789Ten Pty Ltd v Westpac Banking Corporation Ltd

nal Plc [2020] 2 WLR 1256; [2020] EWCA Civ 177 Gardner v Irvin (1878) LR 4 Ex D 49 Goldberg v Ng [1995] HCA 39; (1995) 185 CLR 83 Grant v Downs (1976) 11 ALR 577; (1976) 135 CLR 674 Hancock v Rinehart [2016] NSWSC 12 Hastie Group Limited (in liq) v Moore (t/as Deloitte Touche Tohmatsu) [2016] NSWCA 305; (2016) 339 ALR 635 Hellenic Mutual War Risks Association (Bermuda) v Harrison (The "Sagheera") [1997] 1 Ll Rep 160 Mann v Carnell [1999] HCA 66; (1999) 201 CLR 1 Mitsubishi Electric Australia Pty Limited v Victorian WorkCover Authority (2002) 4 VR 332; [2002] VSCA 59 National Crime Authority v S (1991) 100 ALR 151, 159 New Cap Reinsurance Corporation Ltd (In Liq) v Renaissance Reinsurance Ltd [2007] NSWSC 258 Nine Films and Television Pty Ltd v Ninox Television Ltd [(2005) 65 IPR 442 Osland v Secretary, Department of Justice (2008) 234 CLR 275; [2008] HCA 37 Parry-Jones v Law Society [1969] 1 Ch 1 Pricewaterhouse v BCCI Holdings (Luxembourg) SA [1992] BCLC 583 R (Morgan Grenfell and Co Limited) v Special Commissioner of Income Tax [2003] 1 AC 563; [2002] UK HL 21 R v Derby Magistrates' Court; Ex parte B [1995] 4 All ER 526; [1996] AC 487 R v Kinghorn (No 4) [2019] NSWSC 1420 Rawlinson & Hunter Trustees SA v Akers [2014] 4 All ER 627; [2014] EWCA Civ 136 Rawlinson and Hunter Trustees SA v Akers [2013] All ER (D) 357 (Jul); [2013] EWHC 2297 (QB) Re Global Advanced Metals Pty Limited [2019] NSWSC 1545 Singtel Optus Pty Ltd v Weston (2011) 81 NSWLR 526; [2011] NSWSC 1083 Telstra Corporation Ltd v Australis Media Holdings (No 2) (1997) 41 NSWLR 346 Thomason v The Council of The Municipality of Campbelltown [(1939) 39 SR (NSW) 347 Westpac Banking Corporation v 789Ten Pty Ltd (2005) 55 ACSR 519; [2005] NSWCA 321 Category: Principal judgment Parties: Robert Hutson (First Plaintiff) Scott Langdon (Second Plaintiff) New Hope Corporation Limited (Applicant/Interested Party) Representation: Counsel: Mr D Cook SC / Mr D Krochmalik (Plaintiffs) Mr J Giles SC / Mr C Mitchell (Applicant/Interested Party)

Solicitors: Ashurst (Plaintiff) Gilbert & Tobin (Applicant/Interested Party) File Number(s): 2020/135695

Judgment

1. HER HONOUR: New Hope Corporation Limited seeks to restrict access to documents produced by its auditor, Deloitte Touche Tohmatsu, on the basis of client legal privilege. The documents are said to disclose legal advice obtained by New Hope from Baker McKenzie. The documents were produced in answer to an order for production issued by this Court at the request of Robert Hutson and Scott Langdon, liquidators of two wholly owned subsidiaries of New Hope, Northern Energy Corporation Limited (in liquidation) and Colton Coal Pty Limited (in liquidation), in connection with liquidators' examinations scheduled to take place next month.
2. The first issue is whether New Hope has established a claim for client legal privilege in respect of Baker McKenzie's advice, not being a joint privilege shared with its subsidiaries: Farrow Mortgage Services Pty Limited (in liq) v Webb (1996) 132 FLR 466; (1996) 14 ACLC 1240; (1996) 39 NSWLR 601 at 608; Hellenic Mutual War Risks Association (Bermuda) v Harrison (The "Sagheera") [1997] 1 Ll Rep 160 at 165. The second issue is whether, by disclosing the advice to its auditor, New Hope waived privilege limited to Deloitte only, or also to Northern Energy and Colton Coal, or to the world at large. The last possibility may not be necessary to decide, it being sufficient for the liquidators' purpose that any privilege was waived vis a vis the subsidiaries.
3. The parties agreed that the common law governs the position. This is because section 131A of the Evidence Act 1995 (NSW) - which extends the operation of the Act to pre-trial production and inspection of documents - does not extend to a claim for privilege made by a third party rather than the person required to produce documents. In such a case, the common law continues to apply: Singtel Optus Pty Ltd v Weston (2011) 81 NSWLR 526; [2011] NSWSC 1083 at [25]-[28] per White J; R v Kinghorn (No 4) [2019] NSWSC 1420 at [75]; Director of Public Prosecutions (Cth) v Kinghorn; Kinghorn v Director of Public Prosecutions (Cth) (2020) 379 ALR 345; [2020] NSWCCA 48 at [36]. Whilst it is unlikely that a different result will pertain in respect of the existence of the privilege, common law principles in respect of waiver are not identical to section 122 of the Evidence Act as to the circumstances in which privilege may be lost: Mann v Carnell [1999] HCA 66; (1999) 201 CLR 1 at [23].

EVIDENCE IN SUPPORT OF APPLICATION

1. In support of the claim for privilege, New Hope relied on affidavits sworn by its general counsel and company secretary, Janelle Moody, its chief financial officer, Matthew Busch and its solicitor. The liquidators relied on affidavits sworn by Mr Hutson.
2. Ms Moody became general counsel and company secretary of New Hope Corporation on 1 May 2018. Ms Moody's responsibilities include providing legal advice to New Hope or entities within the New Hope Group, retaining independent legal advisers to provide legal advice and "ensuring that legal advice is appropriately disseminated within New Hope, and where necessary to other advisers, to preserve the confidential and privileged nature of that legal advice". Mr Busch became the chief financial officer of New Hope in 2014. His responsibilities include oversight of the internal management team, management reporting and financial reporting obligations of the New Hope Group.
3. Of course, a claim for privilege may also be established "by reference to the nature of the documents, supported by argument or submissions" (AWB v Cole (No 5) at [44]) and, here, the documents were the key piece of evidence. The parties agreed that I should look at the documents and I was provided with an unredacted copy.

RETAINER OF AUDITOR

1. New Hope is the parent company for the New Hope Group, which has diversified business interests and operations spanning coal mining, exploration, port operation, oil, agricultural and investment. The financial report of the New Hope Group is prepared on a consolidated basis, including reporting on the financial position of Northern Energy and Colton Coal. The financial year for the New Hope Group ends on 31 July of each calendar year.
2. As a company listed on the Australian Stock Exchange, New Hope must have its annual financial report audited. Deloitte has been the auditor for the New Hope Group for, at least, the 2017 and 2018 financial years. Deloitte's audit engagement letters for these audits are in evidence and in like terms. In each case, the audit engagement letter was addressed to the chair of the audit committee of New Hope and signed by Mr Busch on behalf of New Hope. In each case, Deloitte was engaged to audit the financial report of New Hope "and its subsidiaries". In addition, Deloitte was specifically engaged to audit the special purpose financial report of Northern Energy, although Mr Hutson has not found any separate audited financial statements for Northern Energy, or Colton Coal for that matter. Mr Hutson's review of the audit files maintained by Deloitte confirms that the financial statements or positions of Northern Energy and Colton Coal were audited in the context of a single audit of each of the companies in the New Hope Group.
3. The audit engagement letters confirmed that Deloitte was independent of New Hope, as required by the Corporations Act 2001 (Cth) and applicable professional standards, and required to comply with ethical requirements. Deloitte noted that, as such, it would exercise professional judgment and maintain professional scepticism throughout the audits. The engagement would be conducted on the basis that the directors acknowledged and understood their responsibility inter alia to provide Deloitte with access to all information relevant to the preparation of the financial report including additional information that Deloitte may request. The directors agree to give Deloitte unrestricted access to persons from whom Deloitte determined it necessary to obtain evidence.
4. This is consistent with the auditor's right of access described at [66], as is clause 11 of Deloitte's standard terms and conditions accompanying the audit engagement letters, which provided: 11 What you agree to do 11.1 You agree to co-operate with us and provide us with all reasonable and necessary assistance so that we can provide the Services to you. This includes providing us with timely and reasonable access as appropriate, to your premises, facilities, Information and Representatives. 11.2 In addition to any responsibilities you may have that are set out in the Letter, you are responsible for: … (e) providing us with accurate and complete Information. Where any Information that we require in order to provide the Services is to be provided by someone else, you are responsible for ensuring that Information is provided to us. You will need to give us all Information that is relevant to the Services, even if the same Information has been given to us previously during another engagement; and … 11.3 You acknowledge that: … (b) our ability to provide the Services depends on you meeting your responsibilities under this Agreement and instructing us or responding to our requests in a timely and effective manner; and (c) we are entitled to and will rely on Information provided by you, the decisions you make and any approvals you give; and (d) we will not be liable for any default that arises because you do not fulfill your obligations.

2017 audit

1. To backtrack for context, and drawing on events as relayed in the portions of a New Hope memorandum over which no privilege is claimed, Northern Energy holds coal exploration assets including the "Colton Project". In September 2011, Colton Coal entered into a "Take or Pay Agreement" with Wiggins Island Coal Export Terminal Pty Limited (WICET). Northern Energy is the guarantor of the "Take or Pay Agreement". The term of the agreement was ten years from the mechanical completion date, which occurred in May 2015. A downturn in the mining sector delayed the commencement of operations at the Colton Project so that Northern Energy began making payments under the agreement some years before any benefits were expected to be received.
2. As best I can tell, in the course of auditing the 2017 financial statements, Deloitte prepared a file note entitled "Impact of current WICET obligations". Drawing on workpapers from the 2016 audit and more recent events, Deloitte considered whether the "Take or Pay Agreement" could be considered an onerous contract under Australian Accounting Standard AASB 137 "Provisions, contingent liabilities and contingent assets". A claim for privilege is made over a portion of the note, which I have considered at [76].

2018 audit

1. Deloitte was retained on 9 February 2018 to audit the 2018 financial year. According to the New Hope memorandum, in February 2018 a review of the resources and reserves for the Colton Project, including an update under the JORC 2012 code, was identified for action. "JORC" refers to Joint Ore Resources Committee. I understand the JORC 2012 code to be a reference to the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves, being a professional code of practice that sets minimum standards for public reporting of minerals exploration results, mineral resources and ore reserves: www.jorc.org. The decision to engage external experts was discussed with New Hope's legal counsel. In March 2018, an independent expert, Barry Saunders, was engaged to prepare a "JORC" resources assessment for the New Hope Group.
2. According to the New Hope memorandum, on 4 June 2018, a director of Colton Coal, Shane Stephan, issued a No Adverse Effects notice to WICET, which confirmed the reserve positions had not altered at that time. From mid-June 2018, however, New Hope also began to speak with Mark Dempsey about preparing a reserves review and issuing a reserves report for the Colton Project under the JORC 2012 code. Mr Dempsey was provided with some preliminary information. In July 2018, an updated resources report was issued to the New Hope Group in compliance with the JORC 2012 code, which indicated that resources for the Colton Project project were reduced from 76 megatonnes to 68 megatonnes.

RETAINER OF BAKER McKENZIE

1. On 13 August 2018, according to the New Hope memorandum, Andre Du Preez, New Hope's primary liaison with Mr Saunders, advised Executive Management (presumably, of New Hope) that Mr Dempsey had some concerns based on the information he had received to date that there may be a reduction in the reserves position of the Colton Project. The New Hope memorandum records: On 13 August 2018 after being made aware of a potential issue with the JORC reserves position of the Colton project, Shane Stephan and Matthew Busch contacted the New Hope Chairman to outline the concerns. Immediately after speaking to the Chairman Steven Glanz from Baker McKenzie was engaged to provide advice. The New Hope Audit Committee Chair was also briefed on the position. It will be seen from this note that the reduction in reserves was seen to be a significant matter to bring to the attention of two main bodies: the board and the audit committee.
2. On 14 August 2018, Baker McKenzie sent an email to Mr Busch and Mr Stephan. A claim for privilege has been made over reference to the content of this email in a later Deloitte's file note. On 17 August 2018, New Hope retained Baker McKenzie to give advice regarding WICET arrangements. The letter of retainer was sent by Baker McKenzie to Mr Busch and noted that the firm would be acting for New Hope. The scope of work described in the letter was: In this assignment Baker & McKenzie will provide legal services relating to contractual arrangements with Wiggins Island Coal Export Terminal. The liquidator points to the wide scope of work, noting the retainer does not specify that advice will be provided to New Hope but, rather, legal services will be provided "relating to" the WICET contract, which was sufficiently broad to encompass providing legal services to Deloitte in respect of the matter. Beyond the email and letter, New Hope's witnesses say nothing about the circumstances in which it was thought necessary to retain Baker McKenzie and for what purpose.
3. On 18 August 2018, Mr Dempsey was engaged to prepare a reserves review and issue a reserves report for the Colton Project under the JORC 2012 code. On 22 August 2018, an update was provided to the full board. Management noted the perceived concerns in relation to the reserves position, although work still needed to be done before a JORC report could be released. Management challenged the assumptions included within the reserves' estimation model. Ongoing discussions over subsequent weeks regarding assumptions in the underlying reserves assessments culminated in a meeting between New Hope management and Mr Saunders on 3 September 2018. At the meeting, Executive Management formed a view that there was unlikely to be a position which resulted in reserves being maintained.

SUBMISSIONS

1. In addition to the submissions already set out, New Hope submitted that each communication over which privilege is claimed conveys the substance of a request for legal advice from, or the provision of legal advice to, New Hope by its lawyers, principally Baker McKenzie. Each request for, or provision of, legal advice was disclosed to Deloitte on an express term of confidentiality and solely for the purposes of an audit of New Hope. Disclosure in these circumstances was not inconsistent with maintenance of confidentiality. It was submitted that Ms Moody and Mr Busch's evidence supported a finding that the documents contained confidential and privileged legal advice received by New Hope which was disclosed to Deloitte on an express term of confidentiality and solely for the purposes of an audit. The disclosure to Deloitte constituted a limited waiver only and privilege was maintainable against third parties.
2. The liquidators submitted that the evidence did not establish that the materials were privileged, did not rise above mere assertion and did not meet the evidentiary requirements described in Hancock v Rinehart [2016] NSWSC 12. Apart from the fact that Baker McKenzie was retained to provide advice and there was a meeting between representatives of New Hope, Deloitte and Baker McKenzie, the evidence otherwise made general (inadmissible) conclusory statements that the documents disclosed the substance of legal advice. There is no evidence as to the circumstances of the legal advice provided to New Hope such as when it was provided, to whom and by whom. Nor was there evidence of the circumstances in which the documents were created by Deloitte. Nobody from Deloitte gave evidence; nor was there any hearsay evidence on information and belief from any representative of Deloitte. The liquidators' senior counsel submitted: … There is absolutely no attempt made by New Hope to explain why it was that Baker McKenzie were asked to advise on the contractual arrangements concerning WICET at that particular point in time years after contract had been entered into. … nobody from New Hope has actually gone hand on heart and told your Honour that the advice referred to in these documents is given for the dominant purpose of providing legal advice to New Hope. … your Honour has every basis for drawing an inference that the dominant purpose or at least an equal purpose of bringing Baker McKenzie into this particular issue, in light of the concerns raised by Deloitte, is to fend off Deloitte's concerns so that they don't get a qualified opinion for the audit …

COMMON LAW ADVICE PRIVILEGE

1. There was no dispute as to the principles. At common law, client legal privilege attaches to confidential communications passing between a client and the client's legal adviser for the dominant purpose of obtaining or giving legal advice: Baker v Campbell [1983] HCA 39; (1983) 153 CLR 52 at 122; Esso Australia Resources Ltd v Commissioner of Taxation (Cth) [1999] HCA 67; (1999) 201 CLR 49 at 64. The privilege attaches to the confidential communication rather than the document recording the advice. Although a document will commonly be the means of communication; "the focus is always on the communication, not just the document which records or manifests the communication": Cantor v Audi Australia Pty Ltd [2016] FCA 1391 at [63]; Commissioner of Australian Federal Police v Propend Finance Pty Ltd [1997] HCA 3; (1997) 188 CLR 501 at 529, 543, 552, 568, 580-581, 585; New Cap Reinsurance Corporation Ltd (In Liq) v Renaissance Reinsurance Ltd [2007] NSWSC 258 at [19].
2. The privilege is a fundamental common law right: Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission [2002] HCA 49; (2002) 213 CLR 543 at 552-553. The privilege exists to serve the public interest in the administration of justice by encouraging full and frank disclosure by clients to their lawyers: Esso at 64; Cantor v Audi at [56]. As explained by Lord Taylor CJ in R v Derby Magistrates' Court; Ex parte B [1995] 4 All ER 526; [1996] AC 487 at 507: The principle … is that a [person] must be able to consult [their] lawyer in confidence, since otherwise [they] might hold back half the truth. The client must be sure that what [they tell their] lawyer in confidence will never be revealed without [their] consent. Legal professional privilege … is a fundamental condition on which the administration of justice as a whole rests.

Communications with third parties

1. Baker McKenzie's advice was communicated to someone other than New Hope, being to a third party, Deloitte. Unlike litigation privilege - which protects confidential communications made in connection with the provision of legal services in relation to legal proceedings - advice privilege is not available "where one of the parties to the communication is a third party who is not the agent of the client for the purpose of the communication": Mitsubishi Electric Australia Pty Limited v Victorian WorkCover Authority (2002) 4 VR 332; [2002] VSCA 59 at [9]. A third party may be a mere conduit, passing on information from or to the lawyer or client and such communications using the third party as a messenger are privileged: DSE (Holdings) Pty Limited v InterTAN Inc [2003] FCA 1191; (2003) 135 FCR 151 at [91]. A third party may be more than a conduit, for example, they may make independent investigations, assessment and comment in order that legal advice be given.
2. Such communications will be privileged if the third party is an agent of the client and if the communication is both confidential and made to the solicitor in their professional capacity with a view to providing legal advice to the client: Australian Rugby Union Limited v Hospitality Group Pty Limited [1999] FCA 1061; (1999) 165 ALR 253 at [29]. The question is whether the communication between the third party and the solicitor is to be taken to be the same as a communication between the client and the solicitor; "What is necessary is that the third party be the client's deputed agent to communicate with the lawyer in connection with the provision of legal advice": DSE (Holdings) at [94], [96].
3. A company's auditor is unlikely to be regarded as its agent for the purpose of legal advice privilege: 789Ten Pty Ltd v Westpac Banking Corporation Ltd (2005) 215 ALR 131; [2005] NSWSC 123 at [22], [73] (appeal dismissed in Westpac Banking Corporation v 789Ten Pty Ltd (2005) 55 ACSR 519; [2005] NSWCA 321). At first instance, Bergin J considered that the fact that the Corporations Act 2001 (Cth) requires an auditor to be independent weighs against the implication that an auditor stands in the shoes of the audited company as its agent in receiving information from third parties about the company (at [62]), although noted that caution needs to be exercised in making generalisations as each situation needed to be assessed individually: at [70]. On appeal, Tobias JA (with whom the other members of the Court agreed) considered that Bergin J's conclusions in respect of agency were "clearly cogent" and correct: at [29]. New Hope does not suggest that Deloitte was its agent for the purpose of legal advice privilege.

Dominant purpose

1. For privilege to attach, the dominant purpose of the communication must be obtaining or giving legal advice. The "dominant purpose" is the ruling, prevailing or most influential purpose having the element of clear paramountcy: 789Ten v Westpac at [22]; Federal Commissioner of Taxation v Spotless Services Ltd [1996] HCA 34; (1996) 186 CLR 404 at 416. A confidential communication with a legal adviser will not attract privilege unless the dominant purpose is to obtain or give legal advice rather than advice of a purely commercial or public relations nature, although the concept of legal advice will be interpreted widely so as to include advice as to what a client should prudently or sensibly do: AWB Limited v Cole (No 5) [2006] FCA 1234; (2006) 155 FCR 30 at [47].
2. Where the purpose of obtaining legal advice is to provide it to a third party (which I understand is what the liquidators say happened here), then the implications for 'dominant purpose' are as described by Bromwich J in Cantor v Audi at [68]: If the facts as found on the evidence demonstrate objectively that subsequent use, for example by provision to a third party, was a purpose in creating it equal to or greater than the purpose of providing legal advice, that will be sufficient to displace the provision of the advice to the client as being dominant in the sense of being the ruling, prevailing, or most influential purpose. In that event, there is no privilege. But a later decision to use legal advice in that way, even if made immediately after communication and perhaps dependent on considering the contents of the advice or the conclusions reached in making that decision, will not displace the dominant purpose otherwise established.
3. In ascertaining the "dominant purpose", it is important to look at the whole of the correspondence rather than simply rely upon a statement by the person claiming the privilege as to the reason why a letter from a solicitor was sought: 789Ten v Westpac at [46]. The Court will look at 'purpose' from an objective standpoint, looking at all relevant evidence including evidence of subjective purpose: Rawlinson & Hunter Trustees SA v Akers [2014] EWCA Civ 136; [2014] 4 All ER 627 at [13].
4. A good illustration of "dominant purpose" in the context of auditors is Pricewaterhouse v BCCI Holdings (Luxembourg) SA [1992] BCLC 583. Pricewaterhouse was auditor of Bank of Credit & Commerce International SA (BCCI). A committee of investigation was established by BCCI's controlling shareholders to investigate problem loans, on Pricewaterhouse's recommendation as auditor. Pricewaterhouse was a member of the committee. Under the terms of reference of the committee, Pricewaterhouse was required to report to BCCI's solicitors, Allen & Overy, to enable them to give legal advice to BCCI. Following the collapse of BCCI, the Serious Fraud Office and the Bank of England served notices requiring the production of documents by Pricewaterhouse. BCCI claimed privilege over documents brought into existence by Pricewaterhouse.

Waiver

1. A person who would otherwise be entitled to the benefit of legal advice privilege may waive that privilege; "It is inconsistency between the conduct of the client and maintenance of the confidentiality which effects a waiver of the privilege": Mann v Carnell at [28]. And further, at [29]: 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. See likewise Expense Reduction Analysts Group Pty Limited v Armstrong Strategic Management and Marketing Pty Limited [2013] HCA 46; (2013) 250 CLR 303 at [30].
2. Mere reference to the existence of a privileged communication will not suffice; waiver ordinarily only occurs where the contents of privileged communications are relied upon: Hastie Group Limited (in liq) v Moore (t/as Deloitte Touche Tohmatsu) [2016] NSWCA 305; (2016) 339 ALR 635 at [53] per Leeming JA. As Allsop J summarised the position in DSE (Holdings) at [61], privilege will be waived where a confidential communication has been laid open to necessary scrutiny and by so doing, that is, by expressly or impliedly making an assertion about the contents of the communication or laying the communication open to scrutiny, the inconsistency enunciated in Mann v Carnell is brought about. Further, "quite specific inconsistency is necessary to establish waiver. Even reference to legal advice, without more, will not suffice. The inconsistency must be reasonably manifest": Cantor v Audi at [99].
3. In order to determine whether there has been waiver of client legal privilege, the Court is bound to analyse the acts or omissions of the privilege holder that are said to be inconsistent with the maintenance of the privilege: Commissioner of Taxation v Rio Tinto Limited (2006) 151 FCR 341; [2006] FCAFC 86 at [45]. Osland v Secretary, Department of Justice (2008) 234 CLR 275; [2008] HCA 37 is a useful illustration. Ms Osland was convicted of murder and petitioned the Governor of Victoria for mercy. The Attorney-General for Victoria issued a press release stating that he had obtained a joint opinion from three Queen's Counsel recommending that the petition be denied. Ms Osland sought access to the joint advice and the Attorney-General claimed privilege. As to whether any privilege had been waived by the press release, Gleeson CJ, Gummow, Heydon and Kiefel JJ applied the principles as stated in Mann v Carnell, noting that whether a party's conduct was inconsistent with maintaining privilege "is to be made in the context and circumstances of the case, and in light of any considerations of fairness arising from that context or those circumstances": at [45].

Limited waiver

1. In Goldberg v Ng [1995] HCA 39; (1995) 185 CLR 83, Deane, Dawson and Gaudron JJ observed that waiver of privilege can be limited so that it applies only in relation to particular persons, materials or purposes: at 95-96. In Mann v Carnell, Gleeson CJ, Gaudron, Gummow and Callinan JJ reviewed Goldberg v Ng in terms which indicate that limited waiver is not a sub-set of waiver; rather, the same considerations of inconsistency and fairness apply which may have the result, in a particular situation, that waiver to one does not result in waiver to all. At [30]-[31]: 30 In Goldberg v Ng this Court considered a case in which there was disclosure of a privileged communication to a third party, for a limited and specific purpose, and upon terms that the third party would treat the information disclosed as confidential. The Court was divided upon whether, in the circumstances of the case, privilege was waived. However, the reasoning of all members of the Court was inconsistent with the proposition that any voluntary disclosure to a third party necessarily waives privilege. No application was made on the present appeal to re-open Goldberg or any of the earlier authorities on the subject. In Goldberg, reference was made [at 120] to the statement of Jordan CJ in Thomason v The Council of The Municipality of Campbelltown [(1939) 39 SR (NSW) 347 at 355]: "The mere fact that a person on some one occasion chooses to impart to another or others advice which he has received from his solicitor indicates no intention on his part to waive his right to refuse on other occasions to disclose in evidence what that advice was, and supplies no sufficient reason for depriving him of a form of protection which the law has deemed it specially necessary to throw around communications between solicitor and client". 31 His Honour's reference to intention must be read subject to what has been said above.
2. Limited waiver is perhaps most often seen in a regulatory context, when a person is requested or obliged to disclose privileged material to a regulator but may nonetheless maintain privilege to prevent the material being used in a wider context: British Coal Corporation v Dennis Rye Ltd (No 2) [1988] 3 All ER 816; [1988] 1 WLR 1113 (privileged documents handed to police in criminal investigation); Parry-Jones v Law Society [1969] 1 Ch 1 (solicitor hands privileged documents to Law Society under statutory investigative powers). The Australian Securities and Investments Commission (ASIC) offers such an arrangement in Information Sheet 165, "Claims of legal professional privilege", and ASIC's "Voluntary confidential LPP disclosure agreement" published on . As Section 5 of Information Sheet 165 explains, the agreement provides that ASIC and the privilege holder agree that disclosure of information to ASIC is not a waiver of privilege, although notes that the agreement does not prevent third parties from asserting that privilege has been waived. Further: ASIC believes there can be a public benefit in accepting privileged documents (or documents claimed to be privileged) on this basis, as it may assist in the effective and efficient conclusion of ASIC's investigation and determination of consequential steps (which might include no further regulatory action). It may also assist the parties to identify efficiently, and with precision, the critical issues to be addressed in an investigation. It will often be in the public interest for ASIC, in seeking to perform its regulatory functions, to have access to LPP material and it will often not be detrimental to the privilege holder for this to occur.

Limited waiver to auditors

1. Applying these principles, particularly the analysis demonstrated in Osland v Secretary, Department of Justice, one must consider the context in which a company discloses privileged information to its auditor. Whilst some companies may choose to have their accounts audited, other companies, particularly publicly listed companies, must have their accounts audited in accordance with Division 3 of Part 2M of the Corporations Act and obtain an auditor's report: section 301(1), Corporations Act. The auditor has a right of access at all reasonable times to the books of the company and to require any officer to give the auditor information, explanations or other assistance for the purposes of the audit, so long as the request is reasonable: section 310, Corporations Act. Likewise, where accounts and financial statements are prepared on a consolidated basis, then the auditor has a right of access to the books of any subsidiary: sections 323, 323A and 323B, Corporations Act. Failure to comply with sections 323 or 323B is a strict liability offence.
2. Based on the books of the company supplemented by further information, explanation and assistance sought from and provided by the company, the auditors must form an opinion as to whether the company's financial report is in accordance with the Corporations Act, complies with accounting standards and gives a true and fair view of the financial position and performance of the company or consolidated entity: section 307, Corporation Act. An auditor is obliged to report to the members of the company as to the opinion which the auditor has formed (section 308 of the Corporations Act) and, potentially, also to report to ASIC (section 311 of the Corporations Act). The auditor's report will accompany the financial statements of a publicly listed company and thus become publicly available.
3. In this context, the evident purpose of disclosing privileged information to an auditor is likely to be to discharge one's statutory obligations to provide information to the auditor and, more importantly, to give the auditor access to the material they need to form an opinion as to whether the company's financial report is in accordance with the Corporations Act and accounting standards and gives a true and fair view of the financial position of the company. Of course, if the legal advice disclosed to an auditor was procured for the purpose of persuading the auditor, or in order to advise the auditor, then a claim for privilege will fail. This is not because privilege has been waived but because the legal advice was not privileged in the first place; the legal advice was not obtained for the dominant purpose of giving legal advice to the company.

Onus and evidentiary requirements

1. The onus of establishing a claim for privilege is on the person claiming it, and is not achieved simply by resort to a verbal formula or ritual: Grant v Downs (1976) 11 ALR 577; (1976) 135 CLR 674 at 689; Mitsubishi Electric at [11]. Likewise, it is the challenger of the privilege who bears the onus of demonstrating waiver of privilege: Archer Capital 4A Pty Ltd as trustee for the Archer Capital Trust 4A v Sage Group plc (No 2) (2013) 306 ALR 384; [2013] FCA 1098 at [100].
2. The evidence in support of a claim for privilege must be specific enough to show something of the deponent's analysis of the purpose for which the documents were created, and should refer to such contemporary material as is possible without disclosing the privileged material: Rawlinson v Akers [2014] at [13]. As Brereton J observed in Hancock v Rinehart at [7]: To sustain a claim of privilege, the claimant must not merely assert it; but must prove the facts that establish that it is properly made. Thus a mere sworn assertion that the documents are privileged does not suffice, because it is an inadmissible assertion of law; the claimant must set out the facts from which the court can see that the assertion is rightly made [Gardner v Irvin (1878) LR 4 Ex D 49, 53], or in other words "expose … facts from which the [court] would have been able to make an informed decision as to whether the claim was supportable" [National Crime Authority v S (1991) 100 ALR 151, 159 (Lockhart J)]. The evidence must reveal the relevant characteristics of each document in respect of which privilege is claimed, and must do so by admissible direct evidence, not hearsay. … The reference to "hearsay" in [7] may be understood as "inadmissible hearsay": Re Global Advanced Metals Pty Limited [2019] NSWSC 1545 at [16]-[17].
3. In Cantor v Audi, Bromwich J described the various ways in which a claim for privilege may be established. At [69]: Proof of the various necessary characteristics of being in substance legal advice, confidentiality and dominant purpose can be achieved in a variety of ways, depending on the case at hand. In discharging the onus, "focused and specific evidence" is usually needed; where possible a court should be assisted by evidence of the thought processes behind, or the nature and purpose of the advice sought: Barnes at 605 [18]. However specific evidence is not always needed; nor is evidence of thought processes always required. The nature and extent of the evidence needed to prove the existence of privilege is very much fact and circumstance dependent, albeit with an inherent level of risk if that sort of evidence is not adduced. There is no fixed evidentiary path or process for discharging the onus, although mere verbal formulae and conclusions as to purpose will not suffice. As was pointed out in Cole (No 5) at 44 [44(1)] (referring to Grant v Downs at 689, Commissioner of Taxation (Cth) v Pratt Holdings Pty Ltd [2005] FCA 1247; (2005) 225 ALR 266 at 278 [30] and AWB Ltd v Cole [2006] FCA 571; (2006) 152 FCR 382 at 402 [63]): … The onus might be discharged by evidence as to the circumstances and context in which the communications occurred or the documents were brought into existence, or by evidence as to the purposes of the person who made the communication, or authored the document, or procured its creation. It might also be discharged by reference to the nature of the documents, supported by arguments or submissions… .

CONCLUSION

1. There was a paucity of evidence adduced by New Hope in support of the claim for privilege. New Hope's affidavit evidence did have a formulaic quality. In respect of each of the documents, either Mr Busch or Ms Moody deposed that the portion of the document over which a claim for privilege was made disclosed the subject of legal advice; they are not aware that the legal advice disclosed by New Hope to Deloitte and summarised in the document was disclosed by New Hope to Deloitte on any basis and for any purpose other than solely for the purposes of the audit services Deloitte provided to New Hope under the terms of its retainer. Mr Busch has no recollection of the telephone conference with Deloitte and Baker McKenzie referred to at [29], but did recall retaining and providing instructions to Baker McKenzie, although didn't say what the purpose of retaining the firm was.
2. The evidence of Ms Moody and Mr Busch was relevant to limited waiver, but not to the existence of client legal privilege. Thus, determination of the claim for privilege largely turned upon what I could extract from the privileged documents themselves, and thus perhaps made the task of deciding questions of privilege more laborious. I do not doubt that the information and documents provided by New Hope to Deloitte were confidential. The information was commercially sensitive. Under the terms of its retainer, Deloitte agreed to maintain the confidentiality of the material, subject to complying with its statutory obligations as an auditor under the Corporations Act and auditing standards, and subject to compulsory legal process including orders for production issued by this Court. In respect of the Baker McKenzie advices supplied to Deloitte on 17 September 2018 (see [36]), it is clear that privilege and confidentiality were maintained in respect of those advices.
3. The audit engagement letters, when viewed against the context of the Corporations Act, audit standards and the evidence of New Hope's witnesses and Mr Hutson, indicate that Deloitte was retained by New Hope to audit consolidated financial statements, including to audit the accounts of Northern Energy and Colton Coal. This might involve obtaining further information from New Hope or its subsidiaries before forming an opinion as to whether New Hope's financial report gave a true and fair view of the financial position and performance of the consolidated entity. If, in the course of the audit, Deloitte became aware of a significant matter affecting the accounts of Northern Energy and Colton Coal but which was known only to New Hope, then Deloitte could expect New Hope to communicate this matter to its subsidiaries or, if not, Deloitte may not issue its report in respect of the accounts.

ORDERS

1. For these reasons, and noting that the liquidators have already been provided with redacted versions of the documents over which a claim for privilege is made, I make the following orders and directions: 1. No person be given access to Packet S-4 and Packet S-5 other than New Hope Corporation Limited and Deloitte Touche Tohmatsu. 2. Packet S-4 and Packet S-5 be returned to Deloitte Touche Tohmatsu, and that Packet S-4 and Packet S-5 may be uplifted by the solicitors for Deloitte Touche Tohmatsu and returned to Deloitte Touche Tohmatsu. 3. New Hope Corporation Limited to retain a copy of the documents in Packet S-4 and Packet S-5 for 12 months, after which those copies be returned by New Hope Corporation Limited to Deloitte Touche Tohmatsu (or its solicitors).

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 14 August 2020