Aquila Resources Ltd v Pasminco Ltd (Administrators Appointed)

[2002] WASC 314

AQUILA RESOURCES LTD & ANOR -v- PASMINCO LTD (ADMINISTRATORS APPOINTED) & ORS [2002] WASC 314

Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[2002] WASC 314
Case No:	CIV:2618/2001	Heard:	16 DECEMBER 2002
Coram:	MASTER SANDERSON	Delivered:	20/12/02
No of pages:	10	Judgment Part:	1 of 1
Result:	Appeal allowed in part
Category:	B
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Parties:	AQUILA RESOURCES LTD (ACN 092 002 769) AQUILA EHM PTY LTD (ACN 095 529 445) PASMINCO LTD (ADMINISTRATORS APPOINTED) (ACN 004 368 674) MIM HOLDNGS LTD (ACN 009 814 019) ERNEST HENRY MINING PTY LTD (ACN 008 495 574) SAVAGE RESOURCES LTD (ADMINISTRATORS APPOINTED) (ACN 009 551 624) SAVAGE EHM FINANCE PTY LTD (ADMINISTRATORS APPOINTED) (ACN 071 375 221)
Catchwords:	Practice and procedure Application for an order for inspection where parts of a document blocked out Adequacy of description of document over which privilege claimed Appeal from decision of Case Management Registrar Turns on own facts
Legislation:	Nil
Case References:	Alfred Crompton Amusement Machines Ltd v Commissioners of Customs and Excise (1971) 2 All ER 843 Carew v White (1842) 5 Beav 172 Churton v Frewen (1865) 2 Dr & Sm 390 Commissioner of Taxation v Coombes [1999] FCA 842 Curlex Manufacturing Pty Ltd v Carlingford Australia General Insurance Ltd (1987) 2 Qd R 335 Gardner v Irvine (1878) 4 Ex D 49 Argyle Brewery Pty Ltd (t/as Craig Brewery Bar & Grill) v Darling Harbourside (Sydney) Pty Ltd (1994) 120 ALR 537 Bushtown Holdings Pty Ltd v Conlan [1999] WASC 123 CTC Resources NL v Australian Stock Exchange Ltd (2000) 22 WAR 48 Dalleagles v ASC (1991) 4 WAR 325 Diamond Offshore General Co v Woodside Energy Ltd [2000] WASC 204 Dubai Bank Ltd v Galadari (1989) 3 WLR 1044 Esso Australia Resources Ltd v Federal Commissioner of Taxation (1999) 201 CLR 49 GE Capital Corporate Finance Group Ltd v Bankers Trust Co [1995] 1 WLR 172 Goldace Holdings Pty Ltd v Vodafone Network Pty Ltd [2000] WASC 267 Graham v Sutton, Carden & Co [1897] 1 Ch 761 Grant v Downs (1976) 135 CLR 674 Gray v Associated Book Publishers [2002] FCA 1045 Hadid v Lenfest Communications Inc, unreported; FCA; 4 November 1996 John Allan Ltd v Keegan [1968] WAR 125 McCarthy v Dolpag Pty Ltd [2000] WASCA 106 Middleton v Western Australia (1996) 17 WAR 201 Mulley v Manifold (1959) 103 CLR 341 National Crime Authority v S (1991) 100 ALR 151 Smith's Weekly Publishing Co Ltd v Sunday Times (1923) 31 CLR 552 Southern Equities Corp Ltd (In Liq) v Arthur Andersen & Co (No 6) [2001] SASC 358 Southern Equities Corp Ltd (In Liq) v Arthur Andersen & Co (No 7) [2002] SASC 1 Southern Equities Ltd v Western Australian Government Holdings (1993) 10 WAR 1 Telebooth Pty Ltd v Telstra Corporation Ltd, unreported; 17 August 1993 Tipperary Developments Pty Ltd v Western Australia [1999] WASC 62 Water Authority of Western Australia v AIC Holdings Pty Ltd (1991) 7 WAR 135 Waterford v The Commonwealth of Australia (1987) 163 CLR 54 Waugh v British Railways Board [1980] AC 521

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION : AQUILA RESOURCES LTD & ANOR -v- PASMINCO LTD (ADMINISTRATORS APPOINTED) & ORS [2002] WASC 314 CORAM : MASTER SANDERSON HEARD : 16 DECEMBER 2002 DELIVERED : 20 DECEMBER 2002 FILE NO/S : CIV 2618 of 2001 BETWEEN : AQUILA RESOURCES LTD (ACN 092 002 769)

First Applicant

AQUILA EHM PTY LTD (ACN 095 529 445)
Second Applicant

AND

PASMINCO LTD (ADMINISTRATORS APPOINTED) (ACN 004 368 674)
First Respondent

MIM HOLDNGS LTD (ACN 009 814 019)
Second Respondent

ERNEST HENRY MINING PTY LTD (ACN 008 495 574)
Third Respondent

SAVAGE RESOURCES LTD (ADMINISTRATORS APPOINTED) (ACN 009 551 624)
Fourth Respondent

SAVAGE EHM FINANCE PTY LTD (ADMINISTRATORS APPOINTED) (ACN 071 375 221)
Fifth Respondent

(Page 2)

Catchwords:

Practice and procedure - Application for an order for inspection where parts of a document blocked out - Adequacy of description of document over which privilege claimed - Appeal from decision of Case Management Registrar - Turns on own facts

Legislation:

Nil

Result:

Appeal allowed in part

Category: B

Representation:

Counsel:

First Applicant : Mr G H Murphy
Second Applicant : Mr G H Murphy
First Respondent : No appearance
Second Respondent : Mr A R Beech
Third Respondent : No appearance
Fourth Respondent : No appearance
Fifth Respondent : No appearance

Solicitors:

First Applicant : Fearis Salter Power Shervington
Second Applicant : Fearis Salter Power Shervington
First Respondent : No appearance
Second Respondent : Allens Arthur Robinson
Third Respondent : No appearance
Fourth Respondent : No appearance
Fifth Respondent : No appearance

(Page 3)
Case(s) referred to in judgment(s):

Alfred Crompton Amusement Machines Ltd v Commissioners of Customs and Excise (1971) 2 All ER 843
Carew v White (1842) 5 Beav 172
Churton v Frewen (1865) 2 Dr & Sm 390
Commissioner of Taxation v Coombes [1999] FCA 842
Curlex Manufacturing Pty Ltd v Carlingford Australia General Insurance Ltd (1987) 2 Qd R 335
Gardner v Irvine (1878) 4 Ex D 49

Case(s) also cited:

Argyle Brewery Pty Ltd (t/as Craig Brewery Bar & Grill) v Darling Harbourside (Sydney) Pty Ltd (1994) 120 ALR 537
Bushtown Holdings Pty Ltd v Conlan [1999] WASC 123
CTC Resources NL v Australian Stock Exchange Ltd (2000) 22 WAR 48
Dalleagles v ASC (1991) 4 WAR 325
Diamond Offshore General Co v Woodside Energy Ltd [2000] WASC 204
Dubai Bank Ltd v Galadari (1989) 3 WLR 1044
Esso Australia Resources Ltd v Federal Commissioner of Taxation (1999) 201 CLR 49
GE Capital Corporate Finance Group Ltd v Bankers Trust Co [1995] 1 WLR 172
Goldace Holdings Pty Ltd v Vodafone Network Pty Ltd [2000] WASC 267
Graham v Sutton, Carden & Co [1897] 1 Ch 761
Grant v Downs (1976) 135 CLR 674
Gray v Associated Book Publishers [2002] FCA 1045
Hadid v Lenfest Communications Inc, unreported; FCA; 4 November 1996
John Allan Ltd v Keegan [1968] WAR 125
McCarthy v Dolpag Pty Ltd [2000] WASCA 106
Middleton v Western Australia (1996) 17 WAR 201
Mulley v Manifold (1959) 103 CLR 341
National Crime Authority v S (1991) 100 ALR 151
Smith's Weekly Publishing Co Ltd v Sunday Times (1923) 31 CLR 552
Southern Equities Corp Ltd (In Liq) v Arthur Andersen & Co (No 6) [2001] SASC 358
Southern Equities Corp Ltd (In Liq) v Arthur Andersen & Co (No 7) [2002] SASC 1



(Page 4)

Southern Equities Ltd v Western Australian Government Holdings (1993) 10 WAR 1
Telebooth Pty Ltd v Telstra Corporation Ltd, unreported; 17 August 1993
Tipperary Developments Pty Ltd v Western Australia [1999] WASC 62
Water Authority of Western Australia v AIC Holdings Pty Ltd (1991) 7 WAR 135
Waterford v The Commonwealth of Australia (1987) 163 CLR 54
Waugh v British Railways Board [1980] AC 521

(Page 5)

1 MASTER SANDERSON: This is an appeal from a decision of Registrar C Boyle sitting as a Case Management Registrar. Before detailing the application and the orders made by the Case Management Registrar, I should give some of the background to this appeal. On 12 April 2002 I ordered that the second respondent (who I will refer to as "MIM") give discovery verified by affidavit of certain documents. As a consequence of this order, MIM filed and served an affidavit of Marian Frances Gibney ("Ms Gibney") sworn 3 May 2002. In Part 1 of the First Schedule, 34 documents were listed. Under Part 2 of schedule 1 there appeared the following:

"Correspondence passing between the Second Respondent and its solicitors, and file notes and other documents prepared, for the purpose of seeking or giving legal advice, or obtaining or providing legal services."

2 The plaintiff (who I will refer to as "Aquila") wrote to MIM offering the view that the description of documents over which privilege was claimed, found in Part 2 of the First Schedule was inadequate. Without admitting this to be the case, MIM filed the second affidavit of Ms Gibney sworn 19 July 2002. In that affidavit Ms Gibney sets out her qualifications and says she is the Executive General Manager Corporate Affairs and Secretary and General Counsel of MIM (par 2). She also says that the facts set out in her affidavit are "within my own knowledge except where indicated otherwise, in which case they are based on information and belief, which I verily believe to be true". Appearing as annexure "MFG1" to Ms Gibney's second affidavit is a letter from Allens Arthur Robinson, MIM's solicitors, to Fearis Salter Power Shervington, Aquila's solicitors. That letter refers to and describes five documents over which privilege is claimed. Ms Gibney, in her affidavit, confirms the claim of the privilege. Documents 3 and 4 in that list are described in the following way:

"3. Handwritten notes of Bill Zillmann, Senior Associate of Allens Arthur Robinson lawyers.

4. E-mail from Ben Zillmann to Angus Graham, attaching a file note."

3 Of these documents, Ms Gibney says (at par 9):

"I further confirm, as indicated in my first affidavit and in the List itself, that the documents in part 2 of the first schedule to the List are privileged from production because they were

(Page 6)

prepared for the purpose of seeking or giving legal advice, or obtaining or providing legal services."

4 When solicitors for Aquila came to inspect MIM's documents, they found that significant parts of these documents were covered up or obscured. On behalf of MIM it is said that this was done because these parts of the documents are irrelevant (in her first affidavit Ms Gibney says the reason why the parts of the documents were obscured was commercial confidentiality, commercial sensitivity or irrelevance. By the time this matter came to be argued it was accepted by MIM that the only basis upon which parts of a document could be obscured was if they were irrelevant. It was maintained by MIM that the parts that were obscured were irrelevant.) By application to the Case Management Registrar dated 12 September 2002, Aquila sought inspection in full of eight numbered documents which had been partly obscured and inspection of documents 3 and 4 over which privilege had been claimed. Registrar C Boyle on 28 November 2002 dismissed the application. It is against that decision that Aquila appeals. The appeal raises two separate and distinct questions, albeit both are related to the discovery process. It is convenient to deal first with the question of whether or not MIM should be required to give inspection of the discovered documents in their entirety.

5 The parties were in agreement on a number of points of principle. First, it is proper and appropriate for a party giving inspection to cover up parts of a document which it is not required to discover. In Curlex Manufacturing Pty Ltd v Carlingford Australia General Insurance Ltd (1987) 2 Qd R 335, McPherson J put the position as follows (at 339):

"The point to be gathered from this digression is that for at least 150 years it has been possible to resist on some proper ground production of parts of discoverable documents, and to do so entirely without reference to the question whether the part in respect of which non-production was claimed was of 'the same subject matter' as another part as to which production was not resisted."

6 Second, if relevant and irrelevant material in a document is so intertwined that to blank out the irrelevant material would render the document incomprehensible, then the whole of the document should be available for inspection. This principle was confirmed by McPherson J in the Curlex decision (at 341) by reference to two early English cases of Churton v Frewen (1865) 2 Dr & Sm 390; 62 ER 669 and Carew v White (1842) 5 Beav 172; 49 ER 142.
(Page 7)

7 Thirdly, it is for Aquila to establish that the masking was inappropriate. When part of a document is blanked out, it is proper for the deponent to attest that this was done because the part which was blanked out was irrelevant. As McPherson J says in Curlex, the modern practice is to refer to this in the body of the discovery affidavit. In this case, Ms Gibney deals with this in her second affidavit. She says (at par 5):

"Certain parts of documents numbered 4, 9, 10, 11, 12, 19, 23, 24 and 30 in part 1 of the first schedule to the List were sealed up on the basis that they contain confidential and commercially sensitive information that is not relevant to the Order for Pre-Action Discovery made by Master Sanderson on 12 April 2002."

8 The documents themselves appear as annexure "RPD3" to the affidavit of Roy Philip Daniel ("Mr Daniel") sworn 30 August 2002. The documents appear to fall into two broad categories. Document 9, which is to be found on page 27 of Mr Daniel's affidavit is a facsimile from one Lesley Tesolin to certain named individuals. In the first paragraph of the document a brief synopsis of the "deal" MIM might reach with Pasminco is specified. What is obscured is the dollar amounts and the terms upon which the purchase price was to be paid. As to the remaining documents, what appears to have been omitted is an analysis by MIM personnel of the merits or otherwise of acquiring Pasminco's interest in the Ernest Henry Mine ("the Mine"). Documents 23 and 24 are memorandums provided to MIM's board of directors. It is not entirely clear from these two documents just what it is that has been obscured. However, given the way that the documents read it would be reasonable to assume that once again it is an analysis of the pros and cons of acquiring the interest in the Mine.

9 Dealing first with document 9, the fact the document has been discovered at all indicates that it is a document related to a matter in issue between the parties. Given the nature of that issue, can it then be said that the parts of the document and have been obscured are irrelevant to the issue between the parties? The difficulty in answering this question arises because as yet, the issues between Aquila and MIM, and indeed the issues between Aquila and Pasminco (the first respondent), have not yet crystallised. What Aquila has obtained is an order for pre-action discovery. To obtain that order it was necessary only for Aquila to set out in the broadest terms the cause of action it may have against MIM. It is not possible by reference to the pleadings then to define an issue and test the relevance of a particular document against the pleaded case.

(Page 8)

10 Having said that, it does seem to me, that so far as document 9 is concerned, the amount MIM contemplated paying for the Mine and the manner of payment are matters related to an issue between the parties. On the application for pre--action discovery, Aquila articulated its case in this way. It said that consequent upon representations made by Pasminco, it agreed to an extension of MIM's pre-emption period. It was Aquila's case that representations made by officers of Pasminco during negotiations about the grant of the extension might have been misleading and deceptive. So far as there was as claim against MIM, it was said that MIM may have been knowingly concerned in the misleading and deceptive conduct. That being so, it would seem to me that discussions within MIM about how much would be paid for the Mine and the way in which the payment would be made relate to a matter in issue between the parties - that is, whether there was some financial arrangement between MIM and Pasminco which could have underpinned representations made by Pasminco to Aquila. While I would accept that the connection is somewhat speculative, I think in the circumstances it is proper to conclude that the amounts blacked out in document 9 ought be available for inspection.

11 However, I am not convinced that the material omitted from the other documents is relevant. An analysis of the pros and cons by officers of MIM on the issue of buying Pasminco's interest in the Mine does not seem to me to go to the issues Aquila wishes to investigate. The question can perhaps be put in this way - of what relevance is it to Aquila's claim that MIM was knowingly concerned in misrepresentations by Pasminco as to the reasons why an extension of the pre-emption period should be agreed, to know MIM's internal analysis of the merits or otherwise of acquiring Pasminco's interest in the Mine? Once the issue is put in that way I think it becomes clear that the matters which have been blacked out are irrelevant and no inspection ought be ordered. In summary then, I would order inspection of document 9 in totality and I would allow the appeal to that extent. Otherwise the orders of the Registrar should stand.

12 That then leaves the question of whether or not inspection ought be ordered of the two documents over which privilege is claimed. It was common ground between the parties that the documents in question related to a meeting which took place between the legal representatives of MIM and Pasminco in Melbourne on 1 March 2001. For the purposes of this application, counsel for MIM was prepared to concede that this meeting was not protected by any privilege - that is to say, there was no argument that at trial evidence could not be given by those who participated in the meeting as to what occurred. It was also common

(Page 9)

ground between the parties that a document recording what took place at the meeting, if it was prepared for the dominant purpose of giving legal advice, could attract privilege: see Commissioner of Taxation v Coombes [1999] FCA 842.

13 On behalf of Aquila, it was said the description of the document provided gave no indication of why it was said the document was privileged. Furthermore, the affidavit of Ms Gibney did not rectify the defect. Apart from anything else, Ms Gibney was not the author of the document and she gives no indication of the basis of her belief that the documents are privileged.

14 It is a fundamental requirement of a claim for privilege that the documents over which privilege is claimed be properly described. In Gardner v Irvine (1878) 4 Ex D 49, Cotton LJ said (at 53):

"An affidavit in answer to an application for discovery must be construed strictly, because the other side cannot adduce evidence to contradict it. The person seeking discovery is bound by the affidavit made by his opponent, and therefore it ought to be full. It is not sufficient for the affidavits to say that the letters are a correspondence between a client and his solicitor, the letters must be professional communications of a confidential character for the purpose of getting legal advice. I think that the plaintiffs are not entitled to have the dates of the letters and such other particulars of correspondence as may enable them to discover indirectly the contents of the letters, and thus to cause the defendants to furnish evidence against themselves in the action."

15 A full analysis of the authorities on this issue is to be found in Alfred Crompton Amusement Machines Ltd v Commissioners of Customs and Excise (1971) 2 All ER 843 per Eveleigh J at 847-851. Judged against the criteria that emerges from the cases there considered, it is plain that the description of the documents provided by Ms Gibney is inadequate. Nor is the position rescued by her second affidavit - there is still no adequate description which explains why these documents attract privilege. That being so, the appellant has prima facie made out its case for an order or production of the documents.

16 During the course of submissions, counsel for MIM offered, if there was any doubt about the privilege attached to these documents, to provide a further affidavit which detailed the claim for privilege. I indicated at the

(Page 10)

time that, as Ms Gibney had already filed two affidavits, I did not think it proper to allow a further affidavit to be filed. In retrospect, I was, I think, too hasty in reaching that conclusion. Having read again the decision of Eveleigh J in Alfred Crompton, I note that Eveleigh J thought the appropriate course was to allow the party maintaining privilege a further opportunity to put on affidavit material justifying the claim. That, I think, is the proper course in this case.

17 Accordingly, what I propose is that the appeal be allowed and an order be made that Ms Gibney, or some other officer of MIM, provide further affidavit evidence in relation to the claim for privilege. Once that evidence is in, the matter can be further considered.

18 I will give the parties the opportunity to consider these reasons and bring in a minute of orders. I will also hear the parties as to costs.