Accounting & Legal Dynamics P/L v Duesbury Information Technology P/L

[1993] FCA 832

x3a 9 3

JUDGMENT No. ...m.,....,,.,,,.,I .eee,,leel,,

IN THE FEDERAL COURT OF AUSTRALIA )

NEW SOUTH WALES DISTRICT REGISTRY ) NO. NG 838 of 1991

GENERAL DIVISION 1

Between: ACCOUNTING h LEGAL DYNAMICS PTY

LTD and ANOR

Applicant

And: DUESBDRY INFORMATION TECIINOLOGY

PTY LIMITED

Respondent

EX TEMPORE JUDGMENT

EINPELD a SYDNEY 22 OCTOBER 1993

The matter before the Court this morning involves a question of legal professional privilege in relation to documents produced to the Court by a company called Software Associates Pty Limited. According to the available material, there are or were four sets of documents in dispute on the question of access. One of them is described variously in correspondence but appears to be a facsimile cover sheet from counsel for the applicant to which was attached a draft amended statement of claim. Although the communication is between the barrister and the subpoenaed company direct and is not a communication between the barrister and his instructing solicitor or client, it seems to me clear and it is no longer in dispute that that set of documentation is and would be covered legal professional privilege and I therefore deny

access it. RECEIVED

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A second document involved in those for which privilege is claimed is a letter by the present solicitor for the applicant dated 17 August 1992 written on the letterhead of the applicant company to the company producing the documents. It is explained that the solicitor for the applicant who is now in private practice at Palm Beach was at the relevant time an officer of the applicant company. Although he was then providing some legal advice to that company, he was in the main fulfilling a positive administrative function within the company structure.

I have carefully read the letter, especially in light of the fact that counsel for the applicant has argued that notwithstanding the letterhead, the letter should be construed as being from the solicitor for the applicant to a third party in connection with the preparation of the litigation. In my opinion the letter is not one which could be construed as covered by legal professional privilege. Although the signatory of the letter is a solicitor who was using his legal skills amongst others in formulating its contents, the letter could not conceivably be interpreted as

having been written by a lawyer as a distant or objective	participant in proceedings seeking to advance the legal interests
of the applicant. Although the letter involves the interests of thatcompany, and although it covers the question of arrangements for the obtaining of expert advice which has or will come to be used in one form or other as evidence in the proceedings, it seems to me that the letter could not be construed as coming within the principles appropriate to legal professional privilege. Accordingly, I shall allow access to that document.
The third document in dispute is what is described as a "debtor system evaluation" for the applicant company by a previous name. This document is dated September 1991 and was furnished to the applicant on 10 September. The action commenced in December of that year. It is not possible for me, with no knowledge of the details of what appears to be quite likely to be complex litigation concerning the appropriateness and suitability or adequacy of accounting computer software, to make a detailed assessment at this stage as to the part that this material could or might play in the ultimate proceedings between the applicant and the respondent. In relevant respects, therefore, I must be influenced by three factors. The first and most important is that in an affidavit in the present proceedings for access to the documentation, the applicant's solicitor Mr Morgan has described the report as providing "a technical appraisal of the debtor's software which the respondent wrote for the applicant. The report was commissioned by myself on behalf of the applicants upon the advice of counsel." Secondly, in a letter written by
M r Morgan on his own letterhead, as solicitor for the applicant,
to the solicitor for the respondent, he described this document
as "Report of Software Associates which came into existence on
the request of our counsel to his instructing solicitor which request was then passed onto Software Associates."
The third piece of information in this regard comes from the report itself, where its origin is described as "This report was produced by Software Associates a result of an evaluation of the
client's accounts receivable system. The system . . . was
developed by Duesburys in mid 1989 . . . and commissioned into production in September 1989. This evaluation was commissioned to assist in the court proceedings between the client and DIT. As such, the aim of the report is to deal with general issues rather than to provide excessive technical detail." DIT is the abbreviation for the respondent.
Those three pieces of information which, as Mr Morgan was not sought for cross examination, are all I have to go on at present, lead me to the belief that this report was obtained for the express purpose of the then contemplated court proceedings between the applicant and the respondent. I am informed from the bar table by the solicitor for the respondent that prior to the commencement of the proceedings the parties were in considerable discussions about the software and how any actual or perceived defects could be corrected. The inference, to me, is that by about September 1991 it seemed likelythatthose discussions were not going to bear fruit and that the applicant needed, then, to contemplate its legal position in full with a view to taking the
present proceedings. As presently advised, I think that I should draw the conclusion from those circumstances that the report of
Software Associates of September 1991 was obtained in contemplation of legal proceedings and is, therefore, covered by legal professional privilege.
The final document is a report of Professor C.N.G. Dampney marked DRAFT IN CONFIDENCE commissioned from or by a company called Macquarie Park Research Limited. M r Morgan's affidavit, to which I earlier referred, informs me that Associate Professor Dampney is an expert witness by whom several affidavits have been filed in support of the applicant's case.
It should, therefore, be assumed that Professor Dampney will be a witness, perhaps a crucial witness, for the applicant in the case. The actual copy of the report produced has attached to it a 'with compliments' slip on the printed letterhead of the applicant company. It is addressed to Wayne, who from other documents should be assumed to be Wayne Johnson of Software Associates, and it is signed by David, whom I assume is David Morgan, the solicitor for the applicant. It carries with it a note: "Copy of Kit Dampney's report for your perusal. " The report carries a printing date of 10 August and appears to have been signedby Professor Dampney on 18 August 1992, considerably after the commencement of the proceedings.
There seems to be little doubt, and there has in fact been no challenge at all to the statement to this effect in M r Morgan's
the applicant to prepare a report for the purpose of use in affidavit in this matter, that Professor Dampney was retained by
evidence in the proceedings. The letter from M r Morgan to the solicitor for the respondent of 15 October 1993 to which I made earlier reference describes it as "Draft Report of Professor Kit Dampney which report was requested after legal proceedings had commenced and for the sole purpose of legal proceedings". Mr Morgan has not been required for cross-examination and his

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statement has not been challenged. His statement in the letter
should therefore be accepted.

Allowing for the fact that I am not and cannot be an expert on the technical details, the content of the report apparently represents the results of an examination by the Professor of the software program in dispute. However, the report is incomplete. There are some queries noted as matters requiring further consideration and checking, and it is clear that although there are some positive statements in the report, its contents are the Professor's thinking as at the date on which the document is signed, not necessarily to be taken as the final report or the evidence that he would be willing to give or support in the proceedings.

It may be that during the hearing of the matter, this document could be required to be made available on the basis that he relied upon some of its contents in the production of the final report or of the affidavits which he has filed in the

by legal professional privilege in that it was commissioned and	proceedings, but to me the document at present is clearly covered
obtained for the sole purpose of assisting the applicant's case against the respondent. I refuse access to that document at this stage.