Attorney-General (NT) v Kearney

SALIENT FACTS

1. The plaintiffs rely on the affidavit of Hannah Kate Griffiths sworn 28 March 2024 to support the claim that the Transcript is privileged. The affidavit states that the Transcript is marked "private", it transcribes an interview that was conducted in private on 28 January 2022 between the Liquidator's legal representatives and Mr Davies and the interview was held and the Transcript prepared by the Liquidator's representatives for the purpose of the Liquidator obtaining legal advice on various matters, including the claims available to the plaintiffs against the first and second defendants and commencing the proceedings against the first and second defendants.
2. There is evidence that in advance of the interview the solicitors for the Liquidator conducted correspondence with Mr Davies to make arrangements for an examination of him to be undertaken.
3. On 5 November 2021, the solicitors for the Liquidator sent an email to Mr Davies which attached a summons for examination and order for production issued by the Liquidator and made arrangements for service of those documents upon him.
4. On 16 November 2021, the solicitors for the Liquidator sent an email to Mr Davies in relation to the order for production and then stated the following under the heading "Summons for Examination": We note the Summons for Examination is returnable in the Supreme Court of NSW on 31 January 2022. The Liquidator proposes that your examination hearing be conducted in private under examination conditions pursuant to s 597(d) of the Corporations Act 2001 (Cth). This would involve a recorded interview, with you taking an oath or affirmation and consenting to the recorded interview, in the presence of the Liquidator and Counsel (and any legal representative you may have retained) rather than attending the Court on the nominated date. Subject to your views as to whether you are prepared to undertake your examination on this basis, we will approach the Court for appropriate orders and circulate proposed dates for your consideration. Please let us know whether you consent to your examination being held in private and we will approach the Court for an order to that effect.
5. During the course of the hearing of these proceedings on 22 March 2024, the Liquidator was cross-examined by counsel for the first and second defendants, who referred to the email of 16 November 2021. Evidence was given by the Liquidator that the interview with Mr Davies was done over Zoom and the following exchange then took place (T185.1-2): Q. So the proposal changed after the date of this email? A. [It] must've done.
6. The proceedings were commenced by originating process filed 31 March 2023 and the claims made were first articulated in the statement of claim filed 3 May 2023. While Mr Davies was previously the fourth defendant in the proceedings in relation to the alleged breach of his statutory and fiduciary duties as a director of Alora Davies, on 10 July 2023 by consent the claims against him were dismissed with no order as to costs.
7. After Mr Davies ceased to be a party in the proceedings, the claims made by the plaintiffs have been those that are set out in the amended statement of claim filed 16 August 2023.

LEGAL PRINCIPLES

1. Section 125 of the Evidence Act states: (1) This Division does not prevent the adducing of evidence of - (a) a communication made or the contents of a document prepared by a client or lawyer (or both), or a party who is not represented in the proceeding by a lawyer, in furtherance of the commission of a fraud or an offence or the commission of an act that renders a person liable to a civil penalty, or (b) a communication or the contents of a document that the client or lawyer (or both), or the party, knew or ought reasonably to have known was made or prepared in furtherance of a deliberate abuse of a power. (2) For the purposes of this section, if the commission of the fraud, offence or act, or the abuse of power, is a fact in issue and there are reasonable grounds for finding that - (a) the fraud, offence or act, or the abuse of power, was committed, and (b) a communication was made or document prepared in furtherance of the commission of the fraud, offence or act or the abuse of power, the court may find that the communication was so made or the document so prepared. (3) In this section - power means a power conferred by or under an Australian law.
2. I was referred by the first and second defendants to Australian Securities and Investments Commission v Tzouvelis [2023] FCA 431, a decision of O'Callaghan J in the Federal Court of Australia in which consideration was given to the legal principles regarding what is considered to be an exception to legal professional privilege. In Tzouvelis, O'Callaghan J at [12] set out the principles concerning the operation of what is called the "fraud or other illegal purpose" exception to legal professional privilege which, it is said, prevents the relevant document from becoming the subject of privilege because privilege never attaches to the document in the first place. I was also referred to Tzouvelis at [14] which states that the application of the rule is not limited to fraud or crime, citing the statement made by Gibbs CJ in Attorney-General (NT) v Kearney (1985) 158 CLR 500 at 513 where it was said that: …legal professional privilege will be denied to a communication which is made for the purpose of frustrating the processes of the law itself, even though no crime or fraud is contemplated.
3. It was submitted by the first and second defendants that the relevant improper purpose does not need to be proved on the balance of probabilities, referring to Tzouvelis at [20] where it is said that, in relation to matters of privilege, only the prima facie test applies, citing the following passage from AWB Ltd v Cole (No 5) (2006) 155 FCR 30 where Young J at [218] said: The 'prima facie' test arguably reflects the fact that issues of legal professional privilege are usually dealt with in the interlocutory stages of a proceeding, but the authorities have not departed from that formulation where a declaration is sought in relation to privilege issues … It must also be established, on the same prima facie basis, that the communication which is the subject of the claim for privilege was made in furtherance of, or as a step preparatory to, the commission of the fraud or wrongdoing.
4. The plaintiffs referred to Van Der Lee v New South Wales [2002] NSWCA 286 where, at [24], [61] and [68], reference was made to the matters which are to be considered in s 125 of the Evidence Act ("furtherance of a deliberate abuse of power") and, in particular, the statement made in Idoport Pty Ltd v National Australia Bank Limited [2001] NSWSC 222 by Hodgson CJ in Eq at [64] that the client knows the acts in question are an abuse of power. I was also referred to Fairfax Publications Pty Ltd v Abernethy [1999] NSWSC 826, where Adams J at [10] said: Such a motive requires consideration, as seems to me obvious, of intent or purpose. It follows that it will never or almost never be capable of determination by the mere objective circumstance of illegality. Of course, the nature and circumstances of the illegality may enable the improper purpose or intention to be deduced and perhaps to the level of prima facie proof, but in this case there is no evidence which would permit such a conclusion.
5. The exercise that I am undertaking is one pursuant to rule 1.9(4) of the Uniform Civil Procedure Rules 2005 (NSW). It is one in which I have to determine whether or not a privilege attaches to the Transcript.

SUBMISSIONS & CONSIDERATION

1. It was submitted by the first and second defendants that the relevant deliberate abuse of power which is required to be found pursuant to s 125 of the Evidence Act can be deduced from the email of 16 November 2021 and the fact that it refers to a section of the Corporations Act 2001 (Cth) which does not exist, namely, s 597(d). It is said that I should infer that there was a deliberate abuse of power by seeking to exercise powers under the Corporations Act which do not exist.
2. I note that the relevant statement is contained within an email sent by a lawyer acting on behalf of the Liquidator. There is no direct evidence of the state of mind of the Liquidator in relation to the relevant communications.
3. I am not, however, satisfied that even on a prima facie basis I could find that there was a deliberate abuse of power merely by reference in the email to a provision of a Corporations Act that does not exist.
4. In any event, I note that the Liquidator was cross-examined by counsel for the first and second defendants on 22 March 2024 in relation to this email and no suggestion was made to the Liquidator at the time of the cross-examination what his state of mind may or may not have been at the time the email was sent. In addition, it is clear from the excerpt of that cross-examination that what ultimately transpired was not what was contemplated in the email of 16 November 2021, but instead something different, to which reference is made expressly in the answer that was given by the Liquidator when a proposition regarding this email was put to him. In the circumstances, I do not consider that I can accept the submission that was made by the first and second defendants that I should infer that there was a deliberate abuse of power.
5. I accept the submissions that were made on behalf of the plaintiffs that the evidence indicates that Mr Davies attended a private interview that was conducted over Zoom, and that the proposal which was contained in the email of 16 November 2021 was not carried through in the form of the interview that in fact took place. I also accept the submission that was made on behalf of the plaintiffs that the evidence that has been put before me is insufficient to demonstrate any form of deliberate abuse of power in relation to the conduct of the interview.
6. In the circumstances, I decline to make any form of finding in accordance with s 125 of the Evidence Act and as a result, the Transcript is not to be the subject of a production order to be made by the court.

ORDERS

1. I decline to make any form of order that there be production of the Transcript. I order that the first and second defendants are to pay the plaintiffs' costs in relation to this application.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 19 April 2024