Ingot & Ors v Macquarie & Ors

FILE NUMBER(S) : SC 50169/01 F M Douglas QC/W G Muddle/B F Katekar (for plaintiffs) A S Bell (for 1st, 2nd and 3rd defendants) COUNSEL : I Pike (5th, 7th and 8th defendants and mention for the 9th defendant) E A Collins (12th defendant) T Bathurst QC/P Brereton (13th defendant) F Gleeson/J Watson (14th defendant) Deacons (plaintiffs) Mallesons Stephen Jaques (Macquarie Parties) Atanaskovic Hartnell (4th defendant) Colin Biggers & Paisley (5th, 7th and 8th defendants and mention for the 9th defendant) M D Nikolaidis & Co (11th defendant) SOLICITORS : Minter Ellison (12th defendant) Blake Dawson Waldron (13th defendant) Henry Davis York (NCRA) TressCox (Guy Carpenter)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST

10 November 2004 Ex tempore (revised 11 November 2004)

50169/01 INGOT CAPITAL INVESTMENTS PTY LIMITED & ORS v MACQUARIE EQUITY CAPITAL MARKETS LIMITED & ORS JUDGMENT (On claim for privilege) 1 HIS HONOUR: By Notice to Produce served on 8 November 2004, the Macquarie Parties require the plaintiffs to produce, among other things, the following documents:

"3. All documents referring to or recording the advice from Mr Douglas QC and Junior Counsel referred to in paragraph 23 of Mr Bonner's affidavit." 2 That request was made in the context of the seventh application by the plaintiffs to amend their Summons, which application is supported by an affidavit of their solicitor, Mr Grant Robert Bonner, sworn 5 November 2004. 3 Paragraph 23 of that affidavit (which is the paragraph referred to in paragraph 3 of the Notice to Produce) reads as follows: "23. Having taken advice from Mr Douglas and Junior Counsel, and having considered the material myself, I have formed the view that it is appropriate that the allegations of involvement by the Macquarie Parties in the contraventions by NCRH be reinstated, and that similar allegations be made against the other defendants and in particular, PWC and Phillips Fox in respect of Mr Mutton's involvement as well as that of Mr Peck." 4 The Macquarie Parties, in support of their claim that privilege did not attach to the documents, having regard to the use that (they said) was sought to be made of them, referred to my decisions in Singapore Airlines v Sydney Airports Corporation [2004] NSWSC 380 and Gordian Runoff v Price [2004] NSWSC 600. 5 In the authorities referred to, in particular, in the former of those judgments (Singapore Airlines at [55]), I concluded that the balance of authority favoured the proposition that the common law test in relation to waiver of privilege, as enunciated most recently in Mann v Carnell (1999) 201 CLR 1, should be applied to the statutory concept of consent referred to in s 122(1) of the Evidence Act 1995. 6 I said that, in asking whether there has been consent for the purposes of s 122(1), consent included implied as well as express consent and that the common law test remained applicable to ascertain whether there had been implied or imputed consent. 7 For the plaintiffs, Mr Muddle of Counsel submitted that, to the extent that what I have said in Singapore Airlines took the question raised by s 122(1) beyond the limits of the concept of express permission in s 122(2), then it amounted to an impermissible gloss on the language of the former subsection. He relied on the decision of Rolfe J in Ampolex Ltd v Perpetual Trustee Co (Canberra) Ltd (1996) 40 NSWLR 12, and on the decision of Giles J in NRMA Ltd & Ors v Morgan & Ors (No 2) [1999] NSWSC 694. 8 I do not think that the primary position taken by the plaintiffs is correct. In particular, I note that Rolfe J in Ampolex and Giles J in NRMA considered the matter by reference to s 122(2). It is clear that s 122(2) is not applicable in the present case because on no basis has there been knowing and voluntary disclosure of the substance of the advices to which paragraph 3 of the Notice to Produce is directed. 9 It does not seem to have been put to their Honours that the alternative argument based on subsection (1) might have applied and their Honours do not appear to have considered the matter by reference to the factors which, in Singapore Airlines and in the decisions referred to in that decision, I thought might apply to the s 122(1) test. That does not mean that the Macquarie Parties are entitled to the documents. 10 The question, as I said in Singapore Airlines, is to be answered, not by reference to considerations of fairness, but by reference to whether the conduct of the party prima facie entitled to the privilege in dealing with the privileged material is inconsistent with the continued maintenance of confidentiality. 11 In Singapore Airlines, the case was clear. The party entitled to the privilege had made use of what was prima facie privileged in a way that could not be said to be consistent with the continued maintenance of confidentiality. 12 The position was equally clear in Gordian Runoff, where the question of state of mind lay at the heart of the particular issue and where the party entitled to the privilege had acted in a manifestly inconsistent way in, on the one hand, relying on the substance of the privileged material in support of its position in the litigation and, on the other, trying to maintain that privilege. 13 The question in the present case is whether Mr Bonner's state of mind, and the relevance of the advice from counsel in the formation of that state of mind, is so central that paragraph 23, referring only to the advice of counsel, (for present purposes) amounts to a consent, an implied or imputed consent to the waiver of privilege. 14 In Garratt's Ltd v Thanga Thangathurai [2002] NSWSC 39, (a decision I relied upon in Singapore Airlines), Bergin J referred to the relevant test as that being enunciated by Hodgson CJ in Eq in Wayne Lawrence Pty Ltd v Hunt (19 October 1999, unreported). Her Honour set out at [64] the relevant portion of his Honour's decision: "Standard Chartered was decided before the introduction of the Evidence Act 1995 (NSW). However after the introduction of the Act Hodgson CJ in Eq. in Wayne Lawrence Pty Limited v Hunt (t/as Hunt Musgrave and Peach) NSWSC, unreported, 19 October 1999 said at para 12: It does not seem to me that the assertion of a belief must, in all the circumstances, be taken as consenting to evidence being led of any legal advice or confidential communication that could be relevant to whether such belief was held or the reasonableness of such belief. It seems to me that factors relevant to whether that consent is to be considered as having been given, or whether privilege is taken to have been waived, would include the significance to the belief to the case as a whole; the relevance of the reasonableness of the belief to the case as a whole; the probability or otherwise of the legal advice being relevant to the holding of the belief, or being relevant to its reasonableness; and in circumstances where the court inspects the legal advice in question in order to make a decision, the extent to which the legal advice does in fact bear upon the holding of the belief or its reasonableness, and the extent to which the legal advice relevant to those matters is inextricably bound up with the legal advice going to other questions as to which there has been no consent or waiver. It seems to me that, on the basis of all those matters at least, the court has to make a judgment as to what is reasonable and what is fair in the particular case." 15 Her Honour said at [69] that the question before her was to be resolved by applying the guidance given by Hodgson CJ in Eq in Wayne Lawrence. I propose to adopt that course in the present case. 16 I am of the view, despite the submissions of Mr Muddle to the contrary, that what his Honour said (expressed in relation to the centrality of the issue to the issues in the proceedings) can be applied by parity of reasoning to an interlocutory application such as this. 17 However, applying that test, I do not think that paragraph 23, or the state of mind of Mr Bonner referred to in it, can be regarded as so central to the present issue that the mere reference to the taking of advice can be seen as waiving privilege in that advice. Far less do I think that the fact of taking advice possesses the necessary central importance to which the Chief Judge referred. 18 It is undoubtedly correct to say, particularly having regard to some submissions advanced for the Macquarie Parties, that the reasons for the attitude now taken by the plaintiffs, in relation to their application to amend, are of some importance. It is undoubtedly correct to say that Mr Bonner's view, as the solicitor for the plaintiffs, is a matter to be taken into account in weighing the various considerations that will bear upon the disposition of the application for leave to amend. 19 However, particularly bearing in mind that the advice may (and perhaps is likely to) bear not just upon the application for leave to amend, but upon the plaintiffs' prospects in the proceedings overall, and bearing in mind that this is an interlocutory application and not a final hearing, I do not regard paragraph 23 as waiving privilege or, in the terms of s 122(1), as indicating at least implied or imputed consent to disclosure. 20 I therefore uphold the plaintiffs' claim of privilege in relation to the documents referred to in paragraph 3 of the Notice to Produce.

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