AED Oil Limited v Elizabeth Back (No 3)
[2010] VSC 403
•10 September 2010
IN THE SUPREME COURT OF VICTORIA
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
COMMERCIAL COURT
No. 2001 of 2008
| AED OIL LIMITED & ORS | Plaintiffs |
| (according to the schedule attached) | |
| and | |
| ELIZABETH BACK & ORS | Defendants |
| (according to the schedule attached) |
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| JUDGE: | JUDD J |
| WHERE HELD: | Melbourne |
| DATE OF HEARING: | 1 September 2010 |
| DATE OF JUDGMENT: | 10 September 2010 |
| CASE MAY BE CITED AS: | AED Oil Limited & Ors v Elizabeth Back & Ors (No 3) |
| MEDIUM NEUTRAL CITATION: | [2010] VSC 403 |
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PRACTICE AND PROCEDURE – Legal professional privilege – Legal advice privilege –
Adequacy of material in support – Waiver.
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| APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr WT Houghton QC | Corrs Chambers Westgarth |
| Dr MJ Collins | ||
| For the First and Fourth to | Mr J Davis | Freehills |
| Ninth Defendants |
_________________________________________________________________________________
HIS HONOUR:
Introduction
This is an application by the plaintiffs, AED Oil Pty Ltd and AED Services Pte Ltd, to inspect documents produced by the eleventh defendant, Clayton Utz, pursuant to a subpoena. Claims for legal professional privilege were made by the fourth defendant, Equinox Energy Pty Ltd; the fifth defendant, Equinox Engineering & Installation Pty Ltd (formerly Petroleum Development Consultants Pty Ltd and hereafter referred to as PDC); the sixth defendant, Petroleum Development Consultants PTE Ltd; and the previous shareholders of PDC, Michael Johnson, the eighth defendant, and non-parties Guy Harvey, Kevin Bosley, Mark Casey and Donna Rieckemann. They resisted production of some of the documents, claiming they were irrelevant to any issue in the proceeding or that the content recorded a request for legal advice or assistance or advice given in circumstances of confidence.
Background
The first plaintiff, AED Oil Limited was engaged in the business of oil exploration and the development of oil reserves in the Puffin Oil Field in the Timor Sea. The second plaintiff, AED Services Pte Ltd is a company incorporated in Singapore. It is a wholly owned subsidiary of AED Oil. It was engaged in the same business.
Until about September 2005, Elizabeth Back was a solicitor employed by Minter Ellison, providing legal services to AED Oil. She became company secretary and remained in that position until about mid 2007. Ms Back was also employed by AED Oil as general counsel until late August 2007 and was a director of AED Services until late November 2007.
PDC was in the business of providing underwater installation services to the oil and gas exploration industry. Those services involved the installation of pipes, equipment and platforms. Mr Johnson, the eighth defendant, was and is a director of PDC.
On about 3 November 2006, AED Oil, Sea Production Ltd, a company managed by the seventh defendant, Petter Hoie, and PDC entered into an agreement, by way of a ‘Letter of Intent’, under which PDC would be appointed by AED Oil and Sea Production as the contractor for the provision of sub-sea aspects of work that were required for the Timor Sea project. The works were described in the statement of claim as the ‘Joint Venture Works’.
The Letter of Intent contemplated that a Singapore based company might perform the services which PDC agreed to provide under the Letter of Intent. On about 7 November 2006 Petroleum Development Consultants Pte Ltd was incorporated in Singapore as a wholly owned subsidiary of PDC. It commenced to perform the sub-sea aspects of the Joint Venture Works, pursuant to the Letter of Intent in about December 2006. The plaintiffs alleged that Ms Back was responsible for the inappropriate appointment of PDC and thus PDC Singapore, as the contracting party. The Letter of Intent was later replaced by an Installation Contract.
The plaintiffs alleged that in about January 2007 Ms Back and the second defendant, Andrew Venables, agreed to acquire PDC from its shareholders and take the profits to be earned for the Joint Venture Works. Until late 2007 Mr Venables was a partner of the firm, minter Ellison, and was responsible for providing legal services to the plaintiffs. In May 2007, Mepaco Pty Ltd (later to become Equinox Energy) was incorporated by them for the purpose of making the acquisition. The name Mepaco was apparently manufactured from the first letter of the given name of each of Michael Johnson, Elizabeth Back, Petter Hoie and Andrew Venables. Mepaco was the trustee of the Lamp Oil Trust. The beneficiaries under the trust included Mr Johnson, Mr Venables and Ms Back.
PDC’s shareholders (Johnson, Harvey, Bosley, Casey and Riekemann) agreed to sell and Mepaco agreed to buy all of the issued shares in PDC. Ms Back became a director in about May 2007. Mr Venables became a director of PDC following the takeover and a short time later became a director of Equinox Energy Holdings. In October 2007 PDC changed its name to Equinox Energy Installation; and in January 2008 changed its name again to Equinox Engineering & Installation. The share sale agreement included terms under which the vendors of the shares became entitled to a 50% after tax profit share from the Joint Venture Works.
The plaintiffs commenced this proceeding against Ms Back alleging breach of contractual and professional duties, breach of duty as an officer of the plaintiffs, and breach of fiduciary duties arising out of the preparation and implementation of a Charter Contract and other contracts made in connection with the development of the oil reserves in the Puffin oil field. The plaintiffs alleged that in about June 2006 Ms Back, on behalf of AED Oil, engaged Clayton Utz to provide legal services including advice in relation to the proper construction of the Charter Contract. The plaintiffs alleged that from July 2006, Clayton Utz knew that Ms Back was a solicitor and general counsel, company secretary, and an employee of AED Oil and, as such, owed a duty to AED Oil not to use her position improperly to gain an advantage for herself or someone else or to cause detriment to AED Oil.
The plaintiffs alleged that from early May 2007 until about 3 August 2007, the shareholders of PDC engaged Heath Lewis, a solicitor at Clayton Utz, to act for them in connection with the sale. Clayton Utz was later retained by PDC and continued to undertake work for Equinox Energy. The plaintiffs will no doubt seek to establish a close association between Clayton Utz and Ms Back and Mr Venables in particular. The plaintiffs alleged that, with the knowledge it had, Clayton Utz should have advised AED Oil of the prejudicial conduct of Ms Back and Mr Venables, and had it done so the breach of fiduciary duty by Ms Back, in deriving a benefit or causing detriment to AED Oil, would not have occurred; and breaches of fiduciary duty by Mr Venables, who participated in the acquisition of PDC, would not have occurred. The plaintiffs claim that AED Oil suffered loss and damage by reason of their breaches of duty, which would have been avoided had Clayton Utz performed its duty.
The dispute
Clayton Utz had been directed to file and serve an affidavit of discovery by 15 January 2010. At a directions hearing on 19 January 2010 the plaintiff complained about the adequacy of its discovery. I expressed the view at the time that Clayton Utz may have taken an unduly narrow view of its discovery obligation. The plaintiff proposed that it be authorised to issue a subpoena to Clayton Utz. Such a course would ordinarily amount to an abuse of process, but I authorised such a course if Clayton Utz were to maintain its narrow approach to discovery. Claims of legal professional privilege were foreshadowed.
Consequently, the plaintiff issued a subpoena directed to Clayton Utz, dated 8 February 2010, requiring production of three categories of documents, two of which captured documents that might potentially have been protected by legal professional privilege. At a directions hearing on 15 February 2010, orders were made providing inspection of documents produced by Clayton Utz, for which no claim of legal professional privilege was made. Clayton Utz did not make a claim on its own account, but anticipated instructions from its former clients, and therefore sought to protect the remainder of the documents from disclosure.
In respect of those documents for which a claim for legal professional privilege was anticipated, directions were made requiring Clayton Utz to file and serve a schedule identifying any documents produced under Category 2 of the subpoena, for which a claim might be made, stating whether instructions had been obtained to maintain such a claim, and the basis for the claim. Clayton Utz was further ordered to review the material falling within Category 3 of the subpoena within 14 days, and to produce those documents to the court by 2 March 2010. It was directed to prepare a schedule with similar information as that required for the Category 2 documents. Leave was granted to representatives of the claimants to inspect the documents produced under Categories 2 and 3, for the purpose of formulating claims for legal professional privilege.
Further directions were made on 2 March 2010 requiring Clayton Utz, by 26 March 2010, to file and serve a schedule describing each document in Categories 2 and 3 of the subpoena setting out, in respect of each such document, the grounds upon which any claim for legal professional privilege was made. It was further ordered that any affidavits in support of any claims be filed and served by 1 April 2010 and that the plaintiffs file and serve any affidavits in response by 7 April 2010. The subpoena was otherwise stood over until 9 April 2010.
On 9 April 2010, time was extended for the filing of further affidavits in support of claims, and for revised schedules setting out the grounds upon which the claims were made. On 14 May 2010, time was again extended for the filing of further affidavits in support of the claims for legal professional privilege. On 13 August 2010 the dispute in relation to the claims for legal professional privilege were fixed for hearing.
Objection to production of some documents was initially taken by the vendor shareholders in PDC, who included Mr Johnson. A claim was made by Mr Johnson in an affidavit sworn 2 March 2010. He said that in early May 2007 negotiations commenced for a Letter of Intent between Mepaco and the vendor shareholders for the sale of their shares in PDC to Mepaco. He said that the negotiations were primarily conducted between Mr Venables on behalf of Mepaco and himself, and subsequently with Mr Harvey, on behalf of the vendor shareholders. Mr Johnson said that the vendors required legal advice in relation to the process of sale; the rights and liabilities under a Letter of Intent negotiated for the purposes of the sale; a subsequent share sale agreement by which they agreed to sell their shares to Mepaco; and employment contracts. He said that the vendors retained Mr Lewis, and the firm of Clayton Utz, to advise them in relation to the transaction. He said that the communications with Clayton Utz were confidential, were to remain confidential, and were for the dominant purpose of seeking and obtaining legal advice on the Letter of Intent, share sale agreement and related matters. He asserted a general claim of legal professional privilege in relation to the Category 2 and 3 documents which could only be properly characterised as a holding claim. Mr Johnson went on to say that following settlement of the purchase of the shares in PDC by Mepaco, Clayton Utz were asked by PDC to provide further advice and assistance in post-completion matters and in relation to a further possible transaction. He said that communications in relation to those matters were placed by Clayton Utz on the same file. The obvious purpose of drawing attention to these documents was to differentiate them from documents relating to the acquisition of PDC.
By an affidavit sworn 2 March 2010, Paul Dominic Evans, of the firm Freehills, solicitors for the first and fourth to ninth defendants, supported the claim for privilege by the vendor shareholders in PDC. He deposed that he had received from the solicitors acting on behalf of Clayton Utz a listing of documents on the relevant file which, he said, appeared on their face to be privileged because they comprise instructions or requests of advice by one or more of the vendors to Clayton Utz in relation to the transaction; advice from Clayton Utz in relation to the transaction; and drafts and annotations of drafts of documents for the purpose of the transaction.
By a further affidavit, sworn 7 April 2010, Mr Johnson deposed that he had received from Mr Evans of Freehills, a listing of the electronic documents produced by Clayton Utz pursuant to the subpoena, and that he had been advised by Freehills that a proper claim for privilege existed. He asserted privilege in relation to the documents on the basis that they contained information falling within various categories defined by him, which were later utilised for the purpose of the preparation of a schedule. The categories are broadly defined as: Category 1 – instructions and advice; Category 2 – drafts; Category 3 – internal notes of instructions and advice or professional work associated with such instructions and advice.
Mr Harvey, a former shareholder in PDC, also swore an affidavit on 17 June 2010 in support of the claims for privilege. He purported to make a claim on his own behalf, and on behalf of Mr Bosley, Ms Rieckemann and Mr Casey. The basis for his claim is in almost identical terms to that made by Mr Johnson, with similar generality. He adopted the same categories as Mr Johnson and asserted that documents produced by Clayton Utz fell within the various categories. He produced schedules of documents which contained a document number, description, date, time where relevant, and category number. Many of the documents appear to be hardcopy emails passing between Mr Lewis and others in relation to the transactions. The subject-matter of the communications was not readily apparent. Some of them had a wide range of recipients.
Peter William van der Zanden, a solicitor with Hotchkin Hanly Lawyers, of Perth, filed an affidavit sworn 17 June 2010 in support of the claims. That firm acted for Mr Harvey, Mr Bosley, Ms Rieckemann and Mr Casey. He said that he prepared the schedules produced by Mr Harvey, so as to indicate which of the documents were the subject of a claim to legal professional privilege by his clients. He said that he formed the view, based on the matters contained in Mr Harvey’s affidavit, and his review of the documents, that a proper claim for legal professional privilege was made in respect of the undeleted documents in the schedule. Some documents had been electronically deleted.
On 23 June 2010, Mr Johnson swore a further affidavit in support of the claims for privilege. He produced an amended schedule and asserted a claim for privilege in relation to the documents therein on the basis that they fell into the category of document indicated in the schedule. The categories were those earlier explained by him.
Objection was initially taken by the claimants to production of more than 1100 documents. In the consolidated schedules, the plaintiffs indicated their intention to challenge 413 documents on five grounds, set out in a letter dated 10 August 2010 from the plaintiffs’ solicitors to the solicitors for the first and fourth to ninth defendants, Clayton Utz and Hotchkin Hanly Lawyers. The challenges were as follow:
1. Documents which, given the content of the communication and/or based on the description of the document, are not privileged. Examples of such documents include:
(a)
documents that are purely commercial in nature and do not involve the seeking or provision of legal advice. (For example we refer to the email of 17 May 2007 sent at 10.51 and listed as document 2, 74 and 283 of Mr Johnson’s privilege lists. This email is titled “The latest Deal”. This is an email from Michael Johnson to Bosley, Harvey, Casey and Cordia Johnson and does not include any lawyer or legal advice. It is discovered by others including Minter Ellison, and is described in the Statement of Claim. This has been raised by us on numerous occasions in correspondence and in court at the last hearing. Notwithstanding the above Mr Johnson still asserts privilege over the document);
(b)
documents that are communications sent to or including third party persons or entities such as Andrew Venables (prior to the share sale), Elizabeth Back (prior to the share sale), Minter Ellison or other third parties;
(c)
documents that constitute communications between Heath Lewis and Elizabeth Back at a time when she was still an employee of AED; and
(d)
documents in which a lawyer is merely CC’d or which on their description do not fit within any grounds of the privilege categories set out in paragraph 5 of the Johnson affidavit dated 7 April 2010.
2 Documents in relation to the sale of shares in PDC in which only Michael Johnson is the party communicating with Clayton Utz. As previously stated we do not accept Mr Johnson can claim privilege over communications concerning the sale of PDC in circumstances where he was both a purchaser and vendor in the transaction. He did not treat such communications with the requisite confidentiality and it would otherwise be inappropriate for him to now seek to avoid disclosure of such communications on grounds of purported privilege.
3 Documents that have been discovered and or produced by other parties in these proceedings so that even if they were once privileged (which is not conceded), privilege has been waived.
4 Documents over which there are reasonable grounds for believing that the relevant communication was provided or made in furtherance of or in connection with an improper purpose pursuant to the principles outlined in AWB v Cole.
On 31 August 2010, the day before the disputed claims were to be argued, the solicitors for the first and fourth to ninth defendants informed the plaintiffs’ solicitors, and other parties, that,
without conceding any claim of privilege in any other document produced under subpoena and not challenged, the first and fourth to ninth defendants relinquished their claim of privilege over all challenged documents but for the 18 enumerated in the accompanying schedule.
Attached to the letter was a schedule describing 18 documents, the basis for the claim by reference to Mr Johnson’s categories, other information in relation to the provenance of the document and the grounds of challenge by the plaintiffs. A copy of the schedule is attachment A to these reasons.
On 30 August 2010, Ms Back swore an affidavit in support of the claim for legal professional privilege, confined to the 18 documents in the schedule. She deposed that documents 2 to 8 and 11 to 17 were records of instructions given and advice received between herself or Mr Venables, on behalf of Equinox Energy and PDC and Mr Lewis of Clayton Utz, as solicitors in connection with negotiations for a consultancy agreement which was unconnected with this proceeding. She asserted a claim for privilege in respect of them.
In relation to the documents numbered 9, 10 and 18, Ms Back said that they were records of instructions given and advice received passing between herself or Mr Venables on behalf of Equinox Energy and PDC, and Mr Lewis and Thomas Choo Kong Yu of Allen & Gledhill, solicitors of Singapore, in connection with the incorporation of Equinox Energy Holding Pte Ltd. She said these documents were unrelated to this proceeding. She said that the claim of privilege was maintained over them.
Prior to the hearing, the court received a letter, copied to all relevant parties, in the nature of a submission on behalf of Mr Harvey, Mr Bosley, Mr Casey and Ms Rieckemann, from Hotchkin Hanly Lawyers in Perth. The submission had obviously been prepared without knowledge that the contest had been narrowed to 18 documents. Insofar as the submission related to any of the documents still in contention, I have taken those submissions into account. I note that the vendor shareholder did not object to the court inspecting the documents for the purpose of resolving the claims.
By the time the hearing commenced, the claimants had abandoned their claim to document 1, a file note dated 30 May 2007. Counsel for the claimants provided to the court a bundle of copy documents corresponding with the documents enumerated and described in the schedule. The claimants submitted that documents 2 to 8 and 11 to 17 were irrelevant and that inspection should not be permitted on that basis alone. The plaintiffs submitted that, while the transactions to which those documents related may have post-dated the share sale agreement, the documents were evidence of the depth and extent of the continuing relationship between Clayton Utz, Equinox Energy, Ms Back and Mr Venables. They submitted that the documents may be employed to rebut the denial by Clayton Utz to paragraph 13(d) in the plaintiffs’ amended substituted statement of claim, dated 14 July 2009. By that paragraph, the plaintiffs alleged that Clayton Utz was and had been since at least December 2007 a provider of legal services to PDC and PDC Singapore.
Having reviewed the documents said to be irrelevant, I am of the opinion that they are relevant to issues in dispute in this proceeding. By its amended defence dated 15 January 2010, Clayton Utz sought to confine the scope of its legal retainers. Relevantly, it sought to confine its retainer to acting on behalf of the PDC shareholders in relation to the sale of their shares, and only acting for PDC and PDC Singapore in relation to a proceeding commenced in the Supreme Court of Western Australia in November 2007. Clayton Utz denied any obligation to warn AED Oil as alleged by the plaintiffs.
The general principles applicable to claims for legal advice privilege are usefully set out in the judgment of Young J in AWB Ltd v Cole anor (No 5).[1] The relevant principles, summarised by his Honour, are as follows:
[1] (2006) 155 FCR 30, [41]-[45].
(1)
The party claiming privilege carries the onus of proving that the communication was undertaken, or the document was brought into existence, for the dominant purpose of giving or obtaining legal advice. The onus might be discharged by evidence as to the circumstances and context in which the communications occurred or the documents were brought into existence, or by evidence as to the purposes of the person who made the communication, or authored the document, or procured its creation. It might also be discharged by reference to the nature of the documents, supported by argument or submissions: see Grant v Downs (1976) 135 CLR 674 at 689 ; 11 ALR 577 at 589 (Grant); Cmr of Taxation v Pratt Holdings Pty Ltd (2005) 225 ALR 266 ; [2005] FCA 1247 at [30] (Pratt Holdings); and AWB at [63].
… (3)
The existence of legal professional privilege is not established merely by the use of verbal formula: Grantat CLR 689; ALR 589 per Stephen, Mason and Murphy JJ. Nor is a claim of privilege established by mere assertion that privilege applies to particular communications or that communications are undertaken for the purpose of obtaining or giving “legal advice”: National Crime Authority v S (1991) 29 FCR 203 at 211– 12 ; 100 ALR 151 at 159–60 per Lockhart J; Candacal Pty Ltd v Industry Research and Development Board (2005) 223 ALR 284 ; [2005] FCA 649 at [70] (Candacal); Seven Network Ltd v News Ltd [2005] FCA 142 at [6]– [8]. If assertions of that kind are received in evidence in support of the privilege claim, their conclusionary nature can leave unclear what advice was really being sought. There will be cases in which a claim of privilege will not be sustainable in the absence of evidence identifying the circumstances in which the relevant communication took place and the topics to which the instructions or advice were directed: Kennedy v Wallace (2004) 142 FCR 185 ; 213 ALR 108 ; [2004] FCAFC 337 (Kennedy (FCAFC)) at [12]–[17] per Black CJ and Emmett J and at [144]–[145] and at [166]–[171] per Allsop J; see also Southern Equities Corp Ltd (in liq) v Arthur Andersen & Co (No 6) [2001] SASC 398.
(4)
Where communications take place between a client and his or her independent legal advisers, or between a client’s in-house lawyers and those legal advisers, it may be appropriate to assume that legitimate legal advice was being sought, absent any contrary indications: Kennedy v Wallace (2004) 208 ALR 424 ; [2004] FCA 332 at [65] (Kennedy (FCA)) per Gyles J; affirmed on appeal, Kennedy (FCAFC)at [23]–[27] per Black CJ and Emmett J. In Kennedy (FCAFC), Black CJ and Emmett J inclined to the view that in the ordinary case of a client consulting a lawyer about a legal problem in uncontroversial circumstances, proof of those facts alone will provide a sufficient basis for a conclusion that legitimate legal advice is being sought or given.
… (7)
The concept of legal advice is fairly wide. It extends to professional advice as to what a party should prudently or sensibly do in the relevant legal context; but it does not extend to advice that is purely commercial or of a public relations character: Balabel v Air India [1988] 1 Ch 317 at 323 and 330 ; [1988] 2 All ER 246 at 248 and 253 (Balabel); Nederlandse Reassurantie Groep Holding NV v Bacon and Woodrow [1995] 1 All ER 976 at 983 (Nederlandse); Three Rivers District Council v Governor and Company of the Bank of England (No 6) [2005] 1 AC 610 ; [2005] 4 All ER 948 at [43]–[44], [59]–[60], [114] and [120] (Three Rivers); Dalleagles Pty Ltd v Australian Securities Commission (1991) 4 WAR 325 at 332–3 ; 6 ACSR 498 at 504–6 (Dalleagles); DSE (Holdings) Pty Ltd v Intertan Inc (2003) 135 FCR 151 ; 203 ALR 348 ; [2003] FCA 1191 at [25]– [71] (DSE); and AWB at [100]–[101].
(8)
Legal professional privilege protects the disclosure of documents that record legal work carried out by the lawyer for the benefit of the client, such as research memoranda, collations and summaries of documents, chronologies and the like, whether or not they are actually provided to the client: Danielsat [44] per McHugh J; Cmr of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501 at 550 ; 141 ALR 545 at 582 ; [1997] HCA 3 (Propend), per McHugh J; Dalleaglesat WAR 333–4; ACSR 505–7 per Anderson J; Trade Practices Commission v Sterling (1979) 36 FLR 244 at 245–6 (Sterling) per Lockhart J; and Kennedy v Lyell (1883) 23 Ch D 387 at 407; Lyell v Kennedy (No 3) (1884) 27 Ch D 1 at 31 per Bowen LJ; Propend Finance Pty Ltd v Cmr of Australian Federal Police (1995) 58 FCR 224 at 266 ; 128 ALR 657 at 697 per Lindgren J.
… (11)
Legal professional privilege protects communications rather than documents, as the test for privilege is anchored to the purpose for which the document was brought into existence …
(12)
The court has power to examine documents over which legal professional privilege is claimed. Where there is a disputed claim, the High Court has said that the court should not be hesitant to exercise such a power: Esso; see also Grant at CLR 689; ALR 589. If the power is exercised, the court will need to recognise that it does not have the benefit of submissions or evidence that might place the document in its proper context. The essential purpose of such an inspection is to determine whether, on its face, the nature and content of the document supports the claim for legal professional privilege.
The plaintiffs submitted that the evidence did not support the existence of legal professional privilege in the content of any of the documents. The plaintiffs further submitted that insofar as privilege might attach to some or all of the content of a document, all but for documents 6 and 14 had already been produced for inspection by Mr Venables. Thus, any privilege otherwise subsisting in the documents had been waived. The plaintiffs put their waiver argument on the basis that Mr Venables had authority to waive privilege and that his disclosure was not inadvertent.
The claimants initially responded to the waiver argument by submitting that there existed a joint privilege and Mr Venables was incapable of unilateral waiver. The joint privilege was said to be that of Mr Venables and the vendor shareholders. The claimants submitted that inadvertent disclosure in the course of discovery would not necessarily constitute a waiver. The test was whether a party entitled to the privilege had, by his or her conduct, acted inconsistently with the maintenance of the privilege.[2] The claimants submitted that there was no identifiable action by any of them, as holders of the relevant privilege, that was inconsistent with its maintenance. Accordingly, the privilege should be upheld notwithstanding disclosure by Mr Venables.
[2] Mann v Carnell (1999) 201 CLR 1, 13; Spotless Group Ltd v Premier Building and Consulting Pty Ltd (2006) 16 VR 1, [25].
By a supplementary submission, delivered after the conclusion of argument, the claimants sought to reopen their case by relying on paragraph 4.2(a) of Mr Venables’ second further amended defence, in which he alleged that he ceased to be a director of Equinox Energy in about October 2008 and ceased to be a director of PDC on 10 March 2008. The claimants produced ASIC historical company extracts to support those contentions. Presumably, Mr Venables produced the relevant documents at some time after his resignation as an officer of both entities. The claimants impliedly contended that accordingly, Mr Venables had no authority to waive the joint privilege.
The evidence in support of the claims for privilege is unacceptably general. It may be assumed that in some circumstances it is difficult, and may be burdensome, to prepare affidavit evidence to explain the circumstances in which each and every document was prepared and communicated and to explain why its content or part thereof is confidential. Had the claimants been required to press their claims to more than 1100 documents, or even 400 documents, a court may give more latitude in its requirement for detailed evidence supporting the claim. In the present case, there are only 17 documents. While it is true that some of the affidavit material was prepared in support of a claim advanced in respect of more than 400 documents, with the limited number of documents now in contention, the generality of the affidavit material was unacceptable. It is so general as to be of little assistance other than to state, as a broad proposition, the category into which the claimants would place each document.
The court may, of course, inspect documents. The content of a document may disclose the necessary characteristics to support a claim for privilege. The content may provide compelling evidence to support of a claim. For example, a letter of advice, on a solicitor’s letter head, addressed to a client, may speak for itself. Unfortunately, the documents in contention do not evidence a basis for the claims with that degree of clarity.
Document 2
Document 2 is an email dated 19 October 2007 from Mr Lewis to Dr Christopher Back, the father of Ms Back. The email was copied to Mr Venables at Equinox Energy and to Anna Casellas. The subject-matter of the communication is a draft employment agreement between Dr Back and Equinox Energy. A copy of the draft agreement was attached.
The nature of the communication is a commercial exchange between the solicitor acting on behalf of Equinox Energy and the opposite party in the negotiation over the contract. There is no basis for the claim of privilege.
Document 3
Document 3 is an email dated 24 October 2007 from Mr Lewis to Mr Venables in relation to the Equinox Energy contract under negotiation with Dr Back. The document includes other emails passing between Mr Lewis and Dr Back which are plainly not privileged. It is possible that the email first mentioned, between Mr Lewis and Mr Venables might be characterised as a confidential communication for the purpose of giving or obtaining advice. Mr Lewis appeared to be seeking some instructions. That part of the document appears to support a prima facie claim to legal professional privilege.
Document 4
Document 4 falls into the same category as Document 3. There is an email dated 24 October 2007 from Mr Venables to Mr Lewis and one of the same date from Mr Lewis to Mr Venables. The earlier email is the same communication as that found in Document 3, followed by a response from Mr Venables. In my opinion those emails are prima facie privileged, but the remainder of the document is not.
Document 5
Document 5 is comprised of a sequence of emails passing between Dr Back and Mr Lewis, and Dr Back and Mr Venables. The communications fall into the same category as Document 2. They are in the nature of commercial negotiations passing between parties to a proposed contract. They do not record confidential communications for the purpose of giving or obtaining advice.
Document 6
Document 6 falls into the same category as Document 2. It is a communication passing between Mr Venables and Dr Back in relation to proposed bonus arrangements to be incorporated within the employment contract.
Document 7
Most of Document 7 is comprised of email communications passing between Mr Lewis and Dr Back. Those communications are not privileged. There is one communication, dated 29 October 2007, passing between Mr Venables and Mr Lewis, although its content does not disclose a basis upon which it might be inferred that it was a privileged confidential communication. In my opinion the whole of Document 7 is not privileged.
Document 8
Document 8 is an email sequence which includes the emails in Document 7, but with an additional email from Mr Lewis to Mr Venables, dated 29 October 2007, in which Mr Lewis seeks instructions from Mr Venables. Only that part of the document could be the subject of legal professional privilege. I find that the email dated 29 October 2007 from Mr Lewis to Mr Venables is prima facie privileged, while the balance of the document is not.
Document 9
Document 9 is an email, dated 29 October 2007, from Ms Back to Mr Choo, with a copy to Mr Lewis, Mr Hoie, Mr Venables and Arne Johnsen. The content of the email is self-explanatory, involving a request by Ms Back to Mr Choo to understate work in connection with the incorporation of Equinox Energy Holdings.
By a letter dated 3 September 2010, after the conclusion of argument, Freehills wrote to the plaintiffs’ solicitors, with a copy to the court, identifying various email recipients who had not been identified with sufficient particularity in the affidavit material in support of the claims or in the emails. The information so provided has not been verified by affidavit. This belated data was a good example of the kind of detail ordinarily required in support of a claim for legal professional privilege. The information has been provided without any response from the plaintiffs and I am reluctant to rely upon it for the purpose of resolving any of the claims. Insofar as the information gave details of the identity of Arne Johnsen, it would not, even if verified by affidavit, have been sufficient to establish that the disclosure to Mr Johnsen did not undermine the confidentiality of the communication. Given the content of the communication and its disclosure to Mr Johnsen, I would not have been prepared to find that the document records a confidential communication but for the inclusion of Mr Johnsen in later emails passing between the Singapore solicitors engaged by Equinox Energy and its representatives. I infer that those communications were intended to be confidential. I therefore find the email to be prima facie privileged.
Document 10
The sequence of emails in Document 10 passed between Ms Back and Irene Tan of DBS Bank, concerning the establishment of a bank account for a company Equinox Offshore Accommodation Ltd. The communications are of a commercial nature passing between banker and prospective customer, and do not fall within any category of legal advice privilege.
Document 11
Document 11 is another in the category of commercial communications passing between negotiating parties, Dr Back and representatives of Equinox Energy. It is not privileged.
Document 12
Document 12 contains an email sequence. The first email, dated 5 November 2007, is from Dr Back to Mr Lewis. The second email, dated 12 November 2007 is from Mr Lewis to Dr Back. The third email, dated 16 November 2007 is from Dr Back to Mr Lewis and the fourth email, dated 16 November 2007 is from Mr Venables to Mr Lewis. The first three emails are plainly not privileged. They are exchanges between parties negotiating a contract. The email between Mr Venables and Mr Lewis may be privileged, although its content does not evidence a confidential communication. There is no other evidence bearing directly upon the nature of the communication. I find that the whole of Document 12 is not privileged.
Document 13
Document 13 contains two emails. The first is dated 22 November 2007, from Dr Back to Mr Lewis and Mr Venables, and the second is dated 22 November 2007, from Mr Lewis to Dr Back. The subject-matter of the emails is the finalisation of the consultancy contract. Once again, these emails represent contractual negotiations between the parties to a proposed contract, and are not privileged.
Document 14
Document 14 is an email from Mr Lewis to Dr Back enclosing a draft employment agreement. The document falls into the same category as those mentioned above, as a document recording negotiations between the proposed parties to a commercial contract.
Document 15
Document 15 is an email sequence, commencing with an email dated 22 November 2007, from Dr Back to Mr Lewis. The second email is also dated 22 November 2007 from Mr Lewis to Dr Back. The third email is dated 26 November 2007 from Dr Back to Mr Lewis and the fourth, dated 26 November 2007, from Mr Lewis to Mr Venables. It is only the fourth email, passing between Mr Lewis and Mr Venables, which might attract legal professional privilege. The content of the email suggests a request by Mr Lewis for instructions. I am satisfied that only so much of the document as records the email from Mr Lewis to Mr Venables is prima facie privileged.
Document 16
Document 16 is an email sequence, commencing with an email dated 22 November 2007 from Dr Back to Mr Lewis, concerning the finalisation of the consultancy contract. Thereafter, there are emails passing between Dr Back and Mr Lewis on 22 November 2007 and 26 November 2007. A subsequent email dated 26 November 2007 is the same as the email contained in Document 15, which I have found to be prima facie privileged. There is an additional email in Document 16, dated 26 November 2007, from Mr Venables to Mr Lewis which is a response by Mr Venables to Mr Lewis’ request for instruction. I would include that email with the previous one, as prima facie privileged.
Document 17
Document 17 is another email sequence including the non-privileged emails referred to in Documents 15 and 16 and an email dated 26 November 2007 from Mr Lewis to Mr Venables, which is also found in Documents 15 and 16, and which I have found to be prima facie privileged. The new email in Document 17 is also dated 26 November 2007. It is from Mr Venables to Mr Lewis, concerning the finalisation of the consultancy contract with Dr Back. Mr Venables was responding once again to a request from Mr Lewis for instructions. I consider that email to be prima facie privileged.
Document 18
Document 18 is another email sequence concerning the proposed incorporation of Equinox Energy Holdings Pte Ltd in Singapore. The sequence commenced with an email from Mr Choo to Ms Back in relation to a management contract. That email is dated 29 October 2007. The next email, also dated 29 October 2007, is an email from Ms Back to Mr Choo, with a copy to Mr Hoie, Mr Venables and Sunit Chabra, and concerns the management contract. It is an email in response to the email from Mr Choo. The next email is also dated 29 October 2007, from Mr Choo to Ms Back, with a copy to Mr Lewis, Mr Hoie, Mr Venables, Mr Johnsen and Jasmine Chen Qiu Shi concerning the incorporation of Equinox Energy Holdings Pte Ltd. The email appears to be a request from Mr Choo for instructions to complete the work he has undertaken in Singapore. The final email in the chain is from Ms Back to Mr Choo, with a copy to the same parties as in the preceding email. Ms Back provided some information to Mr Choo in response to his request for instructions.
The exchanges recorded in the emails appears to involve a request for instructions by a solicitor or firm of solicitors in Singapore and provision of information and response to the request. I am satisfied from examination of the document that it is prima facie privileged.
Waiver
Mr Venables was an officer of the entity purchasing the shares sold by the vendor shareholders. Insofar as he came into possession of, and disclosed through the discovery process, documents that related to the share sale transaction, the waiver of privilege occurred through the communication of information to him, as a party representing the other side to the transaction.
Most of the 17 documents in contention have been disclosed by Mr Venables to the plaintiffs in the discovery process. The exceptions are Documents 6 and 14, which are not, in any event, privileged. I note that Ms Back thought otherwise, describing those documents as ‘records of instructions given and advice received between herself and Andrew Venables on behalf of the fourth and fifth defendants and Heath Lewis (of Clayton Utz) as solicitors for the fourth and fifth defendants in connection with the negotiation of a consultancy agreement for the purpose of the business of the fourth and fifth defendants unconnected with these proceedings’. Presumably the reference to ‘herself’ should be a reference to ‘myself’. Even if so intended, the affidavit failed to explain the role of Ms Back in communications passing only between her father, Dr Back, and Mr Venables. This and other broad assertions of privilege, in circumstances where there is no apparent basis for a claim, cast doubt upon the validity of the claims as a whole.
Insofar as I have found that privilege prima facie subsisted in some documents, Mr Venables probably came into possession of that material as an officer of Equinox Energy. There is no evidence from Mr Venables, or anyone else for that matter, concerning the circumstances in which he received or disclosed the documents. The supplementary submission made on behalf of the claimants does not go so far as to contend that Mr Venables was not authorised to disclose the material. The affidavits are silent on the topic, even though the basis for the plaintiffs’ allegation of waiver has been well-known for some time. Mr Venables is a legal practitioner, no doubt well-aware of his duty in relation to the protection of a client’s legal professional privilege. Merely because he resigned as an officer of the client entity, Equinox Energy, does not relieve him of the obligations which he had to protect their confidential information. In the absence of any evidence to the contrary, I infer that when disclosing the material Mr Venables did not act in breach of his duty to Equinox Energy to protect its confidentiality. Were the position otherwise there would no doubt have been evidence to support such an irregularity.
Accordingly, insofar as I have found that some parts of some documents were prima facie privileged, any such privilege as existed was waived when Mr Venables disclosed the documents to the plaintiffs.
Costs
The plaintiffs seek their costs in relation to the resolution of this dispute. The claimants argue that they should not be penalised for narrowing the issues, and taking a common sense approach to reduce the scope of the dispute to a handful of documents. Parties to litigation must be encouraged to take pragmatic and time- saving steps to narrow the issues between them. The commendable steps taken by the claimants to reduce the scope of the dispute has resulted in a relatively brief hearing, which will have the beneficial effect of reducing the cost burden on all parties. Ultimately, however, the plaintiffs have succeeded in their application for inspection and are entitled to their costs. The scope of the order is confined to the plaintiffs’ application for inspection and the claimants’ opposition to inspection.
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ATTACHMENT ‘A’
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