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Pro-Invest Australian Hospitality (ST) Pty Ltd v Tactical Project Management Pty Ltd[2025] QCA 10

Pro-Invest Australian Hospitality (ST) Pty Ltd v Tactical Project Management Pty Ltd[2025] QCA 10

SUPREME COURT OF QUEENSLAND

CITATION:

Pro-Invest Australian Hospitality (ST) Pty Ltd v Tactical Project Management Pty Ltd [2025] QCA 10

PARTIES:

PRO-INVEST AUSTRALIAN HOSPITALITY (ST) PTY LTD AS TRUSTEE FOR THE PRO-INVEST AUSTRALIAN HOSPITALITY OPPORTUNITY TRUST (BRS SPRING HILL) TRUST

(ABN 51 713 049 610)

(appellant)

v

TACTICAL PROJECT MANAGEMENT PTY LTD (ACN 153 807 464) AS TRUSTEE FOR THE TPM UNIT TRUST

(ABN 45 673 805 105)

(first respondent)

THWAITE CONSULTING GROUP PTY LTD

(ABN 76 090 810 816)

(second respondent)

FILE NO/S:

Appeal No 8805 of 2024

SC No 2710 of 2021

DIVISION:

Court of Appeal

PROCEEDING:

General Civil Appeal

ORIGINATING COURT:

Supreme Court at Brisbane – [2024] QSC 101; unreported 6 June 2024 (Bowskill CJ)

DELIVERED ON:

14 February 2025

DELIVERED AT:

Brisbane

HEARING DATE:

25 October 2024

JUDGES:

Mullins P and Flanagan and Brown JJA

ORDERS:

  1. Appeal allowed.
  2. Order 5 made on 6 June 2024 is set aside.
  3. Order 6 made on 6 June 2024 is varied by deleting “, including the hearing on 6 June 2024”.
  4. No order as to costs in respect of the hearing on 6 June 2024.
  5. The respondents must pay the appellant’s costs of the appeal.

CATCHWORDS:

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – DISCOVERY AND INTERROGATORIES – DISCOVERY AND INSPECTION OF DOCUMENTS – PRODUCTION AND INSPECTION OF DOCUMENTS – GROUNDS FOR RESISTING PRODUCTION – PRIVILEGE – CLIENT LEGAL PRIVILEGE – WAIVER OF PRIVILEGE – where the plaintiff as the developer of a hotel was unsuccessful in defending the claim brought against it by the builder Built Qld Pty Ltd (the Built proceeding) for the price of carrying out the direction in respect of the air conditioning system given by the defendant as project manager and the delay damages from carrying out that direction (the mechanical direction issues) – where the plaintiff sought to recover from the defendant the amounts it paid to Built for damages and interest for the mechanical direction issues as well as the plaintiff’s costs arising out of the Built proceeding attributable to the mechanical direction issues – where the plaintiff’s solicitors had sought an expert report by a costs assessor to determine the proportion of the costs incurred by the plaintiff in the Built proceeding attributable to the mechanical direction issues – where the plaintiff’s solicitors’ invoices were provided to the costs assessor in an unredacted form – where the defendant and third party brought an application against the plaintiff seeking further disclosure – where it was decided against the plaintiff at first instance that the plaintiff must disclose copies of any documents referred to in the narratives of the invoices – where it was found at first instance that the plaintiff had waived legal professional privilege by making a claim for damages in respect of the costs of the Built proceeding attributable to the mechanical direction issues – whether there was any conduct by the plaintiff that was inconsistent with the maintenance of its legal professional privilege in the documents referred to in the narratives of the invoices

Uniform Civil Procedure Rules 1999 (Qld), r 765

Birch v Birch [2020] QCA 31, cited

DSE (Holdings) Pty Ltd v Intertan Inc (2003) 127 FCR 499; [2003] FCA 384, considered

Inche Noriah v Shaik Allie Bin Omar [1929] AC 127; [1928] UKPC 76, cited

Lake Cumbeline Pty Ltd v Effem Foods Pty Ltd (1994) 126 ALR 58; [1994] FCA 1479, considered

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

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

The Queensland Local Government Superannuation Board v Allen [2016] QCA 325, cited

COUNSEL:

A C Stumer KC, with J Mitchenson, for the appellant

J P O'Regan for the first respondent

H E P Clift, with H L Lilley, for the second respondent

SOLICITORS:

Thomson Geer for the appellant

Thynne & Macartney for the first respondent

Clyde & Co Australia for the second respondent

  1. [1]
    MULLINS P:  The learned Chief Justice disposed of applications brought by the defendant and the third party (which are now respectively the first and second respondents) against the plaintiff (which is the appellant on this appeal) seeking further disclosure in Pro-Invest Australian Hospitality Opportunity (St) Pty Ltd v Tactical Project Management Pty Ltd [2024] QSC 101 (the reasons).  It is convenient to refer to the parties by their roles in the proceeding in the Trial Division (the proceeding) and to adopt other abbreviations used in the reasons.
  2. [2]
    When the reasons were published on 23 May 2024, the making of the formal order to reflect the reasons was deferred until the parties made further submissions on 6 June 2024.  The parties had reached agreement by then on all aspects of the order except for paragraph 5 and the issue of costs.  Further reasons were given by the Chief Justice ex tempore on 6 June 2024 (the further reasons).
  3. [3]
    Paragraphs 5 and 6 of the Chief Justice’s order made on 6 June 2024 are the subject of this appeal:

“5. Pursuant to rule 366 of the UCPR, the Plaintiff is to disclose, by 31 July 2024, any document relating to the narratives contained on the invoices relevant to the Plaintiffs claim in paragraph 37(f) of the amended statement of claim and disclosed pursuant to order 3(a) above.

  1.  The Plaintiff pay the Defendant’s and Third Party’s costs of the applications, including the hearing on 6 June 2024.”
  1. [4]
    On 23 July 2024, the Chief Justice stayed order 5 pending the determination of this appeal.
  2. [5]
    The nature of the proceeding is set out in [1]-[6] of the reasons.  The plaintiff was unsuccessful in defending the claim brought against it by Built for the price of carrying out the direction given by the defendant as project manager to rectify the air conditioning system so that it would provide for independent heating/cooling function (referred to as the “mechanical direction”), as well as delay damages arising from the carrying out of the mechanical direction.  The claims for the cost of the works in carrying out the mechanical direction and the resulting delay damages will be referred to as “the mechanical direction issues”.  The plaintiff seeks to recover from the defendant in the proceeding both the amounts it paid to Built (for damages and interest) for the mechanical direction issues as well as costs arising out of the Built v Pro-Invest proceeding (including the appeals) (the Built proceeding).  The costs arising out of the Built proceeding cover the plaintiff’s own costs of the Built proceeding and the costs it was liable to pay Built due to Built’s successful appeal: see [4] of the reasons.  The defendant joined the third party which had been engaged by the defendant to provide mechanical consulting services for the project as the third party in the proceeding.
  3. [6]
    The issue determined by the Chief Justice that was decided against the appellant and has resulted in this appeal was set out at subparagraph (f) of [8] of the reasons as whether the appellant should be required to disclose copies of any documents relating to the narratives contained in the invoices relied upon in seeking the costs alleged in paragraph 37(f) of the amended statement of claim filed on 27 June 2023 (the statement of claim) on the basis it had waived privilege in those documents, given the nature of its claim in the proceeding.  The main issues pursued on the appeal by the plaintiff were:
    1. Did the Chief Justice err in finding that legal professional privilege in the documents referred to in the narratives of the invoices was waived?
    2. If the plaintiff succeeded on that issue, should the order for costs made by the Chief Justice be set aside and the costs of the applications before the Chief Justice be reserved?
  4. [7]
    Issue (a) is based on grounds 1 and 2 in the notice of appeal.  In lieu of the Chief Justice’s finding that the plaintiff had waived legal professional privilege, the plaintiff seeks findings that the documents referred to in the narratives to the plaintiff’s invoices were subject to legal professional privilege and that the plaintiff had not waived that privilege by making a claim for damages in respect of its costs of the Built proceeding.  Ground 2 asserts that the Chief Justice erred in law in finding that by seeking to recover as damages the costs of the Built proceeding, the plaintiff had opened up the reasonableness of those costs and that the Chief Justice ought to have found:

“(a) it was for the [defendant] to plead and prove that any part of the costs incurred by the [plaintiff] in the Built Proceedings were not reasonably incurred; and

  1.  the [defendant] had not pleaded that any part of the costs incurred by the [plaintiff] in the Built Proceedings were not reasonably incurred;
  1.  in any event, a pleading by the [defendant] that part of the costs incurred by the [plaintiff] in the Built Proceedings was not reasonably incurred would not amount to a waiver of legal professional privilege by the [plaintiff] in the documents referred to in the narratives to the [plaintiff’s] invoices in the Built Proceedings.”
  1. [8]
    Grounds 3 to 5 of the notice of appeal raise subsidiary issues which it will be necessary to address only if the plaintiff does not succeed on issue (a).

Nature of this appeal

  1. [9]
    It is common ground between the parties that, as the appeal is from an interlocutory decision in a proceeding in the Trial Division the appeal is an appeal stricto sensu under r 765(2) of the Uniform Civil Procedure Rules 1999 (Qld).  The role of this Court is to determine whether the judgment below was correct when it was given on the material before the Chief Justice.

Pleadings before the Chief Justice

  1. [10]
    Paragraph 37 of the statement of claim sets out the plaintiff’s identification of the loss and damage alleged to be suffered by reason of the defendant’s breaches of contract, breach of duty of care and contraventions of the Australian Consumer Law and include:

“(a) $940,942.17 (including GST) for the price of the mechanical variation; …

  1.  $591,123.68 (including GST) for 83 days in delay costs due to the mechanical variation; …
  1.  costs arising out of the Court Proceedings, including subsequent appeals, insofar as is relevant to the matters in subparagraphs (a) and (c) above.”
  1. [11]
    Paragraphs 37(a) and (c) are the claims for damages for the mechanical direction issues.  By virtue of paragraph 37(f) of the statement of claim, the plaintiff is claiming the costs of the Built proceeding relating to the mechanical direction issues.
  2. [12]
    Apart from not admitting that the plaintiff incurred the costs alleged in paragraph 37 of the statement of claim, the defendant pleads specifically to paragraph 37(f) of the statement of claim in paragraph 54(b)(iv) of the amended defence and counterclaim filed on 4 October 2023 (the defence and counterclaim) in the following terms:

“[T]he costs alleged in paragraph 37(f), if incurred by the Plaintiff, are not costs caused by the alleged breach of contract or duty or contravention of the Australian Consumer Law, but were caused by the Plaintiff’s failure to pay amounts owed to Built when they were due and decision to defend the Court Proceedings.”

  1. [13]
    The issues raised between the plaintiff and the defendant on the pleadings about the plaintiff’s claim for costs were, first, proof that the costs were incurred and, secondly, the causation of the plaintiff’s incurring those costs.
  2. [14]
    In paragraph 47 of the amended third party statement of claim filed on 3 October 2023 (the third party statement of claim) the defendant pleads that, if the plaintiff succeeds in the proceeding against the defendant, then the breaches alleged against the defendant were caused by the third party’s breach of the mechanical services engagement with the defendant, breach of duty or contravention of the Australian Consumer Law.  The defendant pleads in paragraph 48(b)(ii) of the third party statement of claim that, as a consequence of those breaches or contravention by the third party, the defendant will suffer loss being “any amount of damages and interest for which it is found liable to the plaintiff in the within proceedings”.
  3. [15]
    In paragraph 47 of the defence of the third party filed on 27 October 2023 (the third party defence), the third party denies paragraph 47 of the third party statement of claim for the reasons pleaded in paragraphs 37, 43 and 45 of the third party defence, also because any loss and damage suffered by the defendant or by the plaintiff was caused by their own failures to take reasonable care, and because the third party’s conduct at the time of the project “would be widely accepted by the professional opinion of its peers as being competent professional practice in the industry”.
  4. [16]
    The third party’s specific response to paragraph 48 of the third party statement of claim is that it does not admit that the plaintiff suffered the loss and damage alleged, but if the plaintiff did suffer the loss and damage alleged against the defendant in the statement of claim, then the third party relies on the limitation of the defendant’s liability under the consultancy agreement.  The third party otherwise denies paragraph 48 of the third party statement of claim for the reasons pleaded in paragraph 47 of the third party defence.
  5. [17]
    The issues that arise from the third party pleadings are that the third party puts in issue the proof of the plaintiff’s claim for costs, the causation of those costs and also the issue of the limitation of the defendant’s liability under the consultancy agreement.  The question of the reasonableness of the costs incurred by the plaintiff in the Built proceeding is not an express issue on any of the pleadings.

Expert report

  1. [18]
    Solicitor and costs assessor Mr Walter was briefed by the plaintiff’s solicitors to prepare an expert report in respect of that part of the costs incurred or expended by the plaintiff as the defendant in the Built proceeding attributable to the mechanical direction issues.  Even though Mr Walter is an expert costs assessor, he was not instructed to, and did not, perform a costs assessment of the plaintiff’s costs of the Built proceeding for the purpose of working out the relevant proportion of the total costs incurred by the plaintiff in the Built proceeding that relate to the mechanical direction issues.
  2. [19]
    Mr Walter prepared his report dated 19 February 2024 (the report) that was filed in the proceeding.  The report includes as annexure 2 the letter of instructions to Mr Walter which includes the index of documents provided by the plaintiff’s solicitors to Mr Walter.  Mr Walter summarised at [4.3] of his report the material which he had considered, giving them numbers between 1 and 19.  Item 15 was the invoices for professional legal services rendered and costs incurred in the Built proceeding by the plaintiff with its solicitors from 30 June 2018 to 31 May 2022 and item 16 was an Excel spreadsheet tabulating those invoices.  Item 17 was the invoices for professional legal services rendered and costs incurred in the appeal to this Court by Built in the Built proceeding.  Item 18 was the invoices for professional legal services rendered and costs incurred in the application for special leave to appeal by the plaintiff to the High Court in respect of the Built proceeding.
  3. [20]
    Those invoices were provided to Mr Walter in an unredacted form.
  4. [21]
    The plaintiff’s solicitors did not provide Mr Walter with their file for the Built proceeding or the documents referred to in the narrations to the unredacted invoices.  (Pursuant to paragraph 3(a) of the Chief Justice’s order made on 6 June 2024, the plaintiff was ordered to disclose unredacted copies of the invoices relied upon in seeking the costs alleged in paragraph 37(f) of the statement of claim.  Those unredacted copies of the invoices have been provided by the plaintiff, as required by the Chief Justice’s order, and there was no appeal against that order.)
  5. [22]
    Mr Walter set out his approach in preparing the report in section 7 of the report.  He stated at [7.5]:

“In the event that Pro-Invest is successful in this proceeding, it is my opinion that the costs awarded as damages as were incurred by Pro-Invest in the proceeding between solicitor and own client may not be quantified by the scheme for costs assessment under Chapter 17A of the UCPR or under Part 3.4, Division 7 of the Legal Profession Act 2007 (Qld). However, the reasonableness of the quantum of costs as damages may reasonably be established by expert evidence in accordance with the usual principles applied for establishing other heads of damages.”

  1. [23]
    Rule 678 of the UCPR provides that chapter 17A applies to costs to be assessed under an Act, the UCPR or an order of the court.  Part 3.4 of division 7 of the Legal Profession Act 2007 (Qld) regulates costs disclosure by law practices to clients regarding legal costs and provides for clients or third party payers to apply for an assessment of the legal costs.  (It is noteworthy that Mr Walter’s views on how the plaintiff’s claim for loss and damage for its costs arising out of the Built proceeding would be proved was not a matter on which Mr Walter’s opinion was sought by the plaintiff and did not accord with the plaintiff’s submissions on this appeal as to what it had to prove in respect of the quantum of its costs of the Built proceeding relating to the mechanical direction issues.)
  2. [24]
    Mr Walter set out in section 8 of the report the methodology which he employed to determine the proportion of the plaintiff’s costs in the Built proceeding in defending that part of the claim arising from the mechanical direction issues.  He set out his approach at [8.2] of the report:

“In order for me to determine a reasonable assessment of Pro-Invest’s costs in defending that part of Built’s Claim arising from the Mechanical Direction, it is necessary in my opinion to consider all of the material referred to in paragraph 4.3 of this report, to derive a proportion or percentage of the work as is incidental to the issue of the Mechanical Direction, and to apply an apportionment of the legal work undertaken to the Costs. I have not conducted an assessment of Pro‑Invest’s solicitors’ file.”

  1. [25]
    It is apparent from [8.5] of the report that, when Mr Walter refers in the report to a “reasonable assessment” of the plaintiff’s costs in the Built proceeding, he is using the description of “reasonable” to describe the apportionment of all the costs incurred in the Built proceeding by the plaintiff between the defence of the mechanical direction issues and the other issues in the Built proceeding.
  2. [26]
    Mr Walter recorded at [9.31] of the report that:

“Necessarily I have examined the Invoices in order to formulate my opinion about the fairness and reasonableness thereof.”

  1. [27]
    At [9.36] of the report, Mr Walter noted “the fundamental questions for consideration by a costs assessor conducting an assessment of costs between solicitor and own client” included whether it was reasonable to undertake the legal work, whether the work was carried out reasonably, and the fairness and reasonableness of the amount of the costs.  Mr Walter then noted at [9.37] of the report that, notwithstanding that he had taken account of the criteria for costs assessment in preparing the report, he confirmed that he had approached the task of preparing the report and estimating the costs in accordance with the process set out in section 8 of the report.
  2. [28]
    The opinion was expressed by Mr Walter at [9.44] of the report that it was “fair and reasonable” for the plaintiff’s solicitors to have charged on an hourly rate basis in the Built proceeding and that the hourly rates charged by them and by the plaintiff’s counsel were “fair and reasonable”.  The reference in [9.31] and [9.44] of the report to the fairness and reasonableness of the plaintiff’s invoices was therefore to the basis of charging on an hourly rate for the relevant staff member.  Mr Walter then at [9.45] of the report identified that upon his review of the invoices there ought reasonably be certain disallowances or reductions in respect of the costs which were identified as:
    1. reduction in the sum of $615,055.26 from the gross costs which represented the amount of GST charged on the basis that the plaintiff was registered for GST;
    2. removal of the sum of $5,615 (excluding GST) which had been incorrectly or inadvertently claimed; and
    3. a global reduction of 2.5 per cent to allow for the vicissitudes of legal practice and litigation including repetition of legal work by the litigation team of solicitors, the supervision of multiple staff and the costs of retention of at least four junior counsel retained from time to time.
  3. [29]
    That resulted in net total costs of $5,991,314.14 for the Built proceeding that were incurred by the plaintiff.  Mr Walter then took into account his analysis at section 11 of the report of various relevant factors relating to the legal work undertaken by the plaintiff’s solicitors.  He had analysed the quantum of the claim, the pleadings, the written closing submissions, court time in the trial, witness statements and expert reports and costs submissions to calculate the percentage of the legal work applicable to the mechanical direction issues.
  4. [30]
    Mr Walter’s opinion (at [12.1] of the report) was that, taking into account all the elements or factors identified in section 11 of the report, the costs relating to the defence of Built’s claim incidental to the mechanical direction issues would reasonably be apportioned as to 55.8 per cent of the plaintiff’s total costs.

The reasons

  1. [31]
    The Chief Justice addressed (at [32]-[43] of the reasons) the issue of whether the plaintiff should disclose unredacted copies of the invoices on the basis it waived privilege in the redacted parts by providing unredacted copies of the invoices to Mr Walter.
  2. [32]
    The Chief Justice preferred to draw the inference from Mr Walter’s report that was put forward by the defendant and the third party that Mr Walter used the unredacted invoices in a way that could be said to influence the content of the report (and there is no challenge to this finding on the appeal).  The Chief Justice (at [42] of the reasons) rejected the plaintiff’s submission that it was not reasonable to draw that inference having regard to the ultimate basis on which Mr Walter expressed his view as to the proportion of the costs attributable to the mechanical direction.  The Chief Justice then stated (at [42]):

“It is inconsistent with what Mr Walter has himself said, particularly in [9.31] of the report. It is also inconsistent with Mr Walter’s ability to form a view about the amount to be deducted, on the basis it was incorrectly or inadvertently included on five invoices. It is reasonable to infer that Mr Walter not only had regard to all the information available to him on the face of the invoices, but also that that information influenced the content of the report, at least to some extent, such that it would be unfair for Pro-Invest to rely on the report without disclosing the unredacted invoices.”

  1. [33]
    The Chief Justice dealt with (at [44]-[55] of the reasons) the issue of whether the plaintiff should disclose copies of any documents referred to in the narratives in the invoices provided to the expert.  The Chief Justice found (at [45]) that the plaintiff should disclose such documents, as the plaintiff had impliedly waived privilege in those documents by opening up the question of the amount and reasonableness of its costs incurred in the Built proceeding.  The Chief Justice accepted (at [46]) that the plaintiff had not put in issue the content of any privileged communications between it and its lawyers in relation to the Built proceeding.  The Chief Justice then stated (at [46]):

“However, what Pro-Invest has done, by this proceeding is to ‘necessarily lay open the confidential communication to scrutiny’ – resulting in a forensic unfairness if its claim for damages comprising its legal costs in the Built v Pro-Invest proceeding is allowed to proceed without disclosure of documents that will enable scrutiny of the amount and reasonableness of those costs.” (footnote omitted)

  1. [34]
    The phrase quoted by the Chief Justice “necessarily lay open the confidential communication to scrutiny” is footnoted to The Queensland Local Government Superannuation Board v Allen [2016] QCA 325 at [71] where it was stated:

“In cases of this kind, it has been held that where ‘the party entitled to the privilege makes an assertion (express or implied), or brings a case, which is either about the contents of the confidential communication or which necessarily lays open the confidential communication to scrutiny and, by such conduct, an inconsistency arises between the act and the maintenance of the confidence, informed partly by the forensic unfairness of allowing the claim to proceed without disclosure of the communication’, the privilege in the communication will be waived. It has also been held that it ‘is not apparently open to another party to litigation to force waiver of a party’s legal professional privilege by making assertions about, or seeking to put in issue, that party’s state of mind’. Indeed, that is just another way of saying that implied waiver can only come about through the acts or omissions of the privilege holder, and not the party seeking to destroy the privilege.” (footnotes omitted)

  1. [35]
    The quote set out in the first sentence of [71] of Allen is from DSE (Holdings) Pty Ltd v Intertan Inc (2003) 127 FCR 499 at [58].
  2. [36]
    The Chief Justice explained (at [48] of the reasons) that “it might be said that the privilege has done its work, in the context of the Built v Pro-Invest proceeding” and, where the plaintiff seeks to recover its legal costs incurred in the Built proceeding and so has opened up the question of the amount and reasonableness of those costs, that privilege must yield, as a matter of “basic fairness”.
  3. [37]
    It was a contested issue before the Chief Justice as to how legal costs claimed as loss and damage are proved.  The plaintiff relied upon Gray v Sirtex Medical Ltd (2011) 193 FCR 1 at [24], [26] and [41] to contend that it was entitled to recover, if it succeeded in its claim, all the costs it incurred in the Built proceeding.  The defendant and the third party argued, however, that where legal costs were claimed as damages, what is recoverable is the costs assessed on the standard basis (or on the indemnity basis depending on the circumstances) following an assessment.  The Chief Justice considered (at [49] of the reasons) that the basis on which costs could be recoverable as damages in another proceeding was a question of law to be agitated at the trial, but for present purposes the position adopted by the defendant and the third party was arguable.  (The conclusion is the subject of ground 3 of the notice of appeal.)
  4. [38]
    The defendant and the third party submitted to the Chief Justice that they should be permitted to scrutinise the costs incurred by the plaintiff in the Built proceeding that are now claimed as damages by engaging an expert costs assessor.  There was evidence before the Chief Justice from the third party’s costs assessor that he required access to the plaintiff’s solicitors file in the Built proceeding to provide an opinion in relation to the reasonableness of the costs incurred on a gross sum basis.  The Chief Justice concluded (at [55] of the reasons):

“In my view, having reached the conclusion that, by opening up the question of the amount and reasonableness of the legal costs it incurred in the Built v Pro-Invest proceeding, Pro-Invest has waived privilege in the documents referred to in the narratives in the invoices; and in light of the evidence that in order for an expert costs assessor to properly form an opinion about the reasonableness of those costs (let alone, an assessment on the standard basis) it would be necessary to review those documents from the solicitors’ file, it is appropriate to order that they be disclosed.”

  1. [39]
    Grounds 4 and 5 of the notice of appeal focus on the conclusion that the documents from the plaintiff’s solicitor’s file in the Built proceeding were required by the third party’s expert costs assessor to assess the reasonableness of the costs incurred by the plaintiff in the Built proceeding.

Did the Chief Justice err in finding that legal professional privilege in the documents referred to in the narratives of the invoices was waived?

  1. [40]
    The first critical step in the Chief Justice’s reasoning was that the amount and reasonableness of the costs incurred by the plaintiff arising out of the Built proceeding that are claimed by the plaintiff as damages from the defendant were in issue on the pleadings in the proceeding.  The second critical step in the Chief Justice’s reasoning was that the plaintiff’s legal professional privilege must yield as a matter of basic fairness where the question was the amount and reasonableness of the plaintiff’s costs incurred in the Built proceeding.  In dealing with whether there is any error in the Chief Justice’s finding that legal professional privilege in the documents referred to in the narratives of the invoices provided to Mr Walter for the report was waived by the plaintiff, it is relevant to consider:
    1. the nature of legal professional privilege;
    2. on the pleadings before the Chief Justice, what the plaintiff’s claim to recover the costs arising out of the Built proceeding entails; and
    3. whether there was any conduct of the plaintiff that put the content of the documents referred to in the narratives of the invoices in issue or necessarily laid open the contents of those documents to scrutiny or any other conduct of the plaintiff that was otherwise inconsistent with the maintenance of the privilege?
  2. [41]
    Legal professional privilege is a common law immunity for the benefit of the client and it may be expressly or impliedly waived by the client:  Mann v Carnell (1999) 201 CLR 1 at [28] and Allen at [4] and [50].  It may be impliedly waived by the conduct of the client where the actions of the client are inconsistent with the maintenance of the confidentiality which the privilege is intended to protect: Mann at [29] and Allen at [4] and [52].  When legal professional privilege attaches to a document, the privilege attaches for all time, unless it is waived: see Giannarelli v Wraith [No 2] (1991) 171 CLR 592 at 601 and Osland v Secretary, Department of Justice (2008) 234 CLR 275 at [39]-[40].
  3. [42]
    The joint judgment of Gleeson CJ and Gaudron, Gummow and Callinan JJ in Mann at [28] gave examples of inconsistency between the conduct of the client and maintenance of the confidentiality which would result in waiver of the privilege:

“Examples include disclosure by a client of the client’s version of a communication with a lawyer, which entitles the lawyer to give his or her account of the communication, or the institution of proceedings for professional negligence against a lawyer, in which the lawyer’s evidence as to advice given to the client will be received.” (footnotes omitted)

  1. [43]
    There were statements in Attorney-General (NT) v Maurice (1986) 161 CLR 475 at 487-488, 492-493 and 497-498 to the effect that waiver of legal professional privilege by imputation or implication of law was based on notions of fairness but that was clarified in Mann at [29], where it was stated in the joint judgment that:

“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.”

  1. [44]
    Gleeson CJ and Gummow, Heydon and Kiefel JJ noted in Osland (at [45]) that implied waiver “reflects a judgment that the conduct of the party entitled to the privilege is inconsistent with the maintenance of the confidentiality which the privilege is intended to protect” and that such a judgment is to be made “in the context and circumstances of the case, and in the light of any considerations of fairness arising from that context or those circumstances”.
  2. [45]
    Allsop J (as his Honour then was) in DSE considered in detail authorities both prior and post Mann on implied waiver of legal professional privilege.  In DSE, the applicant and the respondents were respectively the purchaser and vendors under a share acquisition agreement that was completed.  There was provision in the agreement for an adjustment known as the “Net Asset Correction” that depended on the December Accounts (as defined).  The parties were in dispute over whether the accounts known as the December Corporate Pack were the December Accounts within the meaning of the Agreement.  The applicant contended they were and the respondents contended they were not.  The applicant alleged that the negotiations were conducted on assumptions held by both the applicant and the respondents that the December Corporate Pack was the December Accounts for the purpose of the draft agreements and would be the December Accounts for the purposes of any concluded agreement.  The respondents put these matters in issue.  Allsop J concluded (at [115]) that the respondents by joining issue in their defence with an allegation made by the applicant that the applicant and the respondents had a certain state of mind during the negotiations for the agreement had not waived privilege on legal advice relevantly connected with the formation of their state of mind.
  3. [46]
    Allsop J in DSE emphasised at [14], [24], [61], [95], [96] and [115] that, after Mann, it is the inconsistency between the relevant act of the holder of the privilege and the maintenance of the confidentiality that is essential and “not a broad balancing process based on fairness”.  Allsop J stated at [115]:

“The act of mere denial by the respondents of an assertion by the applicants is not an act by the respondents which expressly or impliedly makes an assertion about the contents of any privileged communication or which necessarily lays any such communication open to scrutiny. There is no act of the respondents inconsistent with the maintenance of the confidentiality. There is a joinder of issue on a question of fact to which the privileged communication can be seen as relevant. That is insufficient in my view for it to be concluded that there exists the necessary inconsistency enunciated by Mann v Carnell.”

  1. [47]
    One category of case that Allsop J referred to in DSE that may fall within those cases where a party to litigation makes an assertion “which necessarily lays open the confidential communication to scrutiny” is the undue influence case.  Undue influence cases were considered by analogy in Thomason v Campbelltown Municipal Council (1939) 39 SR (NSW) 347 at 358-359.  Reference was made to the practice for the donee to cross-examine the donor with a view to proving that the donor had competent legal advice when the donor entered into the transaction favourable to the donee and to call and examine the donor’s legal adviser if the legal adviser were available: see Inche Noriah v Shaik Allie Bin Omar [1929] AC 127 at 130-131.  A recent example where the donor’s legal adviser gave evidence of the advice given to the donor before entry into the impugned transaction is Birch v Birch [2020] QCA 31 at [20]-[26] and [83]-[85].  In an undue influence case, the donor could not withhold the evidence of the legal advice given to the donor prior to entry into the impugned transaction on the ground of legal professional privilege, as that would be inconsistent with the donor’s claim based on undue influence by the donee.  The intervention of legal advice to the donor may negate the allegation made by the donor of the undue influence of the donee.  Allsop J explained in DSE at [58]:

“It is sufficient to understand, I think, that in most undue influence cases (and in Thomason when its circumstances are appreciated) the party entitled to the privilege makes an assertion (express or implied), or brings a case, which is either about the contents of the confidential communication or which necessarily lays open the confidential communication to scrutiny and, by such conduct, an inconsistency arises between the act and the maintenance of the confidence, informed partly by the forensic unfairness of allowing the claim to proceed without disclosure of the communication.”

  1. [48]
    It is common ground among the parties that the plaintiff has not put the content of any confidential communications in issue.  The defendant and the third party were relying on the other category of case referred to in DSE at [58] and Allen at [71] that the plaintiff’s case “necessarily lays open” the confidential communications referred to in the invoices.
  2. [49]
    The plaintiff submits that the Chief Justice was in error at the first step in concluding that the plaintiff’s claim for its costs of the Built proceeding as damages meant that the plaintiff opened up the question of the amount and reasonableness of the legal costs that it incurred.  The plaintiff maintains that it has not placed the content of its confidential communications referred to in the narratives in the invoices in issue.  The plaintiff submits that the effect of the Chief Justice’s conclusion is that a party could not bring any claim for costs as damages without waiving legal professional privilege.
  3. [50]
    The plaintiff relies on Lake Cumbeline Pty Ltd v Effem Foods Pty Ltd (1994) 126 ALR 58 which involved a claim for costs as damages where Tamberlin J explained why memoranda of costs which had been provided by way of disclosure that did not disclose the nature or content of the privileged material did not result in the waiver of legal professional privilege in respect of the documents referred to in the memoranda.  Even though Cumbeline was decided before Mann and applied the test of fairness rather than inconsistency, the plaintiff submits that the following observations of   Tamberlin J at 69 remain apt:

“If the court were to hold that when a party makes a claim for damages in the nature of costs and provides a list of the costs and amounts in respect of which the claim is made, but does not disclose any communications, advice or instructions, such party has waived legal professional privilege in relation to all those underlying documents the result would be, in my view, to undermine the basic right to which a client is entitled. It would have the consequence that the other party in later proceedings is entitled to examine the briefs, communications, instructions, retainers and advices considered by the client and to use information originally brought into existence in legal professional confidence for any purpose it wishes in other litigation. In these circumstances the prospect of such a result would substantially impede freedom of communication between client and legal advisers, which is at the very heart of the privilege, by discouraging free and uninhibited discussion of the issues and questions in the fear that these communications could later be disclosed to the severe disadvantage of the client.”

  1. [51]
    The defendant accepted that it is sufficient for the plaintiff to discharge its onus of proof in respect of the costs it incurred in the Built proceeding as damages claimed against the defendant to prove that it incurred the costs because of the defendant’s conduct and submitted that an evidential onus falls upon the defendant to prove that the costs were not reasonably incurred or incurred in an unreasonable amount.  The defendant submits that, in those circumstances, it would be unfair for the plaintiff to maintain its legal professional privilege in respect of the documents referred to in the plaintiff’s solicitor’s invoices, as that would materially hamper the defendant from assessing whether the legal services giving rise to the costs were caused by the impugned conduct of the defendant or were reasonably undertaken by the plaintiff and the costs for those services were reasonable.  This submission does not recognise that it is the holder of the privilege whose conduct must waive the privilege and the test is inconsistency between the holder’s conduct and the maintenance of the privilege.  It also overlooks that the defendant is already in possession of the unredacted invoices on which the plaintiff bases it claim for the proportion of the total costs incurred in the Built proceeding that are attributable to the mechanical direction issues.
  2. [52]
    The defendant characterised the implied waiver of legal professional privilege in respect of legal advice given to the donor before the impugned transaction in an undue influence case as analogous to the position that must apply to the plaintiff’s documents referred to in its solicitor’s invoices that quantify the plaintiff’s claim against the defendant for its costs of the Built proceeding due to the defendant’s impugned conduct.  The analogy fails.  Waiver of privilege in respect of legal advice given to the donor where the donor makes a claim that the impugned transaction was entered into as a result of the undue influence of the donee is directly relevant to whether the donor can prove its cause of action.  The plaintiff is merely seeking to quantify the costs it has incurred in the Built proceeding that are attributable to the mechanical direction issues and it is not necessary to the proof of the plaintiff’s claim that it discloses the content of the confidential communications that are referred to in the narratives in its invoices for the purpose of establishing the amount that it paid to the plaintiff’s solicitors for their legal services in the Built proceeding.
  3. [53]
    In relation to the plaintiff’s claim against the defendant to recover the plaintiff’s costs arising out of the Built proceeding, the plaintiff is claiming the costs that it actually incurred in the Built proceeding relating to the mechanical direction issues (as set out above at [13]).  The purpose of the plaintiff’s obtaining the expert report was only to determine the proportion of the actual total costs incurred by the plaintiff that were attributable to the mechanical direction issues.  To the extent that it was argued by the defendant and the third party that Mr Walter expressed an opinion that the plaintiff would be seeking to prove “the reasonableness of the quantum of costs as damages”, that was not a matter on which Mr Walter’s opinion was sought by the plaintiff (as noted in [23] above) and is not conduct attributable to the plaintiff for the purpose of determining whether there was a waiver of legal professional privilege in respect of the documents referred to in the invoices provided to Mr Walter.  The reasonableness of the amount of those costs was not in issue on the pleadings that were before the Chief Justice.  Consistent with the observations of Tamberlin J in Cumberline, the plaintiff’s provision of unredacted invoices to Mr Walter for the purpose of his preparation of the report to apportion the costs incurred by the plaintiff in the Built proceeding is also conduct by the plaintiff that does not amount to waiver of its legal professional privilege in the underlying documents referred to in the narratives of the invoices.  That position was not altered by the provision of the unredacted invoices to the defendant and the third party in accordance with the Chief Justice’s order.
  4. [54]
    It is for the plaintiff to choose how it proves the claim for its costs of the Built proceeding.  This was recognised by the third party’s description of Mr Walter’s report and his methodology as “a rough and ready way of analysing the costs” and that the third party and the defendant should not be precluded “from undertaking a more thorough and proper analysis”.  That latter submission overlooks that the case of the third party and the defendant is responsive to the plaintiff’s chosen method of proving the quantum of any of its heads of damage and discharging the onus it bears in proving that quantum.  The defendant (and third party) may elect to show that the plaintiff’s chosen method is inadequate for the proof of the quantum of its costs relating to the mechanical direction issues in the Built proceeding.  It would be an unusual strategy for the defendant to assert that the plaintiff has not discharged its onus by the defendant’s undertaking a more “thorough” analysis to give an accurate quantum for the plaintiff’s claim for damages.
  5. [55]
    The Chief Justice was in error in that step in the reasoning that the plaintiff had opened up the question of the reasonableness of the costs it incurred in the Built proceeding relating to the mechanical direction issues by claiming them as a head of damage in the proceeding.
  6. [56]
    Even if the reasonableness of the plaintiff’s costs in the Built proceeding was in issue in the proceeding, it does not follow that the plaintiff would be bound to make its documents which are the subject of legal professional privilege open to scrutiny.  The plaintiff can seek to prove the claim for its costs without disclosing the documents that are subject of legal professional privilege.  Whether it succeeds in proving its quantum by the methodology used by Mr Walter will be a matter for the trial judge.  The fact that access to those documents might be of potential assistance to the defendant and the third party in scrutinising the plaintiff’s claim for its legal costs does not impinge on the plaintiff’s right as the holder of the privilege not to disclose the documents the subject of its legal professional privilege where the plaintiff is not otherwise relying on the content of those documents.
  7. [57]
    As clarified in Mann and illustrated in DSE, the focus of determining whether there is a waiver of legal professional privilege is on the conduct of the holder of that privilege.  The pursuit by the plaintiff of the head of damages particularised in paragraph 37(f) of the statement of claim without reliance on the content of any of its documents which are the subject of legal professional privilege is not conduct which is inconsistent with the maintenance of its claim of legal professional privilege in respect of those documents.  The issue of fairness is not at large and is considered by reference to any inconsistency in the conduct of the plaintiff in respect of maintaining legal professional privilege and not the preference of the defendant and the third party or any costs assessor they may seek to call as a witness in the trial for access to the plaintiff’s documents in the Built proceeding that are the plaintiff’s confidential communications.  There has been no conduct by the plaintiff in the proceeding which “necessarily lays opens” its confidential communications in the Built proceeding.
  8. [58]
    The Chief Justice was therefore in error in the second step in the reasoning in concluding that the plaintiff’s legal professional privilege must yield as a matter of basic fairness.  Issue (a) must be decided in favour of the plaintiff.  It is therefore not necessary to deal with any of grounds 3 to 5 of the notice of appeal.

Orders

  1. [59]
    It was common ground among the parties that the costs of the appeal should follow the event.  As to issue (b), the parties differed on what orders for costs were appropriate, in the event that the plaintiff was successful in setting aside paragraph 5 of the order made on 6 June 2024.  The plaintiff submitted that paragraph 6 should be set aside and an order that the costs of the two applications before the Chief Justice should be reserved, so that their determination would await the ultimate outcome of the proceeding.  The defendant and the third party submitted that, even if paragraph 5 of the order made on 6 June 2024 was set aside, they still had substantial success on the applications before the Chief Justice and that there should be no alteration to paragraph 6 of that order.
  2. [60]
    At the hearing on 6 June 2024, the plaintiff sought a qualification to be added to proposed order 5 in the following terms:

“… except documents the content of which is subject to advice privilege as claimed in an affidavit sworn by the solicitor for the Plaintiff which identifies the documents by references to the invoices, the date of the documents and the pages of the documents.”

  1. [61]
    As the further reasons explained, the Chief Justice rejected the plaintiff’s proposal, as it did not reflect the outcome of the Chief Justice’s decision in respect of waiver of legal professional privilege.  Order 5 was therefore made in the terms proposed without the qualification introduced by the plaintiff.
  2. [62]
    Even though the defendant and the third party have not succeeded in upholding the order requiring disclosure of any document relating to the narratives in the unredacted invoices, the extensive orders made by the Chief Justice on 6 June 2024 reflect considerable success by those parties in respect of the applications that were before the Chief Justice.  Apart from the costs order made in respect of the hearing on 6 June 2024, the success the plaintiff has had on this appeal does not warrant revisiting the order for costs made by the Chief Justice.  As the issue argued on 6 June 2024 was primarily concerned with the terms of order 5 in respect of which order the plaintiff has now succeeded on appeal, but the qualification advanced on that occasion by the plaintiff was doomed to fail at that stage as it did not reflect the reasons, it is appropriate that no party should receive its costs for the hearing on 6 June 2024.
  3. [63]
    The orders which should be made are:
  1. Appeal allowed.
  2. Order 5 made on 6 June 2024 is set aside.
  3. Order 6 made on 6 June 2024 is varied by deleting “, including the hearing on 6 June 2024”.
  4. No order as to costs in respect of the hearing on 6 June 2024.
  5. The respondents must pay the appellant’s costs of the appeal.
  1. [64]
    FLANAGAN JA:  I agree with Mullins P.
  2. [65]
    BROWN JA:  I agree with the orders proposed by the President and generally agree with the President’s reasons.  With the benefit of her Honour’s detailed reasons, I provide short reasons as to the basis of my agreement.
  3. [66]
    The learned Chief Justice considered that the plaintiff had “waived privilege … by opening up the question of the amount and reasonableness of its costs incurred in the Built v Pro-Invest proceeding, a point which is reinforced by the argument – to be had at trial – about the proper measure of legal costs as damages”.
  4. [67]
    It is uncontroversial that the pleadings did not put the content of the confidential communications in issue.  For the reasons set out by the President, neither the bringing of the claim for damages which sought costs of the earlier proceedings, nor the provision of the expert report by the plaintiff, opened up the question of amount and reasonableness of costs incurred and gave rise to conduct which was inconsistent with the maintenance of the legal professional privilege by the plaintiff.
  5. [68]
    At the time of the hearing before the Chief Justice, neither the defendant or third party specifically raised, as an issue on the pleadings, the reasonableness of the costs claimed.  That said, even if the question of reasonableness had been raised by the defendants, that would not of itself give rise to a waiver of privilege, which can “only come about through the acts or omissions of the privilege holder, and not the party seeking to destroy the privilege”.[1]  Even if the maintenance of legal professional privilege over the documents in question by the plaintiff constrains the defendant and third party in challenging the amount and reasonableness of the costs claimed by the plaintiff, any unfairness that arises is not, for the reasons set out by the President, sufficient to waive legal professional privilege.
  6. [69]
    Similarly, even if there is an arguable legal dispute as to the correctness of the plaintiff’s position that it is entitled to claim all costs incurred in relation to the mechanical direction issues, the plaintiff’s position is not inconsistent with its maintaining of legal professional privilege over the documents in question.  It may be of course, that if the plaintiff maintains its present approach that it may not be able to prove its claim, if as a matter of law it is determined that it is only entitled to its reasonable costs.
  7. [70]
    I agree with the proposed orders of the President.

Footnotes

[1] The Queensland Government Superannuation Board v Allen [2016] QCA 325 at [71].

Close

Editorial Notes

  • Published Case Name:

    Pro-Invest Australian Hospitality (ST) Pty Ltd v Tactical Project Management Pty Ltd

  • Shortened Case Name:

    Pro-Invest Australian Hospitality (ST) Pty Ltd v Tactical Project Management Pty Ltd

  • MNC:

    [2025] QCA 10

  • Court:

    QCA

  • Judge(s):

    Mullins P, Flanagan JJA, Brown JJA

  • Date:

    14 Feb 2025

  • White Star Case:

    Yes

Litigation History

EventCitation or FileDateNotes
Primary Judgment[2024] QSC 10123 May 2024Applications for further disclosure: Bowskill CJ.
Primary JudgmentSC2710/21 (No citation)06 Jun 2024Form of orders and costs: Bowskill CJ.
Notice of Appeal FiledFile Number: CA 8805/2402 Jul 2024Notice of appeal filed.
Appeal Determined (QCA)[2025] QCA 1014 Feb 2025Appeal allowed: Mullins P (Flanagan JA agreeing), Brown JA agreeing separately.

Appeal Status

Appeal Determined (QCA)

Cases Cited

Case NameFull CitationFrequency
Attorney-General ( N.T.) v Maurice (1986) 161 CLR 475
1 citation
Jump To
Cite 1 - (1986) 161 CLR 475
Birch v Birch [2020] QCA 31
2 citations
Jump To
Cite 1 - [2020] QCA 31
Cite 2 - [2020] QCA 31
DSE (Holdings) Pty Ltd v Intertan Inc [2003] FCA 384
1 citation
Jump To
Cite 1 - [2003] FCA 384
DSE (Holdings) Pty Ltd v Intertan Inc (2003) 127 FCR 499
2 citations
Jump To
Cite 1 - (2003) 127 FCR 499
Cite 2 - (2003) 127 FCR 499
Giannarelli v Wraith (1991) 171 CLR 592
1 citation
Jump To
Cite 1 - (1991) 171 CLR 592
Gray v Sirtex Medical Ltd (2011) 193 FCR 1
1 citation
Jump To
Cite 1 - (2011) 193 FCR 1
Inche Noriah v Shaik Allie Bin Omar [1929] AC 127
2 citations
Jump To
Cite 1 - [1929] AC 127
Cite 2 - [1929] AC 127
Lake Cumbeline Pty Ltd & Ors v Effem Foods Pty Ltd (1994) 126 ALR 58
2 citations
Jump To
Cite 1 - (1994) 126 ALR 58
Cite 2 - (1994) 126 ALR 58
Mann v Carnell [1999] HCA 66
1 citation
Jump To
Cite 1 - [1999] HCA 66
Mann v Carnell (1999) 201 CLR 1
2 citations
Jump To
Cite 1 - (1999) 201 CLR 1
Cite 2 - (1999) 201 CLR 1
Osland v Secretary to the Department of Justice [2008] HCA 37
1 citation
Jump To
Cite 1 - [2008] HCA 37
Osland v Secretary, Dept of Justice (2008) 234 CLR 275
2 citations
Jump To
Cite 1 - (2008) 234 CLR 275
Cite 2 - (2008) 234 CLR 275
Pro-Invest Australian Hospitality Opportunity (St) Pty Ltd v Tactical Project Management Pty Ltd [2024] QSC 101
2 citations
Jump To
Cite 1 - [2024] QSC 101
Cite 2 - [2024] QSC 101
Queensland Local Government Superannuation Board v Allen [2016] QCA 325
3 citations
Jump To
Cite 1 - [2016] QCA 325
Cite 2 - [2016] QCA 325
Cite 3 - [2016] QCA 325
Thomason v The Council of the Municipality of Campbelltown (1939) 39 S.R. (N.S.W.) 347
1 citation
Jump To
Cite 1 - (1939) 39 S.R. (N.S.W.) 347

Cases Citing

No judgments on Queensland Judgments cite this judgment.

1

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