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[2012] FCA 787
Federal Court of Australia
2012-07-30
Marshall J
Original judgment source is linked above.
INTRODUCTION 1 These reasons for judgment set out in a fuller form the basis for the Court's orders made in this matter on 21 June 2012. Accordingly, they should be read in conjunction with the reasons published on 11 July 2012. See Gibbins Investments Pty Ltd v Samuel Savage as Executor of the Estate of John Thomas Savage (Deceased) [2012] FCA 742 ("the earlier judgment"). 2 The earlier judgment at [15] to [17] requires further exposition. The circumstances in which those reasons were prepared did not permit that to occur at an earlier time. These reasons for judgment now expand upon the basis for the Court's acceptance that s 131(2)(b), (f) and (i) of the Evidence Act 1995 (Cth) ("the Act") apply to the relevant communications.
(i) The solicitors' communications 3 The earlier judgment sets out the relevant statutory provisions. At [15], I concluded as follows: The solicitors' communications of 14 and 21 March 2012 are, in my view, covered by the exception in s 131(2)(b). That is because the substance of the evidence has been disclosed in the Fast Track Response with the implied consent of the respondents. The same applies to the email but not to the deed itself. 4 At [7] of the earlier judgment, the solicitors' communications of 14 and 21 March 2012 are identified as having occurred in telephone conversations between Mr Yorston for the applicant and Mr Hannan for the respondents. At [11] of the Fast Track Statement the applicant contended that: The Executors threaten and intend unless restrained by this Honourable Court from so doing to sell, transfer, dispose of, pledge, encumber or otherwise deal with the 45 Australian Magnetite Shares and the 45 Peko Shares other than in accordance with the Constitutions of those companies and, in particular, contrary to the Pre-emptive Rights contained in cll 27 and 28 of those Constitutions. PARTICULARS The applicant relies upon the content of telephone discussions between its solicitor and the Executors' solicitor held: (a) on 14 March 2012, in which the Executors' solicitor said words to the effect that the Executors would sell their interests to someone else if the Applicant did not want to buy them; (b) on 21 March 2012 in which the Executors' solicitor said words to the effect that the Executors had sought an expression of interest and relied on this in valuing their interests. 5 At [11] of the Fast Track Response the respondents replied: The Executors deny the allegations in paragraph 11 of the Applicant's contentions [and] say further that the communications relied upon by the Applicant are: (a) privileged communications within the meaning of section 131 of the Evidence Act (Cwth) in that the same was made during a telephone conversations [sic] between the lawyers for the parties in connection with an attempt by those parties to negotiate a settlement of the Dispute and that evidence of the same cannot be adduced in this proceeding; and (b) were not to the effect alleged. PARTICULARS The telephone conversations between Neil Hannan, the solicitor for the Estate and the Executors and Mark Yorston, solicitor for the Applicants, as referred to, were held on a without prejudice basis in connection with an attempt by those parties to negotiate a settlement of the Dispute. On 14 March 2012 Mr Hannan said to Mr Yorston, words to the effect, that the Executors had a duty to dispose of the assets of Estate, including the shares in Australian Magnetite and Peko, for market price and that, subject to the pre-emptive rights, if Gibbins Investments was not willing to purchase those shares the shares would have to be sold to someone else. On 21 March 2012, Mr Hannan said to Mr Yorston, words to the effect, that the Executors had sought indications of the value of the shares held in Australian Magnetite and Peko from alternative parties, subject to the pre-emptive rights. 6 It is immediately apparent and critical that in the Fast Track Response, in the second and third paragraph of the particulars, the respondents set out the substance of the very conversations they assert to be privileged. The Court accepts the submission of counsel for the applicant that a truncated version of the solicitors' communications has been set out in the Fast Track Response. Accordingly, the substance of the solicitors' communications has been disclosed, with the implied consent of the respondents.
(ii) The email of 13 March 2012 7 On 13 March 2012, the second respondent, Ms Clegg, sent an email to Mr Bill Gibbins of the applicant. The email was headed "WITHOUT PREJUDICE". Omitting formal parts, it stated: Please find attached the Estate's offer to sell its shares upon the terms set out in the attached terms of settlement. These terms have been signed by all executors and Bactron and can be accepted by you forwarding to us a copy of the same duly executed by the parties which you control namely, Gibbins Investments Pty Ltd, Biga Nominees Pty Ltd, Sitzler Savage Pty Ltd and yourself and executed by you on behalf of Australian Magnetite Pty Ltd. The offer contained in these terms expires at 4pm on 15 March 2012 at which time it is withdrawn unless it has been previously accepted. A document headed "Deed of Settlement" was attached to the email. 8 At [8] of the Fast Track Statement, the applicant claims: By an email transmitted on 13 March 2012, the Executors made offers to sell to Gibbins Investments (Share Offers) the Estate's: (a) 45 Australian Magnetite Shares, for a price of $900,000 (b) 45 Peko Shares, for a price of $300,000. PARTICULARS The Share Offers were in writing, signed by each of the Executors and transmitted to William John Gibbins by email on 13 March 2012, at 7.21pm. The Share Offers were expressed to be open for acceptance until 4.00pm on 15 March 2012 at which time it would be withdrawn. A copy of the email and attachment may be inspected by appointment. 9 In reply at [8] of the Fast Track Response, the respondents say: The Executors deny the allegations in paragraph 8 of the Applicant's contentions and say further that: (a) the documents referred to therein are privileged documents within the meaning of section 131 of the Evidence Act (Cth) and that evidence of the same cannot be adduced in this proceeding in that: (i) the covering email sent by the Second Respondent to the Applicant on 13 March 2012 at 7:22pm ("email") was headed "Without Prejudice" and stated: "WITHOUT PREJUDICE" "Dear Bill Please find attached the Estate's offer to sell its shares upon the terms set out in the attached terms of settlement. These terms have been signed by all executors and Bactron and can be accepted by you forwarding to us a copy of the same duly executed by the parties which you control namely, Gibbins Investments Pty Ltd, Biga Nominees Pty Ltd, Sitzler Savage Pty Ltd and yourself and executed by you on behalf of Australian Magnetite Pty Ltd. The offer contained in these terms expires at 4pm on 15 March 2012 at which time it is withdrawn unless it has been previously accepted. We await your response" (ii) the proposed Deed of Settlement ("Settlement Offer") attached to the email was a document that had been prepared by the lawyers for the Estate, the Executors and Bactron Pty Ltd in connection with an attempt by those parties to negotiate a settlement of a series of interconnected and ongoing disputes between the Estate, the Executors and Bactron Pty Ltd on one hand and the Applicant and its controller, William Gibbins ("Gibbins") and Biga Nominees Pty Ltd, on the other hand, as to the parties various shareholdings, units and interests in, inter alia: 1 Australian Magnetite; 2 Peko; 3 the Sitzler Savage Discretionary Unit Trust; and 4 the Peko Project, as described in a 2007 Heads of Agreement between the late John Thomas Savage and Bill Gibbins and, inter alia, the companies set out above; the 2007 Heads of Agreement being the subject of a judgment in the Federal Court of Australia, at first instance, by her Honour Justice Gordon in Gibbins Investments Pty Ltd v Savage [2011] FCA 527 and by the Full Court of the Federal Court of Australia in Vermillion Resources Pty Ltd v Gibbins Investments Pty Ltd [2011] FCAFC 149. [Collectively above, "Dispute"] PARTICULARS The dispute between the late Jack Thomas Savage, and later his Estate, the Executors and Bactron Pty Ltd on the one hand and Applicant and its controller, William Gibbins ("Gibbins") and Biga Nominees Pty Ltd on the other hand revolves around: (a) the joint shareholdings and/or unit holdings the parties formerly held in Sitzler Savage Pty Ltd and still hold in Australian Magnetite, Peko and the Sitzler Savage Discretionary Unit Trust; and (b) the parties' involvement in the Peko Project as described in a 2007 Heads of Agreement between the late John Thomas Savage and Gibbins and the various companies controlled by them. Part of the dispute, concerning Sitzler Savage Pty Ltd was the subject of a judgement in the Federal Court of Australia, at first instance, by her Honour Justice Gordon in Gibbins Investments Pty Ltd v Savage [2011] FCA 527 and later by the Full Court of the Federal Court of Australia in Vermillion Resources Pty Ltd v Gibbins Investments Pty Ltd [2011] FCAFC 149. Since the above decisions the parties have remained been in dispute and negotiation, inter alia, as to the following matters: (c) the control of the right to extract, sell and distribute minerals, including magnetite, from tailings located on mining tenements located near Tenants Creek in the Northern Territory as set out in the judgment of his Honour Justice Murphy in Smith, in the matter of Peko Rehabilitation Project Pty Ltd (Receiver and Manager Appointed) (in liq) [2011] FCA 1448; (d) the control of the books and records of Australian Magnetite and the whereabouts of the assets of Australian Magnetite; (e) the control of the 19 units of the 20 units in the Sitzler Savage Discretionary Unit Trust held by the Estate; (f) a guarantee given by the late Jack Thomas Savage in relation to a debt owed by Peko to the Commonwealth of Australia, which debt and guarantee was assigned to Northern Mining Holding Pty Ltd; (g) causes of action and claims that each party may have against the other and their respective companies in relation to Sitzler Savage, the Sitzler Savage Discretionary Unit Trust Australian Magnetite, Peko, Bactron and the Peko Project. Copies of the documents referred to above are in possession of the lawyers for the Respondents and may be inspected upon appointment. (b) the Settlement Offer constituted an offer by Estate, the Executors and Bactron Pty Ltd to enter into an agreement with the Applicant, Gibbins and Biga Nominees Pty Ltd, subject to whole of the terms and conditions set out in the Settlement Offer and not otherwise; and (c) the Settlement Offer did not constitute a proposal by the Executors for a transfer of shares held by [the] Estate in Australian Magnetite and/or Peko within the meaning of the Constitutions of the same. 10 It is readily apparent that the respondents have set out the entire terms of the email. Accordingly, they have disclosed the substance of the email with implied consent.
Section 131(2)(f) 11 At [16] of the earlier reasons, the Court observed that s 131(2)(f) applies "because the proceeding is one to enforce an agreement or one in respect of which the making of such an agreement is in issue". What follows is the reasoning underpinning that view. 12 The question whether or not the parties reached an agreement about the sale of shares is at the heart of the proceeding. The applicant contends that it accepted the respondents' offer to sell shares in respect of which it held pre-emptive rights. Whether or not there was an acceptance of such an offer is a central issue in the proceeding. Therefore, it is beyond doubt that the proceeding is one in respect of which the making of an agreement about the purchase of shares is in issue. The Fast Track application seeks specific performance of pre-emptive rights. One aspect of the determination of that issue will be whether there was an agreement to purchase the shares arising out of the acceptance by the applicant of an offer made by the respondents.
section 131(2)(i) 13 At [17] of the earlier reasons the Court said that it considered that s 131(2)(i) of the Act applied "because the communications affect the right of the applicant to enforce its pre-emptive right to purchase shares…". What follows are the reasons for that view. 14 The email communication had legal implications. The deadline attached to the offer made by the respondents in the email may have constituted a breach of pre-emptive rights claimed by the applicant. The sending of the email involved the making of a communication affecting the rights of a person. The implications for the legal rights of the applicant stem from the applicant holding pre-emptive rights to the shares, the desire of the respondents to sell the shares and their extant threat to do so irrespective of the applicant's pre-emptive rights. 15 The relevant threats are clear on the evidence of Mr Yorston, which the Court accepts. That evidence is that the solicitor for the respondents, Mr Hannan, made the following comments to Mr Yorston in respect of Mr Bill Gibbins of the applicant and the purchase of shares: "Bill had his chance and he blew it"; and "If Bill doesn't want to buy them my clients will sell them to someone else".
concluding comment 16 The above constitutes fuller reasons designed to supplement the necessarily truncated conclusions at [15] to [17] of the earlier reasons. They represent the last word of the Court as currently constituted on this interlocutory application. There are no further orders arising out of the reasons for judgment dated this day. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Marshall J .
Gibbins Investments Pty Ltd
Samuel Savage as Executor of the Estate of John Thomas Savage