Alliance Craton Explorer Pty Ltd v Quasar Resources Pty Ltd - [2011] SASCFC 64

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court: Permission to Appeal in Private)
ALLIANCE CRATON EXPLORER PTY LTD v QUASAR RESOURCES PTY LTD & ANOR
[2011] SASCFC 64
Reasons for Decision of The Full Court
(The Honourable Chief Justice Doyle, The Honourable Justice Vanstone and The Honourable Justice Peek)
4 July 2011
APPEAL AND NEW TRIAL - APPEAL - PRACTICE AND PROCEDURE - SOUTH AUSTRALIA - WHEN APPEAL LIES - BY LEAVE OF COURT - GENERALLY
PROCEDURE - DISCOVERY AND INTERROGATORIES - DISCOVERY AND INSPECTION OF DOCUMENTS - PRODUCTION AND INSPECTION - GROUNDS FOR RESISTING PRODUCTION - LEGAL PROFESSIONAL PRIVILEGE
Application for permission to appeal in private pursuant to Supreme Court Civil Rules 2006 (SA) r 291 – appeal against order of a judge permitting the plaintiff to inspect certain documents disclosed by each of the defendants – defendant's sought to rely on legal professional privilege to prevent inspection – whether permission to appeal raises matters of practical significance – whether a dispute as to the relevant principle.
Held (Doyle CJ, Vanstone and Peek JJ): application for permission to appeal refused.
Supreme Court Civil Rules 2006 (SA) r 291, referred to.
Farrow Mortgage Services Pty Ltd v Webb (1996) 39 NSWLR 601, discussed.
Alliance Craton Explorer Pty Ltd v Quasar Resources Pty Ltd & Anor [2011] SASC 90, considered.

ALLIANCE CRATON EXPLORER PTY LTD v QUASAR RESOURCES PTY LTD & ANOR
[2011] SASCFC 64
Full Court: Doyle CJ, Vanstone and Peek JJ

THE COURT: In an action in this Court a Judge ordered that the plaintiff, Alliance Craton Explorer Pty Ltd (Alliance), be permitted to inspect certain documents disclosed by each of the defendants, Quasar Resources Pty Ltd (Quasar) and Heathgate Resources Pty Ltd (Heathgate). Quasar and Heathgate had objected to this order, claiming that each of the documents was the subject of legal professional privilege in their hands, and so protected from disclosure.
Each of the defendants has applied for permission to appeal to the Full Court against the Judge’s decision.
The Court has considered the application under r 291 of the Supreme Court Civil Rules 2006 (SA). The Court has considered written submissions filed by each of the defendants. It has not heard oral argument.
Alliance and Heathgate entered into a contractual joint venture. The aim was to explore for minerals and to mine them if a suitable prospect was found. Heathgate transferred its rights and obligations to Quasar. Quasar became the manager of the joint venture. Quasar engaged Heathgate to carry out various tasks for Quasar. A dispute arose. Alliance alleged that Quasar had acted in breach of duties owed to Alliance, and that Heathgate knowingly participated in Quasar’s breaches of duty or contract. The relevant documents related to legal advice obtained by Quasar and Heathgate with reference to, in one way or another, aspects of the joint venture.
Before the Judge, Alliance argued that each of the documents in question was the subject of joint privilege, held jointly by Quasar, Heathgate and it, and in some cases by Quasar and it. Accordingly, while the documents were subject to legal professional privilege, they were producible to Alliance because it was a party to the joint venture: Alliance Craton Explorer Pty Ltd v Quasar Resources Pty Ltd & Anor [2011] SASC 90 at [35].
The parties appear to have accepted as correct the following statement by Sheller JA in Farrow Mortgage Services Pty Ltd v Webb (1996) 39 NSWLR 601:
Two or more persons may join in communicating with a legal adviser for the purpose of retaining his or her services or obtaining his or her advice. The privilege which protects these communications from disclosure belongs to all the persons who joined in seeking the service or obtaining the advice. The privilege is a joint privilege. So is it also if one of a group of persons in a formal legal relationship communicates with a legal adviser about a matter in which the members of the group share an interest. Communications by one partner about the affairs of the partnership or a trustee about the affairs of the trust are examples. Implicit in the relationship is the duty or obligation to disclose to other parties thereto the content of the communication. Accordingly no privilege attaches to such communications as against others who, with the client, share an interest in the subject matter of communication. But the parties together are entitled to maintain the privilege “against the rest of the world”: Phipson, par 20-28 and par 28-29. Logically the joint nature of the privilege means that all to whom it belongs must concur in waiving it. Theirs is one inseverable right.
It was the second situation identified by Sheller JA that was the relevant one. In the application for permission to appeal, Quasar and Heathgate continued to treat the statement by Sheller JA as accurate.
The Judge summarised their argument as follows:
[57]Quasar and Heathgate submitted that in the second of these alternatives, an obligation by one member of a group to disclose its communications with a legal advisor about a matter of shared interest to the other members of the group was a necessary and additional element for the existence of the joint privilege. Alliance, on the other hand, submitted that such an obligation was of a consequential kind, ie, it arose from the circumstance that one of a group in a formal legal relationship had sought legal advice on a matter in which all group members shared an interest. This difference led to some debate at the hearing about what Sheller JA had intended to convey by the quoted passage.
In our opinion the Judge appears to have accepted the substance of the submission by Quasar and Heathgate. He said at [61]:
[61]In these circumstances, I do not accept the submission of Alliance that, in relation to the second of the two alternatives identified by Sheller JA, the Court’s satisfaction that two persons were in a formal legal relationship and that the communication of one concerned a matter of common interest, will be sufficient for the privilege to be joint. I will proceed on the basis that a joint privilege will arise when one of a group of people in a formal legal relationship communicates with a lawyer for the purpose of obtaining or receiving legal advice about a matter in which the members of the group share an interest, and when there is implicit in the relationship between the group members a duty or obligation to disclose to the other members the content of the communication.
The Judge proceeded on the basis that the joint venture agreement contemplated Quasar acting on behalf of the joint venturers, and acting as agent of Alliance, in particular in negotiating a native title mining agreement. There seems to be no dispute about that.
In the application for permission to appeal, the defendants argue that the Judge held that once the relationship could be described as one of agency, it must follow that the agent cannot keep confidential from the principal communications with the lawyer whom the agent has separately and independently retained. In their written submission, counsel for Heathgate argue:
What the Trial Judge was required to do, but did not do, was to go beyond the label of “agency” and consider the particular relationship between the parties and the particular circumstances in which the privileged communications were created in order to determine whether the communications were ones which Quasar and Heathgate were bound to disclose to Alliance. The contract between them imposed no such obligation.
We do not accept this submission. In our opinion in the passage set out above from para [61] of the Judge’s reasons, he makes it clear that he looked beyond the existence of an agency, and considered whether in the particular circumstances there was a duty of disclosure. This is reinforced by what the Judge said at [94]:
[94]As previously noted, this alternative requires the Court to be satisfied that Quasar, being in a formal legal relationship with Alliance, had sought legal advice about a matter in which both Quasar and Alliance had a shared interest, in circumstances giving rise to an obligation by Quasar to disclose the content of its communications to Alliance.
In their submissions, the defendants identify the “key paragraph” as para [98] of the Judge’s reasons. There the Judge said in part:
[98]… The relationship of agency by itself gives rise to a duty of disclosure. Documents brought into existence by agents during the course of, and for the purposes of, the agency are the principal’s documents and should be provided to the principal on request.
Footnote omitted
We agree that, standing alone, that passage might suggest that the fact of agency was enough. But that is not what the Judge said. As well as the passages to which we have already referred, we refer to para [99] of the Judge’s reasons where he said:
[99]I did not understand Quasar and Heathgate to dispute that the communications with the respective lawyers related to matters in which Quasar and Alliance had a shared interest. Having regard to the content of the affidavit passages quoted earlier, such a submission would in any event have been difficult to sustain.
And he went onto say at [102]:
[102]… However, the evidence adduced by Quasar and Heathgate to which I referred earlier does not support the conclusion that Quasar (and Heathgate on Quasar’s behalf) sought legal advice for Quasar’s own purposes, as distinct from the purpose of the negotiation of the First NTMA on behalf of the joint venture. In fact evidence of this kind is, with one possible exception, remarkably absent. It is to be expected, for example, that if either Quasar or Heathgate had sought legal advice concerning Quasar’s own position or concerning the responsibilities or duties of Quasar under the JVA to Alliance in the negotiation of the First NTMA, this would have been clearly articulated in at least one of the affidavits. None of the affidavits of Ms Steed, Mr Wedd, Mr Grey or Ms Engström suggest that the legal advice in question was sought or given for some purpose other than that of pursuit of the joint venture.
In our opinion the Judge did consider the particular relationship between the parties, and the particular circumstances in which the relevant communications were created. We consider that the passages referred to make that clear.
We agree that this application for permission to appeal raises an issue of some practical significance. But the relevant principle is identified by Sheller JA in the passage set out above. There is no dispute as to the relevant principle. In our opinion the Judge has not made the error, in applying that principle to the facts, attributed to him by the defendants. If there is a matter to be argued on appeal, it is no more than the application of the principle to the facts.
As things stand, the action is headed for an early trial. It is generally undesirable to disrupt the preparation for trial. That is another factor pointing against a grant of permission to appeal.
In our opinion as there is no issue of principle, and the case at best gives rise to an application of well established principle to the facts, and bearing in mind that the matter is headed for an early trial, we do not think it is an appropriate case for a grant of permission to appeal.
The Court refuses permission to appeal.