CAREY -v- KORDA & WINTERBOTTOM [No 2] [2011] WASC 220 (26 August 2011)

Supreme Court of WA|2011-08-26|Before: Edelman J

1 The issues in this proceeding concern the operation of legal professional privilege in relation to communications contained in two types of document. The first is bills of costs from a firm of solicitors, Corrs Chambers Westgarth (Corrs). The second is schedules (Recharge Schedules) of costs incurred by receivers which were initially charged to a management company, and subsequently recharged by the management company to individual companies in the group.

2 The first issue considered in this decision is the nature of a receiver's 'agency' relationship with the company in receivership: is a receiver and manager the proper party to assert legal professional privilege? Other issues which arise as a consequence of my conclusion on the first issue are whether there is sufficient evidence to maintain a claim for legal professional privilege, and whether the privilege has been waived, or abrogated by statute.

4 The first defendants (the Receivers) are receivers and managers of each of eight companies. The companies are, or were, part of the Westpoint Group. One of the companies is Westpoint Corporation Ltd (in liq). One function of Westpoint Corporation was to be the immediate recipient of billing invoices for other companies in the group.

5 The second defendant (the Lender) holds a fixed and floating charge (the Charge) over assets of the Companies (the Secured Property). After each company committed an act of default, the Lender appointed the Receivers as receivers and managers of each of the Companies.

6 The first plaintiff, Mr Carey, is a director of all of the Companies except Westpoint Management Limited. He is also a member of Westpoint Corporation Pty Ltd. The second plaintiff is a member of Westpoint Management Limited. I will refer below to both parties jointly as the plaintiffs.

7 On 30 August 2010, the plaintiffs commenced proceedings by originating process. The background and detail of those proceedings are explained in the decision of Le Miere J in Carey v Korda [2010] WASC 362. Le Miere J ordered that there be a trial of seven issues. It is necessary to set these issues out below because one of these issues was reargued before me. The issues were:

(a) Whether, having regard to section 471A(1) of the Corporations Act 2001 (Cth) (Act):

(i) the Plaintiff has, or is otherwise entitled to exercise, any right of access to the financial records of the companies in liquidation, namely Westpoint Corporation Ltd, Bayview Port Melbourne Ltd and Westpoint Management Ltd, pursuant to section 290 of the Act;

(ii) the Plaintiff may inspect records kept by the First Defendants pursuant to section 421(2) of the Act with respect to the companies in liquidation referred to in subparagraph (i) herein; and

(iii) the Plaintiff has standing to bring this application with respect to the companies in liquidation referred to in subparagraph (i) herein or to obtain the relief sought with respect to those companies.

(b) Whether the records within section 421(2) of the Act include records kept by the First Defendants in their personal capacity, or whether they are limited to records kept by the First Defendants as correctly record and explain transactions entered into by the First Defendants in their capacity as the receivers and managers of the Companies the subject of this application.

(c) Whether the records within section 421(2) of the Act extend to any documents beyond the receivership MYOB records (as exemplified by annexure RHM8 to the affidavit of Russell Harry Morgan sworn 12 October 2010) and, in particular, whether those records include tax invoices:

(i) issued by the First Defendants for their fees as receivers and managers of the companies the subject of this application; and

(ii) received by the First Defendant from Corrs Chambers Westgarth for their services to the First Defendants as receivers and managers of the companies the subject of this application.

(d) Whether the First Defendants are entitled to redact information contained in the records to which the Plaintiff is not otherwise entitled under section 290 and/or section 421(2) of the Act, either as a matter of the proper construction of sections 290 and 421(2) of the Act, alternatively as a matter of discretion in granting relief.

(e) Whether any rights which the Plaintiff may have to inspect records under section 290 and section 421(2) of the Act are subject to any proper claim for legal professional privilege by the First Defendants, either as a matter of the proper construction of sections 290 and 421(2) of the Act, alternatively as a matter of discretion in granting relief. (The Court is not asked to determine any claims for privilege at this stage).

(f) Whether the Plaintiff should, as a matter of discretion, be granted any relief at all in the light of the First Defendants' previous offer to provide the documents referred to at paragraph 28 of the letter from the First Defendants' solicitors to the Plaintiff's solicitors of 22 October 2010.

(g) Whether any relief to be granted to the Plaintiff should, in the exercise of the Court's discretion, be conditional upon the Plaintiff agreeing to meet, and providing security in respect of, the First Defendants' reasonable fees and costs associated with complying with that order. (If so, the parties should be ordered to confer as to the quantum of those fees and costs and the form of security to be given).

8 In his reasons for decision in Carey v Korda [27] [30], Le Miere J declined to make orders for inspection of the financial records of two of the eight companies. The first of those was Emu Brewery Developments Pty Ltd (in liq), in respect of which no application for inspection was brought. The second was Bayview Port Melbourne Ltd (in liq). Le Miere J held that neither plaintiff had standing to inspect the documents of Bayview Port Melbourne. The Receivers were also entitled to redact, for irrelevance, information held by the other six companies concerning the transactions of Bayview Port Melbourne or Emu Brewery Developments: [31] [33].

9 In the case of the other six companies (referred to in these reasons as 'the Companies'), Le Miere J held that the plaintiffs' right to inspect the financial records was subject to the issue of legal professional privilege. He did not determine whether legal professional privilege applied. That question is the subject of these reasons. However, in relation to issue (e), Le Miere J observed that:

It is common ground that s 421(2) does not abrogate legal professional privilege. The Receivers are entitled to redact any relevant information in the document which is the subject of legal professional privilege [35].

10 Le Miere J then observed that the question of whether or not any information in the relevant documents is subject to legal professional privilege had not been determined; the Receivers had not, at that stage, made any claim for the privilege. Now they have. Their claim for legal professional privilege is the subject of this proceeding.

11 The plaintiffs oppose the claim by the Receivers for legal professional privilege. The plaintiffs broadly raise four issues, including the issue of discharge of onus (ts 213).

12 First, who is the party entitled to claim privilege? Plainly, legal professional privilege resides in the client of the solicitors. But who was the client of Corrs? The Receivers say that they were the client. The plaintiffs say that the Companies were the client.

13 Secondly, have the Receivers discharged their onus of showing that the information contained in the bills of costs and Recharge Schedules attracts the claim for privilege?

14 Thirdly, was the privilege waived by disclosure of the bills of costs and Recharge Schedules to the Companies?

15 Fourthly, has the privilege been abrogated by statute, in particular by reference to the Legal Practice Act 2003 (WA), the Legal Profession Act 2008 (WA) or the Corporations Act 2001 (Cth) s 421?

(1) the Receivers were the clients of Corrs, and hence the proper party to assert the privilege;

(2) there is sufficient evidence to maintain the privilege (based also upon my inspection of the documents);

(4) the privilege has not been displaced by any statute or statutory policy.

1. Who is the party entitled to claim privilege? Bride v Freehill Hollingdale & Page

17 The starting point is to consider the party who was the client of Corrs and hence entitled to the legal professional privilege. The most directly relevant authority is the decision of the Full Court of the Supreme Court of Western Australia in Bride v Freehill Hollingdale & Page (Unreported, WASC, Library No 950548, 16 October 1995, BC9502646). Senior counsel for the Receivers relied heavily upon that case. Senior counsel for the plaintiffs sought to distinguish it.

18 In Bride, the appellants owned two parcels of land in Katanning which they held on trust. They had mortgaged those parcels of land. The lender alleged that the appellant mortgagors had defaulted on their mortgage. The lender appointed receivers and managers for the land. The receivers then engaged the services of a firm of solicitors. The land was subsequently sold by the lender, through a real estate agent.

19 The mortgagors claimed that the receivers had been invalidly appointed, and that the sales were made at a gross undervalue. The mortgagors commenced actions against various parties including the solicitors. The allegation against the solicitors was that they were aware that the receivers had been invalidly appointed and that they were aware that the sale price was at a gross undervalue. The claim was struck out, and the mortgagors brought an appeal to the Full Court of the Supreme Court of Western Australia.

20 In joint reasons, the Full Court rejected the appeal. In relation to the solicitors, the mortgagors essentially argued that they had engaged the solicitors in a derivative manner, through the agency of the receivers. Their argument can be divided into two steps. First, the mortgagors asserted that the receivers were their agents. Secondly, the mortgagors argued that the engagement of the solicitors by the receivers made the solicitors sub-agents for the mortgagors.

21 The Full Court rejected the mortgagors' argument that the receivers were their agents. The argument was described as proceeding from a 'fundamental misunderstanding of the true nature of the agency relationship constituted by an appointment of a receiver under a mortgage arrangement of this nature' (10 11).

22 In Bride, as in this case, the mortgagors placed significant emphasis on an agency clause in the mortgage. The Full Court quoted from the standard form clause in the mortgage:

The Bank may at any time after this security becomes enforceable appoint any person as receiver and manager (receiver) of the mortgaged premises and may remove the receiver. That any receiver appointed by Bank shall be the agent of the [mortgagor] who shall be solely responsible for the Acts and defaults and for his remuneration.

23 The judgment of the Full Court contains a typographical error in relation to an important word. It uses the word 'Bank' in the place where I have inserted the word 'mortgagor'. I have consulted the case file in the Supreme Court records. The pleadings at first instance before Master Adams set out the clause (cl 9B) in full. They reveal the typographical error in the Full Court's reasons. It is also clear that this error is merely typographical from the subsequent discussion of the Full Court to which I refer below.

24 In its reasons on this point, the Full Court explained that the standard form clause did not create a relationship of agency between the mortgagor and the receivers such that the receivers were acting for the mortgagor in appointing the solicitors. The court quoted from Gomba Holdings UK Ltd v Minories Finance Ltd [1988] 1 WLR 1231 and made a number of further points (11 14), which I summarise below.

25 First, the reason that a clause like this is employed so frequently is to minimise the exposure of the lender for defaults by a receiver whom the lender appoints. The purpose of the clause creating an agency relationship between mortgagor and receiver is to protect a lender by attempting to impose any liability for the receiver's acts upon a mortgagor. This is achieved by treating acts which are done for the benefit of a lender as if they were acts of a mortgagor.

26 Secondly, the agency relationship between the mortgagor and the receiver is 'far removed from the ordinary principal and agent situation' (12); the receiver is the mortgagor's agent 'whether the mortgagor likes it or not' (11); it is the lender, not the mortgagor, who can dismiss the receiver; the mortgagor cannot instruct the receiver as to how to conduct the receivership.

27 Thirdly, the receiver is also a party quite separate from both the appointing mortgagor and the mortgagee. As to the mortgagor, when the receiver is appointed, there is usually an adverse relationship between the appointing lender and the mortgagor. That adversarial situation between lender and mortgagor often infects the relationship between the lenderappointed receiver and the mortgagor. As to the mortgagee, the receiver is exposed to different liability from that of the mortgagee, particularly in cases where there is a clause like the one quoted above. This means that it is necessary, or at least desirable, for a receiver to obtain legal advice which is peculiar to his or her activities.

28 Fourthly, although the receiver owes duties to the mortgagor, those duties are not fiduciary duties. I interpolate here that duties of skill and care are now thought not to be fiduciary duties: see Corporations Act s 420A; Permanent Building Society (in liq) v Wheeler (1994) 14 ACSR 109, 157; and Bristol & West Building Society v Mothew [1998] Ch 1. In contrast the Full Court explained that where the solicitor acts for the receiver the relationship is a fiduciary one (13), and also involves duties of confidentiality owed by the solicitor to the receiver.

29 For these reasons, the Full Court squarely rejected the appellant's argument that the receivers were the agent of the mortgagors (Mr and Mrs Bride) for the purposes of engaging the solicitors. The Full Court held that the solicitors were legal advisers to the receivers.

30 The Full Court also held that a further difficulty for the mortgagors was that there was nothing to suggest that the receivers had even been involved in the sale of the properties, or in the appointment of the real estate agent who sold the properties. As explained below, this was an alternative ground for the decision.

31 The facts of Bride are closely analogous to this case. A question in Bride was whether the solicitors were acting as agents, or subagents, for the mortgagors. Similarly, in this case, the first question is whether the solicitors, Corrs, were acting as agents, or subagents, for the chargor Companies. The relevant clause in Bride is also in very similar terms to the clause in the Charge in this case. Clause 12 of the Charge in this case provides as follows:

(a) A Receiver, subject to clause 12.1(b), is the agent of the Chargor who alone is responsible for the Receiver's acts and omissions and remuneration.

(b) The Lender may appoint a Receiver as the agent of the Lender and delegate to a Receiver any of the Lender's rights under this document.

(a) A Receiver has the right in relation to any property in respect of which the Receiver is appointed, unless limited by the terms of the Receiver's appointment, to do everything that the Chargor may lawfully authorise an agent to do on behalf of the Chargor in relation to that property and, without limitation, a Receiver may in relation to that property exercise:

(i) the rights capable of being conferred on receivers and receivers and managers by the Corporations Act 2001 and the laws of any relevant jurisdiction;

(ii) the rights set out in clauses 11.3 to 11.10 inclusive;

(iii) the rights of the Chargor and the directors of the Chargor; and

(iv) any other rights the Lender may by notice to a Receiver give to a Receiver.

(b) The Lender may by notice to a Receiver at any time give to, or remove from, a Receiver all or any of the rights referred to in clause 12.2(a).

32 As the Full Court in Bride observed, provisions, of which cl 12.1(a) is one, are deeming provisions which treat acts of a receiver, done for the benefit of a lender, as if those acts were done as agent for the mortgagor. The words 'as if', which are used by the Full Court, demonstrate the fiction which is involved in these provisions: Haskins v Commonwealth of Australia [2011] HCA 28 [95] (Heydon J); Re Macks; Ex parte Saint [2000] HCA 62; (2000) 204 CLR 158, 203 [115] (McHugh J). The receiver is not the general agent for the mortgagor at all.

33 Even the label 'agent' can cause confusion. Core instances of agency, such as a contract concluded by a messenger, really 'need no explanation and introduce no new principle': O W Holmes 'Agency' (1891) 8 Harvard Law Rev 345, 346, 348; see also T Krebs 'Agency Law for Muggles: Why there is no Magic in Agency' in A Burrows and E Peel Contract Formation and Parties (2010), ch 10. These core instances of agency simply involve the attribution of the conduct of the agent to another by whose instructions, and for whose benefit, the agent is acting.

34 Unfortunately the word 'agent' is used in multifarious situations with different shades of meaning. '[N]o word is more commonly and constantly abused than the word "agent"': Colonial Mutual Life Assurance Society Ltd v Producers & Citizens Cooperative Assurance Co of Australia Ltd [1931] HCA 53; (1931) 46 CLR 41, 50 (Dixon J); Scott v Davis (2000) 204 CLR 333, 408 [227] (Gummow J).

35 In the context of receivership, receivers have been described as occupying 'a very special position' of agency: Sheahan v Carrier Air Conditioning Pty Ltd [1997] HCA 37; (1997) 189 CLR 407, 432 (Dawson, Gaudron & Gummow JJ) citing Visbord v Federal Commissioner of Taxation [1943] HCA 4; (1943) 68 CLR 354, 382 (Williams J). Further, in Gomba Holdings UK Ltd v Homan [1986] 1 WLR 1301, 1305 (affirmed [1988] 1 WLR 1231), Hoffmann J described a receiver and manager as only 'nominally' the agent of the company.

36 For these reasons, serious caution must be exercised when construing the meaning of the word 'agent' and attributing consequences to the use of that label. This is particularly the case in the context of the relationship between receiver and company.

37 In this case, as in Bride, when cl 12.1 describes the Receiver as 'agent' of the Company chargor, it is merely a verbal device used 'for attaining desired legal consequences': L Fuller Legal Fictions (1967), page 73. The desired legal consequence is to shift liability for defaults by the Receiver. The Lender is attempting to shift liability which it may incur for the Receiver's default to the chargor company. Clause 12.1 as a 'legal device' also provides some protection to the Receivers from personal liability for their acts: Sheahan v Carrier Air Conditioning (433) (Dawson, Gaudron & Gummow JJ).

38 The attempted shift of liability in this way by cl 12.1 does not, and can not, turn the Receivers into general agents of the Companies. It does not mean that legal advice sought by the Receivers is sought on behalf of the Companies.

39 Senior counsel for the plaintiffs submitted that Bride could be distinguished in four ways. The first two ways upon which senior counsel for the plaintiffs sought to distinguish Bride concerned the fact that the case had been decided on the ground that it was the bank which had sold the relevant properties, not the receiver. This is true but, as explained above, this was only an alternative reason for the decision. It does not alter the fact that the Full Court also decided the case on the basis that the solicitors were acting for the receivers.

40 The third way in which Bride was sought to be distinguished was a submission that the solicitors in Bride were acting for the mortgagee and not for Mr and Mrs Bride (as mortgagors). This is not correct. The Full Court held that the solicitors were acting for the receivers. This is also the very point in issue in this case.

41 The final ground upon which Bride was sought to be distinguished was that the Receivers had been involved in procuring the sale of assets of the Companies, and had done work in relation to property related assets. The argument was that since the Lender was not in possession the sales could only have been effected by the Companies themselves. In effecting the sales, and in considering how to deal with Company assets, legal advice may have been required. It was submitted that in giving such advice Corrs must have acted, at least in some respects, for the Companies. Senior counsel also pointed to bills rendered by Corrs to various of the Companies and asserted that these bills showed that Corrs was engaged by the Companies directly.

42 The work performed by the Receivers is discussed in an affidavit of Mr Morgan sworn on 1 February 2011 (Morgan 1). Mr Morgan is a chartered accountant working for Korda Mentha. He had day to day conduct of the receiverships and was supervised by the Receivers.

43 Annexure RHM 5 to Morgan 1 (page 25) is a document which lists various categories of work which were undertaken by the Receivers. I refer in further detail below to these categories of work when considering whether the Receiver has adduced sufficient evidence to maintain legal professional privilege. One of these categories of work considered below is entitled 'dealing with litigation risk' (page 39) in which work was done in considering how to respond to threats of litigation made against the Receivers. Other work done included sale of assets and property realisations (pages 28 32).

44 In relation to sale of assets and property realisations, annexure RHM 5 provides descriptions of the work done by the Receivers. Some of the numerous examples include the following: rent collection, management of the properties prior to sale, reviewing sale contracts and drafting confidentiality agreements, drafting and lodging caveats, obtaining valuations, liaising with settlement agents, advising on subrogated debt and security transfers (see pars 7 8, 12.1 12.8, 12.10 of annexure RHM 5).

45 Another matter described was work done by the Receivers in relation to the Warnbro Fair Shopping Centre. The Receivers investigated transactions concerning an option to purchase this shopping centre and obtained legal advice: par 12.6. The Receivers also had to litigate to realise the asset and had to consider complex GST and stamp duty issues: pars 12.9 12.10.

46 There are several reasons why advice given by Corrs to the Receivers in relation to these matters was advice to them as Receivers and not as general agents for the Companies. First, the powers of the Receivers were not powers of the Companies. As Lord Atkinson remarked of a receiver's management of the business of a company, '[h]is powers [are] those of such an officer [of the court], not those of the company': Moss Steamship Company Ltd v Whinney [1912] AC 254, 266. See also Parsons v Sovereign Bank of Canada [1913] AC 160, 167 (Viscount Haldane LC); Kerr and Hunter on Receivers and Administrators (19th ed, 2010) 185 [663], 243 [910].

47 It is true that actual sales and property realisations could only have been performed by the Companies themselves since the Lender was not in possession. To the extent that the Receivers actually procured those sales for the Companies then the Receivers did this on behalf of the Companies. However, in considering the exercise of their legal powers the Receivers were not acting on behalf of the Companies. Clause 11.3 cl 11.10 of the Charge provide for broad powers for the Lender. By cl 12.2(a)(ii) the Receiver has the same broad powers. The powers are wide ranging and some examples include powers to take possession of the Secured Property, to sell the Secured Property, to carry on any business of the company, to manage and to deal with the Secured Property, and, acting in the name of the company, to make calls on shares in the company. When the Receivers considered how to exercise their broad powers, the Receivers were acting qua Receivers not on behalf of the Companies.

48 The Receivers also owed a range of duties to the Companies in the exercise of their powers. Those duties are wider than the duties owed by the receiver to Mr and Mrs Bride (as individuals) in Bride. The wide duties include the Receivers' duties as 'officers' of the Companies (see s 9 Corporations Act) including their duties of care and diligence (s 180), good faith (s 181), not to improperly use their position (s 182) and not to improperly use information (s 183). The existence of these duties, and the potential liability upon the Receivers for breach of them, simply reinforces the point that the engagement of Corrs was to advise the Receivers and not the Companies. Hence, when the Receivers sought advice from Corrs concerning the exercise of any of these powers, that advice was given to the Receivers in their capacity as receivers and managers.

49 A second reason why the advice given to the Receivers was not given to them as agents of the Companies is because when Corrs advised the Receivers they did so in circumstances where the Receivers had been threatened with litigation concerning their management of the Companies. Any advice, or consideration, given to the prospect of liability of the Receivers could only have been in relation to the Receivers as the principal client themselves. I consider that point further below at [80] [82].

50 A third reason why Corrs were not advising the Receivers in the capacity of the Receivers as agents of the Companies, can be seen from evidence of Corrs' bills of costs which was tendered during this hearing (exhibit 1). An affidavit was provided from Mr Dominic Gerard Emmett, sworn on 23 February 2010. At par 3 of that affidavit Mr Emmett deposes to the instructions he received from one of the Receivers at that time, Mr Oren Zohar. Mr Emmett is a partner at Corrs. He says that Mr Zohar instructed him 'to act on behalf of the Receivers in respect of the receivership of Westpoint Corporation Pty Ltd (In liq) ... and the companies listed in Schedule 1' (emphasis added).

51 Although the engagement letters annexed to Mr Emmett's affidavit refer to each client as the relevant Company, this must have been because the terms of the Charge require payment of the legal fees to be borne by the Companies. The engagement letters are addressed to the Receivers personally and commence with the words '[t]hank you for instructing us to provide general advice on this receivership' (emphasis added). This conclusion is reinforced by my inspection of the sealed affidavits of Mr Morgan which are identical to the affidavits filed and provided to the plaintiffs in these proceedings, but without the redactions. A number of the redacted parts of Mr Morgan's affidavits clearly demonstrate that Corrs considered that they were advising the Receivers.

52 In conclusion on this first issue, the clients of Corrs were the Receivers. However, even if the clients of Corrs were the Companies, then further issues might still arise before the question of legal professional privilege could be conclusively resolved.

53 One further question may be whether the Receivers were also a client of Corrs, at least to the extent that the Receivers sought advice on matters peculiar to their receivership or to litigation against them personally. Could the advice given by Corrs or counsel be filleted into that advice given to the Receivers and that which is given to the Companies? I doubt it.

54 A second, related, question would be whether the Receivers would have a joint interest in the legal advice so that the privilege could only be waived by both the Receivers and the Companies: see Farrow Mortgage Services Pty Ltd (in Liq) v Webb (1996) 39 NSWLR 601.

55 A third question which could arise if the Companies were the clients of Corrs could be whether the Companies, who are not parties to these proceedings, would still assert privilege against the plaintiffs over the bills of costs and Recharge Schedules.

56 Related to the third question is a fourth question whether the Lender or the Receivers have power under the Charge to insist that the Companies assert the privilege against the plaintiffs.

57 However, these matters were not argued before me and it is not necessary for me to consider them because I have concluded that Corrs were engaged by the Receivers and that legal advice was not provided to the Receivers as agents for the Companies.

2. Have the Receivers discharged their onus of showing that the information contained in the bills of costs and Recharge Schedules attracts the claim for privilege? The legal principles

58 Having concluded that the Receivers were the clients of Corrs, and therefore the proper party to maintain legal professional privilege, the next question is whether the Receivers have established that the privilege exists. The Receivers assert privilege over the entirety of the bills of costs (as redacted) and supporting narratives, as well as over identified entries in the Recharge Schedules where it is said that those entries will disclose, either directly or indirectly, the nature of privileged communications.

59 The essential principles governing legal professional privilege are well established, although occasionally the terminology can mislead. It is extremely common for discussion to refer to the privilege as attaching to documents, or to describe documents as privileged. Strictly, this is not accurate. A privilege is a liberty held by a legal or natural person. In the case of legal professional privilege the privilege is a liberty to resist disclosure of communications (whether written or oral) of which another person would otherwise have a right. The liberty or privilege arises where a confidential communication is brought into existence for the dominant purpose of giving or obtaining legal advice or for use in existing or anticipated litigation: Esso Australia Resources Ltd v Commissioner of Taxation of the Commonwealth of Australia [1999] HCA 67; (1999) 201 CLR 49.

60 The question raised by this issue is whether the redacted communications in the bills of costs and Recharge Schedules were confidential communications brought into existence for the dominant purpose of giving or obtaining legal advice or for use in existing or anticipated litigation.

61 In AWB Ltd v Cole (No 5) [2006] FCA 1234; (2006) 155 FCR 30, 44 47 [44], Young J usefully summarised twelve of the established principles. Relevantly to this application, his Honour held that although the onus of proof lies on the Receivers to satisfy the court that the privilege exists, it will usually be sufficient simply to show that a client has consulted a lawyer in Australia concerning a legal problem, and there is nothing controversial about the circumstances in which the client has approached the lawyer: [44](4) citing Kennedy v Wallace [2004] FCAFC 337; (2004) 142 FCR 185, 192 [27] (Black CJ & Emmett J). This may also have been the reason why Owen J suggested that there is an evidentiary onus of proof upon a party challenging an assertion of legal professional privilege to show that the claim is either unfounded or mistaken: Brambles Holdings Ltd v WMC Engineering Services Pty Ltd (1995) 14 WAR 239, 247 (Kennedy & Rowland JJ not deciding the point: 240, 243).

62 Implicit in these suggestions appears to be an assertion that a presumption - a standardised inference - arises in uncontroversial circumstances where legal advice is sought. In other words, in those circumstances there is a presumption that the privilege will arise. Although that approach may sometimes provide a useful starting point, I do not consider that the bills of costs and Recharge Schedules in this case are susceptible to such a presumption. This is because, as I explain below, some information in both these communications is usually not privileged.

63 Senior counsel for the plaintiffs submitted that the claim for privilege cannot extend to those parts of the bills of costs narrative which disclose the date that work was done, who did the work, the time that was spent on the work, the hourly charge for the work and the amount charged with respect to each item of work. Essentially, these matters were said to be outside the scope of the claim for privilege.

64 Matters which do not usually attract the privilege include solicitors' time sheets (see R v Manchester Crown Court; Ex parte Rogers [1999] 4 All ER 35 (Court of Appeal)), solicitors' memoranda of fees (Lake Cumbeline Pty Ltd v Effem Foods Pty Ltd (t/as Uncle Ben's of Australia) (1994) 126 ALR 58), and costs agreements (Cook v Pasminco Ltd (No 2) [2000] FCA 1819; (2000) 107 FCR 44, 53 [47] (Lindgren J)). The reason why these documents do not usually permit a person to maintain privilege over their contents is because the communication contained is not usually brought into existence for the dominant purpose of giving or obtaining legal advice or for use in existing or anticipated litigation. A bill of costs, for example, is brought into existence for the purpose of obtaining payment. Further, those documents do not usually reveal, directly or indirectly, the content of privileged communications.

65 However, the situation is different where a bill of costs or Recharge Schedule goes beyond merely recording the costs incurred and 'recites the nature of the professional service in respect of which it is proposed to charge fees': Lake Cumbeline v Effem Foods (68) (Tamberlin J).

66 Because a bill of costs in detailed form will ordinarily disclose, directly or indirectly, the instructions given by a client to a solicitor or counsel, these bills of costs have sometimes been described as 'prima facie' or 'generally' attracting privilege: Ainsworth v Wilding [1900] 2 Ch 315, 322 (Stirling J); Packer v Deputy Commissioner of Taxation (Qld) [1985] 1 Qd R 275, 287 (McPherson J), 295 (Shepherdson J).

67 There is a good reason for the different treatment of the recitals, or narratives, in a detailed bill of costs from the treatment of those matters such as the total fee charged for work, or the time spent. The reason is that the recital or narrative in a detailed bill of costs usually repeats or describes a confidential communication, such as the nature of the legal advice provided. That confidential communication, which is described, may have been brought into existence for the dominant purpose of obtaining legal advice or for use in existing or anticipated litigation. If so, then there is a need to extend the claim of privilege to the information in the bill of costs. To deny the privilege to the communication in the detailed bill of costs, which is a necessary and anticipated adjunct to the preparation of the original privileged communication, would undermine the privilege: Hodgson v Amcor Ltd [2011] VSC 204 [63] (Vickery J).

68 In other words, the reason why the authorities treat detailed narratives in a bill of costs as usually privileged can be seen by an analogy. The analogy is with a lawyer who photocopies a document containing privileged communications for the purpose of retaining a copy for safekeeping (a non-privileged purpose). Privilege can be asserted in relation to the communication in the copy because otherwise the privilege would be undermined: see Brambles Holdings Ltd v Trade Practices Commission (No 3) [1981] FCA 83; (1981) 58 FLR 452, 458 (Franki J); Vardas v South British Insurance Co Ltd [1984] 2 NSWLR 652, 655 656 (Clarke J).

69 Therefore, in relation to the bills of costs from Corrs and to the Recharge Schedules the question is whether the redactions in those documents are descriptions or summaries which would reveal privileged communications.

70 It may sometimes be difficult to discern whether a description would indirectly reveal the content of a privileged communication. For instance, as explained above, basic matters in a summary of costs might not usually reveal communications which are the subject of a claim for legal professional privilege: the date on which work is done, the rates charged for the work done, who did the work, the time that was spent on the work, and the amount charged with respect to each item of work. But, it is possible that even those matters might sometimes reveal the content of privileged communications. For instance, in exceptional cases the time spent, or amount charged, for work done might indicate the importance or nature of the work and could tend to reveal the nature of the instruction. However, it is not necessary to consider the issue in relation to those matters in this case because the cover sheets to bills of costs have been provided. As I explain below, the redacted narratives are part of a composite whole which would reveal privileged communications.

71 As explained above, the first type of communication in relation to which the Receivers assert privilege from disclosure concerns parts of the bills of costs from Corrs. The Receivers rely upon two affidavits sworn by Mr Morgan: Morgan 1, dated 1 February 2011, which I describe at [42] above, and which annexes, as RHM 8, the redacted versions of the Corrs bills of costs. The Receivers also rely upon a supplementary affidavit of Mr Morgan dated 4 February 2011 (Morgan 2) annexing further bills of costs which were omitted from Morgan 1 by administrative oversight (Morgan 2, par 4). There are more than 1200 pages of bills of costs.

72 In Morgan 1, at par 19, Mr Morgan explains the manner in which Corrs administered their bills of costs. If work was done by Corrs for any individual company, then the bill was sent to that company. If work was done in relation to a number of (or all) of the Companies, but it was not feasible to divide the work amongst them, then the bill was sent to Westpoint Corporation.

73 In the open version of Mr Morgan's affidavits the front page of the bills of costs are included. A typical example is the first bill of costs at Morgan 1, page 138. It is addressed to one of the Companies, Huntingdale Village Pty Ltd. The bill of costs is marked to the attention of Mr Zohar (who was, at that time, one of the receivers). It is dated 28 February 2006. It provides for the amount of professional fees to be paid and the expenses incurred. The detailed part of the bill of costs schedule is then redacted, although not entirely. Information is provided concerning expenses schedules, including enquiry fees with agencies such as the Water Corporation.

74 Morgan 1 also exhibits tax invoices to individual Companies which provide information concerning the amount of that Company's liability as a part of the total fee issued to Westpoint Corporation. So, for instance, Morgan 1, page 201, shows that the share of the total professional fees incurred by Huntingdale Village Pty Ltd in the period ending 22 January 2010 is 20% of the total of the fees incurred. Amounts are provided. Similarly, Morgan 2, page 44, annexes the bill of costs for Paragon Apartments Ltd for the same period. This bill of costs shows that Paragon Apartments also bore 20% of the total of the fees incurred for that period.

75 Morgan 1 also exhibits fee notes provided from counsel, including the name of the counsel performing the work, the date of issue of the fee note, the cost for the work performed but redacting the detailed description of the work which was done.

76 In summary, the material in Morgan 1 and Morgan 2 which is not redacted concerns those matters, which I have described above at [65], which are not usually the subject of a claim for privilege. The redacted parts of bills of costs are described in Morgan 1 as relating to each of the following (which I summarise):

(1) a summary which contains narrations of the work done by Corrs in relation to specific issues;

(2) a detailed list of narrations for the work done by individual legal practitioners and article clerks; and

(3) similar narrations in invoices from counsel, mostly referrable to actual or threatened litigation.

77 These redacted parts cannot be meaningfully divided to reveal any unprivileged content. They concern the matters which, for the reasons I have explained, a claim for privilege would usually be maintained. However, in written submissions, the plaintiffs objected to the lack of specificity in the Receivers' descriptions of their claims for privilege. In particular, complaint was made that there was no identification of which narrations in each bill of costs related to each of the three categories described above.

78 I do not consider that in these circumstances it was necessary for the Receivers to descend to the level of detail suggested by the plaintiffs. In any event, senior counsel for the Receivers invited me to inspect the sealed affidavits of Mr Morgan in which the redacted parts of Morgan 1 and Morgan 2 were visible. I have acceded to that invitation. A court should not be hesitant to exercise its power to inspect documents to determine if privilege exists: Esso Australia Resources v Commissioner of Taxation (70) [52] (Gleeson CJ, Gaudron & Gummow JJ).

79 After having inspected the sealed versions of Morgan 1 and Morgan 2, I am satisfied that all of the redactions concern communications fall within the three categories described above, and that all would reveal, directly or indirectly, the content of privileged communications. I do not consider it is possible to remove any parts of those redactions, which form part of a composite whole.

80 There is another important consideration in this case which further reinforces the conclusion that I have already reached that the privilege has been established. This consideration is that the legal work by Corrs for the Receivers was performed under a cloud of actual and threatened litigation against the Receivers. The threats of litigation against the Receivers, since 30 March 2006, included litigation for excessive costs; for not realising the best prices in the sale of assets; for unauthorised entry to premises; for unauthorised taking of documents and disclosure to third parties; for failure to provide information to enable Mr Carey to refinance secured debt or purchase secured debt; and various allegations about the conduct of the Receivers.

81 Some of these threats materialised into litigation. Some of that litigation continues. As Mr Russell Morgan deposed in his affidavit, the Receivers needed to seek advice from Corrs, in relation to a large amount of work in order to manage an 'unusually high litigation risk' (Morgan 1, par 14). Even if the Receivers were not the subject of litigation or threatened litigation, I would still have reached the conclusion that the redacted passages are properly the subject of legal professional privilege. However, the existence of the threatened and actual litigation against the Receivers further reinforces that conclusion. It would be an impossible task to attempt to segregate those references in the detailed narrations of the advice provided which concerned only any express advice provided to the Receivers concerning that litigation.

82 In the light of the threatened and actual litigation against the Receivers, consideration of the liability of the Receivers must have been a matter generally which 'would reasonably arise in the course of carrying out express instructions': State of New South Wales v Betfair Pty Ltd [2009] FCAFC 160; (2009) 180 FCR 543, 548 [16] (Kenny, Stone & Middleton JJ); DSE (Holdings) Pty Ltd v Intertan Inc [2003] FCA 1191; (2003) 135 FCR 151, 168 [50] (Allsop J).

83 The second type of document with which this application is concerned is the Recharge Schedules. The Recharge Schedules concern the remuneration and expenses of the Receivers. In Morgan 1, Mr Morgan explains, at pars 24 25, that the Recharge Schedules formed part of a billing system which was developed by the Receivers as an efficient way of obtaining payment approval from the Lender. The Receivers would issue a single invoice to Westpoint Corporation in respect of all the charges for the Companies during a relevant period. The invoice was then presented to the Lender for approval and, once approval was obtained, it was issued to Westpoint Corporation for payment. Following payment, Westpoint Corporation would then recharge the relevant amount to the Westpoint company which had incurred the charges.

84 This recharging generally occurred every six months. The recharge issued was a one page invoice to the relevant company. The one page recharge invoices were supported by Recharge Schedules. The Recharge Schedules set out individual timesheet entries which are extracted from the time recording system used by the Receivers' firm.

85 Annexed to the affidavit of Mr Morgan at RHM 7 are Recharge Schedules for a number of different invoices (invoices 4448, 5023, 5185, 5219, 7352, and 11103). The sample of Recharge Schedules comprises only 54 pages and has been redacted in part. This sampling approach to assessment of whether privilege exists in relation to the Recharge Schedules was contemplated by Le Miere J in Carey v Korda [47].

86 Mr Morgan says (pars 29 37) that the redactions in the Recharge Schedules fall within three categories (which I summarise):

(1) Oral or written communications between the Receivers (or employees of the Receivers' firm) and Corrs or counsel which disclose the nature of instructions or advice sought or given or in relation to anticipated, pending or actual litigation.

(2) Tasks undertaken by the Receivers (or employees of the Receivers' firm) which disclose the nature of instructions or advice sought by Corrs or counsel or for the dominant purpose of pending or anticipated litigation or actual litigation.

(3) Mixed tasks undertaken by the Receivers (or employees of the Receivers' firm) and oral or written communications with Corrs or counsel which disclose the nature of instructions or advice sought or given by Corrs or counsel or for the dominant purpose of pending or anticipated litigation or actual litigation.

87 Within category (1) are redactions in RHM 7 which are marked 1.1, 1.2, 1.3 and 1.4. Mr Morgan explains, at pars 30 - 33, the reasons why redactions fall within this category. First, the redacted narratives in invoices 4448 and 11103 marked 1.1 disclose the subject matter on which counsel's advice was sought and obtained (RHM 7: 86, 87, 134, 135). Secondly, the redacted narration in invoice 7352 marked 1.2 discloses the subject matter on which counsel's advice was sought, and which was discussed with counsel and Corrs (RHM 7: 126, 128). Thirdly, the redacted narratives in invoices 4448, 5219, 7352 and 11103 marked 1.3 disclose the subject matter on which advice was sought from, and/or given by, Corrs where the advice was in relation to anticipated, pending or actual litigation (RHM 7: 88, 116, 126, 133, 134). Fourthly, the redacted narratives in invoices 4448, 5219, and 11103 marked 1.4 disclose the subject matter on which advice was sought from or given by Corrs (RHM 7: 84, 121, 134).

88 Within category (2) are redactions marked 2.1 and 2.2. Mr Morgan explains, at pars 34 35 the reasons why redactions fall within this category. First, the redacted narratives in invoices 4448 and 7352 marked 2.1 disclose the subject matter on which advice was sought from or given by Corrs or counsel and tasks undertaken by the Receivers for the purpose of anticipated, pending or actual litigation (RHM 7: 87, 88, 99, 100, 126). Secondly, the redacted narratives in invoices 5023, 5185 and 7352 and 11103 marked 2.2 disclose the subject matter on which advice was sought from or given by Corrs or counsel (RHM 7: 100, 109, 128, 134).

89 Within category (3) are redactions marked 3.1 and 3.2. First, the redacted narratives in invoices 5023 and 5219 marked 3.1 contain a mixture of a tasks undertaken by an employee of the Receivers and a communication with Corrs which indirectly disclose the subject matter on which advice was sought from or given by Corrs (RHM 7: 97, 111, 120). Secondly, the redacted narratives in invoices 5185 and 5219 marked 3.2 contain a mixture of a task undertaken by an employee of the Receivers and a communication with Corrs, which indirectly discloses the subject matter on which advice was sought from or given by Corrs or counsel for the dominant purpose for use in anticipated, pending or actual litigation (RHM 7: 111, 120, 121).

90 In written submissions for the plaintiffs objection is also raised to the insufficient particularity of the claim for privilege in relation to the Recharge Schedules. The plaintiffs say that the descriptions of the redactions are little more than assertion and that the Receivers have not deposed to any facts that establish that disclosure of the redacted entries would disclose the subject matter on which advice was sought or given. I do not consider that the Receivers needed to particularise the details of their claim for privilege in relation to the sample Recharge Schedules any further than is contained in Mr Morgan's affidavit.

91 In any event, I have inspected all the Recharge Schedules in the sealed version of Morgan 1. Each of the claims for privilege in relation to communications which have been reacted in Morgan 1 is properly made.

3. Whether privilege was waived by disclosure of the bills of costs and Recharge Schedules to the Companies?

92 I have concluded that the Receivers can maintain a claim for legal professional privilege in relation to the bills of costs and Recharge Schedules, and that they have satisfied their onus of proof. The penultimate issue which is then raised by the plaintiffs is whether the Receivers have waived their claim to privilege. The submission is that the Receivers waived any privilege to which they were entitled by disclosing to the Companies the bills of costs and the Recharge Schedules.

93 The leading decision in relation to waiver of legal professional privilege is Mann v Carnell [1999] HCA 66; (1999) 201 CLR 1. In that case, Mr Mann had complained to a member of the Legislative Assembly of the Australian Capital Territory about the conduct of the government in litigation he had brought against it. The member passed the complaint on to the chief minister who disclosed the government's legal advice to the member by way of explanation. The member wrote back to Mr Mann and enclosed the cover page of the legal advice provided to him. Mr Mann argued that the Chief Minister had waived privilege by disclosing the legal advice to the member. A majority of the High Court of Australia (Gleeson CJ, Gaudron, Gummow, Kirby & Callinan JJ) held that privilege had not been waived. The test applied was whether the conduct of the chief minister was inconsistent with the maintenance of confidentiality in relation to the communication ((13) [28] (Gleeson CJ, Gaudron, Gummow & Callinan JJ). If there were such inconsistency then this would be conduct inconsistent with the maintenance of the privilege. However, the chief minister's conduct was not inconsistent with maintaining the confidentiality of the communication.

94 The test for waiver which derives from the joint judgment in Mann, differs in some respects from the previous approach of the High Court of Australia. In particular, prior to Mann, the governing consideration was the 'fairness' of allowing the holder to maintain legal professional privilege: Attorney General for the Northern Territory v Maurice [1986] HCA 80; (1986) 161 CLR 475; Goldberg v Ng [1995] HCA 39; (1995) 185 CLR 83. After Mann, the governing consideration is whether the conduct of the person entitled to the privilege is inconsistent with the maintenance of the confidentiality of the communication, although considerations of fairness are still relevant to that question: [34].

95 In Mann the joint judgment of a plurality of the High Court, at [32], referred to a number of cases where disclosure of privileged documents to third parties for limited and specific purposes did not lead to a loss of the privilege: British Coal Corporation v Dennis Rye Ltd (No 2) [1988] 1 WLR 1113; Goldman v Hesper [1988] 1 WLR 1238; Gotha City v Sotheby's [1997] EWCA Civ 1897; [1998] 1 WLR 114. The plurality observed, at [30], that no application had been made to reopen the decision in Goldberg v Ng, in which voluntary disclosure of legal advice to the Law Society was held to have waived the privilege. However, the plurality observed that the decision was consistent with the conclusion that voluntary disclosure to a third party does not necessarily waive privilege.

96 In summary, the question of waiver is not one concerning the subjective intentions of the person holding the privilege. It is whether the conduct of the holder of the privilege, such as a voluntary (intentional) act of disclosure, is conduct which is inconsistent with the maintenance of the confidentiality of the communication.

97 In this case, the disclosure by the Receivers of the bills of costs and Recharge Schedules to the Companies was not inconsistent with the maintenance of the confidentiality of the privileged communications in those documents. The disclosure by the Receivers was for a limited and particular purpose. That purpose involved the Receivers allocating, as they were required to do, the relevant costs and disbursements between the Companies. It also involved the Receivers providing explanation to the Companies of the purpose for which payment from them was required.

98 In this respect, the disclosure by the Receivers can be compared with the provision of the legal advice by the chief minister to the member in Mann on a confidential basis. This was not a waiver of the privilege. Another comparison is Osland v Secretary to the Department of Justice [2008] HCA 37; (2008) 234 CLR 275. In that case, there was no waiver of privilege arising from the disclosure by the Attorney-General for Victoria that he had obtained legal advice from three senior counsel recommending that a petition for mercy be denied. The disclosure was for the limited purpose of satisfying the public that due process had been followed in considering the petition, and that the decision was not based on political considerations: (298) [48] (Gleeson CJ, Gummow, Heydon & Kiefel JJ).

99 In written submissions on waiver, the plaintiffs also asserted that the bills of costs and Recharge Schedules were documents which were, respectively, received and created in the course of the Receivers acting for the Companies. It was argued that this meant that those documents are owned by the Companies and cannot therefore be the subject of a claim for privilege. As explained in my consideration of the first issue in these reasons, the premise of this argument is flawed. The Receivers were not general agents for the Companies; the bills of costs from Corrs and the Recharge Schedule requests for payment of those costs were not documents owned by the Companies.

100 In Boulos v Carter; Re TARBS World TV Australia Pty Ltd [2005] NSWSC 891; (2005) 194 FLR 96, the plaintiff directors brought applications against receivers to inspect company records. One basis for the claim was pursuant to s 421 of the Corporations Act. In the course of considering the rights of the plaintiffs under the general law, Barrett J opined that documents created or received by receivers 'in the course of acting for the company (including as the agent of the company under the charge) must be regarded as owned by the company': (108) [47].

101 In relation to the first issue (ie the issue of who is the party entitled to claim privilege), I explained above that the Receivers were not acting for the Companies when they sought and obtained legal advice from Corrs. Hence, the documents received by the Receivers from Corrs or counsel were not owned by the company. In Boulos, Barrett J, at [47], also quoted from the second edition of Tolleys Company Law and emphasised the difference between two types of documents. On the one hand, there are documents concerning the acts of a receiver conducted on behalf of a company, such as sale of the company assets. These belong to the company. On the other hand, there are documents which contain advice or information about the receivership which are produced to enable the receiver to assess how to discharge his duties. These documents belong to the receiver. It does not matter that they were produced at the expense of the company. The bills of costs and Recharge Schedules fall neatly into this latter category for the reasons I have explained above in consideration of the first issue in these proceedings.

102 For these reasons, the bills of costs from Corrs and the Recharge Schedules were documents which were created for the benefit of the Receivers and the provision of privileged communications in those documents to the Companies was not a waiver of the Receivers' legal professional privilege.

4. Whether the privilege has been impliedly abrogated by statute or policy?

103 The final issue is whether the Receivers' legal professional privilege has been abrogated by legislation or policy. This issue was raised by the plaintiffs in supplementary written submissions filed shortly before the hearing. The primary argument on behalf of the plaintiffs was effectively that the Legal Practice Act and the Legal Profession Act had abrogated legal professional privilege in relation to any bill of costs, whether in detailed narrative form or not.

104 The argument on behalf of the plaintiffs was effectively as follows. Under the Legal Practice Act a 'party charged' includes a person who has paid a solicitor's bill (s 228(2)(a)(i)), and a person liable to pay or to reimburse another for costs in a solicitors' bill (s 228(2)(a)(iii)). Since the Companies had paid Corrs' bills of costs then the Companies were parties charged under the Legal Practice Act. As parties charged under the Legal Practice Act, the Companies have a right to require Corrs to tax their bills of costs (s 232). If the bill of costs does not contain sufficient material to enable the taxing officer to tax the bill, the taxing officer may order the solicitor to lodge a more detailed bill of costs (s 234). Since the Companies have a right to demand that the bills of costs be taxed it was submitted that the Legal Practice Act must have abrogated legal professional privilege.

105 For completeness, at least in relation to legal work performed in Western Australia, the plaintiffs referred also to the Legal Profession Act. The Legal Profession Act contains similar provisions to those described above: see s 253(1)(c) and s 295. So, the plaintiffs submitted, their argument that legal professional privilege had been abrogated applied in relation to all work done by Corrs in this matter in Western Australia.

106 The plaintiffs' argument that the Legal Practice Act and Legal Profession Act have abrogated privilege is not confined to cases where a party entitled to the privilege had applied for taxation of a bill of costs. In order to succeed in this case the plaintiffs need to establish that the privilege is abrogated in every case where a party could apply for taxation of the bill of costs. The reason why the argument needs to be so broad is because no application for taxation had been made in this case.

107 It was suggested in argument that an application had been made by some of the Companies for an extension of time within which to bring an application for taxation. But no application for taxation of any bill of costs has been made, and the Companies are not before this court. Hence, the plaintiffs needed to establish that the mere potential to tax a bill of costs meant that the statute which created the power to tax had abrogated legal professional privilege.

108 If the plaintiffs' submission were correct it would mean that almost all of the authorities discussed above at [58] [70] were wrongly decided. In each case, the courts need not have considered whether legal professional privilege applied because in every case involving a bill of costs that privilege had been abrogated by legislation providing for the power of a party to have a bill of costs taxed. However, as a matter of construction of the legislation it is not necessary to reach this conclusion which might otherwise be very surprising.

109 As a matter of construction, the Legal Practice Act and the Legal Profession Act do not abrogate the privilege. A statute will only be taken to have abrogated an important common law privilege such as legal professional privilege if it clearly indicates that it has done so: Daniels Corporation International Pty Ltd v Australian Competition & Consumer Commission [2002] HCA 49; (2002) 213 CLR 543, 553 [11] (Gleeson CJ, Gaudron, Gummow & Hayne JJ).

110 There is no clear indication in the Legal Practice Act or Legal Profession Act that legal professional privilege is to be abrogated. Indeed, a particularly clear indication would be expected since the effect of such a conclusion would be so wide ranging. In many cases the summary in a detailed bill of costs could reveal significant information about the nature of legal advice sought and received. That summary information would no longer be privileged in any case.

111 Further, there are strong indications in those Acts that legal professional privilege should be maintained. Part 12 of the Legal Practice Act is concerned with complaints and discipline. Section 201 of pt 12 expressly provides that a claim for privilege cannot be asserted to resist disclosure of information to the Complaints Committee. Section 201(3) then provides that this disclosure does not operate as a waiver of legal professional privilege. In other words, the Legal Practice Act has provided that, in one limited respect, in relation to the Complaints Committee only, legal professional privilege is abrogated. There are corresponding provisions in the Legal Profession Act (see s 468). The express abrogation of legal professional privilege in this limited respect in these Acts leaves no room for any implied abrogation of a much more general, wideranging, effect.

112 The plaintiffs also made a related submission that the privilege had been abrogated by s 421 of the Corporations Act. Although, as senior counsel for the plaintiffs observed, the matter was not argued before Le Miere J, it was common ground in the proceedings before his Honour that s 421 of the Corporations Act did not abrogate legal professional privilege: Carey v Korda [35].

113 In any event, there is nothing in s 421 which could abrogate legal professional privilege expressly or by implication. There is no express abrogation of the privilege in s 421. Nor is there any reason why s 421 impliedly requires the abrogation of legal professional privilege.

114 In the context of a provision which was more broadly worded than s 421, in Daniels Corporation International v ACCC the High Court of Australia rejected an argument that legal professional privilege had been abrogated by implication. By comparison, s 421(2) is concerned only with financial records. Receivers and other managing controllers of property are held to account under s 421(2) by the myriad of financial records which can be inspected, without the need also to abrogate legal professional privilege to compel the production of narratives of legal advice received. Section 9 defines 'financial records' to include invoices, receipts, orders for the payment of money, bills of exchange, cheques, promissory notes and vouchers, documents of prime entry, and working papers and other documents needed to explain the methods for making up financial statements or adjustments to the financial statements.

115 As to scrutiny of the Receivers in this particular case, I have already referred above to all the information disclosed by the Receivers in the cover sheets before the narratives in the bills of costs and in the Recharge Schedules. The Receivers have also disclosed records of receipts and payments for each bank account maintained by them as MYOB records: see affidavit of Mr Morgan dated 12 October 2010, and Carey v Korda [2]. I do not accept the submission that without abrogation of legal professional privilege, the Receivers would 'escape all scrutiny' (ts 200).

116 Finally, to the extent to which the plaintiffs suggested that there was some general public policy that had abrogated legal professional privilege in this case, then such an argument must be rejected. Legal professional privilege is itself the product of a balancing exercise between competing public interests. No further balancing of public interests is either necessary or possible: Commissioner of Australian Federal Police v Propend Finance Pty Ltd [1997] HCA 3; (1997) 188 CLR 501, 583 (Kirby J).

117 For these reasons, there has been no statutory abrogation of the legal professional privilege held by the Receivers, nor any abrogation for any reasons of policy.

118 The legal professional privilege in relation to communications from Corrs is held by the Receivers. The Receivers hold that privilege on their own account, not as agents for the Companies. The Receivers have discharged their onus of showing that the redactions they made in the bills of costs and Recharge Schedules are privileged. The Receivers did not waive the privilege by disclosure of the bills of costs or Recharge Schedules to the Companies. And the legal professional privilege of the Receivers has not been impliedly abrogated by statute or for any reason of policy.

At a glance

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Before

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Judgment (141 paragraphs)

Legislation Cited (2)

Cases Cited (22)