BETWEEN : TRANSPACIFIC CLEANAWAY PTY LTD (ACN 000 164 938)

GOLDCROWN CORPORATION PTY LTD (ACN 104 069 838) atf the WILSON FAMILY TRUST

Practice and procedure - Discovery - Whether defendants should provide a full description of documents the subject of a claim of privilege - Turns on own facts

Boase v Seven Network (Operations) Ltd [2005] WASC 174

Derby & Co Ltd v Weldon (No 7) [1990] 1 WLR 1156

Gardner v Irvin (1878) 4 Ex D 49

Interchase Corporation Ltd (in liq) v Grosvenor Hill (Queensland) Pty Ltd (No 2) [1999] 1 Qd R 163

Kadlunga Proprietors v Electricity Trust of South Australia (1985) 39 SASR 410

Lazenby v Zammit [1987] TASSC 5; (1987) Tas R 54

Refrigerated Express Lines (A/Asia) Pty Ltd v Australian Meat and Livestock Corporation (1979) 42 FLR 204

Taylor v Batten (1878) 4 QBD 85

1 LE MIERE J: The plaintiff applies for an order that the first and second defendants provide a full description of all documents the subject of a claim of privilege against self incrimination. I will refer to the first and second defendants as 'the defendants'.

2 In its re-amended statement of claim filed 1 April 2009 the plaintiff pleads the following case. Between 2003 and 23 August 2007 the first defendant (Mr Wilson) was employed by the plaintiff as a technical services manager and operations manager. Mr Wilson was the trustee for the Wilson Family Trust (the Trust). PSS Project Support Services (PSS) was a business effectively owned and controlled by Mr Wilson. Tank & Vessel Engineering Pty Ltd (TVE) is a company providing maintenance and other services. Between 2003 and 2006 the plaintiff engaged TVE as one of its primary contractors to undertake certain works for the plaintiff. The first defendant caused PSS to issue invoices to TVE (PSS invoices) knowing that the invoices would be incorporated into invoices which would be rendered by TVE to the plaintiff. The plaintiff paid each TVE invoice. Following payment by the plaintiff of the TVE invoices, TVE paid the PSS invoices to PSS which payments were in turn paid to Mr Wilson and/or the Trust or to third parties at the direction of Mr Wilson and/or the Trust.

3 The plaintiff's case is that the PSS invoices were not genuine invoices in that the materials or services purportedly provided or performed were never in fact provided or performed, alternatively were for materials or services provided or performed by the plaintiff but which Mr Wilson pretended to have been provided or performed by PSS, or alternatively were for materials or services which arose from business opportunities which properly belonged to the plaintiff which business opportunities and the benefits arising there from Mr Wilson wrongfully diverted to PSS, himself and/or the Trust. The plaintiff says that Mr Wilson breached his contractual obligations and fiduciary duties to the plaintiff and by reason of those breaches wrongly obtained profits, property and benefits for PSS, himself and/or the Trust being the payments received under the PSS invoices.

4 By their defence the defendants admit that Mr Wilson was employed by the plaintiff. The defendants deny that Mr Wilson was the trustee of the Trust. The defendants deny that Mr Wilson effectively owned and controlled PSS. The defendants do not admit that the plaintiff engaged TVE as one of its primary contractors to undertake certain works for the plaintiff and for which work the plaintiff expected to receive invoices. The defendants deny that Mr Wilson caused PSS to issue the PSS invoices knowing that the invoices would be incorporated into invoices which would be rendered by TVE to the plaintiff and denies that the plaintiff paid each TVE invoice. The defendants do not admit that TVE paid the PSS invoices to PSS which payments were in turn paid to Mr Wilson and/or the Trust or to third parties at the direction of Mr Wilson and/or the Trust. The defendants do not admit that the PSS invoices were not genuine invoices in that the materials or services purportedly provided or performed thereunder were never in fact provided or performed. The defendants deny the alternative pleas that the PSS invoices were for materials or services provided or performed by the plaintiff but which Mr Wilson pretended to have been provided or performed by PSS or were for materials or services which arose from business opportunities which properly belonged to the plaintiff but which business opportunities and the benefits arising therefrom Mr Wilson wrongly diverted to PSS, himself and/or the Trust. The defendants deny that Mr Wilson breached his contractual obligations and fiduciary duties to the plaintiff and deny that the plaintiff is entitled to any relief.

5 On 30 April 2009 the first defendant filed a list of documents dated 29 April 2009 and verified by an affidavit sworn by Mr Wilson on 29 April 2009. In his affidavit Mr Wilson said that he is the person identified as the first and second defendant in this action, that the statements of fact made by him in [1], [3] and [4] of the list of documents are true, that the statements of fact made by him in [2] of the list are true to the best of his knowledge, information and belief and the statements made by him in [5] of the list are true to the best of his knowledge, information and belief.

6 In [2] of the list of documents Mr Wilson objects to produce the documents described in item 1 in pt 2 of sch 1 on the ground that to do so would tend to incriminate him or expose him to a penalty. The documents in item 1 in pt 2 of sch 1 are described as 'bundle of financial records and documentation' and the date is stated to be 'various'.

7 Mr Wilson states that the grounds for his belief that to produce the documents described in item 1 in pt 2 of sch 1 would tend to incriminate him or expose him to a penalty are as follows:

1. I object to produce the documents described in Item 1 in Part 2 of Schedule 1 on the ground that to do so would tend to incriminate me or expose me to a penalty. The grounds for this belief are:

(a) I was an employee of the plaintiff during the period from 2003 to 2007;

(b) The plaintiff alleges in the Re-amended statement of claim ('statement of claim') and plaintiff's answers to the request for further and better particulars to the amended statement of claim dated 17 February 2009 ('answers') that:

(i) Tank and Vessel Engineering Pty Ltd ('TVE') was a supplier of services to the plaintiff (see para [9] of the statement of claim);

(ii) I had a conversation with a Mr Brad Stoner, who is alleged to be a principal of TVE. The effect of the discussion is alleged to be that:

(A) an entity owned by me and under my control, PSS Project Support Services ('PSS'), would render invoices to TVE; and

(B) TVE would incorporate the PSS invoices in invoices rendered by TVE to the plaintiff

(see the particulars under para [10] of the statement of claim);

(A) were not 'genuine' invoices in that they were for materials and services which were not in fact provided;

(B) involved the pretence that the services and materials were provided by PSS but in fact the materials and services were provided by me

(iv) any materials provided by PSS to TVE were actually materials which belonged to the plaintiff (seen answer 9(b)).

(c) I am advised by Mr Stefano Boni, the principal of my solicitor and verily believe that the allegations made by the plaintiff in these proceedings amount to allegations of the following criminal activities:

(i) stealing while a servant, contrary to section 371 of the Criminal Code ('Code');

(ii) fraud, contrary to section 409 of the Code; and

(iii) conspiracy to commit fraud, contrary to section 558 of the Code.

(i) that the allegations made by the plaintiff in these proceedings amount to an allegation that I have contravened section 182 of the Corporations Act; and

(ii) that section 182 of the Corporations Act is a penalty offence within section 1317E of the Act.

8 The plaintiff says that the defendants are obliged, but have failed, to give a full description of all the documents the subject of the claim of privilege against self-incrimination.

9 By letter of 19 May 2009 the solicitors for the defendants wrote:

Mr Wilson accepts that usually, a full description is given of the documents in respect of a claim for privilege is made. That is not, however, an absolute rule. Where the description of the documents has a tendency to incriminate the deponent, the deponent is not obliged to provide that information. In the present case, the core of the plaintiff's case appears to be that Mr Wilson made an agreement with Mr Stoner to prepare false invoices. A description of the documents in respect of which privilege was claimed which indicated, one way or the other, that Mr Wilson had financial records of the types alleged in the statement of claim, might tend to incriminate Mr Wilson. Accordingly, Mr Wilson is entitled to decline to provide a more detailed description of the documents in his possession.

Without prejudice to the position put in the previous paragraph, we are instructed to inform you that the financial records:

(a) relate to the period from 2003 to 2006; and

(b) include income taxation returns and bank statements [2] - [3].

10 The plaintiff submits that it is possible, and required by the rules, for the defendants to disclose further information about other types of financial record without encroaching on the detail of material that might enliven the privilege. The plaintiff says this includes:

(d) the entity in respect of which the document is a record.

(1) The list of documents made in compliance with Rule 1 or with an order under Rule 7 must be in Form no 17, and must enumerate the documents in a convenient order and as shortly as possible, but describing each of them or, in the case of bundles of documents of the same nature, each bundle, sufficiently to enable it to be identified ...

(2) If it is claimed that any documents are privileged from production, the claim must be made and the list of documents with a sufficient statement of the grounds of the privilege.

11 Order 26 r 4(1) imposes an obligation on a party giving discovery to describe each of the documents, or in the case of bundles of documents of the same nature, each bundle, sufficiently to enable it to be identified. Rule 4(2) requires a party claiming that any documents are privileged to make the claim with a sufficient statement of the grounds of the privilege. There is no express requirement in the rules that a party making discovery is obliged to go further and describe each document claimed to be privileged sufficiently to enable the claim of privilege to be tested.

12 Counsel for the plaintiff submitted that a party making discovery is obliged to give a sufficient description of documents for which privilege is claimed so as to enable the claim of privilege to be tested. This raises the question whether O 26 r 4 impliedly obliges a party making discovery to go further than identifying the documents for which privilege is claimed sufficiently to enable them to be identified. There is authority in Australia to the effect that a party asserting privilege is required to give a sufficient description of the documents as to enable the claim of privilege to be tested. However, before referring to that authority it is convenient to refer to English authorities on the question.

13 In Taylor v Batten (1878) 4 QBD 85 Cotton LJ disagreed with the submission that parties seeking discovery are entitled to be put in such a position as to test the truth of the affidavit by the description of the documents.

But it is said that the plaintiffs are entitled to be put in such a position as to test the truth of the affidavit by the description of the documents. That, however, is, in our opinion, erroneous. The only object of the affidavit is to enable the Court to order the documents to be produced, if it think fit to make an order to that effect; and if words are used which, if true, protect the documents, no further particularity is necessary than in the case of documents for which protection is not claimed. If an affidavit claiming protection for documents some of which are, while others are not, privileged did not sufficiently shew which were entitled to protection, the Court would either order production of all or, as under ordinary circumstances would be the proper course, allow the party an opportunity of making a further affidavit to identify the documents entitled to protection (88).

15 In Gardner v Irvin (1878) 4 Ex D 49 the Court of Appeal held that the defendants' affidavit of discovery was insufficient because it merely stated that the documents are privileged but did not state the facts giving rise to the privilege. Cotton LJ said that the plaintiffs were not entitled to have the dates of the letters and such other particulars of the correspondence that may enable them to discover indirectly the contents of the letters (53).

16 The principle applied by Cotton LJ in Taylor v Batten and Gardner v Irvin was approved in Derby & Co Ltd v Weldon (No 7) [1990] 1 WLR 1156 where Vinelott J rejected a submission that the circumstances of the case justified a requirement that fuller descriptions be given of documents for which privilege was claimed. Vinelott J held:

Where privilege is claimed for professional communications of a confidential character obtained for the purpose of getting legal advice, it has not in modern times been the practice to require the party claiming privilege to bundle and number them. The claim for privilege is treated as itself a sufficient description of them (1179).

17 There is some support for the plaintiff's proposition in Australia. In Kadlunga Proprietors v Electricity Trust of South Australia (1985) 39 SASR 410, White J, with whom King CJ and Millhouse J agreed, held that the description of documents claimed to be privileged from production should be sufficient to disclose, without disclosing the contents of the documents, whether or not the documents are documents to which the head of privilege relied upon can extend. The court held that the description of the documents in the list filed was insufficient, and that an order should be made for further and better discovery of documents by way of a more accurate description of the documents. White J said:

What is required in properly describing discovered documents will vary from case to case depending on the nature of the document and the particular ground of privilege claimed. In this case it is especially important to include the date of preparation of the protected documents as part of their description (415).

In that case the privilege claimed was legal professional privilege. White J said that it was important to disclose the date of the documents in respect of which privilege was claimed because unless the date of the document was disclosed there was no way of testing whether it could reasonably have come into being for use in legal proceedings reasonably anticipated or in train at the time of its creation.

18 The plaintiff also relies upon the decision of Master Newnes (as his Honour then was) in Boase v Seven Network (Operations) Ltd [2005] WASC 174. Newnes M found that the claim to privilege in that case was inadequate. A number of documents had been described simply as 'document' and others as 'draft letter'. Newnes M said:

In the present case, I do not consider that the description of a document for which privilege is claimed simply in terms such as 'document' or 'draft letter' is adequate. I accept that a document is not to be described in terms which disclose privileged information but I consider that the descriptions could be more informative than those to which I have referred. It seems to me it is possible, at the least, to give a generic description of the contents of the document, or to give a generic description of the recipient, or intended recipient, of the letter, such as 'prospective witness' or such like, so that if it become necessary to do so the particular document can be related to the document described in the list [29].

The vice which Newnes M identified in the description of the documents for which privilege was claimed was that it was not possible to relate each document to the particular head of privilege claimed and the grounds for it. Newnes M said:

It seems to me that in the circumstances the appropriate course is first to require the plaintiff to put in order the discovery of the documents for which privilege is claimed. I would therefore order the plaintiff to file and serve an affidavit containing a description of each such document sufficient to identify it (without disclosing its contents), and stating in respect of each document the specific basis, or bases, upon which legal professional privilege is claimed [32].

19 This case is different from Boase v Seven Network (Operations) Ltd. In this case the list of documents clearly identifies the particular head of privilege, that is privilege against self-incrimination, which applies to each of the documents in relation to which privilege is claimed. Furthermore, the list contains a statement of the grounds of the privilege claimed beyond a mere assertion that the documents are the subject of privilege against self-incrimination.

20 In Lazenby v Zammit [1987] TASSC 5; (1987) Tas R 54 the Full Court of the Tasmanian Supreme Court declined to follow Kadlunga, holding that the defendants in that case were not entitled to a description that would enable them to form a prima facie view as to the correctness of the claim to privilege. The court determined that the only test of whether documents have been sufficiently described is the test laid down in Taylor v Batten, namely that documents must be so described that it will be possible to determine whether a document produced is one of those mentioned in the list of documents.

21 In Interchase Corporation Ltd (in liq) v Grosvenor Hill (Queensland) Pty Ltd (No 2) [1999] 1 Qd R 163 the appellant made disclosure of an expert valuation report which was not privileged. The appellant claimed legal professional privilege in relation to other documents related to that valuation. The documents for which privilege were claimed were identified by three elements: a range of dates applicable to them, the marking of each document with a letter, and the marking of each document with a number. De Jersey J, with whom Pincus JA and Thomas J agreed, held that the identification will be sufficient if it will facilitate the production of a particular document for which the privilege has been claimed, in the event, for example, of a cesser of the privilege or should the court order production upon a ruling that the privilege does not in fact attach (170). The court rejected the submission that the purpose of the identification was to facilitate an examination by the other party, the recipient of the affidavit of disclosure, of the validity of the claim of privilege. De Jersey J said that one difficulty about requiring any identification of the nature of the document, beyond the sworn assertion of the general ground of privilege, is that the further identification could involve a degree of disclosure which could detract from the very privilege against production being claimed (170).

22 The proposition that documents in respect of which privilege is claimed must be described sufficiently to enable the claim for privilege to be tested is not supported by the terms of O 26 r 4 and the preponderance of authority. It is sufficient if the documents are described sufficiently to enable each of them to be identified and the claim for privilege contains a sufficient statement of the grounds of the privilege.

23 Whatever degree of precision is required by the rules in the description of a document in a list of documents the party giving discovery is not required to indirectly disclose the contents of the documents or to furnish evidence against himself. In Refrigerated Express Lines (A/Asia) Pty Ltd v Australian Meat and Livestock Corporation (1979) 42 FLR 204 Deane J said:

I should, perhaps, add that if, in relation to any particular document of which discovery is required by a respondent, the view is taken that to describe it by reference to its nature or contents would tend to render that respondent liable to a penalty, that circumstance in itself would justify less precision in the description of the document than would otherwise be appropriate. In circumstances where lack of precision of description would not, in the view of the particular respondent, suffice to avoid a tendency to expose to a penalty, an application to modify the order for discovery could of course be made to the court (212).

24 The defendants' list is inadequate. The documents described in item 1 in pt 2 of sch 1 are described as 'bundle of financial records and documentation' and the date is stated to be 'various'. The list does not describe the documents sufficiently to enable them to be identified. The defendants should give further and better discovery by way of a list, verified by affidavit, that adequately describes the documents in respect of which privilege is claimed.

25 The description does not have to be sufficiently detailed to enable the claim for privilege to be tested. It is sufficient if the documents are described sufficiently to enable each of them to be identified if they are required to be produced. The method adopted in Interchase Corporation Ltd (in liq) v Grosvenor Hill (Queensland) Pty Ltd (No 2) of identifying the documents by the marking of each document with a letter and a number is the minimal requirement.

26 Where it is practicable to do so the defendants should describe the nature of each document or bundle of documents without indirectly disclosing their contents or furnishing evidence against the defendants. For example, in their letter of 19 May 2009 the solicitors for the defendants stated that the documents related to the period from 2003 - 2006 and include income taxation returns and bank statements. I infer from that statement that Mr Wilson may describe some of the documents as income taxation returns and some of the documents as bank statements without disclosing their contents or otherwise incriminating himself. I accept that there are other documents that Mr Wilson has described as financial records or financial documents that he cannot further describe without incriminating himself. He is not required to provide any more detailed description of the nature of the document. It would be sufficient if such documents are described by a generic description such as 'financial records' or 'financial documents' and the range of dates relating to the documents is stated. Each document should be separately marked with a letter or number or in some other way so that it may be identified if it is required to be produced.