Solicitors:
Hall and Wilcox (Plaintiffs/Respondents)
Clifford Chance (Defendants/Applicants)
File Number(s): SC 2014/247471; 2015/245237
[2]
Judgment
I published a judgment in this matter on 23 September 2016 (Hastie Group Ltd (in liq) v Moore t/as Deloitte Touche Tohmatsu [2016] NSWSC 1355). These reasons assume familiarity with that judgment.
I concluded that the plaintiffs ("the Hastie Companies") had established a prima facie case that the redactions they propose to make to the 16 documents referred to in Hall & Wilcox's letter of 16 September 2016 were the subject of client legal privilege. I reached this conclusion on the basis of affidavit evidence given by Ms Elisabeth Pickthall, a solicitor employed by Hall & Wilcox.
It would have been more accurate for me to have said that I was satisfied that the Hastie Companies had made out a prima facie case that those documents fell within the category referred to by McDougall J in his Honour's judgment of 14 September 2016 (Hastie Group Ltd (In liq) v Moore & ors [2016] NSWSC 1315) namely that they concern passages in the documents which revealed:
"[L]egal advice or views in relation to prospects, strategy or tactics."
In my judgment of 23 September 2016 I said that I proposed to inspect the documents in question to "scrutinise and test" whether that prima facie position had been established.
I also said that I would give the Hastie Companies a further short time to adduce evidence as to the basis upon which redaction was proposed in relation to the time sheets of the Liquidators and of their solicitors and to invite submissions as to what steps should be taken in relation to any further documents in respect of which redaction is sought by the Hastie Companies.
There is no longer any dispute as to the redactions proposed by the Hastie Companies concerning their solicitors' time sheets.
The parties now agree that I should inspect the Liquidators' time sheets, and the further documents in respect of which redaction is sought to ascertain whether the redactions are in respect of material the subject of McDougall J's direction.
The parties agree that I may decide all remaining issues on the papers.
To assist me carry out that exercise the solicitors for the Hastie Companies have provided me with a folder containing redacted and unredacted copies of the 20 documents in respect of which the Hastie Companies propose redaction.
I will express my conclusions by reference to those documents as they are described in the index to the folder.
As will be seen, my inspection of the unredacted documents reveals that much of the redacted material that I found, on a prima facie basis, based on Ms Pickthall's affidavit, to fall within McDougall J's exception, does not do so and should be revealed.
[3]
Document 1 - Supplementary Memorandum to Liquidators' Report to Receivers of 10 April 2013
I will deal first with the material under the heading "Background".
The figure in the fourth line of arrow point one has been redacted. Ms Pickthall advanced no reason for this. It simply describes the limit of the relevant D&O policy. It should be revealed.
Part of the material in the third arrow point and all of the material in the fourth arrow point has been redacted. Ms Pickthall said this material conveyed legal advice given by Henry Davis York ("HDY") to the Liquidators "in connection with the issue of priority of proceeds". Both arrow points appear to address that question but make no reference to any advice from HDY. Indeed, the passages read as if the Liquidators are expressing their own views (as the words used include "the Liquidators would consider" and "we are of the view"). As Ms Pickthall has asserted that these matters do reflect advice given by HDY, I will give the Liquidators an opportunity to produce the advice that it is said is being repeated in these passages. If no such advice can be produced, these passages should be revealed.
The material in the fifth arrow point has been completely redacted. Ms Pickthall states that this passage "provides legal advice in relation to proposed claims" against directors of the Hastie Companies and sets out a "strategy in connection with those proposed proceedings". I do not read the material that way. It contains assertions about the level of cover under the relevant D&O policies. The material should be revealed.
The material under the sixth arrow point has also been completely redacted on the basis, Ms Pickthall said, that it provides legal advice and recommendations as to strategy. I agree. That passage may be redacted.
The entirety of section 2 of the document (including its heading) has been redacted on the basis that it contains "detailed advice and sets out a detailed strategy and tactics in relation to proposed claims to be made against the former directors and officers of the Hastie Group". I agree. That material may be redacted.
The bulk of section 3 of the document (under the heading "Next Steps") has been redacted on the basis that it contains a summary of recommendations as to strategy in relation to proposed claims against the directors and against Deloitte.
I do not read the redacted passages as having this effect. The passages simply set out the detail of what the "recommendations" (referred to in the unredacted part of this document) will relate to. As the prospect of "recommendations" is revealed, I see no reason for redaction of the description of what those recommendations will relate to. This material should be revealed.
[4]
Document 2 - email from Carl Hoerner (at PPB Advisory) to Leonard McCarthy (at HDY) of 7 May 2013
The redacted passage summarises the information contained in section 2 of Document 1. It may be redacted.
[5]
Document 3 - email from Leonard McCarthy (at HDY) to Jason Ireland (at McGrathNicol) and Stephanie Witts (at Minter Ellison) attaching a PowerPoint presentation to be given to a banking syndicate called "Hastie Group Director and Auditor Claims"
Ms Pickthall stated that this document was prepared by the Liquidators in conjunction with HDY.
The second slide is headed "Current Position". The material in the first arrow point has been redacted. That material appears to reflect legal advice given concerning proposed claims against former directors and may be redacted.
Slide three is headed "Potential Claims". The first subheading and the three arrow points under that subheading have been redacted. That material does no more than identify that there is a potential claim against former directors and officers of the Hastie Group. The other arrow points do not appear to reflect legal advice or deal with any matters of strategy. The material should be revealed.
All the material on slide four (including the heading) has been redacted. I accept this material sets out a number of strategic and tactical recommendations in relation to proposed claims against directors. It may be redacted.
Slide five (including the heading) has been redacted. It contains details of potential causes of action and appears to reflect legal advice given about that matter. It may be redacted.
Slide six is headed "What we know". The matters redacted do not appear to reflect legal advice or matters of strategy but, rather, appear to be the Liquidators' own conclusions as to shortcomings in the financial operation of the Hastie Companies. This material should be revealed.
The next three slides (that is, between that headed "What we know" and that headed "Auditor claim") have been completely redacted. They reflect legal advice as to what the Liquidators would have to prove in relation to the proposed claims against the directors and contain reasons why a certain course should be adopted prior to the commencement of proceedings against the directors (that is questions of strategy). They may be redacted.
No redactions are sought in respect of the next four slides.
The final slide is headed "Summary". The material redacted reflects matters of strategy which are the subject of earlier permissible redactions. It may be redacted.
[6]
Documents 4 and 8 - draft memorandum from PPB and HDY to Mr Cosimo Borrelli (a potential litigation funder) entitled "Hastie Group Ltd (in liquidation) and its subsidiaries 'Potential Claims against Third Parties'" dated November 2013 (and attached to an email from Mr Hoerner to Mr McCarthy of 21 November 2013
Some words in par 1.2 of this document have been redacted. Ms Pickthall did not seek to justify that redaction. I see no justification for it. The material should be revealed.
Passages in pars 1.3(a), (b), (c) and (d) have been redacted. Inconsistent redactions of par 1.3(c)(i) have been produced (although the differences appear immaterial). The net redacted portions set out matters of strategy in relation to possible claims against the directors and may be retained.
All of par 2 (including the heading) has been redacted. It sets out details of the Liquidators' strategy in relation to the claims against the directors. The redaction may be retained.
The heading in par 3, and the whole of par 3.1, has been redacted. Ms Pickthall stated that this material sets out detailed legal advice in respect of proposed claims against the directors. That is not how I read this material. Rather it sets out what the Liquidators' review of the Hastie Companies' accounts and board packs reveal. The material appears to be the Liquidators' critique of what the directors did. The material should be revealed.
Paragraph 3.3 has been redacted completely and portions of par 3.4, 3.5, 3.6 and 3.7 have been redacted. Ms Pickthall described all of these redactions as being in respect of detailed legal advice arising out of the matters in par 3.2 (which is not redacted and which deals with a report made to the board by the former CEO of Hastie, Mr Wild). I do not read the redacted passages this way. Rather they appear to be the Liquidators' own analysis of Mr Wild's statement including the Liquidators' conclusions as to assets that may have been overstated, of inventories, of adequacy of provisioning and of matters relating to goodwill. I see no basis for the redactions. The material should be revealed.
Paragraphs 4.2 and 4.4 (which appear under the heading "Middle East Operations") have been redacted on the basis, according to Ms Pickthall, that they set out detailed legal advice. The material does not appear to me to reflect legal advice. It appears to reflect the Liquidators' own conclusions as to the conduct of the directors. It should be revealed.
Paragraphs 4.5 and 4.6 have been redacted. These paragraphs set out matters of strategy concerning the Liquidators' claims against the directors. The redaction is justified.
Parts of par 5 (which is headed "Likely examinees") have been redacted. The redacted portions deal with the evidence that the Liquidators evidently anticipated that the potential examinees might give. These are strategic and tactical matters. The redaction is in my opinion justified.
Paragraph 7.2 has been almost completely redacted. This paragraph appears under the heading "Timeline and process" and deals with the focus of the Liquidators' proposed inquiries. It thus appears to relate to matters of strategy or tactics. The redaction is justified.
For the same reason the redactions in par 7.3 are, in my opinion, justified.
Almost all of par 8 which appears under the heading "Reporting to the investors following the further investigations" has been redacted. Ms Pickthall stated that these paragraphs set out key strategic steps in connection with the proposed claims to be made against the directors. I do not read the paragraph this way. It simply summarises what the Liquidators and HDY evidently anticipated a later report to investors would cover. The material should be revealed.
[7]
Documents 5 and 10 - letter from Maurice Blackburn to Mr Craig Crosbie (one of the Liquidators) of 26 August 2014
Maurice Blackburn were acting for a proposed litigation funder, Claims Funding Australia Pty Ltd ("CFA").
The second part of par 7 is redacted. But this sets out what Maurice Blackburn state that CFA will require to be included in advice from senior counsel. It should be revealed.
Paragraphs 10, 11 and 12 (under the heading "Recoverability") have been redacted. But these set out observations and comments made by Maurice Blackburn. They should be revealed.
Redactions have also been made to pars 15, 19 and 20. I see no basis for these redactions. They simply set out Maurice Blackburn's client's position. The material should be revealed.
[8]
Documents 6 and 11 - letter from Hall & Wilcox to Maurice Blackburn of 16 October 2014
Ms Pickthall said that the material redacted conveyed key strategies in relation to the proposed claim against the directors and against Deloitte.
I agree with this, so far as concerns the first two redacted passages (the redactions on page one).
Otherwise the redacted passages deal with steps that Hall & Wilcox propose be undertaken in order to enable CFA to consider the funding application. I do not see on what basis this material can be redacted. It should be revealed.
[9]
Documents 7 and 12 - letter from Hall & Wilcox to Maurice Blackburn of 19 November 2014
This letter has been redacted almost in its entirety.
Ms Pickthall stated that the redactions related to key strategies concerning proposed claims against the directors of Hastie.
The material comprises responses to enquiries made by Maurice Blackburn on behalf of the potential litigation funder, CFA.
It should be revealed, save for the second sentence of par 1, which reflects advice HDY evidently gave about D&O policies maintained by the Hastie Companies.
[10]
Document 9 - email from Mr Hoerner to Mr McCarthy of 29 January 2014
Ms Pickthall said that the redacted portions of this document conveyed legal advice and identified key strategies in relation to the proposed claims against the directors.
That is not how I read the redacted passages which appear to me to relate to the source of funds within one or more of the Hastie entities to conduct preliminary investigations. I see no justification for the redactions. The material should be revealed.
[11]
Document 13 - email from Hall & Wilcox to Mr Wyles QC of 1 April 2015
The redacted portion relates to information given by Hall & Wilcox to Mr Wyles for the purpose of the preparation of a memorandum of advice. The redaction is justified.
[12]
Document 14 - letter from Hall & Wilcox to Maurice Blackburn of 22 March 2016
Paragraphs 3.2 to 4.3 of this document have been redacted.
The paragraphs deal with questions of strategy and tactics in relation to the proposed claims against the directors. The redaction is justified.
[13]
Document 15 - email from Hall & Wilcox to Maurice Blackburn of 30 May 2016
The material redacted relates to advice given by counsel. The redaction is justified.
[14]
Document 16 - email from Hall & Wilcox to Maurice Blackburn 17 August 2016
The redacted material relates to questions of strategy concerning the claims to be made against the directors. The redaction is justified.
[15]
Document 17 - email from Hall & Wilcox to Mr Crosbie of 4 August 2014
The redacted material relates to matters to be discussed at a proposed meeting concerning the proposed claims against the directors and against Deloitte. It reveals questions of strategy and tactics. The redaction is justified.
[16]
Document 18 - Hall & Wilcox time sheets
As I have said, there is now no dispute about the redactions proposed in relation to these documents.
[17]
Document 19 - Liquidators' time sheets
Detailed redactions are proposed in relation to a number of entries in the time sheets of the Liquidators and the Liquidators' staff.
Ms Pickthall has sought to justify these redactions upon the basis that the redacted words "tend to identify a particular area of focus or enquiry" of the Liquidators in relation to these proceedings or the proposed proceedings against the directors.
The proposed redactions relate to extremely brief references to the subject matter of correspondence reviewed, of discussions had, of meetings held and of documents written. They reveal (albeit in very brief terms) the nature of the work the subject of the time entries. I do not see, however, that they reveal matters of strategy of tactics. They certainly do not reveal the contents of legal advice.
The time sheets should be revealed in unredacted form.
[18]
Document 20 - Hall & Wilcox letter of engagement of 2 February 2015.
This is Hall & Wilcox's costs agreement with the Liquidators.
A costs agreement that does "no more than specify rates for work to be done by specified classes of persons, and/or give a global figure for carrying out a specified task, and/or give estimates for carrying out a specified task, are not the subject of client legal privilege at general law" (per Hodgson JA at CSR Ltd v Eddy (2008) 70 NSWLR 725; NSWCA 83 at [7]).
Much of what is sought to be redacted from this document falls within that category.
Otherwise, the letter announces the obtaining of a conditional funder from CFA and some of the terms on which that funding had been obtained.
I see no basis for any of the redactions sought. The document should be produced unredacted.
[19]
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.
Decision last updated: 19 April 2018