Consideration
70 I accepted that in relation to the Centro/External Lawyers Communications and the Solicitor Notes of Interviews and Meetings, the communications concerned occurred between a client and its solicitor acting in a professional capacity with reference to transactions covered by the solicitors' retainer. Evidence of those facts was either expressly given or may be inferred from the evidence given by the solicitors involved who deposed to the general circumstances in which the communications occurred as well as to their understanding of the purpose of those communications. Those facts, for reasons I have already dealt with, may be accepted as demonstrating on a prima facie basis that the communications occurred for the dominant purpose of the lawyers providing, and Centro obtaining, legal advice. It is well established that, subject to the dominant purpose test being met, legal professional privilege will extend to communications made by officers or employees of the client that relate to the information sought by the client's legal advisor to enable him or her to advise: AWB at [44] (Principle (9)). The evidence given by the solicitors in relation to communications received by them from Centro, in the context of the solicitors acting in a professional capacity in pursuance of a retainer to give legal advice, is sufficient to support a finding that, the communications received by them were provided to them to enable the giving of legal advice.
71 Legal professional privilege also protects the disclosure of documents that record legal work carried out by the lawyer for the benefit of the client such as memoranda, collations and summaries of documents, chronologies and the like, whether or not they are actually provided to the client: AWB at [44] (Principle (8)). So long as the dominant purpose test is satisfied, legal professional privilege will extend to the work product (including draft advices) that fall within the Solicitors Internal Communications subcategory identified above. Those communications were created by lawyers in a professional capacity with reference to the performance of work covered by the lawyers' retainer to give legal advice, and in the absence of contrary indications, must be assumed to be for the purpose of the lawyers providing legitimate legal advice to Centro: AWB at [44] (Principle (4)).
72 So long as the dominant purpose requirement is satisfied, communications between a solicitor and a third party (such as an accountant or another solicitor) will be protected by legal professional privilege where the function of the third party was that of enabling the client of the solicitor to obtain legal advice from the solicitor: State of New South Wales v Betfair Pty Ltd (2009) 180 FCR 543, at [29]-[33] (Kenny, Stone and Middleton JJ). The evidence in relation to the Centro Solicitors/KPMG Communications (including the privileged terms of the Freehills/KPMG Retainer and the Middletons/KPMG Retainer) and the evidence in relation to the Middletons/Other Solicitors Communications is sufficient to demonstrate that the function of those communications was to enable Centro to obtain legal advice from Freehills pursuant to the Freehills Retainer or from Middletons pursuant to the Middletons Retainer. Absent any contrary indications, that evidence is also sufficient to permit a conclusion, at least on a prima facie basis, that the dominant purpose for the creation of those communications was for Centro to obtain, and for Freehills and Middletons to provide, legal advice. I deal further below with the nature of the advice in question and why I was satisfied that the advice to be provided with the assistance of KPMG was legal advice.
73 Communications between Centro and its in-house lawyers is the subject of the final subcategory - the Centro/Internal Lawyers Communications. The evidence in relation to those communications passing between Centro and its internal lawyers takes a similar form as that earlier dealt with in relation to the Hutchinson Records. However, the context of the communications is somewhat different. While the context is not confined to communications between an internal lawyer and a Board member at a Board meeting, these were communications between a corporation and its independent legal adviser in furtherance of the provision of legal advice by an external solicitor. Unless contrary indications otherwise exist, the evidence should be regarded as sufficient to establish, on a prima facie basis, that the dominant purpose for the making of those communications was for its lawyers to give, and for Centro to obtain, legal advice.
74 The prima facie position as to dominant purpose which I have determined that the evidence demonstrated, may be displaced. That may be the case where the evidence points to another purpose or purposes held by the client which suggests an alternative purpose in relation to the whole or perhaps a part of the communications in question. I accepted PWC's contention that, ultimately, it is Centro's purposes which need to be ascertained.
75 PWC identified an alternative or additional purpose to any purpose Centro may have had to obtain legal advice, which it described as the conduct of an accounting inquiry or investigation to determine the correct classification of debt for the operational purpose of Centro discharging its statutory obligations in relation to its accounts.
76 I accepted that Centro held such a purpose. I found that in furtherance of that purpose Centro management conducted, at least to some extent, its own investigations including with some assistance from KPMG. The extent of management's investigations was not clear. The 11 January 2008 Minutes of the Board Audit and Risk Management Committee suggests that those investigations occurred at least in January 2008 but there was evidence that Mr Belcher (Centro's Group Financial Accountant) was speaking to KPMG about how he should interpret accounting standards in "January/February 2008".
77 Largely by reference to Mr Cooper's evidence, I found that on or about 15 January 2008, Centro determined that a review be conducted of the classification of debt which would be independent of management. On or just prior to 17 January 2008, CNP retained Freehills. The subject matter of that retainer was the provision by Freehills of legal advice over a range of issues and circumstances. However, I inferred that CNP engaged Freehills including for the purpose of pursuing its desire for an investigation independent of management into the classification of debt. I further found that in doing so, it is probable that CNP expected that KPMG would be retained by Freehills to assist Freehills in providing advice to CNP pursuant to the Freehills Retainer.
78 Middletons were retained by CER from on or about 31 January 2008. The subject matter of that retainer was the provision by Middletons of legal advice over a range of issues and circumstances but again I inferred that CER engaged Middletons including for the purpose of there being an investigation independent of management of the classification of debt. I further inferred that in doing so, CER expected that KPMG would be retained by Middletons to assist Middletons in providing advice to CER pursuant to the Middletons Retainer.
79 The findings I made and have just set out did not persuade me that the prima facie position I found in relation to dominant purpose should be displaced, in the sense that I should no longer have been satisfied that Centro's burden on that issue had been discharged. I reached that conclusion primarily because I was not satisfied that Centro's purpose in seeking an investigation into, and advice to determine, the correct classification of its debt detracted from what the evidence otherwise demonstrated to have been its purpose of seeking legal advice.
80 As I have said, the concept of legal advice is fairly wide. It extends to professional advice as to what a party should prudently and sensibly do in the relevant legal context; but it does not extend to advice that is purely commercial or of a public relations character: AWB at [44] (Principle (7)).
81 Advice about the proper classification of debt by a corporation with statutory reporting obligations in relation to its accounts seems to me to be advice as to what a party should do in a relevant legal context. It may be advice which requires the assistance of an accountant familiar with the application of accounting standards but that alone does not take the advice outside of the concept of legal advice. As Stone J said in Pratt Holdings Pty Ltd v Commissioner of Taxation (2004) 136 FCR 357 at [103]:
The complexity of present day commerce means that it is increasingly necessary for a client to have the assistance of experts, including financial experts such as accountants, in formulating a request for legal advice and in providing legal advisers with sufficient understanding of the facts to enable that advice to be given. This much was recognised by Taylor LJ in Balabel.
82 It was my view that, advice on the correct classification of Centro's debt was likely to require the exercise of legal skills and expertise. Although the evidence before me as to the nature of the exercise involved was scant, PWC's own submissions make good the proposition that the exercise involved the legitimate participation of lawyers providing legal expertise.
83 It is necessary to recount PWC's description of the nature of the accounting inquiry it says was required by Centro. The description given was not relevantly contested and I treated it as part of the uncontroversial factual context in which this application was to be determined. As I have earlier stated, accounting standard AASB101 was a relevant standard on the classification of debt. In a consideration of whether a debt had been misclassified, it was necessary for Centro to consider the application of accounting standard AASB101. Under that standard, a debt is to be treated as a current liability unless there existed a right to repay the debt more than 12 months after the date on which the relevant financial accounts were prepared. In the absence of a contractual right to repay at or after that time, a debt ought be shown as a current liability.
84 PWC contended that, in that context, an inquiry would need to investigate in relation to the various financing facilities in question, their terms and their ability to be renewed. That requirement, PWC contended, explained the need to inquire about what the factual position was in relation to the various facilities including by interviewing Centro's employees about communications with financiers.
85 Questions as to the meaning of the terms of loan agreements or other financing facilities and whether and when obligations to pay or rights to defer payment either exist or arise provide fertile and legitimate ground for the exercise of legal expertise. It may well be the case that a mixture of legal and accounting expertise was required, but there is nothing artificial or contrived in engaging a lawyer where the exercise is likely to require significant legal expertise. Such a process may well involve a review of documentation and interviews with persons involved in various transactions, but as Young J said in AWB at [45], such activities are not to be readily separated from the ultimate legal advice given by lawyers. To do so would be to take an unduly narrow approach to the scope of legal advice privilege.
86 Furthermore, it needs to be appreciated that the advice sought by Centro as to the proper classification of its debt was not sought in a vacuum. The advice sought was sought in the context of Centro seeking other and related advice as to legal issues and concerns which flowed out of the same topic. Those circumstances serve to support the conclusion that the advice sought as to the correct classification of debt should, together with the other advice sought, be characterised as Centro seeking legal advice, that is, professional advice as to what Centro should prudently or sensibly do in a relevant legal context.
87 For those reasons, I was not satisfied that Centro's purpose in engaging Freehills and Middletons in relation to the question of the correct classification of its debt, was not for the purpose of obtaining legitimate legal advice.
88 In seeking advice as to the correct classification of its debt there can be no doubt that Centro held the operational purpose of wanting to utilise that advice to correct its classification of debt if that was required. But the existence of that operational purpose does not diminish the dominant purpose of obtaining legal advice. Legal advice is rarely sought in a commercial context merely for the sake of receiving advice. It is almost always sought by a client for the purpose of applying the advice to a commercial or other operational purpose. The existence of a posterior operational purpose of that kind is of no moment where the client's purpose in engaging its lawyer is to seek legal advice and assistance.
89 The facts of this case are readily distinguishable from those dealt with by Robson J in Perry v Powercor Australia Ltd [2011] VSC 308. PWC placed much reliance on that decision and the fact that it was subsequently upheld by of the Court of Appeal of the Supreme Court of Victoria in Powercor Australia Ltd v Perry [2011] VSCA 239.
90 Powercor involved the question of whether investigative reports prepared by technical experts into the course of a major bushfire were privileged. It was contended that the investigative reports were commissioned by Powercor so that its lawyers could assess how Powercor might deal with anticipated litigation. Robson J concluded that Powercor had multiple purposes in commissioning the reports, including the operational purpose of finding out what had happened and the role Powercor's assets had played in the fire, in circumstances where no other process of investigation had apparently been engaged in by Powercor. In the absence of an explanation by Powercor of the variety of uses to which the information would be put and why it was needed, Robson J was not satisfied that Powercor had discharged its burden of satisfying the court that its dominant purpose in obtaining the investigative reports was a privileged purpose.
91 Powercor is best understood as an example of the kind of non-privileged investigation referred to by Stephen, Mason and Murphy JJ in Grant v Downs (1976) 135 CLR 674 at 687. That is, an investigation carried out for the purpose of arming the central management of a corporation with actual knowledge of what its agents had done. Carter Holt Harvey Wood Products Australia Pty Ltd v Auspine Ltd [2008] VSCA 59 provides another such example.
92 Unlike the situation in Powercor, the evidence before me showed that what had happened in relation to the classification of debt had been at least the subject of an initial investigation by management. Further, insofar as it can be suggested that the investigation conducted by Freehills and Middletons nevertheless had a purpose of informing management of what had happened in relation to the classification of debt, the involvement of lawyers and the use of legal expertise and assistance was, for the reasons referred to above, a necessary and legitimate part of that process and of investigating Centro's obligations and whether or not its classification of debt was correct. This was not a situation where the investigative report of non-lawyers is sought to be protected from disclosure simply because a lawyer has been instructed to evaluate the report once prepared and provide legal advice. If I had come to the conclusion that the involvement of Freehills and Middletons in the investigation of the correct classification of debt was artificial, contrived or was an exercise in which the involvement of a lawyer was objectively unjustified, I would likely have reached a different result.