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This case considered a number of issues relating to legal professional privilege, including: whether a referee could determine claims for privilege; whether privilege had been established over certain documents (or whether they were disclosable as expert reports or statements); and whether privilege had been waived by putting in issue the state of mind of a company in a pleaded defence.
8 November 2021
The parties – Santos and Fluor – have been involved in a long running dispute about a liquefied natural gas project. . In this judgment the Court was asked to consider a number of applications that broadly related to the issue of client legal privilege. The key issues were: (1) whether a referee could determine claims for privilege; (2) whether privilege had been established; and (3) whether privilege had been waived.
Whether a referee could determine claims for privilege
Initially, there was a dispute between the parties as to the scope of the power of referees to resolve issues of privilege. . Brown J observed that the question of whether or not privilege exists “is a substantive legal matter”. . Notably, r 501 Uniform Civil Procedure Rules 1999 (“UCPR”) provides that the Court may, at any stage of a proceeding, make an order referring a question in the proceeding to a referee. Subsection (4) provides that a “question” includes a question “of fact or law, or both”.
Accordingly, the parties agreed that the power of the Court to make an order enabling a referee to determine issues of privilege was “beyond doubt”. . Given that such issues were likely to arise again in the future, the parties agreed to a consent order that would enable this for future disputes about privilege. .
Whether privilege had been established
Fluor took issue with claims of privilege made by Santos. The documents in question were produced for the overall purpose of obtaining legal advice as to potential claims. , . However, the evidence did not address “the purpose of creating each individual document the subject of the present dispute”. . Given that the onus of establishing client legal privilege is on the party claiming it, the question was whether Santos had provided sufficient evidence to support the claim. , .
Brown J considered that the evidence was sufficient to establish that the documents were created “as a step in the process of creating documents that were to be provided to the solicitors for the dominant purpose of obtaining [legal] advice”, and that the “dominant purpose of the creation of the documents was for the purpose of using their contents in order to obtain legal advice”. . That satisfied the relevant test for privilege, which is that a “confidential communication is made for the dominant purpose of giving or obtaining advice or the provision of legal services” (citing Daniels Corporation International Pty Ltd v ACCC (2002) 213 CLR 543). , .
Her Honour noted that it had been made clear by Young J in AWB v Cole (No 5) (2006) 155 FCR 30 that the protection of client legal privilege extends to “notes, memoranda or other documents made by officers or employees of the entity that relate to the information sought by the client’s legal advisor, whether or not they themselves were communicated to the lawyer”. . That such documents were protected was supported by an analogy that could be drawn in relation to the protection of draft advices, “which are protected by privilege so as not to disclose the privileged communication”. .
Notably, Brown J also rejected an argument by Fluor that some of the documents were disclosable under r 212(2) of the UCPR on the basis that they were a “statement or report of an expert”. . Even assuming the relevant authors were “experts”, her Honour concluded that there was “nothing to suggest that these documents involved the reasoning or opinion of an expert and have the character of being a statement or report of an expert”. .
Whether privilege had been waived
Santos alleged that Fluor had waived privilege in relation to certain documents. . According to a majority of the High Court in Mann v Carnell (1999) 201 CLR 1, what brings waiver “is the inconsistency … between the conduct of the client and maintenance of the confidentiality”. . That enquiry may be “informed by considerations of fairness”. . The onus of establishing waiver is on the party that alleges it. .
The question of waiver in this case requires some background. Namely, in the substantive proceedings Santos seeks to recover certain monies from Fluor; in its defence, Fluor pleads a case in estoppel. . One of the particulars in Fluor’s estoppel defence is that its executives were unaware that Santos would bring a claim of the kind it ultimately did. . The documents over which Fluor claimed privilege were said to relate to legal documents created for “the dominant purpose of litigation being reasonably anticipated”. . Santos submitted that it was inconsistent for Fluor to plead that its executives did not know of the potential legal claim that may be brought against Fluor, while maintaining “privilege over documents directly relevant and material to whether those things had occurred to the executives of Fluor” (namely, the advice documents produced in reasonable anticipation of litigation). .
Brown J drew upon the reasons of Burns J (with whom McMurdo P and Philippides JA agreed) in Queensland Local Government Superannuation Board v Allen  QCA 325. –. Notably, his Honour had concluded there that “the mere fact that a party puts their state of mind in issue in the proceedings does not necessarily give rise to an implied waiver in respect of legal advice that may have been received, even if it may have been relevant to the privilege holder’s state of mind”. . In the end, the question was whether “as part of the privilege holder’s case, an assertion has been made that lays open the privileged communication to scrutiny with the consequence that an inconsistency arises between the making of the assertion and maintenance of the privilege”. . Her Honour considered, after a review of this and other authorities, that “[s]omething more” than “the mere pleading of a state of mind” would be necessary to amount to waiver. .
In the result, her Honour was not satisfied that Fluor had done “something more” such that it had waived privilege. . In particular, her Honour observed that there was “no express reference to the contents of the confidential communications” in Fluor’s defence. . The circumstances were “not sufficient” to conclude that Fluor had “laid open the advice to scrutiny”. .