ASIC v Rich

Civil Procedure Act 2005 (NSW) s 68 LEGISLATION CITED : Corporations Act 2001 (Cth) Part 5.9 Evidence Act 1995 (NSW) ss 117, 118, 119, 122 Uniform Civil Procedure Rules, Rule 1.9

ASIC v Rich [2004] NSWSC 1089 AWB Ltd v Cole [2006] FCA 571 Balabel v Air India [1988] Ch 317 Commissioner Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501 Commissioner of Taxation (Cth) v Pratt Holdings Pty Ltd (2006) 225 ALR 266 Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543 DSE (Holdings) Pty Ltd v InterTAN Inc (2003) 135 FCR 151 Esso Australia Resources Ltd v Commission of Taxation (1999) 201 CLR 49 Esso Australia Resources Ltd v FCT (1999) 201 CLR 49 General Manager, WorkCover Authority of NSW v Law Society of NSW [2006] NSWCA 84 Grant v Downs (1976) 135 CLR 674 Grant v Downs (976) 135 CLR 679 Hawksford v Hawksford [2005] NSWSC 796 Ho v Powell (2001) 51 NSWLR 572 CASES CITED : In the matter of Bauhaus Pyrmont Pty Ltd (in liq) [2006] NSWSC 543 In the matter of Southland Coal Pty Ltd (recrs & mgrs apptd) (in liq) [2006] NSWSC 184; (2006) 58 ACSR 113) Kennedy v Wallace (2004) 142 FCR 185 Meteyard v Love [2005] NSWCA 444; (2005) 56 ACSR 487) Mitsubishi Electric Australia Pty Ltd v Victorian Workcover Authority [2002] 4 VR 335 National Crime Authority v S (1991) 100 ALR 151 Pratt Holdings Pty Ltd v Commissioner of Taxation (2004) 136 FCR 357 Re Bufalo Corp Pty Ltd (No 2); ex parte Prime Life Corp Ltd (2002) 7 VR 350 Re Doran Constructions Pty Ltd (in liq) (2002) 194 ALR 101 Re Southland Coal Pty Ltd [2005] NSWSC 259 Seven Network Ltd v News Ltd [2005] FCA 1342 The Sagheera [1997] 1 Lloyd's Rep 160 Three Rivers District Council v Governor and Company of the Bank of England (No 6) [2005] 1 AC 610 Vardas v South British Insurance Company Ltd [1984] 2 NSWLR 652 Waterford v Commonwealth (1987) 163 CLR 54

Andrew John Love, Peter Ivan Felix Geroff and Alan Edward Lewis in their capacity as receivers and managers of Southland Coal Pty Ltd (recs & mgrs apptd)(in liq) (P, A) Alan Meteyard (D1, R1) Lawrence Holland (D2, R2) Andrew Bart (D3) PARTIES : Guy Raynal (D4) Bruce McKensey (D5) Crawford & Company (Australia) Pty Ltd (D6) McKensey Mining Services Pty Ltd (D7) QBE Insurance (Australia) Ltd (D8, R3)

COUNSEL : R G Forster SC and J A Soars (A) M Walton SC & R S Hollo (Rs)

SOLICITORS : Henry David York (A) Wotton & Kearney (Rs)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

1091/05 IN THE MATTER OF SOUTHLAND COAL PTY LTD (RECEIVERS & MANAGERS APPOINTED)(IN LIQ) JUDGMENT 1 HIS HONOUR: The receivers and managers of the property and undertaking of Southland Coal Pty Ltd ("the Receivers") have caused examination summonses to be issued against executive officers of QBE Insurance (Australia) Ltd ("QBE") and certain other entities ("the QBE Parties"). Examinations are scheduled for late September. The Receivers are seeking production of documents in connection with the examinations. Production has been resisted by the QBE Parties. On 30 June 2006 I delivered reasons for judgment on the Receivers' application for production of documents (In the matter of Southland Coal Pty Ltd (recrs & mgrs apptd) (in liq) [2006] NSWSC 184; (2006) 58 ACSR 113). 2 One of the submissions of the QBE Parties was that the court should not make orders for production unless provision is made in the orders excluding privileged documents. They contended that many of the documents sought by the Receivers were protected by legal professional privilege. I held (at [80]) that the correct course, in a case such as this, where production is fully contested and the parties are legally represented, is that the court should proceed in accordance with the Uniform Civil Procedure Rules by making unqualified orders for production coupled with liberty to apply. The liberty to apply could be exercised, if needed, to obtain the court's directions, the objective being to bring forward contested privilege claims for resolution, after specific documents have been identified and particular claims for privilege have been made in respect of the identified documents. 3 On 7 July 2006 I made orders for production against Lawrence Holland, Alan Meteyard and QBE Insurance (Australia) Ltd returnable on 17 July 2005, with affidavits in support of any claim for privilege to be served by the same day. Some documents were produced but in respect of many documents, the QBE Parties claimed privilege either for the whole document or part of it. Brendan Thomas Hammond, an employed solicitor acting for the QBE Parties, has sworn two affidavits (14 July 2006 and 28 August 2006) giving evidence as to the grounds upon which the privilege is claimed. The Receivers challenge those claims for privilege in relation to certain specific documents, and seek orders for access to the documents. The application for access came before me for hearing on 1 September 2006. These are my reasons for judgment on that application. 4 At an earlier stage in this dispute, when the matter was before the Court of Appeal (Meteyard v Love [2005] NSWCA 444; (2005) 56 ACSR 487), the evidence indicated that the orders for production then in issue would require the production of a very large quantity of documents, and a claim for privilege would be made, and might well be sustainable, in respect of the majority of the documents. However, the volume of documents produced subject to a contested claim for privilege is now quite small. This may be partly because the Receivers significantly narrowed the scope of their demand for production during and prior to the hearing that led to my 30 June 2006 judgment. There were also some negotiations between the parties that served to limit the number of documents in dispute. By the time of the hearing on 1 September 2006 there were only 16 disputed documents. 5 The QBE Parties have either produced those documents in redacted form, or have declined to produce them, in each case for the reasons given in Mr Hammond's affidavits. They have tendered the disputed documents in two bundles. Bundle 1 (Exhibit R1) contains the documents supplied to the Receivers, and Bundle 2 (Exhibit R2) comprises the full, unredacted bundle of disputed documents. Exhibit BTH 2 is a table giving brief descriptions of the documents and indicating (inter alia) whether privilege is claimed over the whole or part. 6 The QBE Parties invited me to compare the two versions of the documents and make rulings, document by document, on the basis of what I had seen, applying the legal principles for which they contended. The Receivers submitted that I should decide in their favour on the ground that the QBE Parties have failed to prove adequate grounds for their claims for privilege, but they submitted that if the court was not prepared to proceed on that basis, this would be an appropriate case for the court to exercise its discretion to inspect each of the disputed documents in respect of which sufficient doubt has been raised. 7 The legal principles discussed later in this judgment establish that, when there are contested claims for privilege over documents that are the subject of a subpoena or notice to produce, it may be appropriate for the court to inspect the documents for the purpose of deciding whether they are privileged. This is the case, although the party seeking production is not given the opportunity to see the documents and formulate its submissions accordingly. One of the issues for the court is whether the judge determining the privilege claim is likely to be the judge hearing the case. If so, the best course will frequently be for the rulings on privilege to be made by some other judge. 8 Here, it is unlikely that the eventual proceedings to resolve the dispute between the Receivers and the QBE Parties as to whether QBE's policy responds to Southland's insurance claim will be heard in the Equity Division of this Court. If, unexpectedly, the case comes into the Equity Division, it will be easy for the court and the parties to arrange for it to be heard by some judge other than me. Therefore the constraint, that is normally unwise for the trial judge to inspect documents alleged to be privileged before a ruling is made on them, has no application in this case. 9 This judgment will proceed as follows. First, I shall briefly identify the principles upon which the assessment of the claims for privilege in the present case depends. Second, I shall consider each document, one by one, applying the principles to those documents and giving reasons for my decisions in summary form. My reasons will be in summary form so as to avoid disclosing the contents of documents over which the privilege claim has been sustained. In giving those reasons, I shall first consider whether the grounds advanced by Mr Hammond are adequate of themselves to justify a claim for privilege, without inspection of the documents. I shall then give my decision upon the combined basis of Mr Hammond's evidence and my inspection. The former issue is relevant both to the submission by the Receivers that Mr Hammond's evidence fails to discharge the onus of the QBE Parties to establish grounds for privilege, irrespective of inspection, and to the question of costs. Legal principles 10 It is important to remember the statutory context in which the questions for privilege arise in the present case. When a party, who receives a subpoena or order to produce documents issued by this court, wishes to resist production or access on the ground of legal professional privilege, the civil procedure legislation and the uniform procedural rules of New South Wales make applicable the statutory privilege provisions of the Evidence Act. 11 The orders for production were issued under s 68 of the Civil Procedure Act 2005 (NSW). Rule 1.9(3) of the Uniform Civil Procedure Rules entitles a person to object to producing a document on the ground that it is a privileged document, and subrule (4) says that a person objecting may not be compelled to produce a document unless and until the objection is overruled. Subrule (5) makes provision for the court to receive evidence and allow cross-examination, and to require the person objecting to produce a document, for the purpose of ruling on the objection. "Privileged document" is defined in the Dictionary to the UCPR to mean a document that contains "privileged information", in turn defined, relevantly, to mean information of which evidence could not, by virtue of the operation of Division I of Part 3.10 of the Evidence Act 1995 (NSW), be adduced in the proceedings over the objection of any person. Sections 118, 119 and 122 are in Division I of Part 3.10. 12 Some judicial pronouncements about privilege are directed to privilege at general law rather than under the Uniform Evidence Act, either because the question arises as a matter of admissibility of evidence in a legal proceeding in a court that is not subject to the Uniform Evidence Act, or because the question is whether privilege may be asserted against some non-curial compulsory production process (such as the statutory power of a regulator or Royal Commissioner to require production of documents) which does not bring into play the Uniform Evidence Act principles. Cases about legal professional privilege in such contexts may not be wholly applicable in the Evidence Act context. 13 The claims for privilege made by the QBE Parties are under s 118 (legal advice), s 119 (litigation) and s 122(5) (disclosure to another person to whom the same lawyer is providing legal services). The parties respectively put before me some formulations of legal principles about the scope and application of the sections, that were (they said) germane to the present case. For the most part, there was no disagreement between them about the formulations of the principles, but there was disagreement on three issues. I shall first set out the principles which were common ground, and then consider the matters in contention. 14 A formulation of the uncontested principles about client legal privilege which the parties drew to my attention, adequate for present purposes, is set out in paras (a)-(j) below.

(a) Rule of substantive law - "Legal professional privilege is a rule of substantive law which may be availed of by a person to resist the giving of information or the production of documents which would reveal communications between a client and his or her lawyer made for the dominant purpose of giving or obtaining legal advice and the provision of legal services, including representation in legal proceedings" ( Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543, at [9] per Gleeson CJ, Gaudron, Gummow and Hayne JJ). The "rule of substantive law" is, of course, affected by the terms of the Evidence Act where the Act applies.

(b) Two-stage process - Assessing a claim for privilege under s 118 or s 119 is a two-stage process. The first step is for the court to be satisfied that the communication or contents, disclosure of which is sought to be prevented, satisfies the requirements set out in s 118 or s 119 or both sections. The second step is for the court to be satisfied that the production of the document or the unredacted part of it would result in the disclosure of a confidential communication or the confidential contents of a document.

(c) Onus - The party claiming privilege bears the onus of establishing the basis of the claim and the party seeking production does not bear the onus of excluding privilege ( Mitsubishi Electric Australia Pty Ltd v Victorian WorkCover Authority (2002) 4 VR 332 at 337; ASIC v Rich [2004] NSWSC 1089 at [2]; In the matter of Bauhaus Pyrmont Pty Ltd (in liq) [2006] NSWSC 543 at [24]). The party claiming privilege must establish the facts from which the court can determine that the privilege is capable of being asserted ( National Crime Authority v S (1991) 100 ALR 151 at 159). The facts are to be proved on the balance of probabilities (Evidence Act, s 142).

(d) Legal advice - Section 118 protects certain confidential communications and the contents of confidential documents made or prepared for the dominant purpose of a lawyer providing legal advice to a client. In this context, "legal advice" is understood in a pragmatic sense. In General Manager, WorkCover Authority of NSW v Law Society of NSW [2006] NSWCA 84, at [77] to [78], McColl JA quoted, evidently with approval, the observation of Taylor LJ in Balabel v Air India [1988] Ch 317, at 330, that "legal advice is not confined to telling the client the law; it must include advice as to what should prudently and sensibly be done in the relevant legal context". This assumes, of course, that the advice is professional advice given by a lawyer in his or her capacity as such. Taylor LJ's dictum was applied in Three Rivers District Council v Governor and Company of the Bank of England (No 6) [2005] 1 AC 610, at 648 per Lord Scott of Foscote, 657 per Lord Rodger of Earlsferry, and 678 per Lord Carswell. There the House of Lords held that the Bank was entitled to claim legal professional privilege in respect of communications with its solicitors not only concerning its legal rights and obligations, but also concerning the presentation of its evidence to an inquiry so as to minimise criticism. See also DSE (Holdings) Pty Ltd v InterTAN Inc (2003) 135 FCR 151; AWB Ltd v Cole [2006] FCA 571.

(e) Whether disclosure would result from adducing the evidence - Under both s 118 and s 119 the evidence is not to be adduced if adducing evidence would result in disclosure of certain confidential communications or the contents of certain confidential documents. The question is whether what is disclosed by adducing the evidence explicitly reveals the confidential communication or the contents of the confidential document, or supports an inference of fact as to the content of the confidential communication or document, which has a definite and reasonable foundation. Disclosure does not occur if what is adduced in evidence merely causes the reader to "wonder or speculate whether legal advice has been obtained and what was the substance of that advice" ( AWB Ltd v Cole at [133], per Young J).

(f) Communications between third party and client - Communications by a third party with a client, not directed to the client's lawyers, may be protected by legal advice privilege, if the function of the communications is to enable the client to obtain legal advice and the third party is so implicated in communications made by the client to its legal adviser as to bring the third party's work product within the rationale of the privilege ( Pratt Holdings Pty Ltd v Commissioner of Taxation (2004) 136 FCR 357, at [41] per Finn J and [105] per Stone J).

(g) Purpose is a question of fact - The purpose for which a communication is made or a document is created is a question of fact ( Esso Australia Resources Ltd v Commission of Taxation (1999) 201 CLR 49; Waterford v Commonwealth (1987) 163 CLR 54; Bauhaus at [24]). Purpose and intended use must be determined objectively, having regard to all of the evidence ( AWB Ltd v Cole at [122]). Purpose cannot be proved by mere assertion by a third party. Normally (but not always) the relevant purpose is that of the maker of the communication for which privilege is sought.

(h) Dominant purpose - The dominant purpose of the communication must be determined objectively, having regard to all the circumstances in which the communication was made and its nature ( Grant v Downs (1976) 135 CLR 674 at 689, per Stephen, Mason and Murphy JJ; Commissioner of Taxation (Cth) v Pratt Holdings Pty Ltd (2006) 225 ALR 266, at [30] per Kenny J; AWB Ltd v Cole [2006] FCA 571 at [110], per Young J). What is required is an objective view of all of the evidence, taking into account the evidence not only of the author of the communication but of the person or authority under whose direction the document was prepared. If the document would have been prepared irrespective of the intention to obtain professional legal services, it will not satisfy the test ( Grant v Downs , at 688, per Stephen, Mason and Murphy JJ). The existence of an ancillary purpose is not fatal to a claim for privilege, but if there are two purposes of equal weight, it is unlikely that one would dominate the other - Stephen Odgers, Uniform Evidence Law, 6th ed at [1.3.10500] to [1.3.10520].

(i) A claim for privilege will not succeed if all that emerges is that the document is a commercial document or has been brought into existence in the ordinary course of business - In these circumstances, unless the court is satisfied that the dominant purpose is that identified in ss 118 or 119, no privilege applies. It is necessary to distinguish between documents brought into existence to communicate legal advice, and documents brought into existence to allow the party seeking to maintain privilege to invite comment on commercial alternatives available to it or to allow it to make a decision in the ordinary course of its insurance business as to whether or not to grant indemnity. The former may be privileged, but the latter is not, as it does not satisfy the dominant purpose test (see Seven Network Ltd v News Ltd [2005] FCA 1342 at [27]). The nature or character of the documents may illuminate the purpose ( Seven Network at [38]). Passages from Sutton's Insurance Law in Australia (3rd ed, LBC, 1999 at [15.98]) were cited with approval in Re Southland Coal Pty Ltd [2005] NSWSC 259 at [70] and [71], per Young CJ in Eq, as follows: "Documents created so that the insurer can be informed generally and can in the ordinary course of business investigate any claim that might be made before deciding what to do … are not privileged in contrast to the situation where the reports are prepared at a time when litigation is either likely or anticipated." (See also Vardas v South British Insurance Company Ltd [1984] 2 NSWLR 652, 656.)

(j) Failure to call relevant witnesses - If the party asserting privilege over a communication has the capacity to call direct evidence on the issue of purpose, but does not do so, the tribunal of fact is entitled to infer that this evidence would not have assisted the person's case ( Ho v Powell (2001) 51 NSWLR 572 at 576; Hawksford v Hawksford [2005] NSWSC 796 at [19], per Campbell J).

(k) Inspection by the court - The court has the power to inspect the document itself to determine a claim for privilege, especially where differing kinds of claim about the basis of privilege are made ( Grant v Downs (976) 135 CLR 679 at 689; Hawksford v Hawksford [2005] NSWSC 796 at [21], per Campbell J). It should not be hesitant to exercise that power ( Esso Australia Resources Ltd v FCT (1999) 201 CLR 49 at 70, per Gleeson CJ, Gaudron and Gummow JJ). That is especially the case where the judge hearing the application relating to privilege is not the trial judge. 15 The three matters of principle that were contested related, respectively, to whether legal professional privilege protects communications rather than documents and if so, the consequences of that proposition; whether the court's determination of the privilege issues is a final determination on which only admissible evidence may be received; and whether dominant purpose can be proved by evidence from a lawyer.

Communications and documents 16 The QBE Parties submitted that legal professional privilege protects communications, not documents as such. They cited the observation of Dawson J in Commissioner Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501 at 515, that "to say that a document is privileged is merely a shorthand way of saying that the communication constituted by the document is privileged" (see also Toohey J at 525, Gaudron J at 543, McHugh J at 552 and Gummow J at 569; and see AWB Ltd v Cole, at [102] per Young J). Propend was a case arising under the search warrant provisions of s 10 of the Crimes Act 1914 (Cth), rather than in circumstances governed by the Uniform Evidence Act. AWB Ltd v Cole arose under the Royal Commissions Act 1902 (Cth) (see at [25] to [59]), again a situation not governed by the Uniform Evidence Act. 17 The legal propositions in these decisions must be received with circumspection in cases where the Evidence Act applies. Both s 118 and s 119 literally protect not only certain confidential communications, but also the contents of certain confidential documents (whether delivered or not). If, therefore, a document satisfies the requirements of either section - if, that is, it is a confidential document that was prepared by the requisite person for the requisite dominant purpose - the contents of the document are not to be disclosed, regardless of whether those contents have been or are to be communicated. To say that the statutory provisions protect the "communication constituted by the document", rather than the document as such, is correct only in the sense that the privilege attaches to the information contained in the document (whether communicated or not) rather than to the piece of paper upon which that information is recorded. 18 This difference in content or emphasis, between the Evidence Act provisions and the observations in Propend and AWB Ltd v Cole, may have no significant practical consequences. Take two examples. First, a confidential draft pleading or draft witness statement prepared for the requisite dominant purpose is protected from disclosure under both the Evidence Act and the general law, whether or not the draft reflects some communication that has occurred or is a wholly uncommunicated draft. Under the Evidence Act the result flows from the simple application of the statute, which applies to the contents of the confidential document "whether delivered or not". Under the general law, as propounded in Propend and AWB Ltd v Cole, the contents of the document are protected if their disclosure would reveal (or allow the reader to infer) the content or substance of a privileged communication that has been incorporated into the draft (AWB Ltd v Cole at [132]). Arguably the contents are also protected if the confidential draft, having been prepared for the purpose of legal advice or proceedings, is intended to be communicated in pursuit of that purpose. 19 The second example relates to copies of documents. Under the general law, legal professional privilege can attach to copies of non-privileged documents, if the copy is brought into existence for the dominant purpose of providing legal advice or providing professional legal services relating to proceedings or anticipated proceedings (Propend, at 507 per Brennan CJ, 544 per Gaudron J, 553-4 per McHugh J, 571 per Gummow J, and 587 per Kirby J; AWB Ltd v Cole at [103] per Young J). Under the Evidence Act, if the copy is made by the client or the lawyer for the requisite dominant purpose, its contents are protected from disclosure provided the document is "confidential", a requirement probably satisfied where the copy is made for the purpose of obtaining confidential legal advice. 20 In the present case, the principal significance of the distinction between communications and documents is that some of the disputed documents are e-mails exchanged between officers of QBE or between an officer of QBE and a third party. The issue to be addressed is not whether those e-mails, per se, are privileged, but whether the grant of access to them would result in disclosure or privileged communications such as the provision of legal advice by Wotton & Kearney to their client QBE.

Final or interlocutory determination 21 The Receivers submitted that the court's determination of the privilege issue is a determination on a final basis, and so evidence on the issue is required to be in admissible form. The QBE Parties contended that this is wrong in law. 22 The Receivers relied on the decision of Gyles J in Kennedy v Wallace (2004) 142 FCR 185, at [110] to [118]. In that case a person whose documents had been seized purportedly under search warrant made an application under s 39B(1) and (1A)(c) of the Judiciary Act 1903 (Cth) for return of the documents, claiming that the documents were either subject to legal professional privilege or that they had not been covered by the warrant. The proceeding was, as Gyles J remarked (at [112]), a proceeding to seek to enforce a common law right or immunity, and there was a dispute or controversy between the parties as to whether the applicant was legally entitled to the benefit of the privilege. That was a "matter" within the meaning of s 39B, a decision on which would be the final resolution of the dispute or controversy between the parties. The execution of the warrant was part of an ongoing investigation by ASIC, but nevertheless the issues raised by the application would be finally determined in the present proceeding (at [113]). 23 In the present case, the proceeding is for the examination of certain of the QBE Parties under Part 5.9 of the Corporations Act, and the production of documents is sought for the purposes of the examinations. As I observed in my judgment of 30 June 2006 (at [40]), when used in connection with an examination, the procedure for production of documents is ancillary to the examination process. The applications for orders for production and for access to the documents have been made by interlocutory applications in the examination proceeding. The examinations have yet to be conducted. 24 In Re Doran Constructions Pty Ltd (in liq) (2002) 194 ALR 101, a solicitor called Freeman was served with a summons to produce documents in connection with examinations under Part 5.9 of the Corporations Law, and he objected to production on the ground of legal professional privilege. A Deputy Registrar of this court upheld his claim, and an application was made before Campbell J to review the Deputy Registrar's ruling. Campbell J said (at [128]): "I should make clear the scope of the decision I am making concerning these documents. It is that Mr Freeman has sworn that the documents concerned professional communications between himself and a client other than Doran Constructions. Thus, the documents are prima facie privileged. There is nothing which appears in the evidence before me to show that the privilege is not applicable. This decision is, however, an interlocutory decision. If, on another occasion, another judicial officer were to have evidence which led to a conclusion that in fact no privilege attached, a different conclusion might be arrived at. Hence, the decision I make is not a final decision that the documents are privileged. Rather, it is a decision that the documents need not be produced pursuant to the order for production …". 25 In Re Bufalo Corp Pty Ltd (No 2); ex parte Prime Life Corp Ltd (2002) 7 VR 350, Hansen J referred to Doran at [43]-[44], with apparent approval. Gyles J referred (at [114]) to both Doran and Bufalo Corp without disapproval, but he said that the issue in Doran (and, in substance, in Bufalo Corp) was clearly distinguishable from the case before him, because the jurisdiction being exercised in Doran was the court's supervision of examinations conducted in that court by a liquidator under Part 5.9. 26 In my view the effect of the cases is that the court's determination of matters of privilege, raised in response to orders for production ancillary to examinations under Part 5.9, is an interlocutory rather than final decision. For Gyles J, one of the consequences of the matter before him being a matter for final determination was that evidence as to the issue of privilege was required to be in admissible form, and hearsay evidence should accordingly not be received (at [118]). Since, in the present case, the matter for determination is interlocutory, it is open to the court to follow the practice normally taken when receiving evidence in interlocutory applications.

Lawyer's evidence 27 The Receivers put forward, as one of their relevant legal principles, the statement that "the dominant purpose of a client cannot be proved by evidence from the lawyer". They did not cite authority directly for that proposition. In my opinion the statement is expressed too broadly and categorically. 28 In my opinion, evidence by a lawyer on information and belief about his or her client's motivation in causing a communication to occur, if allowed, will not of itself be sufficient to establish that the dominant purpose of the communication attracts legal advice or litigation privilege. But the lawyer may be in a position to give admissible evidence about the circumstances surrounding the communication, which will suffice, perhaps together with inferences from the document itself, to establish the privilege. Further, the purpose of a communication between a client and a lawyer can in some circumstances be inferred from the purpose of the lawyer's retainer (General Manager, WorkCover Authority of NSW v Law Society of NSW [2006] NSWCA 84, at [85] and [88] per McColl JA, quoting from The Sagheera [1997] 1 Lloyd's Rep 160 at 168, per Rix J); DSE (Holdings) Pty Ltd v InterTAN Inc (2003) 135 FCR 151, at [52] and [58], per Allsop J). 29 In the present case the QBE Parties rely on the affidavit evidence of Mr Hammond. He is an employed solicitor, working under the supervision of Mr Wotton, the partner at Wotton & Kearney who is the solicitor on the record in this proceeding. While in some cases it would be inappropriate for a party claiming privilege to rely on the evidence of an employed solicitor, rather than the partner having carriage of the matter or an officer of the client entity, in the present case my view is that Mr Hammond is an appropriate person to give evidence of the kind he has given. He is clearly closely involved in the day-to-day carriage of the matter, in a position of some responsibility. 30 I reject the submission made on behalf of the Receivers that an adverse inference should be drawn from the absence of direct evidence from the authors of the various documents. Given the context in which privilege issues arise in a case such as this, it is in my view unnecessary for the party claiming privilege to adduce evidence from the author of each document over which the claim is made, especially where there are multiple authors. The process of doing so would, in my opinion, unduly complicate, extend, and render unacceptably expensive, the process of determining privilege issues in connection with liquidator examinations. It would be inimical to the just, quick and cheap resolution of disputes, which it is the court's duty to promote. 31 Mr Hammond's evidence was prefaced by the general statement (affidavit of 14 June 2006 at [1]) that "unless otherwise stated" the facts to which he deposed are within his own knowledge, or are apparent from the files of Wotton & Kearney, or he has become aware of them by reason of assisting Mr Wotton in the day-to-day carriage of the proceeding. In his affidavit of 14 July 2006 he worked his way through the disputed documents and purported to give evidence about the nature of the documents and the grounds of privilege said to attach to their contents. This included evidence about the purpose for which the documents were prepared or the communications were made. In his affidavit of 28 August 2006, he explained that when he referred to the purpose or the dominant purpose of communications, he ascertained that purpose having regard to: · the relevant background against which the communications were created (summarised in my factual findings below); · the nature and terms of the retainer of Wotton & Kearney (about which I have made findings set out below); · his examination of the files of Wotton & Kearney; · his knowledge of the substance of the legal advice conveyed to QBE by the firm and by counsel; · his examination of the files of QBE, including the documents produced; · his conversations with Lawrence Holland of QBE (Mr Holland is a Technical Claims Officer, Property in the Sydney office of QBE, responsible for the day-to-day handling of claims under the policy in the present case); and · the nature, subject matter and terms of the documents that have been produced. 32 The Receivers criticised this presentation of evidence, contending that it was impossible to know, in respect of Mr Hammond's evidence about a particular document, which of the sources of knowledge he was relying on. Having perused Mr Hammond's affidavits, I do not find anything in his general approach that would cause me to exclude the evidence in limine. In my view, however, given the interlocutory nature of the application for access and the determination that I am to make, and the absence of any cross-examination of Mr Hammond in which such matters might have been explored, it is appropriate for me to accept Mr Hammond's evidence on its face. That does not necessarily mean that I shall accept everything he has said, particularly since I shall be able to compare his statements with the unredacted documents. 33 A specific attack on Mr Hammond's evidence was made on the basis that it had failed to establish that the material over which privilege was claimed (documents or parts of documents) did not contain extraneous matter, or if it did, the extraneous matter could not be separated from the privileged matter (citing Seven Network at [33] and Waterford at 66). I agree that it is part of the establishment of proper grounds for privilege for the party claiming privilege to address the question whether there is extraneous material in the documents subject to a privilege claim. I have taken this submission into account in considering each document. However, evidence characterising the document as a whole may suffice to exclude any suggestion that the document contains extrinsic material. 34 I do not regard General Manager, WorkCover Authority of NSW v Law Society of NSW [2006] NSWCA 44 as inconsistent with this approach to extraneous material. There McColl JA (at [73]) said that a confidential communication will attract privilege even if it contains extraneous matter as long as it was prepared for the dominant purpose of giving legal advice. But her Honour cited the Waterford case, in circumstances making it clear that she was not intending to depart from the relevant statements in that case (except to the extent that the Waterford case was decided at a time when the "sole purpose" rather than the "dominant purpose" test was applicable). The correct approach is to ascertain whether there is extraneous material, and then to consider whether the communication containing that extraneous material was made for the dominant purpose identified in s 118 or s 119. In order for that to be done, the first step is that the party asserting privilege must adduce evidence as to whether there is or is not extraneous material in the communication or document in issue.

"Common Deficiencies" 35 The Receivers submitted that, in light of the legal principles that I have described, the claims for privilege in the present case have a number of shared or "Common Deficiencies", namely failure to show: (i) identification with specificity of the advice or communication in respect of which privilege is claimed under s 118 or 119 (particularly where it is said that the content or substance of the advice or communication has been reproduced in a subsequent document); (ii) that the dominant purpose of the advice or communication was a privileged purpose under s 118 or 119; (iii) that the subsequent communication (where relevant) reveals the content or substance of the advice or communication in respect of which privilege is asserted; (iv) that the entirety of the masked part of the document (or the whole of the document in respect of which objection to production is made) reproduces only the content or substance of privileged legal advice or communications and no other matters which are by their nature not privileged; (v) rebuttal of the inference to be drawn from the face of the document that it is of a commercial nature and was brought into existence in the ordinary course of business in order to allow QBE to make ordinary business decisions; (vi) that the onus of establishing the claim has generally been discharged. 36 I do not disagree that these matters are "deficiencies" in a case designed to prove privilege, but care must be taken not to push them to far. For example, matter (i) obviously does not require that the party seeking to prove privilege must give evidence of the content of the advice or communication. The evidence to be given is evidence of the occasion of the communication and its general nature or characterisation. For example, it is likely to be sufficient, in my view, if evidence is given that the privileged document is an e-mail communication from one officer of a company to another containing a summary of confidential legal advice given by the company's lawyers at a meeting on the same day. But, although the strict rules of admissibility of evidence do not apply, the evidence is likely to be insufficient to establish the privilege if it is a bare assertion by someone who is not the author of the document, which does not supply any clear indication of the source of or basis for the assertion. 37 Proof of dominant purpose (matter (ii)) may be defective if reliance is placed on an affidavit by a deponent who does not clearly identify the sources of the assertion by which he purports to articulate the dominant purpose. But sometimes the source will be obvious. For example, where the document is characterised as a letter of advice by lawyers to their client, that characterisation is sufficient to give rise to the inference that the letter was prepared for the dominant purpose of providing the legal advice that it contains. Similarly, as to matter (iii), it will often be unnecessary for the deponent to reveal the source for his assertion that the document is a subsequent communication revealing the contents of confidential legal advice, if in the circumstances it is obvious that the source is perusal of the document itself. 38 As to matter (iv), where the deponent characterises the document and gives evidence about purpose or dominant purpose, it will normally be unnecessary to say that there is no extraneous material not fitting the categorisation, because the categorisation itself implies that this is so. 39 As to matter (v), evidence displacing any suggestion that the document is merely a commercial document prepared in the ordinary course of business need not, of course, convey the contents of the communication which is said to be privileged. It may therefore be merely a matter of characterising the document and identifying the circumstances of its preparation and communication. 40 Subject to these explanatory observations, I have taken the "Common Deficiencies" specifically into account in my review of the evidence of the QBE Parties concerning each document, and in my perusal of the unredacted documents. I have found that, generally speaking, where Mr Hammond gives evidence that a document discloses confidential legal advice, the appropriate inference from his evidence is that he has derived his characterisation of the document as one disclosing legal advice from perusal of the document itself (although on occasion his evidence might be supplemented by one or more of the other sources that he identifies). I think that inference is sufficiently obvious that it is unnecessary to require him to say, whenever such evidence is given, that his source is his perusal of the document. 41 Where, however, he says that a particular document was created for a stated purpose or dominant purpose, the source of his evidence is frequently unclear. He might be relying on the document itself, in cases where the purpose is evident on its face. That would be so, for example, where the document is a letter of advice from his firm, and probably also where the document does no more than to convey his firm's advice. Or he might be relying on his knowledge of his firm's or his client's file or his conversations with Mr Holland. He does not always identify his source. Where he has failed to do so, his statement about purpose will be inadequate to prove the "dominant purpose" ingredient of privilege.

The Receivers' "concession" 42 In their written submissions, the Receivers said that they were "prepared to concede that the court could reasonably infer that the actual communications from Mr Wotton, Mr Chylek and Mr John Marshall SC (but not any interpretation or summary of, or commentary on, such communication by others) are privileged from production." The QBE Parties referred to this at the hearing of the privilege claims as a "concession" by the Receivers, and handed up a table purporting to identify documents which were privileged on the basis of the concession. 43 The wording of the Receivers' submission makes it clear that they were not intending to concede that all communications by Mr Wotton, Mr Chylek and Mr Marshall SC are ipso facto privileged. Their point was that the court may infer that the elements of privilege are present in respect of those documents merely on the basis of inspection. Facts 44 In their written submissions, the QBE Parties set out a series of matters, based partly on the findings in my 30 June 2006 judgment (at [4)-[23]) and partly on the affidavit evidence of Mr Hammond, which they described as "the surrounding circumstances and factual matrix in which the documents were created and the communications, sought to be protected from disclosure, [were] made". Their statement of the relevant factual matters was not challenged by the Receivers at the hearing of the privilege issues, and I am content to adopt it for the purposes of the present judgment. The statement is in substance as follows: (a) on 23 December 2003, there was a "spontaneous combustion incident" at the coal mine. Although no lives were lost, valuable mining equipment was destroyed and the economic consequences of the explosion and fire were catastrophic. The Department of Mineral Resources made orders to seal the mine on 27 December 2003. QBE was notified of the closure of the mine on that day (judgment at [7]; Hammond 14 July 2006 at [5]); (b) on the day of the incident Southland notified insurers of the spontaneous combustion incident which it was said was likely to occasion loss, destruction or damage (Hammond 14 July 2006 at [6]; Exhibit BTH 1 p 30); (c) QBE instructed Wotton & Kearney on 2 January 2004 to advise with respect to the investigation of the spontaneous combustion incident and indemnity issues that might arise under the policy (judgment at [9]; Hammond 14 July 2006 at [21]). Wotton & Kearney were also appointed to act on behalf of London Insurers who had underwritten 30% of the risk; (d) on 4 January 2004 Wotton & Kearney met with Messrs Bart and Raynal of Crawford (an insurance loss adjuster). At that meeting they identified a number of "policy issues" that would need to be resolved before Wotton & Kearney could advise QBE whether an indemnity was available for anticipated claims (judgment at [10]; Hammond 14 July 2006 at [23]). At that stage there were a number of "live policy" issues and it was agreed at that meeting that the range of issues that were likely to arise in the claim could be controversial; (e) on the following day, Wotton & Kearney wrote to Crawford withdrawing QBE's instructions and telling Crawford to take their instructions from the firm (judgment at [10]; Hammond 14 July 2006 at [21.3]; Exhibited BTH 1 pp 19-20); (f) an initial advice was sent by Wotton & Kearney to QBE on 9 January 2004. This was the first of many advices sent by Wotton & Kearney to the insurers. Subsequently Wotton & Kearney gave many advices, and had almost daily dealings with the consultants (Hammond 14 July 2006 at [26]). Wotton & Kearney spent 884 hours of solicitors' time on the matter up to February 2005 (judgment at [9]); (g) Wotton & Kearney retained Mr McKensey of McKensey Mining on 14 January 2004 to provide expert advice on the conduct of the investigation and matters relevant to the policy (Hammond 14 July 2006 at [24]; Exhibit BTH 1 pp 21-22); (h) on 22 January 2004 Thiess and Thiess Southland indicated by a letter of that date that they intended to make a claim under the policy (Hammond 14 July 2006 at [27.3]; Exhibit BTH 1 pp 28-35); (i) on 29 January 2004, Mr Raynal and Mr McKensey travelled to the mine to inspect documents which were to have been made available. They were met by a solicitor from Freehills, acting for the receivers, who handed them a confidentiality undertaking to be signed before the documents were reviewed. That led to rather lengthy debate in correspondence about the terms of the confidentiality undertaking, before an acceptable form was finally settled on about 18 February 2004 (judgment at [15]); (j) on 17 February 2004 Wotton & Kearney retained Mr Gallagher of International Mining Consultants Pty limited to work with Mr McKensey and Mr Raynal in the investigation and to provide Wotton & Kearney with advice relevant to the cause of the spontaneous combustion incident and matters on which Wotton & Kearney were required to advise the insurers relevant to the indemnity issues in the policy (Hammond 14 July 2006 at [29]; Exhibit BTH 1 pp 41-43); (k) on 20 February 2004 Wotton & Kearney received an interim claim submission from MSM Loss Management, claims preparers instructed on behalf of Thiess (Hammond 14 July 2006 at [31], Exhibit BTH 1 page 63); (l) on 24 February 2004 Wotton & Kearney caused a preliminary brief to advise to be sent to Mr Marshall SC. Further briefs to him were sent during the course of 2004 and 2005 (Hammond 14 July 2006 at [32]); (m) from March 2004 to the end of 2004 there was a substantial quantity of correspondence between the solicitors canvassing many issues. A summary of those issues is set out at [21] of the judgment; (n) Crawford and McKensey interviewed mine personnel in the period from February 2004 to June 2004 (judgment at [18]); (o) Southland made a further interim claim on the insurers on 31 May 2004. The claim was made on a "constructive total loss" basis for over $35 million and its claim under the "recovery and repair option" was nearly $68 million (judgment at [17]); (p) on 3 September 2004 Wotton & Kearney received a second interim claim submission from MSM on behalf of Thiess (Hammond 14 July 2006 at [35]; Exhibit BTH 1); (q) Allens Arthur Robinson on behalf of the Thiess parties wrote to Wotton & Kearney and Freehills on 16 September 2004 and again on 6 October 2004, asserting that unless Wotton & Kearney communicated the insurer's decision on the indemnity within a certain period, they anticipated receiving instructions to commence proceedings against insurers on behalf of the Thiess parties (Hammond 14 July 2006 at [36]; Exhibit BTH 1 pp 71, 76); (r) on 24 December 2004 Allens served a summons commencing proceedings by the Thiess parties in the Commercial List of this court (Hammond 14 July 2006 at [37]; Exhibit BTH 1 p 77); (s) shortly after the commencement of the Thiess proceedings, Moray & Agnew were instructed to represent the interests of the London Insurers. Up to that time Wotton & Kearney represented the London Insurers to advise on the spontaneous combustion incident and relevant indemnity issues which might arise under the policy. Wotton & Kearney retained Crawford and McKensey on 5 January 2004 and 14 January 2004 respectively on behalf of both QBE and the London Insurers (Hammond 14 July 2006 at [38]-[40]). 45 It should be noted that in the Court of Appeal, Basten JA considered the facts relating to the retainer of experts and held that each of the experts who were retained to assist the insurer was an agent of the insurer, for the purpose of carrying out such investigation as was required for it to obtain advice (at [124]-[127]). 46 These factual matters are significant for several reasons. First, they indicate the nature and scope of the retainer of Wotton & Kearney for QBE and the London Insurers, and shed light on the correct characterisation of the communications in the disputed documents. 47 The QBE Parties submitted that the facts had displaced any inference that the communications between Wotton & Kearney and QBE, which are disclosed in the contested documents, were about commercial matters made in "the ordinary course of business". They said it was plain from the facts that communications by Wotton & Kearney both with QBE and with the expert consultants who reported to the firm were made pursuant to Wotton & Kearney's retainer. They asserted that the dominant purpose of the retainer was for Wotton & Kearney to provide legal advice with respect to the investigation of the spontaneous combustion incident and indemnity and quantum issues that might arise under the policy, and to provide legal services in relation to the anticipated proceedings to be brought by the insured parties for indemnity under the policy. I agree that this was purpose of the retainer. I also agree that the facts that I have set out generally weaken any inference that the communications in the disputed documents were commercial communications in the ordinary course of business. But it is still necessary to assess the documents one by one. 48 The QBE Parties submitted that in light of the facts, the court should infer that litigation was anticipated, or had become a real prospect, by about February 2004, and in any case no later than May 2004. In the earlier chapter of this litigation, described in my judgment of 30 June 2006, Young J held at first instance (Re Southland Coal Pty Ltd [2005] NSWSC 259) that the point may have been reached when litigation was a real prospect some time after January 2004, though it was most likely not as early as January 2004. The Court of Appeal (at [80]-[81]) rejected a submission that his Honour had found that the relevant communications "could not be privileged" within the meaning of s 119, but found it unnecessary to give further consideration to that section. 49 The question whether legal proceedings are "anticipated" within the meaning of s 119 requires the court to consider whether there was, at the relevant time, a real prospect of litigation, as distinct from the mere possibility (Mitsubishi Electric Australia Pty Ltd v Victorian Workcover Authority [2002] 4 VR 335). In my view, the correct inference from the facts is that legal proceedings between Southland and the insurers (QBE and the London Insurers) were "anticipated" as from late February 2004, when Wotton & Kearney received the interim claim submission from MSM Loss Management and caused a preliminary brief to advise to be sent to Mr Marshall SC. If I were wrong in that view, then it would at least be clear that there were anticipated proceedings from the end of May 2004, when Southland made its further interim claim for a very large amount. I have reached these conclusions taking into account the catastrophic nature of the spontaneous combustion incident, and its serious economic consequences; Southland's early notification of the likelihood of a claim in circumstances where the amount of the claim would obviously be great; the recognition, as early as the meeting of 4 January 2004, that issues had arisen that were bound to be controversial; the structuring of the advisory relationships so that advisers were required to report to the solicitors; the significance of the interim claim submission by MSM Loss Management on behalf of the Thiess parties in February 2004; and Southland's requirement for the advisers to give confidentiality undertakings. Document 3 50 This is an e-mail chain including an e-mail from Mr Hatz (Technical Claims Manager, Property of QBE based in Melbourne) to Mr Nicholls (National Claims Manager of QBE) dated 6 January 2004. According to Exhibit BTH 2, privilege has been claimed over part of it under s 118. However, on 17 July 2006 the solicitors for the QBE Parties wrote to the solicitors for the Receivers informing them that no privilege was claimed in relation to Document 3, and that the only objection to the production of the document was to those parts of the document containing information as to provisions and/or reserves (Annexure D to the affidavit of Mr Hammond dated 28 August 2006). The ground appears to be, as Mr Hammond said in his affidavit of 14 July 2006, that these matters are outside the scope of the orders for production. 51 Literally construed, para 3 of the schedule to the orders for production would include the whole of Document 3, especially having regard to the wide definition of the word "Report". But the orders for production must be construed in light of their history. As I explained in my judgment of 30 June 2006 (at [61]), the text of the proposed orders for production underwent several revisions. In the form in which they stood when exhibited to Mr Atkins' affidavit of 1 March 2006, the proposed orders required production of all documents recording or referring to QBE's valuation of the claims and any provisioning made by QBE in respect of the claims. But by the time of the hearing on 23 March 2006, the claim for an order in those terms had been withdrawn. It seems to me that, consistently with the withdrawal of that claim, it is appropriate for the QBE Parties to exclude from production the parts of the e-mail chain that relate to provisioning and reserves, and any process of recording the claim and establishing an authority in connection with provisioning. 52 Mr Hammond's evidence about Document 3, that the excluded part contains communications between officers of QBE relating to the provisioning of the claims and the establishment of reserves, is sufficient to ground the claim that Document 3 is outside the proper scope of the orders for production. It is obvious from his description that he bases his evidence on his perusal of the e-mail chain. His evidence on Document 3 does not suffer from the "Common Deficiencies". I have inspected the unredacted document and I am satisfied that Mr Hammond's description of the part that has been excluded is correct. Documents 5 and 5A 53 Document 5 is an e-mail from Mr Holland to Mr Meteyard (QBE's General Manager, Corporation Division) dated 9 July 2004 attaching Mr Holland's file note "summarising the current position". Document 5A is the same e-mail and file note but the e-mail contains some handwriting and the file note displays some underlining and ticks. Privilege is claimed in respect of part of the file note, but not the handwriting or the ticks on the file note. It could not plausibly be contended that disclosure of the handwriting and the ticks constitutes waiver of any otherwise privileged material. 54 According to Mr Hammond (14 July 2006 at [44]) the handwriting and marks were made by Mr Hatz. He said in his affidavit of 28 August 2006 (at [4]) that it was apparent from the files and file notes of Wotton & Kearney that the parts of Mr Holland's file note for which privilege is claimed contain confidential communications recording legal advice provided by Wotton & Kearney in discussions between Mr Holland and Mr Chylek of Wotton & Kearney on 9 July 2004 and legal advice provided by Wotton & Kearney in discussions between Mr Holland and Mr Wotton on 25 June 2004. 55 Mr Hammond's evidence on Documents 5 and 5A in his August affidavit does not suffer from the "Common Deficiencies". He has identified the source for his evidence by referring to Wotton & Kearney's files. He does not put the claim for privilege on the basis of the dominant purpose of Mr Holland in preparing his file note, but rather on the basis that the file note communicates privileged legal advice. In my opinion his description is sufficient to establish the claim for privilege, unless perusal of the document suggests that Mr Hammond's description is inaccurate. 56 I have perused the unredacted Documents 5 and 5A. There is nothing in Mr Holland's file note itself to refer to any meeting between Mr Holland and either Mr Chylek or Mr Wotton. Further, except for the last paragraph, the file note is about procedural and timing matters to do with the claims rather than about legal advice in the narrow sense. However, my view is that all of the excluded parts of the file note fall within the broad notion of "legal advice" explained in the Balabel case (discussed above), as long as they were provided by a lawyer to his or her client in a professional capacity. Mr Hammond's evidence, taken from Wotton & Kearney's files, asserts that the excluded material communicates advice provided to Mr Holland by lawyers in their professional capacity. Privilege has been established. Document 6 57 This is an e-mail from Mr Holland to various representatives of the London Insurers, Messrs Mitchell, Schramm, Perry and Proctor, dated 19 August 2004. The QBE Parties propose to exclude the whole of it except for the introductory paragraph, in which Mr Holland explained that he was writing to the recipients in his capacity as the responsible claims representative at QBE and noted that 30% of the risk had been placed with various London-based insurers and syndicates. 58 According to Mr Hammond (14 July 2006, at [45]), the parts of the e-mail in respect of which objection is taken disclose confidential legal advice provided by Wotton & Kearney to the insurers (at [45.1]), and disclose the contents of confidential communications with QBE's loss assessors and mining consultants prepared on the instructions of Wotton & Kearney for the purpose of enabling the firm to provide legal advice to the insurers, advice which has in fact been provided (at [45.2]). 59 On its face, Mr Hammond's evidence at [45.1] seems to be based on his reading of the e-mail itself. If it were tendered as a categorisation of the whole of the excluded material, it would be sufficient to establish a case of privilege. But his evidence at [45.2] contains an assertion that the communications of the experts were prepared on the instructions of the solicitors for the purpose of enabling the solicitors to provide legal advice. He does not specify the source of his assertion that the experts were acting on instructions of the solicitors, or the source of the assertion that the purpose of the instructions was to enable the solicitors to provide legal advice. Therefore his evidence at [45.2] would, if taken alone, be insufficient to establish a case of privilege. Mr Hammond has provided two characterisations of the excluded material, without making it clear whether each subparagraph is intended to describe the whole of the excluded material, or one of them is intended to apply to part and the other is to apply to the remainder of the excluded material. I would not regard his evidence as sufficient to make out a claim for privilege in the absence of my inspection of the material. 60 Having inspected the excluded material, I have reached the clear conclusion that access to it should be denied under s 118. In my opinion the excluded material is entirely a summary of confidential legal advice evidently, on its face, provided by Wotton & Kearney with the assistance of expert input from consultants. That part of the material that describes the consultants' work is part of the summary of the legal advice, in my view, and not an extraneous commercial communication to be excluded from the claim for privilege. 61 The Receivers submitted that, on the face of the redacted document, there has been a knowing and voluntary disclosure to another person of the substance of the legal advice, and therefore according to s 122(2) of the Evidence Act, privilege is no longer available. But it is plain from my outline of the facts that, at the time when the e-mail was written, Wotton & Kearney were instructed by both QBE and the London Insurers, who had 30% of the risk. Wotton & Kearney retained the expert consultants on behalf of QBE and the London Insurers. Therefore, in terms of s 122(5), disclosure by Mr Holland on behalf of QBE to the London Insurers was disclosure concerning a matter in relation to which, at the time, the same lawyer was providing professional legal services to both QBE and the London Insurers. Additionally, having regard to my finding that legal proceedings were anticipated well before August 2004, it was disclosure to a person with whom QBE had at that time a common interest relating to an anticipated proceeding by Southland for indemnity under the policy. Consequently there was no waiver of privilege under s 122(2) because of the application of s 122(5). Document 8 62 This is an e-mail from Mr Holland to Mr Meteyard and others at QBE dated 30 September 2004. According to Mr Hammond (14 July 2006 at [46]), the parts in respect of which objection is taken disclose communications between officers of QBE relating to the provisioning of the claims and the establishment of reserves, and therefore fall outside the scope of the orders for production. He also deposed that those parts disclose the contents of confidential communications with QBE's loss assessors which were prepared on the instructions of Wotton & Kearney for the purpose of enabling the firm to provide legal advice to QBE, which has in fact been provided. 63 For the reasons I have given with respect to Document 3, communications relating to provisioning of the claims and the establishment of reserves fall outside the scope of the orders for production, on their proper construction, having regard to the history of their drafting. Mr Hammond's evidence that the document discloses communications relating to provisioning and reserves does not suffer from "Common Deficiencies", and it is sufficient to exclude the parts of the e-mail relating to those matters, unless on perusal it appears that the excluded parts cover other matters as well. I have perused the unredacted Document 8. All of the excluded material relates to provisioning and reserves. Therefore access to that material should be denied on that ground. It is unnecessary to deal with Mr Hammond's evidence concerning privilege. Document 9 64 This is a series of e-mails and attachments, namely: Document (i): an e-mail from Mr Chylek to Mr Holland dated 20 October 2004 at 9:34 a.m., with attachments; Document (ii): an e-mail from Mr Holland to Messrs Nicholls and Hatz dated 20 October 2004 at 10:17 a.m., copied to Mr Chylek and Mr Wotton, attaching Document (i) and attachments; and Document (iii) an e-mail from Mr Hatz to Mr Holland dated 20 October 2004 at 1:06 p.m. 65 Privilege is claimed over the whole of this material, under both s 118 and s 119 (the latter on the ground that by October 2004 legal proceedings were clearly anticipated). 66 According to Mr Hammond (14 July 2006 at [47.1]), Document 9(i) and its attachments disclose confidential legal advice provided by Wotton & Kearney to QBE in relation to the claims and in relation to legal proceedings anticipated at the suit of Southland, Thiess Southland and Thiess (at 47.1). His evidence is that they also disclose the substance of a report of mining consultants, Mr Gallagher and Mr McKensey, which was prepared on the instructions of Wotton & Kearney for the purpose of enabling the firm to provide legal advice to QBE, which has in fact been provided (at 47.1). 67 In my view this evidence suffers from the same difficulties as Mr Hammond's evidence with respect to Document 6. The description at 47.1 would be sufficient to establish privilege (this time under both s 118 and s 119), if it were intended to apply to the whole of the excluded material. The description provides a characterisation of the e-mails, from which the dominant purpose of the making of the communication and the preparation of the documents can be inferred, in this case for the purposes of both s 118 and s 119. But the description at 47.1 is defective, because the sources of Mr Hammond's assertions that instructions were given to the experts by the solicitors, that the experts' report was prepared for the purposes of legal advice, and that legal advice was in fact given, are not specified and are left ambiguous. It is not clear whether Mr Hammond intended both descriptions to apply to all of the excluded material, or for each description to apply to only part of it. In these circumstances, the evidence is too unclear and I would not regard it as sufficient to make out a claim for privilege in the absence of my inspection of the material. 68 I have inspected the unredacted Document 9(i) and the attachments to it. In my view it is plain on the face of these materials that the experts' report is governed by the solicitors' instructions in such a way that it is appropriate to infer that the whole of the report was, indeed, prepared on the instructions of the solicitors for the purpose of enabling them to provide legal advice and to provide professional legal services in relation to the anticipated proceedings, and it was communicated to the client by the solicitor as part of that process. Therefore I find Document 9(i) to be protected by s 118 and s 119, upon inspection rather than upon the basis of the evidence of the QBE Parties. 69 According to Mr Hammond (14 July 2006 at [47.2]), Document 9(ii) discloses the confidential legal advice contained in Document 9(i), the e-mail from Mr Chylek to Mr Holland (at 47.2), and records a confidential communication between QBE and Wotton & Kearney for the dominant purpose of Wotton & Kearney providing legal advice in relation to the claims, and legal services in relation to the proceedings anticipated at the suit of Southland, Thiess and Thiess Southland (at 47.2). This evidence raises the same problem as I have identified in relation to Mr Hammond's evidence at [47.1] about Document 9(i). For the same reasons, I would not regard the evidence as sufficient to establish privilege in the absence of my inspection of the document. 70 I have inspected Document 9(ii) in its unredacted form. It attaches Document 9(i) and its attachments, and provides a brief summary of the agenda for a proposed meeting with the lawyers. The e-mail confirms that the correct characterisation of Document 9(i) is confidential legal advice. Document 9(ii) is likewise a privileged communication both under s 118 and under s 119. Indeed, it is crystal clear from the contents of the e-mail that litigation was well and truly anticipated by that time. I find that Document 9(ii) is privileged upon inspection rather than upon the basis of the evidence of the QBE Parties. 71 According to Mr Hammond (14 July 2006 at [47.3]), Document 9(iii) is a confidential document prepared by Mr Hatz for Mr Holland concerning matters to be raised with Wotton & Kearney for two dominant purposes. The first is the dominant purpose of Wotton & Kearney providing legal advice in relation to the claims. The second is the dominant purpose of Wotton & Kearney providing legal services in relation to the anticipated proceedings. But Mr Hammond's evidence does not specify, from amongst the choices he provides in para 3 of his affidavit of 28 August 2006, the source for his assertions about the two alleged dominant purposes. I do not regard his evidence as sufficient to prove privilege, absent inspection. 72 I have inspected the unredacted Document 9(iii). The first two paragraphs of the e-mail add to the list of items for discussion with the lawyers at the forthcoming meeting. To disclose them would be to give rise to an inference as to the subject matter of advice obtained from the lawyers at the meeting. Just as Document 9(ii) is privileged under both s 118, and s 119, equally the first two paragraphs of Document 9(iii) are privileged on the same grounds. The last paragraph of Document 9(iii) relates to some proposed steps which, taken in isolation, might be regarded as commercial matters in the ordinary course of QBE's insurance business. But when that paragraph is read in the context of the other two paragraphs of the e-mail, it seems to me that what is under discussion is a course of action to be considered or reviewed by the lawyers at the forthcoming meeting. Therefore the last paragraph is privileged on the same grounds. In summary, Document 9(iii) is privileged upon inspection rather than upon the basis of the evidence of the QBE Parties. Document 10 73 This is an e-mail from Mr Nicholls to Mr Holland dated 20 December 2004, copied to Mr Hatz and Mr Chylek, attaching an e-mail dated 7 December 2004 from Mr Wotton to Mr Holland, which in turn attaches a long letter of the same date from Wotton & Kearney to Mr Holland. Privilege is claimed over the whole of this material, under ss 118 and 119. 74 According to Mr Hammond (14 July 2006 at [48.1]) the e-mail from Mr Wotton to Mr Holland and the attached letter disclose confidential legal advice provided by Wotton & Kearney to QBE in relation to the claims, and in relation to proceedings anticipated at the suit Southland, Thiess and Thiess Southland. In my opinion this evidence is sufficient to establish privilege, unless inspection of the document shows that the description is faulty or that there is extraneous material. I have inspected the e-mail and letter of advice. It is very clearly a privileged communication of legal advice and the provision of professional legal services for the purposes of s 118 and s 119 respectively. There is no extraneous material. The QBE Parties have proved their claim for privilege, by Mr Hammond's evidence, which is confirmed upon inspection. 75 According to Mr Hammond (14 July 2006 at 48.2), the e-mail from Mr Nicholls to Mr Holland copied to Wotton & Kearney discloses the substance of confidential legal advice provided by Wotton & Kearney to QBE which was the subject of the e-mail from Mr Wotton to Mr Holland. That is sufficient to establish privilege, since the description appears on its face to be intended to be a complete description of the communication. Therefore the QBE Parties have established that the e-mail is privileged. Inspection confirms this conclusion. In the e-mail Mr Nicholls does nothing else but comment to Mr Holland on matters directly related to and arising out of Wotton & Kearney's legal advice. Mr Hammond also advanced a second ground to support a claim for privilege (at 48.2), in which he makes assertions about dominant purposes without identifying sources. It is unnecessary for the QBE parties to rely on this part of Mr Hammond's evidence, which would not be sufficient in itself to establish privilege, for the same reasons as I gave in relation to Document 9(iii). Document 12 76 This is a short e-mail dated 5 January 2005 from Mr Holland to Mr Meteyard, Mr Hatz, Mr Isgro and Mr Nicholls of QBE. Privilege is claimed over the whole e-mail, under ss 118 and 119. According to Mr Hammond (14 July 2006 at [50]), privilege is claimed on the basis that the e-mail: · discloses confidential legal advice provided by Wotton & Kearney to QBE in relation to the claims; · discloses the content of confidential communications with QBE's loss assessors prepared on the instructions of Wotton & Kearney for the purpose of enabling Wotton & Kearney to provide legal advice to QBE; and · discloses the substance of confidential communications between Wotton & Kearney and QBE for the dominant purpose of Wotton & Kearney providing legal services in relation to the Thiess proceedings. 77 In my opinion Mr Hammond's evidence is not sufficient, in itself, to establish the claim for privilege. The second and third parts of his assertions cannot be established on the face of the documents themselves, and he has not adequately identified the sources for his assertions, out of the various sources disclosed in his affidavit of 28 August 2006. However, my inspection of the e-mail makes it plain that it is a summary of various matters arising out of a meeting with legal advisers. Although some of the matters appearing in the summary would, taken in isolation, be regarded as commercial matters in the ordinary course of QBE's insurance business, in their context they reflect legal advice of the broad kind described in the Balabel case. In my opinion, Mr Hammond's evidence does not prove that Document 12 is privileged, but my inspection reveals that the whole of the document is privileged. Documents 13 and 13A 78 Document 13 is a series of e-mails beginning with an e-mail dated 5 January 2005 from Sue Turnbull on behalf of Martin Miller of Crawford to Mr Chylek, followed by an e-mail dated 12 January 2005 from Mr Wotton to Mr Holland, attaching Mr Miller's e-mail, and an e-mail dated 17 January 2005 from Mr Holland to Mr Nicholls of QBE. The QBE Parties seek to exclude the whole of the contents of the first two e-mails and one single-sentence paragraph of the final e-mail, under ss 118 and 119. Document 13A is the same as Document 13 except that parts of the e-mails are underlined (by Mr Hatz, according to Mr Hammond) and there are some ticks in the right-hand margin of the e-mails. The QBE Parties do not seek to exclude the ticks and they exclude the underlining only where they seek to exclude the text that is underlined. In these circumstances it is not necessary to deal separately with Document 13A. 79 According to Mr Hammond (14 July 2006 at [51]) the e-mail from Mr Wotton which attaches the e-mail from the Miller discloses (a) confidential legal advice provided by Wotton & Kearney and Mr Marshall SC to QBE; (b) the contents of confidential communications with QBE's loss assessors which were prepared under the instructions of Wotton & Kearney for the purposes of enabling the firm to provide legal advice to QVC which has in fact been provided; and (c) confidential legal advice provided by Wotton & Kearney and Mr Marshall SC in relation to the Thiess proceedings and the proceedings anticipated at the suit of Southland. 80 Subparagraph (b) contains the same deficiencies as paras [45.2], 47.1 and [50.2] of Mr Hammond's affidavit. Further, Mr Hammond does not indicate whether each of the three subparagraphs is intended to apply to the whole of the e-mail and its attachment and if not, the parts to which each description applies. Therefore, for the reasons given earlier, Mr Hammond's evidence is not sufficient to establish the claim for privilege. However, on inspection it is plain that Mr Wotton's e-mail and its attachment are privileged, under both s 118 and s 119. Mr Miller's e-mail seeks legal advice from Wotton & Kearney in the circumstances that it sets out. Mr Wotton provides legal advice to Mr Holland about the matters raised by Mr Miller, the whole of the e-mail being "legal advice" in the Balabel sense, and some of it being legal advice in the narrowest sense. There is no extraneous material. In summary, the whole of the e-mails by Mr Miller and Mr Wotton is privileged, but Mr Hammond has not established the grounds for that conclusion. 81 As to the e-mail from Mr Holland to Mr Nicholls, Mr Hammond says (14 July 2006 at [51.2]) that the excluded sentence discloses confidential communications between Mr Holland and Wotton & Kearney for the purpose of Wotton & Kearney providing legal advice to QBE in relation to the claims, and for the purpose of legal advice in relation to the Thiess proceedings and the anticipated proceedings by Southland. That evidence is adequate to establish the privilege and inspection confirms that the description is accurate. Document 15, 15A and 15B 82 Document 15 comprises two e-mails. The first, dated 16 February 2005, is from Mr Wotton to Mr Holland. The second, bearing the same date, is from Mr Holland to Mr Nicholls, copied to Mr Hatz and Mr Meteyard, attaching Mr Wotton's e-mail. The QBE Parties seek to exclude the whole of Mr Wotton's e-mail, and part of Mr Holland's e-mail. Document 15A is a copy of Document 15 in which there are underlinings and ticks (by Mr Hatz, according to Mr Hammond) on Mr Holland's e-mail. The QBE Parties do not seek to exclude the underlining and ticks except where the underlining relates to excluded material. Document 15B is another copy of Document 15, this time bearing some handwritten notes on Mr Holland's e-mail, which are by Mr Nicholls, according to Mr Hammond's evidence. The QBE Parties do not seek to exclude these handwritten notes. In the circumstances it is sufficient to deal with Document 15 alone. 83 According to Mr Hammond (14 July 2006 at [53.1]) the e-mail from Mr Wotton discloses confidential legal advice provided by Wotton & Kearney to QBE, and discloses the substance of a confidential communication made by Wotton & Kearney to QBE for the purpose of the firm providing legal services in relation to the Thiess proceedings in the anticipated Southland proceedings. In my view the proper construction of Mr Hammond's evidence at [53.1] is that his description of the e-mail is intended to cover the whole of its contents, and to characterise the e-mail as legal advice, including a communication in relation to the proceedings. On that basis, his evidence is sufficient to prove that the e-mail is privileged. Inspection confirms that the whole of Mr Wotton's letter is legal advice, most of it in the narrowest sense and some of it in the broader Balabel sense. 84 As to Mr Holland's e-mail, Mr Hammond says (14 July 2006 at [53.2]) that the e-mail discloses the subject matter of one of the topics of the confidential legal advice provided in Mr Wotton's e-mail, and the substance of a confidential communication made by QBE to Wotton & Kearney for the purposes of the firm providing further legal advice in relation to the claims and in relation to the actual and anticipated proceedings. Here Mr Hammond is quite specific evidence about the excluded material. He does not say that his description applies to the whole of the excluded material, but in my view that is a reasonable inference from his evidence. His evidence is sufficient to establish privilege. Inspection confirms that the whole of the excluded material is as described by Mr Hammond and is privileged. Document 16 85 This comprises an e-mail dated 15 February 2005 from Mr Wotton to Mr Holland, copied to Mr Hatz, Mr Nicholls and Mr Chylek, which attaches a lengthy report by Wotton & Kearney, and an e-mail dated 16 February 2005 from Mr Holland to Mr Meteyard copied to Mr Hatz, attaching Mr Wotton's e-mail and its attachments. Privilege is claimed over the whole of the contents of Mr Wotton's e-mail and attachment and over part of Mr Holland's e-mail, under ss 118 and 119. 86 According to Mr Hammond (14 July 2006 at [54]), the e-mail from Mr Wotton with the attached report discloses confidential legal advice provided by Wotton & Kearney to QBE in relation to the claims, and discloses the substance of a confidential communication made by the firm to QBE for the purpose of the firm providing legal services in relation to the actual and anticipated proceedings. This evidence is the same as Mr Hammond's evidence with respect to Mr Wotton's e-mail which is part of Document 15, and establishes privilege for the same reasons. Inspection confirms that Mr Hammond's evidence is accurate and that the whole of the e-mail and the attached report are privileged under s 118 and s 119. 87 As to the excluded part of Mr Holland's e-mail, Mr Hammond says (at [54.2]) that it discloses the substance of confidential legal advice provided in Mr Wotton's e-mail and report, and is a confidential document prepared by Mr Holland for Mr Meteyard as to the matters raised with Wotton & Kearney, for the dominant purpose of the firm providing further legal advice in relation to the claims and the proceedings. It appears to me reasonable to infer from Mr Hammond's evidence at [54.2], in the context provided by [54.1], that the source of his assertion about the dominant purpose of the excluded material is the excluded material itself. On that basis, his evidence is sufficient to establish the privilege. Inspection confirms that his description is accurate and that the excluded material is privileged under ss 118 and 119. Documents 17 and 18 88 Document 17 is a memo dated 24 February 2005 from Mr Nicholls to Raymond Jones (Managing Director of QBE) and Mr Wotton headed "Southland Coal - Claim: NW1627758". The QBE Parties seek to exclude only part of one sentence of the memo, under ss 118 and 119. Document 18 includes a further copy of Mr Nicholls' memo endorsed by handwriting of Mr Jones. The QBE Parties do not seek to exclude Mr Jones' endorsement 89 There are several attachments to the memo, described in the memo itself as advice from Wotton & Kearney and a memorandum from Mr Marshall SC. The QBE Parties seek to exclude the whole of the contents of Mr Wotton's e-mail dated 24 February 2005 to Mr Holland, copied to Mr Hatz, Mr Nicholls and Mr Chylek, and the attached e-mail from Mr Marshall dated 23 February 2005 and attachments. 90 According to Mr Hammond (14 July 2006 at [55] and [56.1]), the excluded part of Mr Nicholls' memo discloses the substance of confidential legal advice provided by Wotton & Kearney to QBE in relation to the claims and in relation to the Thiess proceedings and the anticipated Southland proceedings. That is sufficient to establish the privilege. Inspection confirms that Mr Hammond's description is correct. 91 As to the attachments to the memo, Mr Hammond says (at [56.2]) that they disclose confidential legal advice provided by Wotton & Kearney and Mr Marshall SC to QBE in relation to the claims and in relation to the Thiess proceedings and the anticipated Southland proceedings. That is sufficient to establish the privilege under ss 118 and 119. Inspection confirms that the description is correct. Conclusions 92 The Receivers have failed to overcome the claim for privilege in respect of any of the disputed documents or parts of documents, and therefore they will not obtain orders for access to any documents that have not already been provided to them. In the case of the following documents or parts of documents, the evidence of the QBE Parties has established their privilege claim: 5, 5A, 10 (both the e-mail from Mr Wotton and the e-mail from Mr Nicholls), 13 and 13A (e-mail from Mr Holland), 15, 15A and 15B (both the e-mail from Mr Wotton and the e-mail from Mr Holland), 16 (in respect of both e-mails), 17 and 18. In addition, the evidence on behalf of the QBE Parties is sufficient to establish that the excluded material in Documents 3 and 8 is outside the scope of the orders for production. In the case of the following documents, the evidence of the QBE parties has been insufficient to establish the privilege claim, but I have concluded that privilege has been made out upon inspection of the documents: 6, 9 (in respect of each of the three e-mails), 12, 13 and 13A (e-mail from Mr Wotton). 93 As to the question of costs, the Receivers' failure to gain access to any of the disputed documents or parts of documents is sufficient to deny them any costs order in their favour. The QBE Parties succeeded in resisting the access claims, but the evidence upon which they relied was, in part, deficient for reasons generally in accordance with the submissions made on behalf of the Receivers. I do not agree with the submission made on behalf of the QBE Parties to the effect that Mr Hammond's evidence was the best that could be done without compromising the confidentiality of the privileged documents. I have identified specific matters that could and should have been addressed, without any effect on the confidentiality of the documents. The success of the QBE Parties arose, where their evidence was deficient, from my inspection of the documents. They should not have the benefit of an order for costs to the extent that they failed to establish privilege by their own evidence. 94 The QBE Parties succeeded in proving privilege in respect of roughly two-thirds of the disputed documents or parts of documents, but that does not mean, in my view, that they should have two-thirds of their costs. Their failure to prove privilege for the remaining documents made a contest inevitable, and a substantial part of the preparation and hearing time was taken up in establishing the principles to be applied, a task that would have been necessary even if the Receivers had conceded privilege in all cases where I have held that the QBE Parties' evidence was sufficient. 95 In submissions on costs, senior counsel for the Receivers contended that as a result of their application for access, Mr Hammond's second affidavit was served, containing the removal of redaction of some documents. I do not regard that outcome as being of any significance on the question of costs. As senior counsel for the QBE Parties pointed out, during the process of dispute over the scope of the orders for production and privilege issues, the Receivers also made some concessions. Concessions of these kinds are typical where a contest about access to documents is sharpened and refined in preparation for the hearing. 96 Doing the best I can to weigh up these matters, I have decided to order the Receivers to pay one half of the QBE Parties' costs, as agreed or assessed. **********

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