Santos Limited v Fluor Australia Pty Ltd & Anor (No 3) [2021] QSC 281

Michael Creedon  |  Matt Hammond  |  Oliver Waddingham

Key takeouts

Legal professional privilege extends to documents created in the course of obtaining legal advice, even if those documents are not communicated to or from a lawyer. Privilege cannot be waived purely on the basis that a document is mentioned in court and may be relevant to the parties arguments.

Facts

This case is a part of litigation between Santos Limited (Santos) and Fluor Australia Pty Ltd and Fluor Corporation (Fluor) for claims by Santos for overpayments in relation to its GLNG gas project (project). 

Before commencing proceedings, Santos carried out a 12 month investigation into the alleged overpayments made to Fluor and issued a number of negative payment certificates under the EPC Contract for the Project. Santos engaged a number of legal advisors to assess their legal options throughout this period. They also engaged a contract claims consultant, a delay analyst and an engineer to prepare and review documents to be provided to legal advisors. The judgment relates to three procedural matters that arose throughout the litigation in relation to Santos’ investigations and the documents prepared by Santos’ advisors

Decision

1. The power of referees to determine privilege

Justice Brown approved a consent order which provided the referees with power to consider matters of privilege, subject to their power to refer a matter to the court under rule 505A of the Uniform Civil Procedure Rules 1999 (UCPR).

2. Fluor’s application challenging Santos’ claim of privilege

Justice Brown found that Santos had established privilege over the documents and that the documents had been prepared for the sole purpose of obtaining legal advice.

The documents in question were prepared by those parties engaged by Santos to prepare documents for the firms Santos had engaged.

Santos claimed that the documents were privileged on the basis they were created by someone who was engaged for the sole purpose of creating documents to provide to a client or lawyer for the purposes of obtaining legal advice. Fluor submitted that the claim of privilege could not be maintained because the affidavit material provided on behalf of Santos, which relied on the purposes of those individuals’ engagement, did not properly claim privilege in accordance with rule 213 of the UCPR.

The affidavits provided by Santos were compliant under rule 213(3) of the UCPR, and that the evidence in those affidavits was a sufficient basis for establishing a claim of privilege. It was emphasised that privilege covers a variety of documents, including drafts, notes and other materials brought into existence for the purpose of communication to a lawyer, even if those interim documents are not ultimately communicated to the lawyer.  

As an alternate argument, Fluor said that the documents were not privileged from disclosure under rule 212(2) of the UCPR, as they were a statement or report of an expert. Justice Brown found that although the documents were potentially prepared by experts, they did not involve any analysis relying upon a specialisation in a particular field. Therefore, the documents did not fall within rule 212(2) of the UCPR and did not need to be disclosed.

3. Santos’ application challenging Fluor’s claim of privilege over an email

Justice Brown denied Santos’ application challenging Fluor’s claim of privilege in relation to all but one document. Her Honour found that Santos had failed to make out an argument that Fluor had waived privilege by an estoppel case put forward by Fluor in their defence and counterclaim.

The key question was whether there was “inconsistency between the conduct of the privilege holder in making an implied assertion about that content of the privileged communication, and the maintenance of privilege in relation to the communication in question.“

Justice Brown was not satisfied that the content of the communications relating to the May 2014 advice had any connection to the claims the subject of the estoppel case and did not relate closely to the state of mind alleged in the defence. On that basis, Her Honour found that “it is not enough that the client is bringing proceedings could, as a reasonable possibility be relevant and of assistance to the other party“.

Justice Brown also considered whether:

• Fluor’s evidence in respect of documents was sufficient to establish the privileged nature of them; or
• alternatively, whether certain documents which were disclosed in a redacted form should have been disclosed in whole.

Santos had previously argued that an affidavit claiming privilege for certain documents had deficiencies in the way it identified the basis for the privilege claimed. In response to this, Fluor provided further affidavits to clarify those matters, strengthening their claims to privilege. A claim of privilege over an email between two Fluor senior executives was rejected because the recipient of the email did not have the relevant legal qualifications necessary for a claim of professional privilege.