Gough & Gilmour Holdings Pty Ltd and ors v Caterpillar of Australia Ltd and anor

Industrial Relations Commission (NSW)|1999-12-21|Before: Boland J, Mr J, Mr P

Industrial Relations Commission of New South Wales in Court Session

CITATION : Gough & Gilmour Holdings Pty Ltd and ors v Caterpillar of Australia Ltd and anor (No. 8) [2001] NSWIRComm 208 FIRST APPLICANT Gough & Gilmour Holdings Pty Ltd

PARTIES : THIRD APPLICANT Anthony Lansley Gilmour

FIRST RESPONDENT Caterpillar of Australia Ltd

SECOND RESPONDENT Caterpillar Inc. FILE NUMBER: IRC 5227 of 2000 CORAM: Boland J Unfair contract - Interlocutory proceedings - Legal professional privilege - Cross-examination on affidavits supporting claim for privilege - Inspection of documents - Agent - Dominant purpose - Cross-examination permitted - Inspection of documents refused. CATCHWORDS : Practice and procedure - Interlocutory proceedings - Legal professional privilege - Cross-examination on affidavits supporting claim for privilege - Inspection of documents - Agent - Dominant purpose - Cross-examination permitted - Inspection of documents refused Industrial Relations Act 1996 LEGISLATION CITED : Industrial Relations Commission Rules 1996 Supreme Court Rules 1970 Auspine Ltd v H S Lawrence & Sons Pty Ltd [1999] FCA 1749 (21 December 1999) Balabel v Air-India [1988] 2 All ER 246 Dinsdale v Commissioner of Inland Revenue (1997) 18 NZTC 13,244 Esso Australia Resources Limited v Commissioner of Taxation (1999) 201 CLR 49 Fruehauf Finance Corporation Pty Ltd v Zurich Australian Insurance Ltd (1990) 20 NSWLR 359 Gough & Gilmour Holdings Pty Limited v Caterpillar of Australia Limited [2001] NSWIRComm 73 Gough & Gilmour Holdings Pty Limited v Caterpillar of Australia Limited [2001] NSWIRComm 92 Gough & Gilmour Holdings Pty Limited v Caterpillar of Australia Limited [2001] NSWIRComm 112 Gough & Gilmour Holdings Pty Limited v Caterpillar of Australia Limited [2001] NSWIRComm 135 Gough & Gilmour Holdings Pty Limited v Caterpillar of Australia Limited [2001] NSWIRComm 147 CASES CITED : Grant v Downs (1976) 135 CLR 674 Guardian Royal Exchange Assurance of New Zealand Ltd v Stuart [1985] 1 NZLR 596 Hartogen Energy Limited (in liquidation) v The Australian Gaslight Company (1992) 36 FCR 557 In re Sarah C Getty Trust [1985] 1 QB 956 Jones v Dunkel (1959) 101 CLR 298 Jones v Great Central Railway Company [1910] AC 4 National Crime Authority v S (1991) 100 ALR 151 Nickmar Pty Ltd v Preservatrice Skandia Insurance Ltd (1985) 3 NSWLR 44 Proctor v Gamble v Medical Research [2001] NSWSC 183 (21 March 2001) Trade Practices Commission v Sterling (1979) 36 FLR 244 Wheeler v Le Marchant (1881) 17 Ch D 675 HEARING DATES: 08/23/2001; 08/24/2001; 08/27/2001; 08/29/2001 DATE OF JUDGMENT: 09/06/2001

APPLICANTS Mr M J Kimber S.C. with Mr I Taylor and Mr A B Gotting of counsel Solicitor: Mr J Robinson Harmers Workplace Lawyers LEGAL REPRESENTATIVES: RESPONDENTS Mr P M Hall Q.C. with Mr W.T. Houghton Q.C. and Mr M Connock of counsel Solicitor: Mr A Gooch Mallesons Stephen Jaques

JUDGMENT: - 31 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION CORAM: BOLAND J 6 September, 2001 Matter No IRC 5227 of 2000 Gough & Gilmour Holdings Pty Limited & ors v Caterpillar of Australia Limited & anor Application under s 106 of the Industrial Relations Act 1996 Interlocutory Judgment No. 8 - Legal Professional Privilege -

1 This notice of motion arises out of proceedings brought by Gough & Gilmour Holdings Pty Limited ("first applicant"), Harcourt David Gough ("second applicant") and Anthony Lansley Gilmour ("third applicant") pursuant to ss 106 and 107 of the Industrial Relations Act 1996. The respondents to the summons for relief are Caterpillar of Australia Limited ("the first respondent") and Caterpillar Inc. ("the second respondent"). The relief sought related to notices served on the applicants by the respondents to terminate contracts in connection with a Caterpillar dealership operated by the applicants in New South Wales and the Australian Capital Territory. In this Judgment, I do not propose to go into any further detail of the background to this matter. Such information is set out in Gough & Gilmour Holdings Pty Limited v Caterpillar of Australia Limited [2001] NSWIRComm 73; Gough & Gilmour Holdings Pty Limited v Caterpillar of Australia Limited [2001] NSWIRComm 92; Gough & Gilmour Holdings Pty Limited v Caterpillar of Australia Limited [2001] NSWIRComm 112; Gough & Gilmour Holdings Pty Limited v Caterpillar of Australia Limited [2001] NSWIRComm 135; Gough & Gilmour Holdings Pty Limited v Caterpillar of Australia Limited [2001] NSWIRComm 147.

2 It might be noted that the issue for determination in this notice of motion, namely a claim for legal professional privilege, is the latest in a number of interlocutory disputes that have needed to be determined to date in this complex and lengthy piece of litigation.

3 The present notice of motion, filed on 17 July 2001 by the respondents, moved the Court for orders that the applicants produce for inspection 306 specified documents to the respondents in three broad categories. The notice of motion came on for hearing on 23, 24, 27 and 29 August 2001. At the hearing, Mr M Connock of counsel for the respondents indicated that the respondents sought access to only two of the three categories of documents identified in the notice of motion, namely: 1. Specified documents produced by PKF, Chartered Accountants and Business Advisers, pursuant to a summons for production issued on 28 February 2001; documents discovered by the applicants relating to PKF, and; documents produced by Gilbert & Tobin pursuant to a summons for production issued on 28 February 2001 ("the PKF documents"). 2. Specified documents produced by PricewaterhouseCoopers ("PWC") pursuant to a summons for production issued on 28 February 2001; documents discovered by the applicants relating to PWC, and; documents produced by Gilbert & Tobin pursuant to a summons for production issued on 28 February 2001 ("the PWC documents"). 4 The respondents submitted that the documents they sought to have produced for inspection might be relevant to the applicants' allegations and evidence regarding the process engaged in by the applicants in 1999 and 2000 in seeking to sell the dealership operated by the applicants. PKF, PWC and Gilbert & Tobin were advisers to the applicants in the sale process.

5 The applicants claimed legal professional privilege over the documents. In support of their claim of privilege over the PKF and PWC documents, the applicants filed four affidavits: An affidavit of John Williamson-Noble sworn on 3 August 2001; an affidavit of Isabel Margaret Shearman sworn on 31 July 2001, an affidavit of Anthony Lansley Gilmour sworn on 2 August 2001, and; an affidavit of Emma Graham Pritchard sworn on 24 August 2001. Objection was taken by Mr Connock to parts of the affidavits. In the event, however, I admitted those parts of the affidavits to which Mr Connock objected on the basis that the statements were made on the deponents' understanding and belief.

Cross-examination on affidavits in support of privilege claim 6 In the proceedings on the motion, Mr Connock indicated that he required the deponents of three of the affidavits supporting the claim of privilege, for cross-examination. Mr M Kimber SC with Mr I Taylor of counsel for the applicants, opposed cross-examination.

7 In the course of the proceedings I ruled that the deponents should be made available for cross-examination. I indicated that I would provide reasons, which I propose to do shortly, but before doing so I should explain the nature of the affidavit material.

8 Mr Williamson-Noble is a partner in the firm of solicitors, Gilbert & Tobin. In June 1999, following a request by the first respondent to the applicants that they sell their dealership, Mr Williamson-Noble was retained by the applicants to act for them. Mr Williamson-Noble said in his affidavit that in providing legal advice to the applicants, he needed assistance on taxation issues and accounting issues. He advised the applicants accordingly. In his affidavit Mr Williamson-Noble said: 8 During the period from about June 1999, I received information on the taxation position of G&G, Mr Gough and/or Mr Gilmour and taxation issues likely to affect G&G, Mr Gough and/or Mr Gilmour from Anthony Sloan, a partner at the accounting firm Pannell Kerr Foster. I have worked with Mr Sloan on behalf of G&G, Mr Gough and/or Mr Gilmour on previous occasions. The purpose of receiving this information from Mr Sloan was to enable me to provide legal advice to G&G, Mr Gough and/or Mr Gilmour. I was instructed by Mr Gough and Ms Shearman to liaise with Mr Sloan in order to obtain information on the taxation position of G&G and taxation issues likely to affect G&G, Mr Gough and/or Mr Gilmour. I was instructed by Mr Gough and Ms Shearman that Mr Sloan was the person in the best position to provide me with information concerning the taxation position of G&G, Mr Gough and/or Mr Gilmour for the purpose of me providing legal advice. I understood that Mr Sloan was retained by G&G, Mr Gough and/or Mr Gilmour; I did not retain Mr Sloan. 9 During the period June 1999 to late 2000, I also received information in relation to the potential sale of G&G or its business from Rick Millen, a partner with PricewaterhouseCoopers ("PWC"), and Chris Williams, an employee at PWC. I was instructed by Mr Gough and Ms Shearman that I would receive information on G&G from Mr Millen and/or Mr Williams directly (as opposed to information being provided by Mr Gough or Ms Shearman). The purpose of me receiving this information was to enable me to provide legal advice to G&G, Mr Gough and/or Mr Gilmour. I was also instructed by Mr Gough and Ms Shearman to provide Mr Millen and Mr Williams with legal advice as representatives of G&G. I understood that PWC was retained by G&G or Mr Gough; I did not retain PWC. 10 During the period June 1999 to late 2000, I provided legal advice to Mr Gough, Mr Gilmour and Ms Shearman on behalf of G&G. I also provided legal advice to Mr Millen and Mr Williams as representatives of G&G. 9 Mr Williamson-Noble identified a large number of the documents in respect of which privilege had been claimed and deposed, in effect, that the documents constituted legal advice to a client or clients.

10 Mr Gilmour, the third applicant in the substantive proceedings, deposed that in June 1999 Mr Williamson-Noble was instructed to provide legal advice to the applicants in relation to the possible sale of the shares in the first applicant and that such advice was provided. Mr Gilmour deposed further that: 4 In June 1999 PricewaterhouseCoopers ("PwC") was retained by the First Applicant, Second Applicant and me to provide specialist business advice in relation to the possible sale of the shares in the First Applicant. Mr Rick Millen, a partner of PwC, and Mr Chris Williams, an Employee of PwC, provided this advice from this time and throughout 2000. 5 PWC and G&T were instructed to receive information on the First Applicant from the other directly. PwC provided information to G&T for the purpose of GST providing PWC, as representative for the First Applicant, Second Applicant and me, with legal advice to assist PwC, as representative for the First Applicant, Second Applicant and me, in acting for the First Applicant, Second Applicant and me.

11 Mr Gilmour deposed that he had read a number of the documents in respect of which privilege had been claimed and deposed, in effect, that the documents constituted legal advice.

12 Ms Shearman was employed at all relevant times by the first applicant in the position of "Corporate Counsel and Public Officer". Ms Shearman is a solicitor of the Supreme Court of New South Wales and holds a current practising certificate. Ms Shearman said that in her capacity as corporate counsel she was "responsible for providing legal advice to the First Applicant, for issuing instructions on behalf of the First Applicant and for coordinating the legal affairs of the First Applicant".

13 After referring to the documents in respect of which privilege had been claimed by the applicants, Ms Shearman said in her affidavit: 11 In the circled documents, various people or organisations are referred to. I identify those persons as follows:

(i) John Williamson-Noble is a partner with Gilbert & Tobin, solicitors. Gilbert & Tobin are the principal lawyers for both the First Applicant and for the Second Applicant personally. Gilbert & Tobin has been retained in these capacities on an ongoing basis since August 1995. Mr Williamson-Noble has been the principal solicitor for the First and Second Applicants since 1988, being at a time when he was a partner at Freehill Hollingdale and Page ("Freehills"). When he moved from Freehills to Gilbert & Tobin, the First and Second Applicants also took the vast majority of their legal work concerning the dealership and the affairs of the Second Applicant across to Gilbert & Tobin. Within days of 8 June 1999, Mr Williamson-Noble was instructed to provide legal advice to the Applicants as to the dispute that had arisen with the First Respondent and thereafter he was also specifically retained to provide legal advice in connection with the dispute and possible sale of the Applicant's dealership. He provided such advice during the balance of 1999 and throughout 2000. Other solicitors within Gilbert & Tobin were engaged to assist Mr Williamson-Noble on various aspects of the dispute and/or sale process, namely Kevin Andronis, Gina Cass-Gottlieb, David Cullen, Helen Paul, Rebecca Pearson and Simon Snow. (b) PKF and Tony Sloan

(i) Pannell Kerr Forster ("PKF") has been retained by the Applicants as their primary accountants and taxation advisers since 1992. Tony Sloan is a partner of that firm. My own legal background was as a taxation specialist. Accordingly, given my role as Corporate Counsel and Public Officer of the First Applicant, it was the practice for PKF to prepare advice as agent for the First Applicant, and then to submit its views to me. I in turn would provide legal advice as necessary on those issues to the First Applicant.

(ii) PKF has at times been requested by the First and Second Applicants to assist Gilbert & Tobin by providing specialist tax input where necessary to ensure that Gilbert & Tobin are able to provide a comprehensive legal opinion to the First and Second Applicants.

(iii) Due to its long association with the Applicants, PKF was also authorised and directed by the First and Second Applicants on an ongoing basis as necessary, to undertake an additional role of providing required information concerning the business affairs of those Applicants directly to Gilbert & Tobin to enable that firm to provide legal advice to the Applicants. Such an approach was efficient and sensible from those Applicants' point of view given the high level of knowledge information held by PKF about the Applicants' business affairs. It also relieved me, or others within the Applicants' organisation, of the burden of accessing such material for the purposes of instructing our solicitors.

iv) In or around June 1999, PKF was specifically instructed to provide any and all information and advice that it was able to provide to the Applicants, their solicitors and other experts concerning accounting, taxation and any other commercial matters within the scope of their knowledge and expertise that was of relevance to the proper management of the Applicants' dispute with the First Respondent and the possible sale of the Applicants' dealership. PKF fulfilled this role during the balance of 1999 and throughout 2000.

(c) Corrs Corrs Chambers Westgarth ("Corrs") is a firm of solicitors retained by the First and/or Second Applicant from time to time to provide legal advice in specialist areas not focused on by Gilbert & Tobin. I recall that this occurred in 1996, in 1998 and again early in 2000. On those occasions, the Applicants dealt with either Mr Tony Sheehan or Mr Charles Cowper.

(d ) J Seve Joanne Seve, former solicitor at Freehills, is a partner of Coopers & Lybrand, engaged by the First Applicant on the recommendation of Mr Williamson-Noble to provide input to Gilbert & Tobin's legal advice to the First Applicant and to the Second Applicant on specific occasions. I believe that Gilbert & Tobin do not have specialist accounting and taxation skills in-house, and when this type of input is needed in order to provide a comprehensive legal opinion, then this has sometimes been sought from Ms Seve.

PricewaterhouseCoopers ("Pwc") is a firm with specialist financial, taxation and business expertise. Rick Millen is a partner of that firm. From June 1999, I know that PWC was retained by the First, Second and Third Applicants on the recommendation of Mr Williamson-Noble. PWC was retained to assist the Applicants in three discrete areas, namely:

(i) to provide an indicative valuation of the dealership business;

(ii) to provide information and give specialist input to the process of the Applicants obtaining legal advice in the same way that PKF did (see paragraph 11(b) above); and

(iii) as agents of the First, Second and Third Applicants to assist in negotiation of the sale of the First Applicant, or its business. 12. Once the dispute arose with the First Respondent in June 1999, given its seriousness and potential complexity and the inevitable relevance and importance of accounting and taxation advice and other financial considerations to the legal advice that the Applicants were seeking in connection with the prudent management of both the dispute and the sale process: (a) Gilbert & Tobin was authorised and directed to liaise and communicate directly with PKF and PWC to the extent that Gilbert & Tobin required input from those agents of the First Applicant for the purpose of providing legal advice; (b) PWC was also authorised and directed to liaise directly with Gilbert & Tobin when legal advice was necessary with respect to any communication that PWC was proposing to send on behalf of the First Applicant; (c) PKF was also authorised and directed to provide such information and input (sic) was requested of it, whether that request emanated from Gilbert & Tobin or from the First Applicant; and (d) as corporate counsel for the First Applicant, I also liaised with and communicated with both PKF and PWC for the purposes of obtaining information to facilitate advice that I was required to give the First Applicant and/or to facilitate advice that Gilbert & Tobin was to provide to the First Applicant. 13. By way of example of the inter-relationship between the legal, accounting and taxation issues that arose for consideration during the course of the dispute with the First Respondent and the sale process with WesTrac, proposals that were advanced by the First Applicant either in its own right or via its agent PWC not only had potential significance for any litigation that might result from the dispute but also had to be considered from a taxation implication point of view. Similarly so, when it came to preparing draft contracts for the proposed sale of the dealership to WesTrac, such considerations also dictated that both PKF and PWC were called upon to provide assistance to Gilbert & Tobin when drafting significant clauses in that agreement. 14 Ms Shearman indicated in her affidavit that she had read all of the documents that were the subject of the claim for privilege. In respect of those documents specified by her that either involved correspondence to or from herself or involved subject matters of communication concerning the dispute or the sale process of which she had direct knowledge, Ms Shearman deposed that the documents legal advice.

15 The affidavit material portrayed an arrangement whereby the applicants had retained Gilbert & Tobin to provide legal advice in connection with the possible sale of the dealership; PKF and Ms Seve had been retained on the recommendation of Mr Williamson-Noble to provide specialist tax input to ensure that Gilbert & Tobin were able to provide the necessary legal advice to the applicants; PWC, a firm with specialist taxation, financial and business expertise, were retained on the recommendation of Mr Williamson-Noble to assist the applicants in a number of areas but, particularly, to provide information and give specialist input to the process of the applicants obtaining legal advice in the same way that PKF did. It was submitted that for the purpose of any consideration of the claim for legal professional privilege, PKF, Seve and PWC were agents of the applicants.

16 In the light of this arrangement it was submitted by Mr Kimber that any communication relating to the sale process that passed between any of the key players in the arrangement, that is, the applicants or their employees, Gilbert & Tobin, PWC, PKF and Seve were confidential communications made for the dominant purpose of a lawyer (Gilbert & Tobin) providing legal advice to the applicants in relation to the sale of the dealership and were, therefore, privileged.

17 Mr Kimber's submissions opposing cross-examination of the deponents of the three affidavits commenced with a review of the relevant authorities regarding privilege. His submissions in this regard may be summarised as follows: 1) In Trade Practices Commission v Sterling (1979) 36 FLR 244 at 245-246 Lockhart J, in relying on various authorities, identified (amongst others) the following relevant classes of documents to which privilege traditionally applied: a) Any communication between a party and his professional legal adviser if it is confidential and made to or by the professional adviser in his professional capacity and with a view to obtaining or giving legal advice or assistance; notwithstanding that the communication is made through agents of the party and the solicitor or the agent or either of them; b) Any document prepared with a view to its being used as a communication of this class, although not in fact so used; c) Communications between the various legal advisers of the client; d) Notes, memoranda, minutes or other documents made by the client or officers of the client or the legal adviser of the client of communications which are themselves privileged, or containing a record of those communications, or relate to information sought by the client's legal adviser to enable him to advise the client or to conduct litigation on his behalf; e) Knowledge, information or belief of the client derived from privileged communications made to him by his solicitor or his agent. 2) In order to attract privilege, the confidential communication between a party (or his or her agent) and his or her legal adviser must be for the dominant purpose of the legal adviser providing legal advice: Esso Australia Resources Limited v Commissioner of Taxation (1999) 201 CLR 49. 3) Documents obtained from third parties who are retained by solicitors, on the explicit instructions of a client, will be subject to legal professional privilege if the information can properly be regarded as collected and communicated confidentially on behalf of the client to its legal adviser, in the character, and for the purpose of, obtaining legal advice: Nickmar Pty Ltd v Preservatrice Skandia Insurance Ltd (1985) 3 NSWLR 44. 4) The protection of privilege applied to all professional communications concerning the giving and receiving of advice between solicitor and client; that the separation of parts of those communications said to be unconnected with the giving and receiving of advice so as to remove the protection of privilege would erode the protection provided by the law to an unacceptable degree; and that, accordingly, information received by a solicitor in his professional capacity from a third party and conveyed by him to his client was privileged and the questioning of the solicitor and his client about that information was not permissible: In re Sarah C Getty Trust [1985] 1 QB 956. 5) Communications passing between solicitor and client in the course of a conveyancing transaction were privileged if the broad purpose of the communications was the obtaining of legal advice by the client as and when appropriate during and throughout the course of the transaction. It was not necessary for the document specifically to seek or contain advice in order to be privileged. On the other hand, not all communications in the ordinary business of a solicitor were privileged: Balabel v Air-India [1988] 2 All ER 246.

18 In applying the authorities to the facts arising from the affidavit material Mr Kimber submitted:

Gilbert & Tobin were retained to provide legal advice to the applicants in relation to the sale of the dealership. 2) Confidential communications passing between the applicants and Gilbert & Tobin in relation to the sale of the dealership were for the dominant purpose of Gilbert & Tobin providing legal advice to the applicants. 3) PWC, Seve and PKF were specifically instructed to provide information and advice to Gilbert & Tobin on a confidential basis for the dominant purpose of Gilbert & Tobin providing legal advice to the applicants in connection with the sale of the dealership. In doing so, PWC, Seve and PKF acted as agents for the applicants. 4) The broad purpose of the communications passing between Gilbert & Tobin, the applicants and agents of the applicants in relation to the sale of the dealership was the obtaining of legal advice by the applicants as and when appropriate during and throughout the course of the transaction. It was not necessary for any one document specifically to seek or contain advice in order to be privileged. 5) Privilege attached to all of the confidential communications passing between the applicants, Gilbert & Tobin, PWC, Seve and PKF in connection with the sale of the dealership. The separation of parts of those communications said to be unconnected with the giving and receiving of advice so as to remove the protection of privilege would erode the protection provided by the law to an unacceptable degree.

19 In opposing cross-examination of Mr Williamson-Noble, Mr Gilmour and Ms Shearman on the issue of privilege, Mr Kimber acknowledged that pursuant to r 186 of the Industrial Relations Commission Rules 1996 it was within the Court's discretion to permit cross-examination.

20 Rule 186 relevantly provides: 186. Privilege (1) Where the Commission, by summons or otherwise, orders any person to produce any document or thing, and any person makes and substantiates sufficient lawful objection to production on grounds of privilege, the Commission must not compel production of that document or thing except production to the Commission for the purpose of ruling on the objection. (2) Where a question is put to a person in the course of examination, and any person makes and substantiates sufficient lawful objection on grounds of privilege to the question being answered, the Commission must not compel an answer to the question. (3) Subrule (1) applies where an order is made for production to, and subrule (2) applies where a question is put to a person in the course of examination before the Commission or any officer of the Commission, or any examiner, referee, or other person authorised to receive evidence, whether on a hearing or on any other occasion. (4) Where a party to any proceedings claims privilege from production of any document, the Commission may, if it thinks fit: (a) permit evidence in relation to the claim to be given by any other party by affidavit or otherwise; and (b) permit cross-examination on any affidavit used in support of the claim. (5) This Rule does not affect any rule of law which authorises or requires the withholding of any document or thing or the refusal to answer any question on the ground that the disclosure of the document or thing or the answering of the question would be injurious to the public interest. (6) Subrules (1), (2) and (3) do not apply to an objection to produce any document or thing or to answer any question on the ground mentioned in subrule (5). (7) The Commission may, on special grounds, allow a claim on grounds of privilege for documents prepared for or by, or communications with, an industrial advocate or an officer or employee of an industrial organisation, if privilege would be accorded those same documents or communications had the advocate, officer or employee been a legal practitioner.

21 Mr Kimber submitted, however, that the Court would only permit cross-examination if the respondents were able to show good and cogent reasons as to why it should be allowed and to what extent it should be allowed. In support of this position Mr Kimber referred to a number of authorities including Fruehauf Finance Corporation Pty Ltd v Zurich Australian Insurance Ltd (1990) 20 NSWLR 359, National Crime Authority v S (1991) 100 ALR 151, Hartogen Energy Limited (in liquidation) v The Australian Gaslight Company (1992) 36 FCR 557, Auspine Ltd v H S Lawrence & Sons Pty Ltd [1999] FCA 1749 (21 December 1999), Proctor v Gamble v Medical Research [2001] NSWSC 183 (21 March 2001) Grant v Downs (1976) 135 CLR 674. Mr Kimber referred to what O'Loughlin J said in Auspine at par 108 in relation to cross-examination on an affidavit of discovery: The principle that an affidavit of discovery should, in most cases, be regarded as conclusive, has become less rigid in its application in recent times, but it has not been abolished. There are times when a court will feel justified in having the subject of discovery pursued in greater detail. The defects in Olympic Airways afford a good example of an appropriate case for further investigations. The cases on legal professional privilege are another example. But the facts in this case have not excited my interest. The respondents have shown a predilection to pursue a state of perfection. Presumably the length of their pocket permits such a course of action; but it is a course of action that is taking up valuable court time when, in my assessment of the matter, the parties could be more gainfully employed in preparing their cases for trial.

22 Mr Kimber also referred to the statement in Ritchie's "Supreme Court Procedure NSW" at [23.3.33] regarding the operation of Pt 36 r 13(3) of the Supreme Court Rules 1970: While Pt 36 r 13 (3) makes clear that the court may permit cross-examination on the evidence supporting a claim for privilege and may also permit opposing evidence to be adduced, it does not require the court to do so wherever a claim for privilege is challenged. The party challenging the privilege claim will still have to show some appropriate ground for the exercise of the discretion. 23 Part 36 r 13(3) of the Supreme Court Rules 1970 is similar to r 186 of the Industrial Relations Commission Rules 1996.

24 Mr Kimber submitted that the applicants were not simply making a bald assertion regarding privilege without any supporting material; quite the contrary. He submitted that "enough was enough" on the privilege issue and that the court should exercise its discretion to refuse cross-examination. 25 Mr Kimber also submitted that the Court should decline to inspect the documents in respect of which privilege had been claimed. Mr Kimber conceded that the Court had power to inspect but that in this case it was not necessary or appropriate.

26 Mr Connock for the respondents indicated, firstly, that he only sought to cross-examine on the question of whether privileged attached to the documents and did not propose to go wider than that issue.

27 Mr Connock referred to a number of authorities. The first was Grant v Downs where Stephen, Mason and Murphy JJ said at 689: He may succeed in achieving this objective by pointing to the nature of the documents or by evidence describing the circumstances in which they were brought into existence. But it should not be thought that the privilege is necessarily or conclusively established by resort to any verbal formula or ritual. The court has power to examine the documents for itself, a power which has perhaps been exercised too sparingly in the past, springing possibly from a misplaced reluctance to go behind the formal claim of privilege. It should not be forgotten that in many instances the character of the documents the subject of the claim will illuminate the purpose for which they were brought into existence. 28 Further, in National Crime Authority v S at 159, Lockhart J said: Affidavits of documents in the discovery process not infrequently claim legal professional privilege by asserting that the purpose for which a document was brought into being was its sole purpose, followed by a statement as to which particular category of legal professional privilege the document belongs; for example, for use in existing or anticipated litigation. Although an affidavit in this form is usually sufficient and uncontroversial, the potential for abuse is obvious. Courts should not be slow to permit cross-examination of the deponent of such an affidavit.

29 The third authority referred to by Mr Connock was Esso Australia Resources Ltd v Commissioner of Taxation (1999) 201 CLR 49 at 70: A court has power to examine documents in cases where there is a disputed claim, and it should not be hesitant to exercise such a power (see Trade Practices Commission v Sterling (1979) 36 FLR 244). In appropriate cases, there is also power to allow cross-examination of a deponent of an affidavit claiming privilege (see National Crime Authority v S (1991) 29 FCR 203). 30 Mr Connock also referred to Guardian Royal Exchange Assurance of New Zealand Ltd v Stuart [1985] 1 NZLR 596 where the Court of Appeal (Cooke, Richardson and Tompkins JJ) dealt with an issue relating to privilege. Cooke J said at 599: As in previous cases in this court (see Konia v Morley, Environmental Defence Society Inc v South Pacific Aluminium Ltd (No 2) [1981] 1 NZLR 153 and Fletcher Timber Ltd v Attorney-General [1984] 1 NZLR 290) inspection of the documents by the Judges has proved illuminating. High Court Judges now appear to be adopting this practice quite commonly in disputed privilege claims. Experience suggests that its advantage in being likely to lead to a more just decision outweighs the disadvantage that only the Judge and not the other side sees the documents if the claim to privilege is upheld. Accordingly, in the field of legal professional privilege at least, I think that in general a Judge who is in any real doubt and is asked by one of the parties to inspect should not hesitate to do so.

31 Guardian Royal Exchange Assurance of New Zealand Ltd v Stuart was referred to with approval by the High Court (Gleeson CJ, Gaudron and Gummow JJ) in Esso Australia Resources at (1999) 201 CLR 49 at 70.

32 Mr Connock's submissions on cross-examination may be summarised as follows: 1) The Court has power to allow cross-examination of the deponents of the affidavits filed in support of the applicants' privilege claim. 2) The High Court and the Federal Court have expressed the view that claims for privilege should be carefully scrutinised and the courts' discretion in this regard should be liberally exercised. 3) In the present case the issue is not mere cross-examination of an affidavit for discovery. Privilege is relevant to the substantive issues in the case and the Court has already said it is not a marginal issue. 4) There has been a decided reluctance on the part of the applicants to produce relevant documents. 5) The claim for privilege rests to a large degree on the proposition that PWC and PKF acted in the role of the applicants' agents. There is no evidence of agencies, only mere assertions. In the absence of being unable to cross-examine on these assertions and being unable to inspect the relevant documents, the respondents would be labouring under a disadvantage that would be unfair. Wheeler v Le Marchant (1881) 17 Ch D 675 is relevant. 6) The applicants have not tendered an affidavit by Mr R Millen, an adviser with PWC, in the proceedings on the motion. Mr Millen's affidavit, filed in the substantive proceedings, is in conflict with other material in the affidavits on the motion regarding the issues of legal advice and agency. 7) There is a real question as to Mr Williamson-Noble's role and whether it was legal or strategic advice he was providing. 8) There is a real question as to whether the provision of advice from PWC and PKF to Gilbert & Tobin was for the dominant purpose of Gilbert & Tobin providing legal advice to the applicants. 9) There is a real question about whether the provision of information from PWC and PKF to Gilbert & Tobin from time to time means that the all of the communications are subject to privilege. 10) If the Court were to exercise its discretion by allowing cross-examination there would be no prejudice to the applicants.

33 As I earlier mentioned, I permitted Mr Connock to cross-examine the deponents of three of the affidavits in relation to the issue of privilege. I did so having regard to the importance of the sale process to the issues in the substantive proceedings and the uncertainty that existed in my mind as to whether, in what was obviously a complex commercial transaction with a number of facets, PKF, Seve and PWC could properly be regarded as agents of the applicants for the purpose of claiming privilege. I was also in some doubt as to whether the communications between PWC and PKF could be said to have been for the dominant purpose of providing legal advice to the applicants. Given this doubt, it would have been unfair to the respondents to refuse to allow them to test the affidavit material. Accordingly, given the discretion available to the Court to allow cross-examination on any affidavit in support of a claim for privilege (r 186(4)) and what I perceive to be a need for the Court to satisfy itself that a claim for privilege is well founded where there is doubt about the claim, permission was given to Mr Connock to cross-examine.

Inspection of the disputed documents 34 Following the cross-examination of Mr Williamson-Noble, Mr Gilmour and Ms Shearman on the question of privilege, Mr Kimber renewed his objection to any inspection of the documents, including inspection by the Court. Mr Kimber traversed in more detail parts of his earlier submissions regarding the authorities and their application to the notice of motion. In relation to the evidence, Mr Kimber submitted: 1) Two of the deponents, namely, Mr Williamson-Noble and Ms Shearman are solicitors on the record in New South Wales. The Court should not hesitate to accept their evidence in relation to agency and legal advice. 2) While Mr Williamson-Noble agreed that he fulfilled a dual role of providing commercial and legal advice, overwhelmingly his role was the provision of commercial legal advice. Balabel v Air-India makes it clear that legal advice extends to advising the client as to what is sensible and prudent in a particular legal context. 3) If a third party is an agent of the client then the communications between the agent and the client's solicitor made for the dominant purpose of obtaining legal advice will be privileged. The applicants engaged both PWC and PKF as agents for various purposes associated with the sale process. Once so engaged they are to be regarded as the applicants' alter egos. 4) It does not matter that there were no express instructions to the agents (PWC and PKF) on every occasion they communicated with Gilbert & Tobin authorising them to do so. The authorities do not require express conferral of authority on agents to communicate with the client's lawyers in order to attract privilege: Nickmar; Wheeler v Le Marchant. 5) In Wheeler v Le Marchant it was contended that documents communicated to the solicitors of the defendants by third parties, though not communicated by such third parties as agents of the clients seeking advice, should be protected because those documents contained information required or asked for by the solicitors, for the purpose of enabling them the better to advise the clients. It was held that such documents are protected where they have come into existence after litigation commenced or was in contemplation but such documents were not protected merely because they were produced by a third person in answer to an inquiry made by a solicitor. Wheeler v Le Marchant does not apply to the present case because on the evidence PWC and PKF were engaged as agents of the applicants to provide information and advice on behalf of the applicants for the dominant purpose of providing legal advice to the applicants regarding the sale process. 6) The applicants did not claim privilege in respect of every communication passing between any themselves and the agents and Gilbert & Tobin. The applicants' lawyers very carefully scrutinised all of the communications and only claimed privilege where it was considered that the confidential communication was prepared for the dominant purpose of providing legal advice to the applicants: see affidavit of Emma Pritchard. 7) Whilst the focus has been on PWC and PKF and their role of agents, another person, Ms J Seve, also acted as an agent for the applicants but only in a limited role. 8) Dinsdale v Commissioner of Inland Revenue (1997) 18 NZTC 13,244 can be distinguished. In that case it was held that notes taken at interviews conducted by an auditing firm instructed by a solicitors for a bank, were not subject to legal professional privilege because the notes were not communications between solicitor and client. This was despite a solicitor being present at many of the interviews. In the present case, on the evidence PWC and PKF were engaged as agents of the applicants to provide information and advice on behalf of the applicants for the dominant purpose of providing legal advice to the applicants regarding the sale process. 9) Jones v Great Central Railway Company [1910] AC 4 can be distinguished on the basis that the trade union was not acting as an agent for the appellant but had to consider and act upon communications from the appellant in its capacity as a trade union. 10) Whilst the applicants had not initially sought to claim privilege on the basis that litigation was anticipated, the respondents had cross-examined on this issue. The evidence of Mr Williamson-Noble was that in being retained to advise the applicants, litigation was one of the things "uppermost in his mind" given the dispute between the applicants and the first respondent. 35 Mr Connock's main submissions in support of his application for the relevant documents to be produced for inspection, may be summarised as follows: 1) The principles relating to any application to inspect documents in respect of which privilege is claimed are clear: Firstly, the onus is on the party claiming privilege to justify its position; secondly, the court should scrutinise with care any claim for privilege; thirdly, a claim for privilege cannot be made good merely be asserting the claim in an affidavit; fourthly, the court has the power and a discretion to inspect documents in respect of which privilege is claimed and the judicial trend is in favour of inspection. 2) The applicants abandoned as the basis of their claim for privilege, anticipated litigation. The applicants should not be allowed to renew a claim for privilege based on anticipated litigation after hearing the evidence on cross-examination. If the Court accepts the applicants reliance on "anticipated litigation" privilege, the respondent makes the same submissions as those put in relation to "legal advice" privilege. Additionally, it is put that there was no evidence of any "anticipated litigation" on the part of the so-called agents, Mr Gilmour or Ms Shearman. Moreover, if the applicants rely on "anticipated litigation" as a basis for claiming privilege then at least some of the communications in respect of which they claim privilege would be caught by the Court's earlier rulings relating to imputed waiver. 3) In Wheeler v Le Marchant, Cotton LJ described an agent in the context of privilege as a person employed as such on the part of the client to obtain legal advice of the solicitor. On the evidence, PKF and PWC were not employed to obtain advice from Gilbert & Tobin. PWC's role was business adviser and negotiator in the sale process; it was not retained to obtain legal advice from a solicitor. PKF's role was as a specialist taxation adviser; it was not retained to receive advice from Gilbert & Tobin. 4) In considering the claim for privilege the Court should examine each of the communications in respect of which privilege is claimed and determine whether the communication was prepared for the dominant purpose of Gilbert & Tobin providing legal advice to the applicants: Dinsdale v Commissioner of Inland Revenue. It would be strange indeed, if all of the documents in respect of which privilege was claimed were prepared for the dominant purpose of providing legal advice and not for other purposes such as strategic advice, negotiating advice, financial advice, valuation advice - all purposes in respect of which the so-called agents had special knowledge and expertise. 5) The court has the power to examine documents in respect of which privilege is claimed. In many instances the character of the documents the subject of the claim will illuminate the purpose for which they were brought into existence: Grant v Downs. A court has power to examine documents in cases where there is a disputed claim and it should not be hesitant to exercise such a power: Esso Australia Resources v Commissioner of Taxation ; National Crime Authority v S; Guardian Royal Assurance. 6) The Court should draw an adverse inference from the fact that the applicants did not call evidence from Mr Millen on the notice of motion: Jones v Dunkel (1959) 101 CLR 298. Mr Millen was a key player in the sale process. By failing to call Mr Millen it may be inferred that his evidence would not have assisted the applicants on the privilege issue. 7) It was Mr Gilmour's evidence that PWC were putting together a commercial strategy that, before it was decided upon, was run past the lawyers. Thus, the dominant purpose of communications was not to provide legal advice but to decide upon a commercial strategy. 8) Ms Shearman evidence was unsatisfactory in a number of respects and she was unforthcoming in respect of a number of matters that should properly have been conceded by her. Her evidence relating to "legal advice" was unsatisfactory in that she sought to extend her role in this respect beyond what could be regarded as reasonable bounds; there was an inconsistency between the evidence of Ms Shearman and Mr Williamson-Noble as to what constituted legal advice; the Court could not rely on Ms Shearman's evidence to the extent contended by Mr Kimber. Relevant legal principles 36 It is helpful at the outset of any consideration of this matter to summarise the applicable legal principles and relevant judicial observations regarding legal professional privilege:

The Commission in Court Session has power to inspect documents for the purpose of determining a contested privilege claim: Esso Australia Resources v Commissioner of Taxation (1999) 201 CLR 49 at 70; Grant v Downs (1976) 135 CLR 674 at 689; Trade Practices Commission v Sterling (1978) 36 FLR 244 at 246. 2) The Commission in Court Session has power to permit cross-examination on any affidavit used to support a claim for privilege: ss 163(2), 164(1) of the Industrial Relations Act 1996; r 186(4) of the Industrial Relations Commission Rules 1996. 3) It is for the party claiming privilege to show that the documents for which the claim is made are privileged: Grant v Downs at 689; 4) A claim for privilege is not conclusively established by the use of a verbal formula. A court has power to examine documents in cases where there is a disputed claim, and it should not be hesitant to exercise such a power: Esso Australia Resources at 70. 5) In allowing production and inspection of documents a court exercises a judicial discretion. In so doing it needs to scrutinise with care claims of legal professional privilege. The court has power to examine the documents for itself, a power which has perhaps been exercised too sparingly in the past, springing possibly from a misplaced reluctance to go behind the formal claim of privilege. It should not be forgotten that in many instances the character of the documents the subject of the claim will illuminate the purpose for which they were brought into existence: Grant v Downs at 688, 689. 6) Experience suggests that the advantage of inspecting a document that is the subject of a claim for privilege in being likely to lead to a more just decision outweighs the disadvantage that only the judge and not the other side sees the documents if the claim for privilege is upheld. In the field of legal professional privilege, in general a judge who is in any real doubt and is asked by one of the parties to inspect should not hesitate to do so: Guardian Royal Exchange Assurance of New Zealand Ltd v Stuart [1985] 1 NZLR 596 at 599. 7) Legal professional privilege attaches to any confidential communication between a party and his or her professional legal adviser if it is made to or by the professional adviser in his or her professional capacity and with a view to obtaining or giving legal advice; notwithstanding that the communication is made through agents of the party and the solicitor or the agent of either of them: Wheeler v Le Marchant; Jones v Great Central Railway Company; Trade Practices Commission v Sterling. 8) In order to attract legal professional privilege the confidential communication referred to in subpar 7 hereof must be for the dominant purpose of the legal adviser providing legal advice to the client: Esso Australia Resources v Commissioner of Taxation (1999) 201 CLR 49 at 73. 9) Legal professional privilege attaches to communications and documents passing between the party's solicitor and a third party if they are made or prepared when litigation is anticipated or commenced, for the purposes of the litigation, with a view to obtaining advice as to it or evidence to be used in it or information which may result in the obtaining of such evidence: Wheeler v Le Marchant; Trade Practices Commission v Sterling at 246. 10) In order to attract legal professional privilege the communication referred to in subpar 9 hereof must be for the dominant purpose of the solicitor providing legal advice or legal services to the client: Esso Australia Resources v Commissioner of Taxation (1999) 201 CLR 49 at 73. 11) Legal professional privilege attaches to communications passing between the party and a third person (who is not the agent of the solicitor to receive the communication from the party) if they are made with reference to litigation either anticipated or commenced, and at the request or suggestion of the party's solicitor; or, even without any such request or suggestion, they are made for the purpose of being put before the solicitor with the object of obtaining his or her advice or enabling him or her to prosecute or defend an action: Wheeler v Le Marchant; Trade Practices Commission v Sterling at 246. 12) In order to attract legal professional privilege the communication referred to in subpar 11 hereof must be for the dominant purpose of the solicitor providing legal advice or legal services to the client: Esso Australia Resources v Commissioner of Taxation (1999) 201 CLR 49 at 73. 13) In most solicitor and client relationships, especially where a transaction involves protracted dealings, advice may be required or appropriate on matters great and small at various stages. There will be a continuum of communication and meetings between the solicitor and client. Where the solicitor or client passes information to the other as part of the continuum aimed at keeping both informed so that advice may be sought and given as required, privilege will attach. A letter from the client containing information may end with such words as 'please advise me what I should do'. But even if it does not, there will usually be implied in the relationship an overall expectation that the solicitor will at each stage, whether asked specifically or not, tender appropriate advice. Moreover, legal advice is not confined to telling the client the law; it must include advice as to what should prudently and sensibly be done in the relevant legal context: Balabel v Air-India [1988] 2 All ER 246 at 254. 14) The separation of those parts of privileged communications said to be unconnected with the giving and receiving of advice so as to remove the protection of privilege would erode the protection provided by the law to an unacceptable degree; and that, accordingly, information received by a solicitor in his professional capacity from a third party and conveyed by him to his client was privileged: In re Sarah C Getty Trust [1985] 1 QB 956 at 964-965. Consideration 37 It seems to me that although the High Court in Esso Australia Resources was seeking to encourage courts to be less reluctant (than hitherto had been the case) to go behind a formal claim for privilege, it was not suggesting that in every case where a claim for privilege was disputed, a court should inspect the relevant document. In suggesting that courts should not be hesitant to exercise the power to inspect contested documents, the High Court referred to Guardian Royal Assurance. In that case the New Zealand Court of Appeal said a judge "who is in any real doubt" should not hesitate to inspect disputed documents. The High Court in Esso Australia Resources also referred to the observations by Stephen, Mason and Murphy JJ in Grant v Downs at 689 that perhaps the courts' power to examine documents had been used too sparingly in the past. But this was not an invitation, in my view, to inspect all contested documents on demand. As Stephen, Mason and Murphy JJ said at 689: It is for the party claiming privilege to show that the documents for which the claim is made are privileged. He may succeed in achieving this objective by pointing to the nature of the documents or by evidence describing the circumstances in which they were brought into existence. 38 In my view, each case will depend on its own circumstances as to whether it is necessary or appropriate to inspect documents over which privileged is claimed. But I consider that, before doing so, there must be real doubt as to whether privilege applies to the contested documents. I also note the caveat expressed by Barwick CJ in Grant v Downs where the Chief Justice said at 677: Whether or not a document does so qualify is a question ultimately to be decided, if need be, upon an inspection by the judge of the document itself, and by the application of the stated principle. I say 'if need be' because where the judge who hears the application for inspection may possibly be the trial judge, sitting without a jury, it may be better to decide the matter upon the evidence as to the purpose of the production of the document rather than upon an inspection of it thus avoiding the complication which might arise from the document having been seen by the judge and privilege from inspection accorded to it.

39 In the present case, unlike Grant v Downs, privilege was not asserted merely by resort to "any verbal formula or ritual". On the contrary, four affidavits were tendered in support of the claim and the deponents of three of those affidavits were subject to cross-examination. The evidence was that Mr Williamson-Noble, a partner with Gilbert & Tobin, was retained by the applicants to provide legal advice to the applicants on the possible sale of the dealership. Mr Williamson-Noble, and solicitors working with him, provided that advice throughout 1999 and 2000. Mr Williamson-Noble's advice included some advice that might be classified as "commercial advice" rather than strictly legal advice. But I consider that it is clear from Balabel and Getty that it would be a barren and wasted exercise to attempt to split the advice for the purpose of determining the privilege issue. It seems to me that given the broader role of solicitors in these modern times the commercial advice proffered by Mr Williamson-Noble was "within the ordinary business of a solicitor": see Balabel at 255.

40 The evidence was also that on the advice of Mr Williamson-Noble and in order to assist him in providing legal advice, the applicants retained PKF and PWC so that they might provide specialist advice on taxation matters and accounting issues in relation to the sale process. PWC and PKF provided such advice to Mr Williamson-Noble to enable him to provide legal advice to the applicants. PKF had been retained by the applicants as their primary accountants and taxation advisers since 1992 and had a "high level" of knowledge about the applicants' business affairs.

41 I have already referred to Ms Shearman's evidence, especially her affidavit at par 12, where she identifies the basis on which Gilbert & Tobin, PWC and PKF were engaged.

42 Ms Shearman also deposed that Joanne Seve, a partner at Coopers & Lybrand provided input to Gilbert & Tobin's legal advice to the first and second applicants and that Corrs Chambers Westgarth, a firm of solicitors, were retained by the first and second applicants from time to time to provide legal advice in specialist areas not focused on by Gilbert & Tobin in 1996, 1998 and 2000.

43 Mr Gilmour, in his affidavit said that: 5. PWC and G&T were instructed to receive information on the First Applicant from the other directly. PWC provided information to G&T for the purpose of G&T providing PWC, as representative for the First Applicant, second Applicant and me, with legal advice to assist PWC, as representative for the First Applicant, Second Applicant and me, in acting for the First Applicant, Second Applicant and me.

44 Undoubtedly in the capacities in which they were engaged, PWC and PKF performed dual roles. For example, PWC was engaged to assist in the negotiation of the sale of the dealership and to provide an indicative valuation of the dealership business. But the evidence was also that PWC - and PKF - were engaged to provide information and give specialist input to Gilbert & Tobin for the purpose of Gilbert & Tobin providing legal advice to the applicants on the sale process.

45 The question arises as to whether the communications passing between PWC and PKF were prepared for the dominant purpose of Gilbert & Tobin providing legal advice to the applicants: Esso Australia Resources. When requested by the first respondent in June 1999 to sell the dealership, the applicants initially approached Mr Williamson-Noble because of his longstanding professional relationship with the applicants and his deep knowledge of the business. Mr Williamson-Noble was retained by the applicants to provide legal advice on the sale of the business. He informed the applicants that he needed additional resources and on his recommendation the applicants retained PWC, PKF and Seve to provide input to the advice that Mr Williamson-Noble was, in turn, to provide to the applicants. I have no reason to disbelieve this evidence. In this context, therefore, it seems to me that any confidential communications prepared by PWC, PKF, Seve and Gilbert & Tobin, and passing between them, were for the dominant purpose of enabling Gilbert & Tobin to provide legal advice to the applicants. It may well have been the case that some of the communications did not seek or provide legal advice but that they were part of the "continuum of communication" of the type referred to in Balabel. That being the case the communications still attract privilege.

46 Mr Connock submitted that the dominant purpose of any communications between PWC, PKF, Seve and Gilbert & Tobin was not to provide legal advice but to decide upon a commercial strategy. There could be no doubt that elements of the communications would have been devoted to developing a commercial strategy, but on the evidence I consider it is open to me to conclude that Gilbert & Tobin was retained to provide legal advice on the sale of the dealership and in order for them to do that effectively PWC, PKF and Seve were retained by the applicants to act on their behalf to provide specialist advice; PKF, PWC and Seve stood in the place of the applicants. As Ms Shearman said, PKF's involvement relieved her and other employees of the first respondent, of the burden of accessing material for the purpose of instructing Gilbert & Tobin.

47 Mr Connock submitted that there was no evidence that PWC, PKF and Seve were specifically engaged as agents by the applicants to obtain the legal advice of Gilbert & Tobin: Wheeler v Le Marchant. I think it is too literal an interpretation of Wheeler v Le Marchant to suggest that privilege only applies in circumstances where an agent is engaged to act on behalf of a client if the agent is specifically retained to obtain legal advice on the client's behalf. I think the modern form of the ratio in Wheeler v Le Marchant was expressed by Lockhart J in Trade Practices Commission v Sterling at 245 subject, of course, to the later decision of the High Court in Esso Australia Resources in relation to the dominant purpose test.

48 Mr Connock submitted that the Court could not be satisfied about whether the documents in respect of which privilege was claimed were prepared for the relevant dominant purpose unless the Court inspected each of the documents. I am satisfied on the affidavit of Ms Pritchard sworn on 24 August 2001, that given the significance that privilege has assumed in the substantive proceedings, the lawyers for the applicants would have carefully and diligently examined all documents over which the applicants claimed privilege and that in respect of the notice of motion before the Court, only retained those documents where a claim for legal professional privilege was properly maintainable. So that, as I understand the evidence, if PWC or PKF prepared a communication that was not for the dominant purpose of providing legal advice to the applicants, it would have been produced to the respondents. Moreover, I have before me evidence that includes evidence of two solicitors on the record, which would indicate that the claim for privilege is properly founded. I acknowledge the difficulty Mr Connock faced in his cross-examination of Ms Shearman and I agree that she could have been more responsive and less obstructive in her answers. However, that did not, in my opinion, detract significantly from the veracity of her evidence in relation to the disputed documents identified in her affidavit.

49 Now, it may have been the case that parts of the privilege communications were unconnected with the giving and receiving of advice and Mr Connock submitted these parts should be produced to the respondents. Again, I rely on the applicants' lawyers as officers of the Court to have, as they said, carefully scrutinised the communications in respect of which they claim privilege, and I consider that it may properly be assumed that they arrived at the view that separation of the unconnected parts of the privileged communications would erode the protection provided by the law to an unacceptable degree: Getty Trust.

50 Mr Connock submitted that I should draw adverse inferences from the failure of the applicants to call Mr Millen to give evidence on the motion. This failure did trouble me to some extent, I must say, but on the other hand, there was the uncontroverted evidence of Mr Williamson-Noble, supported by the evidence of Ms Shearman and Mr Gilmour that, in my opinion, was sufficient to make good the claim for privilege.

51 Having heard the evidence and cross-examination of Mr Williamson-Noble, Mr Gilmour and Ms Shearman, and the thorough and helpful analyses by counsel for both sides of the relevant law, I have decided to refuse the respondents' application for the applicants to produce for inspection, either to the Court or to the respondents, those documents identified in the list annexed to the notice of motion, such list being amended in proceedings on 23 August 2001. In coming to this decision, and very much as a secondary consideration, I note that the privilege issue has had the effect of substantially complicating and prolonging these proceedings. I do not say this as a criticism of any of the parties because it is not deserved, but henceforth I would be most concerned if privilege issues were to unjustifiably distract the Court and the parties from dealing with the substantive issues. I direct those comments to both sides of the record.

52 It may be noted that I have not addressed the privilege issue on the basis of "anticipated litigation" because it was unnecessary to do so.

Orders 53 I make the following order: The application by the respondents in the notice of motion filed on 17 July 2001 that the applicants produce to the respondents for inspection those documents indicated on the list annexed to the notice of motion, such list being subsequently amended in proceedings on 23 August 2001, is refused.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.

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