789Ten v Westpac Banking Corporation Ltd - [2005] NSWSC 123

No judgment structure available for this case.

Reported Decision:
53 ACSR 242

New South Wales

Supreme Court

CITATION:
789TEN Pty Ltd & Ors v Westpac Banking Corporation Ltd [2005] NSWSC 123

HEARING DATE(S): 25 February 2005

JUDGMENT DATE :

8 March 2005

JURISDICTION:
Equity Division
Commercial List

JUDGMENT OF:
Bergin J

DECISION:
See paragraph 75

CATCHWORDS:
[Privilege] - "Litigation privilege" (s 119 of the Evidence Act 1995) and "advice privilege" (s 118 of the Evidence Act 1995) claimed in respect of documents produced on subpoena - Whether documents produced for relevant "dominant purpose" - Claim that some documents covered by s 131(1)(b) of the Evidence Act 1995 - "attempt to negotiate" - Whether the auditor of the Bank was acting as the Bank's agent - Consideration of claim of implied agency in circumstances of auditor's responsibilities under Part 2M.4 of the Corporations Act 2001.

LEGISLATION CITED:
Evidence Act 1995 (NSW)
Corporation Act 2001(Cth)
Legal Profession Act 2004 (NSW)
Supreme Court Rules 1970 (NSW)

CASES CITED:
Alfred Crompton Amusement Machines Ltd v Customs & Excise Commissioners (No. 2) [1972] 2 Q.B. 102
Attorney-General (NT) v Kearney (1985) 158 CLR 500
Australian Rugby Union Ltd v Hospitality Group Pty Ltd (1999) 165 ALR 253
Commissioner of Taxation v Pratt Holdings Pty Ltd (2003) 51 ATR 593
DSE (Holdings) Pty Ltd v InterTAN Inc & Anor (2003) 135 FCR 151
In re Transplanters (Holding Company) Ltd [1958] 1 W.L.R. 822
Law Society of New South Wales v Bruce & Ors (1996) 40 NSWLR 77
Leary v Federal Commissioner of Taxation (1980) 11 ATR 145
McGregor Clothing Company Ltd's Trade Mark [1978] FSR 353
Mitsubishi Electric Australia Pty Ltd v Victorian Workcover Authority (2002) 4 VR 332
Nickmar Pty Ltd & Anor v Preservatrice Skandia Insurance Ltd (1985) 3 NSWLR 44
Pricewaterhouse Coopers (a firm) v Commissioner of Taxation (2004) 207 ALR 217
Singapore Airlines v Sydney Airports Corporation & Anor [2004] NSWSC 380
Telstra Corporation v Australis Media Holdings & Ors (1997) 41 NSWLR 147
Waterford v The Commonwealth (1987) 163 CLR 54
Waugh v British Railways Board [1980] AC 521

PARTIES:
789TEN Pty Ltd (Plaintiff / Respondent)
Westpac Banking Corporation Ltd (Defendant / Applicant)

FILE NUMBER(S):
SC 50167/03

COUNSEL:
M.D. Broun QC (Plaintiff)
F. M. Douglas QC and P. J. Dowdy (Defendant)

SOLICITORS:
Laurence & Laurence Commercial Lawyers (Plaintiff)
Henry Davis York Solicitors (Defendant)

LOWER COURT JURISDICTION:

- 28 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
COMMERCIAL LIST

BERGIN J

8 MARCH 2005

50167/03 789TEN PTY LTD V WESTPAC BANKING CORPORATION & ORS

JUDGMENT

1 This is an application by Notice of Motion brought by the first defendant, Westpac Banking Corporation (the Bank) for an order preventing the plaintiff, 789TEN Pty Ltd, from having access to certain documents produced on Subpoena by KPMG Australia Pty Ltd (KPMG) (the KPMG documents) which included a letter from the Bank to Henry Davis York (HDY) and a letter from HDY to the Bank’s auditors, PricewaterhouseCoopers (PWC)(the HDY letters), on the basis that the documents are subject to legal professional privilege.

2 The application was heard on 25 February 2005 when Mr MD Broun QC appeared for the plaintiff and Mr FM Douglas QC leading Mr PJ Dowdy appeared for the Bank.

3 The main proceedings between the plaintiff and the Bank arose out of the alleged embezzlement by the second defendant, Colin Alexander, of some millions of dollars of the plaintiff's funds from the plaintiff's account with the Bank. Between November 2002 and late June 2003 the Bank retained Allens Arthur Robinson (Allens) in relation to the plaintiff’s claim. From late June 2003 the Bank retained HDY.

4 On 24 October 2002 the plaintiff's solicitors, Laurence & Laurence (LL), wrote to the Bank advising that they had been instructed by the plaintiff to commence proceedings against the Bank and enclosed a draft of the proposed Summons. The Bank was invited "to consider the matter and to notify us whether the Bank wished to discuss the matter further or enter into negotiations before the proceedings are filed". A meetin occurred between representatives of LL and a director of the plaintiff and Allens at which an informal agreement was reached. On 30 December 2002 Allens wrote to LL (the first letter) in the following terms:

789TEN Pty Limited (the

Company

)

Set out below is the basis on which Westpac is willing to cooporate with the Company in relation to the Company's claim.

1. The purpose of the arrangement is:

Transfers

2. Those purposes will be pursued by both the Company and Westpac in a spirit of full and frank cooperation but the carrying out of those purposes is without prejudice to:

3. Westpac will provide the Company with copies of such statements, mandates and other documents relating to the Company's accounts with Westpac as the Company requests. Westpac will not be required to provide the Company with copies of documents that would not be discoverable in proceedings commenced by the Company.

4. The Company will provide Westpac with access to the Company's files relating to the Transfers and the Company's investigations in connection with the Transfers. The Company will not be required to provide Westpac with access to documents that would not be discoverable in proceedings commenced by the Company.

5. Westpac will review the Company's files and, before the end of January 2003, provide the Company with Westpac's preliminary views, with at least a written summary of those views and a proposed timetable where applicable, on:

6. The Company reserves the right to commence proceedings on 7 days' written notice in the event that the Company forms the view that the cooperative process is not progressing satisfactorily.

7. Either party may use any information or document received by it, its employees or advisers in the course of cooperating in relation to the claim for the purpose of:

Westpac's offer of assistance to the Company is not, and should not be regarded as, an admission of liability by Westpac.

Please confirm the Company's agreement to Westpac's offer of assistance on the above terms by signing and returning the enclosed copy of this letter.

5 The copy of the letter was signed and returned to Allens. On 6 March 2003 two bank officers attended LL and inspected a number of files relating to the matter. On 24 March 2003 Allens wrote to LL (the second letter) in the following terms:

We refer to our letter of 30 December 2002 and to your response of 8 January 2003.

1. The Bank believes it may be possible to reach agreement with the Company on:

The Bank requires some further information and advice in order to satisfy itself on those questions.

2. The Bank will also want to conduct further enquiries before it is in a position to reach a view on liability.

3. In order to obtain the additional information it seeks and to conduct those further enquiries, the Bank proposes to retain an accountant to review the Company's files and accounts. The Bank proposes to retain KPMG to conduct that review.

4. In order for KPMG to conduct their review, they will need reasonable access to the Company's files (including the files inspected by the Bank's representatives on 6 March 2003), accounts, accountants and auditors. Could you please advise us whether the Company is prepared to give KPMG that access.

5. The Bank expects that KPMG's review, once started, will take 2 to 4 weeks (depending on the Company's cooperation and receiving access to the Company's accountants and auditors). The Bank will provide the Company with its views on the net amount lost by the Company and whether further recoveries are possible following receipt of KPMG's report. It will also indicate at that time whether it is prepared to make a settlement offer.

6. The terms set out in our letter of 30 December 2002 will apply to KPMG's review.

Please inform us whether the Company agrees to permit KPMG to conduct the proposed review.

6 The Company agreed to KPMG conducting its review. Michael Lee Ball, a partner of Allens, gave affidavit evidence in this application, sworn 18 February 2005, that:

6. For the purpose of my providing legal advice to the Bank in relation to the Company's Claim, I, in or about late March/early April 2003, retained the Forensic Department of KPMG to report to me on the extent of the loss alleged to have been suffered by the Company as a result of the alleged transfers made by Mr Alexander and to identify any evidence which indicated that other persons within the Company (and in particular, Mr Kevin Carter) were aware of Mr Alexander's transfers and activities.

7 Representatives from KPMG attended LL's offices for four days in early April 2003 to inspect the files.

8 Phillip James Crawford, a partner of HDY, gave affidavit evidence sworn on 18 February 2005, that:

("Allens"

5. On 9 July 2003 I met with Messrs David Van Homrigh and Brett Warfield of KPMG at the offices of Henry Davis York during which meeting I said, amongst other things, words to the effect of:

"Henry Davis York has taken this matter over from Allens on behalf of the Bank. I want you to provide me with a copy of your latest draft of your report. Going forward, I want you to focus more on liability in the first instance rather than quantum.

6. After 9 July 2003, I have met with representatives of KPMG on several occasions to discuss certain work being undertaken by KPMG in relation to the Company's Claim. As these proceedings are ongoing, so is the need for expert assistance to be given to the Bank by KPMG in relation to the Company's Claim.

9 Scott Andrew Harris, an employed solicitor with HDY, also gave affidavit evidence, sworn on 23 December 2004, in which he sets out the claim for privilege rather than the factual basis upon which the retainer of KPMG occurred and continued.

The KPMG documents

10 The KPMG documents, the subject of this application, are in the following categories: (a) Engagement letters to Allens; (b) Draft engagement letter to HDY; (c) Correspondence between KPMG and Allens; (d) Correspondence between KPMG and HDY; (e) KPMG file notes of meetings with Allens; (f) KPMG file notes of meetings with HDY; (g) Draft report to Allens; (h) Draft reports to HDY; and (i) KPMG draft internal working notes and memoranda.

11 The plaintiff's main focus is on the draft reports in categories (g) and (h) (the Report). It was submitted that the Report is not privileged because (a) it was not intended to be confidential in that it was, either in full or at least in summary, to be made available to the plaintiff; and (b) if it was a confidential document, any privilege was lost because there was either express consent to disclose it contained in the two letters set out above, or consent should be implied from the circumstances and content of the letters. The Bank claims both "litigation privilege" pursuant to s 119 of the Evidence Act 1995 (the Act) and "settlement privilege" pursuant to s 131 (1) (b) of the Act.

12 The first step in determining whether access should be denied is to decide whether the documents, the subject of the application, are confidential pursuant to s 117 of the Act. Section 117 of the Act provides relevantly:

"confidential communication"

"confidential document"

13 Items (a) - (d) are appropriately categorised as "communications" and items (e) - (i) are appropriately categorised as "documents": Telstra Corporation v Australis Media Holdings & Ors (1997) 41 NSWLR 147 at 149.

14 The plaintiff's claim that the communications and documents were never intended to be confidential depends upon the content and purpose of the two letters extracted above. It was submitted that "the KPMG report either in full or at least in summary, was to be made available to the plaintiff" (written submissions 24/2/2005; par 14). Much emphasis was placed upon the Bank's reference to the "spirit of full and frank cooperation" in paragraph 2 of the first letter. It was submitted that frankness required the disclosure of the content of the report received from KPMG, otherwise the epithet had no meaning in the circumstances of what was occurring at the time. Paragraph 6 of the second letter stated that the “terms of” the first letter “will apply to KPMG’s review”. That statement seems to me to mean that paragraph 5 of the first letter, in which it was stated that “Westpac will review the Company’s files”, would be adjusted or amended to read that “Westpac, with the assistance of KPMG, will review the Company’s files” or “KPMG, on Westpac’s behalf, will review the Company’s files”. Read with paragraph 5 of the second letter the Bank agreed to provide “its views” on more matters than were agreed to in the first letter, in particular, whether it was prepared to make a “settlement offer”. That, it seems to me, was what was to occur in the “spirit of full and frank cooperation”.

15 I do not agree with the plaintiff's submissions that the agreement between the parties evidenced in the two letters was that the Bank was to provide the Report or a summary of the Report to the plaintiff. The first letter made clear that it was the Bank's intention to provide the Bank's preliminary views or a written summary of its preliminary views on the three matters contained in paragraph 5 of that letter, once it had reviewed the Company's files. By March 2003 the Bank had formed a belief, communicated in the second letter, that it "may be possible to reach agreement with the Company" on the two matters referred to in paragraph 1 of that letter. However the Bank advised that it required further "information and advice" in order to satisfy itself on those two matters. It was only after this communication that KPMG became involved. What the Bank promised in the second letter, which was to occur in the spirit of full and frank cooperation, was that after receipt of KPMG's report it would provide to the plaintiff the Bank's "views on the net amount lost by the Company and whether further recoveries are possible" and "whether it is prepared to make a settlement offer". It did not agree to provide the KPMG report.

16 I agree with the Bank's submission that the plaintiff's submissions conflate an intention on the part of the Bank to express its view on the matters with an intention to share the advice and material that led to the Bank forming that view.

17 The parties agreed that I should review the KPMG documents for the purpose of this application and I have done so. I agree with the description of the documents as contained in paragraph 16 of the Bank’s written submissions dated 24 February 2005. I do not in this regard refer to the last sentence of each of the subparagraphs. Many documents are stated to be confidential and it is apparent from their nature and the circumstances in which they were produced or made that the person who created the document or made the communication was under an obligation not to disclose their contents. The contents of any of those documents that may have assisted the Bank to form its own views were not what was intended to be disclosed. It is the Bank's conclusions and views that it agreed to provide to the plaintiff. The documents and communications are in my view all "confidential" for the purposes of the Act.

18 The next question is whether those confidential communications and documents attract any of the privileges in Part 3.10 of the Act. Section 119 (the “litigation privilege”) provides:

119 Litigation

19 Part 36 Rule 13(2) of the Supreme Court Rules 1970 (the Rules) provides relevantly:

document … could not be adduced in the proceedings over the objection of the person, by virtue of the operation of Part 3.10 Division 1 of the Evidence Act.

20 From the chronology outlined above there can be no doubt (and indeed this was not raised as an issue on this application) that at the time all the documents came into existence or the communications occurred, there were "anticipated proceedings". The Bank claims that the documents or the communications recorded in them were prepared or made for the "dominant purpose" of the Bank being provided with professional legal services relating to the proceedings.

21 The plaintiff submitted that the purpose of the preparation of the Report was to enable the Bank to indicate its view on the damages question and whether in fact there was any dispute between the plaintiff and the Bank about what had been lost by the plaintiff.

22 The “dominant” purpose has been described as the prevailing or most influential purpose having the element of clear paramountcy: Waugh v British Railways Board [1980] AC 521; Mitsubishi Electric Australia Pty Ltd v Victorian Workcover Authority (2002) 4 VR 332. The evidence establishes the following facts. Allens were retained to provide professional legal services to the Bank. Allens retained KPMG to report to it on the extent of the loss alleged to have been suffered by the plaintiff and to identify any evidence indicating what other persons within the plaintiff were aware of Mr Alexander's activities. Mr Ball’s evidence was that KPMG were retained for the purpose of him providing the Bank with “legal advice” in relation to the plaintiff’s claim.

23 When HDY were retained that purpose moved slightly to focus more on the question of whether the Bank was liable at all to the plaintiff. I accept that such purpose overlapped with Allen’s instructions to KPMG. Mr Crawford referred in his evidence to KPMG giving “expert assistance … to the Bank” (par 6). On one view, that evidence may suggest that KPMG was to provide direct “expert assistance” to the Bank. It was submitted that the purpose of the Report was to enable the Bank to indicate its view on “the damages question and whether in fact there was any dispute between the plaintiff and the Bank about what had been lost” (written submissions 24/02/05 par 19). Thus the plaintiff submitted that the KPMG documents are not privileged.

24 In support of this submission the plaintiff relied on Waterford v The Commonwealth (1987) 163 CLR 54 at 61 and 96 (written submissions 24/02/05 par 20). That case involved the extent to which communications and advice of lawyers employed by corporations, sometimes known as “in-house” lawyers, were covered by legal professional privilege. The two references, at 61 and 96 in the judgments of Mason and Wilson JJ and Dawson J respectively, refer, with approval, to Alfred Crompton Amusement Machines Ltd. v Customs & Excise Commissioners (No 2) [1972] 2 Q.B. 102 in which Lord Denning M.R. expressed the view of the Court of Appeal that employed lawyers are regarded by the law “in every respect in the same position as those who practice on their own account” and that their communications and advice are protected by legal professional privilege when they are acting “in their capacity as legal advisers”. When those same employees are required to act or advise in relation to matters “which form no part of the profession of the law” such privilege does not attach to those actions or advice.

25 Reliance was also placed upon Attorney-General (NT) v Kearney (1985) 158 CLR 500; Leary v Federal Commissioner of Taxation (1980) 11 ATR 145. Attorney-General (NT) v Kearney takes the proposition no further than imposing some qualifications on its breadth including that the employed lawyer must be subject to a duty to observe professional standards and the liability to professional discipline: at 510, 521-522, 530-531. In Leary v Federal Commissioner of Taxation, an appeal relating to the disallowance of a tax deduction for an alleged “gift” of $10,000, Brennan J, (in agreeing with the orders of Bowen CJ; Deane J also agreeing) referred to the difference between the role of an entrepreneur of a tax scheme and a solicitor, and said at 162: “But activities of an entrepreneur in promotion of a scheme in which taxpayers will be encouraged to participate falls outside the field of professional activity; those activities are not pursued in discharge of some antecedent professional duty. Entrepreneurial activity does not attract the same privilege nor the same protection as professional activity".

26 The proposition in support of which the plaintiff relies upon these cases is that professional accounting services are not services to which the privilege can attach. In line with these authorities, if the employed lawyer was also an accountant and it could be shown that the lawyer was providing accounting services to the employer/client and that such services formed “no part of the profession of the law” or professional legal services then the privilege would not attach.

27 This case is different. I am not satisfied having regard to all the evidence that the dominant purpose of the Report was for it to be provided directly to the Bank to simply enable it to have the benefit of accounting services. Here the lawyers, on the Bank’s behalf, requested the accountants to prepare the Report for the purpose of the lawyers providing professional legal services to the client in circumstances where the plaintiff was about to commence the action outlined in the draft Summons. The issues upon which the lawyers were to provide those professional legal services with the benefit of the Report included the provision of the mechanism for the Bank to express “views” in relation to the net loss suffered by the plaintiff, ensuring that the Bank’s position in the litigation was not compromised in that process. It also included the very important step of deciding in the environment of the pending litigation whether it should make a settlement offer and, if appropriate, implementing the decision.

28 I am satisfied from the two letters, the evidence of the lawyers, and the whole of the KPMG documents and communications that the dominant purpose of the Report was to enable firstly Allens, and then HDY, to provide professional legal services to the Bank relating to the anticipated proceedings. The second letter specifically refers to the Bank’s need for further advice. That is not to say that there were not other purposes, including the identification of the net amount lost by the plaintiff, but it seems to me that the dominant purpose was to enable the lawyers to provide the Bank with professional legal services in relation to a pending action as contained in the draft Summons forwarded to the defendant in October 2002.

29 It was submitted that if I find that the KPMG documents are privileged, then I should allow access on the basis that the defendant has nonetheless consented to the plaintiff having access to the KPMG documents and communications as evidenced in the two letters. I have already dealt with the analysis of the letters in relation to the question of whether the documents are confidential. However on this aspect the plaintiff made the submissions that “in accordance with the principles discussed in” Singapore Airlines v Sydney Airports Corporation & Anor [2004] NSWSC 380 “the circumstances in which the KPMG report came into existence based on the full and frank co-operation implies or imputes consent to the document being ultimately inspected and implies or imputes a waiver of any privilege that may exist”. It was also submitted that “there are many parallels” between the facts of this case and the facts relating to the report the subject of the decision in Singapore Airlines.

30 In Singapore Airlines the Court dealt with a claim of privilege over a report prepared by Mr P Reardon, with the assistance of Mr J Guselli (the Reardon report), in relation to an incident at Sydney Airport in which the door of a Singapore Airlines Boeing 747-400 was damaged by the collapse of an aerobridge that was operated at the time by a Qantas employee. Sydney Airports Corporation (SACL) sought to resist an application for discovery of the Reardon report brought by Singapore Airlines and Qantas.

31 The evidence of the solicitor who obtained the report was that she did so “in order to be in a position to advise SACL in respect to its potential liability to [Singapore Airlines] and any rights it may have against other parties”. The solicitor also gave evidence that she had “formed the view” that the expert engaged to prepare the report would also be used to give evidence on behalf of SACL in any future proceedings”. The evidence in that case established that: (1) there was a need for SACL to report to the Airlines Operations Committee (AOC) to satisfy it of the safety of the aerobridge before it could be put back into operation; (2) some of the recommendations in the Reardon report were communicated to the AOC “to allay their fears”; (3) the purpose of engaging Mr Reardon was to “imbue the recommendations with a higher level of trust than if they had come from a SACL employee”; and (4) a summary of the conclusions reached in the Reardon report was presented to the AOC. In that case the Court concluded that the Reardon report was not prepared for the dominant purpose of SACL being provided with the relevant professional legal services.

32 I do not agree with the plaintiff’s submissions that there are “many parallels” between the present case and the facts in Singapore Airlines. The KPMG Report was not to be provided to the plaintiff nor was it disclosed to a third party as was the case in Singapore Airlines with the disclosure to the AOC. As I have said earlier it was to assist the lawyers to provide the Bank with the relevant professional legal services. The Bank agreed that it would give to the plaintiff the Bank’s views on certain matters including whether a settlement offer would be made. I am not satisfied that there was consent to disclose the KPMG documents expressly or by implication.

33 Access to the KPMG documents is refused.

34 The Bank also relied upon s 131(1)(b) of the Act which provides:

131 Exclusion of evidence of settlement negotiations

35 Section 131(2) sets out various circumstances in which s 131(1) does not apply. They are not relevant in this case having regard to my findings above. Part 36 Rule 13(2)(f) of the Rules provides relevantly:

(f) if the contents or production of the document … would disclose a communication or a document to which section 131 of the Evidence Act applies.

36 The KPMG documents clearly include communications "between one … of the persons in dispute and a third-party". The question is whether those communications and documents occurred or were prepared respectively "in connection with an attempt to negotiate a settlement of the dispute". The two letters extracted earlier in this judgement made it abundantly clear that it was the Bank's intention to advise the plaintiff whether it would make an offer of settlement. However, in this application, although I have been informed that there are other letters between the parties on a without prejudice basis, I am not in a position to conclude that there was "an attempt to negotiate a settlement of the dispute". The parties were proceeding with steps that may have enabled them to resolve some of the issues in dispute – such as net loss suffered by the plaintiff – but what is needed to be established for this section to apply is that the there was “an attempt to negotiate a settlement of the dispute”, that is, the whole dispute and that the document in question is part of that process. There may well have been such an attempt, indeed in the HDY letters there is reference to mediation, but it has not been proved on the evidence in this application that this document related to that attempt. This claim has not been made out.

The HDY letters

37 The two letters referred to as the HDY letters are: (1) a letter dated 24 September 2004 from the Bank to HDY requesting it to communicate directly with the Bank’s auditor, PWC, in relation to certain matters (the Bank’s letter); and (2) a letter dated 8 October 2004 from HDY to PWC (HDY’s letter).

38 The Bank's letter included the following:

In connection with the audit of Westpac Banking Corporation and its controlled entities listed in Appendix A for the year ended 30 September 2004, we request that you provide our auditors, PricewaterhouseCoopers, with the following information.

1. Confirmation that you are acting for the company and its controlled entities in relation to the matter listed.

… [Matter claimed to be privileged]…

2. If you disagree with any of the information included under point 1 above, please detail the nature of your disagreement.

3. Include the details of any other legal matters which you have been or are being instructed on which are not listed in point 1 and which may result in or have resulted in legal action by or against the company or any of its controlled entities. Please identify separately any items that have arisen since the date of this letter and the date of your reply.

4. We authorise you to discuss the matters identified under point 2 and 3 above with our auditors, PricewaterhouseCoopers, if requested.

5. Please outline any factors that have limited your response to the matters identified above.

6. Please detail the amount of any costs and disbursements which were billed but remained unpaid at 30 September 2004.

7. Provide an estimate of the liability owed to your firm for services rendered but unbilled at 30 September 2004.

It is understood by us and our auditors that:

a) the company and its controlled entities may have used other solicitors in certain matters

b) the information sought relates only to legal matters referred to and/or recorded in files of your firm, which were current at any time during the year ended 30 September 2004, or have arisen since the end of that period up to the date of your response

c) unless separately requested, you are not responsible for keeping us, or our auditors, advised of any changes after the date of your letter

d) you are only required to respond on matters referred to you as solicitors for the company and its controlled entities. You are not required to comment on those matters which are in your knowledge solely because a consultant, partner or employee of your firm holds the office of Director, Secretary or otherwise of the company and its controlled entities

e) you will not accept any responsibility to the company and its controlled entities, the auditors, or any other party for any errors or omissions in relation to your reply.

Your reply is sought solely for information in connection with the audit of the financial report. The information will not be quoted or otherwise referred to in any financial report or related documents of the company and its controlled entities. Nor will the information be filed with or furnished to any governmental agency or other person, subject to specific legislative requirements, without the written consent of your firm.

Please forward a signed copy of your reply to our auditors by the 8th October 2004.

39 HDY's letter was in the following terms:

Westpac Banking Corporation-Solicitors Representation Letter

We enclose a copy of a letter dated 24 September 2004 that we have received from the Bank and in relation to which the Bank has requested us to respond directly to you in your capacity as the Bank's auditors.

In response to the queries raised in that letter we say as follows:

1. We confirm that we act for the Bank in relation to the matter referred to in the Bank's letter as 789TEN Pty Limited.

Matter the subject of the privilege claim]

3. The directors' description of the matter can be updated to read as follows:

"Proceedings have been commenced by 789TEN Pty Limited ("

the Company

") in the Supreme Court of New South Wales against the Bank. The Company claims approximately $10,000,000 plus interest and costs in respect of 77 telegraphic transfers which it claims were made by the Bank in breach of its mandate.

The Bank has filed a defence and has filed a cross-claim against the Company and its directors, including the director who had authorised the transfers in a manner different to terms of the authority which the Company had given to the Bank.

Mediation has, to date, been unsuccessful. In the meantime, the Bank has obtained orders requiring the Company to produce all documents relating to the Company's claim. It is expected that these documents will help the Bank assess its position and direct its strategy accordingly.

4. Costs and disbursements which have been billed to the Bank, but which remain unpaid as at 30 September 2004 (detail provided). The liability owed to this firm for services rendered as at 30 September 2004 is therefore (detail provided)

40 The HDY letters were in fact produced by KPMG in response to the subpoena without any claim for privilege being made or notified. Mr Crawford’s evidence is that these letters were disclosed by KPMG “in error”. No point has been taken in respect of that alleged “error” and the parties have argued the matter of substance, as to whether the privilege is attracted.

Section 119 - “litigation privilege”

41 The confidentiality of the HDY letters is not seriously in issue, the real issue is whether they were prepared for the "dominant purpose" of the Bank being provided with "professional legal services relating to an Australian proceeding". In respect of the term “relating to” the proceeding, the Bank relied upon what Giles CJ at Comm D said in Law Society of New South Wales v Bruce (1996) 40 NSWLR 77 when his Honour was discussing the phrase "in relation to" at 84:

R V Murphy

Fountain v Alexander

42 The Bank submitted that there is nothing in s 119 of the Act generally to suggest that the phrase "relating to" should be read down to confine the relevant "services" to, for example, the preparation of witness statements. Indeed it was submitted that a similarly "loose" connection was proposed by the Australian Law Reform Commission in its final report in which it recommended the use of the phrase "in connection with": ALRC 38 at [195]. In Mitsubishi Electric Australia Pty Ltd v Victorian Workcover Authority (2002) 4 VR 332, Batt JA said at [8]:

Wheeler v Le Marchant

43 The parts of the letters at the heart of the claim for privilege refer to the directors “estimate” of “any financial settlement (including costs and disbursements)” that “might be incurred” and HDY’s opinion as to whether that estimate is reasonable. The Bank submitted that the estimation by HDY of the Bank's potential liability, having regard to the estimation made by the directors, was fundamentally connected to the proceedings. It was submitted that such process of confirming whether the directors' estimate was reasonable was the provision of a professional legal service and that such service was “relating to” the proceedings.

44 Although the term "professional legal service" is not defined in the Act, the term "legal services" is defined in the Legal Profession Act 2004 as "work done, or business transacted, in the ordinary course of legal practice". I accept that the provision of a legal opinion as to whether the estimate of a possible settlement is reasonable in all the circumstances is the provision of “professional legal services” within the meaning of that term in the Act. I will assume that the opinion or professional legal service was “relating to” the proceedings.

45 The real question is whether the documents over which privilege is claimed were prepared for the dominant purpose of providing professional legal services relating to the proceedings. The plaintiff submitted that the Bank's statement that HDY's response to PWC was "sought solely for information in connection with the audit of the financial report" makes it abundantly clear that the dominant purpose was not to provide professional legal services to the Bank, but to provide information to the auditor. The Bank submitted that this "subjective characterisation of the purpose of the communication cannot be determinative" (written submissions 24/02/05 par 29). Additionally, and, it was submitted, more importantly, such subjective characterisation is not inconsistent with the proposition that HDY's reply was made and sent for the "dominant purpose" of providing professional legal services relating to the proceedings.

46 It is important to look at the whole of the correspondence to ascertain its dominant purpose, rather than simply relying upon the statement by the Bank as to the reason HDY's response was sought. The Bank's letter commences with a request for provision of information "in connection with the audit of" the Bank and "its controlled entities". Putting to one side the request for the opinion as to the reasonableness of the directors' estimate of any financial settlement, the nature of the information sought from HDY included the details of all matters in which it was retained by the Bank, the detail of costs and disbursements rendered in relation to all legal services provided but remaining unpaid as at 30 September 2004 and HDY's estimate of the Bank's liability to HDY for services rendered, but unbilled, as at 30 September 2004.

47 At the end of the letter, the Bank assured HDY that the information provided would not be quoted or otherwise referred to in any financial report. It also assured HDY that it would not be given to the government or any other person without their written consent. The bank agreed, as did the auditors, that HDY accepted no responsibility to the Bank or its controlled entities, or to the auditors or to any other party for any errors or omissions "in relation to" their reply. The auditors apparently needed to know the detail of matters, other than the present proceedings, for the purpose of auditing the provision the Bank had made for such contingencies.

48 HDY was requested to provide its opinion as to the reasonableness of the directors' estimate. That seems to me to have been a professional legal service and I will assume it was in relation to the proceeding. However that was not the dominant purpose of the HDY letter. The dominant purpose was to let the auditors know whether the figures could be utilised reasonably in the audit. That is also the case in respect of the other information provided by HDY in respect of the detail of the matters and the amount of the liability of the Bank to HDY as at 30 September 2004. The assurances and protections provided to HDY in the Bank’s letter also seem to me to strongly suggest that the dominant purpose of HDY's response was to provide information to the auditor for the purpose of assisting the auditor, the Bank and its controlled entities, with the audit process.

49 I am not satisfied that the HDY’s letters were prepared for the dominant purpose of the Bank being provided with a professional legal service relating to the proceedings.

S 118 – “advice privilege”

50 Section 118 of the Act, which applies to the subpoenaed HDY documents by reason of Part 36 Rule 13(2)(b) of the Rules, provides:

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 the client and a lawyer; 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 to the client.

51 In Mitsubishi Electric Australia Pty Ltd v Victorian Workcover Authority (2002) 4 VR 332 Batt JA said at [8]:

The other aspect of legal professional privilege has been called advice privilege, but it is not available where one of the parties to the communication is a third party who is not the agent of the client for the purpose of the communication.

52 The Bank recognised the difficulty of applying the section unless PWC was the agent of the Bank for the purpose of receipt of the HDY letter. It was submitted that PWC was the agent and thus the "client" by operation of s 117 of the Act which provides: ""client" includes the following: … (b) an … agent of a client". The Bank submitted that agency should be implied from the contents of the letters and the surrounding circumstances. Bowstead & Reynolds on Agency (Reynolds, F.M.B. Bowstead & Reynolds on Agency 17th ed. Sweet & Maxwell, London, 2001) begins with a definition of “agency” as follows at 1-001: “Agency is the fiduciary relationship which exists between two persons, one of whom expressly or impliedly consents that the other should act on his behalf so as to affect his relations with third parties, and the other of whom similarly consents so to act or so acts”. That definition is partly based on the definition of agency in the American Restatement. The authors of Bowstead & Reynolds on Agency refer to the limitations of a definition and others conclude that clear definition will depend so much on the particular circumstances: Meagher, R.P; Heydon, J.D; Leeming, M.J. Meagher, Gummow & Lehane’s Equity Doctrines & Remedies 4th ed Butterworths Lexis Nexis, Sydney, 2002 at [5–205]. This is a conclusion with which I agree.

53 The Bank relied upon DSE (Holdings) Pty Ltd v InterTAN Inc & Anor (2003) 135 FCR 151, in which consideration was given to whether communications between Allens (whose client was InterTAN), and a third party, Salomon Smith Barney (SSB), in relation to the sale of the client’s subsidiary, were privileged. It included consideration of whether SSB was the agent of InerTAN.

54 Allsop J referred to Kenny J’s judgment in Commissioner of Taxation v Pratt Holdings Pty Ltd (2003) 51 ATR 593. In that case, a fundamental issue was the relationship between the client and a firm of accountants, and whether the communications between them were privileged. Kenny J held that in the absence of contemplated or actual litigation, advice privilege did not subsist in a communication between a solicitor or client with a third party, unless the third party is an agent of the client or solicitor for the purpose of the communication; per Stone J at [58] in Pratt Holdings Pty Ltd v Commissioner of Taxation; Pricewaterhouse Coopers (a firm) v Commissioner of Taxation (2004) 207 ALR 217, in which the Full Court allowed the appeal from Kenny J. On appeal Stone J referred to the complexity of commercial arrangements, matched by the increasing volume, complexity and technicality in the law, giving as one example, the corporations legislation [104]. Her Honour, at [103] saw no impediment to the extension of legal professional privilege to the communications from the accounting expert to the client in circumstances where the expert advice was for the purpose of formulating a request for legal advice and in providing legal advisers with sufficient understanding of the facts to enable advice to be given and said:

dominant

55 In DSE (Holdings) Pty Ltd v InterTAN Inc & Anor, Allsop J referred to Kenny J’s judgment in Commissioner of Taxation v Pratt Holdings Pty Ltd and said:

[75] The analysis of the authorities conducted by Kenny J reveals that if there be no litigation anticipated or contemplated, the communications between lawyer or client and third party are only privileged if the third party is an agent of the client for communication with the lawyer. That third party may well have other agency duties and responsibilities, but if the third party has, amongst those responsibilities, a duty to receive or send documents to or from the lawyer as agent of the client, that will bring the third party within the purview of the advice privilege. The important question which arises and which was not the subject of direct argument is as to the necessary width of that agency responsibility for advice privilege to be available. A difficulty arises when the third party does more than pass on information from or to the lawyer or client, that is if the third party agent is more than a mere conduit. If a third party is an agent of the client and is authorised to give and receive communications, he, she or it may also be authorised to make independent investigations, assessment and comment in order that legal advice be given.

56 After a detailed review of further authorities Allsop J said:

Australian Rugby Union v Hospitality Group

(whether as a mere conduit or to prepare to bring into existence or to make some communication of its own)

…

[94] … It seems to me that the question is whether the communication between the third party and the solicitor is to be taken to be the same as a communication between the client and the solicitor. It will be, if the client appoints the third party to communicate with the lawyer on its (the client's) behalf - whether in place of, or in addition to, it. I do not see how this is satisfactorily answered by limiting the role to being a messenger of information provided by the client to the lawyer. If the appointment of agency is, or is to include, the duty to give information and instructions to the lawyer in discussion with the lawyer and receive the lawyers views, it is difficult to understand why the agency is not characterised as one to communicate with the lawyer for the purposes of giving and receiving legal advice.

…

[emphasis added]

57 In reliance upon the underlined portion of the judgment in paragraph 82, the Bank submitted that the fact that PWC had statutory duties as an auditor to use the advice provided by HDY for the purpose of forming an independent view of the Bank's financial reports, did not prevent PWC being the Bank's agent for the purpose of receiving that advice.

58 It needs to be remembered that this is a different set of circumstances to that which prevailed in Australian Rugby Union Ltd v Hospitality Group Pty Ltd (1999) 165 ALR 253 as cited by Allsop J. As his Honour said, the meeting with third parties (the client and the solicitors) was for the purpose of those third parties, one of whom was an agent of the client, providing information to the solicitors for use in their advice. In this case it was the solicitors who were authorised to provide information to the third party, the auditor, for the purpose of the audit.

59 In Nickmar Pty Ltd & Anor v Preservatrice Skandia Insurance Ltd (1985) 3 NSWLR 44, also relied upon by the Bank, a question that arose was whether the report from loss adjusters to the insurer at the request of the solicitor was privileged. Wood J, as his Honour then was, said at 56:

Wheeler v Le Marchant,

Anderson v Bank of British Columbia

60 Once again the circumstances of this case are quite different from that in Nickmar. In this case there was authorisation for the solicitors to provide information to the auditor for the purposes of the audit.

61 The onus is on the plaintiff to establish its claim that the auditor was the agent of the Bank, it being claimed that such agency should be implied from the HDY letters and the surrounding circumstances gleaned from those letters. Division 3 of Part 2M.4 of the Corporations Act 2001 entitled “Auditor Independence” sets out in rather intense detail provisions relating to “auditor independence”. An auditor has an obligation to notify ASIC, irrespective of whether such notification may tend to incriminate the auditor, if a “conflict of interest situation exists in relation to the audited body while the individual auditor or audit company is the auditor of the audited body” (s. 324CA(1A)(b)). A “conflict of interest situation” exists at the relevant time if: (i) the auditor is not capable of exercising “objective or impartial judgment” in relation to the conduct of the audit (s 324CD(1)(a); or (ii) a reasonable person, with full knowledge of all relevant facts and circumstances, would conclude that the auditor is not capable of exercising objective and impartial judgment in relation to the conduct of the audit (s 324CD(1)(b)). Although it appears that some words may have been inadvertently omitted from s 324CD(2), the effect of the subsection is that for the purposes of assessing whether a “conflict of interest situation” exists, regard should be had to “relevant relationships” including the relationship between the auditor and the audited company. The auditor of a public company is required to provide to the directors of the audited company a written declaration of compliance with the “auditor independence requirements” of the Act (s 307C).

62 The auditor has a “right” to access the books of the company and may “require” (such request must be “reasonable”) any officer of the company to give the auditor “information, explanations or other assistance for the purposes of the audit or review” (s 310). It seems to me that an auditor’s request of an officer of a company to disclose material that is protected by advice privilege which is not consented to by the Company would not be a reasonable request. It is the auditor who has to make appropriate judgments about whether the accounts give a true and fair view of the company’s financial position. In my view, the fact that the Corporations Act requires an auditor to be independent of the audited company weighs against the implication that an auditor stands in the shoes of the audited company as its agent in receiving information from third parties about the company.

63 Counsel for the Bank drew my attention to the following portion of the text Disclosure (Matthews, P and Malek, H.M Disclosure 2nd ed Sweet & Maxwell, London, 2000) at par 9.024:

The lawyer advising a third party

The privilege only extends to the lawyer advising his own client, and a communication between the lawyer and the third party (not being the agent of either lawyer or client for the purposes of such communication) is not privileged under this head. Thus, if the lawyer writes to the client's auditor's to inform them of the state of the client's legal affairs (debts, titles, claims made, actual or prospective litigation), then even if the letter should amount to advice, it may not be advice to the client (because the auditor is independent of the company), and hence, the original in the auditors' hands would not be privileged under this head. As the auditor is not the company's agent, the document is not discloseable by the company as in its "control", but would have to be produced to the Court if sought by witness summons, or under the third party disclosure procedure. Any copy retained by the lawyer would, depending on the precise facts, either be retained on behalf of the client (when it would be in the client's control) or as part of the lawyer's working papers (when it would not). But, as a copy of a non-privileged document, almost certainly made for a non-privileged purpose, it would not itself be privileged. In order to maintain privilege, the lawyer must write to the client with advice on the position. The client may then permit the auditor to inspect the advice (confidential basis, so as not to waive the privilege). But this may not be acceptable to the auditor. The client must then choose.

64 Reference was also made to McGregor Clothing Company Ltd’s Trade Mark [1978] FSR 353. In that case Whitford J dealt with the question of whether a letter written by an American attorney, who was advising intervenors in an application for rectification of the trademark register, to the intervenors' Trade Mark agents in the United Kingdom was privileged. The agents in the United Kingdom had written to the intervenors in relation to a question touching the assignment of the Trade Mark, the subject of the litigation. The intervenors approached the American attorney for advice and the American attorney wrote a letter containing that advice, the original of which was sent to the agents in the United Kingdom and a copy of which was sent to the intervenors. Whitford J, in deciding that the claim to privilege was made out, said at 354:

If the advice is confined as between the client and the professional advisor then the privilege claimed may be good. If the advice is broadcast at large then, no doubt the privilege claimed is bad.

I have reached the conclusion that it would really make nonsense of the claim to privilege if the mere communication of what was undoubtedly privileged advice as between [the American attorney] and the [intervenors] were to lose privilege by transmission for action to the agents of the [intervenors] in this country.

65 Once again, the circumstances of that case are different to this. There was no discussion of any requirements of the agent in the United Kingdom having any statutory responsibilities of independence. The present case is a claim of implied agency in circumstances where the auditor, the alleged agent, has statutory responsibilities of independence from the audited company.

66 In In re Transplanters (Holding Company) Ltd [1958] 1 W.L.R. 822 an applicant claimed that the auditor’s certificate on the balance sheets of the company was sufficient acknowledgement of a debt within the meaning of s 23 and 24 of the Limitation Act 1939, because the debt appeared amongst the loans to the company. Wynn-Parry J said at 826:

In my view, an auditor of a company is (apart from any special contract, and there is none in this case) not an agent of the company, at any rate for the purpose of being able to bind the company by merely signing the normal certificate at the foot of the balance-sheet. To hold otherwise would, I think, be contrary to the Companies Act, 1948. No doubt, for certain purposes, the auditors may be regarded as servants of the company, so that the court will not, by mandatory injunction, force upon the company auditors whom the shareholders do not desire to act … But apart again, as I say, from any special contract, the relations between the company and its auditors are governed by the provisions of the Companies Act, 1948, and their duty, as expressed by section 162 (1), is to make a report to the members on the accounts examined by them, and on every balance-sheet and every profit and loss account, and their report is to contain statements as to the various matters mentioned in the Ninth Schedule. That scheme seems to me designed to produce this result, that a skilled professional man or a firm of skilled professional men is or are appointed in order that there is to be before the company all the requisite information indicated in the Act, and that by their certificate they pledge themselves that they have properly performed their statutory duty. But I cannot spell out of their certificate anything which would amount to an acknowledgement within sections 23 and 24 of the Limitations Act, 1939, because I cannot spell out of their relations with the company, as to be extracted from the Companies Act, 1948, any authority to do anything in the nature of giving an acknowledgement within the Limitation Act, 1939, or any authority to do more than to perform the duties laid upon them as auditors by the Companies Act, 1948.

67 Applying the approach adopted by Wynn-Parry J in his review of the applicable Companies Act, I can find nothing in the Corporations Act 2001 that would authorise the auditor, PWC, to act as the Bank's agent. Indeed what is found in the Corporations Act 2001 is quite the opposite. Although the Act anticipates that conflict of interest situations may arise and requires them to be notified to ASIC, the scheme of Part 2M.4 suggests that the conflicts of interest situations are those that arise, for instance, when systems in place to identify them have let the auditor down. In other words, they are relationships that are not presently obvious and may have occurred by reason of another partner in the firm having a relevant relationship or the auditor having acted in the past for clients that may prevent the auditor from exercising, or being seen (by the reasonable person) to be able to exercise, objective and impartial judgment in relation to the conduct of the audit.

68 Section 324CD(1)(b) brings in the necessity for the perception of independence. That is, the auditor should not only be independent but should also be seen to be independent by the statutorily imported reasonable person. That "reasonable person" must be taken to expect that the auditor will comply with the statutory obligation and be independent of the audited company. If an auditor accepts an agency role to receive privileged material not for transmission to the client but for the audit process, the question may arise as to whether the reasonable person who becomes aware that an auditor has knowingly taken on the role as the audited company’s agent to receive privileged information with a duty to keep it secret from third parties, would reasonably conclude that the auditor is not capable of exercising objective and impartial judgment in relation to the conduct of the audit of the company. It will probably depend upon the facts of each case but, in cases of implied agencies, the provisions of Part 2M.4 of the Corporations Act 2001 suggest that the answer to that question would be in the affirmative.

69 The provisions of Part 2M.4 of the Corporations Act 2004 militate against the concept of an auditor acting as agent for the audited company. Distinctions may be drawn between the various types and extent of agency relationships. It may be suggested that the auditors are acting as the audited company’s agent when they seek information from third parties in relation to the company for the purposes of the audit. Indeed in this case the Bank submitted that “a prudent auditor would be unlikely to be satisfied that a company’s financial statements present a “true and fair view” for the purposes of s 297 or s 305 of the [Corporations] Act unless (a) solicitors provided confirmation of directors estimates of contingent liabilities in litigation; and (b) this confirmation was provided directly to the auditor” (written submissions 24/02/05 par 42). No authority was cited for this proposition and no evidence was called in support of it.

70 Caution needs to exercised in respect of such generalisations. Each situation needs to be assessed individually. The responsibility is on the audited company to obtain the detail from third parties and provide it to the auditor. The arrangements made for the auditor making direct contact with third parties may be for ease of operation and the audit process. When that process is adopted the auditors are acting with the authority of the Company to receive the information, not as the Company’s agent, but as the independent auditor with the authority for such disclosure to be made to them for the purpose of the audit.

71 It is assumed that the auditor, PWC, acted consistently with its statutory duties of independence and did not agree to become the Bank's agent. In any event, for the Bank to establish an agency relationship between the auditor and the Bank, I am of the view there would have to be evidence of some special contract in the circumstances of this case. There is no such evidence. I do not, as I was requested to do by the Bank, infer from the HDY letters there was such an agency relationship. Indeed the inference is that the Bank understood the sensitivity of at least some of the material and expressly “authorised” HDY to “discuss” them with “our auditors, PricewaterhouseCoopers, if requested”.

72 When a letter is sought for the purpose, inter alia, of assessing the contingent liabilities in the financial accounts of a company, a company is at risk if it allows its solicitors, carte blanche, to deal directly with the auditors. The better course, for the protection of any privileged communications, is for the solicitors to advise the client and for the client to prepare the letter excluding privileged material and ensuring its protection. The reality of the problem is exposed in Auditing in Australia (Arens, A.A. et al Auditing in Australia 5th ed Prentice Hall, Sydney, 2002) at page 718:

The lawyer is the expert on litigation, yet differences in lawyers' and auditors' responsibilities with respect to common clients have resulted in contentious difficulties. Although auditors are responsible for determining there is adequate disclosure, lawyers are responsible for 'winning the case'. Because information provided by lawyers may affect a case adversely, these responsibilities may conflict. Many lawyers believe that, despite a client's request that they provide the auditor with information, they should be less than candid in letters to auditors because of concern that their replies may:

If a lawyer refuses to provide the auditor with information about material existing legal actions (asserted claims) or unasserted claims, the auditor must modify his or her audit report to reflect the lack of available evidence. This requirement should have the effect of encouraging management to give its lawyers permission to provide contingent liability information to auditors and to encourage lawyers to cooperate with auditors in obtaining information about contingencies.

73 I do not accept that the auditor, PWC, was acting as the Bank’s agent when it received the letter from HDY. PWC received the letter as an independent auditor. Section 118 does not apply to the communication. Even if PWC were the agent of the Bank I am not satisfied that this letter could reasonably be described as a communication for the “dominant purpose” of providing legal advice for the reasons outlined above. The dominant purpose was to enable the auditor to use the information in the audit of the Bank’s financial statements. It was not for the dominant purpose of providing legal advice to the client.

74 There is the separate question of whether the Bank’s letter was a communication to HDY for the dominant purpose of HDY providing legal advice to the Bank. Having regard to my findings, section 118 does not apply. Access is granted to the HDY letters.

75 I make the orders in paragraph 1 and 2 of the Notice of Motion filed on 24 December 2004. Otherwise, I dismiss the Motion except as to costs. The parties are to endeavour to agree on a costs order, however if agreement is not reached the parties are to restore the matter to the List for argument.

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Citations

789TEN Pty Ltd v Westpac Banking Corporation Ltd [2005] NSWSC 123

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CITATION:	789TEN Pty Ltd & Ors v Westpac Banking Corporation Ltd [2005] NSWSC 123
HEARING DATE(S):	25 February 2005
JUDGMENT DATE :	8 March 2005
JURISDICTION:	Equity Division Commercial List
JUDGMENT OF:	Bergin J
DECISION:	See paragraph 75

CATCHWORDS:	[Privilege] - "Litigation privilege" (s 119 of the Evidence Act 1995) and "advice privilege" (s 118 of the Evidence Act 1995) claimed in respect of documents produced on subpoena - Whether documents produced for relevant "dominant purpose" - Claim that some documents covered by s 131(1)(b) of the Evidence Act 1995 - "attempt to negotiate" - Whether the auditor of the Bank was acting as the Bank's agent - Consideration of claim of implied agency in circumstances of auditor's responsibilities under Part 2M.4 of the Corporations Act 2001.
LEGISLATION CITED:	Evidence Act 1995 (NSW) Corporation Act 2001(Cth) Legal Profession Act 2004 (NSW) Supreme Court Rules 1970 (NSW)
CASES CITED:	Alfred Crompton Amusement Machines Ltd v Customs & Excise Commissioners (No. 2) [1972] 2 Q.B. 102 Attorney-General (NT) v Kearney (1985) 158 CLR 500 Australian Rugby Union Ltd v Hospitality Group Pty Ltd (1999) 165 ALR 253 Commissioner of Taxation v Pratt Holdings Pty Ltd (2003) 51 ATR 593 DSE (Holdings) Pty Ltd v InterTAN Inc & Anor (2003) 135 FCR 151 In re Transplanters (Holding Company) Ltd [1958] 1 W.L.R. 822 Law Society of New South Wales v Bruce & Ors (1996) 40 NSWLR 77 Leary v Federal Commissioner of Taxation (1980) 11 ATR 145 McGregor Clothing Company Ltd's Trade Mark [1978] FSR 353 Mitsubishi Electric Australia Pty Ltd v Victorian Workcover Authority (2002) 4 VR 332 Nickmar Pty Ltd & Anor v Preservatrice Skandia Insurance Ltd (1985) 3 NSWLR 44 Pricewaterhouse Coopers (a firm) v Commissioner of Taxation (2004) 207 ALR 217 Singapore Airlines v Sydney Airports Corporation & Anor [2004] NSWSC 380 Telstra Corporation v Australis Media Holdings & Ors (1997) 41 NSWLR 147 Waterford v The Commonwealth (1987) 163 CLR 54 Waugh v British Railways Board [1980] AC 521
PARTIES:	789TEN Pty Ltd (Plaintiff / Respondent) Westpac Banking Corporation Ltd (Defendant / Applicant)
FILE NUMBER(S):	SC 50167/03
COUNSEL:	M.D. Broun QC (Plaintiff) F. M. Douglas QC and P. J. Dowdy (Defendant)
SOLICITORS:	Laurence & Laurence Commercial Lawyers (Plaintiff) Henry Davis York Solicitors (Defendant)