KS v Prime Capital Securities Pty Ltd

SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

Case Title: KS v Prime Capital Securities Pty Ltd (No 4) Citation: [2025] ACTSC 458 Hearing Date: 10 October 2025 Decision Date: 14 October 2025 Before: Mossop J Decision: (1) The plaintiff has first access to the material produced in response to the subpoena identified as SC3200190 including those in the envelope marked privileged until 12pm on 15 October 2025 and, unless any further unresolved and contested claim of privilege is identified by the plaintiffs, thereafter both parties have access to the documents. (2) In the event that any unresolved claim of privilege is identified by the plaintiffs, the documents the subject of the claim are to be identified and all other documents produced are to be available for inspection by the defendant pending resolution of the claim. (3) Liberty to apply is granted up until 17 October 2025 to apply to Mossop J for the resolution of any unresolved and contested claim of privilege in relation to the documents produced pursuant to subpoena SC3200190. (4) Each party is to have access to the documents from the times indicated in these orders. (5) The costs of the application in proceeding dated 22 September 2025 are the defendant’s costs in the cause. Catchwords: PRACTICE AND PROCEDURE – LEGAL PRIVILEGE – Subpoenas – where defendant sought access to file notes said to record advice provided by plaintiffs’ solicitor – where first plaintiff’s lack of commercial understanding in issue in substantive proceedings – advice about the agreement in question (or similar transactions) is relevant to that issue – implied waiver – unjust to withhold documents from defendant PRACTICE AND PROCEDURE – SUBPOENAS – Subpoenas following discovery – where discovery sought in too-narrow terms – where subpoena subsequently issued to capture other relevant documents – in the circumstances, subpoena not oppressive or an abuse of process Legislation Cited: Australian Securities and Investments Commission Act 2001 (Cth), s 12CB National Consumer Credit Protection Act 2009 (Cth), Sch 1 (National Credit Code) Cases Cited: Esso Australia Resources Pty Ltd v BHP Billiton Petroleum (Bass Strait) Pty Ltd [2007] VSCA 224 Mann v Carnell [1999] HCA 66; 201 CLR 1 Parties: KS (by her litigation guardian A Torline) (First Plaintiff) Nusage Pty Ltd in its own capacity and as trustee for the Nusage Trust (Second Plaintiff) Prime Capital Securities Pty Ltd (Defendant) Representation: Counsel Z Mason (Plaintiffs) D Robens (Defendant) Solicitors Adero Law (Plaintiffs) Lexmerca Lawyers (Defendant) File Number: SC 140 of 2024 MOSSOP J: Introduction

1. KS, who sues by a litigation guardian, alleges that she has been diagnosed with multiple serious psychiatric disabilities, including: (a) schizophrenia with symptoms of hallucinations, delusions and disordered thinking; (b) borderline personality disorder; (c) obsessive-compulsive disorder; (d) generalised anxiety disorder; (e) major depressive disorder; and (f) delusional disorder.

2. She and a company of which she was the sole director and shareholder, Nusage Pty Ltd (the company), entered into a Loan, Security and Guarantee Deed (the loan agreement) for the provision of a loan by the defendant, Prime Capital Securities Pty Ltd (Prime). The company was the borrower and KS was a guarantor. The loan was defaulted upon, the defendant obtained an order for the possession of the premises that were the security, and the premises have been, or shortly will be, sold.

3. She and the company have brought proceedings against Prime seeking relief in relation to the loan agreement.

4. Despite the structure of the formal documents giving rise to the transaction being intended to avoid the application of the National Credit Code (Cth) (contained in Sch 1 to the National Consumer Credit Protection Act 2009 (Cth)), the plaintiffs claim that the Code did in fact apply, that Prime breached the terms of the Code in a variety of ways, and that Prime’s conduct was unconscionable within the meaning of s 12CB of the Australian Securities and Investments Commission Act 2001 (Cth) and unconscionable in equity.

5. There is currently a dispute between the parties as to whether or not the plaintiffs have waived privilege over four file notes prepared by a solicitor who acted for the plaintiffs (the solicitor) in relation to the entry into the loan agreement. The documentation of the loan agreement includes a statutory declaration by KS (witnessed by the solicitor) that KS had the opportunity to obtain, and had obtained, legal advice from an independent Australian legal practitioner prior to executing the documentation as to the nature and effect of the documents and her obligations under them.

6. Many documents from the records of the solicitor were provided by way of discovery by the plaintiffs. Subsequent to discovery, Prime issued a subpoena for the records of the solicitor and amongst those records are four file notes which were not previously provided by way of discovery. The position of the plaintiffs was that these file notes were the subject of legal professional privilege and that the commencement of proceedings and the making of the allegations involved in those proceedings did not waive that privilege.

7. Strangely, although the relevant privilege was that of the plaintiffs, the orders of the Registrar precluded the plaintiffs from having access to the documents which had been produced by the solicitor. It is only by inference that the parties and the court have identified the documents the subject of the claim in relation to which there is a dispute.

8. I have not inspected the relevant documents. However, the evidence as to their contents is contained in the affidavit of the plaintiffs’ solicitor in the present proceedings, which is as follows: The other 4 file notes (which I understand are in the bundle) are of conversations between [KS] and [the solicitor] or her staff and pertain to the property purchase and the procurement of finance to complete the purchase but do not include information or advice in relation to the Defendant’s Loan Agreement.

9. The plaintiffs accepted that the material would satisfy the threshold of relevance but did not accept that mere relevance was sufficient to mean that the maintenance of the proceedings resulted in privilege being waived. The plaintiffs’ submissions focused on the limited allegation made at [18] of the Amended Statement of Claim, which provides: The Plaintiffs did not receive legal advice from an independent Australian Legal Practitioner, prior to executing the Loan Agreement, as to the nature and effect of the Loan Agreement.

10. The plaintiffs accepted that, having regard to that allegation, privilege would not be maintainable over documents evidencing the giving of any such advice. However, they said that the file notes in question do not record such advice. As I understand it, that is because the documents do not disclose advice “as to the nature and effect of the Loan Agreement”.

11. On the other hand, Prime contended that, if the documents disclosed advice given to the plaintiffs in relation to other matters relevant to the transaction entered into, including in relation to other attempts to obtain finance, then it would be unfair, having regard to the allegations made in the pleadings, for the plaintiffs to be able to pursue their claim without disclosing that material.

12. Prime pointed to the allegations for the purposes of the claim of unconscionability that include the allegation that KS had “a lack of commercial understanding” and that the lack of understanding meant that she did not appreciate that service of the loan would be impossible and that a default under the loan would mean a loss of equity in the property as a result of interest and penalty charges. Prime submitted that, in order to be able to fairly respond to the plaintiffs’ claim, it would need access to the communications from the solicitor relating to the acquisition of the property and other advice given in relation to attempts to obtain finance as they may cast light upon the special disadvantage and unconscionability issue, even if not directly relevant to the advice given about the terms of the loan agreement itself.

Decision

13. In Mann v Carnell [1999] HCA 66; 201 CLR 1 at [28]-[29], a majority of the High Court identified the principles relevant to waiver of legal professional privilege as follows: At common law, a person who would otherwise be entitled to the benefit of legal professional privilege may waive the privilege. It has been observed that “waiver” is a vague term, used in many senses, and that it often requires further definition according to the context. Legal professional privilege exists to protect the confidentiality of communications between lawyer and client. It is the client who is entitled to the benefit of such confidentiality, and who may relinquish that entitlement. It is inconsistency between the conduct of the client and maintenance of the confidentiality which effects a waiver of the privilege. Examples include disclosure by a client of the client’s version of a communication with a lawyer, which entitles the lawyer to give his or her account of the communication, or the institution of proceedings for professional negligence against a lawyer, in which the lawyer’s evidence as to advice given to the client will be received. Waiver may be express or implied. Disputes as to implied waiver usually arise from the need to decide whether particular conduct is inconsistent with the maintenance of the confidentiality which the privilege is intended to protect. When an affirmative answer is given to such a question, it is sometimes said that waiver is “imputed by operation of law”. This means that the law recognises the inconsistency and determines its consequences, even though such consequences may not reflect the subjective intention of the party who has lost the privilege. Thus, in Benecke v National Australia Bank [(1993) 35 NSWLR 110], the client was held to have waived privilege by giving evidence, in legal proceedings, concerning her instructions to a barrister in related proceedings, even though she apparently believed she could prevent the barrister from giving the barrister’s version of those instructions. She did not subjectively intend to abandon the privilege. She may not even have turned her mind to the question. However, her intentional act was inconsistent with the maintenance of the confidentiality of the communication. What brings about the waiver is the inconsistency, which the courts, where necessary informed by considerations of fairness, perceive, between the conduct of the client and maintenance of the confidentiality; not some overriding principle of fairness operating at large. (Footnotes omitted.)

14. The decision was applied in Esso Australia Resources Pty Ltd v BHP Billiton Petroleum (Bass Strait) Pty Ltd [2007] VSCA 224 at [14]. That was a case in which Esso had pleaded a claim for reimbursement of $31 million in legal costs which were said to be expenditures made as part of a joint undertaking governed by an agreement. The question was whether or not pleading that the legal costs were expenditures made as part of that joint undertaking was such as to waive legal professional privilege in the documents generated in the course of incurring those legal costs. In addressing that issue, the Victorian Court of Appeal said (at [14]): That a party may waive privilege by the mere institution of proceedings is not in doubt. The second of two examples of implied waiver given by the High Court in Carnell was that of a client instituting proceedings against a lawyer for professional negligence. By that conduct, the client waives privilege, and the lawyer can give evidence as to advice given to the client. The case cited in Carnell was Lillicrap v Nalder & Son (a firm) [[1993] 1 WLR 94], in which Dillon LJ adopted the following formulation of the scope of the implied waiver: A client who sues his solicitor invites the court to adjudicate the dispute and thereby … waives privilege and confidence to the extent that is necessary to enable the court to do so fully and fairly in accordance with the law including the law of evidence. Russell LJ proposed the following test: … [B]y bringing civil proceedings against his solicitor, a client impliedly waives privilege in respect of all matters which are relevant to the suit he pursues and, most particularly, where the disclosure of privileged matters is required to enable justice to be done. (Footnotes omitted. Emphasis in original.)

Abuse of process allegation

21. As will be apparent, what I have said addresses the substance of the privilege issue that exists between the parties. However, the plaintiffs had raised, as a preliminary point, that the service of the subpoena upon the solicitor amounted to an abuse of process. That was because the plaintiffs had already provided discovery in the categories which had been agreed between the parties. The issuing of a subpoena was therefore said to be a direct attempt to get around any limitation on that discovery in circumstances where it had not been demonstrated that discovery was inadequate.

22. The manner in which the plaintiffs had responded to the obligation to discover documents in particular categories included obtaining documents in those categories from the solicitor. They were then disclosed pursuant to the obligation to do so. The four relevant file notes were not discovered because they were outside the relevant category of discovery which was limited to all documents “passing between” the plaintiffs and the solicitor in a particular period.

23. The plaintiffs sought to characterise the issuing of a subpoena which was in broader terms and sought all documents “in relation to” KS or the company as “a scarce[ly] disguised attempt to secure discovery by more favourable means”. They contended that it was oppressive to cause the solicitor and the plaintiffs to consider afresh the broad subpoena rather than discrete questions of discovery and privilege.

24. I do not accept that the course adopted by the defendant involved an abuse of process, even if it did involve some inefficiency. It is likely that the category of discovery sought in relation to communications with the solicitor was too narrowly drafted. It was not broad enough to encompass file notes kept by the solicitor recording such communications. It is likely that the defendant realised that it needed a broader range of documents and proceeded to issue the subpoena to the solicitor directly rather than attempting to renegotiate the issue of categories of disclosure so as to permit additional disclosure via the plaintiffs. I do not consider that this involved any oppression of the plaintiffs. It would have been more efficient if the defendant’s categories of documents were drafted somewhat differently, but that is a counsel of perfection rather than the threshold for the establishment of an abuse of process.

25. Whatever procedural course the issue took, it is clear that there was an issue of substance that divided the parties, namely whether or not a broader range of documents in the possession of the solicitor had been subject to a waiver of privilege. That was an issue which the court would be required to determine, whether or not it was raised by way of a claim of privilege over subpoenaed documents or as a debate as to the scope of additional discovery.

26. It is for those reasons that I have dealt with the substance of the issue and not set aside the subpoena as an abuse of process.

Costs [The parties were heard in relation to costs.]

27. The defendant has been successful in establishing a waiver of privilege. That the procedural manner in which the substantive point was ultimately raised was contributed to by the too-narrowly drawn categories of discovery in relation to the solicitor means, in my view, that costs should not simply follow the event. Rather, they should be the defendant’s costs in the cause. Orders

28. The four file notes are disclosable to Prime. It appears to me to be appropriate to grant the plaintiffs first access to the documents so as to ensure that there are no other issues that arise in relation to the envelope which is marked privileged.

29. The orders of the Court are: (1) The plaintiff has first access to the material produced in response to the subpoena identified as SC3200190 including those in the envelope marked privileged until 12pm on 15 October 2025 and, unless any further unresolved and contested claim of privilege is identified by the plaintiffs, thereafter both parties have access to the documents. (2) In the event that any unresolved claim of privilege is identified by the plaintiffs, the documents the subject of the claim are to be identified and all other documents produced are to be available for inspection by the defendant pending resolution of the claim. (3) Liberty to apply is granted up until 17 October 2025 to apply to Mossop J for the resolution of any unresolved and contested claim of privilege in relation to the documents produced pursuant to subpoena SC3200190. (4) Each party is to have access to the documents from the times indicated in these orders. (5) The costs of the application in proceeding dated 22 September 2025 are the defendant’s costs in the cause.

I certify that the preceding twenty-nine [29] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Justice Mossop. Associate: Date: 12 February 2026 **************

Amendments

12 February 2026 Replace all instances of the name of the first plaintiff with “KS” in the title, on the coversheet and within the judgment.