Hendi v Commonwealth of Australia (No. 2)

By notice of motion filed on 26 August 2016 the Commonwealth, the first defendant (the defendant), seeks a declaration that the report and notes produced on subpoena filed on 26 November 2015 by Dr Phillips (the Phillips documents) are the subject of legal professional privilege of the defendant. The motion also seeks consequential orders, including an order that the plaintiff return the Phillips documents to the defendant and not rely on or use any information contained in or obtained from the Phillips documents.

The plaintiffs in proceedings no. 2014/68216 (Nasrin Ghasemi) and 2014/68211 (Hamed Hendi) (the plaintiffs) accepted that the Phillips documents were the subject of legal professional privilege but contended that the defendant had, by its conduct, waived the privilege.

The facts are not controversial and, with one exception, were established by the affidavits read in support of, and in opposition to, the motion. The single exception, which will be addressed further below, relates to a return date on 8 February 2016 which is established by the Court record but was not referred to at all in the parties’ evidence.

The proceedings brought against the defendant (and others) by the plaintiffs were commenced in the District Court in 2014. Sparke Helmore Lawyers were the solicitors on the record for the defendant and had carriage of these matters on its behalf.

The defendant arranged for the plaintiffs to undergo a medico-legal assessment for the purposes of the proceedings with Dr Jonathan Phillips, a forensic psychiatrist, Dr Parmegiani and Dr Roldan. Each of the doctors made clinical notes of the assessments and prepared a report which was forwarded to the defendant. The report of Dr Phillips was dated 7 October 2015. The defendant has not served the report of Dr Phillips.

On 23 October 2015 the defendant transferred conduct of the matter to the Australian Government Solicitor (AGS) at which time Mr Kathner became the solicitor with conduct of the matters (which involved the plaintiffs and two children) on its behalf. Mr Kathner received 19 boxes of documents associated with the matter. It took him a considerable period to process and collate those documents. By about mid to late November 2015 he became aware that Dr Phillips had been retained to conduct medico-legal assessments of the plaintiffs and had forwarded a report. Mr Kathner considered that it was not in the defendant’s interests to rely on the report, which was not served.

On 26 November 2015 the plaintiffs filed subpoenas against persons, who included Dr Parmegiani, Dr Roldan and Dr Phillips. The subpoenas were issued and made returnable before the Court at 9am on 14 December 2015. Dr Phillips, who presumably appreciated that his report and clinical notes were privileged, wrote to the defendant, by letter dated 10 December 2015 in the following terms:

Mr Varley, a solicitor who was subject to Mr Kathner’s supervision, appeared on behalf of the Commonwealth before this Court at 9am on 14 December 2015, being the return date of the subpoena. There was no appearance on behalf of the plaintiffs. Certain documents had been produced to the Court prior to the return date. Documents produced by Ms Angela Carroll from Cumberland Hospital had been put in a packet marked S7 and documents produced by Dr Parmegiani had been put in a packet marked S8. None of the Phillips documents had been produced by 9am on 14 December 2015. Mr Varley asked Senior Deputy Registrar Hedge to make orders granting the defendant first access to these documents. The Senior Deputy Registrar refused to make such orders in the absence of the plaintiffs and without their consent. Mr Varley contacted the plaintiffs’ then solicitor, Ms Breda, who consented to the following orders, which were made by the Court:

Ms Breda’s file note of the conversation does not accord with the orders actually made in that she recorded: “Telephone attendance incoming on Matt- R/S [return of subpoena] I agree to Def [the defendant] first access 7 days for Drs Roldan, Parmegiani and Phillips (11.01 and 11.02).” The note indicated that the orders dealt with documents from Drs Roldan and Phillips as well as Parmegiani but the order only dealt with Dr Parmegiani’s documents, no other documents having been produced by the return date of 14 December 2015.

On the morning of 15 December 2015, between 10am and midday, Mr Kathner attended the Court Registry to inspect the documents produced by Dr Parmegiani. He applied to uplift the subpoenaed documents pursuant to Practice Note SC Gen 3. He later returned the documents to the Court, which were divided into two packets, one in respect of which privilege was claimed, and one in respect of which no privilege was claimed.

Later that day, Mr Kathner wrote to the plaintiffs’ solicitors in the following terms:

In his evidence on the motion, Mr Kathner explained that his wording in the first paragraph set out above was “inelegant” since although he knew from Dr Phillips’ letter that he was proposing to produce documents, he did not know when they would be produced and knew, moreover, that they had not been produced by the time Mr Kathner had attended the Registry on the morning of 15 December 2015. He explained that he sought an undertaking as the documents were prima facie privileged and, on that basis, he was entitled to first right of inspection.

As no documents had been produced by Dr Phillips or Dr Roldan by the return date, Mr Kathner assumed that the plaintiffs’ solicitors would act in accordance with what he considered to be usual practice and professional courtesy (which he himself followed and which he regarded as general practice within the profession) and obtain a further return date and advise Dr Phillips, Dr Roldan and himself of the new date. This did not occur. It was not suggested to Mr Kathner in cross-examination that the practice which he considered to be usual was unreasonable in any respect.

Later on 15 December 2015, this Court’s Registry received documents produced by Dr Phillips in relation to Ms Ghasemi. On 17 December 2015 the Registry received documents produced by Dr Phillips in relation to Mr Hendi.

Mr Kathner did not receive any response to his letter of 15 December 2015. Mr Kathner did not attend the Court again or indicate that the defendant claimed privilege in respect of the Phillips documents.

After the conclusion of the motion and the making of orders I consulted the Court record, which indicates that on 17 December 2015 (the penultimate date of the 2015 Court term), the defendant requested a return date early in the 2016 Court term. The date of 8 February 2016 (the second Monday of the new term) was allocated. I include this matter for completeness, although it was not put to Mr Kathner in cross-examination.

On 22 December 2015 Mr Kathner caused to be filed, on behalf of the defendant, a total of eight cross-claims in respect of each of the four proceedings (by the plaintiffs and two children) against Serco Australia Pty Ltd (who administered the detention centres in which the plaintiffs were detained) and separate cross-claims against International Health and Medical Services Pty Ltd (who provided medical services to detainees). The cross-claims are lengthy pleadings which I accept would have required considerable care and attention by Mr Kathner, who was the solicitor required to verify them.

Mr Kathner was also occupied with a motion filed by related parties in the District Court seeking orders that the District Court transfer these proceedings to the District Court. The motions were accompanied by lengthy affidavits. Mr Kathner appreciated that the District Court did not have power to transfer proceedings in this Court and was endeavouring to work out the best way of dealing with this matter. He was also the solicitor on the record engaged in separate proceedings against the Commonwealth which were listed for hearing at the beginning of the 2016 term, in respect of which the plaintiffs’ solicitors had ceased to act.

On the further return date of 8 February 2016, an order for general access was made, which included the Phillips documents. There is no record of a claim for privilege having been made on that day and no record of who, if anyone, appeared on that day. I include this matter for completeness, although it was not revealed in the evidence before me on the motion and it was not put to Mr Kathner in cross-examination.

On 6 April 2016 the plaintiffs’ solicitors applied for leave to uplift the subpoenaed documents for copying. On 7 or 8 April 2016 they sent an agent to the Court to copy the documents produced on subpoena. The plaintiffs’ copying agents obtained access to the Phillips documents (to which they were entitled having regard to the order for access which was made on 8 February 2016 and the lack of any claim for privilege having been made over the documents), which were copied, along with the other documents produced on subpoena to other third parties.

On 6 May 2016 Mr Kathner resigned from AGS and, accordingly, ceased to be the solicitor with conduct of the matter. Amanda Taylor assumed conduct of the matter on behalf of the defendant on about 12 May 2016.

By letter dated 18 May 2016, the plaintiffs’ solicitor served the report of Dr Phillips on AGS and indicated that they would rely on it in the plaintiffs’ case against the defendant. The letter and report were received by AGS Sydney on 23 May 2016 (where Mr Kathner had been based). AGS Sydney sent it on to AGS Canberra (where Ms Taylor was based) where it was received on 24 May 2016. Ms Taylor first became aware that Dr Phillips had prepared a report when she read the letter from the plaintiffs’ solicitors and the attached report.

After consulting with senior and junior counsel for the defendant, Ms Taylor wrote to the plaintiffs’ solicitors by letter dated 27 May 2016. By that date, she had not had the opportunity to speak with Mr Kathner and indeed did not speak to him about the matter until recently. Her letter was in the following terms:

The plaintiffs’ solicitors neither responded to this letter, nor to the follow-up letters sent by Ms Taylor on 2 June 2016 and 9 June 2016. She tried calling Ms Breda on 4 and 5 July 2016 and left voice messages which were not responded to. On 6 July 2016 Ms Breda sent an email to Ms Taylor informing her that Michael Inger was to be the new solicitor in the matter and required “some time to get across the issue”. Ms Taylor phoned Mr Inger on 19 July 2016, 3 August 2016 and 4 August 2016 and left messages with his paralegal but did not receive a substantive response. On 4 August 2016 Mr Inger wrote to the defendant’s solicitor in the following terms:

This letter led the Commonwealth to file the notice of motion on 26 August 2016 which is to be determined.

Section 117 of the Evidence Act 1995 (NSW) relevantly defines confidential document as follows:

Section 118 of the Evidence Act relevantly provides:

Section 119 of the Evidence Act relevantly provides:

Section 122 of the Evidence Act relevantly provides:

It is common ground that the report of Dr Phillips was a confidential document that attracted client legal privilege. Accordingly, the question is whether the privilege has been lost such that it can be adduced as evidence on behalf of the plaintiffs, or can otherwise be used by them. The resolution of the dispute turns on the provisions of s 122.

In summary, the plaintiffs contended that the Commonwealth had lost its privilege in the report of Dr Phillips which was produced to this Court on subpoena by not expressly claiming it. Mr Armitage, who appeared on behalf of the plaintiffs, also argued that the wording of Mr Kathner’s letter of 15 December 2015 was such as to engender a belief in the plaintiffs’ solicitors that, if no claim for privilege was made by 22 December 2015, the Commonwealth intended to waive it.

In summary, the defendant contended that, at its highest, Mr Kathner had been inadvertent but that neither he nor the Commonwealth had acted inconsistently with the maintenance of the privilege, which, accordingly, inured for its benefit. Mr Jones, who appeared for the defendant, submitted that the fact that the Phillips material had been, unbeknown to the defendant, delivered to the Registry, where it remained for some time, was not particularly material to whether the defendant had behaved in a manner inconsistent with the maintenance of the privilege.

Many of the cases cited involved situations where the question whether a party had acted inconsistently with the maintenance of the privilege turned on actual, deliberate conduct of a party who did not intend to waive the privilege but who was taken to have waived it. This is not such a case. This is a case of inadvertence or oversight by a solicitor. The question is whether such inadvertence or oversight ought cause the solicitor’s client to lose a valuable legal right (to maintain client legal privilege). This question is to be answered by reference to the wording of s 122 of the Evidence Act, and, in particular, whether the party has acted in a way that is inconsistent with the party objecting to the adducing of the evidence because it would result in a disclosure of, relevantly, confidential documents, which in this case are the report and notes of Dr Phillips following medico-legal assessments of the plaintiffs and the other material he produced in answer to the subpoena (being his clinical notes of the medico-legal assessments of the plaintiffs).

Although the question is one of the application of statutory wording, guidance can be obtained from the authorities which have considered the wording.

The question arose in Unsworth v Tristar Steering and Suspension Australia Ltd [2007] FCA 1081. Gyles J considered cases which had addressed the effect of inadvertence in the following paragraphs.

When Mr Inger took over the matter, he may have been unaware of the precise terms of the order for access made by the Court on 14 December 2015 and, understandably, may have misapprehended the effect of Mr Kathner’s letter of 15 December 2015. It does not appear that he relied on the defendant’s failure to claim privilege on 8 February 2016, since he did not refer to it in his affidavit and there was no other evidence before me about what occurred on that day.

The narrative of facts set out above illustrates the pressures on solicitors engaged in litigation and the potential, particularly at busy times, or prior to the vacation, or when files change hands, for matters which would ordinarily be attended to in a timely, unambiguous way to result in misunderstandings. It is important that practitioners not take advantage of each other’s oversights. Much can be resolved by communication. In the present case, the order for general access to the Phillips documents, which was apparently made on 8 February 2016, was at odds with a claim for privilege by the defendant. As there has been no factual inquiry in the evidence before me of how this came to occur it is not appropriate to speculate as to why the defendant, if it appeared at that return date, did not claim privilege over the Phillips documents.

The present case is not one of inadvertent disclosure, but rather inadvertent omission to claim of client legal privilege in respect of documents produced on subpoena to the Court by a third party (who was bound to produce them) which plainly attracted the privilege. Had the plaintiffs’ solicitors, Ms Breda and Mr Inger, turned their minds to the question, they must have appreciated the overwhelming probability that the absence of a claim for privilege in respect of the Phillips documents was the result of an inadvertent oversight on the part of AGS. There was no conceivable forensic reason why the defendant, through AGS, would not press its claim for client legal privilege over medico-legal reports on which it did not intend to rely; and no conceivable reason why the process AGS adopted with respect to the documents produced by Dr Parmegiani (in respect of which privilege was claimed) would not also have been followed with respect to the Phillips documents.

In my view, the defendant has not acted in a way that is inconsistent with the defendant objecting to the adducing of the Phillips documents (and the respective reports in particular) on the basis of client legal privilege, since the fact that privilege over the Phillips documents was not expressly claimed by AGS on its behalf was plainly inadvertent. Accordingly, there has been no loss of such privilege. In these circumstances, I am persuaded that this Court should act to protect the defendant’s client legal privilege in the Phillips documents by making the orders sought in the notice of motion.

The defendant seeks an order for its costs of the motion. Mr Armitage resisted an order that costs follow the event on the basis that there was an important controversy to be resolved and the matter was arguable.

Mr Jones relied on Ms Taylor’s letter of 27 May 2016, which set out in detail: what had transpired; what the defendant contended the position to be; and all relevant authorities including paragraph numbers of the passages relied upon (which were the same authorities relied on by Mr Jones at the hearing of the motion). The letter foreshadowed that the defendant would seek the costs of the motion. On reading the letter, Mr Inger can have been under no misapprehension as to the chronology of events, or that the defendant would seek costs, if successful, on the motion. In these circumstances, in my view, it is appropriate to order that costs follow the event.

I note that Ms Lieu appeared for the First Cross-Defendant at the hearing of the motion. Ms Lieu did not seek costs of the motion.

At the conclusion of the hearing before me on 6 October 2016 I made the following orders in proceedings 2014/68216 and 2014/68211: