcanite, including Mr Anbu, in relation to their continuing employment with Vulcanite and their participation in the “management buy-out” of Vulcanite. These discussions culminated in Mr Anbu entering into three agreements.

7    First, on 29 September 2011, Vulcanite and Mr Anbu entered into an employment contract. The terms of that contract were set out in a letter of offer from Vulcanite which Mr Anbu accepted. The letter provided, amongst other things, that Mr Anbu would be employed in the role of managing director and that Vulcanite could terminate Mr Anbu’s employment, in its absolute discretion, with six months’ notice.

8    Second, on 30 September 2011, Mr Anbu, Vulcanite Holdings and two other investor entities entered into a deed, called a Subscription Deed, pursuant to which Mr Anbu and the other investor entities agreed to subscribe for shares in Vulcanite Holdings, and Vulcanite Holdings agreed to issue shares and options to Mr Anbu and the other investor entities. The Subscription Deed was linked to Mr Anbu’s continuing employment with Vulcanite because Mr Anbu’s rights and obligations under the Subscription Deed concerning the shares and options depended in various ways on Mr Anbu’s continuing employment, or alternatively, the circumstances in which he either resigned or was dismissed from employment.

9    Third, on the same day as he entered into the Subscription Deed, Mr Anbu and the other parties to the Subscription Deed also executed another deed called a Shareholders Deed. This deed contained a number of provisions concerning the continuing management and control of Vulcanite Holdings.

10    Mr Anbu claims that in the course of the discussions or negotiations that preceded his entering into the employment contract and the two deeds, Allegro made a number of representations to him. In general terms, these alleged representations concerned the duration of Mr Anbu’s employment with Vulcanite, the extent of his management and control of Vulcanite or Vulcanite Holdings, the returns that he would make if he invested in Vulcanite, the benefits he would acquire and retain in the form of share options, and the control he would have in respect of his personal investment in Vulcanite Holdings. Mr Anbu also claims that he was induced to believe that Allegro would utilise its influence and control at Vulcanite and Vulcanite Holdings to, amongst other things, ensure that he would remain employed by Vulcanite, would remain as a director of Vulcanite, and would be permitted to retain his shares and options for a period of about three to five years. Mr Anbu’s case is that he believed that at the end of that period, it was expected that he and the other investors would be able to sell their Vulcanite shares at a substantial profit.

11    Importantly for the purposes of the resolution of this pre-trial dispute, Mr Anbu claims that he entered into the employment contract and the two deeds in reliance on the alleged representations and the expectation that Allegro would adhere to those representations. Mr Anbu claims that the representations were untrue, or were misleading and deceptive. It would appear that this allegation flows from the fact that on 24 April 2013, less than two years after the date the employment contract and the two deeds were entered into, Vulcanite terminated Mr Anbu’s employment with six months’ notice. Mr Anbu was shortly thereafter removed as a director of Vulcanite.

12    Mr Anbu alleges that in making the representations, Allegro engaged in conduct that was misleading or deceptive, or likely to mislead or deceive contrary to sections 18 and 31 of the Australian Consumer Law (ACL) (being Schedule 2 to the Competition and Consumer Act 2010 (Cth)). Mr Anbu also contends that the other respondents were involved in Allegro’s contravention of those provisions. Mr Anbu claims that he suffered loss and damage as a result of these contraventions and that he is entitled to recover damages under s 236 of the ACL.

13    For their part, Vulcanite and the other respondents deny that any of the alleged representations were made. The respondents say, amongst other things, that Mr Anbu was not guaranteed employment for three to five years, as he alleges, or any other period. Rather, he was told that his contract of employment would contain a term that his employment would be able to be terminated without cause with six months’ notice. The contract of employment which Mr Anbu ultimately accepted in fact contained such a term. The respondents point out, in their defence, that Mr Anbu received external legal advice concerning the terms of the employment contract and the two deeds.

14    In his pleadings, Mr Anbu makes a number of other allegations concerning the conduct of the respondents, including that they were engaged in, or were involved in, conduct that was unconscionable, in contravention of s 20 of the ACL, and conduct that was oppressive, unfairly prejudicial and unfairly discriminatory for the purposes of Part 2F.1 of the Corporations Act 2001 (Cth). It is unnecessary to consider these other claims in detail for present purposes.

The privilege claims

15    On 3 October 2014, the respondents served a notice to produce on Mr Anbu. A further notice to produce was served on 18 November 2014. It is unnecessary to set out the precise terms of these notices to produce. They were plainly intended to require Mr Anbu to produce essentially all documents recording or evidencing legal advice sought or provided to him in relation to the employment contract and the two deeds.

16    The notices to produce hit their mark. Mr Anbu’s lawyers have produced, in answer to the notices to produce, schedules of documents caught by the terms of the notices to produce. The documents would all appear to be emails or other communications between Mr Anbu and his former solicitors and attachments thereto. Mr Anbu has made a claim of legal professional privilege in respect of all of the documents in these schedules. He has filed affidavit evidence from his current solicitor in which it is asserted that all of the documents in the schedules are confidential communications that were “[c]reated for the sole purpose of providing legal advice in relation to the terms of and entering into an employment contract, shareholder’s deed and subscription deed in 2011 and [Mr Anbu’s] tax affairs in relation to same.”

17    The evidence filed by Mr Anbu in support of his privilege claim was not objected to and is not disputed by the respondents.

18    The respondents do not dispute that the documents in the schedules would appear to be prima facie the subject of proper legal professional privilege claims. They contend, however, that Mr Anbu has waived any privilege otherwise attaching to those documents.

the alleged waiver

19    The respondents contend that there has been both implied waiver and express waiver by Mr Anbu.

20    The respondents’ claim of implied waiver is relatively straightforward. It relies on Mr Anbu’s conduct in putting his state of mind in issue in two respects. First, the respondents point out that Mr Anbu specifically pleads that he relied on the alleged representations. Secondly, the respondents rely on the fact that Mr Anbu has sworn and filed an affidavit in which he gives evidence concerning his state of mind during the negotiations, including his reliance on, or belief or views about, certain things that were communicated to him during the negotiations.

21    The respondents submit that by putting his state of mind in issue in both the pleadings and his affidavit, Mr Anbu has acted inconsistently with the maintenance of privilege over legal advice which may be relevant to that state of mind.

22    There is no dispute that Mr Anbu received legal advice in relation to the terms of the proposed contract of employment, Subscription Deed and Shareholders Deed. The respondents’ case is that, even though Mr Anbu’s pleadings and evidence do not expressly refer to his seeking or obtaining legal advice, or the effect that any such advice had on his state of mind, it would unfairly handicap their case if they were unable to test Mr Anbu’s claimed state of mind by reference to the otherwise privileged communication between Mr Anbu and his former lawyers.

23    The respondents’ case concerning express waiver is confined to three documents in the schedules of documents prepared by Mr Anbu’s lawyers. The respondents contend that two emails that Mr Anbu sent to Allegro in the course of the negotiations refer to legal advice that Mr Anbu received. Since that advice has been disclosed, the respondents argue that they are entitled to be granted access to all documents that contain the same advice.

24    The first email is an email from Mr Anbu to a senior employee of Allegro dated 25 August 2011. That email attaches a document which is said to be the “Management Team’s comments on the shareholders’ agreement, subscription agreement and employment agreement” and which is said to “include comments from our lawyers.” The document attached to the email contains a list of clauses of the relevant agreements, in respect of which amendments are requested, comments are made, or queries are raised.

25    The respondents contend that because this email discloses legal advice that Mr Anbu received in relation to the three agreements, Mr Anbu has waived the entirety of the advice he received concerning the agreements. The respondents seek, in particular, access to an email from Mr Anbu’s lawyers to Mr Anbu dated 25 August 2011 that would, at least at first blush, appear to contain the entire advice that Mr Anbu received in relation to the three agreements.

26    The second email relevant to the respondents’ claim of express waiver is an email from Mr Anbu to a senior employee of Allegro dated 16 September 2011. This email responds to an email sent by that employee to Mr Anbu on 15 September 2011 concerning an issue relating to the proposed issue of options. It would appear that for tax reasons Mr Anbu had to ensure that, when he exercised the options, he would not hold more than 5% of the shares in the company. In the email of 16 September, Mr Anbu says:

My legal advice is that the test will be satisfied if, immediately after I acquire the options, I do not hold more than 5% of the shares in the company. I must also not be in a position to cast (or control the casting of) more than 5% of the maximum number of votes that may be cast at a general meeting of the company.

Therefore, we should be able to leave the deal structure as before provided I satisfy the above tests. Please confirm that I will not be in a position to cast more than 5% of the maximum number of votes that may be cast at a general meeting of the company. From my reading of the documents, I believe this is the case.

27    The respondents contend that because this email discloses the substance of the legal advice that Mr Anbu had received on this topic, he has waived privilege in relation to the documents in which Mr Anbu’s lawyers communicated that advice to him. They point to two emails in one of the schedules of privileged documents, which are both dated 15 September 2011 (the day before Mr Anbu’s email to Allegro) and which would appear to be Mr Anbu’s request for this advice and his lawyers’ response.

28    Whilst the respondents couch their submissions in relation to these two emails in terms of express waiver, it is perhaps more accurate to describe their arguments as engaging the species of implied waiver that may arise where there has been a partial disclosure of the gist, substance or effect of legal advice.

Implied waiver – relevant principles

29    In Archer Capital 4A Pty Ltd (as trustee for the Archer Capital Trust 4A) and Others v Sage Group plc (No 3) (2013) 306 ALR 414 (Archer), I summarised the relevant principles concerning implied or issue waiver in the context of a case not entirely dissimilar to the circumstances of this case. The summary of the relevant principles (at [8] to [26]) is as follows:

8.    In Mann v Carnell (1999) 201 CLR 1; 168 ALR 86; [1999] HCA 66 at [29] (Mann), the principle of implied waiver was put by the majority of the High Court in the following terms:

[29] Waiver may be express or implied. Disputes as to implied waiver usually arise from the need to decide whether particular conduct is inconsistent with the maintenance of the confidentiality which the privilege is intended to protect … What brings about the waiver is the inconsistency, which the courts, where necessary informed by consideration of fairness, perceive, between the conduct of the client and maintenance of the confidentiality; not some overriding principle of fairness operating at large.

9.    The authorities in relation to implied waiver establish that a relevant inconsistency with the continued confidentiality of a communication can arise where the privilege holder directly or indirectly puts in issue the character or contents of the communication in the litigation. It is unnecessary to refer to the relevant authorities at length. They were exhaustively reviewed by Allsop J (as his Honour the Chief Justice then was) in DSE (Holdings) Pty Ltd v Intertan Inc (2003) 127 FCR 499; [2003] FCA 384 (DSE) and by the Full Court of this court in Commissioner of Taxation v Rio Tinto Ltd (2006) 151 FCR 341; 229 ALR 304; [2006] FCAFC 86 (Rio Tinto). In Rio Tinto, the Full Court put the guiding principle in the following terms (at [52]):

[52] These authorities show that, where issue or implied waiver is made out, the privilege holder has expressly or impliedly made an assertion about the contents of an otherwise privileged communication for the purpose of mounting a case or substantiating a defence. Where the privilege holder has put the contents of the otherwise privileged communication in issue, such an act can be regarded as inconsistent with the confidentiality that would otherwise pertain to the communication.

10.    In DSE, Allsop J said (at [58]) that an implied waiver will arise where:

[58] … the party entitled to the privilege makes an assertion (express or implied), or brings a case, which is either about the contents of the confidential communication or which necessarily lays open the confidential communication to scrutiny and, by such conduct, an inconsistency arises between the act and the maintenance of the confidence, informed partly by the forensic unfairness of allowing the claim to proceed without disclosure of the communication.

11.    While DSE was decided before Mann, the Full Court in Rio Tinto at [61] cited with approval Allsop J’s “somewhat more descriptiv[e]” statement of the governing principle.

12.    The governing principle of implied waiver requires a “fact-based inquiry”: Rio Tinto at [61]. Each case will turn on its own facts and circumstances: Rio Tinto at [45] and [47]. The court is required to “analyse the acts or omissions of the privilege holder that are said to be inconsistent with the maintenance of the privilege”: Rio Tinto at [45]. Other cases in which implied waiver has been considered provide limited guidance unless they arise out of similar facts: Rio Tinto at [45].

13.    Three points relevant to the application of the relevant principles of implied waiver to the facts and circumstances of this matter should be emphasised. First, it is at least questionable whether legal advice can properly be said to be an issue in a proceeding merely because it might be relevant to an issue in the proceedings: Adelaide Steamship Co Ltd v Spalvins (1998) 81 FCR 360 at 371; 152 ALR 418 at 426-7 (Adelaide Steamship): cited with approval in Rio Tinto at [53]. In Council of the NSW Bar Association v Archer (2008) 72 NSWLR 236; [2008] NSWCA 164 (Archer) Hodgson JA said (at [48]):

[48] … It is not enough to bring about a waiver of client legal privilege that the client is bringing proceedings in which the content of the privileged communications could, as a reasonable possibility, be relevant and of assistance to the other party. For the client to do this is not inconsistent with the maintenance of the privilege, and does not give rise to unfairness of the type in question. What would involve inconsistency and relevant unfairness is the making of express or implied assertions about the content of the privileged communications, while at the same time seeking to maintain the privilege. In this respect, it may be sufficient that the client is making assertions about the client’s state of mind, in circumstances where there were confidential communications likely to have affected that state of mind.

14.    The second point to emphasise relates to the last sentence of the passage from the judgment of Hodgson JA in Archer that is extracted in the previous paragraph. Sage, in its submissions, places particular emphasis on this sentence and the approval and emphasis given to it by the NSW Court of Appeal in Cooper v Hobbs [2013] NSWCA 70 (Cooper), McColl JA (Bergin CJ in Eq agreeing) at [72]. Sage submits, in effect, that this sentence is directly applicable to this matter because the applicants are making assertions in their pleadings about their state of mind in circumstances where confidential communications are likely to have affected that state of mind.

15.    Four observations can, however, be made about this sentence in Hodgson JA’s judgment in Archer. First, Hodgson JA uses the word “may”, not “will”. His Honour was not suggesting that all cases where assertions are made about a client’s state of mind in circumstances where privileged documents are likely to have affected that state of mind will give rise to an implied waiver. Second, this is supported by the fact that, as pointed out by the Full Court in Rio Tinto, each matter will turn on its own facts and not much is to be gained by reference to other implied waiver cases unless they arise out of similar facts. Third, the facts and circumstances in both Archer and Cooper were significantly different to the facts of this case; and fourth, generalisations about types of cases, including cases where a party puts its state of mind in issue, should not distract from the primary question. As the Full Court in Rio Tinto put it (at [65]):

[65] … As the previous examination of the authorities shows, the question is not whether the Commissioner has put his state of mind in issue but whether he has directly or indirectly put the contents of the otherwise privileged communications in issue in the litigation, either in making a claim or by way of defence. Put another way, to adapt Allsop J’s language in DSE, has the Commissioner (being the privilege holder) made an assertion as part of his or her case in the litigation that lays open the privileged documents to scrutiny, with the consequence that an inconsistency arises between the making of the assertion and the maintenance of the privilege?

16.    The third point relating to the application of the principles of implied waiver to the facts and circumstances of this matter concerns the situation where applied waiver is asserted on the basis that a party has pleaded a case which puts its state of mind, including reliance, in issue. In such cases, Sage relies on the so called “evaluative approach” of Hodgson CJ in Eq in Wayne Lawrence Pty Ltd v Hunt [1999] NSWSC 1044 (Wayne Lawrence). In Wayne Lawrence, Hodgson CJ in Eq said (at [12]):

[12] [I]t seems to me still that the question of whether the advancing of a person’s state of mind is to be taken as consenting the giving of evidence of confidential communication, or as waiving privilege, is a matter of degree in each case. It does not seem to me that the assertion of a belief must, in all circumstances, be taken as consenting to evidence being led of any legal advice or confidential communication that could be relevant to whether such a belief was held or the reasonableness of such belief. It seems to me that factors relevant to whether that consent is to be considered as having been given, or whether privilege is taken to have been waived, would include the significance of the belief to the case as a whole; the relevance of the reasonableness of the belief to the case as a whole; the probability or otherwise of the legal advice being relevant to the holding to that belief, or being relevant to its reasonableness; and in circumstances where the Court inspects the legal advice in question in order to make a decision, the extent to which the legal advice does in fact bear upon the holding of the belief or its reasonableness, and the extent to which the legal advice relevant to those matters is inextricably bound up with legal advice going to other questions as to which there has been no consent or waiver. It seems to me that, on the basis of all those matters at least, the Court has to make a judgment as to what is reasonable, and what is fair in the particular case.

17.    Wayne Lawrence was decided before Mann, which explains the reference, in the last sentence of the above extract, to the relevant judgment of the court being “what is reasonable, and what is fair in the particular case”. None the less, in Chen v City Convenience Leasing Pty Ltd [2005] NSWCA 297 (Chen), Gzell J (with whom Bryson JA and Windeyer J relevantly agreed), having referred to the judgment of Hodgson CJ in Eq in Wayne Lawrence, said (at [41]):

[41] I doubt that a different result will follow from the sort of question referred to in Wayne Lawrence and the sort of question that needs to be answered in order to determine whether there is inconsistency between the conduct of a party and maintenance of client legal privilege as discussed in Mann. In a case like the present one in which reliance upon representations is alleged, questions such as the following need to be explored: Were representations made to the party by and on behalf of the opponent? Does the party say that he or she relied upon the representations and altered his or her course of conduct? Is reliance upon the representations a central, or merely peripheral, aspect of the party’s case? Is it likely that the party received legal advice that had a bearing on the allegation of reliance? Was it likely that the legal advice might raise doubts as to the allegations of reliance or any losses or damage alleged to have been suffered?

18.    The approach of Gzell J in Chen also appears to have met with the approval of Besanko J in SA E.Med Pty Ltd v Calvary Healthcare Adelaide Ltd (No 2) [2011] FCA 835 at [23]-[25].

19.    A number of points may be made in relation to this. First, while it is correct, as Gzell J pointed out, that in DSE Allsop J referred to the relevant passage from Wayne Lawrence as part of his Honour’s extensive review of the authorities, all his Honour said in relation to Wayne Lawrence was (at [103]) “[i]t is clear from these passages that his Honour was of the view that more was involved in the assessment than merely the putting of the matter in issue”: see also in this respect Sackville J in Seven Network Ltd v News Ltd (No 10) (2005) 227 ALR 704; [2005] FCA 1721 at [41] (Seven Network). Second, while the Full Court in Rio Tinto referred with approval to much of what was said by Allsop J in DSE, the Full Court did not refer to Wayne Lawrence.

20.    More significantly, I have some difficulty reconciling the so called evaluative approach with other statements made by Allsop J in DSE and the approach taken by the Full Court in Rio Tinto. The question posed in the passages from Wayne Lawrence and Chen in my view tend to suggest that in cases where a state of mind is pleaded by a party and it is likely that legal advice which might be relevant to that state of mind was obtained by that party, it is likely that implied waiver will be established. Yet in DSE, Allsop J said, after reviewing the authorities decided prior to Mann (at [95]):

[95] … I would have thought that it is too broad a statement to say that a pleading of a state of mind to which legal advice is or might be materially relevant is an adequate surrogate for the expression of principle in Mann v Carnell.

21.    His Honour also said (at [97]) that the view that “relevance to an issue is the proper test is, as a general proposition, difficult to reconcile with Mann”. His Honour also expressed agreement with what was said by Heerey J in Equuscorp Pty Ltd v Kanisha Corp Ltd [1999] ATPR 41-697; [1999] FCA 681 at [13], including that “[t]he bare fact of asserting reliance does not expressly or impliedly assert that the plaintiff relied, or did not rely, on some privileged communication”.

22.    In my opinion, there may be no difficulty with the evaluative approach in Wayne Lawrence and Chen if the questions that are posed are seen as no more than questions that might assist in determining the ultimate question, namely, whether the privilege holder has expressly or impliedly made an assertion about the contents of an otherwise privileged communication for the purpose of mounting a case or substantiating a defence. In my view, however, the questions have a tendency to distract or deflect attention from that test. The questions posed as part of the so-called evaluative approach should not be used as a surrogate for the expression of principle in DSE and Rio Tinto.

23.    I note in this context that in Seven Network, Sackville J, while his Honour ultimately did not need to decide the point, expressed some doubt that the evaluative approach “precisely reflects the content of the inconsistency principle”: (at [46]).

24.    Whatever may be the position in relation to the evaluative approach in Wayne Lawrence and Chen, it is, in my opinion, tolerably clear that the mere fact that a party pleads a cause of action that includes their state of mind as a material fact, or otherwise puts their state of mind in issue in the proceedings, does not necessarily give rise to an implied waiver in respect of legal advice that may have been received by the party, even if that legal advice may be relevant to the party’s state of mind. This was the position taken by Yates J in Ferella v Official Trustee in Bankruptcy (2010) 188 FCR 68; [2010] FCA 766 at [65] where his Honour said:

[65] … However the question is not simply whether the holder of the privilege has put that person’s state of mind in issue but whether that person has directly or indirectly put the contents of the otherwise privileged communication in issue: see [Rio Tinto] at [65]. Indeed, even the fact that the holder privilege makes clear that the advice was relevant or contributed to a particular course of conduct would not be sufficient to waive the privilege unless, possibly, the contents of the legal advice (and not merely the fact of the advice) are specifically put in issue by relying on the contents of the advice to vindicate a claimed state of mind: [Rio Tinto] at [67].

25.    Likewise in Austral Dutch Kaolin Pty Ltd v Hanjin P&C Co Ltd [2011] FCA 638 at [22], Greenwood J said:

[22] As legal professional privilege is an important common law right or common law immunity (Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543; 192 ALR 561; 43 ACSR 189; [2002] HCA 49 at [11] and [44], McHugh J and [85] Kirby J; Baker v Campbell (1983) 153 CLR 52 at 74; 49 ALR 385 at 400) and common law principles apply to these interlocutory questions (Mann v Carnell at [27], [41], [143] and [144]), a party ought not to be denied that right as a result of an implied construct simply by pleading a claim to a remedial right based upon a cause of action in which a state of mind is put in issue unless the party expressly pleads reliance upon a privileged communication as a material fact (or particularises a material fact by reference to an otherwise privileged communication) or the very nature of the claim itself demonstrates clear inconsistency of treatment such as where a client sues his or her lawyer for negligence asserting a sequence of instructions and at the same time seeks to deny, on the ground of legal professional privilege, the disclosure by his or her lawyer of those communications in a forensic analytical process.

26.    In this passage, Greenwood J refers to an example of a claim the very nature of which demonstrates inconsistency with the maintenance of confidentiality in respect of otherwise privileged communications. The example given by Greenwood J is a case where a client sues a lawyer for negligence. An action for negligent advice will put in issue the very advice received by the client. Other examples of such actions include some actions raising allegations of undue influence or actions for rectification where the content of a communication between the lawyer and client or the content of advice received by the client is directly raised by the nature of the allegation. The decision in SA E.Med provides an example of such a rectification case. In such cases, by commencing the action the privilege holder puts in issue the content of the very advice received: see Adelaide Steamship at FCR 371-2; ALR 426. However, as the Full Court observed in Rio Tinto, it is dangerous to generalise from other cases of implied waiver unless they arise from the same facts. There is no closed or categorical list of types of actions that by their very nature give rise to implied waiver. Each case will turn on its own facts and circumstances.

30    I adhere to the views that I expressed in Archer in relation to the so-called evaluative approach in Wayne Lawrence Pty Ltd v Hunt & Ors t/a Hunt Musgrave & Peach [1999] NSWSC 1044 and Chen & Ors v City Convenience Leasing Pty Ltd & Anor [2005] NSWCA 297. Ultimately, the critical question to address when considering whether there has been implied waiver is whether, by making an express or implied assertion about the contents of an otherwise privileged document for the purposes of mounting a case or substantiating a defence, the privilege holder has acted in a way inconsistent with the maintenance of the confidentiality which the privilege is intended to protect.

31    In Krok v Commissioner of Taxation [2015] FCA 51 (Krok), I had cause to consider the relevant principles of implied waiver that apply where there has been a partial disclosure of legal advice. The relevant principles are summarised at [25] to [27] of the judgment in Krok:

25.    Disclosure of the conclusion, gist, substance or effect of legal advice does not necessarily give rise to a waiver of privilege in respect of the whole advice. Whether it does or not in a particular case depends on whether, in the particular context and circumstances of the case, the requisite inconsistency exists between the partial disclosure, on the one hand, and the maintenance of confidentiality in the whole advice on the other: Secretary, Department of Justice v Osland (2007) 26 VAR 425 (Secretary, Department of Justice v Osland) at [49]; approved and upheld by the High Court in Osland v Secretary, Department of Justice (2008) 234 CLR 275 (Osland v Secretary, Department of Justice) at [44]-[50]. The relevant context and circumstances in this respect may include the evident purpose of the disclosure and the legal and practical consequences of limited rather than complete disclosure: Secretary, Department of Justice v Osland at [63]; Osland v Secretary, Department of Justice at [46].

26.    Where a party to litigation discloses or deploys a partial disclosure of legal advice in order to achieve some forensic advantage, while claiming privilege and thereby seeking to deny the other party an opportunity to see the full text of the communication, this may amount to conduct inconsistent with the maintenance of privilege: Secretary, Department of Justice v Osland at [67]; Osland v Secretary, Department of Justice at [35]: British American Tobacco Australia Ltd v Secretary, Department of Health and Ageing (2011) 195 FCR 123 (British American Tobacco) at [46]-[47]. That is no doubt, at least in part, because the judgment as to inconsistency is to be made not only in the context and circumstances of the case, but also in light of any considerations of fairness arising from the context and circumstances: Osland v Secretary, Department of Justice at [45].

27.    Questions of waiver are matters of fact and degree: Nine Films and Television Pty Ltd v Ninox Television Ltd (2005) 65 IPR 442. Each case will turn on its own facts and circumstances and other cases in which implied waiver has been considered provide limited guidance unless they arise out of similar facts: Rio Tinto at [45].

have the pleadings and evidence filed by mr Anbu resulted in an IMPLIED WAIVER?

32    The short answer to this question is “no”.

33    As already indicated, the pleadings filed by Mr Anbu do not refer to the fact that he obtained legal advice, let alone the content of any such advice. Nor could it be said that the pleadings advert to, or make any implied assertions concerning any legal advice obtained by Mr Anbu. The only reference in the pleadings to the fact that Mr Anbu obtained legal advice is in the respondents’ defence. In paragraph 20 of the defence, the respondents deny that Allegro made any of the representations alleged by Mr Anbu. In that context, the respondents point out, no doubt by way of amplification of the general denial, that Mr Anbu obtained external legal advice in relation to the employment contract and the two deeds.

34    The mere fact that, by pleading reliance, Mr Anbu has put his state of mind in issue, does not give rise to an implied waiver in the circumstances of this case. That fact alone does not amount to an express or implied assertion about the contents of any otherwise privileged communication. Nor has Mr Anbu put the contents of otherwise privileged communications in issue, or laid them open to scrutiny. The pleadings, accordingly, do not constitute conduct inconsistent with the maintenance of the confidentiality of any privileged communications.

35    The same can be said of Mr Anbu’s affidavit evidence. In his affidavit, Mr Anbu does not refer at all to the fact that he obtained legal advice. Nor does he advert to, or otherwise make any implied assertions concerning, the nature or content of any legal advice obtained by him.

36    It is undoubtedly correct to say that in a number of parts in his affidavit, Mr Anbu adverts to his state of mind at various times during the negotiations, including following his receipt of correspondence or following conversations he had with various people associated with the respondents. In these parts of his affidavit, Mr Anbu seeks to explain why he entertained certain beliefs or understandings following these communications. He also expressly asserts his reliance on certain representations he says were made to him. Importantly, however, none of the explanations or assertions Mr Anbu gives or makes concerning his state of mind relate or refer in any way to the fact that he had sought and obtained legal advice.

37    Nothing in Mr Anbu’s affidavit amounts to an express or implied assertion about the contents of an otherwise privileged communication. Nor does Mr Anbu, in his affidavit, put in issue, or otherwise lay open to scrutiny, any privileged communication. The filing of Mr Anbu’s affidavit therefore does not constitute conduct inconsistent with the maintenance of confidentiality over any privileged communications.

38    Two additional points should be made in relation to the respondents’ contention that Mr Anbu’s affidavit has given rise to an implied waiver.

39    First, Mr Anbu’s affidavit was tendered by the respondents for the purposes of this application. It has not been read or relied on by Mr Anbu in these proceedings. It may ultimately be the case that parts of the affidavit will not be read by Mr Anbu at the hearing of the principal proceedings. Other parts may be objected to and rejected. To an extent this shows that the respondents’ assertions of implied waiver arising from the affidavit are perhaps premature.

40    Second, the same can be said in relation to the respondents’ assertion that the maintenance of privilege in relation to the documents will unfairly handicap the respondents in testing Mr Anbu’s evidence concerning his state of mind. Undoubtedly, at trial, the respondents will seek to cross-examine Mr Anbu concerning his claims and evidence of reliance. That questioning is likely to touch on the fact that Mr Anbu obtained legal advice concerning the employment contract and the two deeds. It is likely, in these circumstance, that issues concerning privilege and waiver will arise at trial and in the course of Mr Anbu’s cross-examination. The situation may arise where Mr Anbu’s responses to questioning may lay open to scrutiny the privileged communications and that it would be unfair to the respondents for the confidentiality of the communications to be maintained. It is, however, premature to consider these matters at this early stage of the proceedings.

has there been implied waiver by a partial DISCLOSURE of advice?

41    Again, the short answer to this question is “no”.

42    In the particular circumstances and context of this matter, the partial disclosure in the emails of 25 August and 16 September 2011 of the gist, substance or effect of legal advice received by Mr Anbu does not amount to conduct inconsistent with the maintenance of confidentiality in respect of the whole of the advice. The relevant context and circumstances here include the purpose of the partial disclosure by Mr Anbu. It is readily apparent from the emails themselves that Mr Anbu’s purpose in disclosing the gist of the advice he received was to advance the negotiations and the finalisation of the relevant agreements.

43    This is plainly not a case where a party to litigation discloses or deploys a partial disclosure of legal advice to achieve some forensic advantage, whilst claiming privilege and thereby seeking to deny the other party the right to see the whole advice. The disclosure here was not in the context of litigation and it is impossible to see any forensic advantage Mr Anbu may achieve in these proceedings as a result of maintaining the confidentiality of the whole advice. Indeed, neither of the communications appears to be particularly relevant to the issues likely to arise at trial.

44    There is no other reason to conclude that the partial disclosure of the advice by Mr Anbu is inconsistent with the maintenance of confidentiality over the whole advice. The partial disclosure has not therefore given rise to any implied, or for that matter express, waiver of privilege.

disposition

45    It follows that the respondents’ application for access to documents in the schedules of privileged documents on the basis of waiver is dismissed. There is no good reason why the costs of this application should not follow the event. Accordingly, the respondents should pay the costs of and associated with this pre-trial application.

Associate:

Dated:    31 March 2015