Asahi Holdings (Australia) Pty Ltd v Pacific Equity Partners Pty Ltd [2024] FCA 613 | Case summary

Asahi Holdings (Australia) Pty Ltd v Pacific Equity Partners Pty Ltd [2024] FCA 613 | Case summary | Zoe

[19]

Introduction 1 In the near future, the Court will hear three applications in two combined proceedings. The first in QUD 185 of 2024, which is an application by the plaintiff, Sev.en Gamma a.s. (Sev.en), for the removal of the general purpose administrators of the "IG Power" group of companies pursuant to s 447A of the Corporations Act 2001 (Cth). It will be referred to as the "Sev.en application". At the same time, the Court will hear an application in QUD 155 of 2023, in which the general purpose administrators apply for judicial advice that they are justified in recommending that IG Power (Callide) Pty Ltd (IGPC) enter into a deed of company arrangement which is proposed by Callide Energy Pty Ltd (CEPL) (the DOCA). 2 A further application has arisen in the proceedings, being an application by the general purpose administrators to vary orders previously made so that they may call a second meeting creditors for the purposes of giving the creditors of IGPC an opportunity to consider whether to cause IGPC to enter into the DOCA. This will be referred to as the "Daisytek application". 3 For the purposes of the hearing of the applications, Sev.en issued subpoenas to CEPL and CS Energy Limited (CSEL), as well as to their advisors, the McGrathNicol partnership (McGrathNicol) and Dr Sean Brady. In broad terms, the subpoenas seek the production of documents relevant to an investigation by Dr Brady into a catastrophic failure of the C4 power unit at the Callide Power Station in May 2021. Other documents are also sought. 4 In very general terms, there are two groups of protagonists in the overall dispute. The first is Sev.en which has a substantial, albeit indirect, financial interest in IGPC through the shareholdings in a number of companies. Similarly, it has an interest as a financier in respect of substantial funds which were advanced indirectly to IGPC. 5 The other set of protagonists are CEPL and its parent company, CSEL, the latter of which is a State owned entity. 6 Evidently, the disputation between the parties concerns control of the assets of IGPC and, in particular, its rights as a joint venturer in respect of unit C4 and a further power unit, unit C3, at the Callide Power Station. Overlaying this disputation is the fact that IGPC has been put into administration and it has two sets of administrators. First, the general purpose administrators, who are conducting the administration generally. The second are the special purpose administrators, who have been appointed, on the application of Sev.en, to conduct investigations into the cause of the incidents in relation to the C3 and C4 power units. 7 There is no need for the purposes of this application to identify the background factual circumstances of the issues presently before the Court. They appear in an earlier decision, being Sev.en Gamma a.s. v IG Power (Callide) Pty Ltd (Administrators Appointed) [2024] FCA 30. 8 By interlocutory applications dated 15 May 2024, CEPL and CSEL have applied to set aside some parts of the subpoenas issued to them, or have raised objections to the production of some of the documents sought. They also object to the production of some of the documents sought in the subpoena issued to McGrathNicol, and to all of the documents responsive to the subpoena issued to Dr Brady. 9 The attack on the subpoenas falls into two parts. The first is that the documents sought are not sufficiently relevant to an issue in contention between the parties. The second is whether the documents sought to be produced are subject to legal professional privilege. That is the primary objection to the subpoena issued to Dr Brady. 10 Specifically, CEPL and CSEL submit that the following documents have no legitimate forensic purpose: (a) draft reports of Dr Brady received by CEPL and CSEL (being categories 1 to 3 of the Dr Brady subpoena and categories 9 and 11 of the CSEL and CEPL subpoenas respectively); (b) valuation submissions prepared for the default auditor and valuer (being categories 8 and 9 of the CEPL subpoena); and (c) all documents prepared by McGrathNicol during a certain period which refer to or record the identity or potential identity of deed administrators in relation to CEPL's DOCA proposal (being category 6 of the McGrathNicol subpoena). 11 CEPL and CSEL otherwise claim legal professional privilege over communications of the following two kinds: (a) communications concerning the investigation conducted by Dr Brady which are said to be for the dominant purpose of legal advice to be provided to CSEL by Norton Rose Fulbright Australia (NRFA) (being categories 1 to 3 of the Dr Brady subpoena, category 9 of the CSEL subpoena and category 11 of the CEPL subpoena); and (b) communications between Clayton Utz, CSEL, CEPL and McGrathNicol which are also said to be for the dominant purpose of providing legal advice to CSEL and CEPL about non-binding indicative offers to acquire certain assets of IGPC (being particular documents in categories 1 to 6 of the CSEL, CEPL and McGrathNicol subpoenas).

[20]

Background 12 In order to contextualise the following discussion, it is necessary to address, to a limited extent, some of the background relevant to the issues to be determined. 13 Unit C4 suffered a catastrophic failure in May 2021, the consequences of which were substantial. The unit was offline and, to a large degree, has been ever since. That had the corollary of substantially reducing the revenue available to the joint venturers who operated the power unit, being IGPC and CEPL. At the time of its failure it was being operated and maintained by CSEL for IGPC and CEPL pursuant to an agreement under which CSEL had duties in relation to its maintenance and upkeep (the Operation and Maintenance Agreement). 14 The lack of revenue from energy production from unit C4, together with the lack of revenue from unit C3, which also failed, apparently led to administrators being appointed to IGPC - although there may be some debate about the actual cause of its insolvency. It is not in dispute that a very significant issue in the working out of IGPC's administration is the existence of any cause of action which it (and CEPL) might have against CSEL in respect of the latter's obligations under the Operation and Maintenance Agreement. A number of claims have been identified as being potentially available to IGPC, though it must be recognised that the Operation and Maintenance Agreement contains a limitation of liability in respect of some claims. In any event, an important element in the assessment of the value of any claim which IGPC might have against CSEL, is an understanding of the cause of unit C4's catastrophic failure. 15 On or about the day following the failure of unit C4, being 26 May 2021, CSEL engaged the firm NRFA to, inter alia, provide advice in relation to the 25 May 2021 incident. 16 On or about 1 June 2021, Dr Brady was engaged by NRFA to provide a report in relation to the causes of the incident. As at the date of the hearing of this current application, that was days short of three years ago. As best as can be ascertained, no report has yet been produced and no explanation has been provided as to why that is the case. However, it is now submitted by CSEL that any report, draft report or correspondence about the report is confidential and subject to legal professional privilege. 17 The general purpose administrators did not undertake their own investigations as to the cause of the failure of unit C4. Indeed, at the hearing of the application for the appointment of special purpose administrators, the general purpose administrators indicated that they had no opinion at all as to the cause of the failure or who was responsible for it. They also had no active investigation on foot commissioned by them to ascertain those matters. To a greater or lesser degree, they suggested that, for the purposes of putting a DOCA to the creditors of IGPC, they would be sufficiently informed of the causes of the failure of unit C4 by Dr Brady's report. That optimism was misplaced given that CSEL maintains privilege in respect of the report.

[22]

A legitimate forensic purpose 19 The parties were not at odds as to the requirement that any subpoena issued must be for a legitimate forensic purpose. That concept was recently discussed in the Full Court in Seven Network (Operations) Limited v Fairfax Media Publications Pty Limited [2023] FCAFC 185 [37], where the Court observed: … the fundamental principle is that the party issuing a subpoena must demonstrate that the subpoena has a legitimate forensic purpose, and that it may be set aside if it is cast in terms which require the production of documents which do not have apparent relevance to the issues in the case. 20 It is undoubted that the party issuing the subpoena bears the onus of establishing apparent relevance. In this respect, the New South Wales Court of Appeal in Secretary of the Department of Planning, Industry and Environment v Blacktown City Council [2021] NSWCA 145 said, in summary: (a) Whether a subpoena should be set aside depends on whether it involves an abuse of process; (b) It is not necessary to show that the documents subpoenaed will or will be likely to assist the case of the party that has issued the subpoena; and (c) It is sufficient to show that: (i) the subpoena can plausibly be seen to relate to an issue or issues in the proceedings or to "cast light" on such an issue, and the subpoena is not in other respects too vague or oppressive; (ii) there is a reasonable basis for supposing that the material called for will likely add, in the end, in some way or another, to the relevant evidence; and (iii) that the documents sought are "apparently relevant" in the sense that it can be seen that the documents sought to be produced by way of subpoena will materially assist on an identified issue or there is a reasonable basis beyond speculation that it is likely that the subpoenaed documents will assist. 21 On the question of the satisfaction of a legitimate forensic purpose for which documents or categories of documents are sought, it is not necessary that the documents sought will definitely advance the issuing party's case. It suffices if the documents could possibly throw light on the issues or it appears to be "on the cards" that they do so: Roberts-Smith v Fairfax Media Publications Pty Ltd (No 42) [2023] FCA 750 [27].

[23]

The issues in dispute at the forthcoming hearings 22 Necessarily, in order to ascertain whether the documents sought to be produced by the subpoenas are in some way relevant to the issues to be determined, it is necessary to appreciate the scope of the issues which will be in dispute. 23 In the course of submissions, CEPL and CSEL focused on the issues in Sev.en's application to remove the general purpose administrators as being the only issues for which a legitimate forensic purpose could relate. They submitted that the issues, which appear from the affidavit material filed in the Sev.en application, arose from the following developments since the appointment of the special purpose administrators: (a) The alleged obfuscation and delay by the general purpose administrators in producing documents to the special purpose administrators; (b) The general purpose administrators seeking to impose qualifications on the funding deed between the special purpose administrators and Sev.en, leading to an extended hearing relating to the approval of the funding agreement; (c) CEPL abandoning a proposal to appoint the special purpose administrators as deed administrators under its proposed DOCA in favour of the general purpose administrators, who then informed Sev.en that they had selected an alternative DOCA proposal to that proposed by Sev.en; (d) The general purpose administrators making inconsistent representations about CEPL's proposed DOCA to Sev.en and CEPL; and (e) The general purpose administrators moving towards a second meeting of creditors prior to the special purpose administrators' investigation being completed and in circumstances where CSEL and CEPL are allegedly "actively blocking third party bids". 24 On 11 April 2024, this Court made a number of orders providing for the concurrent hearing of Sev.en's application to remove the general purpose administrators and the application by those general purpose administrators for advice as to the propriety of recommending to the creditors of IGPC that they enter into the DOCA proposed by CEPL. The orders made provided for the filing of evidence in each proceeding by the parties albeit without differentiation, as well as for the filing of evidence from any relevant creditor in the combined proceedings. Those orders also provided for the issuing of subpoenas and permission was granted that they be returnable on 29 April 2024. 25 On 23 May 2024, the Court further ordered that the general purpose administrators' Daisytek application be heard together with the Sev.en application and the application for judicial advice. 26 In such circumstances where the three applications are to be heard together, it is axiomatic that the issuing of subpoenas might relate to any of the issues in any of the applications. That is, they may relate to the issues relevant to the removal of the general purpose administrators, the general purpose administrators' application for advice about the appropriateness of entering into the DOCA, or the application to convene the second meeting of creditors early. 27 It was submitted on the part of CSEL and CEPL that the general purpose administrators' application for directions does not encompass any issue about the availability and merits of any claims which IGPC may have against CSEL or CEPL, though they did so without explaining why that might be so. That submission should be rejected. It would seem to be appropriate, on an application for directions about the propriety of presenting a DOCA for the consideration of creditors, to consider whether the amount offered under the DOCA represents some proportionate compensation for the assets which the deed proposer will acquire from the transaction. It would also seem to be appropriate to consider whether a better return was available to the company, its creditors, and members via an alternative procedure for the disposition of the company's assets where it received full value for the assets transferred. No substantive submission was made to the contrary. There is no need to make any final decision on this point and, for present purposes, it is sufficient that consideration of those issues is possible on the administrators' application for judicial advice.

[24]

Submissions for default auditor and valuers 28 CEPL and CSEL claim that the subpoenas require the production by CEPL of certain submissions prepared by it for consideration by an auditor or a valuer with respect of the value of IGPC's interest in the joint venture with CEPL, but that these documents do not relate to any issue to be determined in the proceedings and, therefore, are not being sought for a legitimate forensic purpose. 29 Those submissions made by CEPL as to IGPC's value, were produced and delivered consequent upon it giving notice to IGPC that it was exercising its rights under the joint venture agreement between them to acquire IGPC's interest in the Callide Power Project. The joint venture agreement gave each party the right, to serve a notice to acquire the other's interest in the joint venture upon the occurrence of certain events. One of those events was where the joint venture participant becomes insolvent, which included having an administrator appointed to it. 30 Here, following the appointment of administrators to IGPC, CEPL served a notice under the joint venture agreement to acquire the former's interest. The joint venture agreement made provision for the valuing of a participant's interest on the basis of "Fair Value" or "Book Value". The Fair Value was to be determined by valuers, acting as experts, (referred to as "Default Valuers") appointed by the parties. In this case, Default Valuers were appointed and submissions were made to them by CEPL as to the Fair Value or what matters were relevant to the ascertainment of the Fair Value of IGPC's interest. 31 Although the sale process under the joint venture agreement has now been terminated, CEPL's submissions to the valuer necessarily related to the assessment of the value of IGPC's interest. That is, in turn, relevant to whether the general purpose administrators would be acting appropriately in recommending the proposed DOCA advanced by CEPL. It is a matter relevant to the creditors' decision whether to vote for the DOCA to know whether the DOCA proponent is paying an appropriate consideration for the assets which it acquires. Further, and in general terms, Sev.en appears to allege that the transfer of IGPC's interest under the joint venture pursuant to the DOCA would effectively amount to its disposition at an undervalue and would be to the prejudice of IGPC's members. Again, evidence of the value of IGPC's interest would provide some context of any offer to acquire IGPC's interest under the DOCA. 32 Sev.en also identified that the evidence of CEPL's submissions would be relevant to the Daisytek application. In that application, the general purpose administrators have suggested that CEPL could acquire the joint venture interests of IGPC for significantly less than the quantum offered under the DOCA, by reactivating the compulsory acquisition process. Certainly, the submissions made to the Default Valuers could cast light on the testing of that proposition. 33 Although it has been deposed that the CEPL valuation submissions do not contain any value attributed to IGPC's interest, it appears to be accepted that they contain references to factors to which regard should be had in assessing the Fair Value. It is certainly "on the cards" that such matters might assist in making a broad analysis of the value of IGPC's interest. 34 It was also submitted that the process whereby CEPL would acquire IGPC's interest pursuant to the process in the joint venture agreement has been terminated, with the result that the documents are no longer relevant. That submission was difficult to follow. For present purposes, the question is whether the documents have a relevance to the issues in dispute before the Court, not whether they are still relevant to the purpose for which they were originally created. 35 A further submission was that CEPL's submissions were directed to the value of IGPC's interest in the joint venture as at 8 April 2023, and that the assessment of the value of consideration to be provided in the DOCA is not temporally limited in that way. The impact of that submission should not be accepted. The question is whether it is "on the cards" that the documents will be relevant to an issue in dispute. Here, it is likely that they will be relevant to value to some degree because they identified matters which are relevant to ascertaining value. It may be that the question of whether the DOCA is appropriate is not to be determined by reference to Fair Value, but in determining in this case whether the DOCA should be entered into, it is relevant to consider whether alternative processes which would achieve full value for the creditors, would have a better outcome for the company and its creditors. 36 It follows that CEPL's submissions which were sent to the Default Valuers or prepared for that purpose have a legitimate forensic purpose in relation to the issues to be determined on the applications. To the extent to which the subpoena recipients sought the excision of those documents from the subpoenas, the applications fail.

[25]

The Brady reports 37 This category of documents sought by the subpoenas seek the production of any reports (or draft reports) prepared by or under the supervision of Dr Brady in relation to the failure of unit C4. Also sought are letters of engagement, instructions and terms given to Dr Brady as part of the report, as well as correspondence with CSEL or any external advisors for CSEL relating to the timing of the finalisation or publication of the report. 38 The documents relating to the cause of the catastrophic failure of unit C4 are relevant to the strength of any potential claims IGPC may have against CSEL. On this basis they are directly relevant to the value of any such claims and, therefore, to the value of IGPC's interest in the joint venture. As indicated, the value of IGPC's interest is relevant to the issue of whether the general purpose administrators will be acting appropriately by entering into the proposed DOCA. If the reports of Dr Brady and any associated documents reveal that CSEL is responsible for the failure of unit C4, it will necessarily follow that the value of IGPC's interest in the joint venture will increase by at least 50% of the value of that claim. The identified value of the interest is important in assessing the adequacy of the value of the amount to be paid under the DOCA. 39 Dr Brady's reports and any associated documentation may also throw light on the allegation that the general purpose administrators are acting precipitously be seeking to have CEPL's DOCA passed whilst blocking other bids. It is probable that Dr Brady's report or drafts of it which concern the cause of unit C4's failure, will impact the issues surrounding whether the DOCA proposed by CEPL should be accepted. It is possible that they may throw light on the general purpose administrators seeking to advance the hearing of the creditors' second meeting in the way that they do. In addition, the documents could shed light on the value of claims which IGPC may have and, to this extent, they can be seen to be relevant to whether it is appropriate for the general purpose administrators to propose the CEPL DOCA and whether or not to grant the orders sought in the Daisytek application. 40 There may also be some merit in the proposition that the documents would also be relevant to the issue of whether the general purpose administrators should be removed. Dr Brady's report and associated documents might reveal what might have occurred had the general purpose administrators undertaken an appropriate investigation into the cause of the failure of unit C4. In this way they are sufficiently relevant to the issue of whether the general purpose administrators are acting appropriately in pursuing the DOCA, without waiting for a report as to the cause of the failure of unit C4. 41 Therefore, the documents sought from Dr Brady, being reports of Dr Brady received by CSEL and CEPL, do have a legitimate forensic purpose.

[27]

The McGrathNicol category 6 documents 44 A subpoena was also directed to McGrathNicol and whilst no objection was taken to most of the categories of documents sought on the basis of legitimate forensic purpose, CEPL and CSEL opposed the production of the sixth category of documents, being: All Documents prepared by McGrathNicol during the Relevant Period referring to or recording the identity or potential identity of the deed administrators in relation to any Callide Energy DOCA Proposal. 45 Though CEPL and CSEL accepted that an issue in the proceedings to remove the general purpose administrators is whether the general purpose administrators have acted inappropriately in relation to the identity of the deed administrators under CEPL's DOCA proposal, they submitted that the sixth category of documents is too broad and, in any event, any document with apparent relevance within this category is already covered by the previous five categories set out in the subpoena. There is some force in the former submission, but none in the latter. In relation to the latter, if the documents to be produced are covered by the first five categories, it cannot matter that they are also sought in a cumulative way by another category, and it will cause the subpoena recipients no added difficulty. That conclusion necessarily suggests that the first submission is not valid. If all the documents in category 6 are covered by the first five categories, category 6 cannot be too broad. In any event, the issue of the identity of the administrators under any proposed DOCA is a relevant issue in the proceedings and one in respect of which Sev.en is entitled to obtain production of relevant documents. That includes those documents which "refer" to the identity or potential identity of the deed administrators. If a document refers to the identity of the administrators, albeit without expressly referencing them, it may be as relevant or more relevant than a document that makes an express reference. In any event, in the light of what is presently known in relation to this issue, any search for documents is unlikely to take very long given that it is an issue which is temporally confined. 46 The application to set aside the subpoena in this respect must fail.

[29]

Principles of legal professional privilege 49 There was little to no dispute as to the principles of legal professional privilege at common law. It is accepted that privilege attaches to a confidential communication between a client and lawyer made for the dominant purpose of giving or obtaining legal advice or the provision of legal services, including representation in legal proceedings. 50 The principles were recently summarised by Beach J in Robertson v Singtel Optus Pty Ltd [2023] FCA 1392 [85] - [100] (Robertson v Singtel Optus) and I gratefully adopt what his Honour there stated. Relevant to the present matter, the following points, taken from his Honour's reasons, can be identified: (a) The party seeking to claim privilege bears the onus of establishing that it exists, including each factual element necessary to establish the dominant purpose (at [86], [88]). (b) The privilege only applies to "confidential communications made for the dominant purpose of the client obtaining legal advice or for use in litigation or regulatory investigations or proceedings". The protection is confined to "confidential communications made for the dominant purpose of giving or obtaining (including preparation for obtaining) legal advice or the provision of legal services, including legal representation in litigation or other proceedings" (at [87]). (c) "It is not sufficient to show a substantial purpose or that the privileged purpose is one of two or more purposes of equal weighting; rather it must predominate, and be the paramount or most influential purpose. The ordinary meaning of dominant purpose indicates the need for a ruling, prevailing or most influential purpose" (at [91]). (d) At [88] of his Honour's reasons, it was observed that, in determining whether a communication was made for the dominant purpose of obtaining legal advice, it is convenient to apply the principles stated in AWB Ltd v Cole (No 5) (2006) 155 FCR 30 [44] (AWB v Cole), which were restated and elaborated on in Asahi Holdings (Australia) Pty Ltd v Pacific Equity Partners Pty Ltd (No 4) [2014] FCA 796 [28] - [44]. They include the following: (i) In order to establish the dominant purpose "focused and specific evidence is required in respect of each communication, rather than mere generalised assertion let alone opaque and repetitious verbal formulae." (ii) The relevant time for ascertaining purpose is when the communication was made or when a written document came into existence. (iii) "[T]he relevant purpose may be either that of the author or initiator of the communication, or the person at whose request or under whose authority the communication was created or made. The circumstances will dictate the focus." (iv) The purpose of the communication is that which is objectively ascertained, even though the subjective intention of the author or person requesting the creation of the document may be significant. (v) The content of a communication is relevant in the assessment of its purpose and may carry great weight. (vi) A practical test in ascertaining purpose is to ask whether the communication would have been made irrespective of the obtaining of legal advice. This involves identifying the intended uses of the document which accounted for it being brought into existence. (vii) It is undoubted that legal professional privilege can attach to a document produced by a third-party adviser to a client who seeks to use it for the purpose of obtaining legal advice. In this context, the purpose can readily be inferred by the directness of the communication from the third party adviser to the client's lawyer. (viii) Where third party advisers do work and communicate with a person in a non-litigation context, it is necessary to analyse the precise purpose of each communication. Non-legal advices will rarely be capable of attracting legal professional privilege for the reason that they will almost invariably have the character of discrete advices to the principals. (ix) Even where a client contemplates acquiring the non-legal advice also for the purpose of submitting to legal advisers, that may merely demonstrate that it has been acquired for a multiplicity of purposes. (e) The more that a client "filters, adapts or exercises independent judgment" in relation to a non-lawyer's advice, the less likely privilege can be maintained. Such behaviour will "more readily give rise to an inference that the dominant purpose for the creation of the non-legal advice was a non-privileged purpose (Pratt Holdings Pty Ltd v Commissioner of Taxation (2004) 136 FCR 357 at [47] per Finn J)" (at [93]). (f) "[I]n the context of advice provided for the purpose of a substantial transaction or investigation, the advice by non-legal advisors 'will rarely be capable of attracting privilege for the reason that they will almost invariably have the character of discrete advices to the principal as such, with each advice, along with the lawyer's advice, having a distinctive function and purpose in the principal's decision making …' (Asahi at [40], citing Pratt Holdings at [46] per Finn J), and this remains true even where the non-legal and legal advice are interrelated, in that they 'provide a collective basis for an informed decision by the client' (Asahi at [41])" (at [94]). 51 In this matter, Sev.en submitted that CSEL had not discharged its onus of establishing that Dr Brady's report and associated documents were privileged. In this respect, it focused attention on the sufficiency of the evidence relied on to discharge that onus. In doing so reference was made to the reasons of Brereton J in Hancock v Rinehart (Privilege) [2016] NSWSC 12 [7] where his Honour said: 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, 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". 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. (Footnotes omitted). 52 His Honour's reasoning was endorsed by the New South Wales Court of Appeal in Rinehart v Rinehart [2016] NSWCA 58 [42], where the Court summarised the position on burden of proof as follows: … It is true that the claim of privilege itself does not require evidence. Once made, the claim may be acceded to or contested. If contested, then the burden falls upon the person claiming the privilege to make out the matters which give rise to an entitlement to resist production in the ordinary way, namely, by admissible evidence. (Emphasis in original). 53 It did not appear to be in dispute between the parties that a mere sworn assertion that a document is subject to legal professional privilege or that the purpose of a document was to obtain legal advice, is insufficient to satisfy the onus. 54 As mentioned, Sev.en also seeks the production of drafts of Dr Brady's report. In that respect, it is undoubted that drafts of reports may attract legal professional privilege and may do so even where the final report does not. Importantly, draft communications may reveal an inference about the nature of the legal advice which is sought. In Australian Competition and Consumer Commission v Cadbury Schweppes Pty Ltd (2009) 174 FCR 547, 564 - 565 [73], the Full Court said in relation to drafts of witness statements: … Drafts and final proofs are by nature and in fact different documents. A draft may well include information which is not included in a final version of a witness statement given to an opposing party. A draft may well be a "discussion" document, intended only to be seen and considered by the party's legal advisor. It should not be assumed that the final version is just a reproduction of anything that comes before it. … 55 So long as the dominant purpose is satisfied, draft agreements, letter and pleadings prepared by lawyers as well as draft notes and other material generated by the client for the purposes of communicating with a lawyer are privileged: AWB v Cole at 46 [44(9)]. 56 Some particular care is taken in relation to drafts of reports which are brought into existence for the purpose of being communicated to a client's lawyer, as appears from the following statement of Harper J in Linter Group Ltd v Price Waterhouse [1999] VSC 245 [16]: … [A]n expert is surely permitted, indeed to be encouraged, to change his or her mind, if a change of mind is warranted. Just as a judge ought never to allow publication of a draft of a judgment, in part because it is necessary to preserve the freedom to change his or her mind on further reflection about the case, so experts should not be inhibited by fear of exposure of a draft from changing their minds when such change is warranted by the material ...

[31]

The purposes of the report disclosed by CSEL's public statements 59 The most significant difficulty for CSEL in its attempt to establish legal professional privilege in relation to the Brady report is the range of public statements made by, or on behalf of, CSEL to the effect that it was being obtained for non-legal purposes. The incident in relation to unit C4 and the commissioning of an expert report into it, exposed an inherent tension in CSEL as a government owned corporation having broad interests and obligations as a public body, on the one hand, and, on the other, desiring to protect its private interests. 60 The public statements made by or on behalf of CSEL have three important aspects. The first is that they indicate that the Brady report was being obtained for a range of non-privileged purposes. The second is that the public statements are devoid of any assertion that the report was being commissioned for the purpose of obtaining legal advice. The third is that CSEL asserted, and maintains for the purposes of this application, that the public statements as to the purposes of obtaining the report were true. 61 It is necessary to keep in mind that the context in which the public statements were made was that on 2 June 2021, the Board of CSEL was informed that Dr Brady had been commissioned to prepare a report into the causes of the failure of the C4 power unit. It cannot seriously be doubted that, when the public statements were subsequently made, the makers of the statements or the institutions which they represented were acutely aware that the report was being commissioned through solicitors and that, at least one of its intended purposes, was for it to be used for allowing CSEL's lawyers to provide legal advice. 62 It was in that context that public statements were made by or on behalf of CSEL to the effect that the report to be obtained from Dr Brady: (a) was to be external and independent of CSEL; (b) was obtained for the purpose of ascertaining how the failure of the C4 unit occurred so that lessons could be learned from it, so that the safety of workers and plant could be improved, and to prevent a reoccurrence of the incident; (c) was to be the foundation for the publication of a report so that the power generation industry can learn from the events which had happened. 63 The public statements made by or on behalf of CSEL were conveniently set out in and evidenced by the affidavit material filed by Sev.en and can be identified as follows: (a) A few days following the incident in relation to unit C4, on 28 May 2021 CSEL issued a media release stating that it would be undertaking a "thorough and comprehensive investigation … to determine the cause of this failure". (b) On 11 June 2021, Mr Andrew Bills, who was the CEO of CSEL on 25 May 2021 and for some time thereafter, stated in a news release in relation to the engagement of Dr Brady that: (i) "Dr Sean Brady has been engaged to lead an external, independent investigation and review of the incident on Unit C4"; (ii) "CS Energy is committed to understanding the facts that led to the C4 event so we can learn from it and improve the safety of our people and plant"; and (iii) "A report will be published with findings from the investigation so that the lessons learned can be shared with our peers in the power generation industry". (c) On 26 July 2021, Mr Bills indicated that the independent investigation was underway and that CSEL was "committed to understanding the facts that led to the C4 event so we can learn from it and improve the safety of our people and plant". (d) On 26 July 2021, the Honourable Mick de Brenni, Minister for Energy, Renewables and Hydrogen, who is one of the two shareholding Ministers in CSEL, released Mr Bills' statement of that same day. (e) Mr Jim Soorley, Chairman of CSEL, made statements in the CSEL 2021 annual report stating that a "[a]n independent investigation has been commissioned into what occurred on Unit C4, so that we can learn from it and prevent it from happening again". He added that CSEL was focused on understanding what occurred so that action can be taken to prevent it happening again, and that safety of the workers and the plant can be improved. (f) Similar statements were made in the CSEL 2022 annual report which was issued on 26 August 2022. (g) Sometime in 2022, CSEL released a document entitled, "Energy Charter Disclosure Report 2022". In it, CSEL described Dr Brady's "external, independent investigation into the cause of the C4 incident" as ongoing, and stated that "[t]he investigation is broad in nature and is assessing both the technical and organisational factors that could have contributed to the C4 incident". (h) On 27 August 2023, Minister de Brenni expressed frustration at the slow pace of the return at units at Callide and said that it was important to find out what went wrong at the power station in Central Queensland. He added that, "[w]e want to ensure an event like that which occurred at Callide does not happen again, anywhere". (i) On 18 October 2023, a CSEL media release again indicated in relation to the Brady report that CSEL was "committed to understanding the facts that led to the C4 event so we can learn from it and improve the safety of our people and plant" and "committed to sharing the findings and learnings from the Unit C4 incident with industry to prevent an incident like the C4 event from happening again". (j) In a statement on 30 January 2024, Minister de Brenni indicated that the report may not be made public for commercial reasons, but that CSEL intended to release the technical lessons from the report. (k) On 13 February 2024, Mr Darren Busine, the then CEO of CSEL, said that he expected that the Brady report "will identify further opportunities for organizational improvement", which CSEL will implement, as well as "share any additional learnings with industry". 64 As mentioned, CSEL and CEPL informed the Court that those public statements were true. On the other hand, they also submitted that the dominant purpose of obtaining the report was to obtain legal advice. These are seemingly inconsistent and difficult to reconcile. However, any reconciliation is assisted by reason that the Court was not asked by any party to doubt the truthfulness of the public statements, and I am prepared to proceed on that basis. Indeed, on one view those public statements are inherently reliable. The failure of unit C4 involved the explosion of a turbine which presented a risk to the lives of people who worked around it. On any view, a major priority after an event of that nature would be to secure the services of an independent expert to identify the cause of the incident so that the lives of workers would not be imperilled in the future by any recurrence. It is apparent that the statements on behalf of CSEL identified that as a major goal. Secondary to that, is the fact that the incident constituted a failure of, and damage to, an important piece of infrastructure, and that would necessarily also result in losses of many millions of dollars. Again, the public statements that indicate an important purpose in obtaining the report was to prevent similar damage occurring in the future through a reoccurrence of the incident, are self-evidently trustworthy.

[32]

The engagement of Dr Brady 65 The manner in which Dr Brady was commissioned to prepare his report is important for the purpose of ascertaining whether legal professional privilege attaches to it. 66 On the day of the explosion of unit C4, which resulted in a significant power outage, Mr Bills, in his capacity as CEO of CSEL, established a crisis management team. He acknowledged that from the time of the incident he was responsible for managing the consequences arising from the incident. 67 The team had 11 members including Mr Bills. The personnel covered all aspects of the business including asset managers, corporate services, plant operations, markets and commercial, legal, health and safety, people and culture and corporate affairs. No doubt that composition reflected the echoing consequences which the incident would have across the length and breadth of CSEL's business. 68 Mr Bills deposed that "[i]n addition to ensuring the safety and well-being of CS Energy people and protecting property and the environment", his main concern immediately following the incident was that a "large number of legal issues were likely to arise". It can be accepted that there is little doubt that there would be substantial legal ramifications arising from the incident in a number of the areas of CSEL's business. On the other hand, it can also be accepted that, as Mr Bills had made clear in his public statements, another of his main concerns was ensuring the safety and well-being of CSEL workers and protecting the plant. 69 Mr Bills further said that he discussed the prospect of legal issues arising with Ms Claudia Cameron, CSEL's General Counsel, at the first crisis management meeting. Ms Cameron later advised that she had spoken to Mr Martin Osborne, a partner at NRFA, and asked him to commence a process of preparing formal engagement letters for NRFA to provide legal advice to CSEL about legal issues arising from the incident. 70 NRFA was engaged by CSEL by a letter of engagement dated 26 May 2021 which provided, inter alia: 1.1 On the basis of your emails with Martin Osborne on 25 May 2021 and our video-conference on 26 May 2021, we confirm your instructions to act for you according to the following scope of work: (1) Advise you in relation to the incident on 25 May 2021 at the Callide Power Station that resulted in a significant power outage (the incident); (2) Advise you about the legal consequences, including regulatory, contractual and other potential liabilities that may arise as a consequence of the incident. This will require us to commission or request the commissioning of an investigation into the root cause of the incident so we can provide our advice; (3) Advise you about establishing information sharing protocols with other parties including Intergen; (4) Review various contractual documents provided by you to identify notification requirements and other issues arising out of those contracts; (5) Provide ongoing legal advice during the course of your response to various regulators, stakeholders and other parties about the incident; and (6) Prepare for any anticipated litigation or regulatory action that might arise out of the incident. (Emphasis added). 71 In the days immediately following the incident, Ms Cameron said to Mr Bills that in order for CSEL to be properly advised about its legal risk, NRFA needed to obtain the opinion of an expert who has investigated the cause of the incident. Mr Bills said that he agreed with that and Ms Cameron and he also discussed that the report would be kept confidential so that it could be used for the purpose of obtaining legal advice. 72 In accordance with the above, NRFA subsequently engaged Dr Brady as an expert mechanical engineer to investigate the cause of the incident. On 1 June 2021, NRFA signed a letter of engagement provided by Dr Brady. That letter made reference to what was said to be the purpose of the report: Confidential and subject to legal professional privilege - Engagement Letter for Norton Rose Fulbright Australia We refer to your letter of 1 June 2021. We understand that Norton Rose Fulbright Australia (you) wish to retain Brady Heywood (us) in relation to the Incident on 25 May 2021 ('Incident'). This letter, together with the confidentiality obligations in your letter and the enclosed General Terms and Conditions (General Terms and Conditions), sets out the terms of our Engagement. … Scope of Engagement We understand that we are instructed to opine on matters relating to the Incident. We further understand that we will receive our instructions from you. … Reporting Any report we prepare in accordance with your instructions may only be relied on for the purposes of the proceedings or potential proceedings. Our report or any other deliverable which we provide, or any part of these, may only be published or distributed, as follows: a) for the purpose specified in this letter; b) in accordance with any law or by order of a court of competent jurisdiction; or c) as reasonably required for the purpose of the proceedings or potential proceedings. Prior to finalisation, a draft(s) of report(s) may be provided to you. You must not rely on a draft report. … Client legal privilege We understand that all communications between us and you, as well as any materials or information developed or received by us, whether oral or written, may be protected by client legal privilege and they will be treated by us as confidential subject to any disclosure required by law or an order of a Court or tribunal of competent jurisdiction. … (Emphasis in original). 73 The general terms and conditions which were part of that letter relevantly provided: 4. Confidentiality We will keep confidential all information we obtain from you during the course of this Engagement which is not in the public domain. We will not disclose any confidential information to any other person without your consent, except to the extent required by law or subpoena. (Emphasis in original). 74 On 2 June 2021, Dr Brady signed a letter of engagement provided by NRFA on behalf of CSEL, which articulated the confidential and privileged purpose in the following terms: Confidential and subject to legal professional privilege 1. Introduction 1.1 We act on behalf of CS Energy Limited, the operator of the Callide C Power Station situated near Biloela in central Queensland. 1.2 On 25 May 2021, there was an Incident at the Callide C Power Station, resulting in a significant power outage to a large part of Queensland. 1.3 We wish to retain you to undertake an independent expert investigation into the root cause of the Incident for the purpose of permitting our firm to provide legal advice to CS Energy. 1.4 We will provide you with instructions as to the issues we would like you to investigate and identify in your investigation in due course. … 2. Confidentiality and Privilege 2.1 In accepting this engagement, you agree that: (1) this letter and all future communications (whether electronically maintained or not) between us, between you and our client, are confidential. These communications may be subject to legal professional privilege and therefore you must mark all documents and materials produced by you in relation to this matter as 'Confidential - Subject to Legal Professional Privilege', unless advised otherwise; (2) you must take all steps necessary to preserve the confidentiality of our communications, anything you observe while attending Callide C Power Station, and any material or documents created or obtained by you in the course of preparing any documents or report; … (Emphasis in original). 75 It cannot be doubted that NRFA took what steps it could to clothe any report produced by Dr Brady with legal professional privilege. It acted as any competent firm would by causing the investigative processes to be funnelled through it and to explicitly do so on the basis that all investigations were being conducted for the purposes of it providing legal advice. The arranging of investigations in that manner is not uncommon when significant incidents happen: see Tavcol Pty Ltd v Valbeet Pty Ltd [2016] NSWSC 1002 [46]. The benefit of doing so is that if the report is unfavourable to the client, a claim of legal professional privilege may protect its disclosure to an opposing party. 76 It is possible to accept that, to the extent that it was able to do so in the engagement of Dr Brady, NRFA did all that it could do to ensure that legal professional privilege would attach to any report produced. One might even accept that its intention was that any report produced by Dr Brady would be used only for the purposes of it providing legal advice to CSEL and CEPL. 77 Following the decision to engage Dr Brady, Mr Bills deposed that he kept the Board updated on the circumstances surrounding his engagement and explained that Dr Brady had been engaged by NRFA so that it could provide legal advice to CSEL. He said that, at a Board meeting on 2 June 2021, he informed the Board, and the Board agreed, that the investigation would be confidential and subject to legal professional privilege. He attached the minutes of that meeting to his affidavit in apparent support of his statement of what he told the Board, though there is no mention in those minutes of what he claims he said. There is an entry identifying that Dr Brady had been appointed as the "independent lead investigator following consultation with unions". It is not immediately apparent why that consultation was required if the report was confidential to CSEL and being obtained solely for the purposes of CSEL obtaining legal advice. On the other hand, such consultation would be appropriate where the purpose of the report is to ensure safer working conditions in the future. 78 Reliance was also placed on an email the Company Secretary sent to the Board members on 3 June 2021. It is headed "Strictly Confidential and Subject to Legal Professional Privilege" and attaches a document setting out the Callide Incident Investigation Structure "work streams" which appears to cover the incident investigation structure. It is noted from the attachment that CS Energy Legal, being presumably the in-house legal team, instructed NRFA which instructed Dr Brady, but that CS Energy Legal reported to the Chief Incident Investigation Officer, Mr Bill Hopsick. That rather suggests that any report acquired from Dr Brady would be provided to the investigation team as part of CSEL's internal analysis of how the incident occurred. That is an indicator that the report was to have multiple purposes. 79 It is not particularly clear why that email was marked as being privileged or, if it is, why it was disclosed in Mr Bills' affidavit. The document was copied to Ms Cameron of CS Energy Legal, but that does not explain why it was thought to be privileged. It does not appear to have been created for a privileged purpose. 80 A further Board meeting occurred on 9 June 2021, and Dr Brady's engagement was discussed. The minutes of this meeting state that "communication channels similar to those set up for the Queensland Energy Class Action" would be enacted with the State Government "to protect legal professional privilege". The exact nature of what those channels were is not explained, but it is apparent that the Board was aware of the need to attempt to maintain confidentiality as best as was possible for the purposes of securing legal professional privilege to any report produced. 81 The evidence from Mr Bills' affidavit shows that he also said in his affidavit that he told the Government from an early stage that Dr Bardy's report would not be shared with it and that there was a need to create a confidentiality arrangement with the Government to keep communications about the report privileged. It seems that a communication protocol to ensure that legal professional privilege was maintained was put in place. It does not however, specifically relate to Dr Brady's report but more generally to communications which may relate to the obtaining of legal advice. 82 Mr Bills also instituted an internal information sharing protocol for the purpose of protecting any privilege which existed in the report of Dr Brady and he described that in his affidavit. 83 Mr Bills further identified that a committee referred to as "SteerCo" was established for the purposes of managing Dr Brady's investigation. It appears that the committee, or an informal form of it, met with Dr Brady for the purposes of ascertaining how his investigations were proceeding. There is some inconsistency in relation to the alleged purpose of this committee as, on the workflow sheets attached to Mr Bills' report, the Chief Incident Investigation Officer, also reported to it. That also suggests that as a committee, it was not limited to merely considering the investigation of Dr Brady. 84 The evidence establishes that NRFA advised CSEL on a number of matters arising out of the incident in relation to unit C4 and that, in order to do so, it has conducted investigations in relation to it. It has also been involved in the flow of information to Dr Brady and part of the flow of information from Dr Brady to CSEL. 85 CSEL and CEPL also relied on evidence from Mr Busine, who was the Executive General Manager Revenue Strategy of CSEL at the time of the 2021 incident. He subsequently became its CEO. He addressed the public statements which were made by or on behalf of CSEL, and indicated that they were made to explain the progress of Dr Brady's investigations - that is not a statement to which great credence can be given, as it does not accord with that which was actually said in the public statements. He also referred to additional statements made in the second half of 2023 which, on their face, indicate that the report of Dr Brady was for the purpose of allowing CSEL to understand the facts that led up to the incident, so that CSEL could learn from it and improvements can be made to the safety of CSEL's workers and plant. His review of those statements tends against the maintenance of legal professional privilege in that the statements refer to other important purposes for the obtaining of the report and do not mention that it is to be used for obtaining legal advice. 86 There is no need to traverse the further evidence relating to the manner in which NRFA kept the information in relation to Dr Brady's report confidential. It is sufficiently clear that it did. The evidence disclosed that it retained McGrathNicol to establish a database to host CSEL documents that NRFA lawyers could use to in the preparation of legal advice to be given to CSEL. Dr Brady was given a username and password to access the database. A solicitor from NRFA was embedded in the CSEL legal team who was responsible for gathering documents. Further, a process was established for the purpose of controlling the flow of information between CSEL employees and Dr Brady. Dr Brady was also included in the preparation of witness statements and attended interviews. Although no litigation was then on foot, many of those matters are done in the day-to-day conduct of the litigation process and it is clear that the defending of claims was anticipated in the future. 87 Whilst it is apparent that Dr Brady's activities were enveloped within protocols expected to surround communications to which the legal professional privilege attaches, that is not determinative of whether the dominant purpose of his report was for obtaining legal advice. Certainly, if privilege attached to his work, the protocols surrounding it would have ensured that the privilege was not lost as might have been the case when an independent expert conducts an investigation of this nature in the circumstances in which Dr Brady did.

[35]

The publicly stated purposes 93 Not only was the preparation of a report, such as that to be provided by Dr Brady, which explained the cause of the incident to be expected, CSEL made it known that this was one of its purposes. Within days of the Board meetings where the importance of the confidentiality and legal professional privilege of the report was stressed, CSEL by its public statements indicated that the report was being obtained for several purposes, none of which was to obtain legal advice. The media releases and statements indicated that it was being obtained to understand how the incident occurred, to learn from the incident, to prevent its recurrence, and to improve safety for workers and plant. An ancillary purpose was to share the information with others in the industry. CSEL has maintained that position for over three years. None of these statements were of an incidental nature. They were made purposefully and deliberately, and were made on several occasions and, indeed, repeated over a number of years. 94 CSEL submitted that its public statements were true. Counsel for CSEL was pressed on whether CSEL stood by them, and he indicated that it did. Counsel for Sev.en adopted the truth of those statements as supporting a finding that privilege does not attach to the reports, and their veracity is significant in those circumstances. 95 On one view, the statements that the report from Dr Brady was obtained for the identified purposes can be taken as eschewing the proposition that it was obtained for any other purpose. However, it was submitted by CSEL that the public statements were true, but only as far as they went. That is, the report was commissioned for those identified purposes, but it was in fact obtained for the predominant purpose of obtaining legal advice, though that was not shared with the public. It should be observed that this nuance was not expressed by Mr Bills or anyone else on CSEL's behalf. 96 That is not to say that Mr Bills did not attempt to explain the public statements in his evidence. However, as with the evidence of Mr Busine in this respect, it is difficult to accept. In summary, he deposed that: the statements were made following intense public interest in the incident; they were intended to inform the public about what was happening at CSEL in response to the incident; and they "did not reflect any change" in Mr Bills' or CSEL's motivating purpose for Dr Brady's investigations, being to obtain expert opinion as to the causes of the incident so as to inform legal advice from NRFA. Though the latter point suggests CSEL's subjective purpose, Mr Bills' evidence does not reconcile that purpose with the fact that the repeated public statements objectively indicate multiple purposes for the report, none of which are for legal purposes. 97 There was no cross-examination in the course of the hearing despite the filing of a substantial number of affidavits on behalf of CSEL and CEPL. The Court was informed that it had been agreed between the parties that Sev.en would not cross-examine the deponents on the basis that CSEL and CEPL would not take any Browne v Dunn points by reason of the lack of cross-examination. By this, I understand that I am invited to draw my own conclusions from the evidence as it is and may weigh the probabilities of the evidence without any observation of the witnesses' responses to questions which might have been put to them. This creates some degree of difficulty in relation to the evidence of Mr Bills and others. Whilst he attempts to suggest in his affidavit that the obtaining of a report from Dr Brady was for the sole or dominant purpose of obtaining legal advice, by his public statements and others made on behalf of CSEL, it was indicated that the report was being obtained for other purposes. 98 However, this apparent difficulty is overcome, to some extent, by the submission on behalf of CSEL that its public statements as to the purposes for obtaining the report were true. That being so it can be accepted that the public statements made by CSEL articulate what it regarded as being at least some purposes for which Dr Brady's report was obtained. Moreover, it is axiomatic that the purposes identified would have been important for CSEL. 99 One factor which featured in the public statements was that the report was required in order to protect CSEL's workers. In that respect, in order to prevent a catastrophic failure of a power unit in the future and thereby ensure the safety of workers, CSEL needed to understand how the failure had happened. The importance of protecting human life is indisputably an important reason for obtaining the report. 100 The public statements also referred to the need to protect the plant and the importance of that also cannot be understated. The damage to the power unit was substantial and required tens of millions of dollars to repair, and its inability to produce electricity resulted in many millions of dollars in lost revenues and potential damages. Again, as CSEL's public statements made clear, one purpose for the acquisition of a report to ascertain how the damage occurred was to prevent the same damage occurring in the future. Objectively, that must have been an economically important matter to CSEL. 101 The public statements also referred to ascertaining what had occurred so that lessons could be learned from it for the benefit of the whole industry. Whilst this may not be as important as the two purposes just mentioned, it is self-evident that the sharing of information between industry participants would be a significant matter. That is, no doubt, why it was frequently repeated in the public statements. The sharing of such information will prevent other like events and, in an environment where industry participants share information, it is likely that the receipt of information by CSEL from others will assist in it avoiding difficulties which it might otherwise encounter. Even if sharing learnings and information obtained about the incident was not at all a purpose for obtaining the report, and was merely an inevitable consequence (as counsel for CSEL submitted), that does not alter the fact that CSEL identified several non-legal purposes in its statements.

[36]

The commissioning of the report through the solicitors 102 It can be accepted that one purpose for obtaining the report from Dr Brady was to seek legal advice. It is undoubted that CSEL, as the operator and manager of unit C4 was likely to face some potential legal liability following the incident. Indeed, it is not unfair to form a prima facie view that the incident may not have occurred had CSEL performed its contractual obligations. That is not to say that it did fail in its obligations, but merely that, at first instance, it appears that may have been the case. In such circumstances, CSEL would require legal advice in relation to that and a number of other issues, including its legal liability to any party, any liability which it might have under any regulatory regime relating to power generation, and making a claim on any policy of insurance which it might have. 103 In such circumstances, CSEL was well advised to allow the commissioning of the report from Dr Brady by the solicitors, NRFA. At the very least, that accords any report produced the colour of legal professional privilege, whether it was entitled to it or not, and it is likely that this was intended. Similarly, the establishment of a confidentiality regime around the commissioning of the report and the activities of the CSEL staff who were engaged providing information to Dr Brady, served the purpose of protecting legal professional privilege if it existed, as well as maintaining the colour of that privilege. As has been identified above, that regime had the effect of staff labelling emails as being subject to legal professional privilege, even when they were not. On the other hand, the letters of engagement of NRFA and of Dr Brady were carefully written in an attempt to arrogate legal professional privilege to the relevant activities. By themselves, and excluding the evidence of the public statements, it is possible that they would have made any claim of legal professional privilege, unassailable. 104 The evidence also discloses that, at the time of the incident, CSEL was acutely aware of the importance to it of maintaining legal professional privilege in relation to information where that was possible. The Board minutes of 9 June 2021, recorded that Management had arranged that communication channels were to be set up in the same manner as had been put in place in relation to another major piece of litigation in which it was involved, being a class action in relation to its pricing of electricity. 105 Despite that, the evidence surrounding the report and its internal use is not entirely consistent with the predominant purpose being for obtaining legal professional privilege. Mr Bills attempted in his affidavit to assert that the report was commissioned for the purpose of obtaining legal advice though he attached an email of 3 June 2021, which suggests the contrary. A flowchart in the email, which was said to provide two avenues of investigation, one by CSEL internally, and one by Dr Brady which was commissioned by NRFA, reveals that the report by Dr Brady, was to be received by the internal investigator, the Chief Incident Investigation Officer. A perusal of the "Roles & Responsibilities" of the persons involved, and the "Incident Investigation Priorities" show that Dr Brady's report was to be part of the internal investigation of the incident and of the operational response to it. It is difficult to read the document in any different light and, it might be supposed, that including information obtained from Dr Brady's report into the operational response was not only useful, but was expected. That is entirely consistent with CSEL's public statements. 106 Nevertheless, it can be accepted, however, that weight should be given to the fact that Dr Brady was commissioned through CSEL's legal advisers and that processes were put in place to maintain confidentiality in the report process and in any report produced. These matters favour the conclusion that legal professional privilege exists in the report.

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The weighing of the evidence 107 A situation similar to the present arose before Beach J in Robertson v Singtel Optus. In that case, the applicants sought discovery of documents relating to the production of a report by Deloitte Touche Tohmatsu (Deloitte) for the Optus respondents (Optus) in relation to a data breach. Optus claimed legal professional privilege in relation to the report and associated documents. When the cyber attack occurred, the in-house General Counsel considered that Optus might be subject to a range of regulatory and legal actions arising from it. They included regulatory investigations, civil penalty prosecutions and class actions, amongst others. In the days following the cyber attack, Optus engaged an external law firm, Ashurst, to provide legal advice in relation to such matters. It made the occurrence of the cyber attack public and was immediately contacted by regulatory authorities and individuals making complaints and threatening legal action. Following this, Ashurst briefed counsel to provide legal advice in relation to several aspects of Optus' liability. The General Counsel considered that it was prudent to obtain an independent and external report in relation to the data breach, because it was likely that it would be needed for the purposes of ascertaining the legal liability of Optus in relation to any claims. He was concerned from the outset that the external party providing the report should be engaged through Optus' retained legal advisers, who would be able to identify that which was required from the report, so that it could be most suitably used in defending the several potential legal threats which Optus faced. 108 As occurred in the present case, Optus made public statements about the appointment of Deloitte to conduct an "independent and external review" of the data breach and of Optus' systems, controls and processes. It was said that the review would "play a crucial role in the response to the incident for Optus, as it works to support its customers." Optus also indicated that it was determined to find out what went wrong with its systems and said: This review will help ensure that we understand how it occurred and how we can prevent it from occurring again. It will help inform the response to the incident for Optus. This may also help others in the private and public sector where sensitive data is held and risk of cyberattack exists. 109 Beach J noted that Optus' public statements did not mention that the report had been recommended by its lawyers or that it was being obtained for purposes relating to the receipt of legal advice. 110 It is relevant that Optus' internal documents indicated that the appointment of Deloitte was for broader purposes than merely the acquiring of legal advice and a letter of engagement, which was prepared by Deloitte, asserted that the purpose of its review was for purposes other than assisting Ashurst to provide legal advice. Further, subsequent to the engagement of Deloitte, Optus made a further public statement which indicated that the review was being undertaken for the purpose of preventing cyber attacks in the future and to share that information with all companies. Thereafter, Ashurst put in place protocols with Deloitte for the ostensible purposes of claiming and protecting legal professional privilege in the preparation of the review and the review itself. 111 In his reasons, Beach J noted that the evidence of the General Counsel spoke of the engagement of Deloitte and the review being done for the purposes of obtaining a report to be used in the provision of legal advice. However, that did not sit well with Optus' public statements. It is noted that the evidence before his Honour about the internal machinations of Optus and its purpose in obtaining the review by Deloitte was somewhat vague. Conversely, in the present case, the corresponding evidence is of a substantially greater quality. 112 After articulating the principles relating to legal professional privilege, some of which are identified earlier in these reasons, his Honour rejected the contention that the Deloitte report was obtained for the dominant purpose of obtaining legal advice or for use in litigation. Whilst one purpose was that of obtaining legal advice, there were other purposes including identifying the root causes of the cyberattack for management purposes and rectification, as well as for reviewing Optus' management of cyber risk in relation to its policies and processes. This was particularly clear from the public statements made by the company which emphasised that the review was to identify the cause of the incident so that rectification could be carried out to prevent it happening again. 113 After assaying the evidence, his Honour concluded that he could not determine what was the dominant purpose of obtaining the review from Deloitte, but he did conclude (at [166]) that Optus had not satisfied the court that "the requisite dominant legal purpose can be distilled from the multiplicity of purposes in play". It had not, therefore, discharged the onus of establishing its claim to privilege. 114 In the present matter, CSEL's internal documents were more carefully directed to characterising the acquisition of the report as being for the dominant purpose of obtaining legal advice than was the case in Robertson v Singtel Optus. On the other hand, as has been identified, it is apparent that the report's findings were to feed into CSEL's internal considerations as to how the incident with unit C4 occurred. Importantly, here, there was no effective attempt by CSEL to diminish the public statements made about the purposes of obtaining a report from Dr Brady. On the contrary, they were asserted as being true. Those statements asserted several other purposes for obtaining the report, and nothing was said that one of those purposes was so that legal advice could be obtained. As in Robertson v Singtel Optus, the publicly stated purposes for engaging Dr Brady were the antithesis of his report being acquired for the purposes of obtaining legal advice. 115 It is important that some of the public statements were made by Mr Bills, the then CEO of CSEL, who was in a position to know the purposes for which the report was being obtained. In his public statements he identified a range of purposes, none of which were for the purpose of obtaining legal advice but in his affidavit, he appeared to suggest that the only motivating purpose of the report was for obtaining legal advice. His attempt to reconcile the two positions is meritless and particularly in light of CSEL's resolute adherence to the truth of the public statements. 116 Statements were made also by Mr Soorley, as the Chairman of the Board of CSEL, to the effect that the purposes of engaging Dr Brady were to ascertain how the incident occurred, so that CSEL can learn from it, so that improvements can be made for the safety of workers and for the protection of plant, and that findings of the investigation can be published so that others in the industry can share the lessons learned. These statements were made in CSEL's annual reports for 2021 and 2022 which were apparently prepared and delivered in accordance with s 120 of the Government Owned Corporations Act 1993 (Qld). It is again noteworthy that no mention was made in either report of the legal purposes. 117 Further, Minister de Brenni released Mr Bills' media release indicating that the purpose of the report was to find out what went wrong and so that protections for workers and plant can be put in place. He also expressed his private view that the report was to ensure that such an event does not recur anywhere again. 118 Not only are these statements accepted as being true, they reveal purposes which were self-evidently important for CSEL and that is emphasised by the fact that CSEL felt compelled to publicly articulate them and did so repeatedly. 119 Though the engagement of Mr Brady is clothed in the accoutrement of legal professional privilege, in that there is evidence suggesting that his report was to be for the dominant purpose of obtaining legal advice, the array of other publicly espoused purposes advanced by persons who were in a position to know the truth, renders it impossible to conclude that the purpose of obtaining legal advice or for being used in legal proceedings was the dominant purpose. As was the case in Robertson v Singtel Optus, the making of public statements about the purpose of obtaining a report of this nature cannot be ignored. 120 This is not a case where the purposes of the report other than for provision to lawyers for advice can be said to be subsidiary to the dominant privileged purpose. So much is clear from CSEL's public statements about the use to which the report was to be put. In the context of those statements, it is a matter most stark that the purpose of the report being used for obtaining legal advice was not mentioned. 121 The fact that the sharing of information arising from the Brady report was to occur by the preparation of another report does not alter the above conclusions. On the contrary, it strengthens them. It demonstrates that at least one of the non-privileged purposes was to generate information for inclusion in a public report about the causes of the incident with unit C4. Whilst it may have been the intention to keep Dr Brady's report confidential from the public, that does not diminish one of the purposes of the report being to provide information to other industry participants.

[38]

Conclusion in relation to the Brady reports 122 In these circumstances, legal professional privilege does not attach to either any report of Dr Brady or the documents surrounding its production including correspondence and letters of instruction. 123 Although counsel for CEPL and CSEL suggested that reaching a finding that legal professional privilege does not attach to the Brady report would require the Court to reject the sworn and unchallenged evidence of Mr Bills and others, that is not necessarily true. The core issue in the present case was whether CSEL sufficiently met its onus of establishing that the dominant purpose of the Brady report is the obtaining of legal advice. As the Full Court in Singtel Optus Pty Ltd v Robertson [2024] FCAFC 58 recently stated (at [54]), to determine whether the evidence establishes that the legal purpose is dominant, it is necessary to consider the objective probabilities on the totality of the evidence, having proper regard to both what CSEL's affidavit evidence says, as well as what it does not say or explain. In addition, CSEL and CEPL agreed that no Browne v Dunn point would be taken by reason of the absence of cross-examination. Having done so, they could not complain if objective evidence is favoured over their witnesses' sworn testimony. 124 Notwithstanding the subjective evidence of the solicitors who commissioned the report (including that of Mr Bills as the then CEO) and the documents surrounding Dr Brady's engagement, the substantial number of public statements as to CSEL's non-legal purposes for commissioning the report demonstrate the presence of such significant non-legal purposes that there is insufficient evidence on which to be satisfied that the legal purpose was dominant. In particular, CSEL's evidence did not adequately explain or contextualise the non-legal purposes as opposed to the legal purpose to thereby establish that the legal purpose was CSEL's dominant purpose. 125 Given the foregoing, it is not necessary to consider Sev.en's contention that any privilege attaching to the reports has been waived, although it is difficult to comprehend how that may have been the case.

[39]

Privilege in relation to the draft reports 126 Once it is determined that legal professional privilege does not exist in Dr Brady's report, it generally follows that it does not exist in any of his draft reports. 127 The evidence shows that Dr Brady provided drafts of his reports or drafts of what would or will become his report, to persons within CSEL who had the appropriate technical, operational and organisational expertise to provide feedback. It is also apparent that Clayton Utz, on behalf of CSEL, considered the relevance of Dr Brady's findings and opinions in these drafts, to issues relating to insurance claims. The drafts in question were provided electronically and in a manner that they remained confidential to a limited number of employees of CSEL who had agreed to a protocol to ensure that confidentiality. The Board of CSEL were also provided with drafts of the report so that instructions could be provided. 128 It was submitted that these matters disclosed that the dominant, prevailing or most influential purpose of communications arising from Dr Brady's investigations was so that NRFA could provide legal advice to CSEL on the unit C4 incident. 129 The evidence indicates that the provision of "drafts" of Dr Brady's reports was in fact the provision of parts of the as yet incomplete report. That is, copies of portions of the draft report were sent as described above and it does not appear that a draft of the full report has been circulated. 130 In some instances, parts of the report were sent by Dr Brady to NRFA which passed them on to technical personnel at CSEL who would provide feedback and check for factual and technical accuracy. The mere fact that these parts passed through NRFA or its document management protocols did not cause legal privilege to attach to them. The provision of these parts of the report occurred only for the purpose of the production and completion of the report as a whole which, as has been found, is not privileged. 131 In some other instances, parts of Dr Brady's report were given or sent to NRFA for the purpose of obtaining technical instructions from CSEL. The evidence is that CSEL would provide instructions to NRFA which, in turn, would provide instructions to Dr Brady. Again, the documents in question do not attract legal professional privilege merely because they brush the solicitor's sleeve. As any report of Dr Brady does not have legal professional privilege, neither does correspondence relating to its completion, even if that correspondence passed through the hands of the legal representatives. 132 It seemed to be suggested that some parts of Dr Brady's report were given to or accessed by NRFA and retained counsel for the purpose of providing particular legal advice. Though the evidence in relation to that is meagre, such documents of themselves, being the particular copies given to legal advisers, and any communications of them, would attract legal professional privilege. That is not in the least because they are likely to reveal the nature of the legal advice which is being sought. This, however, does not mean that the original of the copies given to the legal advisers have the same immunity. They, by themselves, or as part of a larger report do not have the same characteristic as the copy submitted for the purpose of allowing legal advice to be given. 133 It can also be accepted that since his engagement, the communications with Dr Brady have been through NRFA which has kept in place measures to retain confidentiality and separation from CSEL. As was submitted on behalf of CSEL, the manner in which the investigation was undertaken and set up was akin to the manner in which solicitors commission expert reports in litigation. Though, whilst this is true, Dr Brady was not engaged to provide an expert report for use in litigation. That was expressly disavowed in his engagement letters. Indeed, his report was to be used for purposes other than him giving evidence in Court. In this case, given that Dr Brady's report is not or will not be privileged, the communications with him will also not be privileged, despite passing through the solicitors.

[40]

Privilege in relation to communications regarding the NBIO process 134 CSEL and CEPL also claim legal professional privilege over communications between Clayton Utz, CSEL, CEPL and McGrathNicol which were said to be for the sole purpose of giving legal advice to CSEL and CEPL in relation to non-binding indicative officers to acquire certain assets of IGPC. These relate to particular documents in each of the subpoenas served on CSEL, CEPL and McGrathNicol. 135 The evidence in relation to the privilege asserted in these documents show that Clayton Utz acted for CSEL and CEPL in relation to non-binding indicative offers made by them for certain of IGPC's assets with the acquisition of the assets being by way of a DOCA. It is asserted that McGrathNicol was retained by Clayton Utz for the purpose of providing CSEL and CEPL with legal advice in relation to offers which were submitted by them to the general purpose administrators in February 2024. In his affidavit Mr Cook deposes that the documents responding to the description in the subpoena served on McGrathNicol are communications passing to or from Clayton Utz for the purpose of obtaining legal advice in respect of the non-binding indicative offers and the terms of any associated deed of company arrangement, which includes the potential identity of the deed administrators. Certain documents are also said to contain commercially sensitive information. 136 This is sought to be supported by an affidavit of Mr Perrett of Clayton Utz who sets out a list of the documents which respond to the descriptions in the subpoenas. There is a brief description of the document, its author, the persons it was sent or copied to, its date and a claim for privilege. 137 The evidence in relation to the claim for privilege is very thin. The highest that it reaches is in paragraphs 7 to 13 of Mr Cook's affidavit of 15 May 2024. All that discloses is that the engagement of McGrathNicol by Clayton Utz was said to be so that the latter could provide legal advice to CSEL and CEPL. He then says that the documents in the list of documents were "for the purpose of Clayton Utz providing legal advice, or receiving instructions for the purpose of providing legal advice". An affidavit of Mr Jonathan Henry of McGrathNicol was also relied upon, which deposes that certain of the documents were: … created for the purpose of internal consideration within McGrathNicol of privileged communications received by McGrathNicol for the purpose of acting as financial advisor in relation to Clayton Utz providing legal advice to [CSEL] and CEPL. 138 This evidence falls well short of "focussed and specific evidence" in respect of each communication. It only constitutes mere generalised assertion and verbal formulae. There are no facts identified from which it can be seen that the claim of privilege is rightly made in respect of each document. There is an absence of facts from which it is possible to discern the matters which reveal the necessary characteristics of the documents in dispute. It follows that there is insufficient evidence to substantiate the claim for privilege in relation to these documents. 139 In this analysis it is relevant that documents produced by an accounting firm are likely to provide accounting information, opinion or advice. Of themselves, they are likely to provide accounting services rather than legal advice. It matters not that the accounting advice is sent to solicitors who might incorporate it into a document which becomes an offer to third parties. The work of an accountant can only be privileged if it has been prepared for the dominant purpose of being used for the provision of legal advice. The funnelling of correspondence through a firm of solicitors does not generate legal professional privilege when its purpose is for matters other than giving or receiving legal advice. 140 In relation to these categories of documents, neither CSEL nor CEPL have discharged their onus of showing that legal professional privilege attaches to the documents.

[43]

QUD 185 of 2024 Defendants Second Defendant: RICHARD J HUGHES IN HIS CAPACITY AS JOINT AND SEVERAL ADMINISTRATOR OF IG POWER (CALLIDE) PTY LTD (ADMINISTRATORS APPOINTED) (SPECIAL PURPOSE ADMINISTRATORS APPOINTED) ACN 082 413 885 Third Defendant: GRANT D SPARKS IN HIS CAPACITY AS JOINT AND SEVERAL ADMINISTRATOR OF IG POWER (CALLIDE) PTY LTD (ADMINISTRATORS APPOINTED) (SPECIAL PURPOSE ADMINISTRATORS APPOINTED) ACN 082 413 885 Fourth Defendant: JOHN RICHARD PARK IN HIS CAPACITY AS JOINT AND SEVERAL SPECIAL PURPOSE ADMINISTRATOR OF IG POWER (CALLIDE) PTY LTD (ADMINISTRATORS APPOINTED) (SPECIAL PURPOSE ADMINISTRATORS APPOINTED) ACN 082 413 885 Fifth Defendant: BENJAMIN PETER CAMPBELL IN HIS CAPACITY AS JOINT AND SEVERAL SPECIAL PURPOSE ADMINISTRATOR OF IG POWER (CALLIDE) PTY LTD (ADMINISTRATORS APPOINTED) (SPECIAL PURPOSE ADMINISTRATORS APPOINTED) ACN 082 413 885 Sixth Defendant: IG POWER HOLDINGS LIMITED ADMINISTRATORS APPOINTED) ACN 082 413 876 Seventh Defendant: RICHARD J HUGHES IN HIS CAPACITY AS JOINT AND SEVERAL ADMINISTRATOR OF IG POWER HOLDINGS LIMITED (ADMINISTRATORS APPOINTED) ACN 082 413 876 Eighth Defendant: GRANT D SPARKS IN HIS CAPACITY AS JOINT AND SEVERAL ADMINISTRATOR OF IG POWER HOLDINGS LIMITED (ADMINISTRATORS APPOINTED) ACN 082 413 876 Ninth Defendant: IG POWER MARKETING PTY LIMITED (ADMINISTRATORS APPOINTED) ACN 082 413 867 Tenth Defendant: RICHARD J HUGHES IN HIS CAPACITY AS JOINT AND SEVERAL ADMINISTRATOR OF IG POWER MARKETING PTY LIMITED (ADMINISTRATORS APPOINTED) ACN 082 413 867 Eleventh Defendant: GRANT D SPARKS IN HIS CAPACITY AS JOINT AND SEVERAL ADMINISTRATOR OF IG POWER MARKETING PTY LIMITED (ADMINISTRATORS APPOINTED) ACN 082 413 867 Twelfth Defendant: IG ENERGY HOLDINGS (AUSTRALIA) PTY LIMITED (ADMINISTRATORS APPOINTED) ACN 090 996 142 Thirteenth Defendant: RICHARD J HUGHES IN HIS CAPACITY AS JOINT AND SEVERAL ADMINISTRATOR OF IG ENERGY HOLDINGS (AUSTRALIA) PTY LIMITED (ADMINISTRATORS APPOINTED) ACN 090 996 142 Fourteenth Defendant: GRANT D SPARKS IN HIS CAPACITY AS JOINT AND SEVERAL ADMINISTRATOR OF IG ENERGY HOLDINGS (AUSTRALIA) PTY LIMITED (ADMINISTRATORS APPOINTED) ACN 090 996 142 Interested Person: CALLIDE ENERGY PTY LTD ACN 082 468 746 Interested Person: CS ENERGY LIMITED ACN 078 848 745 Interested Person: SEAN BRADY Interested Person: ARCADIA ENERGY TRADING PTY LTD ACN 121 803 638

Asahi Holdings (Australia) Pty Ltd v Pacific Equity Partners Pty Ltd

At a glance

Court

Decision date

Before

Source

Judgment (43 paragraphs)

Parties

Legislation Cited (3)

Cases Cited (14)

Cited By (2)