ANTONY LESLIE JOHN WOODINGS as liquidator of THE BELL GROUP LTD AND THE BELL GROUP FINANCE Pty Ltd -v- WA GLENDINNING & ASSOCIATES PTY LTD [2019] WASC 54 (22 February 2019)

ANTONY LESLIE JOHN WOODINGS as liquidator of THE BELL GROUP LTD AND THE BELL GROUP FINANCE Pty Ltd -v- WA GLENDINNING & ASSOCIATES PTY LTD [2019] WASC 54 (22 February 2019) - WASC 2019 case summary — Zoe

[11]

The liquidators were successful in the Main Proceedings.[3] As a result of the Main Proceedings, and other proceedings brought by the liquidators, the liquidators in 2008 recovered approximately $1.8 billion (including interest).[4]
In this matter the parties to the interlocutory applications were all plaintiffs (among others) in the Main Proceedings. BGNV and ICWA are now defendants to the application brought by Mr Woodings in COR 146 of 2014.
1. In Bell Group Ltd (in liq) v Westpac Banking Corporation [No 10] Owen J summarised the findings he made in the Main Proceedings in Bell Group Ltd (in liq) v Westpac Banking Corporation [No 9][5] (when determining the precise form of relief that should be granted) as follows:[6]
  1. The plaintiffs established a cause of action on the first limb of Barnes v Addy; namely, the banks received trust property knowing that it arose from a breach of the directors' fiduciary duties.
  2. The plaintiffs failed to establish a cause of action based on equitable fraud.
  3. There is no such thing as a 'group' Barnes v Addy claim. This, combined with the failure of the equitable fraud claim, means that relief must attach to individual companies and individual transactions.
  4. It follows from the establishment of the first limb Barnes v Addy claim that the plaintiffs have identified trust property (more accurately in the circumstances of this case property to which fiduciary obligations attached) received by the banks.
  5. The plaintiffs are entitled to equitable relief. The guiding principle is that equity intervenes only to the extent necessary to do practical justice between the parties. The court has a wide discretion to mould equitable relief for this purpose. But, like all discretions of this nature, it must be exercised judicially. One aspect of that principle is that there must be a reasonable evidentiary base for the relief ordered.
  6. A prerequisite to equitable relief of the type sought by the plaintiffs is that the other party can be restored to the position it enjoyed prior to the event giving rise to the claim for equitable relief. But exact restoration is not essential. The party must be restored to its original position so far as is possible.
  7. Not all of the Bell group companies that entered into Transactions are plaintiffs in the action. As a general proposition relief cannot be granted to an entity that is not a party to the action. This is especially so where, as in this case, Transactions entered into by non-plaintiff entities have not been set aside.
  8. The primary monetary relief to which the plaintiffs are entitled is the disgorgement by the banks of the proceeds from assets realised or obtained by virtue of rights and powers arising from the impugned Transactions. The proceeds fall into five categories, as discussed in s 35 of Bell (No 9).
  9. The plaintiffs are also entitled to compensatory relief. In Bell (No 9) I made it clear that the compensatory relief would be measured by an award of interest, not through an account of profits.
  10. The banks established that the on-loans from the three BGNV bond issues were subordinated. The plaintiffs failed to establish that the BGNV Subordination Deed was procured by breach of fiduciary duty by BGNV's director. That Transaction has not been set aside.
  11. There are litigation funding arrangements in place between the liquidators of the various Bell group companies and funding creditors. I am not aware of details of the arrangements. At least one application has already been made under s 564 of the Corporations Act 2001 (Cth) (although it has been deferred pending the outcome of this action) and, no doubt, other similar applications will be made in due course. The litigation funding arrangements are of no relevance to my deliberations on relief as between the parties to these proceedings.
2. The proceeds of the Main Proceedings have yet to be distributed by the liquidators in the course of the liquidation of TBGL and BGF. Consequently, in COR 146 of 2014, the substantive application by Mr Woodings is for orders to be made as to how, and to whom, the proceeds of the amounts recovered in the Main Proceedings are to be made in preference to the indemnifying creditors.

[33]

Mr Woodings does not concede that all Proceedings have been concluded. Senior counsel for Mr Woodings referred to an appeal that Mr Woodings has instituted to recover a large tax payment from the ATO. Despite the submission put by ICWA that there are no longer any Proceedings on foot, it does not appear to be disputed by ICWA that this appeal would also constitute Proceedings within the meaning of that term in the indemnifying agreements.
ICWA concedes that the second sentence in cl 9.11 does not apply to it or to the proceedings in COR 146 of 2014. Further, that 'proceedings' referred to in the second sentence of cl 9.11 does not refer to 'Proceedings' as defined in cl 1.1 of the indemnifying agreements.
ICWA says the first sentence of cl 9.11 defines the confidentiality obligation that was imposed upon ICWA (and other indemnifying creditors) in respect of documents and information provided to it by Mr Woodings or solicitors Blake Dawson Waldron. ICWA says the clause encompasses the parties' express agreement as to the metes and bounds of their confidentiality obligations.
ICWA claims it was the obvious intent of the parties to the indemnifying agreements that the parties would be free to disclose such documents in the s 564 proceedings. It says that this was because when the parties entered into the indemnifying agreements, they contemplated bringing the proceedings in COR 146 of 2014. They also point out that pursuant to cl 7.1 of the indemnifying agreements the liquidators were obliged to bring the s 564 application that Mr Woodings makes in these proceedings.
ICWA argues that the determination of the s 564 application is focused upon the risk run by the indemnifying creditors and that those risks were considered in the privileged communications. As such, the parties must have known that there would be a need to place privileged communications before the court.
ICWA's argument also relies upon the effect of cl 7.4 of the indemnifying agreements. Clause 7.4 was inserted by amendment to the indemnifying agreements on 4 July 1997. Clause 7.4 provides:[19]

[35]

ICWA contends that, rather than the indemnifying creditors being prevented from disclosing information in relation to the s 564 application, creditors were obliged by cl 7.4 to each severally support any application brought by the liquidator in accordance with cl 7.2. This, according to ICWA, included but was not limited to their supply to the court of all necessary information to the extent that creditors are able. Thus, it is said that the parties expected that there would come a time at which the obligations of confidentiality would cease, and they would need to lay communications which had previously been privileged before the court.
ICWA also points out that the second sentence in cl 9.11 is not engaged. This is because ICWA has not as a creditor been provided with any documents by Mr Woodings or Mr Totterdell as a result of proceedings brought by it on its own account. Consequently, ICWA claims that it follows from this that because the restrictions on the disclosure of documents provided to ICWA by Mr Woodings related to the Main Proceedings (in its capacity as an indemnifying creditor) cl 9.11 is no longer operable, and ICWA is free to use the information or documents.
ICWA's construction of cl 9.11 relies in part upon an argument that once cl 9.11 was introduced by the further amending agreements the obligation of confidence and entered 'the field' of confidential obligations in the documents was ousted or replaced by cl 9.11. This is said to be the case because cl 9.11 comprehensively covers the field of the indemnifying creditors' confidentiality obligations.
ICWA argues that cl 9.11 captures any information or document which would be perceived as confidential or otherwise privileged. Further, it says that the word 'use' in cl 9.11 goes further than disclosure. Consequently, it attempts to put an argument that the obligation covered by cl 9.11 appears to be wider than the equitable duty of confidence.
Also in support of its argument, ICWA claims the objective purpose of cl 9.11 (when read in the context of the entire terms of the indemnity agreements as amended) is to be found in recital C of the further indemnifying agreements which provides that the purpose of the amendments were to facilitate the prosecution of the Main Proceedings.
ICWA says to implement the objective purpose in recital C, cl 7.4 was included in the further amending agreements together with cl 9.6 which required the liquidator to make available to the indemnifying creditors all books and records of BGF and TBGL, as well as all books and records brought into existence in connection with the liquidation of BGF and TBGL in the course of the examination Proceedings or in the Main Proceedings. ICWA also points to cl 9.6, which expressly permitted the indemnifying creditors to take copies of such books, records and transcripts, and to provide to specified others as it may reasonably require for that purpose of reviewing such books, records and transcripts so as to enable the indemnifying creditors to assess the conduct and outcome of the examination or the Proceedings.
ICWA claims that having paid for the documents, by providing funding for the Main Proceedings, it cannot now be restricted by cl 9.11 from now using the information and documents.
Finally, in support of its argument, ICWA also relies upon the effect of the entire agreement provisions in the indemnifying agreements. Clause 18.1 is to the effect that each indemnifying agreement constitutes the entire agreement between the parties and supersedes all prior agreements, arrangements, undertakings, understandings and negotiations.

[39]

Consequently, Gordon J appears to have determined the point by having regard to the principle that equity will not intervene in a breach of an equitable duty where there is an adequate remedy at law. This, however, is not a point relevant in this matter. Mr Woodings' application does not concern a breach of contract or breach of confidentiality. No use of the documents in question has yet been made by ICWA.
In a subsequent decision of the Full Court of the Federal Court in Optus Networks Pty Ltd v Telstra Corporation Ltd,[24] the court found that both contractual and equitable relationships might happily coexist.[25] In a joint judgment, their Honours referred to the observations of Gordon J in Coles Supermarkets and her reliance on the observation made by Campbell JA in Del Casale v Artedomus (Aust) Pty Ltd,[26] that where a contractual obligation covered the topic, there would be no occasion for equity to intervene,[27] and found that those observations did not apply in the case before the Full Court. The basis for this conclusion was that the contract before the Full Court expressly permitted an account of profits as an available remedy.[28]
Whilst their Honours in Optus found that the express terms of the contract contemplated an account of profits, their Honours also went on to observe that the point made by Gordon J in Coles Supermarkets was opposed to much authority. Their Honours cited a number of cases to that effect.[29] The Full Court in Optus also observed that after Coles Supermarkets was decided the High Court in Tabcorp Holdings Ltd v Bowen Investments Pty Ltd[30] made unfavourable observations about the doctrine of 'efficient breach'.[31] In Tabcorp, the High Court observed that the doctrine of 'efficient breach' took no account of the availability of equitable remedies such as specific performance and injunction, which ensure or encourage the performance of contracts rather than payment of damages for breach.[32]
In Streetscape Projects (Aust) Pty Ltd v City of Sydney, Barrett JA referred to the reasoning in Coles Supermarkets and Del Casale and Optus (among other decisions) and said that:[33]

[45]

I do not agree that if a contractual provision deals with the subject matter of confidentiality, that an equitable duty of confidence is inevitably ousted.
In my respectful opinion, the approach taken by Stevenson J in Gold & Copper Resources; Gordon J in Coles Supermarkets; and Campbell JA in Del Casale should be approached with some caution in this matter.
Firstly, in each of those matters the court was called upon to consider the effect of confidential contractual provisions that created duties of confidentiality in order to consider whether breaches of contractual terms had been made out.
Secondly, I do not agree with Stephenson J's view in Gold & Copper Resources that the view of the Court of Appeal in Streetscape, expressed as obiter, demonstrated a preference for the views of Gordon J in Coles Supermarkets and Campbell JA in Del Casale. Barrett JA expressed no conclusive opinion on the question. In Streetscape, Barrett JA put a question which was not directly called upon to be answered in Optus, Coles Supermarkets, Del Casale or Gold & Copper Resources. The question was 'whether an equitable duty of confidence arises against one party and in favour of another where those parties have given and received contractual promises of confidentiality creating equal or greater protection of the same subject matter'.[38]
In Streetscape, the point Barrett JA squarely put is that to determine whether the equitable duty of confidence is excluded by a contractual provision, dealing with the same subject matter is an issue that turns upon the scope and effect of the contractual provision. If this approach is applied in this matter, the questions to be determined are, firstly, whether cl 9.11 leaves room for the equitable duty of confidence, and secondly if not, what is the effect of cl 9.11.
As Gordon J said in Coles Supermarkets the fundamental rule is that equity will not intervene where there is an adequate remedy at law. Consequently, as contemplated by Barrett JA in Streetscape an assessment may be required in a matter as to whether a contractual promise of confidentiality created equal or greater protection than the equitable duty of confidence.
It does not necessarily follow that the equitable duty of confidence is excluded by an entire agreement clause. Such clauses prevent a finding that the contract contains additional express terms, but they do not prevent a finding that a contract contains implied terms, at least where a term is implied as a matter of construction of the contract rather than from a consideration of background facts.[39]
The equitable duty of confidence is not an implied term but takes effect as an implied undertaking to keep documents and information confidential.[40]
In ascertaining whether cl 9.11 creates a greater or lesser duty of confidence than that which arises in equity, consideration must first be given to the nature of the equitable duty of confidence.
In NP Generations Pty Ltd v Feneley,[41] Debelle J applied the orthodox duty of the equitable obligation as defined by Lord Denning MR in Seager v Copydex Ltd.[42] In NP Generations Pty Ltd Debelle J said:[43]

[58]

It is clear that cl 9.11 of the indemnifying agreements, when read with the other amendments to the indemnifying agreements that took effect on 4 July 1997, did not provide for the use or disclosure of the liquidators' document at large. Nor did cl 9.11 comprehensively cover the field by creating an equal or greater protection of confidence than the equitable duty of confidence.
Clause 9.11 is permissive in its terms. It enables the indemnifying creditors to use documents and information (pursuant to the obligations cast upon the liquidators to provide the documents) in limited circumstances.
Clause 9.11 simply creates in part the purposes for which the indemnifying creditors may use the information or documents provided by the liquidators to the indemnifying creditors.
Clause 9.11 does not comprehensively deal with the subject matter of confidentiality. All the first sentence in cl 9.11 does is to prohibit the use of information or documents in the manner that is prejudicial to the prosecution of the Proceedings. The second sentence is an exception to that restriction.
If the equitable duty of confidence was ousted by cl 9.11, and cl 9.11 could be characterised as constituting a code, inferentially it could be said to follow that the indemnifying creditors could not use the documents and information provided by the liquidators for any other purpose than cl 9.11. In particular, the indemnifying creditors could not use the documents or information for the purposes for which the documents were first provided, that is for the purposes specified in cl 9.1 to 9.7 of the indemnifying agreements. For example, the documents and information may not have been used by the indemnifying creditors for the purpose of considering and obtaining advice in respect of continuing settlement or discontinuing the Main Proceedings.
Clause 9.11 is a very specific provision about the use by the indemnifying creditors to which documents provided by the receivers can be put. It is a not a provision which operates at large to abrogate by replication the equitable duty of confidentiality over the documents provided to the indemnifying creditors.
As senior counsel for Mr Woodings points out, cl 9.11 does not say that it overrides the equitable duty. Nor does it say that it removes, modifies or abrogates the equitable duty. Clause 9.11 restricts what the indemnifying creditors can do with information in the documents for purposes other than the purposes provided for in cl 9.1 to 9.7 of the indemnifying agreements. Clause 9.11 does not enlarge what indemnifying creditors can do with the documents or the information in the documents.
It is a wellestablished general rule of construction of all instruments, including contractual agreements, that rights which exist at common law or by statute are not to be regarded as denied by words of dubious import. Before any such denial is accepted, it must appear with reasonable clarity from the language used that the denial is intended.[45]
In these circumstances, I am not satisfied that it can be said that cl 9.11 creates a greater or equal protection of confidence than the equitable duty.
The question whether cl 9.11 leaves no room for the operation of the equitable duty of confidence could also be said to be answered by considering whether a breach of cl 11 by an indemnifying creditor (such as ICWA) would result in an adequate remedy in the law of contract. Raising this question reveals the nature of the rights and obligations not to use the documents and information, except as prescribed by cl 9.11 which directs attention to whom the rights and obligations created in cl 9.11 are vested.
There is no obligation cast upon the liquidators in cl 9.11 to waive confidentiality or privilege in the documents or information in the documents they are obliged by the terms of the indemnifying agreements to provide to the indemnifying creditors. Yet, a contractual right is conferred upon the liquidators to insist upon use and disclosure by the indemnifying creditors of the documents and information in accordance with the express terms of cl 9.11. This obligation would be enforceable in the law of contract. However, cl 9.11 does not cover the field of the indemnifying creditors' right to use the documents, or the information contained in the documents, as the indemnifying creditors may also use the documents and information for the purposes presented in cl 9.1 to 9.7.
The terms of cl 9.11 do not permit ICWA to now use the documents it has obtained (over which Mr Woodings claims privilege) in circumstances where ICWA concedes these documents are otherwise privileged and no consent to do so (by Mr Woodings or Mr Totterdell) is forthcoming.
In the same way that documents produced in obedience to an order of the court cannot be used for any other purpose other than the purpose for which the documents were provided (unless received into evidence), the same principle could be said to apply. The obligation provided for in cl 9.11 subsists and continues after any Proceedings are concluded without the agreement of the party having the corresponding right to agree to the use (being the liquidators). As counsel for BGNV points out 'once privileged, always privileged. Privilege does not expire by effluxion of time. It only expires by waiver'.[46]
In these circumstances, it is immaterial whether the equitable duty of confidence continues to apply or whether the equitable duty was extinguished by cl 9.11 of the indemnifying agreements.
In this context, the entire agreement clause does not assist ICWA. On the contrary, the effect of the entire agreement clause, as contended by ICWA, is that cl 9.11, when read with the entire agreement clause in cl 18.1, is immaterial. The express terms of cl 9.11 bind ICWA not to disclose or use the documents or information except as provided for in cl 9.11 or for the purposes of cl 9.1 to 9.7.
For these reasons Mr Woodings' claim of privilege over these documents is made out.
In light of ICWA's concession that it is not open for it to rely upon cl 9.11 to use or disclose the documents, it also necessarily follows that on this ground also, the orders Mr Woodings seeks should be made.

[68]

Whether BGNV held retainers with particular firms of solicitors, at relevant times, is material to BGNV's claim of joint legal professional privilege over some of the documents in Mr Woodings' list (sch 1) and a substantial number of documents in ICWA's list (sch 2). The question is whether BGNV held retainers with Blake Dawson Waldron; Mr Edgar (of solicitors Hely Edgar) and solicitors, Lipman Karas.
During the course of hearing submissions from counsel for BGNV and ICWA on 20 and 21 November 2018, I was satisfied that the issue of whether BGNV held relevant retainers at the material times was a point that took BGNV by surprise. For this reason, I granted leave to BGNV to file and serve any evidence concerning the existence, scope and effect of the retainers by 1 February 2019. I then listed this issue for further hearing on 1 March 2019 to hear further evidence and submissions in respect of BGNV's claims for joint legal professional privilege arising out of any joint retainer.
I also reserved argument on, and made an order allowing, further evidence to be adduced in respect of an issue which goes to matters discussed at a meeting between representatives of BGNV and ICWA on 11 June 1996. The meeting concerned negotiations between ICWA, BGNV, Mr Trevor and the Commonwealth over entry into a posttermination intercreditor agreement (PTICA). The matters discussed at this meeting may be material to BGNV's claim for without prejudice privilege over a number of documents. BGNV claim that these documents were created in the course of negotiations which led to the parties entering into the PTICA, after BGNV became a terminating creditor to the indemnifying agreements.
Leaving aside the reserved issues, the parties indicated that it would be of assistance to the preparation for hearing of the substantive matters in COR 146 of 2014 and CIV 2666 of 2016, if prior to 1 March 2019, findings could be made in respect of the remaining claims of privilege made by BGNV. These are:

[92]

In support of its argument that the communications and documents in question are communications which form part of, or disclose the contents of, genuine negotiations, counsel for BGNV referred to document 16 in sch 1 (being a facsimile from Mr Griese to the indemnifying creditors, the liquidators and Blake Dawson Waldron seeking instructions). Counsel for BGNV made a submission that the document identifies a cause of action in the Western Interstate dispute. However, as senior counsel for Mr Woodings points out, the author of the document does no more than refer to a cause of action without any analysis or further comment and then goes on to set out three alternatives to resolve the dispute, none of which involved litigation.
Having read each of the 15 Western Interstate dispute documents over which BGNV claims without prejudice privilege, I am satisfied that there was a dispute. However, I am not satisfied that BGNV has met the threshold test of showing that there was a dispute that involved, or was likely to involve, legal proceedings. In particular, there is nothing in the documents which indicate that litigation was contemplated at any point in time in respect of a dispute as to how the reinstatement and joinder of Western Interstate should be funded, and how any funds recovered by Western Interstate should be shared.
Consequently, I am not satisfied that BGNV has demonstrated that the Western Interstate dispute documents are privileged on grounds of without prejudice privilege. If I am wrong on this point, I make the following findings.
The law as a matter of policy excludes from evidence admissions by words or conduct made by parties in the course of negotiations to settle litigation, or anticipated litigation. The purpose of this is to enable parties engaged in an attempt to settle litigation to communicate freely with each other and without the prejudice that may be caused to them if the negotiations fail and their communications are later used in evidence against them.
Without prejudice privilege, however, conflicts with another matter of public policy. Specifically, the principle that a court should have access to all relevant evidence.
In Dowling v Ultraceuticals Pty Ltd, Hammerschlag J observed that without prejudice privilege extends to prevent disclosure to third parties in a subsequent dispute, provided there is sufficient connection between the subject matter of the original dispute and the later dispute.[60] In this context, his Honour went on to observe:[61]

[96]

Having regard to the subject matter of the Western Interstate dispute and the matters pleaded in COR 146 of 2014, I am satisfied that there is a connection between the subject matter of each dispute.
However, I am not satisfied that there is a sufficient connection between the two disputes as there is no material before the court upon which it could be found that BGNV had a legitimate expectation that the material brought into existence for the purpose of settling the Western Interstate dispute, would not be used against it in the s 564 proceedings in COR 146 of 2014.
As ICWA points out, it has not been demonstrated that BGNV would not have expected that communications made in the course of negotiations to settle the dispute would not be available to be put into evidence in the s 564 proceedings.
If, however, I am wrong on this point, I am of the view that without prejudice privilege does not apply.
The operation of this class of privilege is not absolute. In Old Papa's, McLure J observed that resort may be had to without prejudice material for a variety of reasons and when the justice of the case requires it and thus may be pleaded into evidence in such a way that the privilege is no longer available.[63]
The documents can be properly found to be the subject of an exception to this claim privilege, which enables a court to examine such communications as evidence of background facts relevant to the construction of a concluded compromise agreement.[64] Whether the documents in question are admissible, and should be admitted into evidence, is not a matter that is open to be considered in this application.
However, it is open to the trial judge to examine these communications during the course of hearing the substantive matter in CIV 2666 of 2016 or in COR 146 of 2014 as these documents may be relevant in the determination of the substantive matters to construe the terms of the WIICA, WIAA and the WIIA.
Whether such material should be admitted is a matter for the trial judge. Evidence of precontractual negotiations is not generally admissible to interpret a concluded written agreement. But evidence of precontractual negotiations may be admissible to establish objective background facts known to both parties. Evidence of precontractual negotiations may also be admissible to establish that the parties were united in rejecting a possible construction.[65] Precontractual negotiations may also be admissible where the parties have agreed the meaning of the word or phrase in negotiation of an agreement.[66]
For these reasons these claims of privilege are not made out.

[101]

BGNV claims that as one of the plaintiffs in the Main Proceedings it is the holder of joint privilege in these documents. BGNV says it is immaterial that Mr Woodings has waived privilege in the documents on grounds that joint privilege cannot be waived by one of the parties who share the privilege. I agree.
As to the second point, ICWA claims that the internal documents prepared by Mr Woodings on behalf of the plaintiffs in the Main Proceedings for a mediation with the banks, in respect over which Mr Woodings makes no claim of continuing privilege, are plainly necessary to assessing risk for the purposes of the s 564 application. BGNV claims, however, that ICWA puts no material before the court to support this assertion. However, it is for BGNV, not ICWA to make out this claim for privilege.
Whether the Dowling principle applies in circumstances where the parties to a subsequent dispute were all plaintiffs in the previous dispute (and thus not opposed to each other) was not addressed in Dowling. However, assuming this principle applies, I make the following findings.
Applying Dowling, the question is whether the policy that protects without prejudice privilege will be served by protecting disclosure of items 101 to 122 of sch 2.
The application by Mr Woodings in COR 146 of 2014 is for orders to be made as to how and to whom the proceeds recovered in the Main Proceedings are to be made in preference to the indemnifying creditors. An inspection of the documents reveals that the documents contain, among other calculations, calculations by Mr Woodings of a number of scenarios going to returns to the banks on Western Interstate loans.
As the subject matter of the dispute in the Main Proceedings and the s 564 proceedings in COR 146 of 2014 is not exactly the same, it is necessary to assess whether there is a sufficient connection between the two disputes to justify an extension of the privilege to the later dispute.
Plainly there is a connection between the two disputes.
Items 101 to 122 of sch 2 were created on 13 July 2005. By that time BGNV ceased to be an indemnifying creditor and became a terminating creditor. The issue is whether the connection is sufficient. The subject matter of the two disputes is not the same. However, the subject matter of s 564 proceedings may arguably raise matters relevant to the risk assumed in the Main Proceedings by the indemnifying creditors, one of which is ICWA. Whether that is so and whether items 101 to 122 of sch 2 should be admitted into evidence in COR 146 of 2014 as objective facts of matters stated in the mediation negotiations is a matter for the trial judge.
Having examined the documents, it is difficult to see how an argument could be raised that the documents are adverse to the interests of BGNV so as to raise a legitimate expectation of protection from disclosure in COR 146 of 2014.
In these circumstances, I am not satisfied that there is a sufficient connection to extend without prejudice privilege in these documents to the proceedings in COR 146 of 2014.
For these reasons, this claim of privilege is not made out.

[110]

Thus, where common interest privilege is applicable, it only prevents privilege being lost by a particular disclosure.
In this matter, if common interest privilege applies to any or all of the documents that are the subject of this category of documents, BGNV will be allowed to resist disclosure of the document or documents.
For this ground of privilege to be made out, firstly, the court must be satisfied that the communications in question are privileged communications. Secondly, the court must be satisfied that BGNV, in receiving the documents as an indemnifying creditor, did so on the basis that it shared a common interest with the liquidators and the other indemnifying creditors.
Mr Woodings claims that the two documents in sch 1, namely item 2 and item 18 (the documents over which this claim is made) are documents that simply state the Commonwealth's view or position on certain legal matters arising in the course of negotiations in respect of the Western Interstate dispute. Mr Woodings claims that when properly understood, these documents do not purport to be a record of legal advice rendered by the Australian Government Solicitor or counsel to the Commonwealth.
In respect of item 18, in sch 1, BGNV claims this document discloses instructions from the Australian Taxation Office. Having inspected item 18, I agree that a mere reference to the topic on which the Australian Government Solicitor intended to seek advice from counsel discloses no privilege matter. Consequently, in respect of item 18 of sch 1, I am not satisfied that a claim of privilege can be made out.
Mr Woodings also claims item 2, in sch 1, does not record any legal advice given by the Australian Government Solicitor. Having inspected this document, I agree. In these circumstances, I am not satisfied that legal professional privilege can be claimed in respect of matters stated in this document going to advice given by the Australian Government Solicitor.
Despite my findings in respect of the without prejudice privilege claim in respect of the Western Interstate dispute for the purposes of determining this category of claim only, I have assumed that the other three documents over which BGNV claims common interest privilege in sch 1 (being items 3, (in respect of the part of item 3 that is not conceded) 16, and 46) contain privileged communications.
As to the sch 2 documents, for the purposes of determining this claim of privilege ICWA does not dispute that the documents in this category could be said to be privileged communications. However, ICWA says the holder of the privilege is Mr Woodings, who does not seek to maintain privilege over those documents.
It appears to be accepted by BGNV, in respect of the documents listed in sch 2 (over which this claim of privilege is made), that Mr Woodings is the primary privilege holder who in turn seeks to waive privilege in these documents.
Thus, the question is whether, in respect of this class of documents the dissemination of the privileged matter caused privilege to be lost when the documents were provided to the indemnifying creditors.
As BGNV point out, it is well settled that:

[114]

Pursuant to the terms of the indemnifying agreements, the indemnifying creditors not only agreed to fund Proceedings, but the liquidators were obliged to give due regard to the unanimous resolutions of the indemnifying creditors in and about the conduct of the Main Proceedings. The indemnifying creditors also had the power to require the liquidators to discontinue the Main Proceedings and to provide reports to the indemnifying creditors about the progress of the Main Proceedings. The liquidators were also obliged to make available to the indemnifying creditors, books and records so as to enable the indemnifying creditors to assess the conduct and outcome of the Main Proceedings. Consequently, it was contemplated by the terms of the indemnifying agreements that the relationship between the liquidators and the indemnifying creditors would be collaborative and require the ongoing assessment of the conduct of the Main Proceedings by both the liquidators and the indemnifying creditors.
Sufficient common interest has been held to exist in respect of confidential communications between a party and its financier.
In Rickard Constructions Pty Ltd v Rickard Hails Moretti Pty Ltd, Bergin J found that since a litigation funder had an interest in the most advantageous conduct of proceedings by the plaintiff, and that the interest was identical with that of the plaintiff, the funder had a common interest in relation to the proceedings.[74]
In Rickard Constructions, the plaintiff was placed into voluntary administration and subsequently entered into a deed of company arrangement. Pursuant to the terms of the deed, one of the plaintiffs' directors and another agreed to provide funding (up to a particular limit) for the purpose of funding the proceedings in the matter before the court. Justice Bergin held that confidential communications made to the funder were protected by privilege because they were made for the dominant purpose of the plaintiff being provided with professional legal services in the context of the litigation. Her Honour said:[75]

[122]

'The question which arises here is whether there is to be attributed to Plutonic and Norgold an implied waiver of the privilege by virtue of the disclosures already made by their co-joint venturer and manager in proceedings brought for their benefit. The documents in question, it should be noted, span dates from 1984 through to 1989. They include some documents already disclosed by Newcrest and BHP Minerals including an important letter of advice from Ward Keller dated 14 June 1984.

The threshold question is whether the principle of implied waiver can extend to materials associated with those disclosed by one party, but in respect of which the privilege vests in another who had a common interest in proceedings brought by the disclosing party. Given that the underlying rationale of implied waiver is one of fairness which can overcome the established rationale of legal professional privilege, I think the answer to that threshold question is yes in principle. The extension of the principle is one, however, to be sparingly applied.

In my opinion the present case is one in which fairness mandates that extension. There are two reasons for that. The first is that the action is brought for the benefit of the joint venture as a whole and although there is no direct evidence on the point, it is difficult to imagine that it would have been brought against the wishes of Plutonic and Norgold or indeed without their consent. The second is that the decision-making process relied upon to support the estoppel appears to involve those parties. In these circumstances they cannot, in my opinion, withhold from scrutiny material which may have operated upon that process when partial disclosure has already been made in these proceedings. The claim for privilege cannot be sustained so far as it relates to legal advice in relation to the leases up to and including 1987. It is not clear to me however, that any later material falls within that category and I shall hear from counsel on that question.'

[124]

It is clear from the reasoning of French J in Newcrest Mining and Giles CJ in Ampolex that an assessment must be made of the interests of all of the parties who have a common interest in the privileged material. Further, if one holder of the privilege seeks to waive legal professional privilege there must be an assessment of whether fairness requires that the act of seeking to waive privilege has an impact upon the others who also hold a common interest in the documents, so as to determine whether there has been an implied waiver of the privilege.
In Patrick v Capital Finance Corporation (Australasia) Pty Ltd, Tamberlin J applied the reasoning of Giles CJ in Ampolex.[83] His Honour observed that the approach of Ampolex and Farrow Mortgages was applied in Australian Competition and Consumer Commission v Australian Safeways Stores Pty Ltd[84] and in Gray v Associated Book Publishers.[85]
The Australian authorities can be compared with the approach in the United Kingdom. The approach of Sheller JA in Farrow Mortgage Services was recently disapproved of by Sir Andrew Smith in Accident Exchange Ltd v McLean.[86] Accident Exchange Ltd (Accident Exchange) was a company that provided replacement motor vehicles to clients whose vehicles had been damaged in an accident. Under the terms of the hire arrangement, Accident Exchange was given the right to pursue claims against the other driver in the name of the client. Accident Exchange commenced actions in the name of the client against various defendants and the question was whether Accident Exchange and the clients had a common interest privilege in particular documents, and if so, whether Accident Exchange alone could waive it. Sir Andrew Smith found that the rule that if legal professional privilege is held jointly it cannot be waived by one person alone could also be applied to a claim to privilege on grounds of common interest. His Honour, however, did acknowledge that in some cases of common interest privilege a proper inference might be drawn that the parties' arrangements were such that one privilege holder might waive the protection.[87]
However, the facts of this matter are not similar to the facts of Accident Exchange. Accident Exchange was an insurer who was entitled to act on behalf of its clients in connection with proceedings in the names of the clients, who objected to the discovery of the documents in question.
The learned author of Cross on Evidence, J D Heydon, puts the test to be applied this way:[88]

[126]

The question BGNV puts is, why would it be unfair for it to maintain the privilege?
Importantly, the position of BGNV in respect of its common interest in the sch 2 documents (and the sch 1 documents) is indistinguishable from the position of ICWA. Both ICWA and BGNV received the documents in question as indemnifying creditors.
BGNV were plaintiffs in the Main Proceedings and were jointly represented by Blake Dawson Waldron together with all the other plaintiffs against the banks. The liquidators were also plaintiffs in the Main Proceedings. The liquidators did not represent BGNV, their relationship was governed by the terms of the indemnifying agreements.
Importantly, whilst BGNV is a defendant in COR 146 of 2014 (and whilst there is a dispute about the ratio of payments to indemnifying creditors) the application is in one sense of benefit to BGNV and the other indemnifying creditors. The application seeks orders pursuant to s 564 of the Corporations Law to repay the indemnifying creditors amounts for advances made pursuant to the indemnifying agreements and other amounts from the balance of the proceeds from the Main Proceedings. When regard is had to these circumstances, where the primary privilege holder is content to waive privilege in these documents, I am of the view that it would be unfair to ICWA to require the consent of BGNV to give an effective waiver of the sch 2 documents.
In particular, it would be unfair to ICWA (who also holds a common interest in the receipt of these documents as an indemnifying creditor) to subrogate its wishes to the wishes of BGNV, as BGNV has no superior right to make any claim of privilege in respect of these communications than ICWA.
The same point applies to the sch 1 documents. BGNV has no superior right to claim privilege over these documents than Mr Woodings.
Irrespective of the issues in dispute in COR 146 of 2014, the proceedings brought by Mr Woodings in COR 146 of 2014 are proceedings brought by Mr Woodings (in the proper execution of his duty as liquidator) and are for the benefit of BGNV and the other indemnifying creditors for orders for the distribution of proceeds from the Main Proceedings.
In these circumstances, fairness mandates that common interest privilege in the sch 1 and sch 2 documents in these categories are to be regarded as impliedly waived.
For these reason, these claims of privilege are not made out.

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Judgment (220 paragraphs)

Cases Cited (33)