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Tarong Energy Corporation Limited v South Burnett Regional Council

 

[2009] QCA 265

Reported at [2010] 1 Qd R 575

 

 

SUPREME COURT OF QUEENSLAND

 

PARTIES:

FILE NO/S:

Court of Appeal

PROCEEDING:

General Civil Appeal

ORIGINATING COURT:

DELIVERED ON:

8 September 2009

DELIVERED AT:

Brisbane 

HEARING DATE:

31 August 2009

JUDGES:

Muir and Fraser JJA and White J

Separate reasons for judgment of each member of the Court, each concurring as to the orders made

ORDERS:

  1. Allow the appeal and set aside the orders made by the primary judge on 10 March 2009.
  2. Order that the application filed on 23 February 2009 be dismissed with costs.
  3. Order that the respondent pay the appellant’s costs of and incidental to the appeal, except for the costs associated with the appellant’s application to adduce new evidence.

CATCHWORDS:

PROCEDURE – DISCOVERY AND INTERROGATORIES – DISCOVERY AND INSPECTION OF DOCUMENTS – PRODUCTION AND INSPECTION – GROUNDS FOR RESISTING PRODUCTION – CLIENT LEGAL PRIVILEGE – WHAT CONSTITUTES – PARTICULAR CASES – where the appellant received an opinion from a barrister in relation to litigation brought against it by the respondent regarding rates – where the appellant gave this opinion to an external management and financial consultant for the purpose of obtaining advice about appropriate budget and rating resolutions – where the consultant provided this advice to the appellant in a report and this report summarised the barrister’s opinion received by the appellant – where the respondent sought production of the consultant’s report in relation to the rates litigation – whether the trial judge erred in holding that the appellant was not entitled to legal professional privilege in the consultant’s report

Local Government Act 1993 (Qld), s 463(1)(f)

Uniform Civil Procedure Rules 1999 (Qld), r 214, r 227(2), r 211(1)(c), r 212(1)(a)

Attorney-General (NT) v Maurice (1986) 161 CLR 475; [1986] HCA 80, cited

Australian Agricultural Company Limited v AMP Life Limited [2006] FCA 371, cited

Australian Hospital Care (Pindara) Pty Ltd v Duggan [1999] VSC 96, cited

Bank of Nova Scotia v Hellenic Mutual War Risks Association (Bermuda) Ltd (The Good Luck) [1992] 2 Lloyd's Rep 540, cited

Bayliss v Cassidy (No 2) [2000] 1 Qd R 464; [1998] QCA 38, cited

British Coal Corp v Dennis Rye Ltd (No 2) [1988] 1 WLR 1113; [1988] 3 All ER 816, cited

Commissioner of Australian Federal Police v Propend Finance Pty Limited (1997) 188 CLR 501; [1997] HCA 3, cited

Curlex Manufacturing Pty Ltd v Carlingford Australia General Insurance Ltd [1987] 2 Qd R 335, cited

Esso Australia Resources Limited v The Commissioner of Taxation (1999) 201 CLR 49; [1999] HCA 67, considered

Goldberg v Ng (1995) 185 CLR 83; [1995] HCA 39, followed

Goldman v Hesper [1988] 1 WLR 1238; [1988] 3 All ER 97, cited

Gotha City v Sotheby’s [1998] 1 WLR 114, cited

Grant v Downs (1976) 135 CLR 674; [1976] HCA 63, cited

Hartogen Energy Ltd (in liq) v Australian Gas Light Co (1992) 36 FCR 557, applied

Henderson v Low& Ors [2000] QSC 417, cited

Mann v Carnell (1999) 201 CLR 1; [1999] HCA 66, applied

Menkens v Wintour [2007] 2 Qd R 40; [2006] QSC 342, cited

Osland v Secretary, Dept of Justice (2008) 234 CLR 275; [2008] HCA 37, cited

Pratt Holdings Pty Ltd v Commissioner of Taxation (Cth) (2004) 136 FCR 357; [2004] FCAFC 122, cited

Spotless Group Ltd v Premier Building and Consulting Group Pty Ltd (2006) 16 VR 1; [2006] VSCA 201, applied

Telstra Corporation v Australis Media Holdings (Unreported, Supreme Court of New South Wales, McLelland CJ in Eq, 11 February 1997), cited

Undercar Australia Pty Ltd v Monbray Pty Ltd (unreported, District Court of Queensland, No 2163 of 1995, 16 November 1999) Skoien SJDC, cited

Vardas v South British Insurance Co Ltd [1984] 2 NSWLR 652, cited

Waterford v The Commonwealth (1987) 163 CLR 54; [1987] HCA 25, considered

COUNSEL:

S P Fynes-Clinton for the appellant

M Hinson SC, with P Telford, for the respondent

SOLICITORS:

King & Company for the appellant

Clayton Utz for the respondent

[1] MUIR JA: I agree with the reasons of Fraser JA and with his proposed orders.

[2] FRASER JA: The appellant (“the Council”) was entitled to legal professional privilege in confidential legal advice relating to litigation about rates brought against it by the respondent (“Tarong”).  The Council communicated that advice to an external management and financial consultant for the purpose of obtaining advice about appropriate budget and rating resolutions.  The consultant gave such advice in a confidential report to a closed meeting of the Council.  The report included a summary of the Council’s legal advice.

[3] The primary judge found that the Council was not entitled to legal professional privilege in the consultant’s report and acceded to Tarong’s application for an order that the Council deliver a copy of it to Tarong.  I have concluded that the Council was entitled to legal professional privilege in those parts of the report which summarised the Council’s legal advice.  The primary judge’s order should be set aside for that reason.

Background

[4] Tarong owns and operates the Tarong Power Station on land within the Council’s local government boundaries.  By an application for a statutory order of review filed in September 2007 Tarong sought orders quashing the Council's resolutions of 3 July 2007 to levy Tarong's land with an annual minimum general rate of $375,000 for the 2008 financial year.  That represented an increase of 8,553 per cent from the previous year's rates of $4,384.  Tarong alleged that the Council’s exercise of its rating power was so unreasonable that no reasonable person could have exercised the power in that way.  The application also asserted an unspecified error of law.

[5] On 27 August 2008 a meeting of Council resolved to repeal budget resolutions made at a meeting on 20 August 2008 and to adopt budget resolutions which levied rates against Tarong's land for the 2009 financial year on a different basis than for the 2008 year.  In the result, the amount of those rates was maintained at $375,000.  Tarong subsequently amended its application to add a challenge to that decision. 

[6] The minutes of the 27 August 2008 meeting referred to a report to the Council by Mr Rinehart.  In the Council's amended list of documents under r 214 of the Uniform Civil Procedure Rules 1999 (Qld) (“UCPR”) the Council claimed privilege from disclosure of that document, which was described as a report “considered in closed session of Respondent convened on 27 August 2008”.  An affidavit by the Council's Chief Executive Officer verified the grounds of the Council's objection to disclosure: the document was prepared by Mr Rinehart, who was engaged by Council on 17 July 2008 to provide it with “Managerial and Financial Officer Services”, and it was endorsed by the Council's “Director of Corporate Services”; it summarised the content of an opinion received from a barrister briefed by the Council's solicitors on its behalf regarding the exercise of the Council’s powers to make and levy rates and charges that were the subject of the litigation; and the document was prepared for a closed session meeting of the Council held on 27 August 2008 in accordance with s 463(1)(f) of the Local Government Act 1993 (Qld).  (That provision permits a local authority meeting to be closed to the public for business relating to “(f) starting or defending legal proceedings involving it”.)

[7] Tarong applied for orders that the respondent deliver to it copies of the Rinehart report and the barrister’s opinion.  The Council resisted the application on the ground that it had a valid claim of legal professional privilege from disclosure of both documents. An affidavit by the Council's solicitor established that Mr Rinehart’s  consultancy contract obliged him to provide his services on a full time basis and as directed by the Chief Executive Officer of the Council.  Mr Rinehart's status was described as "an independent contractor" and it was agreed that he was not an employee or agent of the Council.  The contract included an acknowledgement by Mr Rinehart that he was aware that in the course of his performance of the agreement he would have access to and be "entrusted with" information concerning the Council's affairs which "is or may be confidential".  Mr Rinehart undertook contractual obligations "that he will not divulge to any person whatever or otherwise make use of (and shall use his best endeavour to prevent the publication or disclosure of) any…confidential information", and that he "will not…copy or allow anyone else to copy from any document…which contains any confidential information except as may be necessary in the course of the work for the Council".

[8] The minutes of the 27 August 2008 meeting, which were admitted in evidence at the hearing of the application, recorded that: Councillors unanimously resolved that the meeting be closed to the public for Council discussions in accordance with the Local Government Act 1993 (Qld), s 463(1)(f) "starting or defending legal proceedings involving it”; subsequently, Councillors unanimously resolved that the meeting resume in open Council; the Mayor then reported that, "whilst in closed session, in accordance with the Local Government Act 1993, s 463(1)(f) starting or defending legal proceedings involving it, Council considered matters concerning advice given to Council concerning an application for statutory order of review minimum general rate levy 'power generation'"; and Councillors unanimously resolved that the Mayor's report "be received". 

[9] The next section of the minutes included item 14.1, which was headed, “… Providing advice to Council concerning an application for Statutory Order of Review Minimum General Rate Levy 'Power Generation'”.  Under that heading, item 14.1 commenced as follows:

"Reason for Confidentiality

This report is CONFIDENTIAL in accordance with Section 463(1)(f) of the Local Government Act 1993, which permits the meeting to be closed to the public for business relating to the following:

(f)starting or defending legal proceedings involving it

Précis

Providing advice to Council concerning an application for Statutory Order of Review Minimum General Rate Levy 'Power Generation'.

This report provides advice to Council on legal advice received in relation to an application for Statutory Order of Review Minimum General Rate Levy 'Power Generation' and the impact of that advice on the Budget Resolutions adopted on 13 August 2008.

This will require Council to repeal the budget resolutions as set out in the notice of motion dated 20 August 2008 and to readopt the budget incorporating the following amendments."

[10] The minutes then set out the terms of the proposed, amended budget, the "Officer's Recommendation" that the Council repeal the budget resolutions made a week before, and that the Councillors unanimously voted accordingly.  That was followed by item 14.2 of the minutes, which summarised and set out the proposed budget resolutions for the year ending 30 June 2009, together with the "Officer's Recommendation" concerning the adoption of budgets, the adoption of a revenue statement, and the levying of rates for that year.

[11] After the operation of the order against which the Council now appeals was stayed, the Council delivered to Tarong a redacted copy of the Rinehart report which masked all references to the content of the barrister’s opinion.  The report commences with the heading and statements which appear in item 14.1 of the minutes.  The unmasked parts of the report include recommendations which are also faithfully recorded in the minutes.  The parties treated the redacted report as evidence in the appeal.

[12] At the hearing of the appeal the Council sought leave to rely upon an additional affidavit, sworn after the hearing before the primary judge, in which its Chief Executive Officer expanded upon the minutes of the meeting.  He deposed that the Rinehart report was considered by Councillors only in the closed session of the meeting, that it was not otherwise discussed or considered by Councillors in any open session, and that it was not "tabled" or otherwise dealt with in open session at the meeting.  Tarong opposed the grant of leave for the admission of this evidence on the grounds that it was available to the Council at the hearing of the application and Tarong might have investigated it had the Council sought to rely upon it at that time.  The Council’s submission that it was not aware before the hearing that Tarong would assert that the Rinehart report was discussed in an open meeting does not meet the point that the Council could have but did not adduce this evidence once Tarong adopted that argument at the hearing.  I would refuse leave to admit this evidence, which in my view adds nothing of particular significance to the evidence of the minutes.

Reasons of the primary judge

[13] With the acquiescence of the parties, the primary judge confined the decision to the question whether the Council was entitled to resist production of the Rinehart report.  The primary judge reasoned as follows: Mr Rinehart was an independent contractor, rather than an employee of the Council, and he was not the Council's agent; the minutes demonstrate that although the Rinehart report did convey the Council’s legal advice it was also used for the purpose of allowing the Council to reconsider the budget resolutions that had been adopted at the preceding meeting and to repeal them; reference to the report itself, as requested by counsel for both parties, did not suggest a different view; accordingly, because the report did not have as its dominant purpose the purpose of providing legal advice to the Council in connection with the application for a statutory order of review, the Council had no valid claim of legal professional privilege. 

Arguments on appeal

[14] The primary judge’s reasons reflected the way in which the Council had argued the application, but the Council changed tack on appeal.  In addition to a new argument about the suggested irrelevance of the Rinehart report, the Council argued that the real question on the privilege issue was not whether the dominant purpose of Mr Rinehart's report was to communicate legal advice to the Council, but rather whether the Council had waived legal professional privilege in its confidential legal advice.  The Council argued that the original advice was privileged (so much is not in issue), so that the question was whether the privilege had subsequently been lost; privilege was not lost merely by the republication of all or part of the original advice in another document, because what was protected was the original communication and not merely the document in which it was originally made; privilege was not waived by any subsequent disclosure of the advice unless the disclosure was inconsistent with the maintenance of the confidentiality of the original communication of the legal advice; on the evidence the Council's communication of the legal advice to Mr Rinehart and Mr Rinehart's communication of a summary of it back to the Council were not inconsistent with the maintenance of confidentiality in the legal advice; it followed that the Council was entitled to legal professional privilege in the barrister’s opinion or in so much of the Rinehart report as summarised the barrister's opinion.

[15] In Tarong’s outline of submissions it contended that the dominant purpose of the Council's communication to Mr Rinehart of the barrister's opinion was to facilitate its use by Mr Rinehart in providing his non-legal opinion about the propriety of the budget resolutions which were set aside at the Council meeting.  Tarong then cited authority[1] for its argument that legal professional privilege applied to the communication only if (so far as is here relevant) the communication was made for the dominant purpose of giving legal advice.  After the Court brought to the parties’ attention the decision in Spotless Group Ltd v Premier Building and Consulting Group Pty Ltd,[2] Tarong did not press that argument in oral submissions, although it did not abandon it.  Tarong instead emphasised its argument that the Council had waived privilege.

[16] Tarong argued that the Council waived legal professional privilege in the barrister's opinion by communicating it to Mr Rinehart for his use in formulating advice to the Council about the validity of rating resolutions in respect of all rateable land for the 2009 financial year.  It argued that the fact that Mr Rinehart identified his report as "confidential" was not decisive of that status where the report was relied upon by Council in an open meeting; the minutes demonstrated that the Rinehart report was "tabled" in an open meeting and that the Council relied upon its terms in order to repeal the earlier budget resolutions; that the report had become a public document was established by the Council’s  adoption and use of the report in that way; and the whole of the Rinehart report should be produced because it could not be understood without disclosure of the redacted parts.  Tarong contended that the Council’s non-disclosure of the redacted parts of the report was “unfair” because the Council relied on the Rinehart report as the basis for its decision of 27 August 2008 which was challenged by Tarong.

Discussion

[17] If, as the Council contended, the Rinehart report was not directly relevant to any issue, it is not easy to understand why the Council included the report in its list of documents and subsequently disclosed a redacted copy of it.  The conclusion that the report was directly relevant was arguably dictated by UCPR, r 227(2).  That may in any case be the appropriate inference, but in view of my conclusion that the Council was entitled to resist disclosure on the ground of legal professional privilege it is not necessary to pursue this issue.

[18] The Council conceded that the argument about privilege which it advanced on appeal was "traversed only briefly and peripherally in oral submissions" before the primary judge, but I have not been able to find any hint of it in the record.  Nevertheless, I would permit the Council to make this new argument on appeal.  It is merely a different legal characterisation upon uncontentious facts and Tarong did not contend that it was prejudiced by this new approach.

[19] Spotless Group Ltd v Premier Building and Consulting Group Pty Ltd[3]  is compelling authority for the Council’s argument.  The plaintiff there gave summaries of its legal advice on a confidential basis to a bank which was financing the plaintiff's litigation, to the plaintiff's finance brokers, and to a business and communications strategist which the plaintiff had retained in connection with its litigation.  A majority in the Victorian Court of Appeal affirmed a decision of Byrne J[4] upholding the plaintiff's objection to inspection of the summaries of the legal advice in the hands of the third parties.  Chernov JA, with whose reasons Warren CJ agreed, rejected the defendants' proposition that legal professional privilege did not attach to the confidential third party communications because they were not made for the dominant purpose of receiving legal advice or for use in litigation.  Chernov JA’s following reasons for that conclusion are directly relevant here:[5]

“[20] It seems to me that the appellants’ argument mischaracterises the third party communications.  It is true, and it is unremarkable, that privilege attaches to the communication and not to documents per se.  But the relevant communication that is 'recorded', as it were, by the documents in question is the communication to the respondent of legal advice. To contend that the 'communication', essentially, is the fact of transmission, as the appellants appear to do, is to make the same error as conflating the communication with, for example, a document. It is common ground that the original communication, namely, the legal advice that was provided to the respondent, was subject to legal professional privilege. And it was that communication — that advice — that was passed on to the third parties. That the recommunication was in written form is, as I have said, irrelevant to this issue. What is of relevance is that, on its proper characterisation, the communication that was made to the third parties, effectively by the respondent, was the legal advice which it had received and to which privilege attached. There is no need, in those circumstances, to ask whether the re-communication was made for a 'privileged purpose'. Rather, the relevant question is, as it was in Mann, whether by 'passing on' that communication to the third parties the respondent had waived the privilege.

[21]In my view, such an analysis accords with the underlying basis of the decision of the majority in [Mann v Carnell (1999) 201 CLR 1]…

[22] The majority said [At 4.] that 'the principal question in this appeal is whether legal professional privilege which attached to certain communications was lost by a subsequent disclosure of those communications'. It seems to me, however, that their Honours impliedly accepted that the communications to the member, by way of copies of the legal advice, were subject to legal professional privilege given that, as a matter of substance, they contained the legal advice that was provided to the government and which was plainly privileged. That the recommunication took the form of copy documents was irrelevant. In the circumstances, it is understandable that their Honours considered that the principal question was whether there has been waiver of the privilege. What the majority relevantly said [At 8–9.] was:

'It being acknowledged that the original written communications had been the subject of legal professional privilege, there was an issue as to whether the privilege had been lost by reason of the disclosure by the respondent to [the member] of those communications.

The outcome does not turn upon the particular manner in which the content of the privileged communications was disclosed to [the member]. The privilege attached to the communications, not to the pieces of paper on which they were written. What [the member] was shown were copies, but they were relevantly copies of privileged communications. The question is whether the disclosure to [the member] of the communications resulted in the loss of the privilege.'

[23] That the reformulation or reproduction in another document of an original communication that is subject to legal professional privilege does not deprive the second document of the protection notwithstanding that the copied or subsequent document was not specifically created for the dominant purpose of 'the obtaining legal advice or for use in litigation' has also been recognised in State Bank of South Australia v Smoothdale (No 2) Ltd. [(1995) 64 SASR 224.] In that case King CJ, with whom the other members of the court agreed, rejected an argument that certain witness statements were not protected by legal professional privilege merely because, in form, they were prepared in order to comply with certain court rules and not for the (dominant) purpose of legal advice or use in litigation. His Honour said: [At 226.]

'I think that the argument is fallacious. The documents in question are in substance merely a reproduction of statements already obtained from witnesses for the sole purpose of use in the proceedings, in a form suitable for compliance with the order. They do not lose their character as statements of witnesses because they are prepared with a view to compliance with the order.'

This serves to illustrate, as I have said, that the relevant communication where privileged information is 're-communicated', as it were, is not the fact or circumstance of the reformulation or recommunication but rather the communication giving rise to the privilege in the first instance.

[24]In the circumstances, I would reject the appellants’ claim that the legal advice in the third party communications in this case was not subject to legal professional privilege merely because it was not communicated for a 'privileged purpose'....”

[20] On the majority view in Spotless, the question in this appeal is not whether the Council communicated its barrister’s opinion to Mr Rinehart for the dominant purpose of conveying legal advice.  Rather, the question is whether the Council waived its legal professional privilege in the barrister’s opinion.

[21] Neave JA preferred the opposing view that a client's communication of its legal advice to a third party should not be privileged unless that was itself for the dominant purpose of obtaining or giving legal advice.[6]  Neave JA concluded that neither Goldberg v Ng[7] nor Mann v Carnell[8] was clear authority for the proposition that a copy of a privileged document which is passed on to a third party for a purpose which is unrelated to the provision of legal advice remains privileged unless privilege has been waived.[9] 

[22] Neave JA referred to the rationale of legal professional privilege described in passages in Stephen, Mason and Murphy JJ’s judgment in Grant v Downs[10] and in Mason and Wilson JJ’s judgment in Waterford v Commonwealth:[11]

“[62] Legal professional privilege is a "fundamental and general principle of the common law" rather than merely a rule of evidence.  In Grant v Downs its rationale was expressed as follows:

... it promotes the public interest because it assists and enhances the administration of justice by facilitating the representation of clients by legal advisers, the law being a complex and complicated discipline. This it does by keeping secret their communications, thereby inducing the client to retain the solicitor and seek his advice, and encouraging the client to make a full and frank disclosure of the relevant circumstances to the solicitor. The existence of the privilege reflects, to the extent to which it is accorded, the paramountcy of this public interest over a more general public interest, that which requires that in the interests of a fair trial litigation should be conducted on the footing that all relevant documentary evidence is available.

[63] In Waterford v Commonwealth the High Court acknowledged that:

Legal professional privilege is itself the product of a balancing exercise between competing public interests whereby, subject to the well-recognised crime or fraud exception (cf Reg v Bell; Ex parte Lees the public interest in "the perfect administration of justice" (per Earl of Halsbury LC in Bullivant v Attorney-General (Vic)) is accorded paramountcy over the public interest that requires, in the interests of a fair trial, the admission in evidence of all relevant documentary evidence.

The benefits of free and uninhibited access to candid legal advice are generally regarded as outweighing the competing benefit of having all relevant and probative material available to the court to facilitate the trial process.”

[23] Neave JA considered that this rationale did not require that legal professional privilege be afforded to copies of documents containing or related to legal advice which were communicated to third parties for unrelated purposes.[12]  Her Honour pointed out, with reference to Pratt Holdings Pty Ltd v Commissioner of Taxation (Cth),[13] that a client would be able to pass on legal advice to a third party who was providing expert advice which was relevant to the provision of the legal advice because privilege would cover those communications.  Neave JA thought that a client would not likely be deterred from communicating frankly with the client's lawyer because the client might wish to pass on information to a third party for a reason other than obtaining legal advice: if a client did not want the contents of the advice to become available the remedy was not to provide it to third parties.  Neave JA also saw support for that view in the statements by Gaudron and McHugh JJ in Commissioner of Australian Federal Police v Propend Finance Pty Ltd[14] to the effect that legal professional privilege protected communications between lawyer and client rather than the documents in which such communications might be recorded. 

[24] Neave JA’s analysis accords with that of McHugh J in Mann v Carnell[15] and in Esso Australia Resources Ltd v Commissioner of Taxation of the Commonwealth of Australia.[16]  McHugh J there concluded that whether a subsequent communication of a copy of a document recording a privileged communication is privileged will depend on the purpose for which the new communication is made, but his Honour was in dissent in both cases.

[25] In my respectful opinion, Neave JA’s analysis is not reconcilable with the reasoning of the majority in Mann v Carnell: rather than considering whether the new communication of the legal advice was for a purpose which itself attracted privilege, the majority considered whether the existing privilege in the original legal advice had been waived.[17]  The High Court’s recent expositions of the law concerning waiver of legal professional privilege require that the question be framed in that way.  In Mann v Carnell the majority concluded[18] that the reasoning of all members of the Court in Goldberg v Ng[19] was inconsistent with the proposition that any voluntary disclosure to a third party necessarily waived privilege.  The majority observed that:[20]

"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."

[26] The High Court has since reaffirmed that test.[21] Accordingly, the recipient of a privileged communication may maintain privilege despite a waiver which is "limited so that it applies only in relation to particular persons, materials or purposes".[22] This doctrine is practically irreconcilable with the view that a subsequent communication of privileged legal advice is privileged only if the subsequent communication is itself made for a purpose that would attract privilege. 

[27] That Mann v Carnell requires the analysis adopted by Chernov JA is also indicated by the majority’s apparent approval[23] of decisions to the same effect.  There are other persuasive authorities on point.  Gummow J, when sitting in the Federal Court in Hartogen Energy Ltd (in liq) v Australian Gas Light Co,[24] accepted a submission that the fact that a privileged document was in the hands of a third party does not destroy the privilege, "the question being whether the party entitled to the privilege has waived it."  As Gummow J also pointed out, the courts regularly uphold claims of privilege by a party in respect of documents produced on subpoena by a stranger to the litigation.[25] The same approach was adopted in Bank of Nova Scotia v Hellenic Mutual War Risks Association (Bermuda) Ltd (The Good Luck)[26] and Australian Hospital Care (Pindara) Pty Ltd v Duggan,[27] which Neave JA cited in Spotless,[28] and in a decision cited by the Council in this appeal, Australian Agricultural Co Ltd v AMP Life Ltd.[29]

[28] In my respectful opinion, those decisions give effect to the underlying purposes of the doctrine of legal professional privilege which, so far as it protects the confidentiality of legal advice, include encouraging clients to obtain legal advice for the purpose of using it “in the conduct of his or her affairs”.[30]  That rationale would not be met by the contrary rule, under which privilege in confidential legal advice would be lost where the client communicates it in confidence to an external, non-legal consultant to obtain informed, confidential advice about the regulation of the client’s affairs.

[29] For the disposition of this appeal it is sufficient to state the rule in these terms: a party to litigation who is entitled to legal professional privilege in confidential legal advice about that litigation is entitled to invoke that privilege as a ground for resisting disclosure to the party’s opponent of any subsequent communication of that legal advice, including by way of a copy or summary of it, unless the party has waived its privilege by making that communication or by other conduct.  It is not necessary for the party to establish that the subsequent communication was itself made for a purpose which would attract privilege.

[30] It follows that the Council was entitled to assert legal professional privilege in the barrister’s opinion and in the parts of the Rinehart report which summarised that opinion as a ground for resisting disclosure to Tarong, unless the Council had waived its right to do so.

[31] The Council’s purpose in disclosing the barrister’s opinion to Mr Rinehart was to enable him to provide confidential advice to Council in a meeting closed to the public under a statutory provision which sanctioned that course.  The barrister’s opinion was self-evidently confidential to the Council and Mr Rinehart’s contract bound him to respect that confidence.  It follows that the Council’s communication of the barrister’s opinion to Mr Rinehart was consistent with the maintenance of confidentiality as against Tarong.

[32] As was contemplated, Mr Rinehart then communicated his report to the Council for its confidential consideration in a closed meeting.  The minutes demonstrate that so much of the Rinehart report as summarised the barrister’s opinion was not “tabled” or otherwise publicly disclosed.  The minutes do not contain any record of the content of the opinion.  Nor do they indicate that there was any discussion of its terms in an open session of the meeting.  Reference was made to the fact that the Council had received legal advice, but that was entirely consistent with the subsistence of confidence in the terms of the barrister’s opinion and Mr Rinehart’s summary of it.

[33] Tarong cited no authority that supports its contention that the Council must be taken to have waived privilege by its conduct in passing the challenged resolutions in reliance upon the barrister’s opinion or Mr Rinehart’s summary of it.  As I have mentioned, part of the very rationale for affording legal professional privilege in confidential legal advice is to encourage people to obtain and act upon such advice.  The Local Government Act 1993 (Qld) expressly sanctioned the Council’s conduct of maintaining confidentiality in its legal advice about the litigation by considering it only in a meeting closed to the public, and Tarong did not argue that the Act required the Council to disclose its reasons for making the challenged resolutions or any advice upon which it relied in doing so.  In these circumstances, even if the denial to Tarong of access to the barrister’s opinion would impinge upon the public interest in parties to litigation having full access to all facts relevant to the issues in litigation that would not itself justify the abrogation of the privilege.  In Esso Australia Resources Ltd v Commissioner of Taxation of the Commonwealth of Australia,[31] Gleeson CJ, Gaudron and Gummow JJ referred approvingly to Mason and Wilson JJ’s explanation in Waterford v Commonwealth[32] that “legal professional privilege is itself the product of a balancing exercise between competing public interests and that, given the application of the privilege, no further balancing exercise is required.”

[34] As to Tarong’s argument that it was unfair of the Council to disclose part of the Rinehart report whilst masking those parts which evidenced the Council’s legal advice, the question is not whether the conduct was “unfair” in some general or abstract sense, but whether the Council’s conduct was inconsistent with the maintenance of confidentiality in its legal advice, having regard to considerations of fairness.  There was here no conduct of the kind which was found to be productive of unfairness in the decisions relied upon by Tarong.[33]  In those decisions a party to litigation revealed part of a privileged communication to an opponent or otherwise deployed the privileged communication in litigation.  The Council has not disclosed any part of its barrister’s opinion and it has not sought to rely upon it in the litigation.  At the hearing of the appeal the Council disclaimed any such reliance.

[35] The obligation of a party to a proceeding to disclose each document in the party's possession or under its control which is directly relevant to an allegation in issue in the proceeding[34] does not apply to a document in relation to which there is a valid claim to privilege from disclosure.[35]  These rules are compatible with the established practice under which documents may be disclosed in a form which conceals privileged parts of the documents.[36]  Tarong contended that a suggested gap in comprehensibility of the Rinehart report resulting from the masking of privileged material justified an order for disclosure of the whole report, but the decision it cited for that proposition does not support it.  McLelland CJ in Eq. there described the practice in terms which confined it to incomprehensibility resulting from the redaction of irrelevant material, rather than privileged material:[37]

“There is, however, a difference for the purposes of the application of this rule of practice between cases of privilege, on the one hand, and cases of irrelevance on the other. The existence of a recognised privilege confers a positive right to withhold production, whereas exclusion of part of a document on the ground of irrelevance is permitted as a matter of practice, in order to avoid infringement, for no legitimate purpose, of interests of privacy and confidentiality, and thus to avoid injustice.

There is a serious risk that too assiduous a masking of documents on the grounds of irrelevance will create gaps affecting the ready comprehensibility of the remaining portions of the document and of the context in which those portions appear. If for this, or any other, reason, masking on the ground of alleged irrelevance would detract from a proper understanding of the meaning and significance of the admittedly relevant parts of the document, then such masking is not justified.”

[36] Where, as here, a party masks all of the privileged parts of a document, a mere consequential difficulty in comprehending the balance of the document does not of itself justify abrogation of the privilege.[38]

[37] I conclude that the Council did not waive privilege in the barrister’s opinion or in the summary of it in the Rinehart report.

Proposed orders

[38] The primary judge reserved the costs, presumably on the footing that the question whether the barrister's opinion itself should be disclosed had not been resolved. Accordingly, I consider that the appropriate orders are:

(a) Allow the appeal and set aside the orders made by the primary judge on 10 March 2009.

(b) Order that the application filed on 23 February 2009 be dismissed with costs.

(c) Order that the respondent pay the appellant's costs of and incidental to the appeal, except for the costs associated with the appellant’s application to adduce new evidence.

[39] WHITE J: I have read the reasons for judgment of Fraser JA and agree with his Honour’s reasons and the orders that he proposes.

Footnotes

[1] Esso Australia Resources Limited v The Commissioner of Taxation (1999) 201 CLR 49; [1999] HCA 67, per Gleeson CJ, Gaudron and Gummow JJ jointly, and Callinan J; contra McHugh J and Kirby J.

[2] (2006) 16 VR 1; [2006] VSCA 201.

[3] (2006) 16 VR 1; [2006] VSCA 201.

[4] Premier Building & Consulting Pty Ltd v Spotless Group Ltd (No 6) [2005] VSC 256.

[5] (2006) 16 VR 1; [2006] VSCA 201 at [20]-[25].

[6] (2006) 16 VR 1; [2006] VSCA 201 at [68].

[7] (1995) 185 CLR 83; [1995] HCA 39.

[8] (1999) 201 CLR 1; [1999] HCA 66.

[9] (2006) 16 VR 1; [2006] VSCA 201 at [57]-[60].

[10] (1976) 135 CLR 674 at 685.

[11] (1987) 163 CLR 54; [1987] HCA 25 at 64-5.

[12] (2006) 16 VR 1; [2006] VSCA 201 at [62]-[64].

[13] (2004) 136 FCR 357 at 375, [62].

[14] (1997) 188 CLR 501; [1997] HCA 3 at 543.

[15] (1999) 201 CLR 1; [1999] HCA 66 at [96] – [97].

[16] (1999) 201 CLR 49 at [82].

[17] (1999) 201 CLR 1 at [16].

[18] (1999) 201 CLR 1 at [30].

[19] (1995) 185 CLR 83; [1995] HCA 39.

[20] (1999) 201 CLR 1 at [29]; see also at [28], referring to Cross on Evidence, 5th Aus ed (1996), Para 25005 and Attorney-General (NT) v Maurice (1986) 161 CLR 475 at 497-498.

[21] Osland v Secretary, Department of Justice (2008) 234 CLR 275; [2008] HCA 37, at [45], [49] – [50].

[22] Goldberg v Ng (1995) 185 CLR 83; [1995] HCA 39 at 96.

[23] At [32], citing British Coal Corp v Dennis Rye Ltd (No 2) [1988] 1 WLR 1113; [1988] 3 All ER 816, Goldman v Hesper [1988] 1 WLR 1238; [1988] 3 All ER 97, and Gotha City v Sotheby’s [1998] 1 WLR 114 (see esp. at 119 per Staughton LJ). See also, concerning mere copies of privileged documents, Vardas v South British Insurance Co Ltd [1984] 2 NSWLR 652 which was cited with apparent approval by the majority at [16].

[24] (1992) 36 FCR 557 at 571.

[25] Southern Pacific Hotel Services Inc. v Southern Pacific Hotel Corp Ltd [1984] 1 NSWLR 710 at 715.

[26] [1992] 2 Lloyd's Rep 540 at 540-1, per Saville J.

[27] [1999] VSC 96 at [53], per Gillard J.

[28] (2006) 16 VR 1 at [54], [55].

[29] [2006] FCA 371 at [37] per Cowdroy J.

[30] Esso Australia Resources Ltd v The Commissioner of Taxation of the Commonwealth of Australia (1999) 201 CLR 49 at [35], per Gleeson CJ, Gaudron and Gummow JJ, approving Deane J’s statement in Baker v Campbell (1983) 153 CLR 52; [1983] HCA 39 at 114.

[31] (1999) 201 CLR 49; [1999] HCA 67 at [35].

[32] (1987) 163 CLR 54; [1987] HCA 25 at [64]-[65].

[33] Bayliss v Cassidy (No 2) [2000] 1 Qd R 464; [1998] QCA 38; Henderson v Low [2000] QSC 417; Undercar Australia Pty Ltd v Monbray Pty Ltd (unreported, District Court of Queensland, No 2163 of 1995, 16 November 1999) Skoien SJDC; Attorney-General(NT)  v Maurice (1986) 161 CLR 475; [1986] HCA 80.

[34] UCPR, r 211(1)(c).

[35] UCPR, r 212(1)(a).

[36] See Curlex Manufacturing Pty Ltd v Carlingford Australia General Insurance Ltd [1987] 2 Qd R 335 per McPherson J, whose judgment was described by Hoffmann LJ in GE Capital Corporate Finance Group Ltd v Bankers Trust Co [1995] 1 WLR 172 at 176 as "masterly" and "required reading on this subject".

[37] Telstra Corporation v Australis Media Holdings (Unreported, Supreme Court of New South Wales, McLelland CJ in Eq, 11 February 1997). See also Menkens v Wintour [2007] 2 Qd R 40; [2006] QSC 342.

[38] Curlex Manufacturing Pty Ltd v Carlingford Australia General Insurance Ltd [1987] 2 Qd R 335 at 341-342.

Close

Editorial Notes

  • Published Case Name:

    Tarong Energy Corporation Limited v South Burnett Regional Council (formerly Nanango Shire Council)

  • Shortened Case Name:

    Tarong Energy Corporation Limited v South Burnett Regional Council

  • Reported Citation:

    [2010] 1 Qd R 575

  • MNC:

    [2009] QCA 265

  • Court:

    QCA

  • Judge(s):

    Muir JA, Fraser JA, White J

  • Date:

    08 Sep 2009

Litigation History

Event Citation or File Date Notes
Primary Judgment SC7937/07 (No Citation) 20 Mar 2009 Mullins J.
Appeal Determined (QCA) [2009] QCA 265 [2010] 1 Qd R 575 08 Sep 2009 Appeal allowed: Muir and Fraser JJA and White J.
Appeal Determined (QCA) [2009] QCA 304 09 Oct 2009 Application pursuant to r 388 of the Uniform Civil Procedure Rules 1999 (the slip rule).
Appeal Determined (QCA) [2009] QCA 406 24 Dec 2009 Application for indemnity certificate refused: Muir and Fraser JJA and White J.

Appeal Status

{solid} Appeal Determined (QCA)