Rickard Constructions Pty Limited v Rickard Hails Moretti Pty Limited

Ampolex Ltd v Perpetual Trustee Co (Canberra) Ltd (1995) 37 NSWLR 405 Bank of Nova Scotia v Hellenic Mutual War Risks Associations (Bermuda) Ltd ("The Good Luck") [1992] 2 Lloyd's Rep. 540 Bulk Materials (Coal Handling) Services Pty Ltd v Coal and Allied Operations Pty Ltd (1988) 13 NSWLR 689 Buttes Gas & Oil Co v Hammer (No. 3) [1981] QB 223 Carnell v Mann (1998) 89 FCR 247 Farrow Mortgage Services Ptd Ltd (in liq) v Webb (1996) 39 NSWLR 601 Guinness Peat Properties Ltd. v Fitzroy Robinson Partnership [1987] 1 WLR 1027 CASES CITED : Mann v Carnell (1999) 201 CLR 1 Network Ten Ltd v Capital Televsion Holdings Ltd (1995) 36 NSWLR 275 R v Cox & Railton (1884) 14 QBD 153 Rank Film Distribution Ltd v ENT Ltd (1994) 4 Tas R 281 Re Global Medical Imaging Management Limited (in liq) [2001] NSWSC 476 Somerville v Australian Securities Commission (1995) 60 FCR 319 Southern Cross Airlines Holdings Ltd (in liq) v Arthur Andersen & Co (a firm) (1998) 84 FCR 472 Telstra Corporation v Australis Media Holdings (No 2) (1997) 41 NSWLR 346

PARTIES : Rickard Constructions Pty Limited ACN 055 192 919 (Plaintiff/ Respondent) Allianz Australia Insurance Limited ACN 000 122 850 (Third Defendant/ Applicant)

COUNSEL : TGR Parker SC (Plaintiff/ Respondent) A S Martin SC (Third Defendant/ Applicant)

SOLICITORS : Henderson Taylor Workplace Lawyers (Plaintiff/ Respondent) Moroney Betts (Third Defendant/ Applicant)

• 27 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION TECHNOLOGY & CONSTRUCTION LIST

55027/00 RICKARD CONSTRUCTIONS PTY LIMITED v RICKARD HAILS MORETTI PTY LIMITED JUDGMENT 1 This is an application in which the plaintiff, Rickard Constructions Pty Limited, claims privilege in respect of certain documents that have been produced pursuant to a Notice to Produce. The third defendant, Allianz Australia Insurance Limited (Allianz), challenges the plaintiff's claim for privilege. The documents the subject of the claim for privilege were produced by SST Consulting Services Pty Limited (SST). 2 The main proceedings relate to the failure of pavement laid by the plaintiff at the Port Botany container park and include a claim for a declaration that the plaintiff is entitled to indemnity under the policy of insurance with Allianz for losses it allegedly suffered as a consequence of the failure of the pavement.

The Deed of Company Arrangement (DCA) 3 The plaintiff was placed into voluntary administration on 19 October 2000. Mr Neil Jeffery Singleton, of Simms Lockwood, was appointed as the Administrator of the plaintiff. On 22 December 2000 the plaintiff entered into a Deed of Company Arrangement (DCA) with Mr Singleton, Charles Eric Rickard (a principal of the plaintiff), SST Services Pty Ltd and SST Consulting Services Pty Ltd. 4 Under the DCA the Administrator handed back control of the plaintiff to its directors and it was agreed that the plaintiff would prosecute these proceedings and provide reports to Mr Singleton as to the conduct of the proceedings. The DCA also provided that Mr Rickard and SST Services Pty Limited and SST Consulting Services Pty Limited would "provide financial support for the continued conduct of the Construction List proceedings" by the plaintiff. SST Services and SST Consulting were jointly referred to in the DCA as "SST". I will refer to them jointly as "the funder". 5 The Administrator was required to establish "the Fund" under his control and to apply and appropriate to the Fund the property of the plaintiff, the balance of the Director's Advance and the amount of any settlement or verdict obtained by the plaintiff in these proceedings. The property of the plaintiff is defined to include the whole of the assets and undertakings of the plaintiff including debtors, receivables and retention monies payable to the plaintiff and all cash at the bank. The Director's Advance was defined as the amount of money paid or payable by Mr Rickard or the funder to the Administrator in the amount of $80,000 that had been partly expended on payment of fees and expenses incurred in these proceedings and in payment of the Administrator's remuneration and expenses. 6 The funder was a secured creditor pursuant to a charge over the assets of the plaintiff and agreed to surrender its security or defer enforcement of its security. Mr Rickard and the funder covenanted and agreed to pay all legal fees and expenses incurred in the conduct of these proceedings up to an amount of $150,000 or until 31 March 2001, whichever first occurred. Either could at any time source litigation insurance or other funding to further fund the continued conduct of the proceedings, subject to the agreement of the Administrator. 7 The plaintiff was obliged to provide to the Administrator such reasonable reports as he required as to the conduct of the proceedings. The plaintiff agreed that it would not without the prior written approval of the Administrator capitulate in, settle or compromise the proceedings. Mr Rickard agreed to provide all reasonable assistance to the plaintiff and its legal advisors in prosecuting the proceedings. 8 The plaintiff agreed to pay into the Fund all amounts recovered by way of settlement or verdict in the proceedings. It was only obliged to pay into the Fund the "net amount actually received" after deducting; (1) the amount of any costs order made against the plaintiff; (2) the amount of any legal costs or other costs incurred in the conduct of the proceedings in addition to the funding by Mr Rickard and the funder; and (3) the amount paid to any litigation insurance funder or other funder agreed or approved by the Administrator. 9 The funder agreed that it would be prohibited from enforcing the charge on the plaintiff's property during the term of the DCA and that the Administrator's remuneration and expenses were to be paid in priority to any claim in relation to the secured debt. It also agreed to surrender the security and/or defer enforcement of a company charge dated 13 October 2000 in respect of payment in an amount of $350,000 to a time after payment of the Administrator's remuneration and expenses, the payment of fees and expenses incurred in the conduct of the litigation, the repayment of the director's advance and any unpaid employee entitlements. There was also an agreement that the payment of an amount of $300,000 was to rank equally with the other creditors of the plaintiff and that the payment of the balance of the debt would be deferred until after payment of the other creditors of the plaintiff.

The documents in question 10 The plaintiff retained Andrew Peter Quigley, solicitor and the principal of Andrew P Quigley & Co to act on its behalf in April 2001. On 30 July 2001 Mr Quigley became a partner of Morris Blackburn Cashman Lawyers (MBC) and through those lawyers was retained to act on the plaintiff's behalf. Mr Quigley gave the following evidence in his affidavit sworn on 8 December 2005: 12. In the course of these proceedings for the purpose of providing the Plaintiff with professional legal services in these proceedings and for the purpose of providing legal advice to the Plaintiff, or both, it was my practice to do the following: (a) convene regular meetings, attended by myself, counsel, Mr Rickard and Mr Peter Sweeney, a director of SST, to discuss various aspects of the proceedings; (b) prepare agendas for, and minutes of, the meetings referred to in sub-paragraph (a) above; (c) prepare and review draft affidavits and statements of witnesses, correspondence and loss schedules in the proceedings; (d) correspond with counsel in respect of the Plaintiff's preparation for the proceedings including the sending of documents referred to sub-paragraph (b) and (c) above; (e) send correspondence to the solicitors, acting at various times, for the defendants in these proceedings; (f) send letters or facsimiles to Mr Rickard, on behalf of the Plaintiff, reporting on the progress of proceedings with or without copies of the documents referred to in sub-paragraphs (b), (c), (d) and (e) above; and (g) send letters or facsimiles to Mr Rickard, on behalf of the Plaintiff seeking instructions or providing advice in relation to the proceedings; and (h) receive written instructions from Mr Rickard, on behalf of the plaintiff; 13. At all times since I was retained by the Plaintiff, I was and remain of the view that SST should be kept abreast of the progress of these proceedings. In this regard I dealt with Mr Peter Sweeney. Accordingly, it was my practice to: (a) send to Mr Sweeney letters or facsimiles enclosing copies of the documents referred to in paragraph 12, above; (b) send letters or facsimiles to SST, or Mr Sweeney, on behalf of SST, reporting on the progress of proceedings; (c) send invitations to Mr Sweeney to attend meetings referred to in sub-paragraph 12(a) above. 14. During this time it was also my practice to send to Mr Peter Sweeney as a director of SST: (a) requests for payment, with or without underlying invoices from counsel or experts, in relation to legal costs incurred by the Plaintiff in those proceedings; and (b) other correspondence in relation to the costs of these proceedings. 15. During this time I also received correspondence from Mr Peter Sweeney in relation to the costs of the proceedings. 11 In his affidavit Mr Quigley referred to the funder as "SST". Mr Sweeney is a director of the funder, that is, of both SST Services and SST Consulting. There are four packets of documents that are the subject of this application. They are packets 15, 16, 17 and 19. Packet 17 12 There is a schedule annexed to Mr Quigley's affidavit that purports to describe the documents in question. In all but one instance they are described simply as "Letter", "Facsimile", "Letter and enclosure(s)", "Facsimile and attachments" from MBC to Mr Sweeney or SST Consulting and from Mr Sweeney to Mr Quigley. Document 16 is described as a "letter and enclosure" from MBC to "Rickard Constructions". 13 Mr Quigley describes the documents in packet 17 in his affidavit as follows: 17. I have reviewed those documents and state, apart from document number 19 and 27, all documents are of the type of one or more of those described in paragraphs 12 to 15, above. 18. Document 19 is an internal communication from Mr Peter Sweeney to the other directors of SST concerning a communication from me to him of the type described in paragraph 13 above . 19. Document 27 is a letters sent by me to Mr Sweeney attaching a draft deed and this letter refers to advice given by counsel in respect of the deed. [emphasis added]

14 Allianz no longer presses for access to document 27. Packets 15, 16 and 19 15 The relevant documents in packets 15, 16 and 19 have been listed in a schedule to Luke Neander's affidavit sworn on 1 February 2006. Mr Neander is now the solicitor with the carriage of the matter for the plaintiff since Mr Quigley ceased employment with MBC in December 2005. 16 There is a schedule annexed to Mr Neander's affidavit that purports to describe the documents in question in each of the packets. The documents in packet 15 are simply described as "Facsimile", "Letter and enclosure" or "Facsimile and attachments" between MBC and SST Consulting or Mr Sweeney. The documents in packet 16 are similarly described except that in addition they include such documents between MBC and "Peter Sweeney and Charles Rickard" or "Peter Sweeney & Rickard Constructions". The documents in packet 19 are once again simply described as "Letter", "Facsimile", "Facsimile and attachments", "Letter and enclosure" between MBC and SST Consulting and between Mr Sweeney and Mr Quigley. 17 Mr Neander's affidavit evidence is that the documents in packets 15, 16 and 19 are "of the type described in paragraphs 13 and 14 of Mr Quigley's affidavit". Documents of the type described 18 There was no cross examination of Mr Quigley, so the only description of the documents in packet 17 is that they are "of the type of one or more of those described in paragraphs 12 to 15" of Mr Quigley's affidavit. The type of documents referred to in paragraph 12 of that affidavit seem to be: (1) agendas and minutes of regular meetings attended by Mr Quigley, counsel, Mr Rickard and Mr Sweeney "to discuss various aspects of the proceedings" (agendas and minutes); (2) draft affidavits and statements of witnesses, correspondence and loss schedules in the proceedings (affidavits and statements); (3) correspondence with counsel appearing for the plaintiff in the proceedings in respect of the preparation of the proceedings (correspondence with counsel); (4) correspondence with the solicitors for the defendants (correspondence with defendants' solicitors); (5) letters to Mr Rickard, on behalf of the plaintiff, reporting on the progress of the proceedings (advice to the plaintiff); and (6) letters seeking instructions from the plaintiff and letters from the plaintiff providing instructions (letters of instructions). 19 The evidence given by Mr Quigley that the documents were of the type of "one or more" of those described in paragraph 12 of his affidavit does not seem to mean that the documents in question fall into each of the categories identified. However, I am going to assume that it is suggested that the documents fall within each of the categories and that some fall into more than one of the categories. 20 The type of documents described in paragraph 13 of Mr Quigley's affidavit are: (1) copies of the agendas and minutes, affidavits and statements, correspondence with counsel, advice to the plaintiff and letters of instruction (copy documents); (2) letters to the funder reporting on the progress of the proceedings (progress reports); and (3) invitations to Mr Sweeney to attend the regular meetings with Mr Quigley, counsel and Mr Rickard (invitations). 21 The type of documents described in paragraphs 14 and 15 of Mr Quigley's affidavit is correspondence between MBC and Mr Sweeney, on behalf of the funder, in relation to: (a) legal costs incurred by the plaintiff in the proceedings; and (b) legal costs (generally it seems) of the proceedings (the costs correspondence). 22 Similarly, Mr Neander's evidence is not precise in regards to which documents fall into which categories in paragraphs 13 and 14 of Mr Quigley's affidavit, however, I am going to assume that the documents fall within each of the categories referred to in those paragraphs.

Grounds of challenge 23 Allianz claims that the communications are not protected from disclosure on three bases: (1) they are not privileged by virtue of the operation of s 118 or s 119 of the Evidence Act 1995 (NSW) (the Act); (2) even if they are privileged the plaintiff knowingly and voluntarily disclosed them to SST and Mr Sweeney and any privilege was thus waived or lost pursuant to s 122 (2) of the Act; and (3) they were disclosed to SST and Mr Sweeney with the express or implied consent of the plaintiff and thus any privilege was lost, or waived, pursuant to s 122(4) of the Act. In this latter regard the plaintiff claims that s 122(2) and s 122(4) of the Act are excluded from application to the documents because they are communication with a person with a "common interest" within the meaning of that term in s 122(5)(b) of the Act. Sections 118 and 119 of the Act 24 Allianz submitted that the communications with the funder are not protected from disclosure because they are not confidential communications or confidential documents within the meaning of those terms in s 118 and s 119 of the Act. Section 117 provides relevantly: confidential communication means a communication made in such circumstances that, when it was made:

was under an express or implied obligation not to disclose its contents whether or not the obligation arises under law. confidential document means a document prepared in such circumstances that, when it was prepared:

was under an express or implied obligation not to disclose its contents, whether or not the obligation arises under law.

25 Section 118 of the Act: 118 Legal advice

Evidence is not to be adduced if, on objection by a client, the court finds that adducing the evidence would result in disclosure of: (a) a confidential communication made between a client and a lawyers; or (b) a confidential communication made between 2 or more lawyers acting for the client; or (c) the contents of a confidential document (whether delivered or not) prepared by the client or a lawyer;

for the dominant purpose of the lawyer, or one or more of the lawyers, providing legal advice for the client.

26 Section 119 provides: 119 Litigation

Evidence is not to be adduced if, on objection by a client, the court finds that adducing the evidence would result in disclosure of:

(a) a confidential communication between the client and another person, or between a lawyer acting for the client and another person, that was made; or

(b) the contents of a confidential document (whether delivered or not) that was prepared;

for the dominant purpose of the client being provided with professional legal services relating to an Australian or overseas proceeding (including the proceeding before the court), or an anticipated or pending Australian or overseas proceeding in which the client is or may be, or was or might have been, a party. 27 The "regular meetings" (referred to in paragraph 12(a) of Mr Quigley's affidavit) that were attended by Mr Quigley, counsel, Mr Rickard and Mr Sweeney, were, it seems to me, for the dominant purpose of the plaintiff receiving legal advice and/or being provided with professional legal services in relation to the proceedings. Mr Quigley's evidence was that he sent the documents in question to the funder because he was of the view that the funder "should be kept abreast of the progress of these proceedings". Although the affidavit does not provide an express reason why Mr Sweeney, on behalf of the funder, was invited to the regular meetings it seems fairly obvious that it was for the same reason. The fact that Mr Sweeney was present to be kept abreast in this way does not in my view change the dominant purpose of the meetings. 28 Mr Sweeney also received from MBC copies of the agendas and minutes of these meetings as well as copies of the affidavits and statements, the correspondence with counsel, the correspondence with defendants' solicitors, the advice to the plaintiff and the letters of instructions. It is not contended that the originals of these documents (including the correspondence with defendants' solicitors), prior to their publication to Mr Sweeney are not privileged. In this regard I should observe that there was no specific focus on the various types of documents in the submission made by Allianz, rather, the documents were really dealt with on the basis that they were all privileged in the hands of the plaintiff. "Confidential"? 29 There was no evidence of any express statement or agreement that the funder would undertake to keep confidential the communications (or any record thereof) that it heard or observed at the regular meetings. Similarly there is no evidence of any request made of the funder, or any undertaking given by the funder, to keep confidential the contents of the documents forwarded to it. The only basis upon which the communications could be confidential in the presence of the funder and/or the contents of the documents could be confidential, is if the funder was under an implied obligation to keep the communications and/or contents of the documents confidential (the confidentiality obligation). 30 Allianz submitted that a necessary pre-requisite to the implication of the confidentiality obligation on the funder was the existence of a solicitor/client relationship with Mr Quigley or MBC. In this regard reliance was placed upon R v Cox & Railton (1884) 14 QBD 153 at 168 where Stephen J referred to what passes between solicitor and client "in professional confidence". It was submitted that the funder did not consult with MBC on a professional basis and MBC did not perform any legal services for the funder. In those circumstances there was absent from the relationship between the funder and MBC the reposing of any professional confidence in MBC. 31 There is no suggestion by the plaintiff that the funder was in a solicitor/client relationship with MBC. The plaintiff submitted that such relationship is not a necessary pre-requisite for the implication of the obligation. In this regard reliance was placed on the judgment of the Full Federal Court (Higgins, Lehane and Weinberg JJ) in Carnell v Mann (1998) 89 FCR 247. In that case a similar submission had been made and the Court said at 259: That submission cannot be accepted. The expression "whether or not the obligation arises under law" in s 117(1) would be otiose if the term "obligation" were to be read as narrowly as this. The obligation of confidentiality owed by a solicitor to his client undoubtedly "arises under law", though it may also be based in part upon ethics or morality. Parliament must have had in mind relationships broader than those of a solicitor/client when it enacted the definitions of "confidential communication", and "confidential document" in s 117(1). 32 Although, on appeal, the High Court held that the Full Federal Court erred in deciding that the applicable law was to be found (derivatively) in the Evidence Act 1995 (Cth): Mann v Carnell (1999) 201 CLR 1, per Gleeson CJ, Gaudron, Gummow & Callinan JJ at 12, par [27], there was no criticism of the abovementioned analysis of s 117, which is in the same terms as the Evidence Act 1995 (NSW). 33 Assuming the correctness of the analysis by the Full Federal Court, it seems to me that matters relevant in assessing whether a confidential obligation is implied in relationships or circumstances outside that of solicitor/client include the nature of the relationship in question and the circumstances, including conduct and/or conversations, surrounding the communications or documents in question. It is also permissible to have regard to the nature of the documents in question and the purpose and context of their communication: see Bulk Materials (Coal Handling) Services Pty Ltd v Coal and Allied Operations Pty Ltd (1998) 13 NSWLR 689 at 695E. 34 Allianz seizes upon the absence from Mr Quigley's evidence of any conversations with the funder from which such an obligation could be implied. It was submitted that Mr Quigley could have deposed to such conversations if they had occurred but he did not do so. 35 The plaintiff relied upon Re Global Medical Imaging Management Limited (in liq) [2001] NSWSC 476, a case in which Santow J considered the question of whether a funding agreement between a liquidator and certain third parties satisfied the requirements for litigation privilege in s 119 of the Act. The agreement in question contained clause 10.1 which "confirmed" that it was confidential. Santow J said: 6. At first blush, one might be inclined to treat a funding agreement as falling outside s119, being provided not for the dominant purpose of the provision of professional legal services but, rather, for a purpose anterior to their provision, namely, the funding thereof. Such a view would comport with the trend of a hardening judicial attitude to narrow the scope of the legal professional privilege; see the discussion of the cases cited in "Legal Professional Privilege in Australia" by Dr R J Desiatnik (Prospect, 1999) at 53 as reflected for example that it is not enough for a person merely to assert a claim for privilege ( National Crime Authority v S (1991) 100 ALR 151 at 159 per Lockhart J). That trend of the general law as so interpreted is however not consistently reflected in its statutory counterpart. The Evidence Act 1995 to some extent widens its scope, notably by substituting the dominant purpose test for the sole purpose test, though the general law has now caught up; Esso Australia Resources Ltd v Commissioner of Taxation of the Cth of Australia (1999) 74 ALJR 339. 7 But that first blush view is not the view that I would, on consideration adopt. To deny legal privilege to a funding agreement of this sort would fail to give proper weight to its inextricable connection with the very subject matter of the legal advice that might be given and the nature of the professional legal services to be rendered. It has the potential to reveal the litigant's likely legal strategy. The funding agreement in a literal and substantive sense, fulfils the purpose of providing legal services in terms not only of the overall capacity to have them at all, but also their availability at critical junctures in the case. While it may not reveal the content of legal advice, it reveals the confidential circumstances of its availability and throws oblique light on the confidential circumstances to which the advice is directed.

8 One could, for example, infer from a funding agreement the likelihood of tactical advice being given of a particular kind at different stages of the litigation or, for that matter, of the likelihood of an appeal being advised or not advised. I consider this funding agreement could do so.

9 Accordingly I would conclude that the dominant purpose element is made out.

10 I would add that in some cases, a funding agreement might even allow such a reliable inference of the likely legal advice, that it would fall within the protection of s118. It protects both the legal advice and any related confidential communications. However, I do not need to determine that question here.

36 This decision is not authority for the proposition that the relationship between a funder of litigation and the funded party is a confidential relationship. Rather it may be authority for the more limited proposition that a funding agreement may satisfy the requirements of s 119 of the Act, depending on the particular terms of that agreement. It will depend on the facts of each case. 37 The facts of this case include the fact that the 'funding agreement' or funding arrangement has not been the subject of any claim of confidentiality or privilege. It is contained in the DCA whereby the funder agreed to surrender its security and to fund the litigation in return for the payment out from the Fund of the amounts and in the priority referred to in the DCA. The only person entitled under the DCA to reports "as to the conduct of the litigation" is the Administrator. It is true that there is nothing in the facts proved on this application that suggests that the funder sought to have any say in the way the litigation was conducted or that it requested to be present at the regular meetings. There is also nothing to suggest that it requested to see any of the documents referred to in paragraph 12 of Mr Quigley's affidavit and certainly nothing to suggest that it required copies of documents privileged in the hands of the plaintiff. 38 The funder's obligations to fund the litigation are spelt out in the DCA and are certainly not conditional on either of those matters. If the funder (or Mr Rickard) decided to obtain other additional funding for the litigation, they could not do so without the Administrator's agreement. That may have been a basis upon which the Administrator's entitlement to reports "as to the conduct of the litigation" was thought to be appropriate. There is no suggestion in the evidence that the Administrator was invited to attend the regular meeting or that he received copies of the documents. 39 The basis for the invitations to the funder to attend the regular meetings and for the provision to it of the copies of the documents, was Mr Quigley's "view" that the funder "should be kept abreast of the progress of the proceedings". The only submission put by the plaintiff as to the purpose in such invitations and provision of documents was that it was to "keep the funder sweet" (tr. 9). Mr Parker SC elaborated on this submission in the following exchange (tr. 11-12): PARKER: In connection with disclosure to SST should be seen as conduct for the purposes of the proceedings, I used the phrase keeping the funder sweet, I should have referred to the evidence in that regard which was unchallenged and is in paragraph 13 in Mr Quigley where he says at all times when he was retained he was and remains of the view that SST should be abreast, that is a view he forms in his capacity as a solicitor for Rickard Constructions. HER HONOUR: I am not sure this is all that relevant, is it, that he formed that view? PARKER: Motive doesn't matter but purpose does. In our submission that would show, that supports the view that is the dominant purpose because it is the solicitor who is sending the correspondence, that is why he sends it, he sends it because he has formed a view it is an important part of conducting the proceedings that you should keep the funder informed. HER HONOUR: Why? PARKER: That is what he said and it has not been challenged. HER HONOUR; Isn't it the case that the answer to the why is your submission that he wanted to keep them sweet? PARKER: Presumably, because he sees it as important. HER HONOUR: To keep the money coming. PARKER: Good relations with the funder. 40 Mr Quigley's evidence and these submissions need to be evaluated in the light of the relationship that is established from the evidence. Under the DCA the funder and Mr Rickard "jointly" covenanted and agreed "to pay all legal fees and expenses incurred" in the conduct of these proceedings. The funder and Mr Rickard were given the joint discretion to "source" litigation insurance or other funding "to further fund the continued conduct" of these proceedings, subject to the agreement or approval of the Administrator. It is not unreasonable to infer that when a decision is to be made in relation to whether funding and/or insurance should be pursued the question of the merits or strength of the claim and the quantum of the funding and/or insurance would need to be considered. Those matters from the point of view of the plaintiff would be confidential to the plaintiff.

41 The relationship with the plaintiff as disclosed in the DCA is one in which the funder agreed to provide funding to a particular limit, $150,000 to be funded jointly by Mr Rickard and the funder, subject to such limit being reached before a particular date. That obligation seems to be irrespective of the developments in the proceedings. However there is the additional aspect to the relationship in that the funder and Mr Rickard were given the discretion, to be exercised "at any time", to "source litigation insurance or other funding" to fund "the continued conduct" of these proceedings, subject to the agreement or approval of the Administrator, who also had the discretion to seek litigation funding. That seems to be a far more collaborative and supportive aspect to the relationship as it involves ongoing attention and assessment of what is and/or might be needed for the continued conduct of the litigation. The nature of this relationship has to be taken into account when assessing the "view" Mr Quigley reached and the purpose in inviting the funder to the meetings and sending it the documents. 42 Mr Quigley's evidence is a little tantalising in its brevity. It does not suggest expressly that the reason he provided the documents to the funder was to enable it to make an assessment or judgment about the continued funding of the litigation or the obtaining of litigation funding. One view of it may lead to the conclusion that it was simply because the funder was funding the litigation it "should", or it was entitled to, be "kept abreast of the progress of the proceedings". Mr Parker SC' submission that the purpose was to keep the funder "sweet" is in my view the vernacular of ensuring that the funder was aware of the progress of the litigation so that it would exercise its discretion to "source" funds and/or insurance for the continued conduct of the litigation. 43 It seems to me, having regard to the obviously privileged material that was provided to the funder, that the plaintiff, through Mr Quigley, was seeking to provide the material to the funder so that the litigation could be properly funded and continued and so that the plaintiff could retain its legal representation. I am satisfied that the collaborative and supportive aspects of the relationship between the funder and the plaintiff, the nature of the meetings attended, the documents provided and the abovementioned purpose are matters from which it is appropriate to imply that when the information at the meetings and the contents of the documents were disclosed to the funder it had an obligation not to disclose their contents. In those circumstances, I am satisfied that the communications with the funder were confidential communications within the meaning of that term in s 117 of the Act. 44 The documents, the subject of challenges, are described in the most general way. The evidence is that the enclosures were the copies of the types of documents referred to in Mr Quigley's affidavit. It seems to me that the covering letters are probably confidential communications enclosing confidential documents. It is now necessary to determine whether the documents in question are privileged pursuant to s 118 and/or s 119 of the Act. Privileged? 45 Mr Parker SC submitted that the contents of the documents, copies of which were provided to the funder, were confidential and were prepared by the lawyers for "the dominant purpose" of "providing legal advice" to the plaintiff. It was submitted that in those circumstances the documents are privileged pursuant to s 118(c) of the Act and that the copies in the hands of the funder retain their privileged status. It seems to me that the originals of at least some of the documents, that is the enclosures to the letters sent to the funders, were confidential documents prepared by the lawyers for the dominant purpose of the lawyer providing legal advice to the plaintiff. The question is whether in sending the copies to the funder the plaintiff waived the privilege pursuant to s 122(2) or (4) of the Act in that the documents were knowingly and voluntarily disclosed to the funder or were disclosed with the express or implied consent of the plaintiff. 46 Section 122 provides relevantly: 122 Loss of client legal privilege: consent and related matters

(2) Subject to subsection (5), this Division does not prevent the adducing of evidence if a client or party has knowingly and voluntarily disclosed to another person the substance of the evidence and the disclosure was not made: (a) in the course of making a confidential communication or preparing a confidential document; or …

(4) Subject to subsection (5), this Division does not prevent the adducing of evidence if the substance of the evidence has been disclosed with the express or implied consent of the client or party to another person other than:

(a) a lawyer acting for the client or party; or …

… (b) a disclosure to a person with whom the client or party had, at the time of the disclosure, a common interest relating to a proceeding or an anticipated or pending proceeding in an Australian court or a foreign court. 47 Mr Parker SC relied on Carnell v Mann in support of the submission that the copies of the documents in the hands of the funder retained their privileged status. In that case the then Chief Minister of the Australian Capital Territory, Ms Carnell, provided under a covering letter to another member of the Legislative Assembly, Mr Moore, an Independent, copies of a solicitor's letter of advice and "briefs" received from Senior Counsel advising the ACT Government in respect of a settlement it had reached with Dr Mann in a defamation suit brought against it by Dr Mann. Mr Moore contacted Ms Carnell's office and inquired as to the status of the enclosures. He was requested not to provide copies of them to Dr Mann and in a subsequent telephone conversation the Chief Minister advised Mr Moore that the enclosures had been sent to him "in confidence". Mr Moore sent a copy of the covering letter to Dr Mann but did not provide him with the enclosures, which he sent back to the Chief Minister. Dr Mann then sought access to the enclosures. 48 The primary judge held that the enclosures, being copies of the original solicitor's letter and briefs, were not privileged because they were copied for the purpose of being made available to Mr Moore and their publication was not a privileged occasion. The Full Court held that the primary judge had correctly held that the enclosures in their original form were privileged (at 253) but did not accept the correctness of the reasoning as to the loss of privilege (at 254). The Full Court expressed the view that the primary judge's analysis failed to take into account the effect of the Evidence Act on the doctrine of waiver. It referred to the starting point as s 117 and then analysed s 122 of the Act as it related to the circumstances of that case. The following was said in relation to s 122(2)(a) of the Act at 258-259: It seems clear that the documents sought by Dr Mann were provided by Mrs Carnell to Mr Moore in circumstances where she, as the "client", "knowingly and voluntarily disclosed to another person the substance of the evidence" within the meaning of s 122(2) of the Evidence Act . Such disclosure to a third party may, on occasion, lead to the loss of legal professional privilege at common law: Hooker Corporation Ltd v Darling Harbour Authority (1987) 9 NSWLR 538; Guinness Peat Properties Ltd v Fitzroy Robinson Partnership [1987] 1 WLR 1027; Hartogen Energy Ltd (In liq) v Australian Gas Light Co (1992) 109 ALR 177 and Goldberg v Ng (1995) 185 CLR 83. It is not sufficient, however, to result in the loss of client legal privilege pursuant to s 122(2). That is because the privilege is not lost if "the disclosure was `made ... in the course of making a confidential communication or preparing a confidential document"': see s 122(2)(a). There was obviously a relationship of a confidential nature between Mrs Carnell and Mr Moore. That relationship rendered Mrs Carnell's actions in providing Mr Moore with the documents in question the making of a "confidential communication" within the meaning of s 122(2)(a) of the Evidence Act. It must be recalled that s 117(1) of the Evidence Act defines "confidential communication" as a communication made in such circumstances that, when it was made, the person who made it, or the person to whom it was made, "was under an express or implied obligation not to disclose its contents, whether or not the obligation arises under law". Mr Moore's evidence was that he regarded himself as being under an obligation not to disclose the contents of the documents in question once he had ascertained that Mrs Carnell had provided them to him upon a confidential basis. There was also a body of other evidence to suggest that the particular relationship between Mrs Carnell and Mr Moore was by no means unusual in this regard. It was asserted, for example, that Mrs Carnell's predecessors as Chief Minister had made various documents available to Mr Moore, and to other members of the Legislative Assembly upon a confidential basis. Indeed, the evidence went so far as to make it clear that the practice of a minister briefing, or providing background documentation to, backbench members of Parliament, upon a confidential basis, was one which is common throughout Australia. … It is clear that s 122(2)(a) of the Evidence Act provides that client legal privilege is not lost by reason of the voluntary disclosure to another of a privileged communication if that disclosure was made in the course of a "confidential communication", as defined in s 117(1). The provision by Mrs Carnell to Mr Moore of the documents sought by Dr Mann was a "confidential communication" in this sense. It follows that the client legal privilege which attached to the contents of those documents when they were brought into existence was not lost merely because they were made available to Mr Moore. 49 Section 122(4) is applicable only in circumstances where s 122(2) does not operate: Telstra Corporation v Australis Media Holdings & Ors (No 2) (1997) 41 NSWLR 346 at 350-351; Carnell v Mann at 260. Mr Parker SC submitted that s 122(2) and s 122(4) do not apply because the disclosure to the funder was to a person with a "common interest relating to" the proceedings: s 122(5). 50 Instances in which a "common interest" has been found to exist include: (a) an insured and an insurer/underwriter: Bulk Materials (Coal Handling); Guinness Peat Properties Ltd v Fitzroy Robinson Partnership [1987] 1 WLR 1027; (b) a company and parent (being the beneficial holder of a 50% interest) company: Rank Film Distribution Ltd v ENT Ltd (1994) 4 Tas R 281; (c) a company asserting rights to mineral resources and the sovereign state claiming (territorial) jurisdiction to grant such rights: Buttes Gas & Oil Co v Hammer (No. 3) [1981] QB 223; and (d) a liquidator and creditors, (being the beneficiaries of both the liquidator's statutory obligation to provide information and the liquidation itself): Southern Cross Airlines Holdings Ltd (in liq) v Arthur Andersen & Co (a firm) (1998) 84 FCR 472. The concept of a "common interest" is not rigidly defined, and is a question of fact in each case: Network Ten Ltd v Capital Television Holdings Ltd (1995) 36 NSWLR 275. 51 "A common interest in relation to" proceedings is an identity between genuine interests, and should be distinguished from the contingent intersection of selfish interests: Ampolex Ltd v Perpetual Trustee Co (Canberra) Ltd (1995) 37 NSWLR 405 at 409-410; Network Ten Ltd v Capital Television Holdings Ltd (1995) 36 NSWLR 275; Bank of Nova Scotia v Hellenic Mutual War Risks Association (Bermuda) Ltd. ("The Good Luck") [1992] 2 Lloyd's Rep. 540. In New South Wales a common solicitor is not a pre-requisite to a claim of a common interest in relation to the proceedings: Network Ten Ltd v Capital Television Holdings Ltd (1995) 36 NSWLR 275 at 280.

52 Mr Parker SC relied on Southern Cross Airlines Holdings Ltd. (in liq) v Arthur Andersen & Co (a firm) (1998) 84 FCR 472 in support of the claim of a common interest in the proceedings. In that case the liquidator of the company, in his report to creditors, made brief mention of certain legal advice. Arthur Andersen sought access to the legal advice arguing that any privilege had been waived pursuant to s 122(4) of the Act. Drummond J was of the view that the report could not be said to have disclosed the substance of the advice within the meaning of s 122(4): at 479-480. His Honour then proceeded upon the contingency of possible error in that finding and considered the claim of "a common interest" as between the liquidator and the creditors receiving the report at 480: All that is required for s 122(5)(b) to apply is that there be a disclosure by a person entitled to claim legal professional privilege to another with whom the privileged claimant "had, at the time of the disclosure, a common interest relating to" the action. It is one central object of liquidation that the liquidator exercise his powers and functions for the benefit of the creditors. In recognition of this, the liquidator, while not subject to direction by the creditors or any of them, is required to keep them informed of the progress of the liquidation and can, moreover, be subject to general oversight by the creditors in general meeting or through a committee elected by the creditors. See ss 479, 509, 548 (and 547) of the Corporations Law and McPherson, The Law of Company Liquidation (3rd ed, 1987), at pp. 230-231, 236 and 238. If a liquidator, as here, makes a report to creditors on the progress of his administration, which includes a report on possible avenues of recoupment of funds on behalf of the company which will augment the funds available for distribution to creditors, a disclosure in such a report that the liquidator has good grounds for pursuing claims against a third party is, in my opinion, a disclosure by the liquidator to persons, namely, the creditors, who have a common interest with the liquidator within s 122(5)(b) relating to anticipated action by the liquidator against that third party. [emphasis added] 53 It would appear that it was the statutory obligation to provide information to creditors that was pivotal to the determination that there was a common interest between the liquidator and the relevant creditors in that case. In the present case there is no equivalent statutory obligation.

54 Drummond J considered Somerville v Australian Securities Commission (1995) 60 FCR 319 in which Lockhart J (Jenkinson J agreeing, Lindgren J not deciding) took the view that the interests of the ASC as a public authority pursuing the public good were not in common with the private interests of those in whose names it brought the suit and then went on to consider Farrow Mortgage Services Pty Ltd (in liq) v Webb (1996) 39 NSWLR 601. His Honour said at 481: As is made clear by Lockhart J's discussion in Somerville of the position of the ASC in an action brought by it under s 50 in the name of and for the benefit of an injured party, the ASC does not have either the same or even a similar interest in the successful outcome of such litigation with the beneficiary of the Commission's action. The latter's interest is in the Commission's action being successful. The Commission's interest is solely in ensuring, not that that person's pecuniary interests are vindicated, but that the litigation provides an appropriate vehicle for vindication by the Commission of the public interest in ensuring that misconduct uncovered by a Commission investigation is not left unremedied by action being taken, whatever be the outcome of that action. See Somerville at 324-325 and Australian Securities Commission v Deloitte Touche Tohmatsu (1996) 70 FCR 93 at 114-120. The cases relied on for this view in Somerville were more recently considered in Farrow Mortgage Services Pty Ltd (In Liq) v Webb (1996) 39 NSWLR 601; Sheller JA (Waddell A-JA agreeing and Meagher JA expressing no opinion) said (at 609), that common interest privilege at common law is not a rigidly defined concept, that "[a] mere common interest in the outcome of litigation will be sufficient to enable any party with that interest to rely on it". Since a liquidator and the creditors each have an interest in the proper administration of the company, including the successful outcome of litigation brought by the liquidator in the company's name with a view to augmenting the funds available for the purposes of the liquidator's administration, which include payment of a dividend to the creditors and payment of the fees and commissions due to the liquidator, each has a common interest in the subject matter of advice as to the prospects of such litigation that is sufficient to ensure that the communication of any such privileged advice between them will not destroy the privilege. It matters not that neither the liquidator himself nor any of the creditors have any proprietary interest in the chose in action consisting of a right to claim moneys said to be owing to the company upon which the liquidator sues.

55 Mr Parker SC submitted that the test looks to the practical reality of what the two parties will get out of the litigation. In this respect reliance was placed on the provisions of the DCA whereby the funder obtains benefit out of any settlement or verdict at three levels; the first is the recoupment of the money provided by the funder; the second is the priority over the other creditors in respect of the amount of $350,000; and the third is the twenty cents in the dollar for the amount of $300,000 shared with the other creditors. It was submitted that there is an identity of interests in the success of the litigation. 56 This is not a case in which a professional funder has decided to "invest" in the proceedings for the prospect of profit. As I have said earlier, each case must be considered on its own facts. The type of funding, the arrangements for funding, the relationship between the funder and the funded party and the nature of the interests of the funder and the funded party will require analysis to determine whether there is an identity of interests such that they may be categorised as "common". 57 I have already analysed the type of funding, the arrangements for funding and the nature of the relationship between the funder and the plaintiff. I am of the view that the funder had and has an interest in the most advantageous conduct of these proceedings by the plaintiff. That interest is identical with that of the plaintiff: Bulk Materials at 695. I am satisfied that the funder in this case has "a common interest in relation to" the proceedings and thus s 122(2) and s 122(4) do not apply. Even if that is wrong I am not satisfied that privilege was waived under s 122(2) because the documents were provided to the funder in the course of a confidential communication. As s 122(2) "operates" in this instance s 122(4) need not be considered.

58 A different question arises under s 119 of the Act. It is whether the communications were for the dominant purpose of the plaintiff "being provided with professional legal services". I have already decided that the communications were confidential communications. The dominant purpose in the confidential communications was to provide information to the funder so that it would source the continued funding of the litigation. It may be argued, as it was in Global Imaging, that such a purpose is anterior to the dominant purpose of the client "being provided with professional legal services". In Global Imaging Santow J held that the funding agreement in question in "a literal and substantive sense, fulfils the purpose of providing legal services in terms not only of the overall capacity to have them at all, but also their availability at critical junctures in the case" (at [7]). 59 In this case it is the confidential communications rather than the funding agreement that are under consideration. They are not anterior to the dominant purpose, they are inextricably linked to the nature of the professional legal services being provided to the client. Their dominant purpose was to ensure the overall capacity of the plaintiff to have funding and to ensure that such funding would be forthcoming for the continued funding of the litigation. That seems to me to fall within the description of a dominant purpose of the client "being provided" with professional legal services. This description is to be contrasted with the expression "providing professional legal services". The concept of the client "being provided with" something is of broader import and seems to me to encompass the purpose under consideration here. I am satisfied that the documents are also privileged pursuant to s 119 of the Act. Conclusion 60 I refuse the application for access to the documents. Although I have found that Allianz has failed in obtaining orders for access to the documents there is one aspect of the Motion that has yet to argued. It is a claim pursuant s 125(2) of the Act. Allianz claims that the funder's promotion and funding of the litigation for its own commercial benefit without assuming liability for any adverse costs order, constituted an abuse of power such that the privilege should be lost pursuant to s 125(2) of the Act. I have in mind dismissing the Notice of Motion to the extent that it proceeded on the bases other than the s 125(2) claim but I will hear the parties on the appropriate orders to be made, including costs, when the matter is before the Court for directions of 7 April 2006.

10/04/2006 - Add Bergin J as Judge - Paragraph(s) Coversheet

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