(iii) Hillcrest pursuing its own purposes
42 Finance Now's contention is that there is a prima facie basis for alleging that the substantial purpose of advice provided by Williams & Hughes in respect of which privilege is claimed, was advice to Hillcrest for the purpose of Hillcrest conducting the litigation for its own benefit.
43 The prima facie basis relied upon to demonstrate that the advice was to Hillcrest are:
(a) the litigation funding agreement and, in particular, the two retainers both of which showed Hillcrest as a client and able to give instructions; and
(b) the list of privileged documents shows that, subject to limited exception, Williams & Hughes received correspondence regarding the 31 July 2006 email and the proposed joinder of Mr Turnbull, from Hillcrest rather than Mr Gurtler himself.
44 The prima facie basis for showing the litigation is being conducted by Hillcrest for its own purposes is said to lie in the following:
(a) the applicant receives litigation funding from Hillcrest;
(b) of the 10 cases mentioned in Hillcrest's 2006 Annual Report, the present proceedings have been assessed as involving the second largest claim which Hillcrest is funding;
(c) Hillcrest sustained a net loss in both 2005 and 2006. Over these two years, the net loss was greater than $1 million; and
(d) on 31 July 2006, the chairman of Hillcrest sent the contentious email to the solicitors for Finance Now.
45 To foreshadow my own conclusion, while the evidence such as it is reveals that Mr Gurtler to a significant degree utilised Hillcrest in an agency capacity in dealings with Williams and Hughes and to some extent "placed the matter in Hillcrest's hands": cf Fostiff Pty Ltd v Campbells Cash and Carry Pty Ltd NSWLR at [82]; he remained a client of Williams & Hughes for the purposes of the conduct of the litigation and for the giving of instructions and the receiving of legal advice, including in the presently relevant matter. I am not satisfied that there is any prima facie basis at all for either of the propositions relied upon by Finance Now.
46 It is important, in my view, to understand the nature of the relationships created by the funding agreement and the common retainer. The funding agreement gave Hillcrest and Mr Gurtler common individual interests in the successful prosecution of the litigation, Hillcrest's being most obviously manifest in the percentage interest the agreement gave him in the balance after payment of disbursements of the amount received by way of settlement, judgment or order in the proceeding: see cll 6 and 8 of the funding agreement. Hillcrest also had distinct, several interests under the agreement on some matters on which it was entitled to receive its "own" legal advice: see cl 2. There is nothing at all unusual in contractual arrangements giving rise to both common and several interests in the contracting parties.
47 It is not necessary for present purposes for me to express a concluded view on the question whether the retainer on its proper construction was intended to, and did reflect the division between matters of common interest (on which Mr Gurtler alone could give instructions under cl 4 of the funding agreement) and Hillcrest's several interests (on which it could give instructions). It is sufficient simply to indicate that the funding agreement is not inconsistent with Hillcrest's engaging Williams & Hughes as its own solicitor or with its incurring a liability to pay the costs of Mr Gurtler's proceeding.
48 Before dealing directly with the first respondent's contention there is one matter to which I need refer concerning the characterisation of Gurtler-Hillcrest relationship for the purposes of legal professional privilege. It relates to common interest privilege. Having regard to their relationship inter se in light of the funding agreement and the common retainer, and of their common interest in the successful prosecution of the litigation and in advice given in relation thereto, I am satisfied that a possibly distinctive form of common interest privilege exists between them in relation to lawyer-client communications in the Gurtler proceedings: on common interest privilege see generally Farrow Mortgage Services Pty Ltd (in liq) v Webb (1996) 39 NSWLR 601 at 609 ff; Patrick v Capital Finance Corporation (Australasia) Pty Ltd (2004) 211 ALR 272 at [17]-[19]; Cross on Evidence, 25-265 (Aust ed). I do not, for present purposes, consider it appropriate to characterise their individual interests as selfish and potentially adverse to each other: cf Ampolex Ltd v Perpetual Trustee Co (Canberra) Ltd (1995) 37 NSWLR 405 at 409-410. Rather, while each stands to gain differentially from the litigation, their interests are nonetheless common in that their individual interest came together in the successful prosecution of it.
49 I have described the common interest as possibly distinctive for this reason. It is well accepted that while, normally, all holders with a privilege based on common interest must concur in waiving it, fairness can require that disclosure by one holder of common interest privilege can have effect as a waiver by all: Farrow Mortgage Services Pty Ltd (in liq), at 608; Patrick, at [23]-[29]. In the case of funded litigation, where the party who waives the litigation is the applicant or respondent in the proceedings, that waiver may well as of course bind the litigation funder, whether or not it has consented to the waiver. It is unnecessary that I express a concluded view on this.
50 As to the instruction of lawyers, the funding agreement provided that instructions in the proceedings were to be given by Mr Gurtler, not by Hillcrest: see cl 4. However and despite the "no oral modification" clause in the agreement, it was open to Mr Gurtler and Hillcrest to vary this if they so wished: see GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd (2003) 128 FCR 1 at [213]-[227]. I would note, though, that the funding agreement probably did not preclude Mr Gurtler's use of the agency of Hillcrest in giving instructions in any event.
51 What is clear on the material before me is that, whether or not Hillcrest has acted in strict accordance with the written terms of the funding agreement, the manner of his communication with Williams & Hughes was acquiesced in by Mr Gurtler. This is made clear in his affidavit verifying the list of documents produced. He designedly, as a matter of convenience, had Mr Van Noort deal directly with the lawyers to confirm his instructions or to comment upon their advice in order to enable the lawyers to further advance his case. It is unsurprising that he adopted this course given that as between them Mr Van Noort, as a lawyer, was likely to be more able to make forensic choices than Mr Gurtler: cf Fostif NSWCA at [137].
52 The 31 July email was one Mr Van Noort should never have sent. Nonetheless, on its face, and for the purposes of the Finance Now's present contention, it purports to have been in furtherance of the common interests of Mr Gurtler and Hillcrest. Mr Gurtler may have been unaware of its contents. Still he authorised Mr Van Noort's contact with Mr Hambrett. Whatever complaint Mr Gurtler may have had of his agent's conduct - a matter between himself and his agent to which Finance Now was a stranger - the email itself provides no basis for suggesting that Van Noort was acting other than in Gurtler's, hence their common, interest in the matter.
53 It is equally clear in my view, from the description of the listed documents for which privilege has been claimed, that Williams and Hughes, while occasionally communicating with Van Noort alone, recognised that Mr Gurtler was their client in the proceeding and included him in their communications. In the context of a litigation funding arrangement in which the funder can be expected to take a close interest in the conduct of the litigation, and having regard to the convenience to which Mr Gurtler referred, there is nothing unusual in the course of communications revealed in the list of documents for which privilege is claimed, the more so when Mr Gurtler has acquiesced in that course.
54 Further, the financial circumstances of Hillcrest and the asserted conflict of duty and interest in consequence, do not, on the material before me, provide support for a reasonably arguable case that Hillcrest was acting in its own interests both in relation to the email and for the purposes of the joinder.
55 I am not satisfied that there is a prima facie, or reasonably arguable, case that the litigation was being run by Hillcrest for its own and paramount purposes.