Meteyard & Ors v Love & Ors

Following the fire, Southland Coal sought to claim under its insurance policy with QBE for the loss sustained in the fire. To this end, the summonses and orders for production were issued in respect of each of QBE, an insurance loss assessor and a mining consulting company and individuals associated with each of those three entities.

The issues for determination by the Court of Appeal included whether:

1. the proposed examinations satisfied the jurisdictional requirements of s 596B; and
2. the summonses and orders for production should be set aside on the grounds that they are oppressive or an abuse of process where a significant number of the documents and communications the subject of the summonses and orders for production were likely to be privileged.

The term 'examinable affairs' in s596B includes information relevant to the decision whether to institute proceedings against QBE in relation to the denial of liability under the insurance policy. Such information will include information necessary to assess the justification or otherwise of the denial and in an appropriate case (of which this was not one) information as to the worth of the potential defendant in such proceedings. Re BPTC Ltd (In Liq) (1994) ACSR 460 at 462, Re Hugh Roberts Pty Ltd (In Liq) [1970] 2 NSWR 582 and Grosvenor Hill (Qld) Pty Ltd v Barber (1994) 120 ALR 262

There is nothing in Part 5.9 of the Corporations Act which excludes the immunity provided by client legal privilege from disclosure of confidential information covered by that privilege: at [64]-[68].

Re Compass Airlines Pty Ltd (1992) 35 FCR 447 followed. Corporate affairs Commission (NSW) v Yuill (1991) 172 CLR 319 and Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543 referred to.

Part 36 rule 13 of the Supreme Court Rules operates so as to incorporate by reference the parts of the Evidence Act so as to preserve the right to claim client legal privilege in relation to summons for examination and orders for production: at [78]. Mok v New South Wales Crime Commission [2002] NSWCA 53 referred to.

It was not possible to determine whether particular documents were the subject of privilege as that issue had yet to be litigated. However, given the importance of the issues raised by client legal privilege, and in the absence of a clear procedure by which to raise the issues, the preferable conclusion is that an order for production under Part 36 rule 12 should not be made ex parte where it may be anticipated that such questions will arise or, in the alternative, the order should make express exception for documents subject to privilege: at [132].

The orders for production should be set aside on the basis that it has been established that they are likely to extend to documents which cannot properly be the subject of an order for production, which documents are likely to form a significant proportion of those subjects to the order: at [133].

The individual claimants did not establish that the examination summonses were oppressive. They did not demonstrate that they have no information about the affairs of Southland Coal other than information already known to the receivers and managers or information which is the subject of client legal privilege. Nor did they establish that the need to protect privilege will render the examinations oppressive: at [143]-[144].

1. The breadth of the summonses in the present case does not itself point at the threshold to an abuse of process or improper purpose. The court retains control over the process which acts as a further safeguard: at [8].

2. There is a need for caution in any a priori observations seeking to limit the scope of the very broad definition of 'examinable affairs': at [9].

3. There is a danger of any a priori exclusion of information from examinable affairs on the basis that information sought by examination summons was already known to the Receivers and Managers. No such distinction is made in the definition of 'examinable affairs'. Information that is already available to Receivers and Managers may still be properly examinable in some circumstances: at [11].

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40296/05 SC 1091/05

BEAZLEY JA SANTOW JA BASTEN JA

13 December 2005 ALAN METEYARD & ORS v ANDREW JOHN LOVE & ORS AS RECEIVERS AND MANAGERS OF SOUTHLAND COAL PTY LTD Judgment 1 BEAZLEY JA: I agree with Basten JA. 2 SANTOW JA: Subject to what I say below, I agree generally with the reasons of Basten JA. In particular I agree with the orders he proposes and adopt gratefully his statement of the factual background. 3 These proceedings concern the issue of a number of Examination Summonses and Orders for Production of Documents seeking information or documents concerning what are said to be the "examinable affairs" of Southland Coal Pty Limited (Receivers and Managers appointed) ("Southland Coal"). The Receivers and Managers of Southland Coal were responsible for the issue of the Summonses and Orders for production and are the opponents in this Court. The eight claimants are those persons on whom the Examination Summonses were served. They comprise QBE, which had issued the insurance policy the subject of the claim which is the focus of the Summonses plus various corporations and individuals. Their associated roles are described in Basten JA's statement of the factual background. 4 The statutory basis for the issuance of these Summonses is s596B(1) of the Corporations Act of which sub-paragraph (b)(ii) is invoked. That requires that the court must be satisfied that the person summoned for examination "may be able to give information about examinable affairs of the corporation", "examinable affairs" being defined in the Corporations Act. This part of the challenge disputes that the subject matter of the examination is about "examinable affairs" of Southland Coal. 5 Along with the statutory scheme for production of documents, Part 36 r13 Supreme Court Rules makes express provision for and is directly applicable to, the Orders for Production of Documents in relation to the affairs of Southland Coal. 6 The Summonses are taken out by the Receiver and Manager of Southland Coal (Mr Andrew Love and two others). In that capacity they represent the creditors of the company in a form of external administration. The broad purpose of the power to summon for examination is to obtain information about the "examinable affairs" of the corporation. This is as that expression is defined in wide terms in ss9 and 53 of the Corporations Act. The particular purpose of the present examinations in this case is not exposing misconduct. Rather it is to provide information that will advance the external administration of Southland Coal. It is brought by the representatives of the creditors of that corporation. 7 I consider, consistent with the reasons of Basten JA, that the limitations on the examination power in such a context are as articulated by Lander J in Re New Tel Ltd (in liq) (2005) 54 ACSR 284 at 322-3 [245] to [251], a recent decision of the full Federal Court: "[245] In my opinion, the procedure in Pt 5.9 of the Law and the Act is to aid persons who have the responsibility of the external administration of the company in carrying out their duties.

[246] Those persons who have the responsibility of external administration owe duties to the creditors and the contributories, and to the corporation which they are then managing.

[247] In my opinion, they are entitled only to seek an order for an examination summons where the purpose of the examination is, as was stated in Re Excel, for the benefit of the corporation, its creditors or its contributories.

[248] So also ASIC is only entitled to authorise a person as an eligible applicant if that person's purpose in seeking an examination summons is for the benefit of the corporation, its contributories or its creditors.

[249] Otherwise, every corporation would be at risk of having its examinable officers or its officers or other witnesses examined to the possible detriment of the corporation. For example, a person claiming damages for a tort against a corporation could be authorised by ASIC as an eligible applicant and apply for an examination summons for the purpose of examining the corporation's examinable officers under s 596A or its officers under s 596B to provide evidence in support of the action in tort.

[250] Whilst I agree that the question of what is a proper purpose must be determined by reference to the legislation itself because it is the legislation which gives the power to issue a summons for an examination and the carrying out of an examination, the power cannot be used for a collateral or ulterior purpose. It must be used for a purpose expressly or implicitly authorised by the legislation itself.

[251] The purpose of Pt 5.9 of the Act is not to disadvantage corporations but to make the corporation's examinable officers and other persons within the contemplation of s 596B accountable to those who are obliged to act in the interests of the corporation." 8 I consider that the breadth of the Summonses in the present case does not of itself point a limine to an abuse of process or improper purpose. Nor have either been established at this point. There is a further safeguard should either be established at the examination stage. As Mason CJ in Hamilton v Oades (1989) 166 CLR 486 at 498 observed, "The court retains its power to give directions and to restrain questions in cases where the examination is being conducted for an improper purpose or constitutes an abuse of process: s541(5). Thus if a liquidator were to conduct an examination directed to compel the examinee to disclose defences or to give pre-trial discovery, or to establish guilt, this examination may be restrained as an abuse of process: Hugh J Roberts (1970) 91 WN (NSW), at 541; Huston v Costigan (1982) 45 ALR 559, at 563; Re Gordon (1988) 18 FCR 366." 9 Insofar as the scope of the power depends upon whether the enquiry is directed to the "examinable affairs" of the corporation, I would emphasise the need for caution in any a priori observations seeking to limit the scope of that very broadly defined expression. It will often be only when the matter is looked on in closer detail, that the court will be in any position to ascertain whether the scope of the power has been exceeded or the power abused by its use in a vexatious or oppressive manner. That may only emerge when the examination is under way, though it can emerge earlier in a clear-cut case. Many cases however only reveal themselves as having that abusive or oppressive character after the Summons has issued and examination under way. Some may only have that adverse character in a particular aspect of the examination. 10 It is now settled law that an examination may concern itself with liability under insurance arrangements. Those arrangements may have a direct or indirect bearing on the value of the assets under external administration and hence on the interests of creditors. I would therefore not wish to draw any hard and fast distinction between, for example, matters concerning the insurer's actual decision with respect to the insurance claim as compared to matters preparatory to the making of that decision such as go to a future intention of officers of the insurer with regard to defending a claim. The statutory definition of "examinable affairs" is so wide that it would be unwise to assume such matters of future intention are necessarily beyond its scope. That is a matter for detailed consideration based on the known circumstances of each case. 11 I would make a similar observation about the danger of any a priori exclusion of information from examinable affairs on the basis that information sought by examination summons was already known to the Receivers and Managers. No such distinction is made in the statutory definition of "examinable affairs". Information that is already known to the Receivers and Managers may still be properly examinable in some circumstances. Thus it may be important to know whether the third party knew of that same information at a particular time. Other examples come readily to mind. 12 As I observed in Re New Cap Reinsurance Corporation Holdings Ltd [2001] NSWSC 835, the 1992 legislative changes to the Corporations Law and the judicial interpretation of the amendments enacted with the passage of that Act reflect an expansionist approach to permitting examinations under the Corporations Act. They further underpin the wisdom of generally permitting the examinations to go ahead, given that there remains the protective safeguard of an intervention more precisely focussed at the examination stage. That said, if a clear-cut case of abuse emerges earlier, courts have to intervene if examinees are not to be put to potentially huge expense and inconvenience. In the present case, no such case has yet emerged as Basten JA explains. 13 As to the order for production of documents I have nothing to add to the observations of Basten JA concerning the implications of legal professional privilege and the consequential outcome here. 14 BASTEN JA: On 24 December 2003 there was a spontaneous combustion of gas at a coalmine in the Hunter Valley. The owners of the mine and the operating equipment being used in it were Southland Coal Pty Ltd (Receivers and Managers appointed) ("Southland Coal") (as to 90%) and Theiss Southland Pty Ltd ("Theiss Southland") (as to 10%). Theiss Pty Ltd was the operator of the mine. 15 Southland Coal, jointly with its co-owner, had taken out an insurance policy with QBE Insurance (Australia) Ltd ("QBE") which covered loss, in certain circumstances, including loss arising from spontaneous combustion. No lives were lost in the incident, but the consequences of the fire were catastrophic, resulting in the mine being shut down and the loss of the mining equipment, which was covered by the insurance policy. The event apparently triggered a right on the part of financiers of the group of which Southland Coal was a part to appoint a receiver and manager. The principal asset of the company, to which the charge attached, was the proceeds of the insurance policy. 16 These proceedings concern the issue of a number of summonses and orders for production of documents in relation to the affairs of Southland Coal. The receivers and managers of Southland Coal were responsible for the issue of each summons and order for production and are the Opponents in this Court. The eight Claimants are those persons on whom the examination summonses were served and comprise QBE, which had issued the insurance policy; Crawford & Co Australia Pty Ltd, an insurance loss assessor; McKensey Mining Services Pty Ltd, a company providing consulting services in relation to the mining industry, and various individuals associated with those three corporations.

Background 17 The extraction of coal in the mine was undertaken pursuant to a system of mining known as "long-wall extraction" which involved a sophisticated machine, known as a long-wall miner, which stripped the coal mechanically across the face of the seam. According to the most recent loss assessment by Aon, engaged by Theiss Southland, the loss was $42,214,590. Of that amount, $27,260,000 was attributed to the indemnity value of the long-wall equipment, together with $4,000,000 as the estimated cost of importation of new equipment. The risk assessor was of the opinion that the equipment was physically lost or damaged beyond economic repair or recovery. 18 The various summonses for examination and orders for production were obtained from a Deputy Registrar of the Court on 18 January 2005 at a time when it was not clear whether QBE would deny or seek to limit its liability under the policy. 19 The Claimants did not seek to obtain a copy of the affidavit made in support of the applications, the affidavit not being available to them except pursuant to a court order under s 596C of the Corporations Act 2001 (Cth). Such an order might or might not have been forthcoming: see Re Leisure Developments (Qld) Pty Ltd (in liq) (2002) 41 ACSR 276. Rather, they took the course of seeking to have each summons and order set aside, pursuant to an interlocutory process filed on 10 February 2005. Those applications were heard by Young CJ in Eq on 21 February 2005. 20 Four days after the hearing, on 25 February 2005, the solicitors for QBE wrote to solicitors for the various mining interests, including Southland Coal, advising them that QBE:

(a) contended that the exclusion under clause 14 of the policy in relation to loss arising out of "mining conditions known as creep and/or heave" applied;

(b) non-disclosure of an earlier report (which had been the subject of correspondence between the parties) was not to be relied on as a breach of s 28(3) of the Insurance Contracts Act 1984 (Cth); and

(c) QBE reserved its position with respect to other possible non-disclosures or misrepresentations and as to whether the insured parties had taken "reasonable precautions" under condition 11 of the policy.

The Court was advised that this document was provided to the primary judge, but that no further submissions were made with respect to its significance. His Honour handed down judgment on 31 March 2005, rejecting the challenges to both summonses and orders.

Issues 21 The application to set aside the various summonses and orders for production, as agitated before the primary judge focused on an argument that they were oppressive. Part of that argument relied upon the suggestion that significant numbers of documents which were sought and which would no doubt be the subject of oral questioning were likely to be privileged. Further, that factor must be considered, so it was argued, in the context of investigations and inquiries made over a period of approximately a year as to the circumstances of the fire in the mine. In addition, the Claimants argued below that the proposed examination did not satisfy the jurisdictional requirements in s 596B of the Corporations Act. 22 On appeal, the first four grounds were concerned with jurisdictional issues. The third and fourth denied that the corporate Claimants were "connected entities" in relation to Southland Coal for the purposes of par (c) of the definition in s 9 of "examinable affairs". The operation of that definition will be addressed below, but it was common ground in this Court that his Honour made no express finding based on that provision, beyond noting that qualification under this paragraph was a precondition to the validity of the summons with respect to QBE and the experts: [2005] NSWSC 259 at [22]. 23 Grounds 1 and 2 sought to identify relevant jurisdictional issues and read as follows: "1. His Honour erred in holding that the subject matter sought to be examined and the documents sought to be produced in the summonses constituted "examinable affairs" of Southland Coal Pty Ltd.

2. His Honour ought to have found that the summonses were outside the scope of what is permitted by s 596B of the Corporations Act ."

Grounds 3 and 4 challenged a possible finding that the corporate Claimants were entities connected with Southland Coal. Each of these grounds will be addressed below under the heading "Scope of statutory power". 24 The next set of grounds related to aspects of the challenge referrable to legal professional privilege. These may be grouped in two parts. Grounds 5 and 6 alleged error in failing to hold that each of the Claimants other than QBE was either an agent of QBE or in the alternative an agent of Wotton & Kearney, the solicitors for QBE, in each case for the purposes of ss 117(1) and 118 of the Evidence Act 1995 (NSW). 25 The second pair of grounds dealing with privilege alleged error in holding that communications between the Claimants other than QBE and two of its officers, and the solicitors for QBE "could not be privileged" for the purposes of s 118 or s 119 of the Evidence Act. 26 The final ground of appeal (ground 9) was a general allegation of error in refusing to set aside each summons and order as being "an abuse of process or oppressive". It was on this ground that the Claimants placed the major part of their argument. It was partly, though not entirely, dependent on establishing that a high proportion of the documents were likely to be privileged. It involved a challenge to an exercise of a discretionary power on the part of the Deputy Registrar. 27 Before turning to these grounds of challenge to his Honour's reasons and judgment, dismissing the application, it is convenient to set out the relevant statutory provisions and identify the critical aspects of the statutory scheme.

The statutory scheme: examination summonses 28 Division 1 of Part 5.9 of the Corporations Act is headed "Examining a person about a corporation". Section 596B was the source of power for the grant of the summonses and should be set out in full. 596B Discretionary examination (1) The Court may summon a person for examination about a corporation's examinable affairs if: (a) an eligible applicant applies for the summons; and (b) the Court is satisfied that the person: (i) has taken part or been concerned in examinable affairs of the corporation and has been, or may have been, guilty of misconduct in relation to the corporation; or (ii) may be able to give information about examinable affairs of the corporation. (2) This section has effect subject to section 596A.

Section 596A provides for "mandatory examination", the Court being obliged to issue a summons if specified preconditions are engaged, including the satisfaction of the Court that the person sought to be examined is "an examinable officer of the corporation". The term "examinable officer" is defined in s 9 to cover persons who would have or have had a level of control over the affairs of the corporation, including a director, secretary or executive officer. Section 596A is not invoked in the present case, but its presence and overriding effect demonstrate that the persons who may be summoned under s 596B are intended to fall within a class extending beyond the controllers of the corporation. 29 The receivers and managers of Southland Coal were the applicants in relation to each summons in the present case and it is not in dispute that they were eligible applicants, within par (a), being persons authorised in writing by ASIC to make the relevant application: see s 9, eligible applicant, par (e). No reliance was placed on sub-par (i) of par (b): accordingly, the jurisdictional questions were directed to whether each of the persons the subject of a summons was a person able to give "information" about "examinable affairs" of Southland Coal. 30 A reference to "the Court" in the Corporations Act includes the Supreme Court of New South Wales: see s 58AA(1)(b). The Supreme Court is thus exercising federal jurisdiction vested in it pursuant to s 77(iii) of the Constitution: see ASIC v Edensor Nominees Pty Ltd (2001) 204 CLR 559 at [7]. The jurisdiction of the Court was exercised by a Registrar: see Supreme Court Rules, Schedule E, Part 2, cl 28(ja). Power to seek the discharge of an examination summons issued under s 596B is found in the Supreme Court (Corporations) Rules 1999, r 11.5. 31 The issue of the various summonses occurred by way of an ex parte application made on the basis of an affidavit, the terms of which have not been disclosed to the Claimants and are not before this Court. That step was taken pursuant to s 596C which provides as follows: 596C Affidavit in support of application under section 596B (1) A person who applies under section 596B must file an affidavit that supports the application and complies with the rules. (2) The affidavit is not available for inspection except so far as the Court orders.

As will be noted below, there was some dispute as to whether the Claimants should have sought access to the affidavit, or whether the Opponents should have been expected to tender it in evidence before the primary judge. However, little turns on this question, in part because the ground moved somewhat between the date of the application for the issue of the summonses and the date of judgment below. The nature of a proceeding to discharge an ex parte order may be treated as, in substance, a rehearing of the initial application: Gerah Imports Pty Ltd v The Duke Group Ltd (in liq) (1993) 12 ACSR 513 at 517(30) (Olsson J, King CJ and Millhouse J agreeing). 32 The jurisdictional preconditions to the exercise of power, require that the subject-matter about which information is to be given is the "examinable affairs" of the corporation. This phrase is defined in s 9 as follows: examinable affairs , in relation to a corporation means: (a) the promotion, formation, management, administration or winding-up of the corporation; or (b) any other affairs of the corporation (including anything that is included in the corporation's affairs because of section 53); or (c) the business affairs of a connected entity of the corporation, in so far as they are, or appear to be, relevant to the corporation or to anything that is included in the corporation's examinable affairs because of paragraph (a) or (b). 33 Key parts of s 53 relevant for present purposes include the following: " 53 Affairs of a body corporate For the purposes of the definition of examinable affairs in section 9 … the affairs of a body corporate include: (a) the promotion, formation, membership, control, business, trading, transactions and dealings …, property …, liabilities …, profits and other income, receipts, losses, outgoings and expenditure of the body; …"

No further constraint is imposed in the scope of the term "affairs" by the definition in s 9 which is in the following terms: " affairs , in relation to a body corporate, has, in the provisions referred to in section 53, a meaning affected by that section." 34 Although the definition of "examinable affairs" is exhaustive in form, it is not restrictive. The use, in par (b) of the phrase "any other affairs" is sufficient, in combination with par (a) to include any affairs of the corporation, and indeed there is overlap because the picking-up in par (b) of things included because of s 53 results in the repetition of much of the content of par (a): see discussion in Gerah Imports (supra) at 518-519 in relation to the equivalent provision in the Corporations Law. 35 In the course of argument, there was some discussion as to whether the interest of the company in the outcome of its claim against QBE under the insurance policy constituted "property" or, because it was, as such, the subject of a charge in favour of the principal secured creditor, an equity of redemption. Whether or not any payout under the insurance policy might meet the full indebtedness in relation to the loan secured by the charge, if there is to be a payout, it will constitute a receipt in the hands of the company and will at least affect the amount of any overall loss faced by the company as the result of the shut-down of the mine and destruction of the machinery. Accordingly, it is not possible to argue that information about the claim under the insurance policy would not be information about the examinable affairs of the company: see, generally, Re BPTC Ltd (in liq) (1994) ACSR 460 at 462 (McLelland CJ in Eq). 36 The authorities support the proposition that the examinable affairs of a corporation include:

(a) the existence of an insurance policy relating to the assets of the corporation; (b) the terms and conditions of such a policy; (c) where a claim has been made, the decision of the insurer with respect to the claim, and (d) where a claim has not been determined, the potential value of the claim.

(See, eg, Re Allstate Explorations NL; Ryan v QBE Insurance Ltd (2003) 46 ACSR 379 (Austin J); Re Clutha Ltd (in liq) (2003) 44 ACSR 734 (Gzell J).) 37 What is less clear, however, is what constitutes "information about" such affairs. The term "about" was not the subject of any consideration. The Australian Concise Oxford Dictionary gives as the first set of meanings: " 1 a On the subject of; in connection with (a book about birds …). b relating to … c in relation to … d so as to affect …"

One may fairly say that, in common with the synonymous phrases, "about" is a word of broad denotation which is likely to take its colour from its context: see Technical Products Pty Ltd v State Government Insurance Office (Q) (1989) 167 CLR 45. It is not a word of limitation. 38 The concept of "information" may also need to be considered in context, but appears not to have been the subject of detailed consideration in relation to this provision of the Corporations Act. The primary meaning given in the Australian Concise Oxford Dictionary is "something told; knowledge" and "items of knowledge; news". No doubt information can include matters of fact, belief and opinion; nevertheless, there will be a point at which opinions are better described as speculation rather than information. 39 A consideration of the terms of s 596B(1)(b)(ii) suggests that the scope of the power is delimited by four considerations, namely that:

(a) the proposed examinee may have "information" to give;

(b) the information must be relevant in the sense that it is about "examinable affairs of the corporation";

(c) because the purpose of the section is to allow the receivers and managers to be informed of facts about the affairs of the company, the information should be information not within their knowledge, although the extent of knowledge will not be precisely definable, and

(d) there must be a factual basis for the Court to form a reasonable state of satisfaction that a proposed examinee may have relevant information. 40 The results of an investigation into an incident could affect the payment made to the company, or the decision to refuse a payment. A refusal may, and has in the case of the joint venture partner, Theiss Coal, led to litigation between the insured and the insurer. One possible outcome of such litigation is an order of a court that the insurer make a payment to the company. However, if that flowed from a judgment of the court, it could not properly be said that the consideration by the court of the circumstances of the claim fell within the examinable affairs of the company. That is because the court is exercising its own powers independently of the company, albeit the result may have important consequences for the balance sheet of the company, and even its solvency. 41 That consideration may be extended: there are a large range of actions by strangers to the company which may affect its affairs, including the value of its assets. The imposition of more stringent statutory regulation of mining operations in the interest of safety, and the decisions of a local government authority in relation to the zoning of the land to be used for mining, are but two examples. Even if the company had an entitlement to be heard in relation to a rezoning proposal, the consideration of the proposal by the local government authority would not constitute part of the affairs of the company which would be examinable under s 596B. Of course, the corporation's reaction to such external events would be capable of constituting part of its own affairs. 42 This distinction, as the Claimants noted, derives support from the paragraph in the definition of "examinable affairs" in s 9 of the Corporations Act relating to the affairs of a connected entity of the corporation. Whilst, as noted above, there is considerable overlap between pars (a) and (b) of that definition, par (c) identifies a separate class of factors. The definition of "connected entity" in s 9 picks up the concept of a related body corporate as defined in s 50 and a connected entity as defined in s 64B. One aspect of the definition of a connected entity is a body corporate over which the corporation can exercise control or material influence: another is a body corporate which is indebted to the corporation: s 64B(1)(a) and (f). In relation to such bodies, the business affairs of the body can be examined if they are or appear to be "relevant to" the corporation or the corporation's examinable affairs. This provision confirms the conclusion that the internal operations or activities of another person or corporation will not fall within the examinable affairs of the corporation simply because they have the potential to affect the value of the assets of the corporation. In other words, although the "property" of the corporation may constitute part of its examinable affairs, the phrase "information about" such property should not be read so broadly as to include 'any information which may affect the value of the property'. 43 Application of these principles would suggest that, at least where a decision has been made and communicated, the internal assessment of information by advisers to the insurer fall outside the category of "examinable affairs" of Southland Coal, even though the result of that assessment may be relevant to the decision taken by the insurer and hence to the value and even the solvency of Southland Coal. Such an assessment may need to be distinguished from the insurer's decision with respect to the claim and its grounds for refusal, if it is declined. And an assessment should be distinguished from the information being assessed and, arguably, the fact that the insurer had, or did not have knowledge of particular information. 44 There is, in addition, an established line of authority to the effect that an eligible applicant under s 596B may examine a potential defendant, or an existing defendant, in relation to proposed or actual litigation, in order to determine whether the defendant has sufficient assets to meet an adverse judgment, if unsuccessful in the litigation. On the other hand, the authorities draw a line between those possible topics of inquiry and use of the examination process to determine the strength or weakness of the corporation's case, or its opponent's case, in relation to the dispute. In the recent decision of the Full Court of the Supreme Court of South Australia, In the matter of Normans Wines Ltd (Receivers and Managers appointed) (in liq); Harvey v Burfield [2004] SASC 171 Mullighan J quoted without criticism, the following statement of the trial judge at [42]: "The authorities establish that an improper purpose includes a purpose of using the examination as a dress rehearsal for cross-examination, or for the purpose of destroying the credibility of the examinees or witnesses who might be called for the examinee in substantive proceedings, or for the predominant purpose of obtaining a forensic advantage not available from ordinary pre-trial procedures, or simply to cause undue inconvenience or embarrassment to the examinee or to inflict costs." 45 This statement of principle may be accepted, but it runs together two separate considerations. The last category of examples, namely causing inconvenience or embarrassment or inflicting costs, might be described as an abuse of the process of the Court. Whatever the cause of action or statutory basis for the proceedings, use of the Court's processes to inflict financial or other collateral harm will always be improper: see Williams v Spautz (1992) 174 CLR 509 and Flower & Hart (a firm) v White Industries (Qld) Pty Ltd (1999) 163 ALR 744. The other examples given may be understood as seeking to advance the legitimate purposes of the corporation, but not as obtaining information about its examinable affairs. Such proceedings would be improper because the purpose is foreign to the statutory purpose for which the power was conferred. There is a danger in using the term "abuse of process" to cover that latter class of case. It invites questions about the attainment of some unfair advantage. As Hayne J noted in the Supreme Court of Victoria in New Zealand Steel (Australia) Pty Ltd v Burton (1994) 13 ACSR 610 at 616 (45): "Such an approach would obscure the fundamental question which is whether the power is being used for a purpose foreign to the purpose for which it was given. If it is, then there is an abuse for that reason. If it is not, then no question of fairness arises; the Legislature has permitted the step to be taken in such a case."

That is not to say that an examination may be undertaken in a manner which is vexatious, oppressive or abusive. As Hayne J noted in an earlier passage (at p.614(25)), quoting with approval from the judgment of Street J in Re Hugh J Roberts Pty Ltd (in liq) (1970) 91 WN (NSW) 537 at 541: "Vexation or oppression will not be tolerated no matter when the examination is held." 46 In considering questions of "improper purpose" it is helpful to bear in mind the tripartite characterisation adopted by Aickin J in The Queen v Toohey; Ex parte Northern Land Council (1980-81) 151 CLR 170 at 232-233: "There are three distinct bases upon which an exercise of administrative power or authority and delegated legislative power or authority may be attacked: they are first the existence of a corrupt purpose, second the existence of an improper purpose and third ultra vires in the narrow sense of the act done being beyond the power of the body concerned, irrespective of the motive or intention or person or body exercising the power. It is true that in one sense the term ultra vires is capable of embracing all three conceptions. It is however generally unhelpful, if not misleading, to use the term in that wide sense and I shall confine its use to the narrowest case."

After dealing with corrupt purposes, his Honour continued: "I use the term 'improper purpose' to mean one for which the relevant power or authority was not conferred. It makes no difference whether or not that purpose was known to, or believed or suspected to be necessary by, the person exercising the power. Generally speaking executive or administrative powers are conferred for a purpose as attainable, with greater or lesser difficulty, from the terms of the instrument conferring the power. In the case of legislative powers it is not always possible to discern a purpose, as distinct from subject matter or content. A belief that the act done is being done for an authorised purpose will be irrelevant if the purpose for which the power is in fact exercised is not such a purpose, whether the belief is as to a matter of fact or law."

Whilst recognising that the power to issue a summons is not legislative or administrative, but rather ancillary to the exercise of judicial power, a similar classification may properly be adopted in order to determine whether the limits of s 596B have been exceeded. 47 Returning to the scope of the power conferred by s 596B, the aspect of the examinable affairs of the company of primary relevance in the present circumstances is sufficiently encapsulated in the concepts of management and administration identified in par (a) of the definition of "examinable affairs". Part of the management and administration of Southland Coal will be deciding whether to institute proceedings against QBE in relation to a denial of liability under the insurance policy. Information relevant to that decision forms part of the examinable affairs of Southland Coal. Such information will, consistently with the authorities, include:

(a) information necessary to assess the justification or otherwise of the denial, and

(b) in an appropriate case (of which this is not one) information as to the worth of the potential defendant in such proceedings.

Such material falls within the proper field of examinable affairs described by Street J in Re Hugh J. Roberts Pty Ltd (In Liq) [1970] 2 NSWR 582 at 584, quoted with approval by the Full Court of the Federal Court in Grosvenor Hill (Qld) Pty Ltd v Barber (1994) 120 ALR 262 at 270: "The liquidator is given by the statute this special authority to proceed by way of private examination to obtain information which he needs for the due winding up of the company, the affairs of which he has the responsibility of administrating."

Application of principles: examination summonses 48 Applying these principles in the present context, a distinction can be drawn between the position of QBE itself, and its officers, Mr Meteyard and Mr Holland, on the one hand, and the loss assessors and mining consultants on the other. That is because the information of relevance to the receivers and managers in deciding whether to commence proceedings against QBE will depend on the issues in dispute as to the circumstances of the fire, not the beliefs or attitudes of QBE and its officers. The scope of the potential dispute was not known at the time the Deputy Registrar made the relevant orders; nor was it known at the time of the hearing before the primary judge. It became known, however, during the proceedings. The following issues may be identified from that letter. First, the insurer expressly relied upon an exclusion identified under the heading "Perils exclusions", clause 14, which referred to: "Loss, destruction or damage to property underground, directly or indirectly caused by or arising out of mining conditions known as creep and/or heave."

It follows that any material obtained by QBE, no doubt through the inquiries undertaken by the loss assessors or the mining consultants, which would assist in identifying whether, as a matter of fact, that exclusion operated, would be information about the affairs of the company because it would assist the receivers and managers in making a decision as to whether to pursue a claim under the policy. 49 Secondly, although the letter of 25 February 2005 abandoned an intention to rely upon a particular non-disclosure by the insured, QBE did reserve its rights to rely upon other non-disclosures or misrepresentation of material facts prior to the inception of the policy "pending further investigations". Information about the stage reached in those investigations would also constitute information about the affairs of the company in the sense noted above. 50 Thirdly, the insurer reserved its rights to rely upon a breach of general condition 11, which read: "The Insured shall take all reasonable precautions to prevent loss, destruction or damage to the property insured by this policy."

Again, whether there was a failure to take reasonable precautions appears to be a matter about which QBE remained undecided, as at 25 February 2005. It thus remains a potential issue as between the insured and the insurer. Information relevant to that issue might reasonably be expected to find its way into any report prepared for the insurer by the mining consultants. Again, that information would be within the examinable affairs. 51 Speaking more broadly, information which related to the state of the land, the mine and the mining operations would all be matters which would fall squarely within the concept of information about the examinable affairs of Southland Coal. It is likely that such information would be contained in written reports and, accordingly, a document containing that information could have been the subject of an order to produce pursuant to a summons issued under s 596D(2) or pursuant to an order of the Court under s 597(9), if not privileged and if not already provided. 52 The Court can reasonably infer that material relevant to these issues will have been collected by the loss assessors and mining consultants. Pursuant to the arrangements with the solicitors, it will have been provided to Wotton & Kearney and then to QBE and its officers. Because it was channelled through Wotton & Kearney, there will at least be an issue as to whether it is privileged: the Opponents concede as much. The Court can also infer that both the solicitors and officers of QBE (on behalf of QBE) will have formed opinions about the consequences of this factual material in relation to the insurance claim. These opinions will have informed the content of the letter denying liability and will no doubt inform any defence which might be relied upon if Southland Coal commences proceedings against QBE. Those opinions may, but will not necessarily constitute information about Southland Coal, its mine or mining operations or its property, including any cause of action it may have under the policy. Nevertheless, the Court cannot be satisfied that any examination will necessarily fall outside the legitimate scope of s 596B. 53 Accepting that the opinions may be about the affairs of Southland Coal, for reasons set out below it is possible that such opinions could not be disclosed without revealing the content of legal advice. It is likely that, if available, client legal privilege will be claimed. If the Court were to reach that state of satisfaction, the opinions would not qualify as information which the officers of QBE "may be able to give" in the sense that there is any likelihood that such information could properly be obtained in the course of an examination. It is necessary therefore to address the question of privilege.

Statutory scheme: orders for production 54 Pursuant to s 596D, dealing with the content of an examination summons, a person served with a summons may be required to produce, at the examination, specified books: s 596D(2). The term "books" is defined in s 9 to include: "(a) a register; and (b) any other record of information; and (c) financial reports or financial records, however compiled, recorded or stored; and (d) a document … ."

Section 25 of the Acts Interpretation Act 1901 (Cth) includes the following definitions: "document": (a) any paper or other material on which there is writing; (b) any paper or other material on which there are marks, figures, symbols or perforations having a meaning for persons qualified to interpret them; and (c) any article or material from which sounds, images or writings are capable of being reproduced with or without the aid of any other article or device; "record" includes information stored or recorded by means of a computer; "writing" includes any mode of representing or reproducing words, figures, drawings or symbols in a visible form. 55 The orders for production of documents were not included in the examination summonses but were made separately pursuant to Part 36, r 12 of the Supreme Court Rules. That rule reads: 12(1) The Court may make orders for - (a) the attendance of any person for the purpose of being examined; (b) the attendance of any person or production by him of any document or thing specified or described in the order; or (c) production by any corporation of any document or thing specified or described in the order. (2) An order under sub-rule (1) may be made for the attendance of any person before, and production by him to, or for the production by any corporation to, the Court or a judge or any officer of the Court, examiner, referee, arbitrator, or other person authorised to take evidence, on any trial hearing or other occasion. (3) Sub-rules (1) and (2) apply whether or not the person required by the order to attend or produce any document or thing has been required to do so by subpoena. 56 Questions have arisen in the past, though not addressed in these proceedings, as to whether Part 36, r 12 may properly be called in aid of an examination under s 597 of the Corporations Act pursuant to a summons issued under s 596A or s 596B. In relation to the Corporations Law, an argument that the provisions now found in Part 5.9 of the Corporations Act constituted an "exclusive code" with respect to the production of documents was rejected by McLelland J in Re BPTC Ltd (in liq) (1992) 29 NSWLR 713 at 718A-719E, applied by Bryson J in Re BPTC Ltd (in liq) (No. 5) (1993) 10 ACSR 756, at 765(40). The primary basis for rejecting that proposition was that the power to issue an examination summons under ss 596A and 596B was in each case restricted to individuals and did not apply to corporations; the power to order the production of documents under s 597(9), during an examination, was, as a consequence, restricted to individuals. Accordingly, unless it were intended that the documents of a company could not be the subject of an order for production, an alternative source of power must be relied upon in relation to such documents. 57 A similar "exclusive code" argument was raised with respect to the Corporations Act in Re Chircan Holdings [2002] NSWSC 988. Barrett J concluded at [14]: "It is not possible, in my judgment, to argue that the inclusion of s 596D(2) as a adjunct to ss 596A and 596B in the provisions introduced in June 1993 represents some form of displacement of Part 36 r 12 and its traditional use in this area, at least so far as the several corporations are concerned."

His Honour further concluded in relation to s 597(9) at [15]: "But I must say that I cannot glean from s 597(9), or anywhere else for that matter, an indication that it is intended to be the sole source of jurisdiction to compel the production of books relevant to an examination, or indeed that there is any reason of policy why it should be. The provision is facultative. Examinations of this kind are proceedings of the court. The Corporations Act obviously assumes that a whole range of provisions and procedures relevant to the proceedings of the court will apply to an examination as to any other proceeding. I see no basis on which the Pt 36 r 12 procedure should be regarded as excluded." 58 There are, perhaps, two stages in the analysis supportive of this conclusion. The first is that the amendments introduced in 1993 by the Corporate Law Reform Act 1992 did not exclude the operation of the relevant State rules. The second step in the analysis is to inquire whether, pursuant to s 5E of the Corporations Act, there is direct inconsistency between the Corporations Act and a law of the State: see 5E(4). If there is not, the Corporations Act "is not intended to exclude or limit the concurrent operation of" such a law of the State: s 5E(1). I infer from the analysis undertaken by Barrett J that he would not have identified any such direct inconsistency, so that, at least in relation to a corporation, Part 36, r 12 could be invoked. No issue being raised in this case as to the operation of Part 36 r 12, it is not necessary to resolve any further question as to its operation in relation to individual examinees. Such an operation may be assumed. 59 The challenge made by the Claimants to the orders for production were based on two premises, namely that:

(a) an order for production was ancillary to a proceeding commenced by an examination summons, and

(b) the material which could properly be produced was restricted to that relevant to the proposed examination.

(See generally Re BPTC Ltd (in liq) (No. 5) (1993) 10 ACSR 756, 766(5) (Bryson J), applied in Re Leisure Developments (Qld) Pty Ltd (in liq) (2002) 41 ACSR 276, 281-2 (Austin J).) The effect of these propositions would be that, if an examination summons in relation to an individual were set aside because it was not restricted to "examinable affairs", any order for production of documents relevant to that examination would also fall.

Privilege: applicable law 60 As noted above, the question of privilege arose at a level of abstraction, there being no investigation of particular documents or other material, to which a claim might apply. The matters of principle which were addressed by the primary judge were said to turn on the scope and operation of ss 117 (definitions), 118 (legal advice privilege) and 119 (litigation privilege) of the Evidence Act 1995 (Cth): [2005] NSWSC 259 at [56]. 61 The draft notice of appeal provided by the Claimants identified the relevant source of law with respect to privilege as the Evidence Act 1995 (NSW). The first question to be addressed is whether that assumption is correct. 62 In its terms, the State Evidence Act "applies in relation to all proceedings in a NSW court": s 4(1). However, as noted above, the present proceedings constitute an exercise of federal jurisdiction and the operation of State law will depend on its application by a law of the Commonwealth, an exercise of judicial power being involved; Re Socket Screw and Fastener Distributors (NSW) Pty Ltd (in prov liq) (1994) 51 FCR 599. That effect may be achieved by s 79 of the Judiciary Act 1903 (Cth) or s 80 of that Act, or by a combination of the two: see discussion in The Commonwealth v Mewett (1996-97) 191 CLR 471 at 521-525 and 528 (Gaudron J). Thus, s 79 of the Judiciary Act provides: 79 The laws of each State or Territory, including the laws relating to procedure, evidence, and the competency of witnesses shall, except as otherwise provided by the Constitution or the laws of the Commonwealth, be binding on all Courts exercising federal jurisdiction in that State or Territory in all cases to which they are applicable.

As this provision specifically picks up State laws of evidence (although it is not so limited), it may be treated as the appropriate source of law for present purposes. (An analysis based on s 80 would reach the same conclusion.) Its operation is subject to two conditions, namely that:

(a) there is no law of the Commonwealth which otherwise provides, and

(b) the relevant State law applies in the particular case. 63 The Corporations Act itself is a Commonwealth law which may otherwise provide, in particular respects. Thus, by way of example, sub-ss 597(12) and (12A) make express provision in relation to the privilege against self-incrimination which is inconsistent with s 128 of the State Evidence Act. Otherwise, s 597(7) requires that a person who attends for examination must not without "reasonable excuse" refuse or fail to answer a question or produce books required to be produced. There is no reason in principle to infer from that any intention to exclude or modify the established principles of client legal privilege. 64 However, the point cannot be despatched purely on the basis of principle. In Corporate Affairs Commission (NSW) v Yuill (1991) 172 CLR 319 the High Court held that a power conferred under the former Companies (New South Wales) Code with respect to the investigation of affairs of companies by government agencies, which provided a relevant immunity only on the basis of "reasonable excuse", overrode the general law principles relating to client legal privilege (then commonly known as legal professional privilege). A focus of debate in Yuill was whether "the observance of legal professional privilege [was] a reasonable excuse for non-compliance, for a solicitor who is bound to observe legal professional privilege would be entitled to refuse to comply with a notice issued under s 295": per Brennan J at 324. 65 Following the judgment in Yuill, there was a period of doubt as to whether legal professional privilege provided an immunity from answering questions and producing documents under s 597 of the Corporations Law (and its predecessor in the Code). That doubt was resolved by the Full Court of the Federal Court in Re Compass Airlines Pty Ltd (1992) 35 FCR 447. Lockhart J, in a passage with which Beaumont and Gummow JJ agreed (at 457-459 and 464 respectively) distinguished Yuill and did not apply its reasoning with respect to s 597. His Honour concluded at 459: "For these reasons I am of the opinion that there is no necessary implication to be gleaned from s 597 or other provisions of the Corporations Law to abrogate the availability of a claim for legal professional privilege with respect to an examination under s 597, either in relation to the answering of questions on such an examination (subs(8)) or in producing books (subs(9))."

Beaumont and Gummow JJ reached the same conclusion (at 464): "Given these background considerations, we agree with Lockhart J that it is one thing to construe a provision of the type found in s 597 as taking away, by implication, the right of silence; yet it is a very different thing to read into such a provision an intention to eliminate the very different privilege inherent in a proper legal professional relationship." 66 That conclusion has now been reinforced by the High Court in Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543. In the joint judgment of Gleeson CJ, Gaudron, Gummow and Hayne JJ at [11] their Honours stated: "Legal professional privilege is not merely a rule of substantive law. It has an important common law right or, perhaps, more accurately, an important common law immunity. It is now well settled that statutory provisions are not to be construed as abrogating important common law rights, privileges and immunities in the absence of clear words or a necessary implication to that effect. … It is a rule which, subject to one possible exception, has been strictly applied by this Court since the decision in Re Bolton; Ex parte Beane . … The possible exception to the strict application of that rule was the decision in Yuill ."

At [19] the joint judgment noted that: "Although concerned with legal professional privilege, Yuill was not concerned with s 155 of the [Trade Practices Act]. The question in that case was whether the power under s 295(1) of the Companies (New South Wales) Code (the Code) to require the production of company books was subject to legal professional privilege. It was provided by s 296(2) of the Code that '[a] person [should] not, without reasonable excuse, refuse or fail to comply with a requirement made under s 295'. So, thus, strictly the question decided by Yuill was that legal professional privilege was not a reasonable excuse for failing to comply with a notice under s 295(1) of the Code."

At [35] the joint judgment concluded: "However, it may be that Yuill would now be decided differently." 67 McHugh J, who had been in dissent in Yuill, saw it as a decision with respect to a particular statutory provision. Kirby J who had participated in the decision of this Court overruled in Yuill, expressed the view in Daniels that the reasoning of the majority in the High Court appeared to be at odds with the proposition that legal professional privilege was "a right that will not be taken to have been abolished by legislative provisions except by express language or clear and unmistakeable implication": at [88]. His Honour continued: "Because Yuill dealt with a statute that has long since been repealed, it is unnecessary (even if it would otherwise be appropriate) to overrule it."

Callinan J also considered that Yuill was distinguishable and that it would be a "rather formidable task" to reconcile the reasoning of the majority in Yuill with the approach adopted in Coco v The Queen (1994) 179 CLR 427: Daniels [142]. 68 Given this line of authority, it is clearly open to this Court to adopt the approach of the Full Court of the Federal Court in Compass Airlines in relation to the Corporations Law and hold that the same approach should be applied in relation to the Corporations Act. In my view, this Court should expressly adopt that approach. Accordingly, there is nothing in Part 5.9 of the Corporations Act which excludes the immunity provided by client legal privilege from disclosure of confidential information covered by that privilege. 69 The correctness of that conclusion was assumed by the parties to this appeal. 70 The second possible exception is that the Evidence Act 1995 (Cth) may "otherwise provide" in relation to the State Evidence Act. That Act does not, however, apply except in relation to "proceedings in a federal court or an ACT court": s 4(1). It is not a Commonwealth law which otherwise provides for present purposes. 71 The next question is whether the provisions of the State Evidence Act (hereafter "the Evidence Act") with respect to client legal privilege apply either to the production of documents under Part 36 r 12, or to the answering of questions pursuant to an examination under s 597 of the Corporations Act. That question should be answered first by reference to the terms of the Evidence Act. 72 Two difficulties arise in this respect. First, pursuant to s 4(1), noted above, the Evidence Act applies in relation to "proceedings" in a court. Chapter 2 of the Evidence Act is entitled "Adducing evidence". Chapter 3, as the introductory note states, "is about whether evidence adduced in a proceeding is admissible". Both ss 118 and 119, in Part 3.10, preclude evidence being adduced where their terms are satisfied. Consistently with the approach adopted by the High Court in relation to inspection of discovered documents, ss 118 and 119 would appear not to apply to the production of documents pursuant to an order made under Part 36 r 12: see Esso Australia Resources Ltd v Commissioner of Taxation (1999) 201 CLR 49. A separate question arises as to whether they would operate in relation to an examination under s 597. 73 The question whether an examination is a "proceeding" for the purposes of the Evidence Act 1995 (Cth) has been the subject of conflicting decisions. In Re Interchase Corporation Ltd (1996) 68 FCR 481 Kiefel J held that it was: at 487C-D. In support of that proposition her Honour referred to the decision of the Full Court in Re Socket Screw and Fastener Distributors (supra at [62]), which held that an examination of officers of a company "has long been regarded as a judicial function and the proper subject of judicial power". 74 A similar position has been reached by single judges in the Equity Division in relation to the Evidence Act. Thus, in Re Doran Constructions Pty Ltd (in liq) (2002) 194 ALR 101, Campbell J gave careful consideration to detailed submissions in relation to this question before concluding, consistently with Re Interchase, that the examination was a "proceeding" for the purposes of the Evidence Act and that an examination under s 597 constituted "the adducing of evidence" for the purposes of ss 118 and 122 of the Evidence Act, the latter, relating to waiver of privilege, being the section of direct relevance in that case. That decision was applied by Barrett J in Re Strarch International Pty Ltd (in liq) [2005] NSWSC 583 at [27]. 75 There is authority for a contrary view to be found in the judgment of Allsop J (with whom Ryan J and Heerey J agreed) in the Full Court of the Federal Court in Griffin v Pantzer (2004) 137 FCR 209. That case involved the possible application of the privilege against self-incrimination in relation to the examination of a bankrupt under s 81 of the Bankruptcy Act 1966 (Cth). At [192]-[207] his Honour discussed the application of the Commonwealth Evidence Act in relation to such an examination and held that it did not apply. At [205] his Honour made express reference to the view of Kiefel J in Re Interchase Corporation Ltd, quoting in full the passage in her Honour's judgment referred to at [73] above. His Honour concluded at [206]: "With respect, I do not agree. The examination may be a proceeding for the Federal Court of Australia Act . It does not follow that it is a proceeding in which it is intended that evidence be adduced from witnesses . Her Honour's views were obiter ."

His Honour's views, it may be noted, were also obiter, albeit speaking for the Full Court. 76 This difference in approach need not be resolved for present purposes, because the Supreme Court Rules have made express provision in Part 36 r 13 in the following terms: 13(1) This rule applies where: (a) the Court, by subpoena or otherwise, orders any person to produce any document to; (b) a party is required by a notice served under rule 16(1) to produce any document to; or (c) a question is put to a person in the course of examination before, the Court or a judge or any officer of the Court, or any examiner, referee, arbitrator or other person authorised to receive evidence and neither Part 3.10 of the Evidence Act nor Part 3.10 of the Evidence Act 1995 of the Commonwealth is applicable. (2) The Court shall not compel, and rule 16 shall not require, production of a document or an answer to a question, unless and until the Court directs that the production or answer shall not be prevented by this sub-rule: (a) over the objection of a person if evidence of the documents, or of an answer to the question, could not be adduced in the proceedings over the objection of the person, by virtue of the operation of Part 3.10 Division 1 of the Evidence Act ; … . 77 Reading the sub-rules together, the apparent purpose is to permit a person to rely upon a provision in Part 3.10 of the Evidence Act in resisting production or answering a question, in circumstances where that part would not, in its own terms operate. The language adopted is, however, slightly awkward for two reasons. First, the terms of sub-rule (2)(a), referring to "the proceedings" make it unclear whether there must be proceedings on foot or whether the test is to be applied in relation to hypothetical proceedings. Because the circumstances in which the rule applies envisage that some steps have been taken in the Supreme Court, so long as a wide construction is given to the term "proceedings" consistently with the authorities referred to above, it is appropriate to assume that the reference is to actual proceedings, being those in which answers are sought or production is ordered. 78 The second awkwardness in terminology is that r 2 does not in terms adopt the statutory immunity from production or answer, but only a contingent immunity "unless and until the Court directs" otherwise. However, no issue having been raised as to that terminology in the present case, it is sufficient to accept that a claim for client legal privilege having been properly raised and accepted, the Court would not otherwise direct production of the document because the rule should be understood to 'incorporate by reference' the relevant parts of the Evidence Act: see Mok v New South Wales Crime Commission [2002] NSWCA 53 at [21] (Mason P, Stein JA and Mathews AJA agreeing). 79 Accordingly, this case may be disposed of by reference to the Evidence Act, the relevant provisions of which are set out below: 117 Definitions (1) In this Division: client includes the following: (a) an employer (not being a lawyer) of a lawyer, (b) an employee or agent of a client, … lawyer includes an employee or agent of a lawyer. Party includes the following: (a) an employee or agent of a party, … 118 Legal advice 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) a confidential communication made between the client and a lawyer, or (b) a confidential communication made between 2 or more lawyers acting for the client, or (c) the contents of a confidential document (whether delivered or not) prepared by the client or a lawyer, for the dominant purpose of the lawyer, or one or more of the lawyers, providing legal advice to the client. 119 Litigation 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) a confidential communication between the client and another person, or between a lawyer acting for the client and another person, that was made, or (b) the contents of a confidential document (whether delivered or not) that was prepared, for the dominant purpose of the client being provided with professional legal services relating to an Australian or overseas proceeding (including the proceeding before the court), or an anticipated or pending Australian or overseas proceeding, in which the client is or may be, or was or might have been, a party."

Privilege: approach of primary judge 80 The primary judge dealt separately with the operation of ss 118 and 119. His Honour's conclusions in relation to s 119 may be briefly stated. He commenced with the proposition that "litigation is clearly likely to break out between the parties": at [60]. His Honour noted, however, that it was not possible on the current evidence to determine when litigation became a real prospect but accepted that it was at some point during 2004: at [83]. His Honour's general conclusion was in the following terms at [85]: "I also adopt the Opponents' submission that the probabilities are that, even if some documents in the hands of the proposed examinees are privileged, there will be some documents not in that category about which examinees may be questioned." 81 Although ground 8 of the proposed grounds of appeal suggests that his Honour held that communications between those Claimants who are part of QBE and the solicitors for QBE "could not be privileged" within the meaning of s 119 of the Evidence Act, in my view his Honour made no such finding. Accordingly, the operation of s 119 need not be further considered. 82 The manner in which the primary judge dealt with the question of 'advice privilege' requires closer consideration, in three respects. First, as his Honour noted at [78], the approach he adopted as a matter of principle was for the purpose of determining whether the issue of the summonses was "oppressive or an abuse of process". His Honour continued: "The person conducting the examination may still need to rule on the material before him or her whether, on the facts, privilege applies or not."

Against this, it was put by the Claimants that his Honour's findings in relation to questions of law will inevitably control the determinations made by the judicial officer in charge of the examination process and, accordingly, this Court should consider whether they are correct or not. 83 An invitation in those terms should not be accepted: the relevance of any findings made with respect to the legal principles must be limited to the extent that they were material considerations in the conclusion reached by his Honour with respect to oppression, or any alternative basis upon which the exercise of discretion by the Deputy Registrar may have miscarried. 84 The second point to be noted is that his Honour dealt with the issue by reference to the reports of investigations obtained by QBE or its lawyers from the insurance loss assessors and the mining consultants. A critical issue in that respect was who commissioned the reports and on what authority. His Honour's findings in that regard were at [67], [68] and [75]: "Thus, where a client instructs an expert to prepare a report for the client to transmit to a lawyer for the purpose of obtaining legal advice, the report may well not be privileged. However, the facts of the instant case are that it was the solicitors, not QBE itself who commissioned the expert report and that the solicitors asked the experts to report direct to the solicitors so that they could provide advice to QBE. … The material in the instant case suggests that the solicitors merely obtained general instructions to do what was in their view required to protect the insurers and that the solicitors retained loss assessors and other experts on their own initiative based on previous experience with respect to such incidents."

In such a situation his Honour held that "where the solicitor, acting within general instructions, of his or her own initiative seeks a report from an expert, that report falls outside legal advice privilege": at [77]. 85 The question for present purposes is whether the last statement constituted an error, and if so whether it was material to the conclusion reached by his Honour that oppression had not been demonstrated by the Claimants, so that the circumstances did not require that each summons be set aside. Before turning to the factual inferences relied on for this conclusion it is useful to address the legal principles identified by his Honour. 86 The primary judge gave particular consideration to three cases, the earliest of which was Nickmar Pty Ltd v Preserveatrice Skandia Insurance Ltd (1985) 3 NSWLR 44 (Wood J). In that case, a claim for privilege in relation to third party reports was upheld, but the critical feature identified by the primary judge was that the solicitors who had obtained the reports did so "on the explicit instructions of the client": at [72]. The case was therefore distinguishable from the present case. 87 The facts of that case were in some respects similar to the present case. The reports were prepared for or on behalf of an insurer, who sought to deny liability under a policy of insurance on the basis that the fire from which the relevant damage resulted was lit by the plaintiffs, or with their connivance: ibid at 47A. The insurance loss adjuster originally instructed by the insurance company made a preliminary investigation at the scene of the fire and immediately formed the view that the fire was of a suspicious nature. He reported that fact by telephone to the insurer who then advised him that his instructions were withdrawn and that he would receive further instructions from the insurer's solicitor in due course. The claims examiner for the insurer then rang its solicitors and gave instructions to them to act and to instruct the loss adjustor to continue his investigations on their instructions. He deposed that his sole purpose in instructing the solicitors in this manner "was to obtain legal advice from him, once the investigations had been completed, as to the plaintiff's entitlement to indemnity": ibid p 47G. 88 The Claimants discounted the alleged point of distinction and contended that Nickmar was on all fours with the present case and should have been followed. However, before considering the correctness of this contention, it is necessary to note four points in relation to the nature of the decision. First, Wood J was applying common law principles, and not the Evidence Act. Secondly, his Honour applied a "sole purpose test", rather than the "dominant purpose test" adopted by ss 118 and 119 of the Evidence Act. Thirdly, the case was dealt with as a 'litigation privilege' case, on the basis that the reports were prepared for or in contemplation of litigation. Fourthly, the approach adopted in relation to copies of unprivileged originals was criticised by the High Court in Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501, although that point is not relevant here. 89 Beyond some factual similarities, Nickmar appears to be of little direct relevance to the present case. At 56A-B, Wood J concluded: "I have no difficulty in accepting that it was because of the contemplation of litigation that the solicitors were retained to act in the matter."

Once that conclusion was reached, the second limb of the principle stated in Wheeler v Le Marchant (1881) 17 Ch D 675 operated. It was, in Evidence Act parlance, a s 119 (or litigation privilege) case. In that circumstance, reports prepared by third parties and supplied to the solicitors for the client could attract privilege, even though the client had no direct involvement in obtaining the reports. Thus, nothing turned on the nature of the instructions given to the solicitor. 90 However, Wood J also considered the position of third party reports obtained for the purposes of obtaining legal advice. After setting out several passages from the judgment of the Master of the Rolls and Brett LJ in Wheeler, his Honour continued (at 53G-54): "Each of Jessel MR and Cotton LJ recognised that there was a distinction between communications from third parties acting as agents of a client seeking advice, and from third parties not acting as agents. Communications by the former could perhaps be regarded as communications of the client itself, and on that account attract privilege, where made for the purpose of obtaining advice. Communications by the latter however stand in a different position. Although they become employed on behalf of the client to do certain work, that work is not communicating with a solicitor to obtain legal advice. It is only when their communications are in contemplation of litigation, or for the purpose of giving advice or obtaining evidence with reference to it, that privilege attaches."

That statement of the principle was, however, subject to the qualification, as expressed by Jessel MR at 680, and set out by Wood J at 52G, identifying a contention which was ultimately rejected, namely that: "… documents communicated to the solicitors of the defendants by third parties, though not communicated by such third parties as agents of the clients seeking advice, should be protected, because those documents contained information required or asked for by the solicitors, for the purpose of enabling them the better to advise the clients."

Jessel MR continued, in rejecting that proposition, at 681: "… but it has never hitherto been decided that documents are protected merely because they are produced by a third person in answer to an inquiry by the solicitor." 91 It is clear that the primary judge in the present case relied upon and applied that principle. This required the conclusion that the independent consultants did not prepare the reports on behalf of the defendants, as their agents. That conclusion in turn depended upon the proposition that the solicitors were not expressly authorised to employ such consultants on behalf of QBE, despite the fact that it is implausible that the solicitors would have done so, absent authority and some express or implied undertaking by QBE to meet the additional costs. So viewed, there is some artificiality in concluding that the report of a third party, provided directly to the solicitors for the client may be privileged if the third party was in truth the agent of the client, but not if it was providing a service to the solicitors. The solicitors had no interest in the information or services provided by the third parties, except to the extent that such reports assisted the solicitors in giving legal advice to the client. 92 In particular circumstances, it may well be established that the use of the solicitors to obtain such reports is a mere "stratagem" or "sham", both terms being used by the plaintiffs in Nickmar. There is, of course, a certain irony in these circumstances. If the reports are provided directly to the client, there is at least a danger that the client would have a significant purpose of the report, other than obtaining legal advice. That danger may be thought to be reduced if the report is supplied to the solicitor. On the other hand, if the report is obtained by the solicitor, without the direct intervention of the client, it may not be protected because the third party is held not to be an agent of the client. 93 The next case to which the primary judge made reference was Pratt Holdings Pty Ltd v Commissioner of Taxation (2004) 136 FCR 357, a decision of the Full Court of the Federal Court. The issue in Pratt arose from an attempt by the Commissioner to obtain access to documents pursuant to s 263 of the Income Tax Assessment Act 1936 (Cth). Thus, consistently with Esso Australia Resources Ltd v Commissioner of Taxation (1999) 201 CLR 49, the Court was not required to apply provisions of the Evidence Act, but, as in Nickmar, was concerned with the operation of common law principles. 94 In Pratt, the appellant had sought a report from an accountant, on the advice of its lawyers, valuing certain losses. The corporation received the report and forwarded it to the lawyers. No litigation was pending or anticipated at the time the report was prepared, nor at the time it was forwarded to the lawyers. Accordingly, the question of privilege arose only on the basis that the report was prepared for the dominant purpose of communicating it to the lawyers in order to obtain legal advice. As Finn J noted (Merkel J agreeing) this was not a case of direct communication by the accountant to the lawyers. His Honour held (at [24], referring to the judgment of Cotton LJ at 684-685) that Wheeler was authority for the proposition that: "This privilege should not be given such rein as would allow the legal advisor unilaterally to bring third party communications under the umbrella of lawyer/client communications notwithstanding that the third party was not the client's agent for the purpose."

The comment of particular relevance in the judgment of Cotton LJ in Wheeler was that the third parties in that case "were employed on behalf of the clients, the defendants, to do certain work, but that work was not the communicating with the solicitor to obtain legal advice". The issue as identified by Finn J (at [38]) was as follows: "It is accepted that, when Pratt Holdings received the report and sent it to ABL [the lawyers] in effectuation of its purpose, that communication with its solicitors attracted legal advice privilege. What is not accepted is that the step which was a necessary precondition to effectuating that purpose - ie, the transmission of the report from PriceWaterhouseCoopers to Pratt Holdings for its submission to ABL - resulted in the report and its pendant documents … having or retaining the character of privileged documents in PriceWaterhouseCooper's [sic] hands for which Pratt Holdings could claim privilege." 95 His Honour held that PWC was not Pratt Holdings' agent "for the purpose of collecting and communicating the information contained in the report": at [40]. However, his Honour continued (at [41]): "To deny that a third party is an agent in such circumstances does not, though, provide a sufficient or principled reason for denying privilege to the documentary communication (or contents) it has authored. The important consideration in my view is not the nature of the third party's legal relationship with the party that engaged it but, rather, the nature of the function it performed for that party. If that function was to enable the principal to make the communication necessary to obtain legal advice it required, I can see no reason for withholding the privilege from the documentary communication authored by the third party. That party has been so implicated in the communication made by the client to its legal advisor as to bring its work product within the rationale of legal advice privilege." 96 After a careful and comprehensive review of the authorities, Stone J (with whom Merkel J also agreed) concluded at [105]: "The coherent rationale for legal professional privilege developed by the High Court does not lend itself to artificial distinctions between situations where that expert assistance is provided by an agent or alter-ego of the client and where it is provided by a third party. Nor, in my view, should the availability of privilege depend on whether the expert opinion is delivered to the lawyer directly by the expert or by the client. Provided that the dominant purpose requirement is met I see no reason why privilege should not extend to the communication by the expert to the client. This approach is consistent with the High Court's ruling in Daniels … that legal professional privilege protects communications and therefore prevents the disclosure of information or documents that would reveal communications protected by the doctrine." 97 The approach adopted by the Full Court in Pratt had two limbs. The first entailed a narrow view of the concept of "agent", which would appear to exclude independent consultants employed to provide expert services. (Stone J did not address this question.) The second limb concerned the willingness of the Court to find that a report required by a client for the purpose of obtaining legal advice should be treated as falling within the scope of common law privilege regardless of the precise mechanism by which it was obtained and conveyed to the solicitors. 98 The primary judge did not expressly decline to follow this reasoning, nor did he suggest that it was wrong. Rather, he treated the present case as involving an extension of principle (which did not in terms arise in Pratt) to a communication directly by the third party to the solicitor. 99 Although it may well be correct to say that the present facts were different from Pratt, the distinction his Honour relied upon was one expressly eschewed by Stone J and impliedly, by Finn J, Merkel J agreeing with both. It follows that his Honour's judgment cannot readily be reconciled with the reasoning of the Full Court. 100 The third case referred to by his Honour in this line of authority, was DSE (Holdings) Pty Ltd v InterTan Inc (2003) 135 FCR 151. The particular passages in the judgment of Allsop J relied on were those found at [92] and [94] which concerned the possibility that third party experts might be appointed not merely to identify relevant material, but to communicate those matters to the lawyers. Allsop J stated (at [92]): "Hence, the retention of a loss adjustor or expert to prepare a report about an event or state of affairs which it is contemplated will be submitted to lawyers for advice, may well not be the retaining of a third party to act as an agent to communicate. It may well only be retaining an agent to prepare information. That is sufficient it seems to me to explain Re Highgrade Traders . However, the appointment of someone to liaise with a lawyer and to include in that person's retainer (as here) a standing brief to communicate such matters about the client's affairs and its views on the client's affairs as is thought appropriate, can, it seems to me, be seen as the appointment of an agent to communicate."

His Honour continued at [94]: "With respect, I do not see the basis in principle, or in the authorities, for the conclusion that the agent so appointed to communicate with the lawyer is limited to one who does no more than pass on knowledge or information received from the client. It seems to me that the question is whether the communication between the third party and the solicitor is to be taken to be the same as a communication between the client and the solicitor. It will be, if the client appoints the third party to communicate with the lawyer on its (the client's) behalf - whether in place of, or in addition to, it. I do not see how this is satisfactorily answered by limiting the role to being a messenger of information provided by the client to the lawyer. If the appointment of agency is, or is to include, the duty to give information and instructions to the lawyers in discussion with the lawyer and receive the lawyers [sic] views, it is difficult to understand why the agency is not characterised as one to communicate with the lawyer for the purpose of giving and receiving legal advice."

Because the judgment in DSE (Holdings) predated the appeal in Pratt Holdings , the comments of Allsop J with respect to the appointment of an agent to communicate, which could include an expert, were made before the comments of Finn J to the effect that the expert accountant was not an "agent" for the purposes of the common law rule with respect to privilege. 101 Before leaving the authorities, it is convenient to refer to the decision of the English Court of Appeal in Re Highgrade Traders Ltd [1984] BCLC 151, to which Allsop J referred in the passage set out above and which was relied upon by the Opponents in the present case. As it happens, the case involved an examination of persons having relevant information for the purposes of a winding-up, as well as issues of legal professional privilege. However, the issue with respect to privilege was concerned with circumstances in which litigation was genuinely regarded as being probable: ibid at p 175c-d. The distinction between advice privilege and litigation privilege identified in Wheeler was accepted without discussion: ibid at p 164f.

Application of principles: advice privilege 102 The present issue must be determined by reference to the terms of s 118 of the Evidence Act, as picked up by Part 36 r 13 of the Supreme Court Rules. The protection given by s 118 refers to confidential communications between, relevantly, the client and a lawyer. Section 119, by contrast, includes confidential communications between either the client or a lawyer acting for the client and "another person", apparently reflecting the distinction in Wheeler. On the other hand, the definitions in s 117 of both "client" and "lawyer" include an employee or agent of either. Whether or not this was intended, the result appears to subvert the distinction which would otherwise flow from the operation of the principles set out in Wheeler, at least where agency is established. 103 Section 118, pars (a) and (c) are relevant for present purposes: the former protects confidential communications; the latter protects the contents of a confidential document. 104 There was no suggestion in the present case that in general terms, either the communications between the Claimants and the lawyers for QBE or the documents prepared by the Claimants for the purposes of communicating with QBE would not be confidential. Accepting that the matter was to be dealt with at the level of principle, the Opponents did not make any concession in that regard, but did not challenge the generality of that statement as an available inference from the material set out in the affidavit of the Claimants' solicitor. I would draw that inference. It follows that for the relevant communications and documents to fall within the scope of the statutory privilege under s 118, subject to questions of purpose, the Claimants must be agents either of the client (QBE) or its solicitors (Wotton & Kearney). Accordingly, the present argument turns squarely on the scope of the term "agent" in the definition of both "client" and "lawyer" in s 117 of the Evidence Act. 105 Once attention is paid to the terms of the statute, the question of specific or general instructions and the extent to which the solicitor, as opposed to QBE, took the initiative take on a different complexion. Arguably, it does not matter whether the agent is identified as the agent of the solicitor or the agent of the client, for the purposes of par (c). On the other hand, it may matter if it is necessary to rely on par (a), which does not in terms cover communications between a lawyer and his or her employee or agent. If the mining consultant were an agent of QBE, a communication between it and QBE would not be protected, but a communication directly to the lawyers would be. 106 One answer to this conundrum is that so long as the material collected by the mining consultant as an agent is placed in documentary form, the contents of the document will be protected, whether or not it is communicated. Accordingly, it will be protected even if communicated to QBE, pursuant to par (c), if not par (a). However, if the material is communicated orally by the agent or employee of the client to the client, rather than to the lawyers, that oral communication would appear not to be protected. On one view, that result may not have been intended. A means of avoiding it may be found in the proposition that the general law would protect such an oral communication and s 118 demonstrates no intention to exclude such protection, which would still apply, pursuant to s 9 of the Evidence Act. 107 That conclusion, however, would give rise to a further anomaly. If it were correct to conclude that s 118 extends to communications by third party agents of a client, that could override the second limb of the rule in Wheeler v Le Marchant. Accordingly, to the extent that it was necessary to apply general law principles, unless the reasoning in Pratt in the Full Court of the Federal Court is accepted, oral communications would be protected under the general law so long as they arise as between the client and the lawyer directly, but not if they involve third party agents of the client (or the lawyer). It would seem that, as has occurred with other provisions of the Evidence Act, simplicity has been sought at the expense of coherence and completeness. 108 The rules of client legal privilege form part of the common law which apply to, but are not limited to, evidence in a proceeding, for the purposes of s 9(1): see Daniels v Australian Competition and Consumer Commission (2002) 213 CLR 543 at [5]. However, the terms of s 118 in relation to legal advice, when read with the definitions in s 117, expressly prohibit evidence being adduced which would result in disclosure of the contents of a confidential document prepared by an agent of the client or a lawyer for the dominant purpose of the lawyer providing legal advice to the client. Once it is established that the consultants were appointed for that dominant purpose, it follows that confidential reports prepared by them will be immune from production, an immunity which will extend to adducing oral evidence that would result in disclosure of their contents. 109 One response to this approach is to ask whether the use of the term "agent" in s 117 of the Evidence Act is the same as its use in Wheeler v Le Marchant. In that case the term "agent" was used in a restricted sense. Thus, Jessel MR in Wheeler stated (at 682): "The actual communication to the solicitor by the client is of course protected, and it is equally protected whether it is made by the client in person or is made by an agent on behalf of the client, and whether it is made to the solicitor in person or to a clerk or subordinate of the solicitor who acts in his place and under his direction."

To similar effect were the statements of Cotton LJ (at 684): "It is said that as communications between a client and his legal advisers for the purpose of obtaining legal advice are privileged, therefore any communication between the representatives of the client and the solicitor must be also privileged. That is a fallacious use of the word 'representatives'. If the representative is a person employed as an agent on the part of the client to obtain the legal advice of the solicitor, of course he stands in exactly the same position as the client as regards protection, and his communications with the solicitor stand in the same position as the communications of his principal with the solicitor. But these persons were not representatives in that sense. They were representatives in this sense, that they were employed on behalf of the clients … to do certain work, but that work was not the communicating with the solicitor to obtain legal advice. So their communications cannot be protected on the ground that they are communications between the client by his representatives and the solicitor."

It is clear that agency was recognised as falling within the protection of the privilege only where the communications were through an agent employed for that purpose. No protection extended to communications by independent consultants, whether appointed by the solicitors or the clients. If that is the meaning adopted by s 117 of the Evidence Act , no advice privilege will attach to reports prepared by such persons. 110 Further, McClelland CJ in Eq held in Telstra Corporation v Australis Media Holdings (1997) 41 NSWLR 147 that the reference to "confidential document" in s 118(c) is intended to cover the 'work product' of the lawyer or the client and not documents which would constitute a "confidential communication" within pars (a) or (b). That approach gives a coherent structure to s 118 and should be followed. Nevertheless, it does not answer the proper construction of the definitions of "client" and "lawyer" respectively. 111 In Newcastle Wallsend Coal Co Pty Ltd v Court of Coal Mines Regulation (1997) 42 NSWLR 351 at 389, Powell JA (Meagher JA agreeing) held that an interview conducted by the company's solicitor with an employee of the company was not a communication which fell within s 118(a) because such communications, on the part of the company, are limited to "giving instructions to, or information for the purposes of, obtaining advice" and, on the part of the lawyer, a communication of that advice. In relation to documents, the Court held that the record of each interview was not a confidential document prepared for the purpose of the lawyer providing legal advice, within s 118(c), because such documents are limited to those "containing advice to or a note, or record of, the advice given, or to be given to a client". 112 Whether the language of the Evidence Act, in its terms, leads to this conclusion is unclear. However, the plain language of the Act should not be read down to accord with the common law, but rather effect must be given to the new language. As noted by Gleeson CJ and Hayne J in Papakosmas v The Queen (1999) 196 CLR 297 at [10]: "It is clear from the language of the Act, and from its legislative history, that it was intended to make, and that it has made, substantial changes to the law of evidence in New South Wales. … Section 9 of the Act provides that it does not affect the operation of the common law except so far as the Act provides otherwise expressly or by necessary intendment. Even so, the sections of the Act relevant to this case undoubtedly make express provision different from the common law. It is the language of the statute which now determines the manner in which evidence of the kind presently in question is to be treated."

The Court in that case was dealing with provisions of the Evidence Act concerning recent complaint in sexual assault cases, and was not concerned with client legal privilege. Nevertheless, the principle that the language of the statute must govern is of general application. 113 For present purposes, the focus of attention must be on the operation of s 9, which is in the following terms: 9. Application of common law and equity (1) This Act does not affect the operation of a principle or rule of common law or equity in relation to evidence in a proceeding to which this Act applies, except so far as this Act provides otherwise expressly or by necessary intendment.

Subsection (2) provides some examples, which include evidence of the reasons for decision of a member of a jury, the operation of presumptions and the power to dispense with the rules of evidence in an interlocutory proceeding. This provision itself, which provides a principle for statutory interpretation of the Evidence Act , must be applied in its terms, but nevertheless raises an issue as to how it should operate. 114 The first principle of statutory interpretation is that, subject to constitutional limitations, the law enacted by the Parliament prevails and, to the extent that it is inconsistent with the general law, the latter must give way. That rule, however, is subject to the qualification (itself part of the general law) that fundamental principles of the general law will not be overridden unless the intention is expressed "with irresistible clearness": see Potter v Minahan (1908) 7 CLR 277 at 304 and Bropho v Western Australia (1990) 171 CLR 1 at 18. As was explained in the joint judgment of Mason CJ, Brennan, Gaudron and McHugh JJ in Coco v The Queen (1994) 179 CLR 427 at 437: "The insistence on express authorisation of an abrogation or curtailment of a fundamental right, freedom or immunity must be understood as a requirement for some manifestation or indication that the legislature has not only directed its attention to the question of the abrogation or curtailment of such basic rights, freedoms or immunities but has also determined upon abrogation or curtailment of them. The courts should not impute to the legislature an intention to interfere with fundamental rights. Such an intention must be clearly manifested by unmistakable and unambiguous language. General words will rarely be sufficient for that purpose if they do not specifically deal with the question because, in the context in which they appear, they will often be ambiguous on the aspect of interference with fundamental rights." 115 In Malika Holdings Pty Ltd v Stretton (2001) 204 CLR 290 McHugh J commented on the scope of this qualification. His Honour noted at [28]: "But times change. What is fundamental in one age or place may not be regarded as fundamental in another age or place. When community values are undergoing radical change and few principles or rights are immune from legislative amendment or abolition, as is the case in Australia today, few principles or rights can claim to be so fundamental that it is unlikely that the legislature would want to change them."

Although his Honour noted that there were core areas which might be regarded as remaining within that concept, his Honour concluded (at [29]) that, outside those core areas, "the rule is fast becoming, if it is not already, an interpretative fiction". His Honour concluded at [30]: "Speaking generally, a much surer guide to the legislative intention in areas of legislation dealing with ordinary rights or the general system of law is to construe the language of the enactment in its natural and ordinary meaning, having regard to its context - which will include other provisions of the enactment, its history and the state of the law - as well as the purpose which the enactment seeks to achieve."

A purposive approach is, itself, mandated as the "preferred" approach to construction: Interpretation Act 1987 (NSW), s 33. 116 A second and limited qualification to the principle that primacy must be given to the words of the statute is that the statute itself may adopt the language of the general law. Thus, in Cachia v Haines (1994) 179 CLR 403 at 419, Toohey and Gaudron JJ stated: "In truth any relevant statute or subordinate legislation must be the starting point for a consideration of the appellant's entitlement to costs. That is not to say that the interpretation of any statutory provision or rule of court should be divorced from the historical context in which it was introduced or from the understanding of the time. But the ultimate question is one of interpretation."

Accordingly, even where a statute seeks to record the content of a general law concept, it is the language of the statute and not the general law concept, which must prevail. 117 The rules of evidence include principles which may be understood as protective of fundamental rights, freedoms and immunities, but that could not be said of the general law system of evidence as a whole. Nevertheless, the express intention of s 9 is to preserve general law principles except where the express provisions of the Evidence Act, or its necessary intendment, demonstrates change. This principle of construction applies with respect to matters covered by the Act, as well as those about which it does not purport to speak. 118 Application of this principle requires identification of the relevant general law principles or rules. As noted in the Native Title Act Case (1995) 183 CLR 373 at 485, construing a provision of the Native Title Act 1993 (Cth) which purported to give the common law of Australia in respect of native title the force of a law of the Commonwealth: "… The 'common law' must be understood either as a body of law created and defined by the courts or as a body of law which, having been declared by the courts at a particular time, may in truth be - and be subsequently declared to be - different."

On one view, s 9 may be understood to refer to the "common law or equity" as understood at the time of its enactment. However, it does not seek to prevent developments in such general law principles, which developments will not be limited to a prospective operation. Nor should the section be understood as purporting to freeze the general law in relation to evidence as at the date of its commencement of operation. Rather, common law principles may continue to develop, subject to the qualification that a development which is inconsistent with the express terms of the Evidence Act , or its necessary intendment, will not have effect "in a proceeding to which [the Evidence Act ] applies". 119 Because the Evidence Act does not apply in its own terms to the present proceedings, s 9 will not apply directly to those proceedings. Part 36 r 13, expressly refers only to "the operation of Part 3.10 Division 1 of the Evidence Act" and not to s 9, which is found in Part 1.2. Nevertheless, "the operation" of s 118 depends upon s 9 and accordingly Part 36 r 13, to the extent that it applies s 118, applies it in its operation as provided by s 9 of the Evidence Act. 120 The question to be determined in the present case is thus whether the common law of Australia would provide an immunity from production for the reports prepared by the consultants in the present case and, if so, whether that immunity is inconsistent with s 118, read in its statutory context. 121 As noted above, it is clearly arguable that the relevant principle identified in Wheeler v Le Marchant was more restrictive of the immunity than recent Australian cases would allow. In Nickmar, after setting out a statement of principle by Foster J in Morlea Professional Services Pty Ltd v South British Insurance Co Ltd (unrep, 27 September 1984) Wood J continued at 55C-E: "In this passage his Honour did not advert to the precise circumstances of Wheeler v Le Marchant and of the present case, namely that the documents were obtained by the legal adviser, at his instance, from third parties. Rather his Honour was concerned with documents requested by the client from third parties, which were delivered to the legal adviser. In other words, it was proper to consider the documents as having been brought into existence and communicated to the plaintiff by agents of the insurer. As was shown in Wheeler v Le Marchant such a form of communication may be considered to be that of the client itself. I do not read his Honour as having decided that Wheeler v Le Marchant was wrongly decided and that privilege should be extended to documents provided by a third party, not acting as agent of the client, to a legal adviser for the sole purpose of assisting him to advise that client in the absence of litigation actual or contemplated."

This approach contemplates a wider operation for the concept of an "agent" than that identified in Wheeler at [90] above. 122 As already noted, s 119 may be seen as reflecting the distinction drawn between advice privilege and litigation privilege in Wheeler v Le Marchant. It does not however require, expressly or by necessary intendment, that the nature of an agency relationship be read down in the restrictive manner which may have been intended by the Court in Wheeler. Accordingly, there is no necessary inconsistency between the Evidence Act and the general law to the extent that the latter provides protection in relation to confidential communications and documents undertaken for the dominant purpose of obtaining legal advice, even when those communications or documents come from a third party who is the agent of the client. 123 Whether the same can be said for the principles adopted by the Full Court of the Federal Court in Pratt Holdings is less clear. To the extent that Stone J held that "the availability of privilege [should not] depend on whether the expert opinion is delivered to the lawyer directly by the expert or by the client", the approach adopted by the Full Court may be accepted as consistent with the Evidence Act. However, to the extent that their Honours deny the need for an agency relationship between either the client or the lawyers and the third party expert, the expansion thereby achieved of the general law principles is arguably not consistent with the terms of the Evidence Act. 124 The primary position of the Claimants in the present proceedings was that each of the experts was an agent of the insurer, for the purpose of carrying out such investigation as was required for it to obtain legal advice. Although it was put to the Claimants in the course of argument that an alternative approach was open, namely that the experts were the agents of the solicitors, the Claimants adopted that approach as a fall-back position only. In my view, the primary position of the Claimants with respect to agency should be accepted. 125 As noted in the Claimants' submissions, the primary judge referred on a number of occasions to the expert consultants "retained by" QBE Insurance (at [1] and [7] and [22]). At [62] his Honour stated: "As I noted earlier, QBE through its solicitors, retained Crawford & Mackenzie even before a claim was made under the policy. It obviously made commercial common sense to do so because of the value of obtaining material as soon after the incident as possible."

This statement may raise an issue as to the purpose of retaining the experts, but it is inconsistent with the suggestion that the experts were not retained by the insurer. 126 The initial correspondence between the solicitors for QBE and the consultants is entirely consistent with this conclusion. Indeed, the principal consultants were chosen by QBE and approached before the solicitors sought to approach them. Thus, a letter of 5 January 2004 from Wotton & Kearney to Crawford & Co stated: "I confirm that we are instructed by QBE Insurance (Australia) Ltd in this matter on behalf of QBE and other co-insurers. The previous instructions received by you from QBE in this matter are withdrawn. Please not that you are instructed and retained in this matter by Wotton & Kearney and that you should now take instructions from and report directly to us."

It is true that there is no express reference in this letter to Crawford & Co being agents of QBE, but it may be inferred from the fact that Wotton & Kearney themselves were acting as agents of QBE. In a letter to Mr Bruce McKensey of 14 January 2004, Wotton & Kearney referred to telephone conversations and correspondence with Mr Raynal of Crawford & Co and continued: "We confirm that we are instructed by QBE Insurance (Australia) Ltd in this matter on behalf of QBE and other co-insurers. Please accept our urgent instructions to act on behalf of insurers in this matter. Please note that you are instructed and retained by Wotton & Kearney and you should take instructions from and report directly to us. Your account should be addressed to the co-insurers for their respective proportions and forwarded c/- Wotton & Kearney." 127 Wotton & Kearney had no interest in the cause of the mine catastrophe, except for the purposes of advising QBE. QBE had a real and direct interest: indeed, it is precisely that interest which may lead to questions as to the purpose of QBE in seeking information from the experts. It is an inescapable inference, based on commercial reality, that QBE, not the solicitors, would bear ultimate responsibility for the fees of the consultants. The reason for having the appointment of the consultants undertaken by the solicitors was clearly to enhance the appearance, if not the reality, of the inference that the work was being undertaken for the predominant purpose of obtaining legal advice. Whether the mechanism for appointment was effective in that sense does not, in my view, affect the conclusion that the expert consultants were appointed as agents of QBE. 128 It follows that, if the predominant purpose is established, the reports will be immune from production. 129 Despite a contrary factual finding, his Honour also accepted the proposition that "privilege would be claimed over most documents and answers given at the examination": that being one of the "prefatory averments" apparently accepted at [92], referring to [91]. Whether his Honour's regretful acceptance of that fact was an acceptance that claims would be made, or that claims would be made and likely be accepted, is unclear. However, in the light of the conclusion that reports of third party experts will, if the necessary purpose is established, be the subject of legal advice privilege, it would seem that claims in relation to a significant number of documents are likely to be upheld. 130 The consequences of that conclusion must be assessed by reference to the statutory scheme under which orders for production were made. Part 36, r 13 applies both to orders for production and production on notice under Part 36, r 16. The latter rule provides that a party served with a notice "shall, unless the court otherwise orders, produce the document or thing in accordance with the notice": r 16(1). The effect of r 13(2) is, it would appear, that no order relieving the party under r 16 is necessary: rather, where privilege is invoked, the rule "shall not require" production of the document, until the Court has directed that production "shall not be prevented" by sub-r 13(2). Whether a similar approach is to be adopted in relation to an order for production under r 12 is less clear. Sub-rule 13(3) does not say that in such a case the order "shall not require" production of a privileged document, but rather that the Court "shall not compel" such production, unless and until it directs that the production shall not be prevented. On one construction, the order is unenforceable, pending further consideration by the Court; on the other construction, an order should not be made in the first place seeking to compel production of documents the subject of privilege. 131 In Re BPTC Ltd (in liq) (No. 5) (1993) 10 ACSR 756, Bryson J adverted to the nature of these difficulties, in practical terms, at 759(15)-(30). His Honour was concerned in particular in that case with a complaint as to the excessive scope of the orders for production, made under Part 36, r 12. After referring to the need for affidavit evidence showing the ground on which the order should be made, his Honour continued at (20): "… and further there will be instances where it is not appropriate to act ex parte but the Registrar or other judicial officer should require notice of motion to be given to the party to be affected. More formal procedure would be appropriate where the call for documents is very extensive and compliance might be difficult. There would also be instances where it can be foreseen that there is likely to be some claim for public interest privilege or legal professional privilege, or other dispute."

These comments are appropriate in the present case. 132 Once it is understood that the operation of Part 36 r 13, in relation to an order for production under r 12, precludes the Court from compelling production, even to itself, of a document subject to client legal privilege, an order having that effect should not have been made. Of course, it is not possible for this Court to say that particular documents are the subject of privilege: that issue has yet to be litigated. The mechanism for addressing these issues is by no means clear. In the present case the procedural issues have been blurred by the fact that each summons and order for production was made by the Deputy Registrar in the one, proceeding and each was challenged by way of 'interlocutory process' prescribed with respect to an examination summons only. Given the importance of the issues raised by client legal privilege, and the absence of a clear procedure by which to raise the issues, in my view the preferable conclusion is that an order for production under Part 36 r 12 should not be made ex parte where it may be anticipated that such questions will arise or, in the alternative, the order should make express exception for documents subject to privilege. The fact that a claim for privilege was likely to be raised in the present circumstances was known to the Opponents when they sought the orders and should, in accordance with the obligations of a party seeking ex parte relief, have been disclosed to the Deputy Registrar. Whether or not those possibilities were disclosed is not known. 133 In my view the orders for production should be set aside on the basis that it has been established that they are likely to extend to documents which cannot properly be the subject of an order for production, which documents are likely to form a significant proportion of those subject to the order. It was not suggested by the Opponents that the categories of documents subject to privilege could readily be severed, or that the orders could be saved in part if the conclusion of the Court favoured the submissions of the Claimants. Accordingly the orders for production should be set aside.

Application of principles: examination summonses 134 The primary focus of the Claimants' argument was directed to the circumstances underlying the examination summonses which would, so it was argued, render their issue oppressive. The oppression was said to derive from the combination of the following circumstances:

(a) each of the independent loss assessors and mining consultants had been engaged over a period of approximately a year and had each expended hundreds of hours on their respective investigations;

(b) the product of their investigations had been committed to writing;

(c) a large volume of written material was available to the receivers and managers;

(d) the bulk of the material which was not available would likely be subject to legal professional privilege;

(e) oral examination would require the examinees to make difficult decisions, question by question, as to whether an answer might tend to reveal material subject to privilege;

(f) oral examination would therefore be drawn out and unwieldy, and

(g) because so much of the information known to the examinees had been reduced to writing, oral examination would be unlikely to produce significant new information, not available in documentary form, to the receivers and managers. 135 The legal context for considering this argument has a number of well-established elements. First, the issue of a summons under s 596B involves an exercise of discretionary power and questions of vexation and oppression are undoubtedly relevant considerations. 136 Secondly, the scope and operation of s 596B is such that it will inevitably intrude on private and commercial interests of third parties and require the disclosure of information which would, absent such a provision, be confidential. Despite those consequences, the provision must be given full effect, in accordance with its terms, reflecting a choice made by the Parliament as to the necessary balance between such private and commercial interests and the public interest in the orderly administration of companies under the control of external managers. 137 There are a number of factual matters which also need to be identified in considering the Claimants' submissions.

(a) The argument that, because the investigations were extensive, the process of oral examination will be extensive, is a matter for inference from limited facts. There was no evidence as to the matters which the Opponents sought to make the subject of the examination.

(b) Although it was said that the Opponents had a considerable volume of documentary material already obtained as a result of the investigations carried out by the Claimants, that material was not before the Court; an examination based on that material may be of value to the Opponents.

(c) Further, although it is likely that a considerable volume of the remaining documentary material is subject to client legal privilege, it is not possible to make any precise estimate as to the nature and volume of that material either. 138 It may be reasonable to infer that much of the information sought to be obtained from the Claimants is subject to client legal privilege, and that it is likely, in a general sense, that oral examination will have a tendency to reveal part of the content of the privileged documents, or at least require the examinees to make difficult judgments in that regard. Any claim for privilege will, of course, not be a claim by the First to Seventh Claimants on their own behalf, but will be a claim made on behalf of the QBE. On one view, the oral examinations may well prove lengthy and be subject to real dangers in relation to the inadvertent disclosures of privileged material. On another view, the oral examinations may be carried out with care and deliberation, making due allowance for the need to avoid areas to which privilege attaches and with the purpose of obtaining specific information which is not available in the documents in the possession of or otherwise produced to the Opponents. 139 It was also pressed by the Claimants that the bulk (perhaps nearly all) of the information known to the Claimants is within the knowledge of the receivers and managers. There may be circumstances in which a receiver is entitled to find out whether the examinee has information which is already known to the receiver. However, where the examinee is a stranger to the company, that fact will rarely be information about the affairs of the company. It is not suggested that such an issue arises in the present case. 140 The Claimants further asserted that it was for the receivers and managers to identify the scope of the proposed examination, in order for this matter to be tested. The receivers and managers responded, in part, by saying that they bore no onus and that the Court should assume that each summons was regularly issued on the basis of appropriate information made available to the Deputy Registrar, by way of affidavit. If the Claimants had wanted to see that affidavit, they could have applied to the Court for production: simply by challenging the issue of a summons the Claimants did not place an evidentiary burden on the Opponents to reveal the contents of the affidavit which, according to the statutory scheme, could be kept confidential, until a court otherwise ordered. 141 The position adopted by the Opponents in respect of this issue is correct. As is illustrated by Fetzer v Irving (as Liquidator of Mawson KLM Holdings Pty Ltd in Liq)) [2005] SASC 53 at [27]-[28] an applicant for disclosure of the affidavit will generally be able to obtain access to the affidavit if he or she can demonstrate an arguable case that the issue of the summons exceeded the power of the Court under s 596B and that access to the affidavit is likely to assist in determining the correctness of the challenge. In the present case, the Claimants seek to establish that proposition without access to the affidavit. However, they presumably would not have commenced the present proceedings unless they believed they had an arguable case. If they had an arguable case, they had good prospects of obtaining access to the affidavit. I do not accept the Claimants' assertion that such an application would have been hopeless unless it involved the concession that the present proceedings were hopeless, which it clearly was not intended to do. 142 It follows that, to the extent that it is necessary to determine the nature of the information sought to be obtained by the Opponents, through the examination process, that must be inferred from such material as is before the Court. Inferences may be drawn from two sources: first, the schedule to the orders for production of documents (which is in common form in relation to each of the Claimants) reveals in general terms the areas of interest to the Opponents. Secondly, the extensive documentary record put before the primary judge by way of an affidavit from the solicitor for the Claimants, reveals the nature of the discussion between the parties between the date of the fire and the issue of the various summonses and orders. 143 In my view, the individual Claimants have not demonstrated that they have no information about the affairs of Southland Coal other than -

(a) information already known to the receivers and managers, or

(b) information which is the subject of client legal privilege.

Nor have they established, in my view, even assuming that the relevant expert reports are all subject to client legal privilege, that the need to protect privilege will render the examinations oppressive. Rather, the scope of permissible examination is likely to be established early on in the proceedings, if claims for privilege are made and ruled upon. Indeed, if the Claimants are correct in their assertion that they have little information beyond that which is either known or is the subject of privilege, the examinations will be brief. Oppression is not established. 144 Nor am I satisfied that the jurisdictional basis for the issue of each summons, namely that the proposed examinees do not have relevant information to convey, has been made out. It is not appropriate, on the arguments presented, to seek to distinguish between the positions of individual Claimants. Accordingly, the challenge to the primary judge's decision with respect to the examination summonses should be dismissed.

Conclusions 145 The conclusions reached above involve success for the Claimants with respect to the orders for production, but not with respect to the examination summonses. The separate issues have been treated as part of a single process and must, accordingly, be subject to a single order for costs. On one view, the Claimants are entitled to their costs in relation to so much of the proceedings as resulted in success and the Opponents with respect to the remainder of the proceedings. I would make no order as to the costs of the appeal. 146 Because the same result should have obtained below, I would also make no order as to the costs of the proceedings before the primary judge. 147 Accordingly, I would propose the following orders:

(1) Grant leave to appeal in relation to the judgment and orders of the primary judge made on 31 March 2005;

(2) Direct that the Claimants file a notice of appeal in accordance with Part 51, r 5(2); (3) Subject to the filing of the notice of appeal: (a) order that so much of the judgment and orders of the primary judge as dismissed the challenge to the orders for production made by the Deputy Registrar on 18 January 2005 be set aside and in lieu thereof order that each of the orders for production be set aside; (b) set aside the order for costs made by the primary judge, and (c) otherwise dismiss the appeal, with no order as to costs. **********

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.