FEDERAL COURT OF AUSTRALIA
Morton v Bolinda Publishing Pty Limited [2017] FCA 187
ORDERS
Applicant/Cross-Respondent | ||
AND: | BOLINDA PUBLISHING PTY LIMITED Respondent/Cross-Claimant | |
DATE OF ORDER: |
THE COURT ORDERS THAT:
1. The interlocutory application dated 14 December 2016 is dismissed.
2. The applicant pay the respondent’s costs.
3. The applicant be granted leave to file written submissions, of not more than two (2) pages, in relation to the costs of Ms Anthony, within fifteen (15) working days from the date of these orders.
4. Ms Anthony be granted leave to file written submissions in answer, of not more than two (2) pages, within ten (10) working days thereafter.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
BURLEY J:
1 The applicant and cross-respondent is Ms Kate Morton, an author. The respondent and cross-claimant is Bolinda Publishing Pty Limited (Bolinda), an audiobook publisher which, since 2006, has been the publisher of certain audio books written by Ms Morton. The directors and co-chief executive officers of Bolinda are Ms Rebecca Herrmann and Mr Jan Herrmann. Bolinda has published works of Ms Morton pursuant to four written agreements (publishing agreements). Until about December 2015, Ms Selwa Anthony has been Ms Morton’s literary agent.
2 In her claim against Bolinda, Ms Morton alleges, inter alia, that the publishing agreements have been terminated for breach, and claims for relief in respect of that breach as well as for copyright infringement and misleading and deceptive conduct. In response, Bolinda asserts that Ms Morton’s purported termination of the agreement amounted to a repudiation of the publishing agreements and otherwise denies breach. In its cross-claim, Bolinda seeks, amongst other things, relief against forfeiture in the event that the publishing agreements have been validly terminated by Ms Morton.
3 On 29 November 2016, Bolinda filed its list of documents pursuant to discovery orders made by Perram J on 27 October 2016. Part 2 of the list identified twelve (12) documents in respect of which Bolinda asserted a claim for legal professional privilege. On 14 December 2016, Ms Morton filed an interlocutory application challenging the claim for privilege in respect of eleven (11) of the documents. The application was supported by an affidavit sworn by her solicitor, Michael Frankel, dated 25 January 2017. In response, Bolinda relies on two affidavits sworn by its solicitor, Justin Vaatstra, sworn on 30 December 2016 and 30 January 2017 and an affidavit sworn by the solicitor acting for Ms Anthony, Meredith Paton, sworn on 30 January 2017. Separately, Ms Anthony claims privilege in respect of documents 1 and 3 in the list of documents.
4 The proceedings are listed for hearing commencing on 6 March 2017.
5 For the reasons set out in more detail below, the interlocutory application is dismissed with costs.
6 The first of the publishing agreements between Ms Morton and Bolinda is dated 21 March 2006. It is governed by the laws of the State of Victoria and provides that Bolinda shall make royalty and other payments to the “Proprietor” who is defined as “Kate Morton c/o Selwa Anthony Author Management”. Clause 3.3 provides that “[a]ll monies due under this agreement will be paid to the Proprietor”.
7 The second and third agreements are dated 14 December 2007 and 18 August 2009. The terms of these agreements in relation to payment of royalties are relevantly the same (save that different publications by Ms Morton are identified). The fourth agreement is dated 20 May 2013 and is also relevantly in the same terms, save that clause 3.5 provides that “[p]ayment of royalties must be made according to payment details outlined in the Schedule”. The Schedule provides “Proprietor Details Selwa Anthony Pty Ltd Account Number: [details provided] BSB: [details provided]”.
8 On 15 December 2015, Ms Morton purported to terminate her agency agreement with Ms Anthony.
9 On 8 February 2016, Bolinda received a letter from Ms Morton’s solicitors, Frankel Lawyers (Frankel) which advised Bolinda of the termination, and instructed it to make all payments to an account at Ms Morton’s direction. This letter was described by the respondent as the “first trigger” being the trigger for the first document in respect of which privilege is claimed.
10 Document 1 in the list of documents is a chain of six emails dated from 10 February 2016 to 12 February 2016 from Ms Herrmann to Mr Trevor Choy (Bolinda’s legal advisor), Mr Choy to Ms Herrmann, Ms Herrmann to Ms Anthony, and Ms Anthony to Ms Herrmann.
11 On 12 February 2016, Ms Herrmann, on behalf of Bolinda, wrote to Frankel stating that Bolinda had been made aware by Ms Anthony that an ongoing legal dispute exists between Ms Anthony’s agency and Ms Morton: “[i]n light of this dispute, Bolinda will withhold any payments due under the following audio publishing agreements until this matter has been resolved”. The letter then listed the publishing agreements.
12 On 15 February 2016, Bolinda received a letter from Frankel entitled “Notice of Breach” in which Frankel informed Bolinda that by withholding payments, Bolinda was in fundamental breach of each of the publishing agreements, and notifying Bolinda that unless such breach was rectified within 30 days, the agreements would be terminated. This is said by counsel for Bolinda to be the “second trigger”.
13 Document 2 is a chain of three emails dated 16 and 17 February 2016 variously from Ms Isabella Depiazzi (Bolinda’s Rights and Contracts Executive) to Mr Choy, Mr Choy to Ms Herrmann and Ms Depiazzi, and Ms Herrmann to Mr Choy.
14 Document 3 is a chain of three emails dated 17 February to 24 February 2016 from Ms Herrmann to Mr Choy, Mr Choy to Ms Herrmann, Ms Herrmann to Ms Anthony.
15 Document 4 is a chain of five emails dated from 17 February to 3 March 2016 between Ms Herrmann, Mr Choy and Ms Depiazzi.
16 On 22 March 2016, Bolinda received a letter from Frankel entitled “Termination Notice” stating that Ms Morton accepts Bolinda’s “repudiation”, and as a result, “hereby terminates” the four publishing agreements.
17 Document 5 is a chain of four emails dated 22 March to 29 March 2016 between Ms Herrmann, Mr Choy and Ms Depiazzi.
18 On 29 March 2016, Ms Herrmann wrote a letter on behalf of Bolinda to Frankel which responded to its letter of 22 March 2016. In it, Bolinda denies repudiating the publishing agreements, and states that it is ready and willing to make payment in fulfilment of its obligations under those agreements. It states that there has been no breach of the agreements as monies are not due for two further days and that upon confirmation that the Notice of Termination has been withdrawn, Bolinda will make a payment.
19 On 30 March 2016, Bolinda received a letter from Maxwell Meredith & Co, solicitors acting for Ms Anthony, who is “the agent on the record in respect of the Publishing Agreements”. The letter observed that Ms Morton has purported to terminate the agency agreements she has with Ms Anthony and that that matter is the subject of a summons taken out on behalf of Ms Anthony as plaintiff in proceedings in the Equity Division of the Supreme Court of New South Wales (Supreme Court proceedings). The letter invites Bolinda either to make payments pursuant to the publishing agreements in accordance with their terms as previously done, or hold royalty payments the subject of the dispute in escrow, pending resolution of the matter.
20 Document 6 is a chain of three emails dated 30 March 2016 between Ms Herrmann and Mr Choy.
21 On 31 March 2016, Ms Herrmann received from Ms Anthony a copy of the Summons in the Supreme Court proceedings.
22 Document 7 is an email dated 31 March 2016 from Ms Herrmann to Mr Choy enclosing the summons.
23 Document 8 is an email dated 1 April 2016 from Ms Herrmann to Mr Choy.
24 On 4 April 2016, Bolinda received a letter from Frankel entitled “Termination Notice” referring to letters of 15 February 2016 and 22 March 2016, and stating that as Bolinda “had not rectified the anticipatory breaches” Ms Morton has accepted Bolinda’s repudiation and terminated the publishing agreements.
25 Document 9 is an email dated 4 April 2016 from Ms Herrmann to Mr Choy.
26 On 6 April 2016, Bolinda received a further letter from Frankel which noted the termination of the agreements, referred to Bolinda’s website and asserted that Bolinda had acted in breach of Ms Morton’s copyright.
27 On 7 April 2016, Bolinda sent a letter to Frankel referring to the 6 April 2016 letter, denying breach and stating that it would “today” pay all outstanding monies.
28 On 8 April 2016, a remittance advice was received by Frankel from Bolinda.
29 Document 10 is a chain of five emails dated from 6 to 7 April 2016 between Ms Herrmann and Mr Choy.
30 On 11 April 2016, Ms Morton was served with the summons in the Supreme Court proceedings.
31 On 22 April 2016, Bolinda received a letter from Frankel, seeking certain undertakings in respect of the future conduct of Bolinda with respect to Ms Morton’s intellectual property rights.
32 Document 11 is a chain of three emails dated from 22 to 23 April 2016 between Ms Herrmann, Mr Choy and Mr Herrmann.
2.2 The claim of privilege and background facts
33 Bolinda asserts its claim to legal professional privilege primarily on the basis of evidence given by information and belief by Mr Vaatstra. Broadly speaking, the basis for the claim is that the relevant communications were for the purpose of obtaining the legal advice of Mr Choy.
34 A challenge is made to the ability of such communications to constitute privileged communications in the present circumstances because Mr Choy does not presently, and has not since 2011, held a practising certificate.
35 Mr Vaatstra gives evidence on information he believes to the effect that; Bolinda has been engaging Mr Choy to provide it with intellectual property and licensing related legal advice since approximately 2000; that at the time that Bolinda engaged Mr Choy he had his own law firm called “Choy Lawyers”, and over many years provided legal advice to Bolinda; that Mr Choy holds B.Juris and LLB degrees from Monash University, was admitted to practice in Victoria and has held a practising certificate there; that in about August 2011 he sold his legal practice and has since traded as “ChoyBrown Intellectual Property Law”; and that after selling his practice in about 2011, he has not maintained a practising certificate in Victoria.
36 Mr Vaatstra then says as follows:
31 I am informed by Mr Choy and by Jan Herrmann and believe that as Mr Choy had been the only lawyer for Bolinda for well over a decade (including while he carried on business as “Choy Lawyers”), Mr Choy agreed that he would continue – in a personal capacity – to provide the same legal advice to Bolinda as and when required by Bolinda. Given that Mr Choy no longer had a firm infrastructure he informed Mr Herrmann and Ms Herrmann that there were certain issues he would be unable to assist Bolinda with and that he would notify Jan and Rebecca Herrmann if he did not have the capacity to work on a particular matter. Mr Choy also agreed with Bolinda that he would operate on the same terms as before, only that the invoices would come from Mr Choy personally.
32 I am informed by Rebecca Herrmann and believe that Bolinda has sought legal advice from Mr Choy from time to time since about 2000. Bolinda has continued to seek legal advice on various matters since 2011 on the understanding that Mr Choy was a lawyer and in order to obtain legal advice about intellectual property and licensing issues.
33 I am further informed by Rebecca Herrmann that Mr Choy invoices Bolinda in his own name for the legal advice he provides to Bolinda from time to time. …
34 I am informed by Rebecca Herrmann and Jan Herrmann that they have believed since approximately 2000 that Mr Choy was, and is, able and qualified to provide legal advice and services to Bolinda in relation to the various legal issues arising in relation to its business (which is based in Melbourne, Victoria). It was on the basis of this understanding and to obtain legal advice that Ms Herrmann approached Mr Choy in February 2016 as explained further below.
37 In relation to document 1, Mr Vaatstra refers to the letter of 8 February 2016 from Frankel to Bolinda. He gives evidence on information and belief, relying for its source upon an affidavit sworn by Ms Herrmann on 13 October 2016 (which was filed in the proceedings). He quotes Ms Herrmann to the effect that on 10 February 2016 she had a conversation with Ms Anthony during which Ms Anthony said that she intended to take legal action against Ms Morton in relation to the termination of her agency and her entitlement to commission. Mr Vaatstra then says in relation to the first email in document 1:
I am informed by Ms Herrmann and believe that her purpose in sending Email 1 to Mr Choy was to seek legal advice for Bolinda and in relation to Ms Anthony’s position in respect of the issues raised by the Agency Dispute and the 8 February Letter.
38 Mr Vaatstra then states that in email 2 of document 1, Mr Choy provides advice and seeks further instructions in response to the matters raised by Ms Herrmann in email 1, and that in email 3, Ms Herrmann forwards the first two emails to Ms Anthony and specifically refers to the further instructions and information requested by Mr Choy. Mr Vaatstra then says that he was informed by Ms Herrmann and believes that; at the time of sending emails 1 and 2, Ms Herrmann understood and believed that the emails were related to both Bolinda’s position and Ms Anthony’s position with respect to the applicant’s demand in the 8 February 2016 letter; that by forwarding the email to Ms Anthony, Ms Herrmann did not intend to give up any confidentiality in the email exchanges with Mr Choy; that there was a dispute between Ms Morton and Ms Anthony; and that Ms Anthony intended to issue proceedings against Ms Morton in relation to that dispute.
39 Mr Vaatstra further deposes that he is informed by Ms Herrmann that her purpose in forwarding the emails was to provide Mr Choy’s advice to Ms Anthony as it related to both Bolinda and Ms Anthony’s position, and seek further information from Ms Anthony by reference to Mr Choy’s advice so that further advice could be obtained in relation to the issues raised in the 8 February letter from Frankel to Bolinda and in relation to the agency dispute. Mr Vaatstra then addresses in broad terms the contents of emails 4, 5 and 6 within document 1.
40 Mr Vaatstra’s affidavit continues then to identify in broad terms the nature of each of documents 2 through to 11.
41 Ms Paton’s affidavit is filed in support of the claim for privilege by both Bolinda and Ms Anthony in respect of documents 1 and 3. Ms Paton says that she was informed by Ms Anthony and believes that the email chain which represents document 1 was preceded by a telephone conversation between Ms Anthony and Ms Herrmann on 8 February 2016 in which Ms Herrmann told Ms Anthony that she had received a letter from Frankel informing her that Ms Morton had terminated her agency relationship with Ms Anthony and directing that payments by Bolinda be made directly to Ms Morton; Ms Anthony told Ms Herrmann that Ms Morton’s new agent was attempting to cut Ms Anthony out of her future entitlements to commission and that she intended to take legal proceedings against Ms Morton in relation to her claimed entitlements to commissions.
42 Ms Paton’s affidavit also deposes the following:
10 Towards the end of this telephone conversation, Ms Herrmann said words to the effect of, “I will get our lawyer to look into these issues and will let you know what he says. Can you send me your contracts with Kate Morton so the lawyer can advise us?” Ms Anthony responded with words to the effect of, “Yes, that’s good. I’ll send them through and wait to hear from you”. Ms Anthony ended the phone call with words to the effect of “I would really appreciate his advice”.
11 During the telephone conversation Ms Herrmann repeatedly referred to Mr Choy as Bolinda’s “lawyer”. I am informed by Ms Anthony that she believed and understood that Ms Herrmann was obtaining legal advice from a lawyer. Ms Herrmann also told Ms Anthony that her lawyer resided overseas and she would be emailing him to obtain the advice.
43 Ms Paton then says that she was informed by Ms Anthony and believes that she understood that Ms Herrmann was getting her lawyer to provide advice about both Ms Anthony’s position and Bolinda’s position, having regard to the purported termination of the agency by Ms Morton and the letter from Frankel to Bolinda demanding that Bolinda redirect payments directly to Ms Morton. Ms Anthony’s purpose in providing the publishing contracts to Ms Herrmann was to enable her to provide them to Mr Choy so that he could provide legal advice to Ms Anthony and Bolinda in relation to the dispute in light of the 8 February 2016 letter.
44 Ms Paton says that in relation to document 3, Ms Anthony received a further email from Ms Herrmann. Email 2 of document 3 contained further legal advice from Mr Choy in relation to the same request which is the subject of document 1, and that arose from the telephone conversation on 8 February 2016.
2.3 The asserted waiver of privilege
45 Ms Morton contends that, to the extent that Bolinda succeeds in establishing an entitlement at all to claim legal professional privilege, that privilege has been waived either by the content of its pleading for relief against forfeiture in the cross-claim, the content of Ms Herrmann’s affidavit of 13 October 2016 filed in the main proceedings, or by the provision of documents 1 and 3 to Ms Anthony.
46 Paragraph 41 of the statement of cross-claim provides (emphasis added):
If the Audio Recording Agreements have been terminated (which is denied):
a. Morton’s conduct in:
i. terminating the agency with Selwa Anthony as referred to in paragraph 22 above;
ii. directing Bolinda to make payment to Morton instead of Selwa Anthony in circumstances where:
1. the Agency Dispute was on foot; and
2. the Audio Recording Agreements provided that payments were to be made to Selwa Anthony as alleged in paragraphs 7 and 8 above; and
3. Selwa Anthony had commenced the Anthony Proceeding and was making the allegations set out in paragraphs 23 and 29 above;
contributed to Bolinda’s alleged repudiation, breach or breaches (which are denied) of the Audio Recording Agreements;
b. further, by reason of the Agency Dispute and the matters alleged at paragraphs 22 to 32 above, Bolinda’s alleged repudiation, breach or breaches were:
i. made on the basis of a mistake in relation to the proper recipient of the payments under the Audio Recording Agreements; and/or
ii. otherwise accidental, trivial, slight, inadvertent and not wilful.
47 The passage in the affidavit of Ms Herrmann upon which Ms Morton relies as giving rise to a waiver of privilege is set out from [78] to [84] and in particular as follows (emphasis added):
83 The next thing that happened was that on 22 March 2016, I received another letter from Frankel Lawyers which was entitled “Termination Notice”. A copy of the “Termination Notice” dated 22 March 2016 is at [Tab 32].
84 This letter came as a shock to me. I did not think that Mr Frankel’s earlier breach notice was legitimate in circumstances where Bolinda was complying with all of its obligations under the Audio Recording Agreements. Bolinda was not due to make any payments under the Audio Recording Agreements until the end of March 2016. I did not think that Kate Morton could just terminate the Audio Recording Agreements where the royalty payments were not even due yet.
48 The parties presented a cascading series of options that flow from the claim for privilege which conveniently reflect the issues for determination:
(1) Is Bolinda entitled to legal professional privilege in documents 1 to 11?
(2) Does a joint privilege or common interest privilege apply to the benefit of Bolinda and Ms Anthony in respect of documents 1 and 3?
(3) Has there been a waiver of privilege in documents 1 and 3?
(4) Has there been an issue waiver?
49 Legal professional privilege protects confidential communications between a legal adviser and a client from disclosure. The public policy behind the privilege is to promote candour. The claim for legal privilege professional privilege is governed by common law principles which have been conveniently summarised by Young J in AWB Ltd v Cole (No 5) [2006] FCA 1234; (2006) 155 FCR 30 (AWB) at [44]:
(1) The party claiming privilege carries the onus of proving that the communication was undertaken, or the document was brought into existence, for the dominant purpose of giving or obtaining legal advice. The onus might be discharged by evidence as to the circumstances and context in which the communications occurred or the documents were brought into existence, or by evidence as to the purposes of the person who made the communication, or authored the document, or procured its creation. It might also be discharged by reference to the nature of the documents, supported by argument or submissions.
(2) The purpose for which a document is brought into existence is a question of fact that must be determined objectively. Evidence of the intention of the document’s maker, or of the person who authorised or procured it, is not necessarily conclusive. It may be necessary to examine the evidence concerning the purpose of other persons involved in the hierarchy of decision-making or consultation that led to the creation of the document and its subsequent communication.
(3) The existence of legal professional privilege is not established merely by the use of verbal formula. Nor is a claim of privilege established by mere assertion that privilege applies to particular communications or that communications are undertaken for the purpose of obtaining or giving “legal advice”. If assertions of that kind are received in evidence in support of the privilege claim, their conclusionary nature can leave unclear what advice was really being sought. There will be cases in which a claim of privilege will not be sustainable in the absence of evidence identifying the circumstances in which the relevant communication took place and the topics to which the instructions or advice were directed.
(4) Where communications take place between a client and his or her independent legal advisers, or between a client’s in-house lawyers and those legal advisers, it may be appropriate to assume that legitimate legal advice was being sought, absent any contrary indications. In Kennedy v Wallace, Black CJ and Emmett J inclined to the view that in the ordinary case of a client consulting a lawyer about a legal problem in uncontroversial circumstances, proof of those facts alone will provide a sufficient basis for a conclusion that legitimate legal advice is being sought or given.
(5) A “dominant purpose” is one that predominates over other purposes; it is the prevailing or paramount purpose.
(6) An appropriate starting point when applying the dominant purpose test is to ask what was the intended use or uses of the document which accounted for it being brought into existence.
(7) The concept of legal advice is fairly wide. It extends to professional advice as to what a party should prudently or sensibly do in the relevant legal context; but it does not extend to advice that is purely commercial or of a public relations character.
(8) Legal professional privilege protects the disclosure of documents that record legal work carried out by the lawyer for the benefit of the client, such as research memoranda, collations and summaries of documents, chronologies and the like, whether or not they are actually provided to the client.
(9) Subject to meeting the dominant purpose test, legal professional privilege extends to notes, memoranda or other documents made by officers or employees of the client that relate to information sought by the client’s legal adviser to enable him or her to advise. The privilege extends to drafts, notes and other material brought into existence by the client for the purpose of communication to the lawyer, whether or not they are themselves actually communicated to the lawyer.
(10) Legal professional privilege is capable of attaching to communications between a salaried legal adviser and his or her employer, provided that the legal adviser is consulted in a professional capacity in relation to a professional matter and the communications are made in confidence and arise from the relationship of lawyer and client. Some cases have added a requirement that the lawyer who provided the advice must be admitted to practice. However, in Commonwealth v Vance (2005) 158 ACTR 47, the Full Court (Gray, Connolly and Tamberlin JJ) did not regard the possession of a current practising certificate as an essential precondition to the availability of legal professional privilege: at [23]-[35]. ...
(11) Legal professional privilege protects communications rather than documents, as the test for privilege is anchored to the purpose for which the document was brought into existence. Consequently, legal professional privilege can attach to copies of non-privileged documents if the purpose of bringing the copy into existence satisfies the dominant purpose test. …
(12) The Court has power to examine documents over which legal professional privilege is claimed. Where there is a disputed claim, the High Court has said that the court should not be hesitant to exercise such a power. If the power is exercised, the court will need to recognise that it does not have the benefit of submissions or evidence that might place the document in its proper context. The essential purpose of such an inspection is to determine whether, on its face, the nature and content of the document supports the claim for legal professional privilege.
(citations omitted)
50 When considering the “dominant purpose” test identified in (1) of the quote from AWB set out above, it is to be noted that “dominant” does not mean merely “primary” or “substantial”, but “clearly paramount”; Sydney Airports Corporation Ltd v Singapore Airlines Ltd [2005] NSWCA 47 at [7] (Spigelman CJ, Sheller JA and M W Campbell AJA agreeing).
4.2 Is Bolinda entitled to legal professional privilege in documents 1 – 11?
51 Mr Vaatstra’s affidavit addresses Mr Choy’s qualifications. His evidence is that Mr Choy has provided legal advice to Bolinda since about 2000. When he was first engaged he had his own law firm and has provided intellectual property and contract advice to Bolinda since then. Mr Choy has informed Mr Vaatstra and Mr Vaatstra believes that Mr Choy holds relevant legal qualifications from Monash University; that he was admitted to practice in Victoria and that he has in the past held a practising certificate although, since 2011, when he sold his practice, he has not maintained this. Further, when Mr Choy left his firm, he continued to provide the same type of advice to Bolinda when he was asked to do so. Ms Herrmann understands that Mr Choy is a lawyer and Bolinda has continued to seek legal advice from him since 2011. Mr Choy invoices Bolinda for the legal advice that he provides. It was on the basis of the understanding that Mr Choy is able and qualified to provide legal services that Ms Herrmann approached Mr Choy to provide the legal advice that is the subject of the present claim.
52 Ms Morton contends that Mr Choy was not assisting Bolinda as a legal adviser but in a “personal capacity”, that Bolinda was not at the relevant time receiving legal advice from Mr Choy; that the evidence given by Mr Vaatstra on information and belief does not provide sufficient material to enable the Court objectively to determine that the claim for privilege is well-founded; and that the surrounding circumstances otherwise do not justify any inference in favour of the claim. Ms Morton places particular reliance on Tavcol Pty Ltd v Valbeet Pty Ltd [2016] NSWSC 1002 (McDougall J) (Tavcol) and Hancock v Rinehart (Privilege) [2016] NSWSC 12 at [32] (Brereton J) (Hancock).
53 The first matter for consideration is whether the absence of a practising certificate diminishes or disqualifies the communications from being the subject of a successful claim for privilege. In AWB (point 10 above), Justice Young notes that the requirement for admission to practice is not mandatory. In doing so he refers to Commonwealth v Vance [2005] ACTCA 35; (2005) 158 ACTR 47 (Vance) where the Court of Appeal of the Australian Capital Territory (Gray, Connolly and Tamberlin JJ) concluded, in the context of a claim made in respect of documents created by an employee who had legal qualifications but did not hold a practising certificate, that the absence of the practising certificate was not conclusive ([34], [35]). The Court in Vance endorsed (at [32]) the characterisation made by Downes J in Re McKinnon v Secretary, Department of Foreign Affairs and Trade [2004] AATA 1365; (2004) ALD 780:
The real test is whether the advice had the necessary quality of being independent advice. Whether or not legal professional privilege is attracted should be determined by the substance not the form. …
54 In Commissioner of Taxation v Donoghue [2015] FCAFC 183 (Donoghue) at [100], the Full Court of the Federal Court (Kenny and Perram JJ) said:
The Commissioner submitted that these could not be privileged because Simeon Moore was not a lawyer. It seems that where a client subjectively believes that the person giving legal advice has an entitlement to give legal advice then privilege will attach…
(citing Health Insurance Commission v Freeman [1998] FCA 1340; (1998) 88 FCR 544 at 566-7 (Merkel J, Von Doussa and Carr JJ agreeing) and Grofam Pty Ltd v Australia and New Zealand Banking Group Ltd (1993) 45 FCR 445 at 456).
55 These authorities indicate that the question of legal professional privilege is not determined by the presence or absence of a practising certificate, but by having regard to the whole of the evidence regarding the relationship between the relevant parties, and having regard to the client’s belief that the lawyer was entitled to give the legal advice.
56 The evidence reveals that Mr Choy has legal qualifications, has practised as a solicitor for Bolinda for a significant period of time prior to 2011, and had up until then held a practising certificate. He had been a principal in his own law firm. Bolinda, via Ms Herrmann, assumed that Mr Choy would be able to continue in his role as a legal practitioner and continued to consult him. He rendered invoices for that work. Ms Herrmann believed that Mr Choy would and did provide independent legal advice to Bolinda.
57 The fact that Mr Choy had no practising certificate is a serious matter. Ordinarily, such qualifications stand as a guarantee that he will provide independent legal advice in accordance with the rules and regulations concerning the practice of law within the jurisdiction. The cases which have examined the need for a practising certificate frequently concern in-house legal advisers where the question of the degree of independence that the lawyer has from the employer becomes an issue. As Lord Denning MR explained in Alfred Crompton Amusement Machines Ltd v Customs and Excise Commissioners (No 2) [1972] 2 QB 102 at 129, where the practitioner is also an employee and agent of her or his employer she must be as independent in the doing of her work as any other legal adviser.
58 However, as the survey of the authorities by Gillard J in Australian Hospital Care (Pindara) Pty Ltd v Duggan (No 2) [1999] VSC 131 at [19] – [33], [36] reveals, the question of the qualifications of the lawyer arises in the context of the substantive question of whether the legal adviser is consulted in a legal professional capacity in relation to a professional matter and the communications are made in confidence and arise from the relationship of lawyer and client.
59 In the present case, the complications arising from the provision of advice by in-house employees does not arise. On the basis of the evidence provided, I am satisfied that Mr Choy is a person who has legal qualifications and who was consulted by Bolinda over a long period for the purpose of providing legal advice. As Donoghue (and the cases cited therein at [100]) emphasises, the belief of the party seeking the advice is a significant aspect. The prior relationship between Bolinda and Mr Choy, and in particular the fact that Mr Choy conducted practice as a solicitor and has given legal advice over many years provides a reasonable basis for that belief. I accept that the claim for privilege is sustainable, notwithstanding that Mr Choy does not hold a current practising certificate.
60 Turning now to the claim for privilege in respect of the 11 specific documents, I find that the claim is made out. In this regard, I consider that the circumstances relating to the creation of the documents as outlined in the affidavit of Mr Vaatstra support the finding that they were created for the dominant purpose of giving or obtaining legal advice. The chronology of events, summarised briefly above, supports this view. The early documents in respect of which the claim was made followed communications received from Ms Morton’s lawyers. Those communications raised questions of significance regarding the legal relations between Bolinda and Ms Morton, often in technical terms. I accept the submission by counsel for the respondent that the objective circumstances set out in the chronology strongly suggest that letters from Frankel provided a “trigger” for subsequent requests for advice from Mr Choy. That is supported by the evidence as to purpose given by Mr Vaatstra.
61 Counsel for Ms Morton submitted that I should disregard the evidence of Mr Vaatstra. However, in my view it was evidence given in conformity with the requirements of s 75 of the Evidence Act 1995 (Cth) and was clearly relevant. The decision of McDougall J in Tavcol does not stand for the proposition that evidence given on information and belief in such an application is inadmissible or irrelevant in claims for legal professional privilege (Tavcol at [37]). Mr Vaatstra’s evidence provides context in which the claim for privilege may be assessed.
62 After forming the view that I have expressed above, I examined the documents that are the subject of the claim. I am satisfied that by virtue of their content they separately support the claim. Although Ms Morton opposed this course, citing Tavcol at [56] and Hancock at [32], in my view, the circumstances that led to the Court in those cases declining to conduct such an investigation are quite different. In those cases, the Court considered that there was no objective evidence to support the claim and that in those circumstances it would be unfair and inappropriate for the Court to examine the documents and form the view that a claim should be upheld solely on the basis of construction of the documents. However, in most cases it is permissible and appropriate for the Court to consider and take into account the contents of the communications the subject of the claim; see AWB point (12) above. In the present case it was appropriate. The documents on their face provide support for the claim.
63 Accordingly, I consider that the claim for privilege in respect of documents 1 – 11 is made out.
4.3 Does joint privilege or common interest privilege subsist in documents 1 and 3?
64 The claim to joint privilege in documents 1 and 3 is advanced by Bolinda as an answer to Ms Morton’s claim that any privilege subsisting in these documents has been waived.
65 In Farrow Mortgage Services Pty Ltd (in liq) v Webb (1996) 39 NSWLR 601 (Farrow) at 608 (Sheller JA, Waddell JA agreeing) said:
Shared or similar interests in subject of communication:
Two or more persons may join in communicating with a legal adviser for the purpose of retaining his or her services or obtaining his or her advice. The privilege which protects these communications from disclosure belongs to all the persons who joined in seeking the service or obtaining the advice. The privilege is a joint privilege… Implicit in the relationship is the duty or obligation to disclose to other parties thereto the content of the communication. Accordingly, no privilege attaches to such communications as against others who, with the client, share an interest in the subject matter of communication. But the parties together are entitled to maintain the privilege “against the rest of the world”: Phipson, par 20, 28 and par 20-29. Logically the joint nature of the privilege means that all to whom it belongs must concur in waiving it. Theirs is one in severable right. In pars 20-29 the learned editors of Phipson say that in the case of joint interest, it is sufficient, as against third persons if only one of the interested parties claims the privilege, though all must concur in waiving it. In Rochefoucauld v Boustead [1897] 1 Ch 196, two parties were engaged in a joint venture. The first invited the second to consult his solicitor but, in proceedings against both parties, waived any privilege in respect of what took place. The second party was held to remain entitled to insist upon the maintenance of the privilege.
66 In Tabcorp Holdings Ltd v State of Victoria [2013] VSC 302 at [122], Sifris J said of joint privilege (in the context of s 124 of the Evidence Act 1995 (Cth); citations omitted:
122 “Joint retainer” under s 124 has been given an expansive definition. There is no need for specific contractual documents between each of the parties and the lawyer. Nor are all of the parties required to have communicated with, instructed or received advice directly from the lawyer. Rather what is contemplated is that the advice was sought “for the benefit” of the other joint privilege holders. Whether a lawyer has been jointly retained can be determined by looking at the relationship between the parties, the relationship between the parties and the lawyer and the factual context of the retainer/advice.
67 In the present case, the evidence of Mr Vaatstra indicates that Ms Herrmann supplied Mr Choy with an email from Ms Anthony attaching copies of the publishing agreements. Ms Herrmann informed Mr Choy of the potential disputes raised by the 8 February letter from Frankel and seeks his advice. Ms Herrmann’s purpose in sending email 1 to Mr Choy was to seek legal advice for both Bolinda and Ms Anthony in respect of the issues raised by the dispute concerning the distribution agreements and the manner in which payments should be made pursuant to those agreements. The evidence given on information and belief in relation to these matters is supported by the affidavit of Ms Paton, given on information and belief, from information supplied to her by Ms Anthony. That reveals a conversation between Ms Herrmann and Ms Anthony to the effect that Ms Herrmann would ask Bolinda’s lawyer to look into the issues arising from the 8 February letter, the publishing agreements and the termination of the agency agreement between Ms Anthony and Ms Morton. Ms Herrmann told Ms Anthony that she would let her know what Bolinda’s lawyer says. Each of Ms Herrmann and Ms Paton understood that legal advice would be obtained in relation to the matter.
68 The emails in document 1 are dated 10-12 February 2016. On 12 February 2016, Ms Herrmann wrote to Frankel saying, inter alia:
We write to advise you that we have been made aware by the Selwa Anthony Author Management Agency that an ongoing legal dispute exists between the Agency and Kate Morton.
In light of this dispute, Bolinda will withhold any payments due under the following audio publishing agreements until this matter has been resolved: [publications listed].
The content of letter tends to support the contention that advice from Mr Choy was sought and given in relation to the position of both Bolinda and Ms Anthony.
69 Ms Morton submits that there is no evidence that Ms Anthony and Bolinda joined in communicating with Mr Choy for the purpose of obtaining his advice. She also submits that there is no evidence that Mr Choy was engaged to provide Ms Anthony with legal advice and that by December 2015 “at the latest”, Ms Anthony had procured her own lawyers.
70 However, I am satisfied that Ms Herrmann communicated with Mr Choy, in the circumstances described above, in order for each of Bolinda and Ms Anthony to have the benefit of his advice. I do not believe the fact that Ms Anthony had the benefit of other legal representation precludes a claim of joint privilege in relation to these communications. I am also fortified in this view by my inspection of document 1, the contents of which confirm the circumstances to which I have referred above.
71 A similar claim is made in respect of document 3. Document 3 is an email chain dated 17-24 February 2016 and involves an email from Ms Herrmann to Mr Choy, an email from Mr Choy to Ms Herrmann, and an email from Ms Herrmann to Ms Anthony. In email 1, Ms Herrmann provides the 15 February 2016 “Notice of Breach” letter to Mr Choy and seeks his advice. In email 2, Mr Choy responds to Bolinda in relation to the “Notice of Breach” letter. In email 3, Ms Herrmann forwards emails 1 and 2 to Ms Anthony. Ms Paton gives evidence that email 2 contained legal advice from Mr Choy in relation to the same subject matter as document 1, arising from the conversation between Ms Anthony and Ms Herrmann on 8 February 2016. I have reviewed document 3 and am satisfied that, on its face, it supports all of the matters to which the affidavit evidence refers.
72 Accordingly, in my view, Bolinda and Ms Anthony share a joint privilege in documents 1 and 3.
73 This finding renders it unnecessary for me to decide whether common interest privilege would also apply. However, I am inclined to the view that it would.
74 Common interest is not a rigidly defined concept; Farrow at 609. Where a person entitled to legal professional privilege has such a commonality of interest in relation to the subject matter of the privilege that sharing of the content with an identified third party is consistent, rather than inconsistent with an ongoing intention to preserve confidentiality and privilege, then the provision of a privileged document to that party will not result in a loss of privilege; Marshall v Prescott [2013] NSWCA 152 (Barrett JA, McColl and Ward JJA agreeing) at [57].
75 The principle (identified by the Court of Appeal in Lee v South West Thames Regional Health Authority [1985] 1 WLR 845 and cited by Sheller JA in Farrow at 610) is that a defendant or potential defendant shall be free to seek evidence without being obliged to disclose the result its researches to its opponent. For common interest privilege to apply the relevant communication must be subject to legal professional privilege, the interest in common must be identified, and the exchange of information or advice subject to legal professional privilege must relate to that interest. Common interest privilege is not limited to litigation or anticipated litigation and it is not necessary that parties have a common solicitor; Lane v Admedus Regen Pty Limited [2016] FCA 864 at [27] – [30].
76 I have found that legal professional privilege applies to documents 1 and 3. At the time of the creation of those documents, each of Bolinda and Ms Anthony had an interest in determining the correct construction of the publishing agreements. For Bolinda that interest concerned the identification of the correct recipient of royalties. Ms Anthony was a competitor with Ms Morton in the receipt of those royalties (so that she could receive her agency fees). At the time of the communications each was seeking to obtain advice concerning their position. Each had an interest in responding to Ms Morton’s demands.
77 Accordingly, joint privilege and common interest privilege apply to documents 1 and 3.
4.4 Has there been a waiver of privilege in documents 1 and 3?
78 A waiver of privilege must be by both of the persons in whose benefit the joint or common interest privilege resides; Farrow 608 – 612. In the present case there can be no doubt that Ms Anthony has not expressly or implicitly waived privilege. Ms Morton makes no submission to contrary effect, and the affidavit of Ms Paton explicitly makes the claim for privilege.
79 In these circumstances it is not necessary for me to decide whether Bolinda has waived privilege by the provision of documents to Ms Anthony. Accordingly, documents 1 and 3 are privileged and Ms Morton’s application for access to these documents must be refused.
4.5 Has there been an issue waiver?
80 Ms Morton submits that by virtue of [41] of the Bolinda cross-claim and, separately, the contents of [84] of the affidavit of Ms Herrmann (quoted at [46] and [47] above, respectively), Bolinda has waived privilege in any claimed documents. Ms Morton submits that Bolinda has brought a case which necessarily “laid open” the confidential communications to scrutiny in circumstances where it is clear that contemporaneous advice was provided by Mr Choy that would be likely to have contributed to Bolinda’s state of mind. Ms Morton relies in particular on the decision of Allsop J (as his Honour then was) in DSE (Holdings) Pty Limited v Intertan Inc [2003] FCA 384; (2003) 127 FCR 499 (DSE) at [58].
81 The guiding principle to be applied in determining whether waiver of legal professional privilege occurs at common law is that stated in Mann v Carnell [1999] HCA 66; (1999) 201 CLR 1 where the majority held at [29]:
Waiver may be express of implied. … What brings about the waiver is the inconsistency, which the courts, where necessary informed by considerations of fairness, perceive, between the conduct of the client and maintenance of the confidentiality; not some overriding principle of fairness operating at large.
82 The applicable principles have recently been restated by a Full Court of the Federal Court in Macquarie Bank Ltd v Arup Pty Limited [2016] FCAFC 117 (Middleton, Robertson and Gleeson JJ) at [24] – [34]. In that case, the Full Court endorsed the summary of the law set out by Yates J in Ferella v Official Trustee in Bankruptcy [2010] FCA 766; (2010) 188 FCR 68 (Ferella) at [65] and also the formulation of principle set out in DSE at [58].
83 In Ferella, Yates J said at [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 [Commissioner of Taxation v Rio Tinto Limited [2006] FCAFC 86; (2006) 151 FCR 341 (Rio Tinto)] at [65]. Indeed, even the fact that the holder of the 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].
84 In DSE Allsop J said at [58]:
… It is sufficient to understand, I think, that in most undue influence cases (and in Thomason when its circumstances are appreciated) 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. Read with an understanding of the effect of the then governing influence of Attorney General (NT) v Maurice (1986) 161 CLR 475 on the views of Hodgson J, the above expression of the matter is consistent with the expression of principle by Hodgson J in Standard Chartered.
(italics in original)
85 Ms Morton submits that DSE identifies two forms of waiver. Where the party entitled to claim privilege makes an express or implied assertion or brings a case (a) about the contents of a communication; or (b) which necessarily lays open the confidential communication to scrutiny. She submits that proposition (b) applies to the facts of the present case. In this context it might be thought that the language of DSE leaves open a broader form of waiver than that expressed in Ferella. However, the preferable view is that the underlying principle in both remains the same, namely where there is an express or implied assertion about the content of confidential communications between a party and its legal adviser, then fairness to the other party may mean that this assertion has to be taken to be a waiver. This is apparent from the final sentence in the above passage from DSE when read with [57] of that judgment.
86 The question of whether this form of waiver arises depends in every instance upon the character of the case and how it is conducted; Rio Tinto at [60]. In my view, Bolinda has not in its cross-claim, directly or indirectly, put the contents of the privileged documents in issue, within either proposition (a) or (b).
87 The pleading asserts at [41] that Bolinda’s alleged repudiation, breach or breaches of the publishing agreements were made on the basis of a mistake in relation to the proper recipient of the payments or were otherwise accidental, trivial, slight, inadvertent and not wilful. The factual basis for these contentions is said to arise from the chronology of events to which reference is made above. In particular; on 8 February 2016, Ms Morton informed Bolinda that she had terminated the agency between herself and Ms Anthony and directed Bolinda to pay all amounts owing to Ms Morton directly; on 10 February 2016, Bolinda was informed by Ms Anthony that she was now in dispute with Ms Morton and intended to take legal proceedings against Ms Morton; on 12 February 2016, Bolinda informed Ms Morton that in light of the dispute between Ms Anthony and Ms Morton, Bolinda would withhold payments due under the publishing agreements until the dispute had been resolved; on 15 February 2016, Ms Morton asserted fundamental breach against Bolinda on the basis that it was withholding payments due to Ms Morton; as at that date no royalties were payable by Bolinda under the agreements; on 22 March 2016, Ms Morton purported to terminate the publishing agreements and, as of that date, no royalties or other amounts were due and payable; on 23 March 2016, Ms Anthony issued the Supreme Court proceedings against Ms Morton; on 29 March 2016, Bolinda informed Ms Morton that it remained willing and ready to make payment in fulfilment of its obligations under the publishing agreements, that there was no breach of the agreements as at that date and that upon receiving confirmation that Ms Morton had withdrawn the termination notice, Bolinda would make payments that were due; on 30 March 2016, Bolinda received a letter from Ms Anthony asking Bolinda to pay royalties to her or to hold those amounts in escrow pending resolution of the dispute; on 31 March 2016, Bolinda was served with a copy of a summons filed in the Supreme Court proceedings.
88 The particular character of the present pleading does not of itself “lay open” the privileged communications between Bolinda and Mr Choy to scrutiny. The mistake alleged which is said to give rise to relief against forfeiture arises from the circumstances pleaded, which amount to an allegation that Bolinda was caught in the middle between competing claims to some or all of the royalty payments. Accordingly, no issue waiver applies.
89 Ms Morton also relies on the contents of Ms Herrmann’s affidavit at [84]. This paragraph does not rely on the contents of the communications from Mr Choy to vindicate Bolinda’s state of mind. Accordingly, this paragraph does not constitute an issue waiver within the authorities. The result is that Ms Morton is not entitled to access documents 1 to 11.
90 The interlocutory application is dismissed. The applicant should pay the respondent’s costs.
91 On the first day of the hearing Ms Paton sought leave to appear and make submissions in support of Ms Anthony’s claim for privilege. Over objection from Ms Morton I granted leave. The purpose of the appearance was to advance Ms Anthony’s separate claim to legal professional privilege in respect of documents 1 and 3. That was an appropriate course to take. I consider it likely that the correct order is that Ms Morton pay Ms Anthony’s costs incurred in advancing her claim, however, it may be that Ms Morton wishes to submit that the usual order for costs should not apply. Accordingly, if Ms Morton wishes to advance any submissions in opposition to the course that I have indicated, I will grant her leave within fifteen (15) working days to provide a submission of no more than two pages addressing the subject. Ms Anthony may respond within a further ten (10) working days in a document of similar length. Unless a submission is advanced that I take a different course, I propose to deal with this separate costs issue on the papers and without the need for a further hearing.
I certify that the preceding ninety-one (91) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Burley. |
