Loretta Craig & Ors v Anthony Johnson & Ors

1. [1]

   These are professional negligence proceedings seeking damages for negligence from the defendants, partners in Johnson Winter & Slattery. It is alleged that firm represented the plaintiffs in a commercial dispute in the Equity Division of this Court (“the Equity Proceedings”) heard in 2013 and gave negligent advice in relation to an offer of settlement made to them in those proceedings. The offer was not accepted and the plaintiffs lost their case.

2. [2]

   These proceedings were commenced by the filing of a statement of claim on 3 November 2016. The defendants deny liability and plead s 5O of the Civil Liability Act 2002 (NSW) in their defence.

3. [3]

   On 26 February 2018, the plaintiffs’ solicitor Fil Giles spoke to the solicitor who had acted for the defendants in the Equity Proceedings. On 27 February 2018, he commenced drafting an affidavit with a view to having that solicitor, Fiona Inverarity, sign it. The affidavit deposed to, amongst other things, his understanding of what she told him in that conversation to have been some of her recollections regarding the offer her clients had made in the Equity Proceedings in September 2013.

4. [4]

   It appears Mr Giles made no file note at the time of this discussion. The only record of this conversation was a billing note, which for “Billing Description” included three lines covering a number of activities completed by Mr Giles on 26 February 2018, including, “t/o Fiona – will do affi … dft aaffi fr Fiona to sign re share, Ian to settle…”.

5. [5]

   On 1 March 2018, an email was sent by Mr Giles to Ms Inverarity attaching the draft affidavit, asking that she review the document and “add the additional dates and information required” stating, “If you are happy, we ask that you kindly sign the affidavit and have it witnessed…”

6. [6]

   The draft affidavit included, amongst other things, a lengthy paragraph purporting to specify her “understanding” of the plaintiffs’ claim in the Equity Proceedings and her “instructions” at the time of her clients’ offer in September 2013.

7. [7]

   Ms Inverarity did not reply.

8. [8]

   A further email was sent by Mr Giles at 8.32am on 20 March 2018 in which he says,

9. [9]

   Eight minutes later, at 8:40 am, an email was sent by Ms Inverarity to Mr Giles stating as follows:

10. [10]

    Mr Giles then issued a Subpoena to Produce to Ms Inverarity’s firm in April 2018 seeking production of the following:

11. [11]

    Ms Inverarity produced documents to the Court, some of which were placed into a separate envelope marked “Privileged”.

12. [12]

    On 18 May 2018, Ms Inverarity sent a letter to Mr Giles, as well as to the solicitor acting for the defendants in these proceedings, stating the following:

13. [13]

    The rest of the email dealt with the potential need to engage counsel if an order for costs was to be pursued against her, although later correspondence indicates that order was not to be pressed.

Notice of Motion, 15 May 2018

1. [14]

   The plaintiffs filed a notice of motion on 15 May 2018 seeking orders that the objection taken by Fiona Inverarity to the inspection by the plaintiffs of the documents produced be overruled, and that the plaintiffs have leave to inspect those documents.

2. [15]

   The application is framed pursuant to Uniform Civil Procedure Rules 2005 (NSW) r 1.9(4), which provides as follows:

The legal framework: client legal privilege

1. [16]

   Sections 118 and 119 of the Evidence Act 1995 (NSW) provide as follows:

2. [17]

   Counsel for the plaintiffs submitted that the onus is on Ms Inverarity to persuade the Court that privilege should be upheld. He relied upon Grant v Downs (1976) 135 CLR 674; [1976] HCA 63, Stephen, Mason and Murphy JJ (Barwick CJ agreeing) at 689:

3. [18]

   It is clear from this passage that the party claiming privilege bears the onus of proof that the relevant material is privileged. It is also clear that this onus can be discharged by production of the material to the Court for inspection and by evaluation of the character of the documents.

4. [19]

   With the consent of counsel for the plaintiffs and the defendants, I have undertaken inspection of the material over which privilege is claimed, and have no doubt that the documents are confidential communications between the client and a lawyer acting for the client or confidential communications made between two or more lawyers acting for the client.

5. [20]

   Counsel for the plaintiffs argued that privilege over the material has been waived by operation of s 122(2)-(3) of the Evidence Act 1995 (NSW).

6. [21]

   Section 122 relevantly provides as follows:

7. [22]

   Counsel for plaintiffs submitted that waiver should be found in accordance with the judgment of French CJ, Kiefel, Bell, Gageler and Keane JJ in Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd (2013) 250 CLR 303; [2013] HCA 46 at [30]:

8. [23]

   Counsel for the plaintiffs submitted that the conversation deposed to by Mr Giles that took place on 26 February 2018, four and a half years after the offer was made, in which he says Ms Inverarity stated, “the offer was for a 3% interest in the Memjet technology as a whole”, constituted a disclosure of her instructions, and therefore that she has acted in a way that is inconsistent with the retention of any privilege over the relevant material.

9. [24]

   I do not accept that submission. Even if Ms Inverarity had in fact stated the words attributed to her by Mr Giles (a matter about which some doubt must attend given the absence of a file note and the refusal of Ms Inverarity to agree that is what she said, or to sign any affidavit to that effect), all that statement can amount to is her then current recollection of what the offer was. It is not a “disclosure” of her instructions. Even if it was, that does not mean that the client legal privilege that applies to the material produced, and over which privilege has properly been claimed, has been waived.

10. [25]

    There is nothing in the statement attributed to Ms Inverarity that could be considered to be a “knowing and voluntary” disclosure of the substance of the material in the documents over which privilege has been claimed, nor is it the disclosure of the substance of that material with the express or implied consent of the client or party.

11. [26]

    Ms Inverarity’s emails of 20 March 2018 and 18 May 2018 set out in paragraphs 9 and 12 of this judgment make it abundantly clear that privilege is not waived over that material. To adopt the approach of the Court in Expense Reduction Analysts Group Pty Ltd, this is not an occasion where I should “impute an intention”, because there is nothing in the actions of Ms Inverarity that are “plainly inconsistent with the maintenance of the confidentiality which the privilege is intended to protect”.

12. [27]

    In fact, the opposite applies. Ms Inverarity first made it clear that she was not “supportive” of completing an affidavit but was simply prepared to have a discussion with another solicitor. There is no evidence that, in doing so, she communicated the substance of any of the confidential privileged information or correspondence. Second, she refused to sign the affidavit drafted by Mr Giles. Third, there is no file note that was made contemporaneously which would give any confidence to Mr Giles’ recollection of what Ms Inverarity said. Fourth, Ms Inverarity specifically stated in her email of 20 March 2018, in reply to Mr Giles affidavit 8 minutes prior which suggested that she was “very supportive of signing a draft affidavit confirming the value of the Silverbrook offer”, that she was “not supportive…” and “had not looked at the exact terms of the letter” and “assume[d] the letter speaks for itself”.

13. [28]

    Additionally and fifthly, in her email of 18 May 2018, Ms Inverarity confirms that she has not contacted her clients and “cannot just waive it, as I cannot get instructions”.

14. [29]

    In all the circumstances, I reject the argument that there has been waiver of client legal privilege.

15. [30]

    A supplementary argument was made by counsel for the plaintiffs to the effect that s 126 of the Evidence Act provides a basis upon which I ought to allow the plaintiffs access to the privileged material on the basis of related communications and documents.

16. [31]

    Section 126 provides as follows:

17. [32]

    This argument is not relevant as I have found no waiver in respect of any of the documents over which privilege is claimed and so s 126 has no operation. The argument apparently advanced that service of the letter of offer waived privilege over documents that comprise documents referring to or discussing instructions in relation to the offer (to which I have found privilege apply) is also rejected as incorrect.

18. [33]

    The application fails.

Orders

1. [34]

   I make the following orders:

   1. (1)

      The plaintiffs’ notice of motion filed on 15 May 2018 is dismissed.

   2. (2)

      The plaintiffs are to pay the defendants’ costs of the notice of motion.