[2006] FCA 1234
Balabel v Air India [1988] 1 Ch 317
Beach Petroleum NL v Kennedy (1999) 48 NSWLR 1[1999] NSWCA 408
Black v Smallwood (1966) 117 CLR 52
Commissioner of Taxation (Cth) v Pratt Holdings Pty Ltd [2005] FCA 1247(2005) 225 ALR 266
Cygnett Pty Ltd (ACN 106 996 114) v Souris [2020] FCA 1754
Daniels Corporation International Pty Ltd v ACCC (2002) 213 CLR 543[2002] HCA 49
DSE (Holdings) Pty Ltd v InterTAN Inc (2003) 135 FCR 151[2002] VSCA 59
Pegrum v Fatharly (1996) 14 WAR 92
Pratt Holdings Pty Ltd v Commissioner of Taxation (2004) 136 FCR 357[2004] FCAFC 122
Re Connective Services Pty Ltd (No 2) [2018] VSC 128
Re Doran Constructions Pty Ltd (in liq) [2002] NSWSC 215(2002) 194 ALR 101
Sharpe v Grobbel [2017] NSWSC 1065
Sheahan and Lock (liquidators)Re Binqld Finances Pty Ltd (in liq) [2015] FCA 718
Judgment (40 paragraphs)
[1]
Equititrust Ltd (in liq) (rec apptd) (recs and mgrs apptd) (in its capacity as responsible entity of the Equititrust Income Fund) v Equititrust Ltd (in liq) (recs apptd) (recs and mgrs apptd) (in its own capacity) (No 3) [2016] FCA 738; (2016) 341 ALR 31
Farrow Mortgage Services Pty Ltd (in liq) v Webb (1996) 39 NSWLR 601
Farrow Mortgage Services Pty Ltd v Webb (1995) 13 ACLC 1329
Hodgson v Amcor Ltd; Amcor Ltd v Barnes (No 2) [2011] VSC 204
In the matter of Atlas Construction Group Pty Ltd (in liq) [2019] NSWSC 1656
In the matter of Bauhaus Pyrmont Pty Ltd (in liq) [2006] NSWSC 543
In the matter of Resource Group Services Pty Ltd (in liq) [2018] NSWSC 203
Midland Bank Trust Co Ltd v Hett Stubbs & Kemp [1979] Ch 384
Mitsubishi Electric Australia Pty Ltd v Victorian WorkCover Authority (2002) 4 VR 332; [2002] VSCA 59
Pegrum v Fatharly (1996) 14 WAR 92
Pratt Holdings Pty Ltd v Commissioner of Taxation (2004) 136 FCR 357; [2004] FCAFC 122
Re Connective Services Pty Ltd (No 2) [2018] VSC 128
Re Doran Constructions Pty Ltd (in liq) [2002] NSWSC 215; (2002) 194 ALR 101
Sharpe v Grobbel [2017] NSWSC 1065
Sheahan and Lock (liquidators); Re Binqld Finances Pty Ltd (in liq) [2015] FCA 718; (2015) 107 ACSR 163
State of New South Wales v Public Transport Ticketing Corporation [2011] NSWCA 60
Tesco Supermarkets Ltd v Nattrass [1972] AC 153
Waterford v Commonwealth (1987) 163 CLR 54; [1987] HCA 25
Texts Cited: Ronald J Desiatnik, Legal Professional Privilege in Australia (3rd ed, 2017, LexisNexis Butterworths)
Category: Principal judgment
Parties: Anthony Elkerton in his capacity as liquidator of CGB Labour Hire Pty Ltd (in liq) (ACN 145 079 116) (Plaintiff / Applicant)
Darryl Chadwick (First Defendant / First Respondent)
Rachael Grimshaw (Second Defendant / Second Respondent)
Tracy Boxsell (Third Respondent)
Representation: Counsel:
T Di Francesco (Plaintiff / Applicant)
J Hyde Page (Defendants / Respondents)
HIS HONOUR: The application before the Court is a dispute regarding documents over which legal advice privilege is claimed.
The plaintiff challenges the claim for privilege by an interlocutory process filed on 23 December 2022.
The claims for privilege arise out of litigation and examination orders in respect of a company, CGB Labour Hire Pty Ltd. I will refer to it as "the company". There are other companies related to the company, a number of which also have the letters "CGB" in the company name. Accordingly, where for the purposes of these reasons it is necessary to distinguish between the company and various other related companies, I will do so.
[4]
Relevant parties
The company is a construction company.
On 22 February 2021, Mr Frisken was appointed administrator of the company, and on the following day, he provided an initial report to creditors.
On 29 March 2021, the company was placed into a creditors' voluntary liquidation and the plaintiff in the proceedings, Mr Elkerton, was appointed as liquidator of the company.
The following individuals are associated with the company:
1. Mr Darryl Chadwick - a director of the company;
2. Mr Tracy Boxsell - a former director of the company;
3. Ms Rachel Grimshaw - allegedly an operations manager of the company; and
4. Mr Benjamin Sewell - a solicitor with a firm Sewell & Kettle Lawyers (SKL).
Although the respondents to the interlocutory process are Ms Grimshaw, Mr Chadwick and Mr Boxsell, the hearing of the matter proceeded on the basis that Mr Chadwick and Ms Grimshaw (the respondents for the purposes of the hearing) were the only persons who maintained privilege objections to the plaintiff inspecting the disputed documents.
[5]
Issues
Essentially, the application raises the following issues:
1. What law applies in relation to addressing the question of privilege?
2. Who retained SKL and for what purpose?
3. Does a joint privilege or common interest privilege arise in respect of the disputed documents?
4. What if any particular privilege attaches to the individual disputed documents?
If the company retained SKL or had a joint or common interest privilege in respect of the disputed documents, the claim for privilege fails. In those circumstances it would not be necessary to address the fourth issue.
The fourth issue arises in the event that I find that the company did not have a joint or common interest privilege in respect of the disputed documents. It also arises if I am incorrect in finding that the company had a joint or common interest privilege in respect of the disputed documents.
[6]
Urgency
On 17 January 2023, the matter came before me as Vacation Duty Judge.
On that occasion, Mr Di Francesco appeared for the plaintiff and Mr Hyde Page appeared for the respondents.
The urgency for dealing with the matter is evident from the fact that public examinations were to commence on the first day of term (30 January 2023) and subject to the outcome of the privilege issues, the plaintiff was desirous of being able to access the documents prior to then, to be able to review them and potentially incorporate them into a bundle of documents to be used for the examination, and to otherwise prepare for the examination: T 1.
Given the exigencies of the Vacation Duty Judge list and logistical issues I mentioned to counsel for the parties, I listed the matter on 25 January 2023 to inform the parties in broad terms of my determination of the outcome of the application. At the listing on 25 January 2023, I indicated that in substance the claim for privilege failed and that the documents ought to be made available to the plaintiff.
I identified broadly my conclusions on the issues and requested the parties to cooperate to prepare a draft of orders to give effect to what I had announced and for that to be done by 3PM on 25 January 2023.
For reasons which are not entirely clear, counsel were not able to agree on proposed orders and sent separate emails proposing orders.
In fact, in terms of the determination of the application for access to the documents, counsel did agree on three orders which are set out below as being orders 6-8.
The dispute between counsel related to the fact that Mr Di Francesco sought various particular notations as to my findings but Mr Hyde Page did not agree with those.
In light of the dispute, and having considered the separate proposed orders, I finalised orders and notations 1-8 (set out below), and my Associate informed counsel of the orders I had made.
I had also, on the morning of 25 January 2023, requested the parties to notify my Associate by 4PM if the parties required reasons. Mr Hyde Page indicated that he would need to take some instructions. Mr Di Francesco, at least at that point, thought that if the respondents did not require reasons then the plaintiff would probably not either.
[7]
Identification of disputed documents
For the purposes of determining the matter it is necessary to identify the disputed documents by assigning some reference mark. I address more particularly below the process of refining and identifying the documents in dispute.
However, for present purposes, it suffices to note that subsequent to the hearing on 17 January 2023, counsel provided me with an index listing 20 documents identified as being disputed by reference to alphabetical identifiers A-T. I have directed that that index be marked as MFI-2 (index).
The 20 items had been separated in the index into an initial 10 items in a table being A-J in which there are, apart from those alphabetical identifiers, three additional columns being respectively headed "[d]ocument and page reference", "[c]ontents of document" and "[c]ircumstances in which document was created".
The remaining 10 items in the index are in a separate table in which, apart from the alphabetical identifiers K-T, there are simply two columns being respectively headed "[d]ate of email and sender" and "[c]omment".
Ultimately, the plaintiff did not seek access to four of the documents being items K-N.
The evidence in the proceedings identifies two forms of retainer document. For the purposes of these reasons, it is convenient to refer to:
1. A letter from SKL to Mr Chadwick and Mr Boxsell dated 26 February 2020 as the "first retainer"; and
2. A letter from SKL to Ms Grimshaw and Mr Chadwick dated 26 February 2021 as the "second retainer".
All the disputed documents being the initial 10 disputed items (A-J) and the six email communications (O-T) are referable to the first retainer or predate 26 February 2021.
[8]
Findings
Orders 1 and 2 below are directed to identifying the materials in dispute and noting what the parties had informed the Court regarding the four items (K-N) over which the plaintiff no longer pressed any claim for privilege.
Orders 3-5 encapsulate what I have determined regarding the matter namely:
1. I noted that I was not satisfied that:
1. the first retainer was a retainer to which Mr Chadwick and Mr Boxsell were the only parties; and
2. the company was not a party to the first retainer.
1. I was satisfied that, as a matter of substance, a part of the first retainer involved advice regarding restructuring of the company.
2. I found that the company had a common interest privilege and shared interest with at least the respondents in relation to the disputed documents (other than K-N) in the index.
In light of my findings, it was not strictly necessary for me to address the individual documents. However, in the event that I am incorrect regarding the findings in respect of the retainer and common interest privilege, I have considered whether privilege attaches to the individual documents.
Subject to what I have said above, if I am incorrect in relation to the findings regarding the retainer and common interest privilege, then of the 16 disputed documents I (obiter) accept the claim for privilege in relation to all the documents except for item Q.
[9]
Proceedings
On 13 September 2022, the plaintiff filed an originating process in the Corporations List of the Equity Division of this Court seeking that Mr Chadwick and Mr Boxsell be examined about the company's examinable affairs pursuant to s 596A of the Corporations Act 2001 (Cth) (Corporations Act) and r 11.3 of the Supreme Court (Corporations) Rules 1999 (NSW) (Corporations Rules).
Five further persons are sought to be examined pursuant to the provisions of s 596B Corporations Act being Ms Grimshaw (a former employee of the company who, as noted, is listed in some materials as the operations manager, and was a signatory to the company's bank account), Mr Sewell, Kurt Chadwick (a former employee of the company), Leanne Boss (an employee of JBM Accounting Pty Ltd - the external accountant for the company) and Aaron Fogarty (an employee of the external accountant for the company).
The originating process also sought orders for production in respect of 27 persons or entities including Mr Chadwick, Mr Boxsell and Ms Grimshaw pursuant to s 68 of the Civil Procedure Act 2005 (NSW) (CPA) or, in the alternative, pursuant to s 597(9) Corporations Act.
On 7 October 2022, the Court determined the plaintiff's application to conduct public examinations and issued orders for production.
The Court listed these proceedings for the public examination of the above named seven persons for five days commencing on 30 January 2023.
Most or at least many of the orders for production were issued by the Registrar of the Court on 7 and 12 October 2022 and were returnable in November and December 2022.
At least two of the orders for production were to firms of solicitors being relevantly directed to Rickards Whiteley Pty Ltd and Sewell & Kettle Pty Ltd trading as four entities being Sewell & Kettle, SKL, Sewell & Kettle Insolvency Advisors and Sewell & Kettle Debt Agents.
[10]
The company
An ASIC search for the company obtained on 12 August 2022 shows that:
1. The company was registered in Victoria on 7 July 2010.
2. Initially, the registered office of the company was an address in Glen Alice Road, Rylestone (Rylestone).
3. As from 1 April 2020, the principal place of business of the company was described as being "1930 Bylong Valley Way, Kandos".
4. Mr Chadwick and Mr Boxsell were appointed as directors of the company at the time of the registration.
5. Mr Chadwick remains a director of the company.
6. Mr Boxsell ceased to be a director of the company on 16 November 2020.
7. Mr Chadwick's address is disclosed as being an address in Running Stream in New South Wales.
8. Mr Boxsell's address is disclosed as being the Rylestone address.
9. The shareholders of the company are Mr Chadwick, Mr Boxsell and GBW Nominees Pty Ltd (GBW) each holding one share.
[11]
Related companies
A company R & K Engineering Pty Ltd (RKE) was incorporated on 15 September 2020 and a company search (as at 12 August 2022) discloses that it, like the company, has its principal place of business at 1930 Bylong Valley Road, Kandos. Ms Grimshaw is the sole director and secretary of RKE.
Mr Chadwick holds all the relevant shareholding in RKE.
Mr Di Francesco asserts that RKE took over the business and staff.
During the hearing, when I asked about examining the documents, counsel accepted that it was appropriate and of assistance if I examined the documents: T 44, 45.
[12]
What law applies in addressing the question of privilege
Legal professional privilege is a rule of substantive law which may be availed of by a person to resist the giving of information or production of documents which would reveal communications between a client and his or her lawyer for the dominant purpose of giving or obtaining of legal advice or the provision of legal services including representation in legal proceedings: Daniels Corporation International Pty Ltd v ACCC (2002) 213 CLR 543; [2002] HCA 49 at [9] per Gleeson CJ, Gaudron, Gummow and Hayne JJ.
There is an initial question in the matter whether the provisions of the Evidence Act 1995 (NSW) (Evidence Act) applied or the general law. Sometimes, it is not necessary to determine that issue: e.g. In the matter of Resource Group Services Pty Ltd (in liq) [2018] NSWSC 203 at [2] per Black J (RGS).
Here, neither counsel addressed the issue in submissions as to whether the provisions of the Evidence Act applied or the general law.
The Evidence Act applies to all proceedings in a New South Wales Court including proceedings that are interlocutory proceedings or proceedings of a similar kind or proceedings heard in chambers: s 4(1)(b)-(c).
Pt 3.10 Evidence Act addresses privileges in respect of proceedings in a New South Wales Court.
The Evidence Act particularly addresses the question of the application of Pt 3.10 to preliminary proceedings of Courts.
For the purposes of Pt 3.10 Evidence Act, s 131A(2) makes reference to what is described as a "disclosure requirement", which means a process or order of a Court that requires the disclosure of information or a document and includes a summons or subpoena to produce documents or give evidence and a notice to produce.
If a person is required by a disclosure requirement to give information, or to produce a document, which would result in the disclosure of a communication, a document or its contents or other information of the kind referred to in Divs 1 (client legal privilege), 1A (professional confidential relationship privilege), 1C (journalistic privilege) or 3 (evidence excluded in the public interest), and the person objects to giving that information or providing that document, the Court must determine the application by applying the provisions of Pt 3.10 (other than ss 123 and 128) with any necessary modifications as if the objection to giving information or producing the document were an objection to the giving or adducing of evidence: s 131A(1) Evidence Act.
[13]
Principles
The party claiming privilege bears the onus of establishing the basis for the claim. That includes establishing the relevant lawyer/client relationship: e.g. In the matter of Bauhaus Pyrmont Pty Ltd (in liq) [2006] NSWSC 543 (Bauhaus Pyrmont) at [24] per Austin J citing Mitsubishi Electric Australia Pty Ltd v Victorian WorkCover Authority (2002) 4 VR 332; [2002] VSCA 59 at 337 per Batt JA; ASIC v Rich [2004] NSWSC 1089.
In approaching the question of who retained the firm of solicitors and for what purpose, and the extent of the retainer, it is clear from caselaw that in some cases detailed evidence is provided which enables the Court to approach the question with some degree of confidence: e.g. Farrow Mortgage Services Pty Ltd (in liq) v Webb (1996) 39 NSWLR 601 (FMS v Webb).
In other cases, the evidence is scant: e.g. Equititrust Ltd (in liq) (rec apptd) (recs and mgrs apptd) (in its capacity as responsible entity of the Equititrust Income Fund) v Equititrust Ltd (in liq) (recs apptd) (recs and mgrs apptd) (in its own capacity) (No 3) [2016] FCA 738; (2016) 341 ALR 31 (Equititrust (No 3)); RGS at [5].
In circumstances where there is no direct evidence given of any retainer or no probative evidence which explains the circumstances in which and the purposes for which the engagement occurred and where there is only evidence from a solicitor recording no more than instructions conveyed to the solicitor, it has been observed that little weight may be given to the solicitor's affidavit: Sheahan and Lock (liquidators); Re Binqld Finances Pty Ltd (in liq) [2015] FCA 718; (2015) 107 ACSR 163 at [23] per Foster J.
In Equititrust (No 3), the evidence amounted to no more than assertions by the solicitor regarding the state of the documents over which privilege was claimed and failed to establish the nature of the retainer. Copies of the retainer had not been provided: at [18]-[20].
In RGS, Black J noted that the evidence did not establish that the applicant (who was the sole director and shareholder of the company) was obtaining advice for himself to the exclusion of the company.
Further, there was no evidence of a separate retainer by the applicant personally to the exclusion of a retainer by the company, or a request at any point that the applicant be provided with separate advice than that which was provided to the company as to matters which may have had personal implications for the applicant: at [10].
[14]
Submissions
Mr Di Francesco submitted that the Court should find that on the balance of probabilities there was a joint retainer of SKL by the company and the directors and officers irrespective of who is named on the retainers.
Mr Hyde Page referred to a number of authorities to the effect that a retainer is a contractual relationship citing Beach Petroleum NL v Kennedy (1999) 48 NSWLR 1; [1999] NSWCA 408 at [208] per Spigelman CJ, Sheller and Stein JJA; Pegrum v Fatharly (1996) 14 WAR 92 at 95 per Ipp J (Pegrum v Fatharly).
In particular, Mr Hyde Page submitted that the arrangement between parties as to who should pay for work is seldom material to the question for whom the work is done and to whom the professional duties are owed, referring to Pegrum v Fatharly at 105 per Anderson J (Kennedy J agreeing) citing Midland Bank Trust Co Ltd v Hett Stubbs & Kemp [1979] Ch 384 at 396 per Oliver J.
Mr Hyde Page also referred to the implicit nature of the duty of disclosure in a joint privilege situation citing FMS v Webb at 608B-C per Sheller JA (Waddell AJA agreeing).
He further submitted that where communications relate to matters outside the joint relationship, they are privileged in favour of the person who communicates with the lawyer against the other party to the relationship, even if the latter funded the expense of the communication, e.g. communications between a lawyer and a company in litigation with a shareholder citing Re Doran Constructions Pty Ltd (in liq) [2002] NSWSC 215; (2002) 194 ALR 101 at [73] per Campbell J (as his Honour then was).
Mr Di Francesco referred to the decision of Rees J in Re Atlas.
In Re Atlas, her Honour observed that there was very little evidence before the Court as to why the solicitors were retained and whether that was for the directors personally or also for the company. In that case, there were no invoices and there was limited evidence as to who paid the invoices. There was some evidence that the company paid the first invoice and that someone else paid the remaining fees: at [18].
[15]
Determination
Both counsel took me to various parts of the evidentiary material relied upon.
Without intending to be exhaustive of the material drawn to my attention, I note the following.
I was directed to the first retainer which relevantly included the following terms:
YOUR REFERENCE:
OUR REFERENCE: 101
26 February 2020
Darryl Chadwick & Tracy Boxsell
1902 Bylong Valley Way
Kandos NSW 2848
Dear Sirs
BY EMAIL
Engagement as Legal Advisor
Corporate, contract and dispute resolution counsel
Thank you for engaging my firm.
This letter sets out the scope of our role and the terms of our engagement.
1. SCOPE OF WORK
To represent and advise you regarding corporate, contract and dispute resolution matters including advising your companies and key staff. This applies to work regarding all of your companies and related entities including CGB Services Pty Ltd (Receivers and Managers Appointed), CGB Holdings Pty Ltd, CGB Labour Hire Pty Ltd, CBG Personnel Pty Ltd [sic], CBG Machine Pty Ltd, CGB Operations Pty Ltd, CBG Engineering Pty Ltd [sic], CGB Contracts Pty Ltd and CGB Property Holdings Pty Ltd.
2. RESPONSIBILITY
I will be responsible for your legal work. However, it is not possible or economical for me to undertake all of your legal work so I may be assisted by Tom Wallace (Lawyer) and Sean Forde (Senior Financial Accountant).
3. REPORTING
My firm will report to you and your management staff regarding the status of your matters by email or telephone regularly.
…
This letter and the attached Costs Disclosure constitute a costs agreement between you and Sewell & Kettle Pty Ltd.
If you are satisfied with this costs agreement, please sign below and return a copy of this letter or continue to provide instructions.
If you have any queries please do not hesitate to contact me.
Yours sincerely ACCEPTANCE
SEWELL & KETTLE
[SIGNATURE] We accept the terms set out above.
[space for signature]
Ben Sewell Darryl Chadwick & Tracy Boxsell
Principal
Direct Line: (02) XXXX XXXX Date: / /
Email address: XXXXXXXsklawyers.com.au
I was also directed to a letter from SKL to Ms Grimshaw and Mr Chadwick dated 26 February 2021 (the second retainer quote) which is relevantly in the following terms:
YOUR REFERENCE:
OUR REFERENCE: 101
26 February 2021
Rachael Grimshaw and Darryl Chadwick
1930 Bylong Valley Way
KANDOS NSW 2848
Dear Sir and Madam
BY EMAIL
Engagement as Legal Advisor
Chadwick Grimshaw Pty Ltd and R & K Engineering Pty Ltd
Thank you for engaging my firm in this matter.
This letter sets out the scope of our role and the terms of our engagement. This retainer replaces the monthly retainer dated 27 February 2020. The retainer commences on 1 March 2021.
1. SCOPE OF WORK
To advise and represent you regarding insolvency and other disputes.
2. RESPONSIBILITY
I will be responsible for your legal work. However, it is not possible or economical for me to undertake all of your legal work so I may be assisted by Sean Forde (Senior Financial Accountant) and Natalia Mariani (Analyst).
3. REPORTING
My firm will report to you regarding the status of your matter by email or telephone regularly.
…
This letter and the attached Costs Disclosure constitute a costs agreement between you and Sewell & Kettle Pty Ltd.
If you are satisfied with this costs agreement, please sign below and return a copy of this letter or continue to provide instructions.
If you have any queries please do not hesitate to contact me.
Yours sincerely ACCEPTANCE
SEWELL & KETTLE
[SIGNATURE] We accept the terms set out above.
[SIGNATURES]
Ben Sewell Rachael Grimshaw and Darryl Chadwick
Principal
Email address: XXXXXXXsklawyers.com.au Date: [02/03/21.]
[16]
Does a joint privilege or common interest privilege arise in respect of the disputed documents?
The law distinguishes between what is described as joint privilege and common interest privilege.
Joint privilege envisages a situation in which two or more persons join in communicating with a legal advisor for the purpose of retaining his or her services or obtaining his or her advice. The privilege which protects these communications from disclosure belongs to all the persons who joined in seeking the service or obtaining the advice. The privilege which arises is a joint privilege: see FMS v Webb at 608B per Sheller JA (Waddell AJA agreeing).
A joint privilege will also arise if one of a group of persons in a formal legal relationship communicates with a legal advisor about a matter in which the members of the group share an interest: FMS v Webb at 608B-C.
Implicit in the relationship is the duty or obligation to disclose to other group parties the content of the communication. Accordingly, no privilege attaches to such communications as against others who, with the client, share an interest in the subject matter of the communication: FMS v Webb at 608B-C.
The joint nature of the privilege is an inseverable right and means that all to whom the privilege belongs must concur in waving it: FMS v Webb at 608C-D.
Distinct from circumstances giving rise to joint privilege are those where parties have a shared or similar interest in the subject of the communications between one or more of them and a legal advisor. In such circumstances a common interest privilege may arise: FMS v Webb at 608E.
The distinction between joint privilege and common interest privilege may be important when considering whether disclosure by one of the parties interested in the matter of the contents of the communications with a third party should be treated as a waiver by all the interested parties: FMS v Webb at 608G.
"Common interest" in this context is not a rigidly defined concept: FMS v Webb at 609B.
In Eastmark Holdings Pty Limited v Kabraji (No 3) [2012] NSWSC 1463, Hallen J distinguished between a situation where common interest privilege is asserted against a party (e.g. as in this case) in order to gain access to documents as opposed to where it is pleaded to show that no waiver of privilege has occurred by party A giving documents to party B. His Honour stated at [69]-[70] the following:
69. It may be somewhat of a misnomer to refer to this as "common interest privilege". It may really be that as between persons with a "common interest", there is no confidentiality with respect to the communications concerning that interest, and that privilege may not be asserted by one against the other to resist a legitimate claim for access to the documents.
70. This type of common interest privilege has been described as using common interest privilege "as a sword" rather than as a shield: Phipson on Evidence, 16th Ed, (2005) Ch 24 - 03 at 649.
[17]
Determinations
I have mentioned above that the particular matter number, which is the subject of the disputed documents, relates to the topic of restructure of the business of the company.
It would have been a straightforward matter for the respondents, or at least Mr Chadwick, to adduce evidence as to the circumstances giving rise to the first retainer and, more particularly, as to the distinction between advice for himself and Mr Boxsell to the exclusion of the company.
In light of the matters I have outlined above, I am not satisfied that the assertion, at least at a general level, of Mr Sewell sufficiently or cogently establishes that advice was being given for the directors to the exclusion of the company.
In particular, apart from the fact that there was no evidence from Mr Chadwick of a retainer to the exclusion of a retainer by the company or of particular requests that he and Mr Boxsell be provided with separate advice to that which was being provided to the company, Mr Sewell who did give evidence did not other than in a generalised assertive way indicate that the documents the subject of dispute were brought into being for the dominant purpose of giving advice exclusively to Mr Chadwick and Mr Boxsell, or indeed to Ms Grimshaw for that matter.
It seems to me on the materials before the Court that the proper inference is that the company had a direct interest in the advice and that the directors could only have sought such advice in a context in which they owed fiduciary duties to the company, and could not keep confidential from the company what the directors were proposing should happen with the business of the company and the staff of the company.
Even if the retainer was strictly speaking not a retainer to which the company was a party, it seems to me that the company clearly had a common interest in what was being proposed regarding the restructure.
In the circumstances, I find that there was a sufficient common interest such that the claim for privilege as against the company fails.
In light of what I have found above, as I have noted, it is strictly not necessary for me to address a privilege claim in respect of the specific documents.
Nonetheless, in case I am incorrect in what I have found, I address the matter below.
[18]
Privilege claim in respect of the specific disputed documents
[19]
Principles
In addressing the claim regarding privilege in respect of specific documents regard may be had to the following principles.
A party claiming the privilege bears the onus of establishing the basis for the claim. That includes establishing that the dominant purpose of making the communication or the preparation of the document was for the purpose of the giving or obtaining of legal advice: see e.g. Bauhaus Pyrmont at [24] per Austin J.
Without being exhaustive, communications concerning matters that are protected by a legal advice privilege include instructions given by the client to the solicitor: e.g. Hodgson v Amcor Ltd; Amcor Ltd v Barnes (No 2) [2011] VSC 204 at [62] per Vickery J.
The purpose for which the document is brought into existence is a question of fact that must be determined objectively: Waterford v Commonwealth (1987) 163 CLR 54; [1987] HCA 25. Evidence of the intention of the document's maker, or of the person who authorised or procured it, is not necessarily conclusive: AWB Ltd v Cole (No 5) (2006) 155 FCR 30; [2006] FCA 1234 (AWB Ltd v Cole (No 5)) at [44(2)] per Young J.
A "dominant purpose" is one which predominates over other purposes. It is the prevailing or paramount purpose: AWB Ltd v Cole (No 5) at [44(5)].
An appropriate starting point when applying the dominant purpose test is to ask what was the intended use or uses of the document which accounted for it being brought into existence: AWB Ltd v Cole (No 5) at [44(6)].
The concept of legal advice is fairly wide and extends to professional advice as to what a party should prudently or sensibly do in the relevant legal context but does not extend to advice that is purely commercial or of a public relations character: AWB Ltd v Cole (No 5) at [44(7)] citing Balabel v Air India [1988] 1 Ch 317 at 323 and 330 per Taylor LJ (Parker LJ and Lord Donaldson of Lymington MR agreeing).
It has been said that advice as to commercially advantageous ways to structure a transaction is extremely unlikely to attract privilege because the purpose of putting the advice together will, in most cases, be quite independent of the need for legal advice. Thus, even if the parties have in mind that the advice will be submitted to a lawyer for comment, the purpose is unlikely to be the dominant purpose: Ronald J Desiatnik, Legal Professional Privilege in Australia, (3rd ed, 2017, LexisNexis Butterworths) at 33 citing Pratt Holdings Pty Ltd v Commissioner of Taxation (2004) 136 FCR 357; [2004] FCAFC 122 at [106] per Stone J (Merkel J agreeing).
[20]
Submissions
Mr Di Francesco submitted that the respondents had not provided sufficient evidence or particulars to substantiate their claims that the relevant documents were created for the dominant purpose of providing legal advice.
Mr Hyde Page did not address the documents individually. Nonetheless, I understood him to put a position that there was sufficient evidence from the materials themselves to substantiate the claim of dominant purpose.
[21]
Does a waiver arise?
At the end of the hearing, I raised with counsel whether there was an issue as to, assuming a privilege was made out, whether the privilege had been waived by communications with Ms Grimshaw.
Mr Di Francesco had certainly not presented the case on the basis that that was a specific issue. Mr Hyde Page asserted likewise. Indeed, Mr Hyde Page suggested that it would not be appropriate for me to address that issue at least without affording the parties further procedural fairness to properly address the matter.
I consider that there is a question as to whether Ms Grimshaw was in fact a client of SKL prior to 26 February 2021. However, in light of the fact that the case was not argued on that basis and that Mr Hyde Page cautioned me against addressing the issue of waiver, I will not make any specific findings about such issues.
[22]
Comments (obiter) regarding the disputed documents
I address the 16 disputed items on the assumption (which is contrary to which I have found) that the retainer was not a retainer with the company and that the company did not have a common interest privilege with the directors or at least Mr Chadwick and Mr Boxsell at the time the documents were created.
It is appropriate to consider the 16 items in two separate stages being the first 10 items and then the next 6 items.
[23]
Document A
This document according to the index is described as a restructuring initial report dated 20 March 2020. It has been prepared by Mr Sewell.
The description of the contents of the document indicate that it is a commercial and legal analysis of the entire CGB Group.
As I understand the information provided by Mr Sewell regarding the contents of the document, it was derived from instructions from the clients about the affairs of the group of companies.
It is not entirely accurate to describe the document as "[r]estructuring initial report". The title of the document, apart from bearing those initial words, also bears the words "and checklist".
It appears to me that, subject what I will shortly say, it is in the form of a type of questionnaire about aspects of the business on which Mr Sewell sought instructions from the clients.
For the most part, it seems to me correct to say, as the description asserts, that the document reflects instructions from the clients about the affairs of the group of companies.
On the assumption (which is contrary to my findings) that the company was not the client and there was no common interest privilege, the issue is whether it is confidential information from the clients to Mr Sewell for the dominant purpose of him as a lawyer providing legal advice to them as clients.
Whilst much of the information provided is what I would describe as both general and specific information about the affairs of the group, and not legal advice per se, my sense of the matter is that it is a document which records communications for the purposes of Mr Sewell providing legal advice to the clients.
In that context, my impression is that the document would be privileged.
Additionally, towards the end of the document there is a section on pages 17 and 18, which I have the impression might not merely be instructions, but rather initial thoughts of Mr Sewell preliminary to advising.
[24]
Document B
This document is described as "[k]ey terms". The contents of the document are described as a "[d]raft contract / term sheet for Ms Grimshaw prepared for Mr Chadwick".
Essentially, the document appears to be advice as to what "key terms" should be included in a contract involving Ms Grimshaw and Mr Chadwick, Mr Boxsell or the company.
Although the document has a commercial flavour to it, I would be prepared to infer that the dominant purpose for its production was legal advice as to what should be appropriately included as terms of a proposed contract. On that basis my impression is that the document would be privileged.
[25]
Document C
This document is described as "11 May 2020 Chart". The broad description as to the contents of the document is described as "[a]nalysis of new business structure". It is said that it was prepared to provide advice after Mr Boxsell wished to terminate his relationship with Mr Chadwick. Yet again, whilst it has a strong commercial flavour to it, it does seem to me that it can be fairly described to have been prepared for the purposes of legal advice. My impression is that the document would be privileged.
[26]
Document D
This document is said to be dated "28 May 2020 Memorandum". That dating is incorrect. It is in fact dated 28 July 2020. It is from Mr Sewell and Natalia Mariani with the client being named simply as Mr Chadwick. Whilst it is not evident from the document itself, other material suggests that Ms Mariani was a paralegal with the firm.
The document is described in the index as a "[m]emorandum seeking instructions from" Mr Chadwick with the assertion that it was created for the purpose of providing advice to Mr Chadwick further to Item C.
Subject to the fact that the document is described as being a memo to both Mr Chadwick and Ms Grimshaw, the other assertions appear to be correct.
I do not know whether the document was provided to Ms Grimshaw. At first blush the fact that it is addressed to both Mr Chadwick and Ms Grimshaw is strongly suggestive that it was. However, in light of what I have said above, and fact that whether Ms Grimshaw was a client at that stage was not argued before me, I say nothing further about the matter. My impression is that the document would be privileged.
[27]
Document E
This document is described as "18 August 2020 Final Term Sheet". The document does not bear any date. However, I have no reason to doubt the assertion that it was created on or about that date. The contents of the document are described as "[d]raft terms of agreement with Ms Grimshaw". The assertion is it was created for the purpose of providing advice to Mr Chadwick further to Item C. The document is similar in format to Item B. My impression is that the document would be privileged.
[28]
Document F
This document is described as "26 August 2020 Memorandum". It is a memo to Mr Chadwick and Ms Grimshaw. Again, it is from Mr Sewell and Ms Mariani. The client is described as Mr Chadwick. The assertion as to the contents of the document is that it is a memorandum seeking instructions from Mr Chadwick. The assertion is that it is providing advice to him further to Item C.
What I have said in relation to Item D similarly applies in relation to this document. My impression is that the document would be privileged.
[29]
Document G
This document is dated 26 August 2020. It is described as a file note of a discussion with Ms Grimshaw. The assertion is that it was created in circumstances of "[s]ummary of legal advice provided further to 11 May 2020 Chart above" (i.e. Item C).
Ms Mariani is in fact, according to the file note, the author of the document. The description of the document as being a file note of a discussion with Ms Grimshaw and the description of the circumstances of the creation of the document do not seem to me to entirely capture the essence of the document.
The document makes clear that the attendance was not a personal attendance but rather a telephone conversation. The fact that each of Mr Sewell and Ms Mariani were present and that Ms Mariani made notes suggests that the conference was on speakerphone.
The essence of the document in its terms indicates that Mr Sewell called Ms Grimshaw to explain the memorandum dated 28 July 2020 which will be noted is Item D.
I will say nothing further about the matter other than to observe that there is a clear question as to whether Ms Grimshaw was a client of SKL at that point of time, and, if she was not, whether a waiver of privilege arises. For the reasons I refer to above, I make no finding on either of those issues. However, leaving those questions aside, my impression is that the document would be privileged.
[30]
Document H
This document is similar to Items D and F. The main material difference is that apart from being a memo to Mr Chadwick and Ms Grimshaw, it is additionally described as being a memo to Aaron Fogarty. Apart from the issues I have referred to in relation to Item G, an issue may well arise as to whether there is any waiver of privilege in respect of a communication to Mr Fogarty, if the memo was in fact provided to him. Leaving those questions aside, my impression is that the document would be privileged.
[31]
Document I
This document other than being dated 11 September 2020 is similar to Items D and F. Leaving aside issues of whether Ms Grimshaw was a client at that stage or whether or not there was any waiver of privilege, my impression is that the document would be privileged.
[32]
Document J
This document is dated 13 November 2020 and the contents described as being a memorandum seeking instructions from Mr Chadwick. No detail is provided in the index of the circumstances in which the document was created. The client is indeed named as being Mr Chadwick. Nonetheless, it is in fact a memo from Mr Sewell and Ms Mariani to Mr Chadwick, Ms Grimshaw and Mr Boxsell. This document is of a somewhat different character to the memorandums being Items D, F, H and I. The document seems to me to be more specifically legal advice provided to Mr Boxsell regarding a communication received from the receiver and manager of CGB Services. My impression is that the document would be privileged at least as to Mr Boxsell.
The final six items in dispute, being documents O-T, are email communications.
[33]
Document O
This item is described as an email dated 18 February 2021 from Ms Grimshaw with a comment being "[d]iscussion regarding transfer of registration of vehicle". There are two emails. One is from Ms Grimshaw to Ms Mariani. That is dated 18 February 2021. That is an email seeking advice regarding registration. The second email is dated 19 February 2021 being a response from Ms Mariani to Ms Grimshaw (and copied to Mr Sewell) seemingly providing advice.
Ms Mariani is described in Item P in the index as "paralegal from the firm". The email describes her as an analyst. Questions may arise regarding precisely what description is appropriate for Ms Mariani.
Nonetheless, for the purposes of s 118 Evidence Act and legal advice privilege, "lawyer" means an Australian lawyer, foreign lawyer, or an employee or agent of either of them: s 117 Evidence Act.
I am prepared to accept that Ms Mariani fits the description of being an employee of SKL. On that basis and noting that no particular submissions were addressed to Ms Mariani's position, my impression is that the document would be privileged.
[34]
Document P
This item is described as being dated 3 February 2021 being an email from Ms Mariani. The email is to Ms Grimshaw and copied to both Mr Sewell and Sean Forde. The email was in fact addressed to "Darryl, Rachael and Kurt". The comment in the index is that it is an "[e]mail sending business chart". That appears to be a fair description. My impression is that the document would be privileged.
[35]
Document Q
This is an email dated 2 February 2021 from Sean Forde to Ms Grimshaw and copied to Mr Sewell and Ms Mariani. The comment in the index is that it is "[a]dvice regarding timing of liquidation". Mr Forde, according to the index, is described as "accountant from the firm". The email describes him as "Senior Financial Accountant".
This item of all the disputed items to my mind comes very close to the challenge of working out what is strictly speaking legal advice and, on the other hand, accounting or commercial advice. The email (without disclosing precise contents) seeks instructions on a particular matter and envisages certain actions subject to confirmation of such instructions.
I have reflected as to whether it is properly described as an email prepared for the dominant purpose of providing legal advice. Without anything further, my impression is that the email was not sent for the dominant purpose of providing legal advice and that the document would not be privileged.
[36]
Document R
This item is an email dated 30 June 2020 from Mr Sewell to Ben Cleary copied to Ms Grimshaw. The comment in the index is that it is an "[e]mail with other solicitor acting for Mr Chadwick regarding settlement of proceedings on foot". That appears to be a fair description of the document. My impression is that the document would be privileged.
[37]
Document S
This item is an email dated 28 April 2020 from Mr Sewell addressed to Ms Grimshaw and Mr Boxsell. The email address from Ms Grimshaw is an address that contains reference to CGB Services. Whether that is of any significance is unclear to me. The comment in the index describes the email as being "regarding initial advice provided". Having regard to the subject matter of the email (which is not described in the index) and the content of that email my impression is that the document would be privileged.
[38]
Document T
This last item is an email dated 20 March 2020 from Mr Sewell addressed to Ms Grimshaw, Mr Chadwick and Mr Boxsell (albeit that only email addresses for Ms Grimshaw and Mr Boxsell are contained in the email addresses section). The comment in the index is that it is an email "regarding initial advice provided". It may be that, as with a number of the other items, questions arise as to whether Ms Grimshaw was a client of SKL at that point of time or, if not, whether a waiver of privilege arises. For the reasons I have referred to above, I make no finding on either issue. Leaving those questions aside, having regard to the subject matter and the content of the email, my impression is that the document would be privileged.
[39]
Orders
In the circumstances, the orders made on 25 January 2023 were as follows:
THE COURT:
1. Marks the document described as Index of Disputed Documents, being an attachment to the email of counsel for the respondents Mr Hyde Page sent to the Chambers of Justice Meek on 18 January 2023, which email was sent with the consent of counsel for the plaintiff Mr Di Francesco, listing with alphabetical identifiers documents in dispute as items A to T as MFI-2 (disputed documents).
2. Notes that the parties have advised the court that the plaintiff is not pressing its claim to inspect documents K, L, M and N in MFI-2.
3. Notes that it is not satisfied that:
1. the retainer issued by Sewell & Kettle Lawyers dated 26 February 2020 addressed to Darryl Chadwick and Tracy Boxsell (the first retainer) was a retainer to which Mr Chadwick and Mr Boxsell were the only parties;
2. CGB Labour Hire Pty Ltd (In Liquidation) (the company) was not a party to the first retainer.
1. Notes that it is satisfied that as a matter of substance, a part of the first retainer involved advice regarding restructuring of the company.
2. Notes it has found that the company has a common interest privilege and shared interest with at least the respondents in relation to the disputed documents other than documents K, L, M and N in MFI-2.
3. Orders that the plaintiff be allowed to inspect forthwith the documents in packet S15 identified as items A to T in MFI-2 except for items K, L, M and N.
4. Directs Sewell & Kettle Lawyers as the producing party to forthwith email to Hegarty Legal the documents referred to in order 6 above which the plaintiff may inspect.
5. Orders the respondents (Darryl Chadwick and Rachael Grimshaw) to pay the plaintiff's costs of and incidental to the Interlocutory Process filed 23 December 2022 on the ordinary basis.
[40]
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: 07 February 2023
After I settled and announced the orders, Mr Hyde Page notified my Associate that the respondents did not require reasons.
Mr Di Francesco, however, subsequently responded to my Associate noting that the plaintiff requested reasons as "[t]here have been some issues and disagreements between the parties today as to the effect and interpretation of Justice Meek's findings".
I set out below the reasons for the orders I made.
If the Court orders a person, by subpoena or otherwise, to produce a document to the Court or to an authorised officer, or if a party requests another party by notice (under r 34.1) to produce a document to the Court or an authorised officer, or if the question is put to a person in the course of an examination before the Court, the provisions of r 1.9 Uniform Civil Procedure Rules 2005 (NSW) (UCPR) apply.
Such a ground of objection picks up one of the categories of what is described as a "disclosure requirement" within the meaning of s 131A(2) Evidence Act.
In the case of an issue regarding production of documents preliminary to an examination before the Court, where a person objects to producing the document on the ground that the document is privileged, the combined effect of s 131A Evidence Act and r 1.9 UCPR is that the provisions of Pt 3.10 (Divs 1, 1A, 1C and 3) apply rather than the common law.
The objecting party is not compelled to produce the document unless and until the objection is overruled: r 1.9(4A) UCPR.
A person may object to producing a document on the ground that the document is a privileged document: r 1.9(3) UCPR.
The production of the document to the Court under a claim for privilege does not constitute a waiver of privilege: r 1.9(4B) UCPR.
For the purposes of ruling on the objection, evidence in relation to the claim of privilege may be received from any person by affidavit or otherwise and cross-examination may be permitted on any affidavit used: r 1.9(5)(a)-(b) UCPR.
Further, for the purpose of ruling on the objection, the person objecting may be compelled to produce the document: r 1.9(5)(c) UCPR.
The provisions do not apply if the "person" objecting to disclosure is not the person who is subject to the disclosure requirement: State of New South Wales v Public Transport Ticketing Corporation [2011] NSWCA 60 at [32] per Allsop P (as his Honour then was) (Hodgson JA and Sackville AJA agreeing).
Here the producing party is SKL. The "persons" objecting to disclosure are the respondents.
There might well be an issue in the matter regarding whether Ms Grimshaw was relevantly a client for the purposes of the disputed documents.
However, the matter proceeded on the basis that at least Mr Chadwick was arguably one of the clients with or without the company.
For the purposes of determining the application, I have proceeded on the basis that the order for production of documents constituted a "disclosure requirement" within the meaning of s 131A(2) Evidence Act and that, accordingly, the relevant provisions of Pt 3.10 Evidence Act apply to determining the application.
Where the provisions of the Evidence Act apply, evidence is not to be adduced if, on objection by a client, the Court finds that adducing the evidence would result in disclosure of a confidential communication made between the client and a lawyer or (relevantly) the contents of a confidential document prepared by the client, lawyer or another person for the dominant purpose of the lawyer providing legal advice to the client: s 118 Evidence Act.
Whilst I have addressed the issue as to what law applies, as I have noted, no submissions were made in respect of this.
In particular, neither counsel differentiated between or suggested that there was any material difference in the applicable principles between those that would apply under s 118 Evidence Act and those which would apply under the general law. Accordingly, whilst I have expressed a provisional view on the matter, and found that the Evidence Act applies, I would be prepared in a later case to revisit the issue, having had the benefit of submissions.
His Honour noted submissions that the highest that could be said of the claim that the retainer was a personal one was that some of the documents contained references to matters which impacted upon the applicant's interests and which were directed to his position: at [10].
Black J observed that that of course was not inconsistent with advice being provided to the company, or to the company and, at its highest, also to the applicant: at [10].
In In the matter of Atlas Construction Group Pty Ltd (in liq) [2019] NSWSC 1656 (Re Atlas), Rees J, making reference to this aspect of the decision of Black J, observed that it may be necessary on applications such as this to adduce evidence going to the issue: at [16].
Mr Di Francesco submitted that the first retainer, albeit addressed to Mr Chadwick and Mr Boxsell, was at an address which apart from the actual street number (which he submitted was an error) I should infer was the principal place of business of the company at least from 1 April 2020, and in any event was not the residential address of either Mr Chadwick or Mr Boxsell.
He made further submissions regarding the extent of the retainer emphasising that the scope of work made reference to representing and advising "you" regarding corporate, contract and dispute resolution matters including advising "your companies and key staff" and emphasised that this applied to work regarding "all of your companies and related entities" including various listed companies and the company.
Contrary to the position in Equititrust (No 3) and Re Atlas, copies of the retainers have been provided here. The first retainer is relevantly addressed to Mr Chadwick and Mr Boxsell. The third page contains a box with a heading "[a]cceptance" and includes provision for Mr Chadwick and Mr Boxsell to sign accepting the terms of the retainer set out above.
The copy of the first retainer provided whilst signed by Mr Sewell on behalf of SKL is not signed by either of Mr Chadwick and Mr Boxsell. Whilst Mr Sewell in affidavit evidence referred to the two retainers and asserted that they "were entered into by the law firm and Mr Chadwick and Mr Boxsell and my clients (being Ms Grimshaw and Mr Chadwick)", he does not assert that the first retainer was signed.
There is no evidence from Mr Chadwick nor Mr Boxsell explaining the context in which they approached SKL.
The description of the scope of work in the first retainer is very broad.
Mr Di Francesco suggested I should read the scope of work broadly. Mr Hyde Page (unsurprisingly), on the other hand, suggested I should read the scope of works narrowly.
In particular, he suggested that there was a difference between the scope of work "applying to work regarding all of your companies…" from a potential retainer "applying to work for all your companies…".
Mr Hyde Page suggested that use of the word "regarding" was a reason for construing the retainer as being from Mr Chadwick and Mr Boxsell only, rather than from the company or the group of companies.
Mr Sewell in his affidavit drew attention to the fact that at the time of the first retainer Mr Chadwick and Mr Boxsell each owned one third of the shares in the company, and the other third was owned by GBW (being a company through which the company's former accountant operated).
Mr Sewell asserted that at the time of his engagement he was aware that his clients (which expression he uses to describe Ms Grimshaw and Mr Chadwick) had initiated proceedings against their former accountant.
I refer to this question below. However, there is a somewhat elusive character to Mr Sewell's description of his clients insofar as he includes Ms Grimshaw within that description at least in circumstances where she is not referenced at all in the first retainer.
Mr Sewell in evidence, which is limited under s 136 Evidence Act to his understanding, asserted that at all times his understanding of the first retainer was that he was instructed to provide advice to Mr Boxsell and Mr Chadwick about their business affairs generally which is why he asserts that in the "scope of work" an option was included to provide legal representation and advice to any of the companies.
He claims that at all times during the period when he was being engaged his understanding was that his clients' former accountants were regarded by his clients with hostility which understanding he said was based on his dealings with his clients.
Mr Sewell refers to proceedings against GBW. However, the interlocutory process that he annexes, which appears to have been a document filed in July 2019, is a process in which the company, CGB Services Pty Ltd (CGB Services) and others (the others being unspecified in the document) has commenced proceedings against GBW and others.
The interlocutory process refers to facts stated in the supporting affidavits of Mr Boxsell and Mr Chadwick being directors of the applicants. However, it proceeds to add the name of various other companies in the group including the company. The process seeks leave for the group companies to be joined with CGB Services (and unspecified others) as plaintiffs to the proceedings. He asserts that in light of the dispute with the former accountant in preparing the first retainer he intended that any provision of legal advice specifically to the company would be very limited.
The (July 2019) interlocutory process is an isolated document and is hardly a satisfactory evidentiary basis for determining the nature of any dispute or potential dispute between Mr Chadwick, Mr Boxsell and the company.
However, to the extent that it is relevant, the fact that the process aligns the interests of Mr Boxsell and Mr Chadwick with the company along with various other group companies, hardly, without any further context, supports the view that the company was not a party to the first retainer or that the first retainer did not include within its scope work for the company or for its benefit.
Mr Sewell further asserts that at no time did he intend to enter into a joint retainer with any of Mr Chadwick, Ms Grimshaw and Mr Boxsell and also the company for legal advice, and at the time of his initial engagement he was not aware of and did not foresee that SKL's legal fees would be subsequently paid by any particular company in the CGB Group.
Invoices were issued by SKL for accounting services and legal services from March 2020 until February 2021. They were paid for by the company in transfers from the company's bank account to SKL's trust account and then from SKL's trust account the fees were disbursed to pay SKL's invoices.
Mr Sewell refers to the fact that what he describes as some of the documents produced being the tax invoices and trust account statements are in the name of the company.
He accepts the fact that the trust account software (Open Practice) records the company's name in the "[r]ecord [k]ey". However, he draws attention to the fact that in the "[m]ain [d]etails" screenshot of the trust account software Mr Chadwick's name is recorded as being the client.
As against that, the address given to Mr Chadwick is the Kandos address being the principal place of business of the company.
Each of counsel made submissions regarding what could be gleaned from the screenshots of the accounting software.
There is no detailed evidence from Mr Sewell or anyone else regarding how the entries had been made into the software.
Mr Sewell asserted that by reference to an SKL "[c]urrent [r]ecord [a]udit [t]rail" that on 16 September 2020 the "DOCUMENTS TO NAME 1", which recorded the company as a client, was changed to Mr Chadwick's name.
He made an assertion in the affidavit that "[m]y view is that it became apparent that there was a mistake in the file opening that was rectified in September 2020 to ensure that invoices and trust documents were addressed to Mr Chadwick".
He goes on to say that:
"[i]n 2020 (and for the last six years) I have had all of my invoices and trust account documents prepared by my staff and not myself. I do not have any memory of being advised by my staff of any mistakes with the invoicing of the clients and my view is that this error was corrected by staff as part of their routine work."
Mr Di Francesco submitted that that particular evidence is just pure assertion: T 15. Further, he submitted that in circumstances where there is no evidence from any of the office staff the Court should not assume that the invoices to the company were a mistake. During the hearing, following that submission I indicated to counsel that I would simply read the evidence as an assertion subject to any other material that either counsel wished to draw to my attention to say that the assertion was well-founded or not: T 16.
I was not directed to any further particular material on the issue.
That evidence, albeit assertion, really points up the paucity of material before me.
The invoices, it seems, at least during the period covered by the disputed documents referred to 3 particular matter numbers being:
1. 1653 - Restructure of CGB group;
2. 1655 - Winding up proceedings against CGB Property Holdings Pty Ltd; and
3. 1661 - Accounting and Bookkeeping for restructure.
The documents over which privilege is claimed appear principally to relate to restructure of the CGB Group. In particular, items C, D, F, G, H, I and J all reference matter number 1653.
The impression I have is that all of the first 10 items relate to the structure of the CGB Group and at least in a material way to the company.
The invoices are addressed to the company at the address of the principal place of business.
It seems to me that there is a strong inference that the fact that the company paid invoices suggests that the retainer was jointly with the company. The authorities that Mr Hyde Page has referred to me do not preclude such a finding.
Ultimately, the question is a factual question.
A further matter which sits somewhat at odds with the assertion that Mr Chadwick and Mr Boxsell were the only so-called clients under the first retainer is that the correspondence which is the subject of the disputed materials does not bear that out.
SKL had significant correspondence with Ms Grimshaw from as early as 20 March 2020.
An issue which may well arise at some point is as to whether Ms Grimshaw was a client of SKL at an earlier point of time than 26 February 2021. However, that issue was not at least expressly argued before me.
At the very least, I am not satisfied that the first retainer was a retainer to which Mr Chadwick and Mr Boxsell were the only parties. I am not satisfied that the company was not a party to the first retainer.
I am not satisfied that the respondents have discharged the onus on establishing that the first retainer was only a retainer between Mr Chadwick and Mr Boxsell.
There is no doubt that at least from the time of the appointment of Mr Frisken as administrator, Mr Sewell was corresponding with the administrator and purporting to act for Mr Chadwick. However, that correspondence took place well after the time of the first retainer.
I do not regard correspondence in February or March 2021 annexed to Mr Sewell's affidavit as being materially relevant to explaining the nature of the first retainer in February 2020.
Apart from what appears under the heading "SCOPE OF WORK" in the first retainer, surprisingly there was a paucity of evidence bearing upon the purpose of the first retainer.
This is something that the respondents, or at least Mr Chadwick, would be able to explain. However, as noted, there is no evidence from him.
I have referred to the fact that the disputed documents all relate to matter number 1653 being "Restructure of CGB Group".
Mr Di Francesco submitted that what essentially happened was that advice was sought in respect of the business of the company and the staff of the company with a view to the business and the staff being restructured in a way such that the business and staff would go to RKE and that that it is in fact what occurred. Mr Hyde Page, as I understood him, did not dispute that that was in fact what had occurred.
Having regard to the paucity of evidence, the precise purpose of the individual communications regarding the disputed documents in question is somewhat elusive. Nonetheless, in light of what I have noted as to the nature of the restructuring and the fact that the fees were paid by the company, I am satisfied that, as a matter of substance, a material part of the first retainer involved advice regarding restructuring of the company and that the disputed material generally related to that purpose.
Aspects regarding joint privilege and common interest privilege were helpfully discussed by Brereton J (as his Honour then was) in Sharpe v Grobbel [2017] NSWSC 1065 (Sharpe v Grobbel). His Honour elaborated on the point made by Hallen J as noted above.
In particular, Brereton J summarised a number of principles as follows:
14. This issue arises because of the relationship between the parties at the time when the relevant communications took place, and the purpose of those communications. Where solicitors act for multiple parties jointly, there is by reason of the joint retainer no privilege as between those parties. The holders of a joint privilege have no confidence against each other: if they fall out and sue each other, they cannot claim privilege against each other in respect of communications made during the subsistence of the joint retainer before an actual conflict emerged, although they can maintain privilege against the rest of the world. This applies in connection with advice, as well as with litigation.
15. The principle is not confined to where there is a joint retainer, but extends to circumstances in which multiple parties have a common interest in the subject matter of the communication, although only one of them retains the solicitor. This feature was referred to by the Court of Appeal in Farrow Mortgage Services Pty Ltd (in liq) v Webb (emphasis added):
Two or more persons may join in communicating with a legal advisor for the purpose of retaining his or her services or obtaining his or her advice. The privilege which protects these communications from disclosure belongs to all the persons who joined in seeking the service or obtaining the advice. The privilege is a joint privilege. So it is also if one of the group of persons in a formal legal relationship communicates with a legal advisor about a matter in which the members of the group share an interest. Communications by one partner about the affairs of the partnership or a trustee about the affairs of the trust are examples. Implicit in the relationship is the duty or obligation to disclose to other parties thereto the content of the communication. Accordingly no privilege attaches to such communications as against others who, with the client, share an interest in the subject matter of communication. But the parties together are entitled to maintain the privilege "against the rest of the world": Phipson, par 20-28 and par 20-29.5 ...
16. The fact that the interests of two parties may potentially conflict does not prevent their having a sufficient common interest in the subject matter of the advice at the time it is sought to bring the principle into operation. If the two parties have a common interest in the communication at the time the relevant communication is created, it does not matter that they subsequently fall out, although each will be able to assert privilege against the other in respect of communications created after the falling out.
17. The principle is sometimes called "common interest privilege", and its invocation in this context has sometimes been described as using common interest privilege "as a sword" rather than as a shield; although the authors of Phipson on Evidence, in which this description originated, have now retreated from it. While the concept is related to "common interest privilege" properly so-called, by which privilege is not waived by disclosure of otherwise privileged communications to those with a "common interest", this is somewhat of a misnomer. Rather, the principle here under consideration describes circumstances in which a claim of privilege cannot be sustained, namely against a party who has a joint interest in the subject matter of the communication at the time that it comes into existence. Its availability depends upon the subject communications having been made by one party in furtherance of a joint interest, and in that sense on behalf of all those who share it. In a case where the documents contain legal advice, that joint interest must exist at the time the advice is sought. Thus both the nature of the relationship between those said to have a "common interest", and the purpose of the communication between one of them and the solicitor, are relevant to determining whether there is a relevant "common interest".
18. Whether there is a sufficient "common interest" in the relevant communications has to be decided on the facts of the individual case. However, the following passage in an earlier (14th) edition of Phipson, which is referred to in many of the authorities, is indicative of the circumstances in which as well as the basis on which a sufficient common interest may be found:
No privilege attaches to communications between solicitor and client as against persons sharing a joint interest with the client in the subject-matter of the communication, eg as between partners; a company and its shareholders; trustee and cestui que trust; lord and tenants of a manor as to customs of manor; a lessor and lessee as to production of the lease; reversioner and tenant for life as to common title; two persons stating a case for their joint benefit; or a husband and wife who are not genuinely, but collusively, in contest. Nor does any privilege attach as between joint claimants under the same client - eg between claimants under a testator as to communications between the latter and his solicitor.
Thus where two persons agree to divide the profits made by one of them on contracts made with third parties, the person who does not make the contracts is entitled to production from the person who does of, for example, the opinions of counsel relating to litigation between the contractor and a third party.
But where the communications relate to matters outside the joint interest, they are privileged even as against a person bearing the expense of the communications - eg communications between a plaintiff corporation and its solicitors, against a defendant ratepayer as to matters not connected with rates; or between a company and its solicitors consisting of confidential advice to the former in an action against a shareholder; or between a trustee and his solicitor as against the cestui que trust, where the communication is not made for the former's guidance in the trust, but to enable him to resist litigation by the latter; or where it concerns his character, not as trustee, but as mortgagee of the client.
19. In the current (18th) edition of Phipson, reference is made to Dennis & Sons v West Norfolk Farmers Manure & Chemical Cooperative Co Ltd, in which Simonds J held that shareholders who alleged that directors improperly exercised their powers were entitled to disclosure of a report by accounts obtained by the company in anticipation of the dispute, notwithstanding that it was privileged, on the basis that a beneficiary was entitled to see cases and opinions taken by a trustee for the purpose of the administration of the trust, though not for the purpose of the trustee's defence against litigation by a beneficiary. Then, in positing the question, what constitutes a joint interest for this purpose, the authors conspicuously refer to "the classic example of a company and its shareholders.
20. That the requisite common interest may exist between a company and its shareholders, but not when those communications relate to a suit between the company and the shareholder, accords with the common law right of a shareholder who has a particular interest in a particular dispute to inspect the documents of a company relevant to that dispute.
21. Moreover, directors are entitled, at common law, to access the books and records of the company as a necessary incident of the office of director, in order that they may properly perform their duties. The statutory right of access under Corporations Act, s 198F, now permits access for the purpose of legal proceedings to which a director or former director is or may become a party, notwithstanding that the director's purpose may be a private one. For present purposes I am content to accept, without deciding, that consistently with the authorities on s 247A, s 198F may not abrogate legal professional privilege and thus may not override legal professional privilege in respect of advice to the company in connection with a dispute between it and the director. But subject to that exception, a company cannot insist on privilege against its director (footnotes omitted).
Particular questions arise in relation to joint privilege and common interest privilege in respect of the relationship between a company and its directors.
It has been said that a company can only manifest its acts and intentions by the acts and declarations of human beings: FMS v Webb at 609A-B per Sheller JA (Waddell AJA agreeing) citing Black v Smallwood (1966) 117 CLR 52 at 61 per Windeyer J; Tesco Supermarkets Ltd v Nattrass [1972] AC 153 at 171 per Lord Reid.
Sheller JA noted that directors' knowledge of the decision to obtain advice and the contents of that advice cannot be treated as a disclosure to a party separate from the company itself. The directors receive and act upon the information as the mind and directing will of the company: FMS v Webb at 609A-B.
It has recently been observed that the relationship of company and director is an established category of relationship in which a sufficient commonality of interest will arise for the purpose of common interest privilege: see Cygnett Pty Ltd (ACN 106 996 114) v Souris [2020] FCA 1754 (Cygnett) at [16] per O'Callaghan J. Nonetheless, the position appears to be somewhat more nuanced.
In Farrow Mortgage Services Pty Ltd v Webb (1995) 13 ACLC 1329 (Webb) at 1332, Young J (as his Honour then was) made the general observation that although the interests of company directors and the company itself need to be kept distinct for most purposes, for many purposes their interests coincide and indeed may coincide for different reasons.
His Honour stated at 1332:
Although the interests of company directors and the company itself need to be kept distinct for most purposes, for many purposes their interests coincide. They may coincide for different reasons. One example is where a company director has been convicted of some offence which would disqualify him from holding office. The company wishes to apply to the court to remove his disqualification because it considers that he is the only person with a particular expertise that it needs, whereas the director wants to be able to earn income. Although their interests are separate and their motives are different, they have a joint interest in obtaining the same result. Whilst a company is in life, the obligation between company and directors is, as Gummow J said in Hartogen Energy Ltd & Ors v Australian Gas Light Co & Ors (1992) 10 ACLC 1,324; (1992) 8 ACSR 277, ACLC 1,330-1,331; ACSR 286, a duty of mutual confidentiality. What is knowledge of the company is usually knowledge of the directors and vice versa, and they mutually have to hold the information confidentially. Where there is a closely held corporation, where the directors and the corporators and the corporation itself are substantially identical, it seems to me artificial in the extreme to dissect the entities and to say that the company alone has privilege in communications from lawyers, which the company intended would be obtained for the benefit of both itself and the directors. Despite the paucity of evidence, it seems to me in the instant case that the information was sought on behalf of both the company and the directors and that there is a joint privilege.
It may be noted that in Webb there was significant evidence which bore upon the nature of the advice being sought and to whom it was given. His Honour in this regard stated (at 1332):
In the instant case, the advice shows that three subject matters were being addressed; (a) the affairs of the company; (b) the duties of the directors of the company; and (c) the potential liability of the directors to third parties. The advice given under (a) was primarily given to the company, though the directors were doubtless interested as directors of the company; (b) was given to both; and (c) is a matter which really only concerned the directors in their personal capacity. The advice given by Mr Willmott in particular does distinguish between "your client" and "your clients". Mr Cashion sought to escape from this result by saying that under s 592 of the Corporations Law the company was jointly and severally liable with the directors, so that it was in the company's interest to know whether s 592 was applicable. With respect, this argument is specious. The company was already liable for the whole debt and the effect of s 592 is to strip away the corporate veil and to make the directors liable as well: it does not increase the company's exposure.
On appeal, in FMS v Webb, Sheller JA (Waddell AJA agreeing) noted that the privilege attaching to legal advice obtained by the company is not lost when the advice is disclosed to its directors, but this is not because of their common interest: at 608G-609A.
In Equititrust (No 3), Markovic J observed that whilst directors are the guiding mind of the company and will receive and act on advice in that capacity, that does not mean that there is necessarily a commonality of interest. Her Honour further noted that the fact that the company can only act through its directors does not give rise to a common interest: at [28].
It appears clear that a company and a director may not be said to have a common interest if in the circumstances it could be said that their interests are adverse to one another.
Importantly, O'Callaghan J in Cygnett noted that the authorities make clear that the ultimate question is whether at the time the communication is made, there is an express or implied obligation of confidentiality and that a Court should not refuse to imply such an obligation if the circumstances otherwise justify it, merely on account of the potential for some sort of change in the parties' relationship at a later point: at [24].
This is the very point made by Brereton J in Sharpe v Grobbel at [14].
The question of whether the privilege is joint or whether there is a common interest privilege is ultimately a question of fact. This is evident from the approach of the Court of Appeal in FMS v Webb (see also Re Atlas at [3]).
A number of cases have, on the facts, concluded that directors shared a common interest with the company: see Sharpe v Grobbel at [30]-[31]; FMS v Webb at 618D-E; Re Connective Services Pty Ltd (No 2) [2018] VSC 128 at [59] per Robson J.
There does not appear to be any logical or other cogent reason as to why the inverse should not also be possible, namely that the company shares a common interest with its directors, if the facts allow that conclusion.
There are cases which on the facts suggest that advice regarding corporate restructure may not attract the protection of the privilege: e.g. Commissioner of Taxation (Cth) v Pratt Holdings Pty Ltd [2005] FCA 1247; (2005) 225 ALR 266 at [56] per Kenny J.
In some cases, whether the advice is legal advice or commercial advice may be impossible to disentangle: e.g. DSE (Holdings) Pty Ltd v InterTAN Inc (2003) 135 FCR 151; [2003] FCA 1191 (DSE (Holdings)) at [45] per Allsop J (as his Honour then was).
The distinction, as with other aspects of privilege indicated above, is ultimately a question of fact: DSE (Holdings) at [94].