Optiver Australia Pty Ltd v Tibra Trading Pty Ltd

JUDGE: RARES J DATE: 11 OCTOBER 2012 PLACE: SYDNEY

REASONS FOR JUDGMENT (REVISED FROM THE TRANSCRIPT) 1 The applicants (Optiver) have challenged three subpoenas to give evidence served on experts retained by them. Optiver has not served any reports by those experts on the respondents (the Tibra parties) in this proceeding or the earlier preliminary discovery litigation between the parties. Each of the three experts deposed, in substance, that his sole purpose in producing everything that he produced pursuant to his retainer was in order to provide information to the solicitors for Optiver relevant to their conduct of the litigation between the parties to the proceedings for which he had been retained. The three experts said that they had not produced any material relating to the subject matter of the litigation other than pursuant to or for the purpose of the retainer. Each said that he had not sworn or affirmed any affidavits or experts reports in the context of the dispute between the parties.

The basis of the challenge 2 Optiver argued that the subpoenas should be set aside on two bases, first, that they had no legitimate forensic purpose and, secondly, that any material that might be produced by the experts in answer to the subpoenas would be privileged in any event. 3 The argument proceeded on the threshold point using the broad brush, but unobjected to, statements by each of the three experts to which I have referred. No detailed affidavits were filed that identified particular documents or categories of documents, such as might distinguish materials provided to the experts for the purposes of them being able to assist or give advice, documents expressing opinions or tentative opinions in relation to any of those matters, working papers, their own researcher and the like. Such descriptions would have enabled an examination of the particular documents or categories of documents in order to determine whether they were or were not protected from disclosure by legal professional privilege or client legal privilege under the Evidence Act 1995 (Cth).

Optiver's submissions 4 Optiver argued that the issue of a subpoena ought not be countenanced when it self-evidently sought privileged material, in the circumstances where there was no basis to argue that privilege had been lost. It contended that here the subpoenas were akin to subpoenas seeking communications between Optiver's solicitors and counsel. That may well be so in relation to documents falling within the category of communications actually made between the experts and Optiver's lawyers and documents prepared for the dominant purpose of doing so, such as drafts of the expression of proposed form of what ultimately would be or was intended to be communicated. 5 Optiver argued that the expression of the dominant purpose test by Barwick CJ in Grant v Downs (1976) 135 CLR 674 at 677 was conclusory of its argument. The Chief Justice said that the relevant principle was: "… a document which was produced or brought into existence either with the dominant purpose of its author, or of the person or authority under whose direction, whether particular or general, it was produced or brought into existence, of using it or its contents in order to obtain legal advice or to conduct or aid in the conduct of litigation, at the time of its production in reasonable prospect, should be privileged and excluded from inspection."

Consideration 6 That formulation of the dominant, rather than sole or other, purpose test was accepted and applied in Esso Australia Resources Ltd v Commissioner of Taxation (1999) 201 CLR 49 at 68-69 [46], 73 [61] per Gleeson CJ, Gaudron and Gummow JJ and 107 [173] per Callinan J. Gleeson CJ, Gaudron and Gummow JJ also said (201 CLR at 65 [36]): "Although privilege, where it applies, attaches to communications, not to pieces of paper, discovery is concerned with documents, and privileged communications are frequently in writing. If a written communication is made for the sole purpose of seeking or giving legal advice, or obtaining or providing legal services, the problem of present concern does not arise. It arises where the documentary communication comes into existence for some purpose or purposes in addition to the legal purpose." 7 Likewise, in Daniels Corporation International Pty Limited v Australian Competition and Consumer Commission (2002) 213 CLR 543 at 552 [9], Gleeson CJ, Gaudron, Gummow and Hayne JJ identified that legal professional privilege was a rule of substantive law: "… which may be availed of by a person to resist the giving of information or the production of documents which would reveal communications between a client and his or her lawyer made for the dominant purpose of giving or obtaining legal advice or the provision of legal services, including representation in legal proceedings." (emphasis added) 8 There is a fallacy in Optiver's argument, and a gap in the evidence of its experts on this application. That is that their purpose in producing or collecting all the documents caught by the subpoenas was not necessarily coextensive with a privilege of communication with Optiver's lawyers, although many things that the experts would have done in producing or obtaining documents are likely to have been for that very purpose. But an assertion that particular documents were brought into existence, or as the experts said, were "produced pursuant to my retainer", in order to provide information to Optiver's solicitors, does not necessarily mean that in every situation the privilege will attach to a particular document. In Australian Securities and Investments Commission v Southcorp Limited (2003) 46 ACSR 438 at 441-442 [21], Lindgren J stated a number of principles that were not in dispute in that case. Relevantly, his Honour identified the following categories of documents that did not attract privilege: "(3) Documents generated unilaterally by the expert witness, such as working notes, field notes, and the witness's own drafts of his or her report, do not attract privilege because they are not in the nature of, and would not expose, communications: cf Interchase [Corp. Limited (in liq.) v Grosvenor Hill (Qld) Pty Limited (No 1) [1999] 1 Qd R 141] at 161-2 per Thomas J. … (5) Similarly, privilege cannot be maintained in respect of documents used by an expert to form an opinion or write a report, regardless of how the expert came by the documents; Interchase at 148-150 per Pincus JA, at 161 per Thomas J." 9 Optiver argued that Lindgren J was in error in following the statements in Interchase [1999] 1 Qd R 141 because they had been formulated before the decision of the High Court in Esso 201 CLR 49, in which the accepted test for ascertaining the existence legal professional privilege was changed from a sole purpose test to a dominant purpose test. However, the principle upon which Interchase [1991] 1 Qd R 141 was decided and that supported the propositions extracted by Lindgren J, in my opinion, did not depend upon whether the documents had been produced for the sole, as opposed to the, dominant purpose giving or obtaining legal advice or for use in existing or anticipated litigation. Rather, the principle upon which Thomas J, with whom de Jersey J agreed, was that documents that had been and remained in the expert's possession had not been the subject of any communication with the solicitors or anyone else. Thomas J said (at [1991] 1 Qd R at 162): The basis upon which privilege was claimed for these documents is confined to the claim that they were "brought into existence by Richard Ellis solely for use in this litigation since its commencement and have been kept confidential". (my italics) The italicised words draw attention to what is missing and expose a deficiency in the claim. The documents consist mainly of working papers and valuations of other properties, and lack the quality of confidentiality. There is no reason to think that the documents were made for any confidential purpose. The other deficiency is that they were not communicated or intended to be communicated to anyone. His Honour concluded: "In the present matter, shortly put, the documents in no way make or record communications, let alone confidential communications." 10 In my opinion, that is a correct identification of the relevant principles. Optiver also relied on obiter dicta of Allsop J in Kennedy v Wallace (2004) 142 FCR 185 at 227-229 [228]-[234]. His Honour said (at [229]) that he did: "… not understand the law in Australia to deny privilege to a document made with the dominant purpose of obtaining legal advice on the basis that the document does not amount to the communication." 11 Importantly, there Allsop J was considering documents in the possession of a person who claimed to be a client. His Honour was not dealing with the situation of a third party or expert retained by a solicitor for the purposes of giving opinion evidence or doing work in order to conduct litigation or otherwise to enable the solicitor to give legal advice. The purpose or purposes for which a particular document or category of documents comes into existence will be critical to the determination of a claim that the document or category is privileged. The Court must consider whether the evidence establishes that the dominant purpose for the document coming into existence is for communication of matter to a lawyer, for the purpose of legal advice or use in legal proceedings. As Allsop J went on to say (at [232]): "Advice cannot be given without communication. But that does not mean that no privilege attaches to any document created for the purpose of obtaining the advice (engaging in the communication) until and unless the document is used as part of a communication. That appears to me to undermine the privilege and detract from the protection of the communication itself." 12 There is no reason to doubt the correctness of what his Honour said in that passage. However, the question here is its applicability to the circumstances in the present case. Optiver seeks to rely on it, in effect, as a pre-emptive refutation of the possibility that any material might be elicited by the subpoena to which privilege might not attach, having regard to the statements in the authorities. I do not think that Allsop J expressed so absolute a view. 13 In Pratt Holdings Pty Limited v Commissioner of Taxation (2004) 136 FCR 357, the Full Court carefully explained that a document would be privileged if prepared with the dominant purpose of being used as a communication, and that such a document could include a draft pleading or a draft of correspondence with the client or an advisor of the client (see at 363 [19]-[22], 366 [35] per Finn J, 381-382 [84]-[88] per Stone J. Merkel J agreed with both Finn J and Stone J). The authorities recognise that the privilege is not confined merely to the actual communication itself, but must necessarily extend to such a wider class of documents: see Cross on Evidence (8th Australian edition) (LexisNexis Butterworths, Sydney 2010) at 882-883 [25225] and the cases there cited. As Finn J said in Pratt Holdings 136 FCR at 366 [35]: "… the obvious starting point is with what was the intended use (or uses) of that document which accounted for it being brought into existence." He said that in answering that question, which was one of fact: "… attention necessarily must focus on the purpose (or purposes) of the person who created the document, or who, if not its author, had the authority to, and did, procure its creation." 14 Stone J noted that the dominant purpose requirement does not automatically determine the ambit of the privilege or lead to a conclusion for which in that case the appellants contended. Her Honour also held that lawyers' draft advices, research notes and file notes were capable of being protected (136 FCR at 382 [88]-[89]. 15 Thus, while I accept that it is highly likely that a good deal of what each of the three experts has in the form of documentation caught by the subpoenas will be protected by a claim for legal professional privilege, the authorities recognise that there are likely to be documents in their possession or created by each expert that fall outside that class. I am of opinion that it is sufficiently arguable that it is likely that there will be documents caught by the subpoenas for which no claim of privilege can be sustained. Accordingly, I reject the first substantive basis of Optiver's attack (that only privileged material will be caught by the subpoena and that the affidavits of the experts demonstrate that to be so). 16 The second basis on which Optiver argued the subpoenas should be set aside was that they served no legitimate forensic purpose because anything that might be produced in answer to the subpoena that would not be the subject of a claim for legal professional privilege could not be used in evidence or tendered as an opinion. In my opinion, that argument should also be rejected. The mere fact that the documents themselves may not be admissible in evidence is at the moment, although likely, nonetheless speculative. Moreover, subpoenas can, like discovery, produce documents that may have a relevance for the purpose of the litigation that will enable the Court to be put in a position, on the evidence admitted at the trial, to do justice to the parties by exposing other facts that can be adduced in admissible form. 17 In these proceedings the reports of experts deployed by the parties contain a very considerable series of differences of opinion about a vast range of matters. These differences include what published research shows about how many lines of software individual programmers are capable of writing on a daily basis. Material may be produced in answer to the subpoenas addressed to the three experts, such as published research by others, that has not been discovered by either side or experts upon whom they do rely in the litigation. Depending on the evidence adduced in support of a claim for privilege, published research, copied or identified in documents such as research or file notes, produced in answer to the subpoenas may be found not to be privileged if a claim is made in respect of them: Interchase [1999] 1 Qd R at 162; Southcorp 46 ACSR at 441-442 [21]. For these reasons, I am not satisfied that the subpoenas serve no legitimate or useful purpose.

Conclusion 18 It follows that I refuse to set the subpoenas aside. I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares.

Associate: Dated: 20 November 2012 SCHEDULE NSD 681 of 2009 TIBRA TRADING PTY LTD First Respondent TIBRA CAPITAL PTY LTD ACN 120 313 160 Second Respondent TIBRA INVESTMENT MANAGEMENT LTD ACN 124 402 160 Third Respondent TIBRA GLOBAL SERVICES PTY LTD ACN 120 338 445 Fourth Respondent DINESH BHANDARI Fifth Respondent GLENN WILLIAMSON Sixth Respondent TIMOTHY BERRY Seventh Respondent ANDREW KING Eighth Respondent KINSEY COTTON Ninth Respondent MARTIN NICKOLAS Tenth Respondent NICHOLAS BEGG Eleventh Respondent