PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS –
DISCOVERY AND INTERROGATORIES – DISCOVERY AND INSPECTION
OF DOCUMENTS
– DISCOVERY OF DOCUMENTS – where the proceeding has reached
Source
Original judgment source is linked above.
Catchwords
PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS –DISCOVERY AND INTERROGATORIES – DISCOVERY AND INSPECTIONOF DOCUMENTS– DISCOVERY OF DOCUMENTS – where the proceeding has reacheddisclosure – where the list of documentsdelivered by the defendants listsdocuments in respect of which legal professional privilege is claimed –where an interlocutoryapplication is brought pursuant to rule 213 of theUniform Civil Procedure Rules 1999 (Qld) to challenge the claims ofprivilege – where the defendants were required to file and serve anaffidavit stating theirprivilege claim – where r 213 requires the claimto the privilege to be supported by an affidavit “by an individual whoknows the facts giving rise to the claim” – where the Yao and Zhaodefendants claim privilege over documents in Annexure1 – where the Yaoand Zhao defendants’ solicitor prepared the affidavit – where theYao and Zhao defendants’
solicitor’s affidavit does not say he has
any direct knowledge of the circumstances in which some of the documents were
created
– where the Li defendants claim privilege over documents in
Annexure 2 – where the Li defendants previously claimed privilege
over
documents entitled ‘heads of agreement’ – where the Li
defendants argue a number of documents attract legal
professional privilege for
communications which are seemingly preparatory to and/or facilitated legal
advice – whether rule 213 has been complied with – whether the
claims to privilege could be properly sustained
Uniform Civil Procedure Rules 1999 (Qld), r 7, r 213, r 214, r 366,
r 367, r 371
Fletcher v Fortress Credit Corp (Australia) II Pty Ltd
[2014] QSC 303, considered
International Entertainment (Aust) Pty Ltd v Churchill [2003] QSC
247, cited
Judgment (164 paragraphs)
[1]
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - DISCOVERY AND INTERROGATORIES - DISCOVERY AND INSPECTION OF DOCUMENTS - DISCOVERY OF DOCUMENTS - where the proceeding has reached disclosure - where the list of documents delivered by the defendants lists documents in respect of which legal professional privilege is claimed - where an interlocutory application is brought pursuant to rule 213 of the Uniform Civil Procedure Rules 1999 (Qld) to challenge the claims of privilege - where the defendants were required to file and serve an affidavit stating their privilege claim - where r 213 requires the claim to the privilege to be supported by an affidavit "by an individual who knows the facts giving rise to the claim" - where the Yao and Zhao defendants claim privilege over documents in Annexure 1 - where the Yao and Zhao defendants' solicitor prepared the affidavit - where the Yao and Zhao defendants' solicitor's affidavit does not say he has any direct knowledge of the circumstances in which some of the documents were created - where the Li defendants claim privilege over documents in Annexure 2 - where the Li defendants previously claimed privilege over documents entitled 'heads of agreement' - where the Li defendants argue a number of documents attract legal professional privilege for communications which are seemingly preparatory to and/or facilitated legal advice - whether rule 213 has been complied with - whether the claims to privilege could be properly sustained
Fletcher v Fortress Credit Corp (Australia) II Pty Ltd[2014] QSC 303, considered
[4]
International Entertainment (Aust) Pty Ltd v Churchill[2003] QSC 247, cited
[5]
B T Cohen for the 1st, 3rd, 4th, 5th and 6th defendants (sol)
[6]
Bartley Cohen for the 1st, 3rd, 4th, 5th and 6th defendants
[7]
[1] The present interlocutory application raises some practical issues about legal professional privilege and how the privilege is claimed. First, it is necessary to provide some background.
[8]
[2] The plaintiff, Ms Fang and entities associated with her, have brought these proceedings against:
[9]
(a) the first defendant, Mr Yao, and entities associated with him (the fourth and fifth defendants) ('Yao defendants');
(b) the second defendant, Ms Li, and entities associated with her (the seventh and eighth defendants) ('Li defendants'); and
(c) the third defendant, Ms Zhao, and the sixth defendant, an entity controlled by her ('Zhao defendants').
[10]
[3] The statement of claim alleges that Ms Fang transferred $79 million from China to Mr Yao in Australia between 2016 and 2020. Mr Yao was a registered migration agent until April 2018, when his registration was cancelled by the Department of Home Affairs. Ms Fang alleged that Mr Yao told her he was a lawyer. She alleges that rather than paying the money into a trust account, Mr Yao:
[11]
(a) paid some of the money into Mr Yao's own bank accounts; and
(b) paid some money into bank accounts held by his mother Ms Zhao; and
(c) used some money to buy properties in Australia.
[12]
[4] It is alleged that significant amounts of money are unaccounted for.
[5] It is further alleged that in September 2011, the Commissioner of Taxation garnisheed about $28.5 million of Ms Fang's funds from bank accounts held by Mr Yao and Ms Zhao. The Commissioner is the ninth defendant.[1]
[6] The statement of claim also alleges that Mr Yao acted as the plaintiffs' agent in acquiring various properties. Ms Fang alleges that Mr Yao breached his fiduciary duties as an agent for Ms Fang in causing properties owned by his companies to be sold to the plaintiffs at inflated prices. Ms Fang says that Ms Li was knowingly involved in Mr Yao's breaches of duty.[2]
[7] The proceeding has reached disclosure. The list of documents delivered by the Yao and Zhao defendants lists documents in respect of which legal professional privilege is claimed. By the time of Ms Fang's amended application, there were approximately 156 documents in respect of which production is resisted on the grounds of a claim of legal professional privilege.[3] Similarly, the list of documents delivered by the Li defendants resists production of approximately 85 documents on the grounds of a claim for legal professional privilege.[4] The claims of legal professional privilege were made pursuant to rule 214(1)(a) of the Uniform Civil Procedure Rules 1999 (Qld) ('UCPR').
[8] Pursuant to rule 213 of the UCPR, Ms Fang challenged the claims of privilege. That meant that the Yao, Zhao and Li defendants were required to file and serve an affidavit stating their privilege claim.[5] The affidavit is required to be made by an individual who knows the facts giving rise to the claim of privilege.[6]
[9] The extent of the dispute narrowed by the time of the hearing. For example, some claims to privilege were abandoned. The remaining documents in respect of which privilege was claimed and challenged were listed in a schedule called 'Plaintiff's Aide'. That schedule listed the documents in respect of which privilege is claimed and the and the basis for that claim. The schedule is split into 'Annexure 1' - the documents for which the Yao defendants claimed privilege, and 'Annexure 2' - the documents for which the Li defendants claimed privilege. There is an overlap because some documents appear in both annexures.
[13]
[10] To some extent, the principles are in dispute. However, the dispute seemed to primarily centre on each party's interpretation of the principles. For present purposes it is sufficient to briefly summarise the general principles.
[11] It is generally accepted that there are two categories of legal professional privilege - advice privilege and litigation privilege.[7] Advice privilege applies to confidential communications between a lawyer and their client for the dominant purpose of seeking or being furnished with legal advice from, or by, that lawyer. Litigation privilege applies to a communication made or prepared for the dominant purpose of being used in existing or reasonably contemplated judicial or quasi-judicial proceedings.[8]
[12] The regime in the UCPR for disputes concerning privilege is set out in rule 213:
[14]
(a) a party claims privilege from disclosure of a document; and
(b) another party challenges the claim.
[15]
(2) The party making the claim must, within 7 days after the challenge, file and serve on the other party an affidavit stating the claim.
[16]
(3) The affidavit must be made by an individual who knows the facts giving rise to the claim." [emphasis added]
[17]
[13] It is now necessary to consider each of the categories of documents in respect of which privilege is claimed.
[18]
The MARA matter - Items 1 and 2 in Annexure 1 to the Schedule
[19]
[14] Items 1 and 2 in Annexure 1 to the schedule include these details and claims of privilege:
[20]
(a) Email dated 25 October 2017 entitled 'Notice from MARA: Submissions' from Emma Malloy of Tucker and Cowen to NEW AUS Pty Ltd - "Legal advice privilege - communication by Emma Malloy (Ms Malloy) for the purposes of providing legal advice to the first defendant (Mr Yao)";
(b) Document entitled 'Letter to MARA (TCS01426016).pdf' - "Legal advice privilege - document attached to communication by Ms Malloy for the purposes of proving legal advice to Mr Yao".
[21]
[15] The abbreviation 'MARA' stands for Migration Agents Registration Authority. The email obviously enclosed a '.pdf' letter proposed to be sent by Tucker & Cowen on behalf of Mr Yao to MARA.[9]
[16] In accordance with the regime in rule 213 of the UCPR, Ms Fang's solicitors challenged the claim of privilege.[10] In response to the challenge to the privilege Mr Cohen, the solicitor for the Yao and Zhao defendants, deposed to his clients' claim of privilege over these two documents.
[17] And then, later in his affidavit, Mr Cohen said this:
[22]
"72 For this proceeding, Mr Yao provided me with a costs disclosure and client agreement dated 4 October 2017 from TCS Solicitors Pty Ltd (Tucker & Cowen), a copy of which is at pages 160 to 162 of the bundle. I observe, from that document:
[23]
(b) the subject was "Migration Agents Registration Authority";
[24]
(c) the work to be performed included acting on Mr Yao's behalf in relation to a notice issued to him by the Department of Immigration and Border Protection, reviewing the notice and relevant documents, providing advice in relation to the notice, communicating with Mr Yao in relation to the notice, and preparing submissions in response to the notice;
[25]
(d) Mr Justin Marschke (Principal) and Ms Emma Malloy (Solicitor) (Ms Malloy) were identified as the persons who would be performing the work the subject of the retainer.
[26]
73 I have reviewed the Relevant Documents at items 1 and 2 of the Schedule. Those documents are an email communication with attachment sent by Ms Malloy. Based upon my review of those documents, the email is a communication for the purpose of providing legal advice to Mr Yao." [emphasis added]
[27]
[18] Presumably Mr Cohen exhibited the costs agreement because he apprehended that such a document would not normally be privileged.[11] The costs agreement comprised a letter from Mr Yao's then solicitors, Tucker & Cowen. That letter started in this way:
[28]
"I refer to your recent correspondence with Emma Malloy in relation to this matter.
[29]
The purpose of this letter is to provide you with an estimate of our fees and costs for undertaking that work and to supplement our Costs Disclosure Statement to you dated 7 September 2017 and the Master Client Agreement entered into with you dated 7 September 2017 ("the Master Client Agreement"). We confirm that the terms of our Master Client Agreement (with the specific items applicable to this matter as set out below) apply to the work to be undertaken by us in respect of the above matter.
[30]
For the purposes of the Master Client Agreement, as it applies to our instructions in this particular matter:-
[31]
1. The work to be performed by us is the following:-
[32]
(a) To act on your behalf in relation to the Notice under subsection 309(2) of the Migration Act 1958 received from Department of Immigration and Border Protection (Notice), in the first phase, limited to:
[33]
(ii) Providing preliminary advice to you in relation to the Notice;
[34]
(iii) Communications with you in relation to the Notice; and
[35]
(iv) Preparing submissions in response to the Notice.
[36]
Then further related work subject to further instructions..."
[37]
[19] The result is that the Yao and Zhao defendants make this contend this submission:
[38]
"23 It is uncontroversial in this proceeding that the first defendant (Mr Yao) was formerly a registration migration agent. On 4 October 2017, Tucker & Cowen issued a costs agreement and client agreement to Mr Yao to respond to a notice issued by the Department of Immigration and Border Protection.
[39]
Mr Cohen deposes that he has reviewed the documents which relate to this retainer and, as a result of that review, gives direct evidence of the basis for the privilege claim on behalf of Mr Yao."
[40]
[20] That explanation of the claim to privilege exposes at least two problems.
[21] The first problem is that, despite the requirement of UCPR rule 213 that the claim to the privilege be supported by an affidavit "by an individual who knows the facts giving rise to the claim", the affidavit here is by Mr Cohen, Mr Yao's present solicitor. In fact, Mr Cohen deposes to communications between Mr Yao and his previous solicitor. And so, the facts deposed to by Mr Cohen are at least second-hand.[12]
[22] For Mr Yao it is submitted that:
[43]
(a) while the party asserting the privilege has the ultimate onus of establishing, by admissible evidence, that the privilege is properly claimed, that onus may be discharged by "pointing to the nature of the documents or by evidence describing the circumstances in which they were brought into existence";[13]
(b) there are no "special rules of admissibility" with which a party must comply to make good a claim of privilege;[14]
(c) there is no prohibition on the Yao and Zhao defendants relying on admissible hearsay evidence for the purposes of the plaintiffs' application, which is interlocutory.[15]
[44]
[23] I reject that submission. The submission fails to acknowledge the impact of UCPR rule 213(3). The requirement of the rule is that the claim to the privilege be supported by an affidavit by an individual who knows the facts giving rise to the claim. Thus, in International Entertainment (Aust) Pty Ltd v Churchill McMurdo J accepted a submission that an affidavit supporting the claim of privilege did not comply with rule 213, because the solicitor was not a person who knew the facts giving rise to the claim.[16] His Honour accepted that an affidavit claiming privilege might, in many cases, be sworn by that party's solicitor, if the solicitor was able to give original evidence of the facts justifying the claim. But his Honour held that the case before him was not such a case.
[24] Rule 213(3) plainly has an impact on what would otherwise be the law, at least in Queensland. That is clear from the remarks of McMurdo J in Fletcher v Fortress Credit Corp (Australia) II Pty Ltd:
[45]
"Outside the requirements of r 213, a claim for privilege is often successfully advanced upon the nature of the document itself or the circumstance that it passed between a lawyer and the lawyer's client."[17]
[46]
[25] In Queensland, because of the impact of rule 213(3), the requirements for a claim of privilege are more onerous than may be the case in other states.
[26] In Fletcher v Fortress Credit Corp (Australia) II Pty Ltd, the parties claiming privilege argued that there were a large number of documents for which privilege was claimed and that many of the people involved in the creation of the documents were in Sydney, Brisbane and New York. For that reason, it was unrealistic to expect that any single witness could properly depose to the facts and circumstances which were relevant to the claims for privilege.[18] McMurdo J reasoned that:
[47]
(a) rule 213(3) does not anticipate cases with the degree of complexity and the enormous volume of material of that case;
(b) that was certainly the case in light of the requirement for an affidavit to be made within seven days of a challenge to a claim for privilege;
(c) although it was not the subject of argument that the solicitor for the party claiming privilege became a person who knew the facts giving rise to the claim by consequence of their review of each of the documents, that issue was worth consideration;
(d) the issue was whether the claim for privilege should be allowed notwithstanding the non-compliance with the rule;
(e) by personally reviewing the documents, the solicitor became aware of the character or nature of each document - in the same way as his Honour had reviewed a previous tranche of the documents and became aware of the character or nature of each of those documents, from which he was satisfied that in the majority of cases the claim for privilege is well made.[19]
[48]
[27] Distilling that reasoning, it can be seen that there are two principles that are engaged. The first is that the court can, in an appropriate case, dispense with the requirements of the rule. The second is that, in an appropriate case, the court may regard a solicitor's personal review of the documents as sufficient compliance with the rule.[20]
[28] There is no doubt about the first of those principles. The rules equip the court with ample power to either extend to time required by the rules or to dispense with the requirements of the rules: see, for example, UCPR rules 7, 366(2), 367(1) and 371(2)(d).
[29] The second of those principles is more contentious. The purpose of rule 213(3) is to require the claim to the privilege be supported by an affidavit of an individual who knows the facts giving rise to the claim. That means that the individual or individuals with the relevant knowledge are required to positively depose to the fact that:
[49]
(a) the communication is a communication between lawyer and client (or their agents);
(b) the communication was confidential;
(c) the communication was created for the dominant purpose of seeking or being furnished with legal advice from or by that lawyer.[21]
[50]
[30] In that way, the rule requires some direct evidence from a participant in the privileged communications. However, the second of the principles discussed by McMurdo J permits a substitute process. Under that substitute process, a solicitor is permitted to review the documents,[22] and to then depose to that solicitor's conclusions as to the character and nature of each document as a result of that review. Such a substitute process carries with it a risk that the evident purpose of rule 213(3) would be undermined. Rather than direct evidence, the party claiming privilege could merely proffer the solicitor's opinion that, having conducted a review, the documents attract the privilege.
[31] There are related problems. The opposite party and the court have no opportunity to consider the direct evidence supporting the claim of privilege. Instead, they are left with the conclusions of one party's solicitor. Rather than weighing the factual evidence, they are left with an opinion. There is then the potential for confrontation and perhaps embarrassment if the party persists with the challenge in the face of the opinion, or if the court chooses to inspect the documents. In my view, a process resembling a 'desktop' review by a solicitor does not comply with rule 213(3).[23]
[32] The preferable way to view the reasons of McMurdo J in Fletcher v Fortress Credit Corp (Australia) II Pty Ltd is to regard his Honour as having been satisfied that the case before him was an appropriate case in which to relax the requirements of the rule. In the circumstances, where the rule imposed an impractical burden, his Honour was prepared to accept a substitute process. I would not accept that case as authority for the proposition that a party is entitled to, in effect, sidestep the requirements of rule 213(3) by simply filing and serving an affidavit by a solicitor stating what that solicitor considers to be the character and nature of the disputed documents.
[51]
[34] That last point raises a second problem. Mr Cohen, the present solicitor for Mr Yao, does not say he has any direct knowledge of the circumstances in which the documents items 1 and 2 in Annexure 1 to the schedule were created. The communication was between Ms Malloy, a solicitor with Mr Yao's former solicitors, Tucker & Cowen, and New Aus Pty Ltd, a corporation connected with Mr Yao. It is likely that Mr Cohen has no direct knowledge of the confidentiality of the communication or the dominant purpose for the creation of the document.
[35] The Yao and Zhao defendants, however, submit that Mr Cohen gives "direct evidence" of the basis for the privilege claim on behalf of Mr Yao.[25] It is difficult to see how that can be so. There is no evidence that Mr Cohen had any involvement at the relevant time. Ms Malloy may have been able to give direct evidence of the confidentiality of the communication, and the dominant purpose of its creation. But Mr Cohen's role in reviewing the documents hardly gives him any direct knowledge of the confidentiality of the communication or the dominant purpose for its creation. The review by Mr Cohen does not have the effect of converting indirect knowledge into direct. In fact, the vice that rule 213(3) was evidently designed to overcome was claims of privilege supported by indirect evidence.
[36] As explained, Mr Cohen has exhibited the costs agreement between Tucker & Cowen and Mr Yao. That costs agreement is dated 4 October 2017 and records that Tucker & Cowen were to act for Mr Yao in reviewing a notice by MARA to cancel or suspend Mr Yao's registration as a registered migration agent, or to caution him.[26] They were also to act for him in providing preliminary advice on the notice and in preparing submissions in response to MARA's notice. Ms Malloy of Tucker & Cowen seems to have given that advice because items 1 and 2 of the schedule comprise an email dated 25 October 2017 enclosing, presumably, a draft letter to MARA.
[37] That direct communication between solicitor and client, enclosing a draft response to the notice from MARA would, more than likely, be subject to legal professional privilege because it would be a confidential communication for the purpose of providing legal advice. In essence, the draft is likely to reflect what Ms Malloy advised her client to communicate to MARA. Even if the draft was the same or little different from the version that ultimately went to MARA, the communication between solicitor and client would ordinarily be the subject of advice privilege. On the other hand, what eventually goes to MARA, a government department, can hardly be said to be a communication between solicitor and client, confidential or created for the dominant purpose seeking or being provided with legal advice.
[52]
Sale of 59 Troughton Road - items 3 to 32 of Annexure 1 of the Schedule
[53]
[40] In May 2020, Aus Landpro Pty Ltd transferred the property at 59 Troughton Road, Sunnybank to the third plaintiff. Mr Yao was the sole director of Aus Landpro at the time. The statement of claim alleges that Mr Yao recommended to Ms Fang that she purchase that property, which she did for $6.16 million. Ms Fang alleges that Mr Yao breached his fiduciary duties in recommending and arranging that purchase. It is alleged that Ms Li knowingly participated in those breaches.
[41] Items 3 to 32 of Annexure 1 comprise emails, and attachments to those emails, from Mr Andrew Smith of BlackHill Legal to Mr Yao (at his company New Aus Pty Ltd). Advice privilege is claimed in each case. Again, Mr Cohen exhibits a costs agreement letter. The letter is dated 8 May 2019 - that is a year prior to the impugned sale. The costs agreement letter includes, at 'Item 5' of the letter, an explanation of the BlackHill Legal's retainer:
[54]
Prepare contract of sale (based on your instructions);
Arrange for execution of contract of sale;
Prepare transfer documentation;
Prepare settlement figures and organise settlement;
attend to stamping the contract and transfer documentation; and
attend at settlement.
[55]
Our retainer does not extend beyond the conveyancing process. For example, we will not provide, and our retainer specifically excludes (unless otherwise agreed in writing):
[56]
Accounting and taxation implications of the acquisition (eg, CGT, GST and land tax);
Advice on the commercial viability or other commercial aspects of the transaction (eg, whether the purchase price represents market value);
Advice in relation to asset protection, succession, estate planning, family law arrangements or matrimonial implications of the transaction;
Any physical inspection or survey of the property (including physical limitations, government intervention and operational issues);
Financial and loan advice (eg, how you should fund the purchase or whether the conditions of any approval of finance are satisfactory);
..." [emphasis in the original]
[57]
[42] The costs agreement letter also records that:
[58]
"You have asked us to also act for the purchaser of the property. You must be aware that, where we act for both parties:
[59]
We may be prevented from telling you any information or facts if it would not be in the purchaser's interests to do so;
We cannot advise you if that advice would be against the purchaser's interests; and
If there was a conflict between you and the purchaser, we could not act for either of you against the other's interests and we would need to refer both you and the purchaser away for independent legal advice."
[60]
[43] The fee estimate provided was between $1,500 and $2,000.
[44] None of that suggests that BlackHill Legal was retained to provide legal advice. The costs agreement letter expressly excludes the prospect of legal advice on a wide variety of topics. In those circumstances, it can hardly be said that the work to be performed pursuant to that retainer qualifies as confidential communications between lawyer and client made for the dominant purpose of providing or obtaining legal advice.[28]
[45] Thus, it seems what was intended by the retainer was an 'advice-free' conveyancing transaction. There was the potential for the retainer to change character mid-stream, but there is no evidence of such an alteration to the retainer.
[46] Mr Cohen's affidavit does not improve the claim to advice privilege:
[61]
"78 I have reviewed the Relevant Documents at items 3 to 32 of the Schedule. Each of those documents is a communication (with or without attachments) sent by Mr Smith. Based upon my review of the documents, each is a communication for the purpose of providing legal advice to Mr Yao and/or Aus Land Pro."[29]
[62]
[47] The first sentence merely records what might be termed a 'desktop' review by Mr Cohen and makes clear that, contrary to the requirements of rule 213(3), Mr Cohen has no personal or direct knowledge of the confidentiality or the purpose in creating the documents. The second sentence rather suggests that communications sent by Mr Smith are, by their nature, confidential. That would not often be the case in a conveyancing transaction. For example:
[63]
(a) item 7 is an email from Mr Smith that attaches a contract and special conditions (items 8 and 9);
(b) item 11 similarly attaches a Contract for Commercial Land and Buildings (item 12);
(c) item 14 is an email that attaches a Deed of Variation (item 15);
(d) item 24 is an email that attaches a settlement statement, a BCC rates search, a water meter reading and a land tax certificate (items 25 to 28).
[64]
[48] None of those documents appear to bear a confidential character or appear to be the subject of legal advice, especially having regard to the explicit terms of the retainer.
[49] The third sentence in that paragraph of Mr Cohen's affidavit is an assertion by Mr Cohen that all of the communications were for the purpose of providing legal advice. However, in the light of the pure conveyancing nature of the retainer that seems unlikely. Not even the topic of the advice is explained. And, the alleged provision of legal advice, contrary to the terms of the retainer, appears to span the period before, during and after the conveyance. If the retainer did include the provision of advice, despite the retainer letter, it is difficult to imagine that advice on the transaction would be given over such a wide time span. The likelihood is that paragraph 78 of Mr Cohen's affidavit appears to assume that any communications between solicitor and client are protected by the advice privilege.
[50] In the circumstances, the claim of privilege has not been sustained.
[65]
Childcare development - items 33 to 127 of Annexure 1 of the Schedule
[66]
[51] On 7 June 2019 Mr Yao and Ms Li retained BlackHill Legal to perform the following work for them:
Drafting and negotiation of heads of agreement concerning proposed joint venture and share issue;
The fee estimate assumes around 2 redrafts of the relevant documents will be required, should further redrafting be needed, the estimate provided may increase. We will keep you apprised of any updates in fee estimates at the time our monthly bills are sent; and
Such other work as may be agreed between the parties, from time to time.
[52] BlackHill Legal, again, specifically excluded certain legal advice work unless there was a further written agreement:
[67]
"Our retainer does not extend beyond the document preparation process. For example, we will not provide, and our retainer specifically excludes (unless otherwise agreed in writing):
[68]
Accounting and taxation implications of the transaction (eg, CGT, GST and land tax);
Advice on the commercial viability or other commercial aspects of the transaction;
Advice on financial regulatory requirements for the transaction;
Advice in relation to asset protection, succession, estate planning, family law arrangements or matrimonial implications of the transaction; or
Financial advice."
[69]
[53] The fee estimate was relatively modest and expressed in an odd way:
[70]
"We estimate that your total costs are likely to be between $750.00 and $950.00 excluding $75.00 to $95.00 GST excluding disbursements."
[71]
[54] Five days later a similar costs agreement letter was issued to the eighth defendant, Anxin Capital Pty Ltd, a company controlled by Ms Li. That letter explained this retainer in this way:
[72]
Drafting of development deed concerning proposed joint venture;
The fee estimate assumes around 2 redrafts of the relevant documents will be required, should further redrafting be needed, the estimate provided may increase. We will keep you apprised of any updates in fee estimates at the time our monthly bills are sent; and
Such other work as may be agreed between the parties, from time to time."
[73]
[55] The same exclusions applied.
[56] Mr Cohen deposes to the fact that in July this year he received an email from Ms Laura Hagan of Enyo Lawyers[30] which attached that costs agreement letter. And so, Mr Cohen has received a costs agreement letter from Enyo Lawyers, who presumably received it from Ms Li, Anxin Capital Pty Ltd or BlackHill Legal. Undaunted by receiving the letter third-hand, Mr Cohen ventures this opinion:
[74]
"Based upon my review of the Relevant Documents at items 33 to 124 of the Schedule, each is either a communication or draft contractual document for the purpose of providing legal advice to Mr Yao and/or Ms Li and Anxin."[31]
[75]
[57] As explained, that evidence does not comply with rule 213(3).
[58] Most of the documents that comprise items 33 to 127 in Annexure 1 to the schedule have equivalent documents in Annexure 2 to the schedule and so comprise documents in respect of which the Li defendants also claim privilege. In respect of document 33, Ms Li claims privilege in this way:
[76]
"Document numbered QLI.003.001.0049 is an email from Mr Smith [BlackHill Legal] to me, copied to William [Yao], on 10 April 2019 at 11:52pm. It is a confidential communication sent from Anxin's solicitor to me for the dominant purpose of giving legal advice to Anxin in relation to the external investor."
[77]
[59] A similar formula of words is used for the subsequent documents.
[60] Looking through these documents it appears that:
[78]
(a) BlackHill Legal sent at least three drafts of the heads of agreement to Ms Li with a copy to Mr Yao (see items 38, 39, 40, 41 and 47 in Annexure 1);
(b) BlackHill Legal sent versions of the Development Deed to Ms Li (see items 52, 54, 55, 67, 69 in Annexure 1) and a signed version of the Development Deed (items 55, 56 in Annexure 1) and there were other communications including the provision of a 'completion checklist' (item 50) a note that 'trust funds received' (item 51 in Annexure 1), a trust account statement (item 53 in Annexure 1), copy of a driver's licence (items 79, 80 in Annexure 1), emails attaching forms of authority (items 82, 83, 84, 85 in Annexure 1) emails attaching an SEQ Assets map (items 87, 88, 90, 91 in Annexure 1), an email attaching the development agreement, a completion checklist and three graphic images (items 95-100 in Annexure 1), emails attaching the signed settlement agreement, completion checklist and two landscape concept plans (items 111-115, 116-120 and 121-124 in Annexure 1);
(c) the documents include a calendar entry (item 50) - a document that one would not expect to be confidential or to contain a communication regarding legal advice;
(d) some of the documents are not well described (items 48, 49, 57, 58, 109, 110 in Annexure 1);
(e) some do not appear to comprise communications between solicitor and client (items 53 - a trust account statement emailed from an entity called 'Actionstep'.
[79]
[61] Considering those aspects of the document descriptions, it is hard to avoid the conclusion that privilege is claimed for all communications between solicitor and client rather than for confidential communications between lawyer and clients for the dominant purpose of seeking or being furnished with legal advice by the lawyer.
[80]
ATO reviews - items 128 to 154 of Annexure 1 of the Schedule
[81]
[62] On 18 June 2021, the Australian Tax Office ('ATO') notified Mr Yao and the third defendant, Ms Zhao, of the commencement of a review of their income tax affairs for the financial years 2017 to 2020.[32]
[63] Mr Yao and Ms Zhao retained Bluemont Legal. That law firm sent Mr Yao and Ms Zhao a costs agreement letter dated 30 July 2021. The costs agreement letter records the work to be performed in this way:
[82]
Advice and assistance to you with respect to an ATO tax review of your personal affairs, including taking your instructions with respect to the review, correspondence with the ATO responding to the review letters issued to each of you both dated 18 June 2021 and otherwise concerning the review, assistance with response to the review letter and liaison with your accountants, engaging counsel Daniel McInerney QC and Russ Johnson in accordance with your instructions and liaison with Counsel in respect of the matter;
Attendance and/or instructing Counsel with respect to attendance at any required meetings with the ATO; and
Such other work as may be discussed and agreed between us in writing, such as work that is necessary or incidental to the above.
[83]
Our retainer does not extend beyond the above. For example, we will not provide, and our retainer specifically excludes (unless otherwise agreed in writing):
[84]
Accounting implications, financial and loan advice of the above;
Advice on the commercial viability or other commercial aspects of the above; or
Advice in relation to asset protection, succession, estate planning, family law arrangements or matrimonial implications of the transaction." [emphasis in the original]
[85]
[64] The fee estimate was $15,000 to $150,000 plus GST and counsel fees. Bluemont Legal were authorised to discuss the ATO's reviews with Pitcher Partners Accountants.
[65] A month later Mr Yao and Ms Zhao retained King & Wood Mallesons ('KWM'). KWM required $300,000 in their trust account 'up front'. Their retainer included the following:
[86]
(a) "Review the materials and undertake an initial engagement with the ATOand formulating a proposal and evidence plan (estimate $50,000 - $70,000)."
(b) "Preparing and lodging objections, including settling with counsel (estimate $20,000 - $30,000)."
[87]
[66] Mr Yao provided all of those retainers, authorities and relevant documents to Mr Cohen. Mr Cohen has conducted a review of the relevant documents. As a result, privilege is no longer claimed for items 148-154. Privilege was claimed for items 148-150 because, "on their face", they appeared to be internal working documents of KWM, or internal drafts prepared by Pitcher Partners for KWM, but it had been discovered that those documents went to the ATO. Similarly, Mr Cohen's review determined that privilege had been erroneously claimed for items 151-154.
[67] Mistakes can always be made in litigation. It is a labour-intensive exercise. But it is of concern that privilege was claimed erroneously and because of the way the documents appeared "on their face". That rather suggests a failure to carefully consider, initially at least, the elements of the claim for advice privilege.[33] Considering the documents "on their face" suggests an exercise with at least some degree of superficiality - which is contrary to the intention of those who drafted rule 213(3).
[68] The result of Mr Cohen's review is that privilege is maintained for three groups of items, namely:
[88]
(a) items 128-130 - in support of which Mr Cohen states "Each of those documents is a communication (with or without attachment) sent by Mr Smith. Based upon my review of those documents, each is a communication for the purpose of providing legal advice to Mr Yao and Ms Zhao";
(b) items 132-146 - in support of which Mr Cohen states "Each of those documents is a communication (with or without attachment) sent by Mr Camenzuli [Pitcher Partners]. Based upon my review of those documents, each is a communication for the purpose of Mr Yao and Ms Zhao providing instructions to obtain, or otherwise for the purpose of obtaining, legal advice from KWM"; and
(c) item 147 - in support of which Mr Cohen states "That document...was provided to me by KWM...is a spreadsheet, the metadata for which records that it was authored by KWM; based upon my review, and the matters referred to in subparagraphs (a) and (b) above, is an internal working document prepared by KWM for the purpose of providing legal advice to Mr Yao and Ms Zhao".
[89]
[69] Again, rule 213(3) has not been complied with. Mr Cohen is the present litigation solicitor for Mr Yao and Ms Zhao. He is not shown to have any direct knowledge of the facts giving rise to the claim of privilege or any specific instructions concerning the documents. He is one step removed from the lawyers and accountants involved in the communications. He has, in essence, conducted a desktop review.
[90]
Miscellaneous - items 155 to 160 in Annexure 1 to the Schedule
[91]
[70] Mr Cohen says that item 155 is the third of three attachments to an email from Mr Scott Hornsey of Tucker & Cowen to Mr Yao. All four documents were the subject of a claim of advice privilege. A redacted copy of the email and the first of the attachments have been produced. Ms Fang's amended application does not appear to challenge the redactions to the covering email or the second attachment. That leaves only the third attachment. Mr Cohen submits that the third attachment is a part of a communication by means of the covering email. The attachments are a part of that communication and, Mr Cohen submits, should be regarded as one communication. Then, Mr Cohen submits that these challenges to the claims of privilege must fail because the communication must be dealt with as a whole and it is not open to Ms Fang to object to a discrete part of the communication.
[71] The problem with the argument is that neither side has dealt with these documents on the basis it is one communication. The covering email has been produced, albeit with redactions. The first of the attachments has been produced. The challenge to the claim of privilege is not pressed for the second attachment.
[72] Mr Cohen says that:
[92]
"Based upon my review of the Relevant Document at item 155 of the Schedule, being the Third Attachment (YAO.001.006.2413), it is a document which relates to the communications in the Email (YAO.001.006.2410) which have been redacted."
[93]
[73] That does not take us very far. It merely records that the third attachment is a document attached to the covering email which has been redacted.
[74] Mr Cohen deposes that he has reviewed items 156 to 160 (that is, the documents other than the third attachment) and, as a result of the review, he gives direct evidence the documents form part of a further email, and the attachments are duplicates of the three attachments to the covering email discussed above. The further email is a later in time communication from Mr Hornsey to Mr Yao in the same string as the covering email and, together with its attachments, forms part of the same communication.
[75] The fact that all these documents are part of the same communication can be accepted. However, as explained, that is not the way the parties have dealt with these documents. The real issue is whether the Yao and Zhao defendants have sustained a claim to advice privilege over the documents. They have not done so, as UCPR rule 213(3) requires, by direct evidence by an individual who knows the facts giving rise to the claim of privilege.
[76] The position is similar for item 160. That item is one of 17 attachments to an email from Ms Duong to Mr Yao. The covering email and three of the 17 attachments have been produced. Privilege is maintained for the balance. Again, UCPR rule 213(3) has not been complied with.
[94]
[77] Mr Cohen's affidavit explains his clients' claim to privilege over item 161 in this way:
[95]
"119 On 31 October 2022, the claim and statement of claim commencing this proceeding was filed (CFI 1).
[96]
On 4 August 2023, I caused a notice of change of solicitor to be filed on behalf of my clients, for whom Cowen Schwarz Marschke Lawyers (CSM) were previously the solicitors on the record (CFI 79).
I have reviewed the document at Item 161 of the Schedule. It is a document which was provided by Mr Yao to CSM, and subsequently to me, for the purpose of this proceeding. It records instructions given by Mr Yao."
[97]
[78] Again, rule 213(3) has not been complied with. Mr Cohen was some distance from the creation of the document. However, the fact that the document records instructions given by Mr Yao to his former solicitors means that it is likely that it could be demonstrated that this document is protected by advice privilege.
[79] One rather odd and unexplained feature of this item is that it is a spreadsheet described as "Bank Reconcile Guide .xlsx". It is hard to see how an excel spreadsheet can qualify as the subject of advice privilege.
[98]
[80] As explained, the Li defendants claim privilege over the documents listed in Annexure 2 to the Schedule. Ms Li has sworn an affidavit in which she says that she has reviewed the documents, and that:
[99]
(a) a number of the documents are communications sent by her or other documents created by her;
(b) to the extent that the documents were not sent or otherwise created by her, where she describes the purpose of the documents, that description is based on her review of the documents and familiarity with Anxin's engagement of BlackHill Legal.
[100]
[81] Ms Li has largely complied with rule 213(3) in that she is an individual who knows the facts giving rise to the claim of privilege and has given direct evidence of the facts.
[101]
[82] By a letter dated 15 May 2025 the solicitors representing the Li defendants advised that their clients no longer pressed claims for privilege over documents QLI.003.001.0719 and QLI.003.001.0724, both of which were described as 'heads of agreement'. However, production was refused because Mr Yao had claimed that the documents were protected by privilege. But, "on reflection", Ms Li now presses claims of privilege over these two documents. Ms Li says that these documents are confidential draft documents prepared by BlackHill Legal for the dominant purpose of giving legal advice in relation to the external investment in Anxin and proposed development of the Troughton Road Property.
[83] There is a distinct lack of clarity here. The document descriptions ('heads of agreement') do not suggest circumstances of privilege. Ms Li does not say that the documents were attached to, for example, emails from BlackHill Legal giving legal advice. BlackHill Legal do not give evidence of providing legal advice. And Ms Li has changed her stance. The lack of clarity suggests that the court should inspect the documents itself, although, as will be discussed, that exercise is often a less than satisfactory remedy.
[102]
[84] Document QLI.003.001.0001 is a copy of an undated file note described as 'File Note - Discussion with Yao - Development Deed 59 Troughton - Scanned 17.07.19.pdf'. Ms Li says that undated file note is a note of a telephone call. She says:
[103]
"I do not recall precisely what this call was about, or whether it was with me, but I recall having several telephone conversations with Mr Smith of BlackHill Legal in relation to the proposed purchase of a property at Richlands and the external investor. The dominant (if not only) purpose of all my calls to or from Mr Smith were to give or obtain legal advice in relation to the purchase of a property at Richlands, and the external investor and development of the Troughton Road Property."[34]
[104]
[85] To establish the claim of advice privilege, Ms Li needs to satisfy the court that the document records a confidential communication between lawyer and client made for the dominant purpose of seeking or being furnished with legal advice from or by that lawyer. The threshold problems are that Ms Li does not know whether the communication was with her as the client, and that she does not know the subject matter of the conversation. The fact that Ms Li resorts to discussing in general terms several of her conversations with Mr Smith means that she is really asking the court to infer that, in the circumstances, the conversation was confidential and that it was for the dominant purpose of legal advice. The court is unable to draw that inference, especially given that Ms Li is unable to even say that she was a party to the conversation. The privilege needs to be properly proved. It ought not be the subject of what is, in effect, speculation that she was involved in a confidential communication for the purpose of legal advice.
[86] In the absence of proper evidence establishing the privilege, this document should be produced.
[105]
[87] The following documents are described by Ms Li as emails, email chains, or letters exchanged with Mr Smith (and often copied to Mr Yao and some of which involved Ms Yu as well). Ms Li deposes that these communications came into existence for the dominant purpose of giving or receiving legal advice: QLI.003.001.0049, QLI.003.001.0051, QLI.003.001.0054, QLI.003.001.0057, QLI.003.001.0060, QLI.003.001.0061, QLI.003.001.0062, QLI.003.001.0076 (and its attachment, QLI.003.001.0078), QLI.003.001.0083, QLI.003.001.0084 (including QLI.003.001.0076 and a response from Ms Li to Mr Smith), QLI.003.001.0086 and its response from Mr Smith, QLI.003.001.0087, QLI.003.001.0090 (and its attachments, QLI.003.001.0096 and QLI.003.001.0097), QLI.003.001.0122 (and its attachment, QLI.003.001.0130), QLI.003.001.0137 (including QLI.003.001.0090 and QLI.003.001.0122 and its attachments, QLI.003.001.0148, QLI.003.001.0173 and QLI.003.001.0180), QLI.003.001.0181 (including QLI.003.001.0090, QLI.003.001.0122 and QLI.003.001.0137), QLI.003.001.0192 (including QLI.003.001.0090, QLI.003.001.0122, QLI.003.001.0137 and QLI.003.001.0181), QLI.003.001.0204 (and its attachments, QLI.003.001.0210 and QLI.003.001.0211), QLI.003.001.0212 (and its attachment, QLI.003.001.0214), QLI.003.001.0215, QLI.003.001.0220, QLI.003.001.0223, QLI.003.001.0242, QLI.003.001.0248, QLI.003.001.0255 (and its attachment, QLI.003.001.0262 and the duplicates, QLI.003.001.0263 and QLI.003.001.0270), QLI.003.001.0271 (and its attachment, QLI.003.001.0273), QLI.003.001.0276, QLI.003.001.0280 (and its attachment, QLI.003.001.0283), QLI.003.001.0286, QLI.003.001.0289, QLI.003.001.0300 (and its attachments QLI.003.001.0304 and QLI.003.001.0345), QLI.003.001.0456 (and its attachment, QLI.003.001.0458), QLI.003.001.0483 (and its attachments, QLI.003.001.0485, QLI.003.001.0526, QLI.003.001.0527, and QLI.003.001.0531), QLI.003.001.0548 (including QLI.003.001.0483 and its attachments QLI.003.001.0550, QLI.003.001.0554, QLI.003.001.0555 and QLI.003.001.0596).
[88] Those documents appear to be protected by advice privilege because they comprise communications between lawyer and client, and Ms Li swears that they are for the dominant purpose of obtaining or giving legal advice. Ms Li uses something of a formula of words in claiming the privilege. That is not surprising given the number of documents for which advice privilege is claimed.
[89] However, it is worth looking at some of the other claims to privilege which do not use the same formula of words.
[106]
[90] A problem arises with item QLI.003.001.0088. That item is described as "Trust Funds Received - Development Deed - Matter no. 199022". It is an email communication from Mr Smith to Ms Li. Ms Li explains the claim of privilege in this way:
[107]
"Document numbered QLI.003.001.0088 is an email from Mr Smith to me on 2 August 2019 at 4:58pm. It is a confidential communication sent from Anxin's solicitor to me in relation to funds received in trust, for the purpose of keeping Anxin informed so that I could seek advice as required in relation to this matter."
[108]
[91] The question is whether Ms Li has positively sworn to the communication being for the dominant purpose of obtaining or giving legal advice. Broken down into its elements, Ms Li says that the communication was:
[109]
(a) in relation to funds received in trust;
(b) for the purpose of keeping Anxin informed; and
(c) so that Ms Li could seek legal advice.
[110]
[92] None of that is an assertion that the communications were for the dominant purpose of seeking or being furnished with legal advice. Instead, Ms Li says that the purpose was to keep her informed, which would enable Ms Li to seek legal advice. In other words, what seems to be contended is that the communication was preparatory to and/or facilitated Ms Li seeking some legal advice.
[93] It is a peculiar claim to privilege. It rather suggests that Ms Li seeks to claim privilege for all communications between solicitor and client.
[94] That view of an overly broad approach to claims of advice privilege is also supported by Ms Li's claim to advice privilege for a form of authority (document QLI.003.001.0241). Ms Li swears that that was a confidential document created for the dominant purpose of Anxin obtaining legal advice from BlackHill Legal in relation to the development deed. The claim to privilege is no longer pressed but the making of the privilege claim for such a procedural document itself is a concern.
[111]
Keeping Mr Smith Informed - QLI.003.001.0279 and QLI.003.001.0393
[112]
[95] A similar problem arises with document QLI.003.001.0279. Ms Li describes the claim to privilege in this way:
[113]
"Document numbered QLI.003.001.0279 is an email from Ms Yu to Mr Smith on 22 September 2020 at 1:38pm. I have reviewed that email and it is apparent that it is a confidential communication between Ms Yu on behalf of Anxin and Anxin's solicitor, to keep Mr Smith informed in relation to the development deed between Anxin and the external investor, for the dominant purpose of keeping Anxin's solicitor informed to allow him to give legal advice in relation to the development deed and the DA."[35]
[114]
[96] That paragraph seems to be carefully drafted. Ms Li does not appear to have any direct knowledge of the creation of the document; hence she states that she has reviewed the document and her statement goes to what is "apparent" from the document. From that limited perspective, she says that the objective was to keep Mr Smith informed and that keeping him informed was to allow him to give legal advice. The privilege protects communications for the dominant purpose of seeking or being furnished with legal advice. Merely stating a precondition to the giving of legal advice, that the lawyer be kept informed, may or may not qualify. The words used, particularly the use of the word "allow", rather suggest that the dominant purpose test is not satisfied.
[97] Document QLI.003.001.0393 is in a similar category. Ms Li says:
[115]
"Document numbered QLI.003.001.0393 is an email from Mr Smith to me and William on 6 October 2020 at 4:27pm, and also contains and passes on an earlier email (lower in the email chain) and has as attachments documents numbered QLI.003.001.0395, QLI.003.001.0396, QLI.003.001.0437, QLI.003.001.0438, and QLI.003.001.0455. The email from Mr Smith to me and William is a confidential communication between me and Anxin's solicitor to keep Anxin informed in relation to a draft agreement related to the development of the Troughton Road Property, for the dominant purpose of allowing legal advice to be sought by or given to Anxin about this matter."
[116]
[98] Again, there is a fusing of the need to keep the client informed and the purpose of allowing legal advice to be sought or given. That could qualify, or may not qualify as privileged.
[117]
Emails between Ms Yu and Mr Smith - QLI.003.001.0362
[118]
[99] For item QLI.003.001.0362, Ms Li says this:
[119]
"Document numbered QLI.003.001.0362 is a chain of emails between Ms Yu and Mr Smith between 22 September 2020 and 2 October 2020. I have reviewed the emails in the email chain, and it is apparent that they are confidential communications between Ms Yu on behalf of Anxin and Anxin's solicitor, for the dominant purpose of giving to Anxin or Anxin obtaining legal advice in relation to the development deed."
[120]
[100] Here, Ms Li deposes that she has reviewed the email chain and has decided that those emails meet the test. The emails do not involve her. Ms Li's review is on the basis of what is 'apparent' from the document. The process seems similar to Mr Cohen's desktop review. That does not meet the requirements of rule 213(3).
[121]
[101] For item QLI.003.001.0393 Ms Li says this:
[122]
"Document numbered QLI.003.001.0393 is an email from Mr Smith to me and William [Yao] on 6 October 2020 at 4:27pm, and also contains and passes on an earlier email (lower in the email chain) and has as attachments documents numbered QLI.003.001.0395, QLI.003.001.0396, QLI.003.001.0437, QLI.003.001.0438, and QLI.003.001.0455. The email from Mr Smith to me and William is a confidential communication between me and Anxin's solicitor to keep Anxin informed in relation to a draft agreement related to the development of the Troughton Road Property, for the dominant purpose of allowing legal advice to be sought by or given to Anxin about this matter."[36]
[123]
[102] And so, breaking down the claim into its two constituents, Ms Li's evidence is that:
[124]
(a) Mr Smith, the lawyer for Anxin, sent the email to Mr Yao and Ms Li as representatives of Anxin, so as to keep Anxin informed "in relation to a draft agreement related to the development of the Troughton Road Property"; and
(b) that process of keeping Anxin informed was "for the dominant purpose of allowing legal advice to be sought by or given to Anxin about this matter".
[125]
[103] Again, there is a lack of clarity. First, the topic that Mr Smith was keeping Anxin informed about has a description that involves two rather vague 'connecting' words: "in relation toa draft agreement" [emphasis added] and "related tothe development" [emphasis added]. Second, there is no obvious connection between the process of Mr Smith keeping Anxin informed, and the legal advice being sought or given. Third, there is the use of the word "allowing" which suggests that the communication may not have been for the dominant purpose of seeking or giving legal advice but was merely supplying a factual basis which enabled or facilitated the giving of legal advice. Such a communication may or may not properly be the subject of advice privilege.
[104] Item QLI.003.001.0613 is in a similar category.[37] Again, the idea is that Mr Smith is keeping Anxin informed "in relation tothe development of the Troughton Road Property" [emphasis added] and that process of keeping Anxin informed is "for the dominant purpose of allowingAnxin to seek legal advice as required about this matter" [emphasis added].
[105] Again, there is a lack of clarity, particularly as to the connection between keeping Anxin informed and the seeking or giving of legal advice. There is also the problem that not even the topic of the legal advice is identified. The process of keeping Anxin informed is said to be designed to allow "Anxin to seek legal advice as required about this matter". A very wide class of documents might be said to facilitate 'legal advice as required'. The communication must be made for the dominant purpose of seeking or being furnished with legal advice.
[106] Document QLI.003.001.0663[38] is in substantially the same form and suffers from the same lack of clarity.
[128]
[107] That analysis of the documents produces these conclusions, or in some cases tentative conclusions:
[129]
(a) items 1 and 2 in Annexure 1 to the schedule (the MARA documents) look likely to be protected by advice privilege but the claim of privilege has not been established by direct evidence in accordance with UCPR rule 213(3);
(b) the claim to privilege over items 33 to 127 in Annexure 1 to the Schedule (the Troughton Road documents) also does not comply with UCPR rule 213(3). The documents do not appear to bear a confidential character or to be the subject of legal advice, especially having regard to the explicit terms of the retainer;
(c) both sets of defendants claim advice privilege over items 33 to 127 in Annexure 1 to the Schedule (Childcare development documents) but one claim does not comply with rule 213(3) and the other appears to be so broad as to encompass almost any communication between solicitor and client;
(d) the claims to privilege over items 128 to 161 in Annexure 1 to the Schedule (ATO review documents, Miscellaneous documents and item 161) also do not comply with rule 213(3);
(e) the claims of privilege over the Annexure 2 documents largely comply with rule 213(3) - except for the emails discussed a subparagraph (k) below;
(f) however, there is a lack of clarity about the claims to privilege regarding the heads of agreement documents;
(g) the claim to privilege over the undated file note appears to be based entirely on speculation rather than evidence;
(h) Ms Li uses a formula of words for the claims to privilege over a large number of lawyer/client communications;
(i) in respect of the document QLI.003.001.0088 (Trust Funds Received) Ms Li says is that the purpose was to keep her informed which would enable Ms Li to seek legal advice;
(j) for documents QLI.003.001.0279 the evidence is that the objective was to keep Mr Smith, a solicitor, informed which may or may not be privileged;
(k) the claim to privilege over the emails between Ms Yu and Mr Smith (document QLI.003.001.0362) does not comply with rule 213(3);
(l) the claim to privilege over documents QLI.003.001.0393, QLI.003.001.0613 and QLI.003.001.0663 are rather indirect in that they are said to have been created for the dominant purpose of "allowing" legal advice to be sought by or given to Anxin about "".
[130]
[108] As explained above, the failure to properly sustain the claims to privilege means that the court has three option. The could reject the claims of privilege, inspect the documents itself, or give the Yao, Zhao and Li defendants a further opportunity to sustain their claims to privilege. In choosing the most appropriate orders, it is important to bear in mind that legal professional privilege is an important right as it safeguards the full and unreserved communications between citizens and their lawyers.[39] I am hesitant to adopt the first option and simply vanquish the privilege because of an erroneous view as to how the privilege should be proved - at least, without first giving the active defendants an opportunity to rectify the material.
[109] I propose to adopt the option of inspecting the documents. It is not an entirely satisfactory remedy because the court is really required to wade into the dispute and to, in effect, conduct what I have described as a desktop review. The court is not necessarily in possession of the precise circumstances of the communications.
[110] However, given the unsatisfactory claims to privilege, a review of the contentious documents seems the most appropriate (or perhaps the least unsatisfactory) of the three possible orders.
[131]
[1] The Commissioner took no active part in the application before the court and was content to abide the order of the court.
[132]
[2] This summary of the allegations is based on the plaintiffs' summary of the claims in its submissions at [10].
[133]
[3] This is the total of the documents for which privilege is claimed as listed in the amended application. Some refinement occurred.
[134]
[4] This figure is also taken from the amended application.
[135]
[7] In his text Dr Desiatnik argues for a third category: Deisatnik, Legal Professional Privilege in Australia, 4th ed, (2025) at 30, 31.
[136]
[8] Ibid. These summaries are based on Dr Desiatnik's summary. I have excluded communications that involve an agent for present purposes. See also Grant v Downs (1976) 135 CLR 647 at 683.
[137]
[9] The email is described as the "host reference".
[138]
[10] The times specified in UCPR r 213 were not complied with, and there was something of a correspondence war about the privilege. But fundamentally, the parties acted broadly in accordance with the regime.
[12] The evidence of the communications may be third-hand in so far as the facts are matters that Mr Cohen deposes to on the basis of what he has been told or has learned from the file of the previous solicitors.
[18] [ 2014] QSC 303 at [36]. This case was considered by Brown J in Santos Ltd v Fluor Australia Pty Ltd (No 3)[2021] QSC 281. Her Honour decided that, on the facts of that case, UCPR rule 213(3) had been complied with.
[147]
[19] Subject to the arguments about improper purpose and waiver: [2014] QSC 303 at [40].
[148]
[20] It is possible that the second principle is a subset of the first, see the discussion below.
[149]
[21] For present purposes, I am confining the discussion to advice privilege.
[150]
[22] One would expect that the solicitor with conduct of the proceeding would be reviewing the documents in any event.
[151]
[23] In his 11th affidavit Mr Cohen refers to his "review" of the documents for which privilege is claimed.
[152]
[24] Save for exceptional circumstances, such as those in Fletcher v Fortress Credit Corp (Australia) II Pty Ltd[2014] QSC 303.
[153]
[25] See the Yao and Zhao defendants' submissions, at [24] - the submission is made that: "Mr Cohen deposes that he has reviewed the documents which relate to this retainer and, as a result of that review, gives direct evidence of the basis for the privilege claim on behalf of Mr Yao." [emphasis added]
[28] The position is different where the nature of the retainer is one that requires the provision of legal advice. In those cases, once retained, it is difficult to separate out non-legal advice: see Ransley v Commissioner of Taxation[2015] AATA 728 at [14].
[32] Yao and Zhao defendants' submissions at [33].
[161]
[33] See the discussion above. The elements are communications between a lawyer and their clients; communications that are confidential; and are communications for the dominant purpose of seeking or being furnished with legal advice from or by that lawyer.
[162]
[37] This document is said to include three attachments: QLI.003.001.0617, QLI.003.001.0621, and QLI.003.001.0622.
[163]
[38] This document is said to include four attachments: QLI.003.001.0667, QLI.003.001.0668, QLI.003.001.0672, and QLI.003.001.0673.
[33] That view does not mean that an affidavit by a solicitor cannot satisfy the requirements of the rule. The rule requires direct evidence of the facts giving rise to the privilege claim. For advice privilege the evidence required is that the document was a communication between lawyer and client; and that it was confidential; and that it was created for the dominant purpose of seeking or being furnished with legal advice. That evidence will naturally come from the client or from the lawyer. But the lawyer who can give the evidence, is the lawyer who was directly involved in the communications.[24]
[38] The difficulty is that the claim of privilege has not been established by direct evidence in accordance with rule 213(3). The failure to properly sustain the claim to privilege means that the court could reject the claim of privilege, or inspect the documents itself, or give the Yao defendants a further opportunity to sustain their claim to privilege. I will return to those three options later.
[39] There is one further argument that needs to be considered. Mr Cohen argued that by putting into evidence the costs agreement (which explained the lawyers brief) and by stating his opinion as a result of his review, his clients had gone as far as they could to demonstrate the existence of the advice privilege. He contended that for the court to require his client to go further would require his clients to explain the advice and thereby violate the privilege. I do not accept that submission. As explained, rule 213(3) requires direct evidence of the existence of the privilege. It does not require exposure of the contents of the communications.