CITICORP AUSTRALIA LTD & ORS v CIRILLO & ANOR No. SCGRG-85-1481 [2000] SASC 399

"1. That the plaintiffs do give further and better discovery of each and every document in respect of which the plaintiffs have claimed privilege by specifying the document and the ground upon which privilege is claimed and providing a description of the documents with sufficient detail to enable an assessment of privilege."

2 Various consequential orders are sought but they are unimportant.

3 The plaintiffs commenced these proceedings against the defendants some 15 years ago. The plaintiffs obtained an interim and interlocutory injunction restraining the defendants from dealing with a particular asset, a Poclain Excavator.

4 The injunction was maintained and during the period in which the injunction was maintained the asset deteriorated. Mr Cirillo has claimed that the plaintiffs are liable to pay damages to the defendants upon the plaintiffs undertaking as to damages, which was given at the time of the granting of the injunction.

5 A number of issues have been raised between the parties but an order was made by Olsson J identifying preliminary points for determination. Those points are:

"1.1 Whether the first defendant has locus standi to seek or obtain the relief sought in paragraph 18 of the Amended More Explicit Statement of Claim dated 11 June 1998 in support of his application to enforce the undertakings as to damages contained in the interlocutory injunctions granted by the Honourable Justice Cox on 3 May 1985 and the Honourable Justice White on 10 May 1985 and 24 May 1995 insofar as they were given in respect of the first defendant.

1.2 Whether as at, or at any time subsequent to, 18 April 1983, the first defendant was the owner of the Poclain Excavator Serial No. 77 (the Poclain).

1.3 Whether, in the alternative to 1.2 above, the first defendant is estopped, for the reasons set out in paragraphs 1.3 and 1.4 of the Second Further Amended Defence dated 26 July 1999, from asserting that he was a beneficial owner of the Poclain at any material time.

1.4 Whether, in the further alternative to 1.2 and 1.3 above, the first defendant transferred and assigned his interest in the Poclain to other parties, for the reasons set out in paragraph 1.5 of the Second Amended Further Defence dated 26 July 1999.

1.5 Whether, further or in the alternative to 1.2, 1.3 and 1.4 above, the first defendant abandoned any claim to ownership of the Poclain, as alleged in paragraph 1.7 of the Second Further Amended Defence dated 26 July 1999.

6 The first defendant's claim for damages on the undertaking is dependant on the first defendant establishing that he was the owner of the Poclain at the relevant times.

7 The preliminary issue relating to locus standi depends upon considerations of the Bankruptcy Act 1966 (Cth). The other matters will give rise to considerations of whether the first defendant, Mr Cirillo, was the owner of the Poclain at the relevant time and, if so, whether he is estopped from asserting that he was a beneficial owner and, if he was the owner, transferred and assigned his interest to other parties. The last matter to be considered is whether he had at any time abandoned any claim to ownership.

9 If Mr Cirillo fails to succeed in establishing ownership or, in the alternative, if it is found that he is estopped from asserting that he was the beneficial owner at the relevant time or that he had transferred his interest in the Poclain or abandoned his claim to ownership of the Poclain, then his claim for damages on the undertaking as to damages given by the plaintiffs will fail.

10 No doubt it was for that reason that Olsson J made the order for the determination of those preliminary issues.

11 This litigation, as I have already said, has been going for a considerable length of time. It is clear from a cursory examination of the file that the parties are antagonistic to each other and there is, at least on the part of the first defendant, a sense of mistrust of the plaintiffs' conduct.

12 The plaintiffs have filed a number of lists of documents. The first was filed on 10 November 1997, the second on 11 March 1999, the third on 1 June 1999, the fourth on 11 June 1999, the fifth on 30 June 1999, the sixth on 19 July 1999, the seventh on 26 July 2000 and the eighth on 4 October 2000.

13 It can be seen that six lists were filed prior to the amendments to the Rules which came into force on 3 June 2000 and two lists filed subsequent to those amendments.

14 In each of the lists of documents filed the plaintiffs have discovered documents for which a claim for legal professional privilege has been made.

15 In the first list the plaintiffs have claimed privilege in respect of correspondence emanating from the plaintiffs' solicitors to the plaintiffs and to third parties and correspondence received by the plaintiffs' solicitors from the plaintiffs and third parties for the purpose of existing or contemplated litigation.

16 The plaintiffs have also claimed privilege in respect of drafts pleadings.

17 Further a claim has been made in respect of correspondence between the plaintiffs' solicitors and the defendants' solicitors for the purpose of negotiating or settling disputes.

18 In that first list all of those documents have been described as various and no dates are given.

19 The plaintiffs have adopted a similar course in respect of the second, third and fourth lists. In the fifth list they have identified two particular documents being internal memoranda of the first plaintiff. In the next list of documents they have identified by date and description a number of documents which appear to be internal documents of the first plaintiff and communications between the first plaintiff and its solicitors and communications received by the first plaintiff from its solicitors.

20 It would be fair to summarise the plaintiffs' position for discovery of documents for which legal professional privilege has been claimed in the following terms. First there has been a general claim for privilege over communications between the plaintiffs and the plaintiffs' solicitors and the plaintiffs' solicitors and the plaintiffs. Secondly, there has been a general claim for privilege in respect of communications from the plaintiffs' solicitors to third parties in circumstances where the communications are said to have arisen for the purpose of existing or contemplated litigation. Thirdly, the plaintiffs have claimed legal professional privilege over the class of documents which includes communications between the plaintiffs' solicitors and defendants' solicitors involving negotiations or settlement of disputes. Lastly, the plaintiffs' have apparently discovered separately the first plaintiff's files which include communications from the first plaintiff's solicitors and communications to those solicitors and other communications. In respect of the first plaintiff's file the plaintiffs have listed each of the documents separately and described the documents and, where possible, referenced them to the date of creation.

21 In none of the first six lists of documents was there reference to a microfiche relating to a company called Adelaide Excavators Pty Ltd or any documents lodged at the Australian Securities Commission in respect of that company.

22 However in the seventh list the plaintiffs discovered that microfiche.

23 That document was discovered in that part of the list of documents for which legal professional privilege was not claimed.

24 The first defendant's solicitors wrote to the plaintiffs' solicitors on 18 August 2000 complaining of the plaintiffs failure to discover that microfiche before including it in the seventh list. They asked the plaintiffs' solicitors to advise when it was that the plaintiffs first came into possession of the microfiche and why it was that the microfiche was not discovered in the previous list of documents.

25 The plaintiffs' solicitors replied advising that the microfiche was protected by legal professional privilege as it was obtained on behalf of the plaintiffs for the purpose of the plaintiffs using the documents in these proceedings. However because the plaintiffs' counsel had advised that part of the document contained in the microfiche might be adduced into evidence a decision was taken by the plaintiffs, on the advice of senior counsel, that privilege over the microfiche be waived. Privilege was accordingly waived and, as a result of that, the plaintiffs included the microfiche in that part of the list of documents for which legal professional privilege was not claimed.

26 The first defendant's solicitors were not satisfied with the plaintiffs' solicitors explanation and wrote again on 29 August 2000 seeking further information.

"We further require you within 10 business days to promptly describe each of the documents or where proper class of documents in respect for which privilege has been claimed in all of your clients' lists of documents to date with sufficient particularity in order to enable us to determine for ourselves whether your claim for legal professional privilege has been properly claimed. Should you fail to do so we will take proceedings requiring you to do so. If you need more time than what is specified above in order to comply with our request please advise.

We do not accept your claim for privilege in respect to the microfiche and we will advise you of our views in respect of it once you answer all our queries."

28 The plaintiffs' solicitors replied again asserting that the microfiche was clearly privileged when it was obtained from ASIC because it was obtained for the purpose of use by the plaintiffs' legal advisers in these proceedings.

29 They advised the first defendant's solicitors that they denied that privilege had not been properly claimed by the plaintiffs over any document.

30 In response to the first defendant's assertions that they should further identify each of the documents over which legal professional privilege has been claimed they wrote:

"To provide a description of all those documents will be an extremely time consuming and costly exercise, in which there will be no utility as such descriptions are unlikely to be of assistance in any determination of whether privilege has been properly claimed. We have substantially completed our tender list and we will send it to you shortly. There is no utility in your seeking a further and better statement of the basis upon which privilege has been claimed in relation to any document which is not on our clients' tender list. The Adelaide Excavator microfiche will be on that list."

31 This present application demonstrates the first defendant's dissatisfaction with the plaintiffs' solicitors' replies.

32 This application was supported by an affidavit of the first defendant's solicitors in which he says:

"I am concerned for and on behalf of the first defendant that there may be further documents in existence relevant to the issues in this action over which the plaintiffs may be claiming privilege in view of the late discovery of the microfiche and some of the documents contained therein upon which the plaintiffs will rely upon at the preliminary hearing. Without a proper identification and description of documents over which privilege is claimed, the first defendant will be unable to determine:

b) Whether there are other documents relevant to the issues in this action in existence."

33 It is for that reason that the defendant has mounted this application.

34 Before I turn to the application there is one further order which should be mentioned.

35 On 4 August 2000 Olsson J made the following orders:

"1 That R 55A apply to the action for the purpose of the trial of preliminary issues referred to in the order of Master Burley made on 18 July 2000.

2 Within 21 days, the first defendant serve on the plaintiffs' solicitors a list of all the documents which he proposes to tender at the trial of the preliminary issues referred to in the order of Master Burley made on 18 July 2000, such list to include a reference to the number by which such documents are designated in any list of documents made on discovery.

3 Within 21 days of receipt of the list referred to in paragraph 2, the plaintiffs serve on the first defendant's solicitor a list:

3.1 identifying those documents on the defendant's list which the plaintiffs consent to being admitted into evidence and also those documents the tender of which will be objected to and the brief basis of each such objection;

3.2 listing all additional documents which they propose to tender at the trial of those preliminary issues, such list to include a reference to the number by which such documents are designated in any list of documents made on discovery.

4 Within 21 days of receipt of the list referred to in paragraph 3.2, the first defendant serve on the plaintiffs' solicitors a list which indicates those documents on the plaintiffs' list which the first defendant consents to being admitted into evidence and also those documents the tender of which will be objected to and the brief basis of each such objection.

5 Liberty to either party to apply at short notice as to any dispute concerning production or copying of discovered documents or generally in relation to any interlocutory matter concerning the trial of preliminary issues.

6 That this Management Conference be stood over until Thursday 12 October 2000 at 8.30am."

36 The orders made by Olsson J require the plaintiffs and the first defendant to exchange a list of all documents which they intend to tender at the trial of the preliminary issues. The parties are bound, in my opinion, not only to identify the documents which they intend to rely upon in their case but also documents which they intend to cross-examine upon including any documents relevant to the credit of the opposing party. In other words the parties must identify, within the time prescribed by the orders, all of the documents which may be tendered at the trial of the preliminary issues. If the parties comply with Olsson J's orders the opposing parties must be aware of all documents which are intended to be relied upon.

37 In those circumstances it is impossible, in my opinion, for the first defendant to be concerned that there may be some other documents which have not been discovered "upon which the plaintiffs will rely at the preliminary hearing." Therefore, it appears to me, that the purpose in seeking this further order will not be advanced by the making of the order.

38 However the first defendant claimed that the defendant was entitled to an order in the terms sought under the Rules of Court.

39 Rule 58.01 of the Supreme Court Rules provides:

"Unless the Court otherwise orders, each party shall within twenty-one days after the close of pleadings or affidavits file and deliver to the other party a list of documents in Form 16 in paper form or such other form as the court may direct that are, or have been, in his possession, custody or power, relating to any matter in question in the action. If a party claims that any document is privileged from discovery he shall specify the document and the ground upon which privilege is claimed."

40 Rule 58 is in similar but not the same terms as order 31 r 14 which was considered by the Full Court of this Court in Kadlunga Proprietors v Electricity Trust of South Australia (1985) 39 SASR 410.

"(1) A list of documents made in compliance with Rule 11 or with an order under Rule 12 ... 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 desired to claim that any documents are privileged from production, the claim must be made in the list of documents with a sufficient statement of the grounds of the privilege.

42 In that case White J, who wrote the judgment of the Court (which was agreed to by King CJ and Millhouse J) held that it was both necessary and desirable that the description of a particular document for which legal professional privilege is claimed should be sufficient to disclose quite readily (without disclosing contents) whether or not it is in fact the document to which the head of privilege relied upon can extend.

43 The Full Court said that what is necessary in describing discovered documents will vary from case to case depending on the nature of the document and the particular ground of privilege claimed.

44 In that case it was especially important to include the date of preparation of the protected documents, as part of their description, because it was only in that way the appellant could be able to determine whether the claim for legal professional privilege was properly made.

45 The Full Court specifically left open whether the decision of the Court of Appeal in England in Taylor v Batten (1878) 4 QBD 85 should be followed.

46 Kadlunga Proprietors v Electricity Trust of South Australia (supra) was a case decided upon a rule which was similar to but not the same as r 58. However, I do not think that it could be said that there is anything in the language of either of the rules which would allow the case to be distinguished. Indeed in Kadlunga Proprietors v Electricity Trust of South Australia the Court said that the terms of the order were capable of interpretation which could support either the appellant's or the respondent's submissions.

47 A Judge of this Court has concluded that Kadlunga Proprietors v Electricity Trust of South Australia applies to documents for which legal professional privilege is claimed under r 58; Southern Equities v Arthur Anderson (No. 3) (Supreme Court (SA) Debelle J, No. S6657, 1 May 1998, Unreported BC 9801570).

48 The reasoning of the Full Court in Kadlunga Proprietors v Electricity Trust of South Australia rested upon the principle that legal professional privilege was only available in relation to communications which had been brought into existence for the sole purpose of existing legal proceedings. The Court followed the decision of the High Court in Grant v Downs [1976] HCA 63; (1976) 135 CLR 674.

49 It was critical, in my opinion, to the Full Court's reasoning that a party should be entitled to determine whether a communication for which legal professional privilege was claimed had been brought into the existence for the sole purpose of legal proceedings. The Full Court held that unless the opposing party had a description of the document which was adequate to allow the party to whom the list had been delivered to assess whether the document had been brought into existence for that sole purpose the claim for legal professional privilege could never be tested.

50 Debelle J's decision was given prior to two events which are, in my opinion, important and after a third event which was also, in my opinion, important.

51 Since the decision in Kadlunga Proprietors v Electricity Trust of South Australia of course the 1947 Rules have been repealed and the 1987 Rules enacted. As I have said, however, the terms of r 58.01 do not allow the decision in Kadlunga Proprietors v Electricity Trust of South Australia to be distinguished.

52 However there are other sub-rules to r 58 which are relevant and which might bear upon the applicability of the reasoning in Kadlunga Proprietors v Electricity Trust of South Australia to discovery under r 58.

"(5) Unless the Court otherwise directs the following documents need not be included in a list or affidavit of documents unless the existence or non-existence of such a document is relevant to the determination of an issue in the proceedings:

(a) Pleadings, affidavits and other documents filed in the proceedings, and copies of such documents;

(b) Communications between solicitors for the parties to the proceedings, including facsimile and telex communications, notes of telephone attendances between such solicitors and copies of such communications and notes;

(c) Copies of documents where the original or another copy has been included in the list or affidavit of the party making discovery where the first mentioned copy does not contain any note or endorsement which would itself be discoverable;

(d) Cases for the opinion of counsel and opinions thereon, advices on evidence, proofs of witnesses, communications and notes of communications between solicitors and counsel for a party."

54 Paragraphs (a), (b) and (d) are documents which would otherwise usually be included in that part of a list of documents for which legal professional privilege is claimed.

55 The paragraphs to which I have referred saved the parties from discovering any of the documents referred to and, of course, saved the parties from particularly identifying those documents in the documents for which legal professional privilege is claimed.

56 I think the intention of sub-rule 58.07(5), which was inserted by amendment in August 1991, was to ameliorate the rigours of the decision in Kadlunga Proprietors v Electricity Trust of South Australia.

57 However it could not be said that the sub-rule to which I have referred is of itself sufficient to doubt that Kadlunga Proprietors v Electricity Trust of South Australia is still good law. For that reason it could not be said that the decision of Debelle J in Southern Equities v Arthur Anderson (No. 3) (supra) could be doubted.

58 The second matter which might impact upon whether or not Kadlunga Proprietors v Electricity Trust of South Australia should continue to be regarded as good law was the decision of the High Court in Esso Australia Resources Ltd v The Commissioner of Taxation [1999] HCA 67; (1999) 168 ALR 123.

59 In that case the High Court overruled the decision in Grant v Downs (supra) and substituted for the sole purpose test the dominant purpose test.

60 In doing so it has perpetuated a test based on purpose but the purpose need no longer be a sole purpose but only the dominant purpose.

61 I do not think that that decision subverts the reasoning in Kadlunga Proprietors v Electricity Trust of South Australia.

62 In my opinion, whether the test for legal professional privilege is the sole purpose or dominant purpose does not matter much at least for these purposes. As long as the test is based upon purpose the reasoning which commended itself to the Court in Kadlunga Proprietors v Electricity Trust of South Australia would not be effected.

63 The decision therefore in Esso Australia Resources Ltd v The Commissioner Of Taxation (supra), in my opinion, cannot be used for the purpose of distinguishing Kadlunga Proprietors v Electricity Trust of South Australia.

64 The third matter relates to the amendments to the Rules of Court which introduced r 58A.

65 Rule 58A applies to the exclusion of r 58 to all lists and affidavits of documents including those for supplementary and further discovery filed after 3 June 2000.

66 There is no provision in r 58A to have that rule apply to a list of documents filed before 3 June 2000. Obviously enough it could not apply retrospectively because it deals with the contents of a list of documents. It therefore has no application to any of the lists of documents in this case which were filed before 3 June 2000.

67 It does, however, affect any list of documents filed after that date and, in my opinion, because of its terms means that the decision in Kadlunga Proprietors v Electricity Trust of South Australia does not apply to a list of documents filed since 3 June 2000.

68 In particular r 58A does not include within it r 58.01 which previously provided:

"If a party claims that any document is privileged from discovery he shall specify the document and the ground upon privilege is claimed."

69 Rule 58A.06 provides for the description of documents in a list of documents in the following terms:

"58A.06 (1) A list of documents must identify the documents discovered in such a manner that it is subsequently practicable to ascertain precisely what are the documents referred to, but it is only to contain a concise general description of them.

(2) A list of documents is not to describe documents individually where they are:

(b) contained on a computer disc which is discovered as a disc;

(c) part of a related group of documents where the group is discovered (eg the accounting records for a stated financial year);

(d) differing versions of the same documents (eg drafts 1 to 4 of document X); and

(e) of similar type but of different date or content (eg letters from X to Y dated etc, invoices from P to Q numbered etc, bank statements of A for the months etc).

(3) Rule 58.07(4), (4a) and (5) applies under Rule 58A."

70 In my opinion, r 58A recognises that it is not only no longer necessary but no longer appropriate having regard to the use of the word "only" in r 58A.06(1) to identify documents with the same particularity as was required by r 58 and the decision in Kadlunga Proprietors v Electricity Trust Of South Australia.

71 In my opinion Kadlunga Proprietors v Electricity Trust Of South Australia has no application to r 58A.

"Rule 58.01(2), (3), (4), (5), (6) and (7), 58.04, 58.04A, 58.05, 58.06, 58.08 and 58.09 are to apply to discovery which is governed by Rule 58A, but nothing in Rule 58 is to override what Rule 58A provides about which documents need be discovered, how they are to be described in a list of documents or otherwise."

73 That sub-rule, in my opinion, confirms that r 58A has set in place a new regime in relation to lists of documents.

74 Rule 58 was promulgated to obviate the necessity for a party to provide a list of documents with the sort of particularity that the decision in Kadlunga Proprietors v Electricity Trust of South Australia required.

75 It has been recognised in r 58A that a list of documents is an expensive document for any party in litigation in this Court. Usually it does not provide the opposing party with any more information than the opposing party can obtain by taking inspection pursuant to r 59.

76 The cost to the parties of preparing lists of documents with the particularity previously required has been recognised as too great for the benefit associated with the provision of that document.

77 Rule 58A now recognises that a list of documents need contain far less information than previously required.

78 The first defendant's application is very wide. It requires the plaintiffs to give further and better discovery of each and every document in respect of which the plaintiffs have claimed privilege and to give discovery in accordance with the obligations identified in Kadlunga Proprietors v Electricity Trust of South Australia.

79 In my opinion, because the decision in Kadlunga Proprietors v Electricity Trust of South Australia has no application to r 58A and, because the last two lists of documents were filed in accordance with the obligations now contained in r 58A, the first defendant's application in respect of those two lists of documents has to fail.

80 In so far as the first six lists of documents are contained it is in this Court's discretion, in my opinion, to make the order sought or, in the alternative, if the lists do not presently comply with the obligations in Kadlunga Proprietors v Electricity Trust of South Australia, to make an order relieving the plaintiff of its obligations in that regard.

81 I have no doubt that this application is far too wide.

82 This matter is to proceed upon only limited issues and in circumstances where the parties must have exchanged a list of documents which the parties propose to tender at the trial.

83 Whilst the first defendant's application is to have the plaintiffs particularise all documents for which privilege has been claimed the only documents that could be of interest to the first defendant are those documents relating to the issues to be heard under r 75; documents for which privilege has been claimed; and indeed documents for which privilege has been inappropriately claimed; and documents which are not intended to be relied upon by the plaintiffs.

84 The prospects of such a document existing, in my opinion, are almost minuscule.

85 In those circumstances it seems to me inappropriate to require the plaintiffs to go to the very great expense which this application envisages for the purpose of identifying, with the particularity required, documents which the first defendant would never be entitled to inspect.

86 If the first defendant was able to point to the possibility that such a document of the class mentioned above existed then it might be appropriate to make some form of limited order.

87 However the first defendant has not been able to identify any such document and, in my opinion, the costs which would be occasioned to the plaintiffs by the order sought in the application would be so great as to make this application in truth oppressive.