Baron v Gilmore [2018] NSWSC 439 | Case summary

Supreme Court of NSW|2018-04-06|Before: Ball J

Introduction

On 23 February 2018, the Court, at the request of the first, second, third and fifth defendants, issued a subpoena to Furzer Crestani Forensic (FCF), who are expert accountants retained by the plaintiffs, for various documents held by FCF in connection with reports they prepared for the purposes of these proceedings. The documents were provided to the Court on two USB sticks.
By a notice of motion filed on 23 March 2018, the plaintiffs seek orders the effect of which is to prevent the defendants obtaining access to certain documents that were produced in response to the subpoena on the ground that those documents are the subject of a claim for legal professional privilege made by the plaintiffs.
The documents in respect of which the claim for privilege is made fall into five categories: 1. correspondence between Shakenovsky & Associates, the solicitors for the plainitiffs, and any of Alan Baron, Pierre Bouwer, Ian Gilmore, Adrian Bell, Brayden Gilmore, Chris Katehos, Leanne Marks or any other employee of FCF. Messrs Baron, Bouwer and Ian Gilmore are the plaintiffs. Mr Bell and Mr Brayden Gilmore have provided affidavits for the plaintiffs in the proceedings. Mr Katehos was the person at FCF who was responsible for preparing the reports and Ms Marks assisted him; 2. copies of draft reports prepared by Mr Katehos; 3. draft copies of letters of instruction sent by Shakenovsky & Associates to FCF; 4. copies of notes made by Mr Katehos, Ms Marks or any other employee of FCF; and 5. copies of a document prepared by Mr Ian Gilmore.
In support of the claim for privilege, the plaintiffs rely on an affidavit sworn by Ms Rachel Harrison, who is the solicitor with Shakenovsky & Associates who has carriage of the matter. Attached to that affidavit is a schedule providing a brief description of each document in respect of which privilege is claimed. It will be necessary to say more about the affidavit and schedule shortly.

Relevant legal principles

As anomalous as it seems, it is not disputed that the claim for privilege is to be decided by reference to the common law, and not the Evidence Act 1995 (NSW): see Tavcol Pty Ltd v Valbeet Pty Ltd [2016] NSWSC 1002 at [2]-[12] per McDougall J.
Relevantly, at common law privilege attaches to confidential communications between a client or legal adviser on the one hand and a third party on the other which was made for the dominant purpose of anticipated or existing litigation: see Tavcol at [15]-[17]; Buzzle Operations Pty Ltd (In Liq) v Apple Computer Australia Pty Ltd (2009) 74 NSWLR 469; [2009] NSWSC 225 at [15]-[18] per White J.
Ordinarily, disclosure of an expert's report for the purpose of relying on it in the litigation will result in an implied waiver of the privilege in respect of documents that it can be inferred were used in a way that could be said to influence the content of the report: Australian Securities and Investments Commission v Southcorp Ltd (2003) 46 ACSR 438 at 21 per Lindgren J quoted in Tavcol at [16].

First category

Although the first category is described as consisting of correspondence between certain named individuals or organisations, it is much broader than that, although it includes correspondence of the type described.
Under this category, Ms Harrison deals in her affidavit with three types of document. First, she refers to communications between Shakenovsky & Associates and each of the named persons, which she says were "prepared for the dominant or sole purpose of providing or obtaining legal services relating to the present proceedings".
Second, Ms Harrison says that there was correspondence between Shakenovsky & Associates and Mr Alex Ball, which was copied to FCF. Mr Ball is an agricultural expert and, according to Ms Harrison, the communications concerned possible assistance in advice he could give in relation to the proceedings.
Third, Ms Harrison says that the documents produced under this category include fee notes, retainer agreements and other communications in respect of fees, disbursements and their payment. However, the affidavit does not state who was retained and for what purpose, and the schedule attached to the affidavit lists a number of invoices where it is not apparent who was retained or what was the nature of the work that they did.
It is also apparent from the schedule that privilege is claimed in respect of a number of documents which do not fall within the descriptions contained in the affidavit and the precise nature of which is not apparent from the description in the schedule itself, let alone the purpose for which they were brought into existence.
Courts have frequently stressed the need for an affidavit in support of a claim for privilege to provide sufficient information about a document and the purpose for which it was obtained so that the Court can be satisfied that the claim for privilege is properly made: see, for example, Tavcol at [22]-[27]. Ms Harrison's affidavit does not do that. Instead, it makes a blanket claim for privilege in respect of correspondence between Shakenovsky & Associates and certain named persons. It then attaches a list of documents which appears to include documents falling within classes in respect of which not even a blanket claim is made.
I accept that the details that need to be given in an affidavit in support of a claim for privilege may vary depending on the nature of the documents in question. So, for example, if a document records communications between the solicitors for a party in existing litigation and the party, or a person who has provided an affidavit in the proceedings, it would be reasonable to infer without more that the claim for privilege is properly made. But the same does not follow for other categories of document. That is true of many of the documents referred to in the schedule under this category in respect of which a claim for privilege is made.
In the present case, I would permit the plaintiffs to maintain a claim for privilege over documents consisting of correspondence between Shakenovsky & Associates and each of Messrs Baron, Bouwer, Ian Gilmore, Bell, Brayden Gilmore and Ball. Although only a blanket claim for privilege is made, I think that it is reasonable to infer from the nature of the documents that they were brought into existence for the dominant purpose of this litigation. However, on the evidence before me, I am not prepared to conclude that any of the other documents listed in the schedule under the heading "All correspondence - privilege" are properly the subject of a claim for privilege.

Second category

The second category consists of draft reports. There is no evidence of the purpose for which those drafts were brought into existence. The only evidence is that they were communicated to the plaintiffs and their advisers. However, that is not sufficient to attract a claim for privilege. At a minimum, the drafts would need to be brought into existence for the dominant purpose of including them in communications with the plaintiffs or their legal advisers so that they can be said to form part of the communications. Consequently, in my opinion, there is insufficient evidence to justify the claim for privilege in respect of documents falling into this category.

Third category

The third category consists of letters of instruction to FCF by Shakenovsky & Associates. According to Ms Harrison, Shakenovsky & Associates sent various drafts of the letter of instruction to FCF. The final letter of instruction has been disclosed. I accept that the plaintiffs are entitled to maintain a claim for privilege in respect of these documents.

Fourth category

The fourth category consists of internal notes prepared by FCF.
No evidence is given by Ms Harrison (or anyone else) concerning the purpose or purposes for which the notes were prepared. There is no evidence that the notes record privileged conversations.
It is apparent from the schedule that many, but not all, of the notes record telephone conference calls. The plaintiffs' solicitors and counsel were involved in a number of those conference calls. However, the schedule does not identify the purpose of any of the conference calls.
It is apparent from the reports that FCF undertook its own enquiries and sought further instructions in relation to the factual assumptions it should make for the purpose of preparing its reports. Those assumptions are not the subject of any letter of instruction. It may be inferred that a number of instructions were given orally and it is quite possible that they were given during the conference calls which are the subject of the file notes.
In those circumstances, and in the absence of proper evidence in support of the claim for privilege, I am not prepared to conclude that any of the file notes is privileged.

Fifth category

The fifth category consists of two copies of a document prepared by Mr Ian Gilmore for the purposes of a mediation and which was provided to Mr Katehos to assist him in the preparation of the reports. According to Ms Harrison, she has been informed by Mr Katehos that the document was not relied on by him in the preparation of his reports and was not otherwise referred to.
In my opinion, the document is the subject of a claim of without prejudice privilege.
Since the document was not referred to in the reports and was not used for the purpose of preparing the reports, I do not think privilege in it has been lost.

Orders and costs

The plaintiffs have achieved some success on their motion, although it is limited. In those circumstances, in my opinion it is appropriate to order that each party bear their own costs of the motion.
The orders of the court therefore are that: 1. The defendants be given access to the documents produced on subpoena by Furzer Crestani Forensic other than the following documents: 1. correspondence between Shakenovsky & Associates on the one hand and any of Alan Baron, Pierre Bouwer, Ian Gilmore, Adrian Bell, Brayden Gilmore, Chris Katehos, Leanne Marks or any other employee of FCF on the other; 2. draft letter of instructions from Shakenovsky & Associates to Furzer Crestani Forensic; and 3. the document prepared by Ian Gilmore for the purposes of a mediation between the parties that was given to Mr Katehos. 1. Each party bear their own costs of the plaintiffs' motion filed on 23 March 2018.

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: 11 April 2018

Baron v Gilmore

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