FEDERAL COURT OF AUSTRALIA

BrisConnections Finance Pty Limited (Receivers and Managers Appointed) v Arup Pty Limited [2017] FCA 590

ORDERS

THE COURT ORDERS THAT:

1.    The Amended Interlocutory Application by Arup Pty Ltd dated 8 May 2017 (filed as an attachment to its Outline of Submissions on 9 May 2017) is dismissed.

2.    Any submissions in relation to the costs of the Amended Interlocutory Application (including reserved costs), which submissions are to comprise no more than two pages, are to be filed and served by 4.00pm on 5 June 2017.

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

REASONS FOR JUDGMENT

LEE J:

INTRODUCTION

1    For some time the respondent/cross claimant in this proceeding (Arup) has raised issues concerning whether the applicants (BrisConnections Parties) and the cross respondents (Sponsors) are required to “produce” documents over which they maintain a claim for legal professional privilege.

2    As long ago as 21 December 2016, an interlocutory application was filed seeking production of various classes of documents to Arup. The parties, perhaps unsurprisingly, were not sufficiently enthused by a discovery dispute to take up an offer of an early hearing between Christmas and New Year’s Day last year, and the dispute has since gone through a period of quiescence until relatively recently. When the Court recently relisted the proceeding for case management, directions were made for the hearing of the outstanding dispute and an amended interlocutory application (Application) was provided to the Court along with an outline of submissions filed by Arup on 9 May 2017.

3    At the commencement of the hearing of the Application, Mr Pike SC, senior counsel for Arup, informed the Court that the only relief that would be pressed would be prayers 2 and 3 (and, I infer, the additional prayer relating to the costs of the Application).

4    The consequence of this development was to attenuate the ambit of the dispute to two instances where it is contended that the way in which the BrisConnections Parties joined issue with Arup’s defence gave rise to issue waiver (being, of course, a form of implied waiver: see Commissioner of Taxation v Rio Tinto Limited (2006) 151 FCR 341 at 357).

5    As the alleged issue waiver was only relevant to the BrisConnections Parties, the legal representatives of the Sponsors were excused from the interlocutory hearing. I reserved the issue of costs associated with the abandonment of the relief originally sought as against the Sponsors and will return to this issue of costs at the conclusion of these reasons.

6    Before dealing with the two instances of alleged issue waiver, it is useful to first, provide context by explaining, at a relatively high level of generality, the relevant issues in the proceeding; and secondly, to examine the precise form of relief sought in that part of the Application that is pressed.

BACKGROUND: THE ISSUES IN THE PROCEEDING

7    The parties are not novices in raising issue waiver. Indeed, the background to the dispute is discussed in a decision of the Full Court on a different application concerning this species of implied waiver: Macquarie Bank Limited v Arup Pty Limited [2016] FCAFC 117 at [5]–[10].

8    In very broad summary:

(a)    the BrisConnections Parties allege that Arup engaged in misleading or deceptive conduct or was negligent in preparing traffic forecasts on which BrisConnections relied;

(b)    Arup then brought a claim against the Sponsors (Macquarie Bank Limited, Thiess Pty Ltd and John Holland Pty Ltd) by which it sought to pass on to those parties any liability it may have to the BrisConnections Parties which exceeds $10 million (a liability cap which is relied upon by Arup);

(c)    the Engagement Agreement, pursuant to which Arup contends it provided the traffic forecast reports, contained two important features:

(i)    a reliance statement which was said to set out the terms upon which persons could rely on the traffic forecasts prepared by Arup (Traffic Report Reliance Statement); and

(ii)    a contractual term (at clause 17.9) that was said to limit the liability of Arup to the Sponsors or to any other party to an amount not exceeding $10 million (Limitation of Liability).

9    As noted above, Arup alleges that the traffic forecast reports were prepared by Arup pursuant to the Engagement Agreement; it is further said that Arup only offered to provide each of the reports to the BrisConnections Parties on the condition that any reliance upon them was subject to the Limitation of Liability. It is then asserted that at the time the BrisConnections Parties relied on the reports they accepted the offer (or agreed to the Limitation of Liability condition by virtue of their conduct generally); it follows, as a matter of contract, that the BrisConnections Parties are bound by the Limitation of Liability.

10    Moreover, and directly relevant to the question of issue waiver, Arup also brings a misleading and deceptive conduct claim. This is pleaded, as a defence claiming set off, at paragraphs 137–144 of the Amended Defence to the Second Further Amended Statement of Claim (Defence). Again speaking generally, it is contended that by reason of a number of circumstances set out at paragraphs 101–130 of the Defence, Arup had the “reasonable expectation” that if one or other of the BrisConnections Parties formed the view that they were not bound by the Limitation of Liability, then they would disclose that state of affairs to Arup. No doubt the expression “reasonable expectation” is used by the pleader by reason of the fact that unless the circumstances are such as to give rise to the reasonable expectation that if some relevant fact exists it would be disclosed, it is difficult to see how mere silence could support the inference that the fact does not exist: see Kimberley NZI Finance Ltd v Torero Pty Ltd (1989) ATPR (Digest) 46-054 at 46-056; Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 at 41 (Full Court).

11    In any event, it is further contended that one or other of the BrisConnections Parties did form the view that they were not bound by the Limitation of Liability and that the failure to apprise Arup of this position, in the relevant circumstances, amounted to misleading or deceptive conduct.

12    As is explained in detail below, the precise way in which the BrisConnections Parties, in their Reply to the Defence to Second Further Amended Statement of Claim (Reply), respond to two positive allegations made by Arup in support of this aspect of its claim, gives rise to the issue waiver dispute.

THE FORM OF PRAYERS 2 & 3 OF THE APPLICATION

13    The form of orders in prayers 2 and 3 of the Application are heterodox. In the document filed with Arup’s submissions they are expressed as follows:

2.    The Applicants produce documents required to be discovered pursuant to orders for discovery made in the proceeding, or pursuant to any further orders for discovery made in the proceeding, relevant to a fact in issue in the proceedings and containing legal advice relating to the terms of the reliance statement, and statements regarding limitation of liability, to be included in the PDS to be issued by BrisConnections Management Company Limited, considered in the following meetings:

a.    Commercial / Legal Sub-Committee - meetings recorded in Terms of Reference dated 7 February 2008 and 10 June 2008; and

b.    Due Diligence Committee - 11 February 2008 and 18 February 2008.

3.    The Applicants produce documents required to be discovered pursuant to orders for discovery made in the proceeding, or pursuant to any further orders for discovery made in the proceeding relevant to a fact in issue in the proceedings and containing legal advice, relating to the responsible entity's obligations under clause 30 of the agreement between Thiess Pty Ltd, John Holland Pty Ltd, Macquarie Bank Limited and Arup Pty Limited, considered in the BrisConnections Management Company Limited Board Meeting held on 24 June 2008.

14    Although orders in this form were not ultimately pressed, I indicated at the hearing of the Application that even if I was convinced issue waiver was established, I would decline to make orders in accordance with prayers 2 and 3. They have a number of defects, the most important being that they purport to act prospectively in respect of unspecified documents not currently the subject of any existing discovery order; indeed, they contain the implicit assumption that there will be such orders.

15    The usual and orthodox course would have been to identify either a specified document or documents listed in Part 2 of the list of documents in respect of which privilege is said to have been impliedly waived. If the contentions as to waiver were vindicated, that specific document or those documents (currently discovered in Part 2 of the list) would be the subject of orders for inspection. It would follow that an amended discovery list would be required to be prepared after (and informed by) the decision as to the existence of the issue waiver. This amended list would then list (but now in Part 1) the specified document or documents the subject of the order and any further discovered documents known to the person verifying the amended list to be the subject of the waiver. In this proceeding, this would not extend further than documents previously discovered in Part 2 (over which privilege is claimed) as the evidence reveals that the parties are in agreement that no additional searches are required, at least at present. Although in this case a “Protocol for Electronic Exchange of Documents” may change the format of the list contemplated by the Rules, the principle is the same. Indeed, in cases where a list of documents is prepared properly in accordance with FCR 20.17, the order for inspection should not cause further searches to be made but rather the reclassification of documents already discovered but in respect of which privilege can no longer be conscientiously maintained because of the findings as to waiver.

16    It would be wrong to dismiss these sorts of procedural issues as vulgarities. Compliance with them focuses the argument as to waiver on the precise communication said to no longer be able to be regarded as confidential. An argument about implied waiver should be grounded in the particular circumstances as it requires a “fact-based inquiry” which will turn on its own facts and circumstances: Rio Tinto at [45], [47] and [61]. It also ensures the Court is not proceeding impermissibly on the basis of assumptions.

17    In any event, despite these issues, Arup and the BrisConnections Parties were content to proceed on the basis that the dispute as to issue waiver could be decided in the abstract with the consequences sorted out later. Arup’s argument, as developed in writing and orally, did, however, helpfully focus on the particular facts and circumstances and it was common ground that some, albeit largely unspecified, documents would be required to be produced for inspection if waiver was established. It followed that the question of issue waiver was not hypothetical and hence I was prepared to proceed on the basis proposed by Arup.

STRUCTURE OF REASONS

18    I propose to first identify how Arup puts its two contentions as to issue waiver; secondly, I will turn to an examination of the relevant principles that govern issue waiver; and thirdly, I will summarise the key submissions of the parties (to the extent I have not already done so in identifying Arup’s contentions) and consider if issue waiver is established in relation to what I will call the First Alleged Issue Waiver and the Second Alleged Issue Waiver.

THE FIRST ALLEGED ISSUE WAIVER

19    The First Alleged Issue Waiver is in relation to documents concerning “the terms of the reliance statement, and statements regarding limitation of liability, to be included in the [Product Disclosure Statement] to be used by BrisConnections Management Company Limited” (BMCL) and which was considered in two meetings of what was described as the “Commercial and Legal Sub-Committee” and two meetings of the relevant Due Diligence Committee (DDC).

20    Arup submits that any privilege has been waived by paragraph 15 of the Reply, which is in response to paragraph 123 of the Defence. I set out those paragraphs of the pleadings in full below.

21    Paragraph 123 of the Defence states:

Between in or around February 2008 and June 2008, the Engagement Agreement, the Limitation of Liability, the Traffic Report Reliance Statement and the terms of the reliance statement to be included in the Product Disclosure Statement in the event that an initial Public Offering were to occur (Engagement Agreement, Schedule 2) were considered by the Traffic Sub-Committee, the Legal and Commercial Sub-Committee and the [DDC].

Particulars

Traffic Sub-Committee – Terms of Reference dated 24 January 2008, 4, 12, 19, 25 and 28 February 2008, 3 and 31 March 2008, 6, 10, 16 and 17 June 2008; Commercial / Legal Sub-Committee – Terms of Reference dated 7 February 2008 and 10 June 2008; Minutes of Second Meeting of [DDC] dated 11 February 2008; Minutes of Third Meeting of [DDC] dated 18 February 2008.

22    Paragraph 15 of the Reply states:

In respect of paragraph 123 of the Defence, the Applicants:

(a)    say that the [DDC] and the Legal and Commercial Sub-Committee considered the terms of the reliance statement to be included in the PDS in the context of:

(i)    whether Arup could be referred to in the PDS as an independent expert;

(ii)    whether the statements regarding limitations of liability to be included in the PDS would be enforceable against equity investors, and that accordingly Arup might request back-to-back indemnities from the RE;

(b)    deny that the [DDC], the Traffic Sub-Committee or the Legal and Commercial Sub-Committee considered the Traffic Report Reliance Statement or clause 17.9 of the Engagement Agreement; and

(c)     otherwise deny the paragraph.

23    It is said by Arup, that by paragraph 15 of the Reply, the BrisConnections Parties expressly rely on the matters considered by the DDC and the Commercial and Legal Sub-Committee, in order to respond to what Arup alleges was considered at those meetings; it follows, Arup contends, that the BrisConnections Parties have put in issue the substance of the matters considered in the meetings. If this is correct, the BrisConnections Parties have produced material that records the matters considered by the DDC and the Commercial and Legal Sub-Committee at the relevant meetings and, it is asserted, these documents “clearly demonstrate that legal advice informed consideration of the matters relied on in paragraph 15 of the Reply”.

24    This submission is best understood in the context of four documents, which, together with three other documents, comprised Exhibit A on the Application. These documents are said by Arup to demonstrate clearly that legal advice informed consideration of the matters relied upon in paragraph 15 of the Reply and are as follows:

(a)    The Terms of Reference for the Commercial and Legal Sub-Committee dated 7 February 2008 [BCG.100.007.1462] recorded on page .1462_014. Part of this extract has been underlined and it will be necessary to return to the significance of the underlined words below:

(b)    The Terms of Reference for the Commercial and Legal Sub-Committee dated 10 June 2008 [BCG.100.008.5292] recorded on page .5292_023:

(c)    The minutes of the DDC meeting held on 11 February 2008 [BCG.102.002.5568] which states, under the agenda item “Update on status of other expert’s reports” on page .5574:

•    It was noted the reliance statements presently proposed for the experts, Arup and URS, included limitations of liability (in both cases limited to $10 million). Clauses of this nature have obvious difficulties in the context of a [sic] IPO as it is doubtful they would be enforceable against external investors under the PDS. The Committee noted the possibility that the engineering and traffic experts might request back-to-back indemnities from the issuer which may raise difficulties in the finalising of the PDS.

•    Action item: The issue relating to the back-to-back indemnities to be referred to the Legal and Commercial sub-committee for immediate consideration in this week’s sub-committee meeting.

(d)    The minutes of the DDC meeting held on 18 February 2008 [BCG.219.001.0025], which state under the agenda item “Update of other expert’s reports” on page .0030:

•    [REDACTED]

•    The Committee discussed a provision of the reliance statement under which Arup sought to limit its liability. It was agreed that BrisConnections would not seek to renegotiate term, however the Committee may need to consider an appropriate contingency in the event the expert were to be concerned on the enforceability of this provision.

THE SECOND ALLEGED ISSUE WAIVER

25    The Second Alleged Issue Waiver is in relation to documents containing legal advice relating to the responsibilities of BMCL (as the responsible entity) under clause 30 of the agreement between the Sponsors and Arup, considered in the BMCL Board Meeting held on 24 June 2008. Arup submits that privilege has been waived by paragraph 16(c) of the Reply, which responds to paragraph 125 of the Defence.

26    Paragraph 125 of the Defence states:

On or about 24 June 2008, a board meeting of [BMCL] was held (the Board meeting), wherein:

(a)    Mr John Walter of Corrs Chambers Westgarth advised the board of     directors of [BMCL] in relation to the terms of engagement of Arup;

(b)    Mr Trevor Rowe, Chairman of [BMCL], noted that the obligations were that of the Sponsor Group and not [BMCL]; and

(c)    it was resolved that any request by the Sponsor Group in relation to Arup be declined.

Particulars

Minutes of Board Meeting of [BMCL] dated 24 June 2008.

27    The BrisConnections Parties then plead, at paragraph 16(c) of their Reply:

In respect of paragraph 125 of the Defence, the Applicants say that:

...

(c)    at the Board Meeting held on 24 June 2008, the board of [BMCL]:

(i)    considered the RE's obligations, if any, under clause 30 of the Engagement Agreement;

(ii)    did not consider whether the RE or any other party was bound by any purported limitation of liability contained in clause 17.9 of the Engagement Agreement; and

(d)     otherwise deny that paragraph.

28    Arup then points to a further document which forms part of Exhibit A, the minutes of the relevant Board Meeting of BMCL [BCG.005.001.0413], which have been discovered and which, on page .0414, relevantly state:

Arup     Mr Walter advised the Board in relation to the terms of engagement of Arup Pty Ltd.

The Chairman noted the obligations were that of the Sponsors and not [BMCL].

Resolved that any request by the Sponsors in relation to Arup be declined.

29    Arup contends that since the minutes state that Mr Walter of Corrs Chambers Westgarth advised on the terms of engagement with Arup, paragraph 16(c) refers to the consideration of that legal advice by the Board, in order to substantiate the Reply. It follows, it is argued, that the BrisConnections Parties “have put in issue the substance of that advice”.

RELEVANT PRINCIPLES

30    There was no real dispute as to the applicable principles although, as I will explain below in the context of considering the submissions of the parties, there were differences of emphasis.

31    It is unnecessary to provide an excursus on the law as to implied waiver in general, or issue waiver in particular. The principles have been often assayed and, very recently, were collected by Flick J in BrisConnections Finance Pty Limited (Receivers and Managers appointed) v Arup Pty Limited [2016] FCA 438 at [18] and, on the application for leave to appeal, by the Full Court in Macquarie Bank Limited v Arup Pty Limited [2016] FCAFC 117 at [24]–[32]. Subject to what follows, it is enough to repeat the oft-quoted formulation of Allsop J (as the Chief Justice then was) in DSE (Holdings) Pty Ltd v Intertan Inc (2003) 127 FCR 499 at [58], that an implied waiver arises when:

... 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. [Emphasis in original]

32    Additionally, for present purposes, Arup places particular emphasis on the following two expressions of principle:

(a)    a pleading of legal advice may be sufficient to give rise to a waiver of privilege, however, even when a pleading does not deploy or even refer to legal advice or its effect, it is still open to conclude that privilege is waived if other factors warrant such a finding: see Hancock v Rinehart [2013] NSWSC 1978 at [22] per Brereton J;

(b)    what involves inconsistency and relevant unfairness are express or implied assertions about the content of a privileged communication, while maintaining privilege; in this regard “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”: Council of the New South Wales Bar Association v Archer (2008) 72 NSWLR 236 at 252, per Hodgson JA (with whom Campbell JA agreed).

33    Without detailing a litany of cases that largely turn on their own facts and circumstances, before leaving the topic of how the existence of issue waiver is to be identified, four observations can usefully be made:

(a)    Legal professional privilege is a substantive legal right, and complications in determining when it exists and when it can be maintained reflect the reality that, in considering privilege and its waiver, there is an inherent tension between competing public interests: on the one hand, access to all relevant material for the purposes of quelling a controversy; on the other, the important public interest in maintaining confidentiality in communications between clients and lawyers. A reflection of this tension can be seen in those cases which direct attention to the importance of privilege as a substantive legal right; because of this importance, as Bromwich J stated in Cantor v Audi Australia Pty Ltd [2016] FCA 1391 at [99]: “quite specific inconsistency is necessary to establish waiver. Even reference to legal advice, without more, will not suffice. The inconsistency must be reasonably manifest”.

(b)    The very numerous cases on issue waiver and the differing emphases (and even apparent inconsistencies in expression) in some cases reflect the complexity of reconciling this tension. More particularly, this tension finds reflection in answering the question as to whether an inconsistency sufficient to identify waiver is established. As Flick J noted in BrisConnections Finance at [19], although it is possible to distil, from the very many judicial expressions which deal with this topic, illustrations and various factors to be taken into account in identifying issue waiver, “each is directed to a common attempt to identify that conduct which puts a client in a position of acting inconsistently with the maintenance” of a continued privilege claim.

(c)    The so-called ‘evaluative approach’ has been treated with some caution (including by Wigney J in Archer Capital 4A Pty Limited v Sage Group plc (No 3) (2013) 306 ALR 414; [2013] FCA 1160 at [16]–[23] and the Full Court in Macquarie Bank Limited v Arup Pty Limited at [36]), as the main focus should always be on the Mann v Carnell test ((1999) 201 CLR 1), and posing questions which transparently call for an evaluative analysis should not be used “as a surrogate” for the expression of principle in DSE and Rio Tinto.

(d)    While applying the correct test, however, the question of waiver is one of fact and degree (Osland v Secretary, Department of Justice (2008) 234 CLR 275 at 298–299 per Gleeson CJ, Gummow, Heydon and Kiefel JJ) and determining whether relevant inconsistency exists is not some form of calculus answered by the mechanical application of expressions of principle in cases said to be analogous.

34    With these matters in mind I now come, in more detail, to the two allegations of issue waiver alleged in the present case.

CONSIDERATION

35    In the process of identifying both the First Alleged Waiver and the Second Alleged Waiver above, I have summarised, in general terms, the submissions of Arup and most of the documents to which I was taken and upon which Arup relies. I now turn to a more detailed examination of each of the alleged acts of waiver in the Reply.

The First Alleged Waiver

36    The first thing to note about paragraph 15 of the Reply (extracted at [22] above) is that it is only subparagraph (a) that contains any positive assertions by the BrisConnections Parties and that the balance of the paragraph contains denials (subparagraph (b), being a specific denial and then subparagraph (c), a more general denial). Indeed, properly analysed, subparagraph (b) is otiose.

37    The second thing to be noted, as Mr Rich SC submitted, is that if one then focuses on subparagraph (a), what can be seen is that it engages with an assertion (in the Defence at paragraph 123) that four matters were considered by three different bodies: the first matter is the Engagement Agreement generally (a defined concept in the pleading); the second matter is the Limitation of Liability, which, as explained at [8] above, is at clause 17.9 of the Engagement Agreement; the third matter is the Traffic Report Reliance Statement (again, a defined term in the pleading); and the fourth matter is the terms of the reliance statement to be included in the PDS. These matters are alleged by Arup to have been considered by three bodies: first, the Traffic Sub-Committee, secondly, the Commercial and Legal Sub-Committee; and thirdly, the DDC.

38    As can be seen, the joinder of issue by the BrisConnections Parties in paragraph 15 is to deny that these matters, in truth, were considered by these bodies (save as indicated in subparagraph (a)).

39    To the extent the plea travels beyond a denial (by the opening words of subparagraph (a)), it states that two of these three bodies (the DDC and the Commercial and Legal Sub-Committee) considered only one of these four matters (that is, the terms of the reliance statement to be included in the PDS).

40    The reply plea could have stopped there, but no doubt this would have been open to a request, by way of particulars, for clarification. Moreover, to leave matters Delphic would hardly have contributed to furthering the overarching purpose. In any event, the balance of subparagraph (a) went on to assert that the consideration (by the two bodies of the one matter admitted) occurred in two particular contexts being: first, whether Arup could be referred to in the PDS as an independent expert; and secondly, whether the statements regarding limitations of liability to be included in the PDS would be enforceable against equity investors, and that Arup might request back-to-back indemnities. I pause to remark that textually (and absent recourse to the contemporaneous documents), it is a trifle obscure whether both these bodies considered the reliance statement to be included in the PDS in both these contexts, but for present purposes, this does not matter.

41    As to the first of these contexts identified at subparagraph 15(a)(i), whether Arup could be referred to in the PDS as an independent expert, it appears to be accepted that the basis for this aspect of the pleading was an “issue” relating to the terms of the “Expert Mandates” referred to in the Terms of Reference for the Commercial and Legal Sub-Committee (copies of which were in evidence dated 7 February 2008 and 10 June 2008). The later version of the Terms of Reference, under the heading “Action/ Outcome”, refers to:

Corrs, ABL, MECM and JFI agreed to refer to URS and Arup as experts rather than independent experts. Simon Morris and Deliotte [sic] have further discussed bases of Deloitte appointment to ensure mandate is consistent with accounting standards in respect of their independence.

42    Mr Pike contends that if one refers to the Terms of Reference (versions of which I have reproduced at [24(a) and (b)] above) it is plain contextually that Corrs Chambers Westgarth prepared a memorandum in relation to this topic and that this legal advice “must have been what informed or that must be where one gets the content of the positive allegation in (a)” (Transcript p 28 ll 34–35). It is also evident, from the version of the Terms of Reference dated 10 June 2008 (see [24(b)] above), that the “DDC has been informed of the committee’s concerns with respect to liability limitations”.

43    As to the second of these contexts identified at subparagraph 15(a)(ii), the words used are, Mr Rich submitted, drawn from the minutes of the DDC meeting held on 11 February 2008. This document (which I have reproduced at [24(c)] above) refers to an “Action item” being “[t]he issue relating to the back-to-back indemnities to be referred to the Legal and Commercial sub-committee for immediate consideration in this week’s sub-committee meeting”.

44    Again, Mr Pike contends that if one refers to this document with the minutes of the DDC meeting held a week later on 18 February 2008 (reproduced at [24(d)] above), it is plain that Corrs Chambers Westgarth gave advice (a summary of which has been redacted) on the topic of provision of the reliance statement under which Arup sought to limit its liability and that this advice must have informed the consideration of this topic.

45    Of course, Mr Pike was cognisant of the fact that when one comes to paragraph 15 of the Reply, there is no express statement of any legal advice. He contended, however, that the BrisConnections Parties were, “by implication … obviously … putting in issue the contents of the legal advice” (Transcript p 22 ll 30–31) and having put the contents of otherwise privileged communications in issue, such an act can be regarded as inconsistent with the confidentiality that would otherwise pertain to the communication: see Rio Tinto at [52]. Furthermore, it was suggested that close regard must be had to Hodgson JA’s observations in Archer quoted at [32(b)] above.

46    As I have explained above, however, mechanical application of words used in other cases presents difficulties. The relevant observations of Hodgson JA, must be understood in their context and without ignoring the use by his Honour of the modal verb “may”. Indeed, in the same judgment, Hodgson JA (at [48]), in a passage quoted by the Full Court in Arup at [32]) referred specifically to the need for an express or implied assertion about the content of a privileged communication which gives rise to a relevant inconsistency. 

47    In the end, it all comes back to inconsistency, and this is why, at bottom, the question is whether, inconsistently with the maintenance of privilege, the Reply has directly or indirectly put the contents of the otherwise privileged communications in issue or whether the BrisConnections Parties made an assertion as part of their case 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 of the contents of an otherwise privileged communication: Rio Tinto at [65] (Full Court); The Queensland Local Government Superannuation Board v Allen [2016] QCA 325 at [71] (Court of Appeal).

48    This is simply not the case here. Paragraph 15(a) of the Reply is a response to a factual assertion as to what happened at various meetings; there is no express reference to legal advice, nor is there disclosure of its content or substance. At best, the most that can be said is that legal advice informed consideration of one of the matters pleaded in the Defence at paragraph 123, by two bodies, as referred to in paragraph 15(a) of the Reply. The extent to which it informed consideration (of what may have been a multifactorial process of recommending and decision making) cannot be identified with precision. In the particular facts and circumstances of this case, that is not enough.

49    It is a commonplace that in complex commercial decision-making, one might have regard to, among other things, legal advice, without seeking to deploy the advice or use that advice inconsistently with its confidential character. Indeed, speaking generally, it is very difficult to conceive of a circumstance where a conclusion drawn (or complex decision made) by a due diligence committee would not, at least at some level, be informed by legal advice (given the usual composition of due diligence committees and role of such committees to ensure a prospectus or other disclosure document contains the information required by the Corporations Act 2001 (Cth), does not contain a false, misleading or deceptive statement nor omit material information). This would include communications between sub-committees and a due diligence committee as to matters for which a due diligence committee had ultimate responsibility. Returning to the circumstances of this case, an example of this sort of communication is the Commercial and Legal Sub-Committee informing the DDC of its “concerns with respect to liability limitations in the reliance statement/ mandate letters” (as recorded in the Terms of Reference dated 10 June 2008). Confidential communications of this sort are the whole reason such subcommittees exist.

50    In this sense it may be accepted that legal advice informed consideration by the Commercial and Legal Sub-Committee and the DDC of the one matter (discussed in two contexts) referred to in paragraph 15 of the Reply but notwithstanding this, fairly construed, there has been no assertion by BrisConnections Parties in paragraph 15 that puts the contents of confidential communications in issue or lays those communications open to scrutiny, with the consequence that no inconsistency here arises between the making of the assertion in subparagraph (a) and the maintenance of the privilege: see Rio Tinto at [65]; Queensland Local Government Superannuation Board v Allen at [71]. Moreover, to the extent relevant, one does not need access to the confidential material to understand the fact that the DDC was informed of the Commercial and Legal Sub-Committee’s concern with liability limitations in the reliance statement (see [24(b) above]); nor does one need access to such material to understand why it is that Arup has joined issue the way it has in paragraph 15 of the Reply; suggestions of any forensic unfairness (to the extent fairness plays a part in the analysis, as explained in Mann v Carnell at [29]) are, in my view, overstated.

51    The First Alleged Waiver is not made out.

The Second Alleged Waiver

52    The Second Alleged Waiver is somewhat different, but the result is the same.

53    As has already been noted, an issue in the case is whether Arup had a reasonable expectation that if one or other of the BrisConnections Parties formed the view that they were not bound by the Limitation of Liability that they would disclose the existence of that view to Arup. The Limitation of Liability (as defined in paragraph 110 of the Defence) is that provided for in clause 17.9 of the Engagement Agreement.

54    In paragraph 138 of the Defence, the Arup makes the positive assertion that “the Applicants formed the view that they were not bound by the Limitation of Liability”. Particulars are given of this assertion by reference to a board meeting of BMCL on 24 June 2008. The minutes of this meeting of BMCL are extracted at [28] above. Arup then goes on to particularise paragraph 138 of the Defence further by inferring (because of the attendees at that meeting and a commonality of directors) that the other BrisConnections Parties had formed the same view.

55    The BrisConnections Parties’ response is to confirm consideration took place as to the responsible entity’s obligations, if any, under clause 30 of the Engagement Agreement but to deny specifically any consideration of clause 17.9 of the Engagement Agreement (that is, the defined Limitation of Liability) at the meeting. By way of completeness, clause 30 (and clauses 30.5 and 30.6 in particular) provided that Arup’s total liability “may be reduced by agreement to not exceeding $500,000” in the event the Sponsors elected to proceed with an IPO (subject to agreement by the future directors of the company that was to issue the IPO).

56    It is against this background that Arup now contends that by referring positively to the fact that on 24 June 2008, the board of BMCL considered the responsible entity's obligations under clause 30 of the Engagement Agreement that this amounts to a waiver of the privileged communications that informed those considerations.

57    Given the terms of minutes extracted at [28] above, it can be accepted that Mr Walter advised the board of directors of BMCL in relation to clause 30, and one presumes that such advice was relevant to the response of Mr Rowe, the Chairman of BMCL, to note that “certain obligations” were that of the Sponsors and not BMCL. It can also be accepted that the confidential advice may have been considered in the context of a resolution being discussed and then passed (that a request by the Sponsors in relation to Arup was to be declined). The problem for Arup is that does not involve the BrisConnections Parties, directly or indirectly, putting the contents of Mr Walter’s advice in issue nor have the BrisConnections Parties made an assertion, in paragraph 16(c) of their Reply, that can be fairly said to lay open his advice to scrutiny, with the consequence that an inconsistency arises between the making of the assertion and the maintenance of the privilege in Mr Walter’s advice.

58    The relevant plea was a denial that the topic pleaded by Arup was discussed at the meeting Arup particularised, followed by an explanation of what, in fact, was considered at that meeting. The notion that any forensic unfairness is occasioned by this is, with respect, difficult to understand. Examination of questions of waiver is a fact-dependent analysis and the facts here are a long way away from the sort of case where a party is occasioning forensic unfairness by reason of an inconsistency between an assertion and maintenance of privilege.

59    The Second Alleged Waiver is not made out.

ORDERS AND COSTS

60    The only relief pressed has failed and it follows that an order will be made that the Application be dismissed.

61    As I noted at [5] above, the issue of costs of the Sponsors was reserved. I did so because I considered that it may be appropriate to deal with all issues as to the Sponsors’ costs together; I was also conscious that another application may be made, in a more orthodox form, to raise similar issues that were the subject of the abandoned prayers for relief.

62    On reflection, however, given the failure of the Application generally, my preliminary view is that I should deal at the one time with the issue of costs (including as to the abandonment of the Application in relation to the Sponsors). My tentative view would be to order that Arup pay the costs of the BrisConnections Parties and of the Sponsors of, and incidental to, the Application. I am very conscious, however, that there is much history to this Application, including as recounted in correspondence which was annexed or exhibited to affidavits filed but not read into evidence, and which may be relevant to costs. There may have been things that Arup could have said about what, at first glance, seems a somewhat superficial approach those parties claiming privilege took to proof of that privilege, which may have contributed to the unusual course the Application has taken. Accordingly, I would propose to hear from all parties as to what orders they seek with any such submission to be filed within seven days. The submissions should be no longer than two pages. Unless any party specifically wishes to be heard orally, I will then determine the issue as to costs on the papers.

Associate:

Dated:    29 May 2017

SCHEDULE OF PARTIES