REASONS FOR JUDGMENT
1 PricewaterhouseCoopers (PwC), the applicant, seeks leave to appeal from orders dismissing an application to inspect certain documents referred to as the investigation documents. The application was dismissed on the ground that these communications are subject to legal professional privilege.
2 On 18 November 2011 Bromberg J delivered an extempore judgment in relation to the application. On 28 November 2011 Marshall J made orders giving effect to that judgment and extended the time for PwC to file an application for leave to appeal until 14 days after Bromberg J provided written reasons for judgment.
3 On 10 February 2012 Bromberg J published his reasons for judgment. The application for leave to appeal was filed on 24 February 2012, the very last opportunity under the orders of Marshall J.
4 The application has been listed as a matter of urgency because the trial of the action is listed to commence next Monday, 5 March 2012.
5 In the proceedings it is alleged that corporations in the Centro group (Centro) misclassified debt in the 30 June 2007 financial statements so that current debt was understated and non-current debt was overstated. PwC were the auditors for Centro at the time. The investigation documents relate to investigations conducted between December 2007 and February 2008 by Freehills, Middletons and KPMG into the liabilities of Centro. It is important that the application be determined before 20 March 2012 when PwC may need to use the documents in question in the course of cross-examination of the respondents' witnesses in the trial.
6 The investigation documents were divided into the following six categories by Bromberg J as set out in [48] of his reasons for judgment:
(i) Communications passing between Centro and its solicitors ("the Centro/External Lawyers Communications")
(ii) Communications between Centro and its internal lawyers ("the Centro/Internal Lawyers Communications")
(iii) Notes of interviews conducted by Centro's external solicitors with Centro's employees and of meetings between those solicitors and Centro ("the Solicitor Notes of Interviews and Meetings")
(iv) Solicitors' internal communications, including draft advices prepared by the solicitors ("the Solicitor Internal Communications")
(v) Communications between Centro's external solicitors and KPMG ("the Centro Solicitors/KPMG Communications")
(vi) Communications between Middletons and other solicitors ("the Middletons/Other Solicitors Communications")
[Subcategories omitted]
7 His Honour determined on the evidence that these documents were brought into existence for the dominant purpose of giving or obtaining legal advice. Each of the large number of solicitors involved swore affidavits stating that their sole or dominant purpose in making or receiving the communications was to give, and for Centro to obtain, legal advice under the terms of the respective retainers of Freehills and Middletons. Similarly, two Centro officers, the company secretary and in-house counsel deposed that the sole or dominant purpose of the communications was to give, and for Centro to obtain, legal advice. Similar evidence was given in relation to the other categories of documents.
8 Bromberg J also relied upon the terms of the retainers between Centro and Freehills and Centro and Middletons and the retainers between Freehills and KPMG and Middletons and KPMG. His Honour said at [69]:
Whilst I am unable to reveal the content which I have determined was privileged, I need to indicate that in determining the dominant purpose of CNP [Centro Properties Group] and CER [Centro Retail Group] in relation to the Investigation Documents, I place significant reliance upon the privileged content of the Freehills retainer and the Middletons retainer.
9 PwC argued that there was an additional purpose in Centro obtaining the legal advice, namely, to conduct an accounting inquiry to determine the proper classification of debt for the operational purpose of Centro discharging its statutory obligations. His Honour accepted that this was one purpose. He said at [79]:
The findings I made and have just set out did not persuade me that the prima facie position I found in relation to dominant purpose should be displaced, in the sense that I should no longer have been satisfied that Centro's burden on that issue had been discharged.
10 In order to obtain leave to appeal PwC must establish that there is sufficient doubt as to the correctness of the judgment to warrant reconsideration by an appeal court and further, that if the orders were to remain in place and they were erroneous, there would be significant or substantial injustice to it.
11 In relation to grounds 1 and 2 of the application, Mr Sulan, who appeared for PwC, argued that having found that Centro had two purposes in seeking legal advice it was necessary for Bromberg J to make a finding as to Centro's dominant purpose. Mr Sulan contended that there was no evidence adduced from a responsible officer of Centro to establish its dominant purpose. Further, there were affidavits from the general counsel and company secretary of Centro but they did not address the question of purpose. A strong and adverse inference was said to arise from the failure of those witnesses to adduce the evidence on the question of purpose: Commercial Union Insurance Company of Australia Limited v Ferrcom Pty Limited (1991) 22 NSWLR 389.
12 The affidavits of the solicitors, so it was contended, were formulaic and addressed their own purpose in bringing into existence the communications but not Centro's purpose. Mr Sulan submitted that Powercor Australia Ltd v Perry & Anor [2011] VSCA 239 (19 August 2011) (Powercor) demonstrates that where a corporate purpose is to be proved it is necessary for evidence to be called from the CEO or a person who can speak on behalf of the company on the issue. Thus, in summary, PwC argued that the only way Centro could establish its dominant purpose was by calling a senior officer of the corporation to give that evidence.
13 The statement of this argument demonstrates its vice. The argument takes no account of the evidence in this particular case which was before Bromberg J and upon which he relied. In particular, his Honour referred to the terms of the retainers of Middletons and Freehills and said that they were significant in his conclusion about the purpose of Centro. These were documents emanating from Centro which defined the work to be done by the solicitors. It was a credible source of evidence of the purpose for the communications. Further, it was open to his Honour to conclude from the unchallenged evidence of Centro's solicitors that Centro's dominant purpose in its communication with its solicitors was to obtain legal advice.
14 There was, therefore, more than sufficient evidence to establish that the dominant purpose of Centro communicating with its solicitors was to obtain legal advice. Powercor is a judgment on the facts of that case which does not establish a general principle that the purpose of a corporation may only be proved by adducing evidence from the officers of the corporation.
15 For those reasons, the first two grounds of the application do not raise sufficient doubt about his Honour's findings to warrant the attention of an appeal court.
16 The third and fourth proposed grounds of appeal contend that there was no or no sufficient evidence that the work carried out by Centro's solicitors in their investigations was for the purpose of giving legal advice as to the correct classification of Centro's debt. There was, so it was said, no established nexus between the work done and the provision of legal advice. Mr Sulan particularly referred to the task undertaken by the solicitors of interviewing employees of Centro to establish how the classification of debt had arisen in the 2007 accounts as a matter of history.
17 His Honour explained why the work done was part of the provision of legal advice as follows:
82. It was my view that, advice on the correct classification of Centro's debt was likely to require the exercise of legal skills and expertise. Although the evidence before me as to the nature of the exercise involved was scant, PWC's own submissions make good the proposition that the exercise involved the legitimate participation of lawyers providing legal expertise.
…
85. Questions as to the meaning of the terms of loan agreements or other financing facilities and whether and when obligations to pay or rights to defer payment either exist or arise provide fertile and legitimate ground for the exercise of legal expertise. It may well be the case that a mixture of legal and accounting expertise was required, but there is nothing artificial or contrived in engaging a lawyer where the exercise is likely to require significant legal expertise. Such a process may well involve a review of documentation and interviews with persons involved in various transactions, but as Young J said in AWB at [45], such activities are not to be readily separated from the ultimate legal advice given by lawyers. To do so would be to take an unduly narrow approach to the scope of legal advice privilege.
86. Furthermore, it needs to be appreciated that the advice sought by Centro as to the proper classification of its debt was not sought in a vacuum. The advice sought was sought in the context of Centro seeking other and related advice as to legal issues and concerns which flowed out of the same topic. Those circumstances serve to support the conclusion that the advice sought as to the correct classification of debt should, together with the other advice sought, be characterised as Centro seeking legal advice, that is, professional advice as to what Centro should prudently or sensibly do in a relevant legal context.
18 In the end, PwC's argument was a mere assertion that his Honour's reasoning should not be accepted. This does not demonstrate that the reasoning was erroneous. Again, no sufficient doubt has been shown to warrant the attention of an appeal court in relation to the remaining grounds of the proposed notice of appeal.
19 Mr Sulan contended that if the judgment stands and PwC is prevented from accessing the investigation documents and if it successfully challenges the privilege judgment on an appeal following trial, there may be a need for a retrial. As the current trial is listed for 58 days and includes parties other than those appearing on this application, Mr Sulan contended that there was substantial prejudice not only to PwC but to third parties if the orders were to remain in place. On the other hand, he said, that if leave were granted an appeal would only occupy a few hours and could be completed by 20 March 2012 which is when PwC would require the investigation documents.
20 The consequences relied upon by Mr Sulan are speculative. They might have more force if the proposed grounds of appeal had more merit. In the event, leave to appeal should be refused with costs.
I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice North.