Weston v Publishing and Broadcasting Limited

Judgment 1Listed for hearing by Ward J for four days commencing 15 February 2011 is an interlocutory application made in these proceedings by which the first, second, third, fourth, fifth and eighth defendants ("PBL defendants") seek an order that service of the statement of claim be set aside pursuant to rule 12.11.1(e) of the Uniform Civil Procedure Rules 2005 or alternatively an order that the proceedings be permanently stayed. It is convenient to refer to that pending application by the PBL defendants as "the 15 February application". 2Presently before me for decision is a question concerning production of documents for the purposes of the hearing of the 15 February application. The PBL defendants have sought, by paragraph 24 of a notice under rule 21.10(1)(b), production of the litigation funding agreement entered into by the plaintiffs in order to obtain finance for the pursuit of these proceedings as a whole against the PBL defendants and other defendants. 3The plaintiffs are One.Tel Limited and its special purpose liquidator, Mr Weston. They resist production and say that paragraph 24 of the notice to produce should be set aside. 4The existence of the litigation funding agreement is sufficiently established - particularly through references to it by the Court of Appeal on 1 July 2010 in Deloughery v Weston [2010] NSWCA 148; (2010) 79 ACSR 180 and by me on 5 November 2010 in Weston v Publishing and Broadcasting Ltd [2010] NSWSC 1288 - to make it, for the purposes of rule 21.10(1)(b), a "specific document" that is "clearly identified in the notice". 5I must deal at once with a matter arising from my decision of 5 November 2010 just mentioned. That decision concerned the question whether confidentiality orders previously made in these proceedings should be discharged. The confidentiality orders related to affidavits (and their exhibits) and counsel's written submissions placed before the court by the plaintiffs for the purposes of ex parte applications seeking extensions of time for service. The decision of 5 November 2010 was made upon an application made by defendants other than the PBL defendants, namely, the "News defendants". The decision was that the confidentiality orders should be discharged except as to the litigation funding agreement and certain material associated with it. 6The matter came back before me on 22 November 2010 for submissions on the precise form of the orders removing confidentially embargoes. The PBL defendants participated on that occasion, along with the News defendants, but were permitted to do so only for the limited purpose of the formulation of relief to give effect to the decision already announced on 5 November 2010. 7It became clear at the hearing on 22 November 2010 that the decision of 5 November 2010 had proceed upon an erroneous basis: the litigation funding agreement and associated material which, it had been said, should remain subject to existing confidentiality orders made in these proceedings did not in fact form part of the affidavits and exhibits covered by those confidentiality orders: see Weston v Publishing and Broadcasting Ltd [2010] NSWSC 1350 at [9] - although, as will be seen presently, they were (and are) subject to confidentiality orders made in other proceedings. 8In those circumstances, the PBL defendants say, there has not been, in reality, any effective determination of questions of confidentiality, privilege and public interest in relation to the litigation funding agreement, with the result that all those matters are, as it were, at large upon the present application which is an application by the plaintiffs for an order setting aside the part of the PBL defendants' notice to produce requiring production of the litigation funding agreement. 9There is, I think, theoretical merit in that submission. The fact remains, however, that, in a practical sense, the court has already reached and expressed conclusions on a number of issues going to the question now before it and that it will be inappropriate for those conclusions to be revised unless it is shown that some relevant misapprehension was at work originally, that the matters to be considered upon the present application differ in some material way from those considered upon the determination of the earlier application or that there has been some material change of circumstances. In the particular setting, I do not accept the submission made on behalf of the plaintiffs that, because of the decision of 5 November 2010, the relevant part of the PBL defendants' notice to produce (that is, the part calling for the litigation funding agreement) is an abuse of process. 10I turn now to the merits of the present application. The first question arising is whether the litigation funding agreement and its content are "relevant to a fact in issue", in the sense referred to in rule 21.9(2). 11I am satisfied that, for reasons advanced by counsel for the PBL defendants, that question must be answered in the affirmative. The delineation of the "facts in issue", for the purposes of the rule, cannot be confined to facts that must be found in order to establish an entitlement to the final relief to which the substantive proceedings or to establish some defence to the claim for that final relief. The concept extends to facts proof of which goes to an entitlement (or lack of entitlement) to interlocutory relief in the proceedings. It follows, in my opinion, that the special purpose liquidator cannot be heard to say, in effect, that, because the claims advanced in the statement of claim will, as to their merits, succeed or fail regardless altogether of the existence and terms of the litigation funding agreement, the agreement is not "relevant to a fact in issue". 12The PBL defendants say that the terms and effect of the litigation funding agreement are relevant to a fact in issue in the context of the 15 February application - in that those matters could rationally affect the assessment of the probability of facts making up the state of affairs existing on the occasions (or some of them, at least) on which the special purpose liquidator approached the court seeking extension of the time for service. Implicit in that submission is the proposition, which I accept, that, upon the hearing of the 15 February application, the court will necessarily have regard to the basis on which and reasons for which the decision to make each extension order was made and, for that purpose, will make its own assessment of the material that was taken into account in formulating the decision on the extension application: see [2010] NSWSC 1288 at [23] and surrounding discussion. 13The position the PBL defendants take on this aspect may be stated broadly. They say that the special purpose liquidator, in seeking each extension (or, at least, each except the last), maintained that the funds available in the winding up were insufficient to allow the proceedings initiated by the statement of claim to be conducted to conclusion and that he therefore could not responsibly take the decisive step of serving the statement of claim until he had secured litigation funding in an amount which, when added to the funds independently available, would be sufficient to prosecute the proceedings to conclusion. Thus, in simple terms (and I am not attempting here to paraphrase any submission actually made on an extension application), if the available cash was X and the estimated cost of full conduct of the proceedings was the significantly greater sum of Y, the position the special purpose liquidator took was that he could not properly proceed to serve unless he had secured external funding sufficient to cover the excess of Y over X. 14Litigation funding is now in place - as it was at the time of the last of the extension applications. The amount of that funding (assuming that there is some finite amount) was obviously seen by the special purpose liquidator as sufficient to justify his taking the step of serving the statement of claim, which step he had, he said, previously not taken because of shortage of funds. One might therefore assume that the funding secured was at least Y minus X. Any perusal of the litigation funding agreement will throw light on the validity of that assumption. And if the assumption should turn out to be incorrect, there will be injected into the factual matrix before the court on the hearing of the 15 February application an element highly relevant to its evaluation of the basis on which the earlier extension orders were made. 15This analysis, although in general terms only, is sufficient to persuade me that the content of the litigation funding agreement is relevant to one or more facts in issue in the interlocutory aspect of the proceedings represented by the 15 February application. Lack of relevance is therefore not a basis on which the part of the notice to produce calling for the litigation funding agreement should be set aside. 16The next question is whether the litigation funding agreement is protected by client legal privilege. The matter before me was argued on the parties' shared assumption that the subsistence of such privilege, if established, would justify setting aside of the relevant part of the notice to produce: see, for example, Kimberley Mineral Holdings Ltd v McEwan [1980] 1 NSWLR 210. 17The question of client legal privilege was addressed in the reasons of 5 November 2010 but, as is now clear, on the erroneous footing that the litigation funding agreement had been placed before the court on the last of the plaintiffs' extension applications as part of the affidavit and exhibit material caught by the confidentiality orders that were the subject of the application for discharge to which those reasons related. 18It was held on 5 November 2010 that privilege in the whole of the material placed before the court in connection with the extension applications had been waived. There were two bases for that conclusion. The principal reason was dealt with at [2010] NSWSC 1288, paragraphs [43] to [47]. It went to the circumstances in which the extension applications were made, in particular, the existence of the right recognised by rule 12.11(1)(e) for a defendant to seek to have service set aside if and when service was actually effected following an extension of time for service, the defendants' strenuous (but unsuccessful) attempts to be heard on the hearing of the plaintiffs' first extension application and the virtual certainty (of which the plaintiffs were obviously aware) that the defendants would pursue the rule 12.11(1)(e) course if and when it became available to them. Those circumstances made it unfair, in the relevant sense, for the plaintiffs both to have the benefit of the extension obtained with the aid of the privileged material and thereafter to retain the privilege in the face of the defendants' resort to the rule 12.11(1)(e) right. 19As became clear on 22 November 2010, this reasoning is inapplicable to the litigation funding agreement. The plaintiffs did not place that document before the court in connection with the only extension application made after it came into existence (that is, the last of the extension applications). The unfair inconsistency between the use of the document to obtain an extension and the retention of confidentiality in it as against the defendants therefore does not arise in the way discussed at [2010] NSWSC 1288, paragraphs [43] to [47]. 20The special purpose liquidator did, however, place the litigation funding agreement before the court for another purpose and in another context. In circumstances referred to in both Onefone Australia Pty Ltd v One.Tel Ltd [2010] NSWSC 498; (2010) 78 ACSR 163 and Deloughery v Weston (above), the special purpose liquidator sought, by means of ex parte application, approval of the court under s 477(2B) of the Corporations Act 2001 (Cth) to enable him to enter into the agreement. That, as was held in both the judgments just mentioned, was an application that the special purpose liquidator was entitled to pursue without notice to either the committee of inspection in the winding up or the creditors generally. A fortiori, he was entitled to make the application without notice to PBL defendants or any other defendants in these proceedings. On the hearing of that application, the special purpose liquidator introduced the litigation funding agreement into evidence through an affidavit sworn by him on 14 May 2010 and the court made a confidentiality order in respect of it: see Deloughery v Weston (above) at [8]. 21In the context of the s 477(2B) application, the position of the special purpose liquidator was very closely analogous with that of a trustee seeking judicial advice and, for that purpose, placing confidential legal advice before the court on a confidential basis. That, coupled with the fact that no one other than the special purpose liquidator participated in the hearing of the s 477(2B) application, makes entirely applicable the reasoning in Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar [2006] NSWCA 160; (2006) NSWLR 112 discussed at [2010] NSWSC 1288, paragraph [43]. For that reason, the particular deployment of the litigation funding agreement upon the s 477(2B) application was not inconsistent with retention of privilege in the document's content and did not cause the privilege to be lost. 22As I have said, the reasons of 5 November 2010 described a second basis on which privilege in certain documents had been lost: see [2010] NSWSC 1288, paragraph [51]. Again, however, the fact that the litigation funding agreement was not among the documents under discussion (specifically, in that case, the redacted documents exhibited to Ms Hall-Carney's affidavit of 5 October 2010) means that the considerations that led to the conclusion that privilege had been lost can now be seen not to be applicable to the litigation funding agreement. 23In relation to the litigation funding agreement itself, therefore, the position is as follows: ·The document's content is protected by client legal privilege except to the extent that the privilege has been waived or otherwise lost: ( Re Global Medical Imaging Management Ltd [2001] NSWSC 476 Apple Computer Australia Pty Ltd v Wily [2002] NSWSC 855, Rickard Constructions Pty Ltd v Rickard Hails Moretti Pty Ltd [2006] NSWSC 234, Re Bauhaus Pyrmont Pty Ltd [2006] NSWSC 543, Green (as liquidator of Arimco Mining Pty Ltd) v CGU Insurance Ltd [2008] NSWSC 390). ·The deployment of the agreement by the special purpose liquidator in his s 477(2B) application did not cause privilege to be lost. ·As that is the only demonstrated occasion on which the special purpose liquidator may be considered to have disclosed the agreement and its content outside the privileged context of its creation, no basis is shown for any finding of waiver of other loss of privilege in the agreement. 24It follows that the agreement must be regarded as protected by client legal privilege and that, for that reason alone, the plaintiffs have made out their case for an order setting aside the part of the PBL defendants' notice to produce requiring production of the agreement. 25This makes it unnecessary to consider, in the light of the true facts regarding deployment and use, the applicability to the funding agreement of the reasoning and conclusions appearing at [2010] NSWSC 1288, paragraphs [33] to [38]. 26I was taken by counsel for the PBL defendants to a number of cases, in addition to those mentioned in that part of the 5 November 2010 reasons, in which opinions have been expressed about the need for confidentiality to be maintained in relation to litigation funding arrangements in the interests of maintaining the integrity of the funded proceedings and thereby protecting the due administration of justice. The cases are Spatialinfo Pty Ltd v Telstra Corporation Ltd [2005] FCA 455, Dorajay Pty Ltd v Aristocrat Leisure Ltd [2005] FCA 588 and Brookfield Multiplex Ltd v International Litigation Funding Partners Pte Ltd (No 2) [2009] FCA 449; (2009) 180 FCR 1. It is, I think, sufficient to note that, in each of those cases, the funding agreement was regarded as confidential, to some extent at least, on grounds of improper tactical advantage inimical to the due administration of justice. That being so and in the light of my decision on the privilege question, I say no more about that aspect. 27I order that paragraph 24 of the notice to produce of the first, second, third, fourth, fifth and eighth defendants' dated 7 December 2010 be set aside.