FEDERAL COURT OF AUSTRALIA

Generate Group Pty Ltd v Sea-Tech Automation Pty Ltd [2017] FCA 1261

ORDERS

THE COURT ORDERS THAT:

1.    Paragraph 2 of the interlocutory application dated 17 July 2017 be dismissed.

2.    Within seven days of the date of this order, the parties file and serve written submissions of no more than three pages on the question of costs.

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

REASONS FOR JUDGMENT

GLEESON J:

1    The applicant (“Generate”) claimed legal professional privilege (“LPP”) over two packets of documents produced in answer to subpoenas addressed to Generate and Generate’s lawyer, Stephen Blanks trading as SBA Lawyers.

2    By prayer 2 of interlocutory application dated 17 July 2017, the first respondent (“Sea-Tech”) sought an order that LPP “does not arise” in respect of certain documents contained in the two packets of documents. On 16 August 2017, Jagot J, the docket judge, referred the determination of that application to another judge.

3    The issue for decision is whether Generate’s LPP claims have been established.

Background facts

4    This proceeding commenced on 18 December 2015.

5    A mediation was conducted on 6 February 2017 by a registrar of this Court.

6    On 10 February 2017, there was a case management hearing before Jagot J at which orders were made by consent.

7    On 24 March 2017, there was an interlocutory hearing before Jagot J.

8    The LPP claims were supported by two affidavits of Simone Pettit, Generate’s Operations Manager. Ms Pettit gave evidence that she attended the 6 February 2017 mediation.

Disputed documents

9    Documents in a packet marked “S-13” were produced in answer to the following paragraphs of the subpoena to Generate:

8.    Any documents evidencing or recording communications in the period 26 May 2014 to 12 February 2015 between [Generate] and Stephen Blanks or any solicitor working for, or with, Stephen Blanks.

9.    Any documents evidencing or recording communications in the period 30 January 2017 to 20 March 2017 between [Generate] and Stephen Blanks or any solicitor working for, or with, Stephen Blanks.

10    Prima facie, documents falling within the scope of these paragraphs are likely to be protected by legal professional privilege.

11    Documents in a packet marked “S-14” were produced in answer to the paragraphs of the subpoena to Mr Blanks which mirrored paras 8 and 9 of the subpoena to Generate, as well as the following paragraphs:

5.     Any documents evidencing or recording communications in the period 26 May 2014 to 12 February 2015 between [Generate] or any employee of [Generate] and the Auburn Tennis Club or any employee or officer of the Auburn Tennis Club.

6.     Any documents evidencing or recording communications in the period 30 January 2017 to 20 March 2017 between [Generate] or any employee of [Generate] and the Auburn Tennis Club or any employee or officer of the Auburn Tennis Club.

12    In her affidavit made 26 July 2017, Ms Pettit stated that the documents over which the LPP claims were made are:

(1)    120 documents produced in answer to paras 8 and 9 of the subpoena to Generate; and

(2)    172 documents produced in answer to paras 5, 7 and 8 of the subpoena to Mr Blanks.

13    Ms Pettit gave evidence that during the time periods identified in the relevant paragraphs of the subpoenas, and during the time in between those periods, Generate had retained Mr Blanks for the purposes of obtaining confidential legal advice in relation to a range of commercial matters; and confidential legal advice and representation in relation to various disputes including the present proceedings, unrelated District Court proceedings and anticipated litigation.

14    On 26 July 2017, Jagot J ordered Generate to serve a list of documents specifying:

(a)    in respect of each document over which privilege is claimed and which was brought into existence in connection with the facts, matters and circumstances arising in these proceedings:

(i)    the type of document;

(ii)    the date and time of the document;

(iii)    the author(s) and the recipient(s) of the document; and

(iv)    the basis upon which a claim for privilege is made (e.g. advice privilege or litigation privilege) and the facts said to support such a claim; and

(b)    that documents other than those in (a) were not brought into existence in connection with the facts, matters and circumstances arising in these proceedings.

15    Pursuant to that order, Ms Pettit swore an affidavit on 10 August 2017. She annexed to that affidavit two lists of documents, as follows:

(1)    SP-2, which was an unnumbered list of documents said to have been brought into existence in connection with the facts, matters and circumstances arising in these proceedings and contained in “S-13”.

(2)    SP-3, which was an unnumbered list of documents said to have been brought into existence in connection with the facts, matters and circumstances arising in these proceedings and contained in “S-14”.

16    In accordance with the 26 July 2017 order, Ms Pettit verified that the documents in “S-13” and S-14” not listed in SP-2 and SP-3 were not brought into existence in connection with the facts, matters and circumstances arising in these proceedings.

17    At the hearing, Generate tendered numbered versions of SP-2 and SP-3. There are 238 numbered documents listed in the numbered version of SP-2 and 245 numbered documents in the numbered version of SP-3.

18    Unsurprisingly, having regard to the terms of the subpoenas, the disputed documents are substantially mirror images of communications between Generate and Mr Blanks.

19    Counsel for Generate sought to explain the difference between the number of documents produced by the fact that Mr Blank stored his records in a manner which maintained attachments to emails in a native file format, while Generate maintained documents with attachments as single PDF documents. In cross-examination, Ms Pettit confirmed that the contents of SP-2 and SP-3 were essentially mirror images. In submissions, Mr Brennan clarified SP-2 and SP-3 are essentially mirror images in relation to the documents produced in answer to paras 8 and 9 of the subpoena to Generate and paras 7 and 8 of the subpoena to Mr Blanks. There are documents (in a separate list of 42 documents that forms part of SP-3) which were produced in answer to para 5 of the subpoena to Mr Blank. Mirror images of those documents were produced by Generate in answer to the subpoena but were not the subject of the LPP claims.

20    After hearing the evidence, set out below, as well as Mr Brennan’s oral submissions, I invited Mr Botsman to obtain instructions over the lunch adjournment about whether it would be possible to narrow any of the issues in dispute. After the break, Mr Botsman informed me that Sea-Tech did not press its submissions that the evidence of Ms Pettit was insufficient to support a claim for LPP, that Sea-Tech withdrew its previous objection to the Court inspecting the documents listed in SP-3, and that it would not be necessary for the Court to review nine documents which were copies of documents already produced to Sea-Tech. In effect, Sea-Tech did not suggest that Ms Pettit’s evidence was insufficient to establish the LPP claims but it asked the Court to examine all of the documents to satisfy itself of the claims. In the light of that submission, I made an order that Sea-Tech identify the documents in SP-2 and SP-3 over which it continued to dispute that LPP had been proved.

21    On 26 September 2016, I received a bundle of 57 documents in respect of which the LPP claims were disputed.

Legal principles

22    A person should be entitled to seek and obtain legal advice in the conduct of his or her affairs, and legal assistance in and for the purposes of the conduct of actual or anticipated litigation, without the apprehension of being prejudiced by subsequent disclosure of the communication: Esso Australia Resources Ltd v Federal Commissioner of Taxation [1999] HCA 67; (1999) 201 CLR 49 (“Esso”) at [35].

23    In civil proceedings, confidential communications passing between a client and a legal adviser need not be given in evidence or otherwise disclosed by the client and, without the client’s consent, may not be given in evidence or otherwise disclosed by the legal adviser if made either (1) to enable the client to obtain, or the adviser to give, legal advice or assistance, or (2) with reference to litigation that is actually taking place or was in the contemplation of the client: Heydon JD, Cross on Evidence (11th ed, LexisNexis Butterworths, 2017) at [25210].

24    The rule is most commonly applied to confidential communications between client and legal adviser. Confidentiality of communications may be inferred from the positions that the parties to the communications occupied and the context in which the communications were obviously sent: Construction, Forestry, Mining and Energy Union v De Martin & Gasparini Pty Ltd [2017] FCA 856 (“CFMEU”) at [14].

25    To make out a claim of privilege, it is necessary to establish that the disputed documents comprised or contained confidential communications made for the dominant purpose of obtaining and/or giving legal advice or conducting pending or contemplated litigation: Hancock v Rinehart (Privilege) [2016] NSWSC 12 (“Hancock”) at [5]. The party asserting LPP has the onus of establishing the facts necessary to support the claim. In Hancock at [7], Brereton J said:

To sustain a claim of privilege, the claimant must not merely assert it; but must prove the facts that establish that it is properly made. Thus a mere sworn assertion that the documents are privileged does not suffice, because it is an inadmissible assertion of law; the claimant must set out the facts from which the court can see that the assertion is rightly made, or in other words “expose … facts from which the [court] would have been able to make an informed decision as to whether the claim was supportable”. The evidence must reveal the relevant characteristics of each document in respect of which privilege is claimed, and must do so by admissible direct evidence, not hearsay.

(citations and footnotes omitted)

26    In CFMEU at [9], Wigney J clarified that a claim of privilege cannot be supported by inadmissible hearsay or opinion.

27    In Hancock, a claim of privilege was rejected where it was made without an affidavit from the person claiming privilege, on the basis of an affidavit of a solicitor with no contemporaneous involvement in the creation or receipt of the disputed documents, a description of the documents, a bundle of other documents and a request that the court inspect the relevant documents. The solicitor’s affidavit contained no evidence of the circumstances in which and purpose for which the documents were created.

Inspection of disputed documents

28    The court may examine documents to discover the apparent purpose for which they were brought into existence: Grant v Downs [1976] HCA 63; (1976) 135 CLR 674 at 689; Trade Practices Commission v Sterling (1979) 36 FLR 244; Esso at [52]; AWB Ltd v Cole [2006] FCA 571; (2006) 152 FCR 382 at [116]. However, there is no right to have disputed documents examined: Cross on Evidence at [25240], citing Westminster Airways Ltd v Kuwait Oil Co Ltd [1951] 1 KB 134 at 146; District Council of Mallala v Livestock Markets Ltd [2006] SASC 80; (2006) 94 SASR 258 at [30].

29    In Bailey v Department of Land and Water Conservation [2009] NSWCA 100; (2009) 74 NSWLR 333, Allsop P (Hodgson JA agreeing) said (at [2]):

Parties should not assume that a judge will put himself or herself to the time and trouble of examining a multitude of documents if the relevant party cannot muster sufficient interest in the protection of its rights to provide an affidavit in support of its claim.

30    At [60]-[62], Tobias JA said (Allsop P and Hodgson JA agreeing):

[60]    A common law claim for legal professional privilege was recently discussed by Giles JA, with whom Mason P and Beazley JA agreed, in State of NSW v Jackson [2007] NSWCA 279. His Honour said (at [24]):

In ruling on a claim to legal professional privilege or client legal privilege the court may inspect the relevant documents (Grant v Downs (1976) 135 CLR 674 at 677 and 688-689; Trade Practices Commission v Sterling (1979) 36 FLR 244 at 246-247; Woollahra Municipal Council v Westpac Banking Corporation (1994) 33 NSWLR 529 at 541-542; Esso Australia Resources Ltd v Commissioner of Taxation at [52]; AWB Ltd v Cole (2006) 152 FCR 382 at 391; see also s 133 of the Evidence Act 1995). Inspection is discretionary (Grant v Downs at 688-689; District Council of Mallala v Livestock Markets Ltd (2006) 94 SASR 258 at [30]), for such assistance as it may provide in arriving at the documents’ status. In Esso Australia Resources Ltd v Commissioner of Taxation at [52] Gleeson CJ and Gaudron J and Gummow J said, after observing that a claim for privilege is not conclusively established by use of a verbal formula, that a court ‘should not be hesitant to exercise’ its power to examine documents. Where the parties have put evidence before the court, however, beyond the use of a verbal formula, I respectfully remain of the view expressed in Woollahra Municipal Council v Westpac Banking Corporation at 542, that the court should not unnecessarily pay regard to material which can not be known to the party challenging the claim to privilege.

[61]    In Woollahra Municipal Council v Westpac Banking Corporation (1994) 33 NSWLR 529, Giles J (as he then was) at 542 (being the page reference referred to by him in State of New South Wales v Jackson), when considering whether he should inspect the documents in dispute for the purpose of reaching a conclusion as to whether they were privileged, observed:

In Grant v Downs (1976) 135 CLR 674 at 689, the power to do so [that is, to inspect] was recognised and it was said that ‘in many instances the character of the documents the subject of the claim will illuminate the purpose for which they were brought into existence’. Inspection should not be undertaken unless there is good reason to do so. The Court should be able to proceed upon evidence describing the documents and the circumstances of their creation, and should not unnecessarily pay regard to material which cannot be known to the party challenging the claim to privilege.

[62]    His Honour was there dealing with the power to inspect at common law. The critical word in the passage referred to is “unnecessarily”. If the court is unable to proceed upon the evidence, as in the present case, then in my view there is no impediment to the court exercising its undoubted discretion under s 133 to order that the document or documents be produced and inspected for the purpose of determining the question of whether privilege attaches. How the court utilises the power to inspect under s 133 will obviously depend on the circumstances of each case. I do not consider that merely because the party resisting the claim for privilege objects to the judge exercising the power under s 133 is of itself a legitimate reason to refuse to exercise the discretion: compare Singapore Airlines v Sydney Airports Corporation [2004] NSWSC 380 at [66] per McDougall J. As was noted by Giles JA in State of New South Wales v Jackson in the passage which I have recorded at 348 supra, in Esso Australia Resources Ltd v Commissioner of Taxation (Cth) (1999) 201 CLR 49 at 70 [52], Gleeson CJ, Gaudron J and Gummow J observed that a court “should not be hesitant to exercise” its power to examine documents.

Evidence to support LPP claims

Confidential communications or lawyers’ work product

31    In her 26 July 2017 affidavit, Ms Pettit deposed that the documents the subject of the LPP claims record:

(1)    confidential communications and documents exchanged between Generate and Stephen Blanks, and/or lawyers working with Mr Blanks from time to time, prepared for the dominant purpose of obtaining legal advice, including in relation to commercial transactions that are unrelated to these proceedings;

(2)    confidential communications and documents exchanged between Generate and Stephen Blanks, and/or lawyers working with Mr Blanks from time to time, prepared for the dominant purpose of obtaining legal advice and representation for current and anticipated proceedings, including in relation to these and other, unrelated, proceedings; and

(3)    confidential work product of Stephen Blanks, and/or lawyers working with Mr Blanks from time to time, prepared for the dominant purpose of providing Generate with advice and representation for current and anticipated proceedings, including in relation to these and other, unrelated, proceedings.

Dominant purpose

32    In her 10 August 2017 affidavit Ms Pettit stated that the documents listed in SP-2 and SP-3 were categorised by reference to the following categories:

(1)    Litigation – Preliminary Advice;

(2)    Litigation – Mediation;

(3)    Litigation – Evidence;

(4)    Litigation – Carriage; and

(5)    Litigation – Hearing.

33    Ms Pettit’s affidavit evidence was that:

(1)    the documents in the “Litigation – Preliminary Advice” category came into existence for the purpose of Generate seeking and obtaining confidential advice from SBA Lawyers about the subject matter of these proceedings, in advance of the proceedings being filed in December 2015;

(2)    the documents in the “Litigation – Mediation” category came into existence for the purpose of Generate preparing for and attending the mediation;

(3)    the documents in the “Litigation – Evidence” category came into existence for the purpose of considering what evidence Generate will adduce at the final hearing (including by variously contacting and retaining third parties on a confidential basis) and preparing evidence for various interlocutory hearings, including the hearing before Jagot J on 26 July 2017;

(4)    the documents in the “Litigation – Carriage” category are communications between any or all of Paul Godfrey, John Wallace (each an employee of Generate) and Ms Pettit on the one hand and representatives of SBA Lawyers on the other which came into existence in the course of the day to day carriage of the proceedings; and

(5)    the documents in the “Litigation – Hearing” category came into existence in the course of Generate’s preparation for the 24 March 2017 hearing.

34    The descriptions of documents in the numbered versions of SP-2 and SP-3 are consistent with this evidence. For example, in SP-2:

(1)    The documents described as “preliminary advice” comprise four emails dated between 5 January 2015 and 4 February 2015 between Mr Blanks and, variously, Mr Godfrey and Ms Pettit.

(2)    The documents described as “mediation” are emails or “other documents” dated between 30 January 2017 to 6 February 2017 (with variously dated attachments) between, variously, Ms Pettit, Mr Godfrey or Mr Wallace of Generate and Mr Blanks or Mr Pilseniks of SBA Lawyers.

(3)    The documents described as “mediation” are emails dated between 10 February 2017 and 19 March 2017 between, variously Ms Pettit, Mr Godfrey or Mr Wallace of Generate and Mr Blanks or Mr Pilseniks of SBA Lawyers. In the case of one document, Mr Brennan of counsel appears to be the author of an attachment.

35    It is evident from the descriptions of the documents in the numbered versions of SP-2 and SP- 3 that Ms Pettit was the sender or a recipient of many if not most of the documents.

Oral evidence of Ms Pettit

36    Sea-tech required Ms Pettit to attend for cross-examination and I granted leave for her to be cross-examined. The primary issue was whether Ms Pettit had sufficient personal knowledge to make the LPP claims on behalf of Generate. It is curious that this was doubted in the light of the fact that Ms Pettit had attended the mediation in February 2017. No basis emerged in cross-examination for doubting that Ms Pettit was an appropriate person to prove the LPP claims, or the accuracy and truthfulness of her evidence. In particular, Ms Pettit clarified that:

(1)    she was involved in reviewing and identifying the documents listed in SP-3 (Ms Pettit said that she worked with a solicitor from SBA Lawyers, Ms Steer, to do this task);

(2)    she gave SBA Lawyers instructions about what needed to be produced;

(3)    she reviewed all of the documents that were produced;

(4)    she is the primary person responsible at Generate for this litigation and the correspondence with SBA Lawyers, including the preparation for the mediation;

(5)    on occasions, she was the person responsible for initiating requests to Mr Blanks to provide legal advice and on other occasions, the instigator was Mr Godfrey (who works very closely together with Ms Pettit); and

(6)    Ms Pettit decided which documents would be the subject of LPP claims, and therefore included in SP-2, with input from a solicitor.

Consideration

37    In the light of Mr Botsman’s concession, at the hearing, that Sea-Tech no longer suggested that Ms Pettit’s evidence was insufficient to establish the LPP claims, I have considerable reservations about its request that the Court examine all of the documents to satisfy itself of the claims.

38    However, I did review the bundle of documents and I was satisfied that there was nothing on the face of the documents which raised any doubt that the communications evidenced by the documents were not protected by LPP, or any doubt as to the veracity of Ms Pettit’s evidence concerning the purposes for which those communications occurred.

39    In particular, I note that all of the documents (with a single exception) evidences a communication between client and lawyer which occurred well after the commencement of these proceedings. This appears from the descriptions of the documents in the index to the bundle which, I assume, are the same descriptions provided in SP-2 or SP-3 as the case may be. There is nothing to suggest that the communications were not confidential or that they occurred for any purpose other than the purpose of conducting the proceedings or the purpose of obtaining legal advice on matters arising out of the proceedings.

40    I am satisfied that these documents are protected by LPP.

41    The exception is a document dated 12 February 2015 from Mr Godfrey to Mr Blanks. It is an inquiry which, I infer from Ms Pettit’s evidence concerning other communications requesting legal advice around this time, concerns the provision of that legal advice. On the basis of Ms Pettit’s evidence, I am satisfied that the document is protected by LPP.

Conclusion

42    The disputed documents are protected by LPP.

43    Sea-Tech’s application for the order in prayer 2 of interlocutory application dated 17 July 2017 must be dismissed.

44    I will make directions that the parties file and serve short written submissions on the question of costs.

Associate:

Dated:    30 November 2017