Frederick Swaab v Commissioner of the NSW Police Service [2005] NSWSC 901 | Case summary

JUDGMENT 1 HIS HONOUR: The plaintiff, Frederick Swaab, is a solicitor. Between 1998 and 2000 he acted for a sporting club, and at one stage he held a substantial sum of money on trust for the club. That money was to be used for a purpose authorised by a deed entered into between the club and another organisation. 2 A number of payments were made from that trust fund, but by April 2000 an issue had arisen whether those payments were properly authorised. The plaintiff instructed a colleague in his firm, Harry Snow, to advise him about the matter and to act for him in any legal proceedings which might ensue. The club was a company, but it was deregistered in December 2000. 3 In July 2003 police executed a search warrant at the office of the plaintiff and Mr Snow. Legal professional privilege was claimed in respect of a number of documents embraced by the warrant. In accordance with a protocol agreed to by the Law Society of New South Wales and the Commissioner of Police, those documents were sealed in envelopes and conveyed to the Downing Centre Local Court, where they were lodged with the Justice who had issued the warrant. That claim is now maintained in respect of twelve of the documents. By summons in this Court issued against the Commissioner of the New South Wales Police Service as the defendant, the plaintiff seeks a declaration that they are privileged and an order that they be returned to him. 4 The twelve documents are listed in par 10 of the affidavit of Mr Snow sworn on 21 August 2003. Nine of them are communications between the plaintiff and Mr Snow. The manner in which they are described conveys that they are privileged. Nevertheless, counsel for the defendant asked me to inspect them to satisfy myself that this is so. Counsel for the plaintiff did not object to my doing so, although he argued that it was unnecessary. I have inspected the documents and it does appear to me that they are privileged. 5 It is in relation to the remaining three documents, par 10 (c) - (e) of Mr Snow's affidavit, that the difficulty arises. These are a letter from the plaintiff to the Chairman of the club of 19 July 1999, the plaintiff's file note of a telephone conversation with the Chairman of the club on 7 January 2000, and a fax from the plaintiff to a consultant to the club of 10 January 2000. These are communications during the period that the plaintiff was acting for the club, while it was still on the register. I have inspected these documents also, and it does appear that they were prepared under the cloak of legal professional privilege. However, at the time the search warrant was executed the club was defunct, and counsel for the defendant has challenged the plaintiff's standing to assert the privilege. 6 That challenge is based upon the undoubted proposition that the privilege is that of the client, not the solicitor. Counsel for the defendant relied upon the decision of Pincus J in Baker v Evans (1987) 77 ALR 565, an application for judicial review relating to search warrants. The applicants had been the promoters of a company which was defunct. They asserted legal professional privilege in respect of documents prepared on behalf of the company before its dissolution for the purpose of obtaining legal advice. Pincus J held that the advice had been obtained by the company, not by the applicants personally. His Honour accepted (at 567) that the dissolution of the company did not put an end to the privilege, although it does not appear that that matter was fully argued. However, he did not accept that the privilege was transmitted to the applicants, and concluded (also at 567): Since, as I find, the now defunct company was the client, I can see no basis for upholding a claim of privilege, at the instance of persons who were once interested in the company. The privilege is that of the client. 7 Counsel for the plaintiff, on the other hand, relied upon the decision of Tamberlin J in Lake Cumbeline Pty Ltd v Effem Foods Pty Ltd (1994) 126 ALR 58. The applicants in that case had been directors, and guarantors of the debts and obligations, of a company which had gone into liquidation and been dissolved. They brought proceedings against the respondent arising out of dealings with the company, the nature of which I need not examine for present purposes. Tamberlin J was dealing with the applicants' resistance, on the basis of legal professional privilege, to inspection by the respondent of a large number of documents. The documents were prepared for the purpose of litigation in which the company had been involved, and his Honour proceeded upon the assumption that they were of such a nature as to attract the privilege. 8 It was not in dispute that the privilege was that of the company. Tamberlin J held that, upon its dissolution, title to the documents vested in the Australian Securities Commission by virtue of s576 of the Corporations Law, the provision then in force. By s576(1), the "outstanding property" of a company which had been dissolved, "together with all claims, rights and remedies that the company or its liquidator then had in respect of the property", vested in the Commission. Enquiries of the Commission elicited the response that it "neither waived nor asserted" any claim for privilege in relation to the documents. 9 Tamberlin J observed (at 64) that it is "well settled law that the privilege is that of the client and not of the custodian." His Honour also observed (again at 64) that there is "little or no direct authority" about what happens to the right of a company to claim the privilege after its dissolution, referring to Baker v Evans. He concluded that the privilege of the company in question subsisted unless and until it was "waived by a person or entity competent and able to waive" (at 65). He held that, by s576(1), the privilege had passed to the Commission and it was only that body, being for the time being entitled to it, which could waive it. He added that the applicants themselves could not waive it (even if they were minded to) because it was "not their privilege" (also at 65). 10 There is an apparent conflict between Tamberlin J's approach and that of Pincus J in Baker v Evans. At my request, counsel prepared helpful written submissions, providing cases in which those two decisions had been considered. None of them, however, bears directly upon the question which I am asked to decide. Baker v Evans was referred to in a number of cases set out in the submissions. These include Global Funds (NSW) v Rooney (1994) 36 NSWLR 122, in which Young J (at 130) cited it as authority for the proposition that "if a company is the solicitor's client and that company becomes defunct, there is no basis for upholding a claim of privilege at the instance of the persons who were once interested in the company…" 11 Lake Cumbeline v Effem Foods is referred to in the seventh Australian edition of Cross On Evidence (at [25020]) for the proposition that, in general, failure to claim a privilege does not amount to a waiver. That passage was cited by Haylen J in Workcover v Tsougranis (2002) 117 IR 203 at [49]. In TPC v Ampol Petroleum (Vic) (1994) 54 FCR 316, per Davies J at 323, both Baker v Evans and Lake Cumbeline were referred to as authority for the proposition that legal professional privilege is "that of the client and not that of the lawyer or of the witness who may have given a statement…" 12 These references were all in different contexts from the present case, and provide no more than the most general guidance for the resolution of the issue which confronts me. The matter would appear to be at large. 13 Counsel for the defendant sought to distinguish Lake Cumbeline insofar as it turned upon Tamberlin J's finding that the privilege which had resided in the company passed to the Australian Securities Commission by s576(1) of the Corporations Law. Counsel pointed out that that subsection provided for the vesting in the Commission not only of the property of a dissolved company but also all its "claims, rights and remedies" in respect of that property. The privilege was advanced as a "claim" for the purpose of that subsection: see the judgment at 63 - 4. 14 The effect of the deregistration of the company in the present case is to be found in the current provision, s601AD of the Corporations Act 2001. Subsection (1) provides that a company ceases to exist on deregistration. Subsection (2) provides that all the company's property vests in the Australian Securities and Investments Commission (ASIC). That subsection says nothing about "claims, rights and remedies", and those expressions are not embraced by the definition of "property" in s9 of the Act. Accordingly, counsel submitted, the privilege does not pass to ASIC on deregistration. Like the company itself, it ceases to exist. That being so, he argued, while title to the documents in question passed to ASIC, the privilege attaching to them did not. It was extinguished when the company was deregistered. 15 ASIC was not represented before me, and neither counsel could tell me whether it claimed to be the repository of the privilege and, if so, whether it would seek to rely upon it. 16 However, as counsel for the plaintiff pointed out, s106AH of the Act provides for the reinstatement, in certain circumstances, of the registration of a company which has been deregistered. The real question is whether the privilege can survive deregistration. Whether it passes to ASIC is a different question, and one which I do not find it necessary to determine. I am not persuaded that deregistration extinguishes the privilege and, adopting the reasoning of Tamberlin J in Lake Cumbeline, I consider that there are circumstances in which it can still be asserted. The present is such a case. 17 Baker v Evans itself was not concerned with whether the dissolution of the company extinguished the privilege, Pincus J being prepared to accept that it did not. Rather, it turned upon whether the applicants were the beneficiaries of the privilege, so as to have standing to claim it. That, of course, remains a central issue in the present case. However, the plaintiff is the very solicitor to whom the privileged communications by the company had been made. While the privilege is not his, neither is it for him to waive it. Absent instructions from his client, he is not entitled to disclose any privileged communication: Grant v Downs (1976) 135 CLR 674, in the joint judgment at 686. 18 Counsel for the Commissioner sought to distinguish Lake Cumbeline on this aspect also. He argued that the question of standing did not arise in that case because the only question was whether the applicants were entitled to resist production of documents said to be privileged. Unlike the present plaintiff, they were not seeking any form of relief. However, I am persuaded by the response of counsel for the plaintiff that, as the company's former legal advisor, he is entitled to have this Court determine the question of privilege so that he can discharge his professional obligation. Therein lies his standing. I find that the privilege was not extinguished by the company's deregistration and, accepting the approach of Tamberlin J, that it has not been waived by any person or entity competent to do so. 19 Accordingly, the plaintiff is entitled to the relief which he seeks. I shall consult counsel about the terms of a declaration and any consequential order and, if necessary, I shall hear argument on costs.

Frederick Swaab v Commissioner of the NSW Police Service

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