AUSTRALIAN RELIANCE GROUP PTY LTD -v- COVERFORCE INSURANCE BROKERS VICTORIA PTY LTD [No 3] [2017] WASC 60 (13 March 2017)

1. The contentions in ARG's statement of claim can be summarised as follows:

(a) Until 18 February 2016, ARG and the second to fourth defendants (Byron Dreaming, Sun Devil and Howarth) were each the holders of shares in Reliance Insurance. Two hundred shares had been issued and they were held as follows: ARG (70), Byron Dreaming (62), Sun Devil (62) and Howarth (6).

(b) Those shareholdings were governed by a Shareholders Agreement dated 3 December 2013, made between each of ARG, Byron Dreaming, Sun Devil and Howarth.

(c) Since 19 February 2016, all shares have been held by Coverforce Victoria, a company incorporated on 18 February 2016.

(d) The Shareholders Agreement imposes obligations upon any shareholder seeking to transfer its shareholding to first offer those shares to parties nominated as governing shareholders by way of a 'transfer notice'.

(e) There are terms that govern the issue of a transfer notice, including that the transfer notice is to remain open for 30 days and that the purchase price to be paid if a governing shareholder elects to purchase the shares is to be 80% of 'fair value'. Fair value is ascertained in accordance with a formula and is to be certified by the auditor of Reliance Insurance.

(f) A breach of the transfer notice provisions (for example, by purporting to transfer shares without first issuing a transfer notice) may comprise a default event. Upon a default event, a shareholder may issue a notice to the defaulting party and the defaulting party is then deemed to have issued a transfer notice. A defaulting party irrevocably appoints any two directors of Reliance Insurance to sign share transfer forms.

(g) On 15 January 2016, ARG entered into a share sale agreement by which it was to sell its shareholding in Reliance Insurance to a company called PSC Insurance Group Limited (PSC). It was a condition precedent to the proposed PSC sale agreement that ARG obtain certain consents from the shareholders of Reliance Insurance. Communications ensued between ARG and Reliance Insurance about the PSC sale agreement. On 5 February 2016 Reliance Insurance alleged a default event had occurred and that ARG was deemed to have issued a transfer notice.

(h) On 17 February 2016, Reliance Insurance notified ARG that in response to the deemed transfer notice, Byron Dreaming (a governing shareholder) wished to acquire the shares proposed to be sold by ARG to PSC. Reliance Insurance asserted the price had been determined in accordance with the Shareholders Agreement and provided share transfer forms for execution.

(i) Each of Byron Dreaming, Sun Devil and Howarth transferred their shares to Coverforce Victoria.

(j) ARG disputes that its entry into the PSC sale agreement or its subsequent communications comprised a breach of the Shareholders Agreement and disputes that there were any grounds for a deemed transfer notice. ARG challenges the appointment of a second director to Reliance Insurance on about 11 February 2016 and challenges the transfer of the shares it previously held to Byron Dreaming.

(k) Further, ARG challenges the conduct of each of Byron Dreaming, Sun Devil and Howarth in transferring their shares in Reliance Insurance to Coverforce Victoria and asserts they did not comply with the notice provision of the Shareholders Agreement in that, in summary, they did not first offer to sell their shares to ARG.

(l) ARG seeks relief under various heads, including for breach of the Shareholders Agreement. It asserts that the defendants induced each of the other defendants to breach the Shareholders Agreement and so interfered with contractual relations. It asserts that Byron Dreaming held the shares in Reliance Insurance that were transferred from ARG on constructive trust, that Reliance Insurance knowingly assisted in a breach of that trust and that Coverforce Victoria received the shares knowing of the breach of trust. It says the conduct of Reliance Insurance (by its director Mr Jim Malady) was oppressive. It seeks relief under s 33 of the Corporations Act, damages, accounts of profit, a declaration that the relevant shares in Reliance Insurance are held on trust for ARG and other relief (some in the alternative).

1. By their defence, the defendants assert (in summary) that:

(a) As a result of the entry into the PSC sale agreement and subsequent communications, a default event occurred under the Shareholders Agreement and accordingly ARG was deemed to have issued a transfer notice and the defendants' actions in reliance on the deemed transfer notice provisions and the notice itself were valid.

(b) The appointment of the second director to Reliance Insurance was valid and if not, any acts undertaken by him were in any event validated under the terms of the Shareholders Agreement.

(c) The transfer of the shares held by ARG to Byron Dreaming was valid and the price as determined in accordance with the Shareholders Agreement was paid to ARG's bank account.

(d) Each of Byron Dreaming, Sun Devil and Howarth entered into a share sale agreement with Coverforce Victoria but such agreement was entered into after ARG's shares in Reliance Insurance had been transferred validly to Byron Dreaming.

(e) Each of the defendants had, at all material times, a bona fide belief that ARG was in default of the Shareholder Agreement.

(f) In general, the defendants deny the construction of the Shareholders Agreement as pleaded by ARG and deny any liability to ARG.

1. By its reply, ARG joins issue with the defence and, relevantly, asserts that Byron Dreaming is estopped from asserting that ARG was in breach of the Shareholders Agreement. ARG relies in particular on alleged conversations between Mr Jim Malady (on behalf of Byron Dreaming) and Mr Paul Dwyer (on behalf of PSC).

4 I will adopt the abbreviated names of the parties used in the passage set out above.

5 Coverforce Victoria is a subsidiary in a group of companies (of which the first defendant, which was formerly known as Reliance Insurance, is now also a member). I will refer to the group of companies collectively as Coverforce.

6 In September 2015, Coverforce engaged Minter Ellison Lawyers to act as legal advisor to Coverforce for the potential acquisition of nine subsidiaries of the Reliance Group, which included Reliance Insurance. According to Mr Angelis, the Chief Executive Officer of Coverforce, and a director of Coverforce Victoria, between January 2016 and the end of February 2016, Minter Ellison advised Coverforce on a number of matters which included:

(a) providing advice in relation to the legal strategy involved in executing a process by which Coverforce Victoria acquired shares in Reliance Insurance;

(b) providing advice on the content of correspondence (including the drafting of that correspondence), to be sent by Mr Jim Malady, a director of Reliance Insurance and the principal of Byron Dreaming, to ARG, PSC and Vantage Holdings Group Pty Ltd;

(c) providing advice in relation to litigation anticipated to be brought by ARG against Coverforce and shareholders in Reliance Insurance; and

(d) providing advice in relation to litigation brought by ARG against Coverforce and shareholders from Reliance Insurance from 19 February 2016.

7 Ms Kasey Richmond, company secretary of Coverforce Victoria and legal counsel for Coverforce, also deposed to Minter Ellison having been instructed in relation to those matters.

8 In Mr Malady's affidavit of 28 October 2016, he deposes to conversations which he had with Mr Neate, the principal of Sun Devil, and Mr Angelis following the announcement on the stock exchange of the agreement by ARG to sell its shareholding in Reliance Insurance to PSC. In a conversation on 15 January 2016, Mr Malady said that both he and Mr Angelis expressed surprise at the announcement of the sale of shares and Mr Angelis said that he was keen to continue with the process of due diligence which was then underway with a view to Coverforce acquiring the Reliance Group, including Reliance Insurance. Mr Angelis is said to have told Mr Malady that Coverforce would continue to seek advice as to the best way to progress its purchase of companies in the Reliance Group and that a lawyer at Minter Ellison would look into it. Mr Malady said that he then told Mr Neate that Mr Angelis had spoken to Minter Ellison 'about a plan to do a deal with Coverforce', and that Mr Neate asked to be kept updated. Mr Malady said that thereafter he was provided with various communications containing Minter Ellison's legal advice which, from time to time, he sent to Mr Neate, but which otherwise he treated as confidential.

9 Broadly speaking, it is those communications, and certain documents containing legal advice obtained by Byron Dreaming from solicitors Simon Parsons & Co that are the subject of the application for inspection.

10 Mr Malady in his affidavit of 28 October 2016 says that, in or around October 2015, he engaged Simon Parsons & Co to give advice to Byron Dreaming in relation to a number of matters including the status of the share sale agreement between ARG and Sun Devil, the potential purchase of shares in Reliance Insurance by an external party and the capacity of Sun Devil to sell shares in Reliance Insurance to a third party. Items 2, 6, 7, 27, 28 and 38 of the List of Documents in respect of which privilege is claimed relate to advice sought or given pursuant to that engagement.

11 It is not in issue that the documents of which inspection is sought would, in the hands of the fifth defendant in relation to the documents containing Minter Ellison's advice, and in the hands of the second defendant in relation to documents containing Simon Parsons & Co's advice, attract legal professional privilege enjoyed by the fifth defendant and the second defendant respectively. The relevant question is whether, by reason of the communication by the fifth defendant and second defendant respectively of the substance of that advice to other parties, they waived that privilege. The defendants contend that that is not the case because they each enjoyed a common interest privilege with the party entitled to the privilege.

12 Common interest privilege was explained by Barrett JA, with whom McColl and Ward JJA agreed, in Marshall v Prescott [2013] NSWCA 152 where his Honour said:

If a document in which legal professional privilege subsists is given to someone else so that the content ceases to be confidential, the privilege is usually lost. This is because the act of giving is, in the particular circumstances, inconsistent with any continuing intention to maintain confidentiality: Mann v Carnell (above) at [13]. An exception operates, however, where the person entitled to the privilege and the person to whom the content of the document is made known have such a commonality of interest in relation to the subject matter of the privilege that sharing of the content is consistent, rather than inconsistent, with an ongoing intention to preserve confidentiality and privilege. Questions of common interest privilege usually arise (as here) when litigation is on foot or foreshadowed. The present case does not raise the question whether the concept extends beyond the litigation context [57].

13 In Lane v Admedus Regen Pty Ltd [2016] FCA 864, McKerracher J said:

Common interest privilege is not a rigidly defined concept: Farrow Mortgage Services Pty Ltd (in liq) v Webb [1996] NSWSC 259; (1996) 39 NSWLR 601 (at 609) per Sheller JA, with whom Waddell AJA agreed. A common interest in the outcome of litigation will be sufficient to enable any party with that interest to rely upon it. For common interest privilege to apply:

(a) the relevant communication must be subject to legal professional privilege;

(b) the interest said to be common must be identified; and

(c) the exchange of the information or advice, subject to legal professional privilege must relate to that interest [27].

14 A common interest will not exist where the individual interests of two persons in a particular question are selfish and potentially adverse to each other: Ampolex v Perpetual Trustee Co (Canberra) Ltd (1995) 37 NSWLR 405. See also, Media Ocean Ltd v Optus Mobile Pty Ltd (No 10) [2010] FCA 1348 [52] [54].

15 In this case, there is no issue that the relevant communications were subject to legal professional privilege in the hands of the initial recipient of advice. The defendant identified the interest said to be a common interest, being interest in the proper compliance with the Shareholders Agreement by all of the second, third and fourth defendants so as to achieve the common goal of allowing the lawful transfer of those defendants' shares in the first defendant to the fifth defendant. The advice was given in the context of an expected challenge to the proposed transfer by ARG, and likely litigation that might (and in fact did) ensue.

16 The plaintiff accepts that, at least at a superficial level, the existence of a common interest as between at least the second, third, fourth and fifth defendants can be readily understood. It contends that the first defendant could not be said to have that common interest, a matter to which I will return below.

17 ARG contends, however, that there was at least a potential for the interests of Coverforce Victoria to be in conflict with the interests of Byron Dreaming, Sun Devil and Mr Howarth. That potential divergence of interest is said to be illustrated by the sale agreement ultimately entered into between all five defendants on 19 February 2016. Clause 4.5 of the share sale agreement provides a release of liability of any of Sun Devil, Byron Dreaming, or Mr Howarth in connection with any claim by ARG concerning rights associated with ARG's shares, any breach of the Shareholders Agreement or the existence of preemption rights in favour of ARG. It is contended by the plaintiff that that clause illustrates the potential divergence of the interests of Coverforce Victoria from the interests of the other defendants.

18 I do not accept that submission. I accept that the common interest of Byron Dreaming, Sun Devil, Mr Howarth and Coverforce Victoria was the interest in the legal position as to their capacity to complete the transaction which they ultimately entered, and in effecting the transaction successfully. Clause 4.5 does no more than deal with questions of liability in relation to successful claims by ARG. The advice sought related to the position in the light of potential claims by ARG. The fact that the agreement contained provisions as to the position as between the second to fifth defendants in relation to those claims does not suggest that they did not share a common interest in the successful completion of the transaction.

19 The plaintiff also asserts that there was conflicting interests between Coverforce Victoria and Byron Dreaming, Sun Devil and Mr Howarth which are illustrated by the warranties in the share sale agreement found in cl 4.1 and cl 5.1, indemnities provided in cl 5.2 and cl 6 and the restraint of Mr Neate in cl 7. In my view, those matters do not detract from the proposition that all of the defendants shared a common interest in the completion of the share sale agreement and the resistance of claims which would put that agreement in jeopardy that might be, and were, made by ARG. It is those matters to which the advice in respect of which privilege is claimed was directed.

20 The plaintiff contends that the first defendant could have no possible common interest in a transaction being undertaken by its shareholders with a third party relating to the sale of its shares. It was, however, a party to the ultimate share sale agreement. The agreement contained covenants by the first defendant in relation to certain loan agreements and the subscription of shares in the fifth defendant by the first defendant. I accept that the first defendant had an interest in the question of the capacity of the other parties to the agreement to complete the agreement without breaching the Shareholders Agreement and was a necessary party to the share sale agreement which was ultimately included. The common interest privilege extends to the first defendant.

21 The plaintiff contends that if, contrary to its primary position, the documents are subject to common interest privilege, then that privilege is waived by reason of the pleadings of the defendants as to their state of mind.

22 Paragraph 32 of the statement of claim pleads that each of Byron Dreaming, Sun Devil and Mr Howarth procured, or alternatively induced, the others to breach the shareholders agreement. In response to that plea, par 32 of the defence pleads a denial that the Shareholders Agreement was breached, or that any of Byron Dreaming, Sun Devil or Mr Howarth procured or induced a breach of the Shareholders Agreement and pleads that, if any of them did breach the Shareholders Agreement then, at all material times, 'each of Byron (Dreaming) Sun Devil and Howarth held a bona fide and reasonable belief that each of the others were not in breach of the ... Shareholders Agreement' and that each held a bona fide and reasonable belief that ARG was in default of the Shareholders Agreement.

23 ARG contends that by that plea, the defendants have opened themselves to a requirement to disclose the advice of solicitors which must necessarily have informed their belief and reasonableness of the bona fides of the pleaded belief.

24 Waiver of legal professional privilege occurs in circumstances where the party entitled to the privilege engages in conduct inconsistent with the maintenance of the confidentiality protected by the privilege: Mann v Carnell [1999] HCA 66; (1999) 201 CLR 1 [28] [29].

25 In BrisConnections Finance Pty Ltd (Receivers and Managers Appointed) v Arup Pty Ltd [2016] FCA 438, Flick J outlined a number of propositions, which I respectfully adopt, that emerge from the application of the principle explained in Mann v Carnell. His Honour said:

Instances of the basic principle being applied to circumstances in which it has been suggested that a client has engaged in conduct inconsistent with maintaining the confidentiality of otherwise privileged advice, include cases that have accepted the following propositions:

• it is not necessary for there to be a "specific reference" in a pleading to legal advice for a waiver to occur: Hancock v Rinehart [2013] NSWSC 1978 at [22] per Brereton J. "The test for waiver is not whether the pleadings made any express or implied assertions about the content of the privileged communications, pleaded either as a material fact or as a particular to any material fact, which might be inconsistent with maintenance of the privilege": Vic Hotel Pty Ltd v DC Payments Australasia Pty Ltd [2015] VSCA 101 at [34], [2015] VSCA 101; (2015) 321 ALR 191 at 205 per Dixon AJA (Mandie JA agreeing). It is sufficient if a pleading implicitly puts in issue the content of an otherwise privileged communication or otherwise acts inconsistently with maintaining the privilege;
• it is not sufficient to found a waiver of privilege that the contents of a privileged communication may be relevant to an issue to be resolved: Council of the New South Wales Bar Association v Archer [2008] NSWCA 164 at [48], [2008] NSWCA 164; (2008) 72 NSWLR 236 at 252 per Hodgson JA. See also: Seven Network Ltd v News Limited (No 10) [2005] FCA 1721 at [44], [2005] FCA 1721; (2005) 227 ALR 704 at 715 per Sackville J; Schulman v Abbott Tout Lawyers [2010] FCA 308 at [10] per Flick J; and
• it is not sufficient to found a waiver of privilege that a pleading puts in issue the state of mind of the person claiming the privilege: Ferella v Official Trustee in Bankruptcy [2010] FCA 766 at [65], [2010] FCA 766; (2010) 188 FCR 68 at 81 per Yates J. Similarly, after referring to Ferella, Wigney J in Archer Capital 4A Pty Ltd v Sage Group PLC (No 3) [2013] FCA 1160 at [24], [2013] FCA 1160; (2013) 306 ALR 414 at 421 to 422 observed that it was "tolerably clear that the mere fact that a party pleads a cause of action that includes their state of mind as a material fact, or otherwise puts their state of mind in issue in the proceeding, does not necessarily give rise to an implied waiver in respect of legal advice that may have been received by the party, even if that legal advice may be relevant to the party's state of mind". "[I]t is too broad a statement to say that a pleading of a state of mind to which legal advice is or might be materially relevant is an adequate surrogate for the expression of principle in Mann v Carnell": DSE (Holdings) Pty Ltd v Intertan Inc [2003] FCA 384 at [95], [2003] FCA 384; (2003) 127 FCR 499 at 526 per Allsop J (as his Honour then was).

What is necessary to found a waiver of privilege is conduct that directly or indirectly puts the content of the privileged communication in issue: Commissioner of Taxation v Rio Tinto Ltd [2006] FCAFC 86, (2006) 151 FCR 341. In rejecting a submission that privilege had been waived by replying to a request for particulars and in dismissing the appeal, Kenny, Stone and Edmonds JJ relevantly concluded:

'In any event, even if his Honour was correct in holding that, by the SFIC, the Commissioner raised an issue in the substantive proceeding as to his states of mind, this alone would not provide a proper basis for "issue waiver". As the previous examination of the authorities shows, the question is not whether the Commissioner has put his state of mind in issue but whether he has directly or indirectly put the contents of the otherwise privileged communications in issue in the litigation, either in making a claim or by way of defence. Put another way, to adapt Allsop J's language in DSE, has the Commissioner (being the privilege holder) made an assertion as part of his or her case in the litigation that lays open the privileged documents to scrutiny, with the consequence that an inconsistency arises between the making of the assertion and the maintenance of the privilege?' [65].

The making of express or implied assertions about the content of a privileged communication may, for example, be inconsistent with maintaining the privilege: Council of the New South Wales Bar Association v Archer [2008] NSWCA 164 at [48], [2008] NSWCA 164; (2008) 72 NSWLR 236 at 252 per Hodgson JA. Expressed differently, in Bennett v Chief Executive Officer, Australian Customs Service [2004] FCAFC 237, (2004) 140 FCR 101 at 120 Gyles J referred to the decision in Mann v Carnell and concluded:

'... The test looks to inconsistency between the disclosure that has been made by the client on the one hand and the purpose of confidentiality that underpins legal professional privilege on the other. It is not a matter simply of applying general notions of fairness as assessed by the individual judge. The authorities to which I have referred show that it is well established that for a client to deploy the substance or effect of legal advice for forensic or commercial purposes is inconsistent with the maintenance of the confidentiality that attracts legal professional privilege' [68].

Tamberlin J agreed with Gyles J [18].

26 Flick J also referred to the judgment of Hodgson JA in Council of the New South Wales Bar Association v Archer [2008] NSWCA 164 [48] where his Honour said:

... It is not enough to bring about a waiver of client legal privilege that the client is bringing proceedings in which the content of the privileged communications could, as a reasonable possibility, be relevant and of assistance to the other party. For the client to do this is not inconsistent with the maintenance of the privilege, and does not give rise to unfairness of the type in question. What would involve inconsistency and relevant unfairness is the making of express or implied assertions about the content of the privileged communications, while at the same time seeking to maintain the privilege. In this respect, it may be sufficient that the client is making assertions about the client's state of mind, in circumstances where there were confidential communications likely to have affected that state of mind [48].

27 Particular reliance is placed by the plaintiff on the decision of Giles CJ in Ampolex v Perpetual Trustee Co (1995) 37 NSWLR 405 where Giles CJ said:

GPG Nominees and Allied ... having exposed to scrutiny their corporate states of mind, being states of mind to which their legal advice is likely to have contributed, GPG Nominees and Allied cannot withhold the advice from their opponent. I emphasise that the legal advice is likely to have contributed to the states of mind of GPG Nominees and Allied, as was plain from the dates of and descriptions of the documents: were that not so, the principle may not have applied [411E].

28 In this case, the defendants contend that no waiver has occurred by reason simply of their pleading in their defence a bona fide and reasonable belief that they were not in breach of the shareholders agreement, and ARG was. That was a central question upon which Minter Ellison must have provided advice having regard to the nature of the retainer as explained by Mr Angelis and Ms Richmond. It is inherent in the conclusion that the defendants enjoy common interest privilege that they effectively acted in concert in seeking to defeat ARG's claim and effect the sale of shares to Coverforce. They were guided by legal advice obtained by Coverforce. They plead not only their state of mind as to the relevant legal issues, but also that that state of mind was reasonable and held in good faith. That, in my view, implies that the state of mind was consistent with the legal advice that they were receiving on those very questions. To assert a state of mind as to the very matters upon which legal advice was being taken, then to decline to reveal that legal advice is, in my view, to act inconsistently with the maintenance of the privilege. The plea indirectly put the contents of the otherwise privileged communication in issue. That is so notwithstanding that no specific reference to the legal advice was contained in the pleadings.

29 In the circumstances, inspection of those documents in respect of which privilege is claimed which deal with, or are relevant to, the question as to whether or not the second, third and fourth defendants, or any of them, were in breach of the Shareholders Agreement, or whether ARG was in default of the Shareholders Agreement, should be made available for inspection.

30 It is likely that that waiver applies to all documents in respect of which privilege is claimed. I have not yet inspected the documents to ascertain whether there might be any documents dealing with matters other than advice as to ARG's alleged breach and the lawfulness of the proposed sale of shares to Coverforce. It may not be necessary for me to do so if the defendants accept that all the documents in question deal with those matters.

31 I will hear the parties as to the manner in which those documents should be identified.

32 The second application before me is an application for further and better discovery. The plaintiffs sought further and better discovery of two categories of documents. They were described as follows:

1. All individual emails and attachments to emails within the email chains listed in the defendants' discovery lists over which a claim for privilege has been made; and
2. costs agreements, retainers and communications between the defendants (or any of them) and Minter Ellison, and any documents identifying the scope of work to be performed by Minter Ellison.

33 Neither party addressed the application for further and better discovery in oral submissions. After the application was instituted in September 2016, substitute affidavits of discovery were filed which fulfilled the requirements of the first category of documents, and it would appear that that part of the application now falls away.

34 As to the second category, it is unclear whether the application is now pursued. The documents coming within category two are said to be relevant as a result of the pleadings in the defence as to ARG being a defaulting party under the Shareholders Agreement, the absence of breach by the defendants and the holding by the second defendants of a bona fide and reasonable belief that ARG was, and that they were not, in breach of the Shareholders Agreement. Whether or not they were or were not in breach is unaffected by whether or not they received legal advice, and it is not apparent to me how retainer documents could be relevant to those issues. The reasonableness and good faith of their belief as to whether or not they were in breach turns not on the nature of the retainer of solicitors, but rather on the advice that was actually provided. Having made the ruling as to waiver above, I am not persuaded that the documents referred to in category two, if they exist, are relevant to any issue.

35 The application for further and better discovery should be dismissed.

CITATION : AUSTRALIAN RELIANCE GROUP PTY LTD -v- COVERFORCE INSURANCE BROKERS VICTORIA PTY LTD [No 3] [2017] WASC 60 (S)

BYRON DREAMING PTY LTD (as Trustee for the Malady Family Trust)

SUN DEVIL INVESTMENTS PTY LTD (as Trustee for the JG Neate Family Trust)

ROBERT CARLTON HOWARTH (as Trustee for the Howarth No.1 Trust)

Practice and procedure - Inspection of documents - Court knew of documents - Whether documents should be made available for inspection

First Defendant : Mr J A Thomson SC & Mr J E Scovell

Second Defendant : Mr J A Thomson SC & Mr J E Scovell

Third Defendant : Mr J A Thomson SC & Mr J E Scovell

Fourth Defendant : Mr J A Thomson SC & Mr J E Scovell

Fifth Defendant : Mr J A Thomson SC & Mr J E Scovell

1 CHANEY J: In reasons for decision published on 13 March 2017, I concluded that there should be inspection by the plaintiff of the documents discovered by the first and second defendants, and by the fifth defendant, in respect of which privilege had been claimed where those document deal with, or are relevant to, the question as to whether or not the second, third and fourth defendants, or any of them, were in breach of the shareholders agreement, or whether the plaintiff was in default of the shareholders agreement. Following delivery of those reasons, I invited the defendants to identify any documents in respect of which a claim for privilege had been made which they considered did not relate to the questions which I had identified. In response to that invitation, the defendants' solicitors notified the court by email dated 30 March 2017 of the documents in respect of which they considered privilege had not been waived.

2 The documents notified in relation to the first and second defendant's discovery were those documents numbered 2, 6, 7, 27, 28, 48, 57, 58, 60, 64, 65 and 74 of the documents identified in the list of documents attached to the affidavit of Dennis James Malady sworn 20 July 2016. In relation to the fifth defendant's discovery, the documents notified were documents numbered 17, 20, 40, 42, 52 and 60 of the documents identified in the list of documents attached to the affidavit of Kasey Richmond sworn 15 July 2016 (together the notified documents).

3 I have now reviewed the notified documents. I am satisfied that documents 2, 6 and 7 in Mr Malady's list relate to matters other than the issues in respect of which privilege was waived. The claim to privilege in relation to those documents should be upheld, and inspection of those documents should not be ordered.

4 Having reviewed documents 27, 28, 48 and 57, I consider that those documents are relevant to whether ARG was in breach of the shareholders agreement and inspection should be ordered. In respect of documents 58, 60, 64 and 65, the basis of the claim for privilege is not apparent, and those documents should be made available for inspection.

5 In relation to document 74, I received advice from the defendants' solicitors on 31 March 2017 that that document had been produced in the proceedings by a third party under subpoena, and thus it was accepted that privilege had been waived.

6 In relation to the documents discovered by the fifth defendant, having reviewed documents 17, 20, 40 and 42, I am of the view that those matters are relevant to the question of the lawfulness of the proposed sale of shares by the second, third and fourth defendants to Coverforce, and on that basis should be disclosed. Documents 52 and 60 are draft documents prepared by Minter Ellison for the fifth defendant. They are privileged in the hands of the fifth defendant. They are not, in my view, relevant to any question of breach of the shareholders agreement by the second, third and fourth defendants, and the privilege should be maintained.

7 The parties should file a minute of orders to reflect these reasons.