Plaintiff v Defendant [2017] VSC 704 | Case summary

Supreme Court of Victoria|2017-11-28|Before: DERHAM AsJ

PRACTICE AND PROCEDURE - Subpoena - Client legal privilege claims over documents subpoenaed from non-parties - Evidence Act 2008 (Vic), ss 118 or 119 - Whether privilege sufficiently proved - Whether Court should exercise discretion to inspect documents the subject of the claim to privilege - Evidence Act 2008 (Vic), s 133 - Barnes v Commissioner of Taxation [2007] FCAFC 88; (2007) 242 ALR 601; ; ; ; ; ; referred to.

Notice of Change of Solicitor 4 October 2017 to SBA Law

1 This ruling concerns an objection by Connective Services Pty Ltd and Connective OSN Pty Ltd (together 'Connective') to inspection by the plaintiff of, initially, 18 documents produced in response to three subpoenas issued to M+K Lawyers ('M+K'),[1] Wellingtons Accountants ('Wellingtons')[2] and Mr Andrew Butler ('Butler').[3] The issues are whether the disputed documents are established to have been produced in circumstances attracting client legal privilege ('privilege'), whether the court should inspect the disputed documents in the exercise of its discretion to do so under s 133 of the Evidence Act 2008 (Vic) ('the Evidence Act') and, if the privilege is established, whether that privilege has been waived.

2 I am not satisfied that Connective has established its claims to privilege over any of the disputed documents, so that its claims to privilege fail. In the exercise of the discretion under s 133 of the Evidence Act, I decline to inspect the documents. The disputed documents having been produced to the Court, the plaintiff will be granted access to them.

3 Connective and related or subsidiary companies conduct a mortgage aggregator business, which was founded in late 2003 by two brothers, Glenn Lees ('Glenn') and Murray Lees ('Murray**'**), Sofianos Tsialtis ('Sof') and their associated companies.[4] The two companies initially incorporated to conduct the business were Connective Services OSN Pty Ltd and Connective Services Pty Ltd.

4 This proceeding concerns a dispute regarding the beneficial ownership of a number of the shares in Connective that are held in the name of the defendant, a company associated with Glenn. The plaintiff claims that the shares are held as to one half on trust for it.[5] Murray is the sole director of the plaintiff and it is the trustee of his family trust.

5 A total of 404 documents were produced to the Court by the subpoenaed parties. Pursuant to arrangements between the parties and orders of the Court, these documents were inspected by Connective. Connective initially identified 21 documents claimed to be subject to Connective's privilege pursuant to ss 118 or 119 of the Evidence Act. These were defined as the 'Annexure A documents'.[6] The privilege claims were reduced to 18 documents and the basis was set out in the Deleuil Affidavit.[7] There is a disconformity between the documents as numbered in that affidavit and as numbered in Annexure A, because no claim is made with respect to documents numbered 5, 6 and 7 in Annexure A. Connective has now also relinquished the privilege claim over document number 8.[8]

6 The privileged documents can be categorised as follows:[9]

(a) advice, file notes and communications between M+K, Glenn and others during the period between September 2006 and July 2009, being documents 1-13 in Annexure A ('First Category');

(b) legal advice provided by Maddocks to Connective in June 2011, copies of which were provided to the Commonwealth Bank of Australia ('CBA'), being documents 16, 17, 18 and 19 in Annexure A ('Second Category'); and

(c) communications between Maddocks, Connective and Butler in September 2015 and communications between Butler, Maddocks and others in September 2011, being documents 14, 15, 20 and 21 in Annexure A ('Third Category').

7 Murray's affidavit, which is uncontradicted, provides the following evidence:[10]

(a) in late 2006, Glenn, Murray and Sof had discussions about Mr Mark Haron acquiring an interest in the Connective business. It was proposed that Mr Haron acquire a 25% share;[11]

(b) Glenn, Murray and Sof engaged M+K to provide advice on the proposed transaction;[12]

(i) first, M+K gave advice about the structure of the proposed transaction. This involved M+K preparing draft transaction documents, including drafts of a shareholders agreement, share sale agreement and deed of confirmation (confirming that the shares held by the defendant were held on trust for the plaintiff);

(ii) second, M+K gave advice concerning the tax implications of the proposed transaction. This included advice about a possible share split and the CGT implications for the existing shareholders.

(d) Murray attended at least one meeting with M+K, but, generally, Glenn took the lead in liaising with M+K on these issues.[14] Glenn did so on his own behalf and on behalf of Sof and Murray, as the beneficial or ultimate owners of the business. Glenn kept Sof and Murray informed of M+K advice and the progress of the work in connection with the proposed transaction;[15]

(e) in addition to updating Murray about the progress of the transaction, Glenn shared with Murray copies of advices from time to time received from M+K as well as draft transaction documents;[16]

(f) M+K provided advice and professional services between October 2006 and at least mid-2009;[17]

(g) in late 2009, Butler of Wellingtons was asked to provide advice about the structure of the proposed transaction;[18]

(h) M+K's legal fees were paid for by Connective. The reason for this was that M+K's work concerned the interests of the three ultimate owners (Glenn, Murray and Sof) and it was expedient that the cost of the work was borne by Connective, rather than being separately billed to the three individuals.[19]

8 Connective and the plaintiff both rely on various provisions of the Evidence Act. Connective relies on the following:

(a) section 117 (definition of 'client');

(b) section 118 (advice privilege);

(d) section 131A(1) (application of Part to preliminary proceedings); and

(e) section 133 (Court may inspect documents).

(a) section 122 (waiver); and

(b) section 126 (related documents).

9 In IOOF Holdings Ltd v Maurice Blackburn Pty Ltd[20] Elliott J set out these provisions and summarised the relevant principles as follows:

(a) the party claiming the privilege bears the onus of proof. That onus will only be discharged if the party establishes facts from which the court is able to determine that the privilege is properly claimed;[21]

(b) 'purpose' in 'dominant purpose' means the purpose which led to the creation of the document or the making of the communication;[22]

(c) the 'dominant purpose' is the purpose which was the ruling, prevailing or most influential purpose[23] at the time the document was brought into existence;[24]

(d) there can be only 1 dominant purpose. If there are 2 purposes of equal weight, neither fits the description of a 'dominant purpose';[25]

(e) if a dominant purpose existed, that dominant purpose must be determined objectively, having regard to the evidence, the nature of the document and the parties' submissions.[26] That said, evidence of the subjective purpose of the person making the communication or creating the document is relevant;[27]

(f) ordinarily, the relevant purpose is that of the person who brings into existence the document which includes the privileged communication, but this will not always be the case;[28]

(g) as the test is directed towards the purpose of bringing the document into existence, a copy of a non-privileged document may be privileged;[29]

(h) the material relied upon by the person claiming privilege must be focused and specific. Formulaic and bare conclusory assertions are not sufficient;[30]

(i) with respect to advice privilege, in considering whether a communication is for the purposes of legal advice, the purposes must be construed broadly.[31] Although it does not extend to pure commercial advice, legal advice, in this context, includes any advice as to what should prudently and sensibly be done in the particular legal circumstances in which the client finds itself;[32]

(j) further to sub-paragraph (i), a document created by a lawyer that records her or his legal work carried out for the benefit of the client, such as a research memorandum, a summary of documents or a chronology, will be protected by privilege whether or not the document is provided to the client. Similarly, notes and other material created by the client that relate to the legal advice sought (whether or not actually communicated to the lawyer), or that relate to communications with the lawyer, may be privileged where such documents meet the relevant 'dominant purpose' test;[33]

(k) with respect to litigation privilege, for a proceeding to be 'anticipated or pending' for the purposes of s 119, there must be more than a mere possibility of litigation. As a general rule, there must be a real prospect of litigation, but it does not have to be more likely than not;[34]

(l) many claims for privilege may be determined by the court without the need to inspect the documents. Further, ordinarily, the court will not examine the documents if the party claiming privilege has not established a basis for the claim in an affidavit in support. However, in an appropriate case, the court may examine the documents to make a decision about privilege, particularly where the parties agree to this course;[35]

(m) a law firm or a company may be a 'client' if it engages or employs its own employee lawyer,[36] but privilege will only attach to the relevant communication or document if the employee is consulted confidentially in her or his professional capacity, with the requisite degree of independence, in relation to a professional matter.[37]

10 In relation to waiver of privilege, Elliott J noted that a person may be taken as acting inconsistently with maintaining privilege within the meaning of s 122 by reason of the following:[38]

(a) partial disclosure of communications or documents, while claiming privilege over the remainder;[39]

(b) a party making an assertion as part of its case that puts privileged communications or the contents of privileged documents in issue, or necessarily lays them open to scrutiny.[40]

11 Further, a waiver of advice privilege extends to the documents and information which were taken into account in formulating, or which otherwise underpinned or influenced, the legal advice no longer the subject of privilege.[41]

12 The operation of s 122(2), and the doctrine of imputed waiver with which that section is concerned, is summarised in Mathews v SPI Electricity Pty Ltd as follows:[42]

(a) the object of s 122(2) was to adopt the approach of the High Court in Mann v Carnell[43] to common law waiver (with some presently irrelevant modifications). According to the common law, privilege will be waived where there is an inconsistency between the conduct of a party by making use of a privileged communication and the maintenance of a claim for privilege;[44]

(b) the waiver will be over not only the specific privileged communication which has been used but also over associated material;[45]

(c) the starting point is an analysis of the disclosures or other acts said to be inconsistent with the maintenance of the privilege. It is 'well established that the voluntary disclosure of privileged documents can result in a waiver of privilege of those documents and associated material';[46]

(d) the test to be applied to determine the scope of any waiver of 'associated material' is 'whether the material that the party has chosen to release from privilege represents the whole of the material relevant to the same issue or subject matter';[47]

(e) a waiver over associated material may also result from the application of s 126 of the Evidence Act. This section provides that privilege may not be maintained over a communication or document 'if it reasonably necessary to enable a proper understanding' of a communication or document over which privilege has been lost under s 122 and related provisions.

13 The plaintiff puts at the forefront of its submissions in this case that Connective has not established the privilege claimed to the requisite standard and that I should not inspect the documents pursuant to the power in s 133 of the Evidence Act. It is therefore necessary to expand on the shortly stated propositions that Connective's onus will only be discharged if they establish facts from which the court is able to determine that the privilege is properly claimed and that the material relied upon by Connective must be focused and specific.

14 The test for establishing dominant purpose is summarised in Barnes v Commissioner of Taxation as follows:[48]

The authorities emphasise the need for focused and specific evidence in order to ground a claim for legal professional privilege. In Kennedy v Wallace, Black CJ and Emmett J reiterated the principles that verbal formulae and bare conclusory assertions of purpose are not sufficient to make out a claim for privilege: ...Where possible the court should be assisted by evidence of the thought processes behind, or the nature and purpose of advice being sought in respect of, each particular document. The fact that generalised evidence is not challenged in cross-examination does not mean that such evidence must be accepted, particularly when it is as manifestly inadequate as it is in this case. As in Kennedy, mere general assertions of the purpose of creation of the documents are insufficient to discharge this onus. Even though in that case some evidence as to the purpose of particular records was adduced, Allsop J at [168] considered that the onus had not been discharged because the evidence did not permit a conclusion to be drawn as to the dominant purpose of the creation of any particular document or entry in a document. Simply to show that one purpose for creation of the document was to obtain legal advice or assistance is not good enough. [citations omitted and emphasis added]

15 In AWB Ltd v Cole (No 5), Young J said:[49]

The existence of legal professional privilege is not established merely by the use of verbal formula...Nor is a claim of privilege established by mere assertion that privilege applies to particular communications or that communications are undertaken for the purpose of obtaining or giving 'legal advice'...If assertions of that kind are received in evidence in support of the privilege claim, their conclusionary nature can leave unclear what advice was really being sought. There will be cases in which a claim of privilege will not be sustainable in the absence of evidence identifying the circumstances in which the relevant communication took place and the topics to which the instructions or advice were directed...[citations omitted]

16 In relation to the inspection of documents, s 133 reflects the common law position. In New South Wales v Jackson[50] the New South Wales Court of Appeal described the common law position:

In ruling on a claim to legal professional privilege or client legal privilege the court may inspect the relevant documents ...Inspection is discretionary..., for such assistance as it may provide in arriving at the documents' status. In Esso Australia Resources Ltd v Commissioner of Taxation at [52] Gleeson CJ and Gaudron and Gummow JJ said, after observing that a claim for privilege is not conclusively established by use of a verbal formula, that a court "should not be hesitant to exercise" its power to examine documents. Where the parties have put evidence before the court, however, beyond the use of a verbal formula, I respectfully remain of the view expressed in Woollahra Municipal Council v Westpac Banking Corporation at 542, that the court should not unnecessarily pay regard to material which cannot be known to the party challenging the claim to privilege. [citations omitted]

17 In Woollahra Municipal Council v Westpac Banking Corporation[51] Giles J (as he then was) considered whether he should inspect the documents in dispute for the purpose of reaching a conclusion as to whether they were privileged. He observed:

In Grant v Downs [1976] HCA 63; (1976) 135 CLR 674 at 689, the power to do so [that is, to inspect] was recognised and it was said that 'in many instances the character of the documents the subject of the claim will illuminate the purpose for which they were brought into existence'. Inspection should not be undertaken unless there is good reason to do so. The Court should be able to proceed upon evidence describing the documents and the circumstances of their creation, and should not unnecessarily pay regard to material which cannot be known to the party challenging the claim to privilege. [emphasis added]

18 In Bailey v Department of Land and Water Conservation,[52] Tobias JA remarked in relation to this passage from Woollahra :

His Honour was there dealing with the power to inspect at common law. The critical word in the passage referred to is "unnecessarily". If the court is unable to proceed upon the evidence, as in the present case, then in my view there is no impediment to the court exercising its undoubted discretion under s 133 to order that the document or documents be produced and inspected for the purpose of determining the question of whether privilege attaches. How the court utilises the power to inspect under s 133 will obviously depend on the circumstances of each case. I do not consider that merely because the party resisting the claim for privilege objects to the judge exercising the power under s 133 is of itself a legitimate reason to refuse to exercise the discretion...As was noted by Giles JA in Jackson in the passage which I have recorded at [60] above, in Esso Australia Resources v Commissioner of Taxation ...Gleeson CJ, Gaudron and Gummow JJ observed that a court "should not be hesitant to exercise" its power to examine documents. [citations omitted]

19 In the same case, Allsop P, whilst agreeing with the reasons of Tobias JA generally, commented on the inspection power thus:[53]

For myself, I would not accept as satisfactory the reasons advanced by Mr Harvey for the inadequacy of the evidence [in support of the privilege]. The respondents appeared to have approached the protection of the privilege in a way which can be described as cavalier. Parties should not assume that a judge will put himself or herself to the time and trouble of examining a multitude of documents if the relevant party cannot muster sufficient interest in the protection of its rights to provide an affidavit in support of its claim. That said, the primary judge was plainly entitled to examine the documents to make a decision about privilege. The transcript makes clear that the course he took in inspecting the documents was not opposed by the appellants. In those circumstances, it is not open to the appellants to assert that this decision of his Honour to examine the documents was a miscarriage of any power.

20 Earlier in the reasons of Tobias JA in Bailey, his Honour noted after referring to the decision of Gyles J in Unsworth v Tristar Steering & Suspension Australia Ltd:[54]

However, the decision in Unsworth is not authority for the proposition advanced by the appellants, namely, that the power under s 133 to inspect documents cannot be used as a substitute for admissible evidence to support the various elements necessary to establish privilege so that if evidence in respect of any one of those elements is missing, the gap cannot be filled by an inspection of the documents. In my view s 133 cannot be so construed. The Court's power to inspect is engaged under the section in any case where "a question arises under this Part relating to a document". A question arose in the present case under Pt 3.2 as to whether the documents identified in Part 1(b) of the List attracted privilege under s 118 or s 119 of the Evidence Act. The primary judge was therefore empowered to inspect the documents for the purpose of determining that very question. This he did in the exercise of his discretion. As I conclude under the next heading, no error has been demonstrated in his taking that course.[55]

In any event, the present was not a case where there was no evidence in support of the claim for privilege. Certainly it was inadequate and insufficient but it did establish the legal qualifications of the legal officers who were party to many of the documents and, further, provided some evidence from which his Honour could draw the inference that those officers were relevantly acting as agents of the Director-General in preparing documents relating to the possible prosecution of Mr Bailey.[56]

21 It is clear from these references that the New South Wales Court of Appeal has rejected the proposition that the power conferred by s 133 cannot be used as a substitute for admissible evidence to support the various elements necessary to establish privilege.[57]

22 In Victoria, the approach taken seems a little different. In Tabcorp Holdings Ltd v State of Victoria,[58] Sifris J concluded that the State of Victoria had failed to make out a sufficient evidential foundation for its claim of privilege. The evidence was not sufficiently 'focused and specific', and directed to the requirements of legal advice and the dominant purpose of such advice.[59] In relation to the discretion to inspect the documents under s 133, he said:[60]

With regard to the exercise of this discretion, however, a party claiming privilege cannot delegate to the Court the task of establishing that the privilege exists.[61] Adequate materials must be put before the Court to allow the claim to be entertained. As Tobias JA said in Bailey v Director-General, Department of Land and Water Conservation:

...the power under s 133 to inspect documents cannot be used as a substitute for admissible evidence to support the various elements necessary to establish privilege so that if evidence in respect of any one of those elements is missing, the gap cannot be filled by an inspection of the documents.[62]

In the absence of adequate substantiating evidence, the utility of inspecting the documents is also questionable, as examination of the terms of the documents alone may not answer the question of whether or not they were brought into existence for the dominant purpose of providing or receiving legal advice.[63]

23 The State of Victoria sought leave to appeal the decision on grounds that included that his Honour erred in holding there was insufficient evidence to establish privilege.[64] In the course of his reasons, Hansen JA (with whom Ashley JA agreed) considered the refusal to inspect the disputed documents. He noted that in Ensham Resources Pty Ltd v AIOI Insurance Company Ltd[65] Buchanan J observed that the Court should not normally be asked to fill gaps in the disclosed case for a claim for privilege by inspecting documents which are kept from other parties.[66] Later Hansen JA said:[67]

On the matter of inspection, I do not consider, in the circumstances, that the exercise of discretion under s 133 miscarried. In declining to inspect the judge took into account the insufficiency of the evidence and the possible variety of purposes of communications and documents. In the complexity of the circumstances in this case, how was he to discern the purpose or purposes let alone the dominant purpose? If the State, with its resources, had not provided the evidentiary basis, how was he to do so? After all, it was not for the State to delegate to him the task of establishing the privilege existed, or that he "be asked to fill gaps"[68] in the case. Finally, we were informed by counsel for the State that in respect of 71 documents an inspection would not have assisted.

24 In these circumstances, I am faced with what might appear to be a conflict of authority. I am, of course, bound by the decisions of Sifris J and the Court of Appeal in the Tabcorp decisions.[69] However, the Tabcorp decisions are, in my opinion, authority for the view that where the evidence in support of the claimed privilege is insufficient, then, depending on the circumstances, it may be an acceptable exercise of the discretion under s 133 to refuse to inspect the disputed documents because to do so would amount to the party claiming privilege delegating to the Court the task of establishing that privilege, or the Court filling gaps in the evidence in that party's case.

25 I put it this way because the reasoning of Hansen JA, referred to above in paragraph [23], is not cast in terms that rely on the passage quoted from the reasons of Tobias JA in Bailey, but upon a general consideration of whether the discretion miscarried. Hansen JA referred to the judge taking into account the 'insufficiency of the evidence' and the 'possible variety of purposes of communications and documents', and said that in 'the complexity of the circumstances in this case, how was he to discern the purpose or purposes let alone the dominant purpose?' In my view what this passage shows is, when combined with the concession by the State that in respect of some documents inspection would not have helped, that the Court was not proceeding on the basis that the power under s 133 to inspect documents cannot be used as a substitute for admissible evidence to establish privilege.

26 That every case turns on its own facts and circumstances is demonstrated by the decision in Hancock v Rinehart,[70] a decision of Brereton J in the Supreme Court of New South Wales, upheld in the Court of Appeal.[71] In that case, Ms Bianca Rinehart ('Bianca') had been appointed the new trustee of the Hope Margaret Hancock Trust, in place of Mrs Gina Rinehart ('Gina'). There was a dispute as to whether Gina had delivered all trust documents to Bianca. In connection with that dispute, a subpoena for production was issued at Bianca's request to Sceales & Company, a law firm, which produced documents to the court. In respect of some documents produced Gina claimed they were privileged, not merely that the privilege was that of Gina, but that the privilege was that of Gina in her personal capacity as opposed to her former capacity as trustee. In the course of giving reasons for rejecting the claimed privilege, Brereton J said the following:[72]

To sustain a claim of privilege, the claimant must not merely assert it; but must prove the facts that establish that it is properly made. Thus a mere sworn assertion that the documents are privileged does not suffice, because it is an inadmissible assertion of law; the claimant must set out the facts from which the court can see that the assertion is rightly made,[73] or in other words "expose ... facts from which the [court] would have been able to make an informed decision as to whether the claim was supportable".[74] The evidence must reveal the relevant characteristics of each document in respect of which privilege is claimed,[75] and must do so by admissible direct evidence, not hearsay.[76]

27 The privilege claimed was litigation privilege under s 119 of the Evidence Act and the relevant proceedings were between Gina and the first plaintiff (John) in the Supreme Court of Western Australia. This was to be concluded from 4 sources, an affidavit of Gina's solicitor, the descriptions of the documents, a bundle of other documents tendered, and inspection of the disputed documents by the Court. The plaintiffs objected to the court inspecting the disputed documents. The affidavit of the solicitor contained no evidence of the circumstances in which and purpose for which the disputed documents were created. Nor did it contain an assertion that those documents were privileged - which, as Brereton J noted, would be no more than an inadmissible opinion on the deponent's part, founded on facts not within his knowledge.[77] The affidavit of the solicitor described, in a column in a schedule, the circumstances under which privilege is claimed. His Honour concluded that the facts asserted in that column were unverified assertions of no evidentiary value, the solicitor in question had no contemporaneous involvement in the creation and receipt of the disputed documents, had no personal knowledge of the matters asserted, and could not have given evidence of those matters, other than inadmissible hearsay or opinion.[78] His Honour reviewed the other material relied upon and concluded:[79]

Thus the evidence tendered by Mrs Rinehart, while it establishes that there were in contemplation at the relevant time proceedings between her and the first plaintiff, communications relating to which could potentially fall in the class of personal privileged documents of Mrs Rinehart as distinct from trust documents, does not begin to establish that the Schedule 1 documents comprised or included such communications. There is no testimonial or documentary evidence - save potentially the disputed documents themselves, to which I shall shortly come - as to the circumstances in and purpose for which they were created.

28 Gina pressed the court to inspect the documents to determine the claim for privilege. His Honour stated the issue as being whether a person claiming privilege can sustain the claim by adducing no testimonial evidence of the purpose for and circumstances in which the subject documents were created, but merely asking the court to inspect the documents for the purpose of ruling on the claim.[80] His Honour's analysis of the subpoena process is illuminating and instructive, but not especially relevant here.[81] What is important is the explanation for the Court's power to inspect:

The preferable explanation of the court's power to inspect the documents is that it exists not to facilitate proof by a claimant of the facts required to sustain the claim, but to provide a means of enabling a claim to be scrutinised and tested.[82]

29 After referring to some historical considerations supporting this view, and to the proposition that a party is not entitled to insist on the court inspecting the documents, it being a matter for the discretion of the judge, who will only do so if there is good reason,[83] his Honour expressed substantive reasons why the power to inspect was not to facilitate proof of a privilege claim, as follows:

A further consideration telling in favour of that view is that the essential issue on a claim for privilege is the purpose for which the document or communication in question was made. As that involves ascertaining the purpose of a person, the best direct evidence will be that given by the person whose purpose is in question. While purpose may be inferred from the document, direct evidence of it can be given by the person whose purpose it is. While the documents themselves may well illuminate the purpose for which they were created, to allow them to be used as evidence - let alone the sole evidence - in support of a claim for privilege, would be contrary to well-established practice. It would also be grossly unfair to the other party: if the only evidence of purpose is to be inferred from the document itself, the party seeking access is deprived of any opportunity to test the asserted purpose, which would defeat rather than promote the intent of enabling claims to be tested and scrutinised. As Giles J observed in Woollahra Municipal Council v Westpac Banking Corporation:[84]

The court should be able to proceed on evidence describing the documents and the circumstances of their creation, and should not unnecessarily pay regard to material which cannot be known to the party challenging the claim to privilege.

30 Brereton J expressed his conclusions as follows:[85]

Legal professional privilege is a privilege from production, including from production to the court. Such a claim should be made at the first of the Waind & Hill stages, before the documents are produced to the court. To voluntarily produce the documents to the court for the purpose of use in evidence on the application is inconsistent with maintaining a claim for privilege.[86]

A claim for privilege must be made on sworn direct evidence - not inadmissible hearsay or opinion - proving the facts on which the claim is founded. This is unaffected by the court's discretionary power to require production in order to enable inspection for the purpose of adjudicating the claim, which exists to enable a claim for privilege to be scrutinised, not to enable it to be proved. No party - least of all the party claiming privilege - may insist that the court inspect the documents.

31 Because Gina had tendered no admissible sworn evidence amenable to being tested by cross-examination probative of the facts on which the claim for privilege was founded - in particular, her purpose in making the relevant communications - it was contrary to justice to uphold her claim solely on the basis of an inspection of the documents.[87]

32 In the Court of Appeal, one of the issues was whether or not the primary judge in fact exercised a discretion not to inspect the documents. In a later judgment, when granting a limited stay pending the determination of an application for leave to appeal, Brereton J expressed the view that he had exercised a discretion not to inspect the documents.[88] The Court of Appeal agreed and said that his Honour's reasons at first instance should not be read in a way which is inconsistent with the existence of a discretionary power.[89]

33 The evidence advanced by Connective to establish privilege is the Deleuil affidavit affirmed by a partner in the firm of solicitors acting for Connective in relation to this matter and in other proceedings in which Connective are parties, being S CI 2011 4332, Slea Pty Ltd v Connective Services Pty Ltd ('Oppression Proceeding'), S ECI 2016 001168 ('Pre-emptive Rights Proceeding') and S ECI 2016 001185 ('Confidentiality Proceeding'). Mr Deleuil states, in his affidavit, that he is responsible for the care and conduct of this proceeding and the related proceedings on behalf of Connective. He makes the statement of the source of his knowledge as follows:

Unless otherwise stated, I make this affidavit from my own knowledge, information and belief. Where I affirm matters of information and belief, unless stated otherwise that information is based on the Court documents in the proceedings, and I verily believe those matters to be true.

34 Mr Deleuil gives evidence of the relationship between Connective, Wellingtons, Butler and M+K, referring to an affidavit of Phillip Shulman of 22 February 2017, and identifies the many persons involved in the various communications and their relationship to the several law firms involved in advising Connective from time to time during the period the subject of the Subpoenas. I will refer briefly to these persons' positions or relationships when they first appear in the description of the documents. He relies on his belief - without disclosing any source - when identifying the various lawyers at M+K, Maddocks, Wisewould Mahoney, Cussen Legal and the other persons who are senders or receivers of communications. There was no dispute as to these matters. Nor was there any dispute concerning who amongst the lawyers were acting for Connective, or the defendant (Millsave) about which Mr Deleuil gave evidence on instructions from an unidentified source.

35 Despite stating that he gives evidence 'from my own knowledge, information and belief' it is plain that in giving the evidence about the privileged status of the documents, which I summarise below, Mr Deleuil bases his knowledge on an inspection of the documents rather than upon any evidence derived from the creators of the documents, or facts that might sustain the claim to privilege not derived from the documents themselves. This is evident from the language used, from the fact that many of the documents date from 2006, 2007, 2009 and 2011 when, so far as one can tell, Mr Deleuil was not acting for Connective and from the absence of Mr Deleuil identifying any source (facts or instructions) for his opinion that documents are privileged, other than a description of the documents themselves.

36 The plaintiff relied on the affidavits of Christine Evelyn Darby affirmed on 8 May 2017 ('first Darby affidavit'), 29 August 2017 ('Second Darby affidavit') and 22 September 2017 ('Third Darby Affidavit'), the affidavit of Murray Lees affirmed on 8 May 2017 ('Murray's affidavit') and the affidavit of documents sworn by Graham Maloney and filed on 2 February 2012 ('2012 Affidavit') in Haron v Slea Pty Ltd (No S CI 2011 2114) ('Haron proceeding') and lists of documents as follows:[90]

(a) the third and fourth defendant's Supplementary List of Documents filed on 18 October 2003 in the Haron proceeding ('2013 List'); and

(b) the first, second and fourth to ninth defendants' List of Documents filed on 27 March 2015 in the Oppression Proceeding ('2015 List').

37 The documents in this category are documents numbered 1-4 and 7-13 in Annexure A. The description of the document, the author or sender and recipients, and evidence in support of the privilege, is as follows:

(a) document 1: This is an email chain between M+K, Wellingtons and Connective dated 23 July 2009 comprising-

(i) an email from Butler to Mr Kirton, a principal at M+K, and Glenn, copied to Ms O'Connor (a Manager at Wellingtons), dated 22 July 2009 ('email one');[91] and

(ii) an email from Mr Kirton of M+K to Butler of Wellingtons dated 23 July 2009.[92]

The only evidence given to support the claim for privilege in relation to this document is that 'the Connective Companies claim privilege over document number 1 on the basis of legal advice privilege';[93]

(b) document 2: This is another email chain between M+K, Wellingtons and Connective dated 19 and 20 July 2009 comprising seven email communications:

(i) The first three are between Butler and a Mr Burchartz, a principal at M+K, copied to Glenn, Murray, Mr Haron and Ms O'Connor ('emails three, four and five'); and

(ii) the other four are between Butler and Glenn, Glenn to Butler, copied to Mr Kirton of M+K, Mr Kirton to Glenn and Glenn to Kirton copied to Butler ('emails six, seven, eight and nine').

The evidence in support of the claim for privilege is that emails three and six include at the end of each message the statement 'The information in this email is confidential and may be legally privileged', that emails four, five and seven include the statement 'This message together with any attachment is intended for the use of the person to whom it is addressed and contains information that is privileged and confidential' and that the email correspondence concerns the same subject matter as document one and privilege is claimed on the basis that the document contains legal advice;[94]

(c) document 3: This document is an undated handwritten file note (author unknown, but recorded on M+K 'note to file') regarding legal advice provided to Connective. The only evidence in support of the claim is that privilege is claimed 'on the basis of legal advice privilege';

(d) document 4: This is also a handwritten file note dated 14 July 2009 (author unknown, but recorded on M+K 'note to file') regarding a telephone attendance on Ms O'Connor of Wellingtons concerning the same subject matter as document three. Apart from this the only evidence in support of the claim is that the privilege is claimed on the basis of legal advice privilege;[95]

(e) document 8: This is an internal memorandum to M+K by Mr Warnock, a principal at M+K, addressed to Mr Kirton of M+K with the subject 'connective - tax issues on sale shares'. It contains several handwritten annotations. Again it is claimed to be privileged 'on the basis of legal advice privilege';[96]

(f) document 9: This is another handwritten file note dated on or about 28 February 2007 prepared by Mr Kirton of M+K regarding a telephone attendance on Glenn concerning Connective. Again, the only evidence apart from these circumstances is that the privilege is claimed on the basis of legal advice privilege;[97]

(g) document 10: This is an undated handwritten file note by an unknown author on a M+K 'note to file' regarding a telephone attendance on Glenn concerning Connective. Again, the only other evidence in support of the claim is 'on the basis of legal advice privilege';[98]

(h) document 11: This is a handwritten file note dated 18 September 2006 (author unknown but on M+K 'note to file' paper) regarding a telephone attendance on Glenn concerning Connective. Again, the only other evidence in support of a claim is that it is 'on the basis of legal advice privilege'.[99]

(i) document 12: This is a handwritten file note dated on or about 22 September 2006 (author unknown but recorded on a M+K 'note to file') regarding a telephone attendance on Mr Cussen, a principal at Cussen Legal Pty Ltd concerning Connective. Mr Cussen was engaged by M+K to provide legal advice to or for the benefit of Connective. The only other evidence to support the claim is that it is said to be 'on the basis of legal advice privilege';[100]

(j) document 13: This is a handwritten file note dated 22 September 2006 (author unknown but recorded on an M+K 'note to file') regarding a telephone attendance on Glenn concerning Connective. Again, the only other evidence to support the claim is that it is 'on the basis of legal advice privilege'.[101]

38 The documents in this category are documents 16, 17, 18 and 19 in Annexure A. The description of the document, the author or sender and recipients, and evidence in support of the privilege, is as follows:

(a) documents 16 and 17: this is an email chain between Maddocks, Wellingtons and the CBA dated 21 June 2011 with an attachment (produced by Wellingtons), comprising:

(i) an email from Mr Baring, a partner at Maddocks, to Butler dated 16 June 2011 ('email 12'); and

(ii) an email from Butler to Mr Pell, who was working for the CBA and was involved in a proposed financing arrangement with Connective,[102] dated 21 June 2011 ('email 13'); and

(iii) an attachment being a copy of a Restructure Plan for Connective dated 16 June 2011 prepared by Maddocks ('document 17').

Email 12 has a message at the end stating 'The information in this electronic mail is privileged and confidential, intended only for the use of the individual or entity named'.

Email 13, to which is attached a copy of the Restructure Plan, summarises the advice received from Maddocks. At the end of email 13 there is also a statement that 'The information in this email is confidential and may be privileged'. The evidence given to support the claim for privilege is that Connective claim privilege over the documents on the basis of legal advice privilege;[103]

(b) documents 18 and 19: these documents are identical to documents 16 and 17, but were produced by Butler in response to the Butler subpoena. Connective claims privilege on the basis of legal advice privilege.[104]

39 Documents in this category are numbered 14, 15, 20 and 21 in Annexure A. The description of the documents, the author or sender and recipients, and evidence in support of a privilege, is as follows:

(a) document 14: this is an email chain (produced by Wellingtons) between Connective, Maddocks and Wellingtons dated 28 September 2015 comprising:

(i) an email from Mr Moloney, a director and chairman of Connective, to Mr Baring of Maddocks and Butler, copied to Glen, dated 28 September 2015 ('email 10'); and

(ii) an email from Glen to Mr Moloney, Mr Baring of Maddocks and Butler, dated 28 September 2015 ('email 11');

Both emails 10 and 11 are marked 'confidential and privileged' in the subject field. In email 10, Mr Moloney sets out the Connective company's position in relation to several ongoing and connected issues which are relevant to the Oppression Proceeding and the other related matters. Mr Moloney asks Glen to advise if there was anything he would like to add or change. Email 10 also contains the message at the end stating 'This message together with any attachments is intended for the use of the person to whom it is addressed and contains information that is privileged and confidential'. In email 11, Glen adds his comments to email 10. The evidence in support of the claim for privilege is that the email chain was created for the dominant purpose of the Connective company's requesting legal advice from Maddocks. Connective claims privilege on the basis of legal advice privileged;[105]

(b) document 15 is another copy of email 10 (one of the documents in document 14). The evidence is that it was created for the dominant purpose of the Connective company's requesting legal advice from Maddocks and privilege is claimed on the basis of legal advice privilege;[106]

(c) document 20: this is an email chain between Maddocks, Wellingtons and Connective dated 5 September 2011 (produced by Butler) comprising:

(i) an email from Butler to Ms Williams, Special Counsel at Maddocks, copied to Glen, dated 2 September 2011 ('email 14');

(ii) an email from Ms Williams of Maddocks to Butler, copied to Glen, dated 5 September 2011 ('email 15'); and

(iii) an email from Butler to Ms Williams of Maddocks, copied to Glen, dated 5 September 2011 ('email 16').

These emails all concerned the provision of legal advice by Maddocks to Connective in connection with the Oppression Proceeding. All emails have one form or another of a statement that the email is confidential and may be legally privileged. The claim for privilege is simply made on the basis of litigation advice privilege.[107]

(d) document 21: this is an email chain between Maddocks, Wellingtons, Connective, Wisewould Mahony and Glen dated 29 September 2011 attaching draft versions of General Minutes and seeking advice for the provision of further legal advice by Maddocks to Connective. The email chain comprises:

(i) an email from Glen to Mr Rich of Wisewould Mahony and Butler dated 4 April 2011 ( 'email 17');

(ii) an email from Mr Rich of Wisewould Mahoney to Glen and Butler dated 5 April 2011 ('email 18');

(iii) an email from Butler to Mr Rich of Wisewould Mahony, copied to Glen and Ms O'Connor dated 5 April 2011 ('email 19'); and

(iv) an email from Butler to Ms Williams of Maddocks, copied to Mr Riseley, Mr Moloney and Mr Baring of Maddocks, dated 29 September 2011 ('email 20').

Email 17 contains messages at the end stating, in one way or another, that the email and any attachments are confidential and may contain legally privileged information. Email 19 contains a similar message. Mr Deleuil gives evidence that he is instructed by Mr Graham Moloney that:

(i) Mr Adam Rich was acting for the defendant at the relevant time and was included in the emails 17, 18 and 19 because the subject of the email chain concerned both the defendant and Connective; and

(ii) Mr Glen Riseley was an unrelated client of Butler and was inadvertently copied into email 20 instead of Glen.

Connective claims privilege on the basis of legal advice privilege.[108]

(a) the manner in which Mr Deleuil seeks to establish privilege on behalf of Connective is largely 'formulaic' and constitutes 'bare conclusions'. The purpose or subject matter of each communication is not described.[109]

(b) any privilege over the first two categories was waived when Connective discovered some of those documents and related material in previous proceedings (in respect of the Frist Category) and to the CBA (in respect of the Second Category). Deleuil's affidavit does not address the issue of waiver, notwithstanding that the plaintiff raised this issue as early as April 2017;[110]

(c) in any event, even if the privilege still subsists, it cannot be asserted against Murray. The uncontradicted evidence is that the advice was obtained from M+K Lawyers for his benefit as one of the ultimate owners of the Connective business, as well as for the benefit of the other ultimate owners. Murray's interest in the privileged communication is confirmed by the fact that from time to time M+K's advice was disclosed to him by Glenn.[111] On the evidence it should be found that Murray is a joint holder of, or has a common interest in, any legal privilege that subsists in the communications.[112]

41 In relation to waiver of privilege the plaintiff submitted:

(a) Connective are or were parties to other proceedings in the Supreme Court, including the Haron proceeding and the Oppression proceeding;

(b) in the Haron proceeding and the Oppression proceeding Connective was required to make discovery. In its lists of documents, Connective discovered legal advice provided by, and other privileged communications with, M+K in the 2012 Affidavit, the 2013 List and the 2015 List;

(c) in the Oppression proceeding, Connective disclosed over 60 documents that were brought into existence between October 2006 and November 2009 comprising M+K file notes, M+K advices provided to Connective, email communication between M+K and Glenn (and others) and drafts of the agreements prepared by M+K: 2015 List, documents 452-454, 472-479, 481-482, 485-486, 488-493, 496-501, 503-507, 514-518, 527, 541, 568-570, 597, 596, 599, 601, 609, 617-618, 627-629, 636-637, 643;

(d) the defendant has discovered, in this proceeding, legal advice from M+K relating to tax issues, as well as draft transaction documents relating to the proposed transaction with Mr Haron and correspondence with M+K about the drafts;[113]

(e) email one (in document 1), being an email from Butler to Mr Kirton of M+K, copied to Ms O'Connor of Wellingtons dated 22 July 2009, is document 69 on the 2013 List;

(f) the remainder of the M+K Lawyer documents over which privilege is asserted (being documents 2 to 4 and 7 to 13) concern the 'same issue or subject matter' as the communications that have been disclosed. That subject matter is advice relating to the proposed transaction with Mr Haron, in particular the structure of that transaction and related tax advice. These are the issues on which M+K gave advice during the relevant period;

(g) an examination of the 2013 List and the 2015 List shows that the documents over which privilege is now asserted deal with the same subject matter and came into existence during the same time period:

(i) documents 11-13 (files notes dated 22 September 2006 of discussions with Glenn Lees and with Patrick Cussen) deal with the same subject matter as documents 473, 476 & 481 (file notes of discussions with Glenn Lees and with Patrick Cussen in October and December 2006) and documents 474-479 in the 2015 List (email correspondence between Glenn Lees, Patrick Cussen and Paul Kirton in October 2006).

(ii) documents 1-4 (emails between Mr Kirton, Butler, Mr Glenn Lees and Ms O'Connor, as well as a file note of attendance on Ms O'Connor, in July 2009) deal with the same subject matter as document 587 of the 2015 List (an email between Butler, Mr Kirton, Mr Glenn Lees and Ms O'Connor in July 2009).

(iii) document 9 (a file note of February 2009 of discussions with Glenn Lees) deals with the same subject matter as documents 488-492 (emails, memorandums and file notes involving Glenn Lees, Paul Kirton and Rob Warnock in that same month).

42 Connective bears the onus of establishing that notwithstanding the disclosure of privileged communications to CBA, that privilege was not lost.

43 Prima facie, the disclosure of legal advice to a third party is inconsistent with the continued maintenance of the privilege.[114] Although there are limited circumstances in which disclosure to a third party will not amount to a waiver (for example where the parties have a common interest in the advice), Connective has not adduced any evidence from which the Court is able to conclude that the privilege has not been lost.

44 The evidence adduced to support the assertion of privilege over documents 14, 15, 20 and 21 is 'manifestly inadequate':[115]

(a) as to document 14 (an email chain involving Mr Maloney of Connective, Maddocks, Butler and Glenn), it is said that the document 'sets out Connective's position in relation to several ongoing and connected issues which are relevant to the Oppression Proceedings and the other related matters'.[116] It is then asserted that the document was 'created for the dominant purpose of the Connective Companies requesting legal advice from Maddocks'.[117] This description of the purpose for which the document was created is inadequate. That the communication refers to topics that are 'relevant' to the Oppression proceeding does not show that the communications are privileged. Nor is it asserted, for example, that Mr Maloney sought legal advice in relation to these matters;

(b) as to document 15 (an email from Mr Maloney of Connective to Maddocks, Andrew Butler and Glenn), Deleuil gives no details regarding the purpose of the creation of the document or its subject matter. He merely asserts that the document 'was created for the dominant purpose of the Connective Companies requesting legal advice from Maddocks': Deleuil affidavit at [57]-[60];

(c) as to document 20 (email from Butler to Maddocks), there is only the bare assertion that the documents concern 'the provision of legal advice in connection with the Oppression proceedings';[118] and

(d) as to document 21 (a communication between Connective, Maddocks and the defendant's solicitors), it is said that the document was provided to the defendant's solicitors 'because the subject of the email chain concerned both the defendant and the Connective Companies'. This is insufficient to establish that providing the advice to the defendant did not amount to waiver over the privilege subsisting in that advice. The nature of the defendant's 'interest' in the subject matter is not explained; nor is it explained whether this interest is common, or adverse, to Connective's interest.

45 Connective submitted that all the communications were confidential because:

(a) of the solicitor and client relationship, M+K and Maddocks were under an obligation to Connective not to disclose the contents of the relevant communications;

(b) the communications received by third parties[119] remain confidential.[120] The circumstances in this case make it clear that the third parties were under an obligation not to disclose the communications because:

(i) most communications contain a message at the end of the email stating that it contains information that is privileged and confidential (or a message to similar effect);

(ii) the communications would be regarded by any reasonable person receiving them as confidential by reason of their nature and content as communications between a client and its lawyer because they contain requests for legal advice (from the client), request for instructions (from the solicitor) and/or the provision of legal advice (including discussions concerning this legal advice); and

(c) the third parties were under an obligation that falls within the ambit of the statutory definition given the character of each communication and the fact that most of the email communications contain a message advising that the email contains information that is privileged and confidential (or a message to similar effect).

[t]he onus might be discharged by evidence as to the circumstances and context in which the communications occurred or the documents were brought into existence, or by evidence as to the purposes of the person who made the communication, or authored the document, or procured its creation. [121]

Where communications take place between a client and his or her independent legal advisers, or between a client's in-house lawyers and those legal advisers, it may be appropriate to assume that legitimate legal advice was being sought, absent any contrary indications [citations omitted ][122]

47 Connective submitted that it is sufficient, to establish that all the communications were made or created for the dominant purpose of a lawyer providing legal advice to the client, to identify the recipients and senders, the dates of the communications and make some attempt to identify the topic of the communications.[123] The relevant circumstances and context are that the communications were made, or the documents prepared, for the dominant purpose of:

(a) the provision of legal advice by Connective's former solicitors, M+K and Maddocks, and advice from Wellingtons in support of legal advice being obtained by Connective; and

(b) correspondence between representatives of Connective and third parties, which refer to legal advice provided to Connective.

(c) the dominant purpose is apparent from the description of each document provided at paragraphs 24 to 76 of the Deleuil Affidavit.

48 In relation to waiver, Connective asserted that at all times it has acted consistently with the maintenance of confidentiality and privilege in respect of the documents and that the documents have not been disclosed by Connective in the earlier proceedings nor have they been disclosed in the current proceeding. Connective continues to maintain their privilege over these documents.

49 In oral submissions, Connective said that there were other topics beyond those identified by the plaintiff, being the structure of the transaction with Mr Haron and its tax implications, that legal advice was sought over.[124] However no evidence of these topics was lead.

50 In relation to all the emails that comprise the documents to be considered, each contains a statement to the effect that it contains confidential information which is or may be legally privileged. These statements are advanced in the Deleuil affidavit in support of the privilege claimed. They do not, however, establish any privilege. Indeed, they are no more than formulaic or bare conclusory assertions that do not establish facts from which the Court is able to determine that the privilege is properly claimed. In truth, they amount to no more than a warning to the recipient of the email to take care not to disclose the information in a way that may damage the interests of the sender or the recipient. I therefore set them aside in the consideration of the privilege claims.

First Category the M+K Documents - 1 to 4 and 8 to 13

51 It is first desirable to deal with an overarching consideration applicable, so the plaintiff submitted, to all of the M+K documents. The issue is that the uncontradicted evidence of Murray is that the advice was obtained from M+K for the benefit of the plaintiff as trustee of the Lees Family Trust, as one of the ultimate owners, as well as the other ultimate owners, of Connective. Murray's interest is held, if at all, through the plaintiff.[125] Thus, the plaintiff is a joint holder of the privilege, or has a common interest in any privilege that subsists in the disputed documents or communications.

52 This evidence is supported by the description of some of the disputed documents. Document 2 includes three emails that included Murray as a recipient. The claim to privilege over these emails is nevertheless maintained. In my view, the evidence given in Murray's affidavit demonstrates, at the very least, that any privilege that subsists in emails three, four and five in document 2 is a privilege which the plaintiff shared with the other recipients of the emails. The claim in respect of these emails as against the plaintiff is not maintainable.

53 It is not necessary to consider the application of this overarching consideration further as, in any event, the evidence given to support the claimed privilege is insufficient. I agree with the plaintiff's submission that the manner in which Mr Deleuil seeks to establish privilege on behalf of Connective is largely 'formulaic' and constitutes 'bare conclusions'. The purpose or subject matter of each communication is not described. The evidence in support of the privilege goes no further than the description of the document and the identity of the senders and recipients, in the cases of the emails, and the author in the case of some of the file notes. The bare and unvarnished statements by Mr Deleuil that Connective claim privilege over the particular documents on the basis of legal advice privilege is 'a mere sworn assertion that the documents are privileged' and will not suffice because, as Brereton J observed in Hancock v Rinehart[126] it is an inadmissible assertion of law or an opinion. Connective has not set out the facts from which the court can see that the assertion or opinion is rightly made, or in other words 'expose ... facts from which the [court] would have been able to make an informed decision as to whether the claim was supportable'.[127] The evidence does not reveal the relevant characteristics of each document in respect of which privilege is claimed.

54 The reliance by Connective upon the identity of the law firm or member of the law firm, and for whom they acted, is in this case insufficient evidence to base a claim for privilege. It is insufficient because there is no way of knowing the subject matter or topic with which the communication concerns. All that is said in that connection is the assertion of privilege. Senior counsel for Connective relied on the observations of Young J in AWB Ltd v Cole (No 5) that the evidence as to the circumstances and context in which the communication or document was created, or evidence as to the purpose of the person who made the communication or authored the document was enough to establish the privilege.[128] But in this case there was no evidence as to the purpose of the person who made the communication or authored the document and the evidence as to the circumstances and context in which the communication or document was created are entirely equivocal. There is simply no evidence as to the dominant purpose of any of the communications sufficient to sustain the claim of privilege.

55 Documents 16 and 17 comprise an email chain between Maddocks, Wellingtons and the CBA dated 21 June 2011 with an attachment, being a copy of the Restructure Plan for Connective. Documents 18 and 19 are identical to documents 16 and 17. Email 13 summarises advice received from Maddocks. As Counsel for the plaintiff submitted, the disclosure of legal advice to a third party (CBA) is prima facie inconsistent with the continued maintenance of the privilege.[129] There are limited circumstances in which disclosure to a third party will not amount to a waiver (where the parties have a common interest in the advice is an instance), Connective has not adduced any evidence from which the Court is able to conclude that the privilege has not been lost.

56 There is no evidence in the Deleuil affidavit that explains the role of CBA or why a summary of the advice received from Maddocks was provided to the CBA. It may be inferred that CBA had some involvement in financing the proposed restructure of Connective, but the evidence does not go that far. If it did, the difficulty is there is no evidence from Connective about that purpose and whether CBA had a common interest with Connective in the receipt of the summary of advice. It may be a case where the interest of CBA is an adverse interest, because the relationship would be a lender and borrower, which may not be a common interest of the type that attracts the privilege. The principal point, however, is that there is simply no evidence to maintain the privilege in the face of the disclosure of the advice to the third party.

57 Senior counsel for the defendant submitted that there is enough in the surrounding circumstances and the nature of the documents supported by argument and submission, to discharge the onus on Connective, or at least go so far as to make it necessary for the Court to inspect the documents in the exercise of the power in s 133 of the Evidence Act. True it is that the subject matter of email 13 is a summary of the legal advice given by Maddocks, presumably in relation to the restructure of Connective. But the disclosure of that advice is conduct that is inconsistent with the maintenance of the confidentiality that the privilege is intended to protect. Without evidence to sustain the interest of the CBA in common with the privilege holder, or that the lawyer is providing advice also to the CBA, the disclosure of allegedly privileged communications to the CBA results in an imputed waiver of privilege, even if there is no intention of waiving privilege and the disclosure is for a limited and specific purpose.[130] In this case, the absence of any evidence from Connective as to the circumstances of the disclosure to the CBA, results, in my view, in a loss of the privilege claimed.

58 In relation to document 14, as referred to above (at paragraph [39]), email 10, which is from Mr Moloney, who is director of Connective, to Mr Baring of Maddocks, 'sets out the Connective company's position in relation to several ongoing and connected issues which are relevant to the Oppression Proceeding and the other related matters'. The Oppression proceeding relates to a very wide range of conduct, principally events occurring between 2009 and October 2013. As Almond J described the proceeding in another interlocutory [131]lication:131

Slea, the holder of one-third of the shares in the Connective business (operated at the time through Connective Services and Connective OSN), alleges that a series of acts undertaken by Connective shareholders and directors were oppressive to, unfairly prejudicial to or unfairly discriminatory against Slea under s 232(e) of the Corporations Act 2001 (Cth). This includes events concerning a restructure which resulted in the movement of the business downstream from Connective Services and Connective OSN to wholly owned Connective subsidiaries, and sale of part of the Connective business to Macquarie Bank Limited.

59 On the one hand, the description of the purpose for which the document was created is, by itself, inadequate to support a claim of privilege, even when supported by the evidence of Deleuil that the email chain was created for the dominant purpose of Connective requesting legal advice from Maddocks. That is because Deleuil's evidence is a general assertion of the purpose of its creation and, as the authorities referred to above show, is insufficient to discharge the onus on Connective.

60 On the other hand, the circumstances and context in which the document was created do support the claimed privilege, even though there is no direct evidence as to the purpose of the person who made the communication or authored the document. It is no doubt likely that the initiating email (email 10) has something to do with Connective communicating to Maddocks. But it is unclear, apart from the mere assertion, why Maddocks were advising and in relation to what. I note that Quinn Emanuel Urquhart & Sullivan have been acting for Connective more recently in the Oppression proceeding.[132] Further it is unhelpful for Deleuil to say email 10 also concerned 'other related matters' as well.

61 In relation to email 11, Glenn adds his comments to email 10. The inference from the position that Glenn held (said to be 'a Principal at Connective')[133] is that he is commenting on the information, or instructions, Mr Moloney gave in email 10. Document 15 is another copy of email 10 produced by Butler, to whom it was copied by Mr Moloney.

62 In my view, the evidence in support of the claim to privilege over documents 14 and 15 is insufficient to maintain the privilege. What I have said in relation to documents 1-13 is also applicable here.

63 In relation to document 20, as referred to above (at paragraph [39]), this is an email chain comprising three emails. The evidence in the Deleuil affidavit describes the recipients and senders of the emails and the dates of those emails, but includes no evidence of the purpose for which the communications were created, nor any evidence of the dominant purpose of those communications, apart from the assertion that the emails all concern the provision of legal advice by Maddocks to Connective in connection with the oppression proceedings. Notably, it is asserted that one purpose, rather than the dominant purpose, for creation of the document was to obtain legal advice, and that is not good enough. For the reasons given above the privilege is not established.

64 In relation to document 21, as referred to above (at paragraph [39]), this is an email chain comprising four emails. Once again, the evidence in the Deleuil affidavit describes the recipients and senders of the emails and the dates of those emails, but includes no evidence of the purpose for which the communications were created, nor any evidence of the dominant purpose of those communications, apart from the assertion that the email was 'seeking advice for the provision of further legal advice by Maddocks to Connective'. This is insufficient to discharge the onus on Connective to establish the privilege in respect of this document.

65 There is a further matter relevant in relation to this document. Deleuil was instructed by Mr Graham Moloney of Connective that Mr Adam Rich, the managing partner at Wisewould Mahoney, was acting for the defendant (Millsave) at the relevant time and was included in the emails 17, 18 and 19 because the subject of the email chain concerned both the defendant and Connective. The plaintiff contended that this disclosure to the defendant is inconsistent with maintenance of any privilege, and amounts to a waiver. There is no evidence of the nature of the defendant's interest in the document and it is not explained whether the interest is common or adverse to Connective's interest. There may be circumstances where disclosing instructions for legal advice, or legal advice, to a third party may not amount to waiver. For example, where the advice is, or is to be, provided for a limited and specific purpose to a party with a common interest. But in this case there is no evidence, save the fact that Connective and the defendant are co-defendants in the Oppression proceeding, to support the existence of any common interest, and the burden is on Connective in this case to establish the circumstances which support the maintenance of the confidential character of the document, a common interest in the advice sought or given and to negative a waiver.[134]

66 In these circumstances, the question is whether I should accept the invitation by Connective to inspect the documents? In relation to consideration of the submissions relating to waiver, the plaintiff did not object to inspection of the First Category of documents, documents 1-13. That was so that a comparison could be made between the disputed documents and documents discovered in this and the other proceedings as exhibited to the Third Darby Affidavit and as described in the lists and affidavits of discovery. In relation to the other disputed documents the plaintiff maintained that the evidence in support of the privilege was insufficient and it was inappropriate for the party claiming privilege to rely on the Court inspecting the disputed documents in order to establish the privilege claimed or to fill gaps in the evidence in support.

67 I have set out at some length extracts from the authorities in New South Wales and Victoria on the exercise of the discretion under s 133 of the Evidence Act to inspect the disputed documents. It is clear, I think, from the reasons of Tobias JA in Bailey,[135] and the observations of Hansen JA in Tabcorp[136] that it would be a misconstruction of the power in s 133 of the Evidence Act to decline to inspect the disputed documents solely on the ground that the power under s 133 to inspect documents cannot be used as a substitute for admissible evidence to support the various elements necessary to establish privilege. As Tobias JA said, the Court's power to inspect is engaged under the section in any case where 'a question arises under this Part relating to a document'. The discretion to inspect under s 133, like all discretions, must be exercised taking into account all the relevant facts and matters. As I have said, where the evidence in support of the claimed privilege is insufficient, as it is in this case, then, depending on the circumstances, it may be an acceptable exercise of the discretion under s 133 to refuse to inspect the disputed documents because to do so would amount to the party claiming privilege delegating to the Court the task of establishing that privilege, or the Court filling gaps in the evidence in that party's case.

68 Added to that proposition is the explanation of the purpose of the Court's power to inspect the documents, given by Brereton J in Hancock v Rinehart, namely that it exists not to facilitate proof by a claimant of the facts required to sustain the claim, but to provide a means of enabling a claim to be scrutinised and tested.[137] Despite the established width of the discretion to inspect under s 133 of the Evidence Act, I find this explanation to be the most persuasive rationale for the exercise of the power. But in the circumstances of this case I do not restrict the exercise of the discretion to inspect by reference to this consideration.

69 In the majority of the claims in this application the evidence is so lacking that the only purpose of exercising the discretion to inspect would be to establish whether the documents are subject to privilege, on their face. Indeed, Counsel for Connective made no bones about the purpose of my inspection of the documents, which he invited. Even though he maintained that the identity of the author of the file notes or sender and recipient of the emails, combined with the dates and some attempt by Mr Deleuil to identify the topic, sufficiently established the confidential and privileged nature of the communications contained within them, he sought that the Court inspect them to assist in the determination whether they are privileged.

70 Senior counsel for Connective said he would not ask the Court to inspect the disputed documents unless there was 'a utility to inspection'. That was not because of the lack of precision in the description of them. It was because when one looks at some of these documents 'the answer should be clear'.[138] He maintained that any identification of the subject matter of the advice sought or given in the evidence in support would result in a waiver of privilege and that was the reason that there was no identification of any topic, save in the most general terms, like that used in relation to document 14, as relating to 'to several ongoing and connected issues which are relevant to the Oppression Proceeding and the other related matters.

71 Counsel for Connective is partly right that the nature of the documents in some instances does establish some evidence that the documents might have been created for privileged purposes. This does not include documents 1 and 2 in the First Category, but does include documents 3, 4 and 8-13 in that category. The latter are all file notes, or an internal memorandum, of M+K, the solicitors then acting for Connective. In their nature they are likely to be confidential documents prepared by M+K in some way connected to the provision of advice or, perhaps, some other professional services. But save for the assertion of privilege by Mr Deleuil, there are no further facts to support the dominant purpose of the documents. That is a gap in the evidence that is critical to the establishment of the privilege.

Plaintiff v Defendant

At a glance

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Judgment (313 paragraphs)

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Legislation Cited (2)

Cases Cited (26)