Bolitho v Banksia Securities Ltd (No 14)
[2020] VSC 703
•27 October 2020
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
COMMERCIAL LIST
S CI 2012 07185
| LAURENCE JOHN BOLITHO & ANOR (according to the Schedule attached) | Plaintiffs |
| v | |
| JOHN ROSS LINDHOLM in his capacity as Special Purpose Receiver of Banksia Securities Limited (receivers and Managers appointed) (in liquidation) & ORS (according to the Schedule attached) | Defendants |
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JUDGE: | Daly AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 15 October 2020 |
DATE OF JUDGMENT: | 27 October 2020 |
CASE MAY BE CITED AS: | Bolitho v Banksia Securities Ltd (No 14) |
MEDIUM NEUTRAL CITATION: | [2020] VSC 703 |
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PRACTICE AND PROCEDURE – Privilege against self-exposure to penalty – Proceeding seeking relief under the Civil Procedure Act 2010 (Vic) ss 28 and 29 – Whether proceeding is a penalty proceeding – Yara Australia Pty Ltd v Oswal (2013) 41 VR 245; Rich v ASIC (2004) 220 CLR 129 referred to – Privilege against self-incrimination – Whether right to make an in limine objection to making discovery has been waived – Birrell v Australian National Airlines Commission (1984) 1 FCR 526 referred to – Whether discovery will increase danger of exposure to a penalty or criminal prosecution.
PRACTICE AND PROCEDURE – Legal professional privilege – Evidence Act 2008 (Vic) ss 118 and 119 - Whether communications made for the dominant purpose of providing legal advice or for the provision of professional legal services for the purpose of legal proceedings – Evidence Act 2008 (Vic) ss 122(2), (3) and (5) – Challenges to claims for legal professional privilege – Whether common interest established.
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APPEARANCES: | Counsel | Solicitors |
| For the Second Plaintiff | Mr S Horgan SC with Mr C Tran | Arnold Bloch Liebler |
| For the Fifth Defendant | Mr A Aleksov with Mr A M Christophersen | Garland Hawthorn Brahe Lawyers |
| For the Contradictor | Mr P Jopling AM QC with Ms J Collins | Corrs Chambers Westgarth |
HER HONOUR:
Background and procedural history
These reasons concern disputes between the parties to this proceeding (‘remitter proceeding’) concerning the discovery and inspection of documents which were the subject of orders made by John Dixon J (‘trial judge’) on 16 September 2020 and 8 October 2020. The trial is at an advanced stage,[1] and is due to resume on 30 October 2020. The current disputes have been referred to me by the trial judge, given that their resolution requires the inspection of documents which are the subject of claims for privilege, including legal professional privilege and the privilege against self‑incrimination and exposure to a penalty.
[1]The only further evidence to be led at trial will be in connection with the Contradictor’s claims against the parties joined on 20 August 2020, being Alex Elliott and (the late) Peter Trimbos.
There are two disputes, as follows:
(a) a dispute between the Contradictor and the fifth defendant, Alex Elliott,[2] concerning the production and inspection of documents discovered by him in accordance with orders made by the trial judge on 16 September 2020 (‘Elliott documents’); and
(b) a dispute between the Contradictor and the second plaintiff (‘AFPL’) concerning claims by AFPL for privilege with respect to documents discovered by AFPL in accordance with the orders made by the trial judge (‘AFPL documents’).
[2]In these reasons I refer to the fifth defendant by his first name and surname to distinguish him from his late father, Mr Mark Elliott, a former director of the second plaintiff. No disrespect is intended.
Alex Elliott resists the production of the Elliott documents, and, indeed, production of an unredacted list of the Elliott documents (‘Elliott List’), on the basis that these documents are subject to the privilege against self-exposure to a penalty (‘penalty privilege’) and the privilege against self-incrimination. AFPL resists production of the AFPL documents on the basis that these documents are subject to a claim for client legal privilege and litigation privilege.
The background to this proceeding, including the remitter proceeding, has been canvassed extensively in a number of written judgments, including in a ruling of the trial judge on 26 September 2019,[3] in reasons published by me on 30 April 2020,[4] and most recently, in the decision of the Court of Appeal in Elliott v Lindholm.[5] Given the stage the proceeding has reached, and in the interests of expedition, I do not propose to canvass further the background to the remitter proceeding except where necessary for the purposes of dealing with the applications before me. I do, however, note the following recent developments:
[3]Bolitho v Banksia Securities Ltd (No 6) [2019] VSC 653 (‘Bolitho (No 6)’)
[4]Bolitho v Banksia Securities Ltd (No 8) [2020] VSC 174.
[5][2020] VSCA 260.
(a) the trial commenced on 27 July 2020, and has run for nine hearing days;
(b) shortly prior to the conclusion of the Contradictor’s opening submissions (which were made over five sitting days), the second and third defendants, Messrs O’Bryan SC and Symons,[6] through their senior counsel, informed the Court that they no longer contested any of the allegations made against them by the Contradictor;
[6]Messrs O’Bryan and Symons, along with Mr Anthony Zita/Portfolio Law, are described in those reasons as the ‘lawyer parties’.
(c) the Court continued to hear evidence from a number of witnesses, and on 14 August 2020 the trial was adjourned to 17 September 2020 for the hearing of final submissions;
(d) however, since then there have been numerous interlocutory hearings, including an application for leave to appeal to the Court of Appeal;
(e) on 18 August 2020, the first defendant, the special purpose receiver of Banksia Securities Ltd (‘SPR’) issued a summons seeking orders that certain non‑parties (including Alex Elliott, the moving party in one of the current applications) pay the SPR’s costs of, among other things, the remitter proceeding, including the costs of the Contradictor and their solicitors, who are currently funded by the SPR;
(f) in his affidavit filed in support of the application for the joinder of Alex Elliott, the solicitor for the SPR, Mr David Newman of Maddocks, deposed as follows:
On the basis of [the evidence adduced to date in the remitter proceeding], there are grounds for the Court to conclude that Mr Alex Elliott, as one of its officers, knowingly participated in and assisted with the conduct alleged by the Contradictor in the Remitter, including the fraudulent scheme to enrich AFPL and the Lawyer Parties at the expense of debenture holders.
(g) following the hearing on the return date of the summons referred to in (e) above, on 20 August 2020, the trial judge made orders which, among other things, joined Alex Elliott as the fifth defendant to the remitter proceeding;
(h) on 7 September 2020, the trial judge dismissed an application by Alex Elliott that he recuse himself from any matters concerning him on the basis of certain remarks he made during the course of the hearing on 19 August 2020 (‘recusal application’); and
(i) on 2 October 2020, the Court of Appeal made orders dismissing the appeal against the trial judge’s refusal of the recusal application, but upheld the appeal to the extent that the trial judge had ordered that Alex Elliott provide a ‘full, frank and honest explanation’ regarding his knowledge of and involvement in the conduct of AFPL and the lawyer parties documented in the Contradictor’s Revised List of Issues, for reasons which will be canvassed further later in these reasons.
The issues in the remitter proceeding
The issues in the remitter proceeding are documented in and defined by the Contradictor’s List of Issues, which has evolved over time. The List of Issues was revised on 10 September 2020 (‘Revised List of Issues’), largely to incorporate references to Alex Elliott’s alleged knowledge of or involvement in the conduct of AFPL and the lawyer parties in the primary proceeding (‘Bolitho proceeding’) which, among other things, was said to have been in contravention of their obligations under the Civil Procedure Act 2010 (Vic) (‘CPA’) (‘overarching obligations’).
The flavour of the allegations made in the Revised List of Issues emerges from the summary of the trial judge in the following extract from Bolitho (No 6):[7]
[7][2019] VSC 653. The “non parties” referred to in this extract are the lawyer parties.
Paragraph 7 of the RL Issues … identifies as an issue whether, in general terms, there was disentitling conduct, being conduct by reason of which the court should reduce or disallow AFPL’s claims under s 33ZF of the Act. The document then refers to the Particulars…
The structure of the Particulars is that it is an amalgam document reading in part like a pleading but also identifying evidence and with extensive footnoting in the nature of submissions. Although a document set out as a particularised pleading might be easier to read, the document communicates considerable detail.
The Particulars opens with the allegation that AFPL owed obligations to Mr Bolitho and the other group members under the funding agreement while the non parties as legal practitioners owed a number of duties described as lawyers duties that were owed to Mr Bolitho and to each other group member or each other group member who signed the funding agreement. Alternatively each of AFPL and the non parties owed a duty to act consistently with the interests of all group members.
By paragraph 7, the Particulars allege that AFPL/Mr Elliott[8] directed and controlled the day-to day aspects of the conduct of the Bolitho proceeding. The allegation is particularised. It is further alleged that the conduct of the non-parties was in the course of their agency to act for AFPL and within the actual or apparent scope of their authority. In the premises alleged, AFPL is liable for the conduct of the non-parties and their knowledge is to be imputed to AFPL.
[8]The reference in his Honour’s reasons to “Mr Elliott” is a reference to Mr Mark Elliott.
It is alleged that each of the non parties and Mr Elliott owed overarching obligations pursuant to the Civil Procedure Act. An allegation is also made that, as lawyers, each of those persons owed duties arising at law or pursuant to professional conduct rules. In respect of the Civil Procedure Act, it is alleged that the non parties and Mr Elliott were subject to a paramount duty to the court to further the administration of justice (s 16), had an overarching obligation to act honestly (s 17), had an overarching obligation to refrain from making any claim in the civil proceeding that did not have a proper factual legal basis (s 18), had an overarching obligation to refrain from engaging in conduct which is misleading or deceptive or likely to mislead or deceive (s 21), had an overarching obligation to use reasonable endeavours to ensure that the legal costs and other costs incurred in connection with the civil proceeding were reasonable and proportionate (s 24), and an overarching obligation to minimise delay (s 25).
What then follows is substantial particularisation of conduct:
(a) in relation to settlement negotiation;
(b) in relation to senior counsel’s fees;
(c)in relation to issuing the summons for approval of the settlement and of the notice to debenture holders;
(d)in providing misleading information to an expert witness and/or procuring a misleading report;
(e)in connection with the opinions filed in the first approval application being misleading in seven material respects;
(f) in relation to double counting of settlement distributions scheme costs;
(g) in relation to seeking approval of the settlement distribution scheme;
(h) in submitting to the court that there were no conflicts of interest;
(i)in failing to comply with Corporations Regulations and funding agreement in respect of conflicts of interests; and
(j) conduct in connection with the appeal by Mrs Botsman.[9]
[9]Ibid [125]-[130].
The Revised List of Issues includes a number of allegations directed at Alex Elliott. In particular, the Contradictor alleged that from about March 2016 Alex Elliott became involved in the conduct of the Bolitho proceeding in his professional capacity as a solicitor with Elliott Legal and as an agent of AFPL, along with his father and employer, Mark Elliott. Alex Elliott was included in emails between AFPL and the lawyer parties and worked as Mark Elliott’s ‘right hand man’ in both Elliott Legal and AFPL. Further, Alex Elliott had an indirect financial interest in the outcome of the remitter proceeding by reason of his family’s substantial financial interest in the outcome of the Bolitho proceeding and the remitter proceeding.
As a result of his involvement in the Bolitho proceeding, the Revised List of Issues alleged that Alex Elliot also owed to Mr Bolitho fiduciary duties and duties ( ‘lawyer’s duties’):
(a) of skill, diligence and competence;
(b) to promote and protect Mr Bolitho’s best interests without regard to Alex Elliott’s interests or the interests of any other person; and
(c) to assist Mr Bolitho to understand the issues in the Bolitho proceeding and his possible rights and obligations, such as to allow him to provide proper instructions.
Paragraph 30C of the Revised List of Issues (and the particulars thereto)[10] alleged that Alex Elliott’s involvement in this proceeding encompassed AFPL’s claims for costs and commission by reason that he, among other things:
[10]In this paragraph, and paragraphs 10 to 15 of these reasons, I have adopted the defined terms used in the Revised List of Issues.
(a) participated in the Bolitho Class Action Email Account and the General Class Action Email Account, by which third parties were led to believe they were corresponding with Portfolio Law;
(b) was involved in procuring evidence from Mr Trimbos to support the fee claims advanced by Mr Bolitho/AFPL at the time of the Partial Settlement and Trust Co Settlement;
(c) was involved in working up the “Banksia expenses” spreadsheet (‘spreadsheet’) by which AFPL pre-determined the fees that the lawyer parties were to charge in support of the fee and commission claims advanced by Mr Bolitho/AFPL;
(d) was involved in working up the settlement distribution scheme and in discussions with Mark Elliott and Mr Symons about fees to be charged for that scheme;
(e) was involved in the discussions about the Trust Co Settlement terms;
(f) worked up the script for Mr Zita/Portfolio law to follow in their dealings with debenture holders in relation to the Trust Co Settlement (‘script’), which stated, among other things:
(i) subject to approval by this Court the legal costs and disbursements are $4.75 million plus GST;
(ii) AFPL had paid all legal costs and disbursements; and
(iii) Mr Bolitho would submit to this Court that the payment of $12.8 million to AFPL was just and equitable in remunerating AFPL for its significant financial expense and adverse exposure in commencing and maintaining the Bolitho proceeding;
(g) was involved in the response to the Botsman appeal, including the strategy of seeking to deter Mrs Botsman from prosecuting the appeal and the SPR from assisting the Court of Appeal in consideration of the appeal; and
(h) has been involved in the conduct of the remitter proceeding, including involvement in providing AFPL’s response to the 1 February 2019 discovery orders in the remitter.
The allegations in paragraph 30C of the Revised List of Issues appear primarily directed at establishing that Alex Elliott is a person to whom the overarching obligations apply pursuant to s 10 of the CPA (‘jurisdictional issue’).
Paragraph 70 of the Revised List of Issues alleged that Alex Elliott procured, encouraged, assisted or acquiesced in Mr O’Bryan and Mr Symons charging an excessive or unreasonable amount in respect of fees by, among other things, being involved in the development of the spreadsheet in circumstances where he knew the figures used in the spreadsheet were not based upon a proper quantification of the fees Mr O’Bryan, Mr Symons and Mr Zita/Portfolio Law were entitled to recover.
Paragraphs 78A to D of the Revised List of Issues alleged that Alex Elliott contravened the overarching obligation not to engage in conduct which is misleading or deceptive or likely to mislead or deceive (‘misleading conduct obligation’) by drafting the script in circumstances where Alex Elliot knew:
(a) the claim for $4.75 million plus GST in legal costs was not based on work actually undertaken or costs actually incurred and the legal costs were not fair and reasonable;
(b) the funding agreement did not set a fee;
(c) AFPL had not paid all legal costs and disbursements, had only been required to provide a relatively small amount by way of security for costs, and did not have the financial capacity to meet an adverse costs award of any significant magnitude; and
(d) the commission sought was not just and equitable and was in fact excessive and unreasonable having regard to the expenses and risk actually borne by AFPL.
Paragraphs 171 to 171A of the Revised List of Issues alleged that Alex Elliot contravened the misleading conduct obligation and the paramount duty to the Court to further the administration of justice (‘paramount duty’) in circumstances where he:
(a) knew the Court of Appeal had been provided with and had examined the Third Trimbos Report;
(b) knew that Mr O’Bryan had informed Mark Elliott on 10 June 2018 that it was ‘vitally important that AFP pays MS [Mr Symons] and PL [Portfolio Law] in respect of the accounts that Trimbos has opined on’;
(c) knew that for that reason Mark Elliott had directed Alex Elliot to draw cheques to Mr Symons and Portfolio Law from the ‘old BSL cheque book’, date them 1 August 2018, place them in envelopes marked ‘Do not open until you talk to MEE’ and give them to Mr Symons and Mr Zita;
(d) must have known that the purpose of drawing those cheques was to further the deception created by the Third Trimbos report and lead the Court of Appeal into error as to AFPL’s funding risk and its entitlement to a commission;
(e) knew and specifically raised for discussion with Mark Elliott that there were serious issues as to the integrity of the Third Trimbos Report; and
(f) failed to draw any of these matters to the attention of the Court of Appeal or to correct the misleading conduct.
Paragraph 178A of the Revised List of Issues alleged Alex Elliott breached his duties arising under or in relation to the litigation funding agreement entered into between Mr Bolitho on AFPL on or around 13 March 2014 (‘funding agreement’) by failing to, among other things:
(a) bring to the attention of AFPL, Mr Bolitho and/or other group members conflicts of interest which arose during the Bolitho proceeding;
(b) inform Mr Bolitho and/or other group members of their rights when such conflicts of interest arose; and
(c) advise Mr Bolitho and/or other group members in a manner consistent with the lawyer’s duties and the paramount duty.
The Revised List of Issues further alleged that Alex Elliot breached the following overarching obligations:
(a) the misleading conduct obligation, by:
(iv) his conduct in connection with the arrangements made and implemented by which Mark Elliot/AFPL, Alex Elliot and Mr O’Bryan continued to maintain the dual interests of funder of legal representative, circumventing the Bolitho No 4 Decision and breaching the Bolitho Court Undertakings;[11]
[11]Paragraph 39. The Revised List of issues also alleged this was a breach of the paramount duty.
(v) being complicit in an arrangement by which the parties and the Court were encouraged to believe that the conflicts of interest identified in the Bolitho No 4 Decision and the Bolitho Court undertakings had been addressed, when they had not;[12]
[12]Paragraph 43.
(vi) procuring an agreement containing the Adverse Settlement Terms and failing to advise Mr Bolitho and/or other group members and AFPL that the Adverse Settlement Terms were unreasonable;[13]
[13]Paragraphs 58 and 63. The Revised List of issues also alleged this was a breach of the paramount duty.
(vii) his conduct in connection with seeking to recover from group members fees for Mr O’Bryan and Mr Symons that exceeded a fair and reasonable amount;[14] and
[14]Paragraph 66 . The Revised List of issues also alleged this was a breach of the paramount duty, the overarching obligation to act honestly (‘honesty obligation’) and the overarching obligation to use reasonable endeavours to ensure that legal costs in connection with the civil proceeding were reasonable and proportionate and properly incurred (‘reasonable costs obligation’).
(viii) his conduct in connection with discovering the O’Bryan December 2017 Costs Agreement and Symons December 2017 Costs Disclosure Statements and resisting the Contradictor’s efforts at ascertaining when the documents had been created and served on AFPL;[15]
[15]Paragraphs 181 to 192. The Revised List of issues also alleged this was in breach of the honesty obligation, the reasonable costs obligation and the paramount duty.
(b) the paramount duty by:
(ix) being involved in an arrangement with deprived Mr Bolitho and group members the benefit of an independent solicitor and had the effect of circumventing the Bolitho Court Undertakings in a manner that constituted an abuse of process and/or had the tendency to bring the administration of justice into disrepute;[16]
[16]Paragraph 43(c).
(x) his conduct in drafting and settling the First and Second Bolitho Opinions in support of the settlement approval application pursuant to section 33V and 33ZF of the Supreme Court Act 1986 (Vic);[17]
[17]Paragraph 99. The Revised List of issues also alleged this was in breach of the honesty obligation and the misleading conduct obligation.
(xi) his conduct in connection with seeking excessive fees for AFPL and Portfolio Law to administer a settlement distribution scheme;[18]
[18]Paragraph 150. The Revised List of issues also alleged this was in breach of the honesty obligation, the misleading conduct obligation and the reasonable costs obligation.
(xii) attempting to prevent or dissuade Mrs Botsman from pursuing her appeal and prevent or dissuade the SPR and/or their counsel from providing assistance to the Court of Appeal in consideration of Mrs Botsman’s appeal;[19] and
[19]Paragraph 169.
(xiii) failing to meet the duties he owed to manage and/or avoid conflicts of interest and by pursuing his own interests and the interests of Mr O’Bryan, Mr Symons and Mr Zita/Portfolio Law in seeking to secure payments that exceeded a fair and reasonable amount for legal costs, commission and/or scheme administration costs; and[20]
[20]Paragraph 174.
(c) the honesty obligation by:
(xiv) his conduct in connection with preparing and issuing a summons and notice to group members which states that AFPL was seeking “reimbursement” of legal costs when AFPL had not paid substantially all of the legal costs for which it was seeking reimbursement; and[21]
(xv) his conduct in connection with the Third Trimbos Report.[22]
[21]Paragraph 75. The Revised List of issues also alleged this was in breach of the misleading conduct obligation and the overarching obligation to only make claims that have a proper basis (‘proper basis obligation’).
[22]Paragraph 79. The Revised List of issues also alleged this was in breach of the misleading conduct obligation, the reasonable costs obligation and the paramount duty.
Recent orders for discovery
Consequent upon the orders joining Alex Elliott to the remitter proceeding, on 16 September 2020 and 8 October 2020, the trial judge made orders requiring Alex Elliott to give discovery, including, on 16 September 2020, the following orders:
1.By 30 September 2020, the fifth defendant (‘Mr Elliott’) shall provide discovery documents and communications in the following categories, to the extent they have not already been discovered, and produce the same to second plaintiff (‘AFP’) for inspection:
(a)all documents within the scope of the Court’s discovery orders dated 1 February 2019, 1 March 2019, 20 December 2019, 24 April 2020 and 30 June 2020;
(b)all documents which record or evidence communications between Mark Elliott and Alex Elliott, and which directly relate to Alex Elliott’s role and responsibilities in connection with the conduct of the Bolitho Proceeding, from 1 March 2016 to 20 August 2020;
(c)all documents which record or evidence communications between Alex Elliott and any other person about the terms on which Mr O’Bryan, Mr Symons and/or Portfolio Law were retained by AFP, either generally, or specifically in the Bolitho Proceeding, from 1 March 2016 to 30 June 2019;
(d)all documents which record or evidence communications between Alex Elliott and any other person in relation to the “Banksia Expenses” spreadsheet, from 1 November 2017 to 27 July 2020;
(e)all documents which record or evidence communications between Alex Elliott and Peter Trimbos in relation to any or all of the First to Fifth Trimbos Reports, from 1 June 2016 to 30 June 2020;
(f)all documents which record or evidence communications between Alex Elliott and any other person about the payment of fees to Mr O’Bryan, Mr Symons and/or Portfolio Law, and/or the terms of any such payment and/or the reason/s for making any such payment, from 1 June 2018 to 1 February 2019, including:
(i)all communications relating to the cheques that Alex Elliott was asked to prepare by Mark Elliott in the email dated 11 June 2018 [ABL.001.0601.00003] (‘Cheques’) in respect of the fees of Mr Symons and Portfolio Law (‘Fees’) (or either one of those Cheques);
(ii)all communications relating to Mr Symons and/or Portfolio Law presenting their Cheques in January 2019; and
(iii)all communications relating to any arrangement or understanding in respect of the payment of the Fees,
(g)all documents which record or evidence communications between Alex Elliott and any other person about the response to be provided to the questions asked by Corrs on behalf of the Contradictor in February and March 2019 relating to the fees and fee arrangements in place with Mr O’Bryan, Mr Symons and/or Portfolio Law, from 1 February 2019 to 10 April 2019;
(h)all documents which record or evidence communications between Alex Elliott and any other person about the deletion or destruction of emails or other documents by Mark Elliott/AFP in the course of the remitter, from 1 February 2019 to 20 August 2020;
(i)all documents which record or evidence communications between Alex Elliott and any officer or agent of AFP (including its legal representatives) in relation to the admissions to be made by AFP in response to allegations made in the various iterations of the Contradictor’s Revised List of Issues filed in the proceeding, from 1 June 2020 to 14 July 2020; and
(j)all documents which record or evidence communications between Alex Elliott and any officer or agent of AFP in relation to the trial of this proceeding, from 27 July 2020 to 20 August 2020.
2.By as soon as is reasonably practicable, and by no later than 4:00pm on 7 October 2020, AFP shall advise Mr Elliott and the Contradictor of any claim of privilege in respect of Mr Elliott’s discovery and Mr Elliott shall provide those documents not subject to a claim of privilege to the Contradictor.
3.To the discovery categories identified in paragraph 1 of this order is added the following further category:
(k)all documents evidencing or recording Alex Elliott’s direct or indirect financial interest in AFP and its shareholders and/or in Elliott Legal.
Significantly for the purpose of the present dispute, paragraphs 1 and 2 of these orders were made by consent. The categories in paragraph 1 of the orders are substantially similar to the categories of documents requested in a letter from the Contradictor’s solicitors dated 8 September 2020.[23]
[23]On 14 September 2020 Mr Price sent an email to the Contradictor’s solicitors which stated, among other things: “… my client’s instructions are to agree to provide discovery by 30 September 2020 in accordance with the schedule on the basis that the words ‘to the extent they have not already been discovered. As far as category 11 is concerned, my client does not agree to this … ‘.
A further directions hearing was held on 8 October 2020, during which counsel for Alex Elliott raised for the first time the prospect that Alex Elliott would resist producing the Elliott List and the Elliott documents by reason of the production of such documents potentially exposing him to a penalty. As a consequence, the trial judge made the following orders:
Discovery by the fifth defendant
1.By 4:30pm on 9 October 2020, the fifth defendant (Mr Elliott) shall file and serve his list of documents discovered in response to the Court’s orders dated 16 September 2020 (List), with such redactions or modifications necessary to preserve any claim that he be entitled to object to production of any document on the basis of the privileges against self-incrimination or exposure to a penalty, together with a statement of the grounds on which such claim is asserted. The list shall be accompanied by an application, if any is to be made, supported by an affidavit, verifying the grounds for the asserted redactions and privilege claims.
2.Any application supporting any redaction or objecting to production of the List or any documents referred to therein that may be made pursuant to paragraph 1 shall be made returnable before the Honourable Associate Justice Daly on 14 October 2020 at 10:00am.
3. By 12 October 2020, Mr Elliott:
(a)should provide any unredacted list of documents and copies of documents over which a claim for privilege is asserted, whether to the fact of redaction or to production for inspection, to the Court for the purposes of inspection in connection with any application made under this order, to the chambers of the Honourable Associate Justice Daly by email, in lieu of filing those documents; and
(b)shall provide to the Associate to the Honourable Associate Justice Daly by email and serve any outline of his contentions, in lieu of filing that document.
4.By 13 October 2020, the Contradictor shall provide to the Associate to the Honourable Associate Justice Daly by email and serve any outline of contentions in opposition, in lieu of filing that document.
Discovery by second plaintiff
5.By 4:00pm on 9 October 2020, the second plaintiff (AFP) shall make discovery, by filing and serving a list of documents, of the following categories (AFP Discovery):
(a)ABL's invoices for the period 1 March 2020 to 31 August 2020 evidencing or recording communications with Mr Elliott in relation to the Banksia remitter and the dates of such communications, redacted to omit disclosure of the substance of privileged communications, but unredacted as to the fact of any consultation with Mr Elliott and the dates of such consultation;
(b)all documents created in the period from 1 June 2020 to 14 July 2020 which record or evidence communications between Mr Elliott and any officer or agent of AFP in relation to the admissions to be made by AFP in response to allegations made in the various iterations of the Contradictor's Revised List of Issues filed in the proceeding;
(c)all documents created in the period from 27 July 2020 to 20 August 2020 which record or evidence communications between Mr Elliott and any officer or agent of AFP in relation to the trial of this proceeding; and
(d)all minutes of meeting of the directors and/or shareholders of AFP since 11 February 2020, including any documents subject to a claim of privilege, the grounds for which shall be identified.
6.By 4:00pm on 9 October 2020, AFP shall produce to the Contradictor and the other defendants for inspection the AFP Discovery, save for any documents subject to a claim of privilege.
7.By 4:00pm on 16 October 2020, AFP shall file and serve an affidavit of discovery in accordance with r 29.04 of the Supreme Court (General Civil Procedure) Rules 2015, making discovery of any document discoverable within any of the Court’s previous discovery orders directed to AFP, relating to Mr Elliott’s engagement in the matters the subject of those discovery orders which have not previously been discovered by it, but excluding any documents provided to AFP’s solicitors by Mr Elliott’s solicitors pursuant to paragraphs 1 and 3 of the orders of the Honourable Justice John Dixon made 16 September 2020 (Order).
Other
8.Leave is granted to the Contradictor to issue a subpoena to produce documents to the Prothonotary to Elliott Legal Pty Ltd, seeking production of categories of documents substantially the same form as paragraphs 1 and 3 of the Order.
On 12 October 2020, the solicitors for Alex Elliott filed a summons seeking the following relief:
That [Alex Elliott] be excused from providing discovery of the documents set out in order 1(i) – (j) made by [the trial judge] on 16 September 2020 on the grounds that [Alex Elliott] relies on privilege penalty and the privilege against self‑incrimination.
The summons was supported by an affidavit sworn by Alex Elliott’s solicitor, Mr John Price of Garland Hawthorn Brahe Lawyers, on 9 October 2020 (‘Price affidavit’). In the Price affidavit, Mr Price deposed, in summary, as follows:
(a) the possibility raised by the allegations in the Revised List of Issues that the lawyer parties breached the overarching obligations;
(b) he deposed that:
In substance, there are serious allegations of fraudulent conduct made against several lawyers.
(c) the SPR’s application to join Alex Elliott as a defendant to the remitter proceeding, the orders made by the trial judge on 20 August 2020 and the trial judge’s observations in his reasons;[24]
[24]Bolitho v Banksia Securities Ltd (No 10) [2020] VSC 524 [41].
(d) he deposed as follows:
The List of Issues alleges complicity by Alex Elliott in aspects of the allegations against the “Lawyer Parties” ...
From those remarks, and the orders made, Alex Elliott is now the subject of an inquiry on the Court’s own motion for the purpose of determining whether the prima facie position identified by the judge should lead to concluded findings being made that he has breached the CPA in various ways.
The relief that might be granted if any of the allegations are substantiated includes financial compensation to debenture holders, the payment of costs orders, and possible sanctions in relation to Alex Elliott’s inclusion on the roll of practitioners (ie, to strike Alex Elliott off the roll of practitioners).
(e) he referred to the Revised List of Issues, and what has transpired during the course of the trial to date, and deposed as follows:
I have seen transcript of remarks made during the opening of the remitter on 30 July 2020 in which the trial judge observed, “in the event that these allegations are established one thing that has troubled me in listening to all of this is the question of whether certain parties are fit and proper persons to remain on the roll of practitioners in this court.” [TRA.500.004.0001].
Since this remark, two of the Lawyer Parties, Mr Norman O’Bryan and Mr Michael Symons, have abandoned their case and accepted that they are to be struck off the roll of practitioners (without making admissions).
Although the above remark preceded Alex Elliott being joined to the proceeding, given what has happened since that time and the commonality of the issues alleged against the Lawyer Parties, the potential imposition of a penalty against Alex Elliott is clear.
The reasons for joining Alex Elliot to the proceeding state that there “were many documentary references, that, absent explanation, permit an inference that Alex Elliott was actively involved, or was complicit, in the conduct of AFPL and Mark Elliott that is the foundation of the allegations made by the Contradictor”: Bolitho v Banksia Securities Ltd [No 10] [2020] VSC 524, [18].
(f) he deposed as to the orders made for discovery and the production of the Elliott documents to AFPL;
(g) he deposed that Alex Elliott did not make an in limine objection to providing discovery on the basis of what was said by the trial judge in his reasons in Bolitho v Banksia Securities Ltd (No 6);[25] and
[25][2019] VSC 653 [222].
(h) he deposed as follows:
I am instructed that Alex Elliott asserts penalty privilege in relation to all of the 146 discovered documents, including in relation to the List of Documents.
I am instructed that Alex Elliott asserts privilege against self-incrimination in relation to all of the 146 discovered documents, including in relation to the List of Documents.
As set out above, the SPR has alleged that Alex Elliott “knowingly participated in and assisted with the conduct alleged by the Contradictor in the Remitter, including the fraudulent scheme to enrich AFPL and the Lawyer Parties at the expense of debenture-holders”. The Contradictor has in substance alleged that Alex Elliott has been complicit in a fraud, including apparently by reason of his having been involved in the conduct of the remitter proceeding through some relationship with AFPL.
When allegations of that kind are made, Alex Elliott cannot in law be required to do anything that might tend to assist in the proof of those allegations, either in this proceeding or in any other proceeding.
The Price affidavit concluded as follows:
Additional facts
To provide the factual foundation for the claim, I say as follows:
a. Mr William Crothers is a current director of AFPL.
b. Mr Simon Tan is a current director of AFPL.
c.Mr Raymond So is William Crothers’s accountant and a former director of AFPL.
d.Mr John Mengolian is a principal of law firm Arnold Bloch Liebler (“ABL”).
e. Ms Lara O’Rorke is a senior associate with ABL.
f. Mr Sam Horgan is Queen’s Counsel for AFPL.
g. Mr Chris Tran is Junior Counsel for AFPL.
h. ABL has carriage of this proceeding on behalf of AFPL.
i. The remitter began in November 2018.
On 12 October 2020, Mr Price provided the Elliott List and the Elliott documents to my chambers on a confidential basis. On the same day, the solicitors for AFPL, Arnold Bloch Liebler (‘ABL’) provided a schedule of the AFPL documents over which a claim for privilege had been made (‘AFPL List’), including a description of each of the documents, and, in summary form, the basis upon which the claim for privilege was made, and subsequently provided copies of the AFPL documents.
There is a considerable, but not complete, overlap between the Elliott documents and the AFPL documents. A substantial proportion of the Elliott documents are AFPL documents, and vice versa.
Alex Elliott’s submissions
In his written outline of submissions, Alex Elliott confirmed that he maintains a claim for penalty privilege over each of the Elliott documents, along with the production of the Elliott List, because provision of the Elliott List would disclose features of the Elliott documents which constitutes information which is also the subject of a claim for a penalty privilege.
Alex Elliott relied upon the following matters in support of the proposition that the penalty privilege is engaged:[26]
[26]Alex Elliott also invokes the privilege against self-incrimination, given the serious nature of the allegations in the remitter proceeding, but for the purposes of these reasons it is convenient to refer only to the penalty privilege.
(a) the penalty privilege absolves a defendant from providing information which will assist in establishing the defendant’s liability to a penalty in the proceeding at hand or in other proceedings;
(b) the penalty privilege applies to excuse parties from filing pleadings, providing particulars, answering interrogatories, making discovery, and producing documents;
(c) the penalty privilege will be enlivened where the proceeding was of a nature which might expose a party to a penalty;
(d) the remitter proceeding is penal in character, in that Alex Elliott, if found to have breached the overarching obligations under the CPA, is exposed to a risk that he be ordered to pay some or all of the legal costs associated with the settlement of the original proceeding, and the remitter proceeding ‘ … upon the premise that, as an officer of the Court and a party to whom the duties of the [CPA] applied, it is his conduct as a solicitor (ie qua solicitor) that warrants such an order’;
(e) the power of the Court to order a solicitor to pay costs, has, in addition to compensatory or protective objects or effects, is also punitive in character;
(f) Alex Elliott submitted as follows:
Given the specific provisions that the Court has found to be engaged in respect of Alex Elliott, it is squarely in issue that an order made under ss 28 or 29 of the CP Act would have a punitive character, in addition to any other characterisation that such orders might bear.
(a)First, those sections are within Pt 2.4 of the CP Act, which is headed “Sanctions for contravening the overarching obligations.” The Court of Appeal noted in Yara v Oswal that s 29 is to be interpreted in line with that heading, and that s 29 operates as a “sanction” and that ss 28 and 29 “imbue the Court with broad disciplinary powers”.
(b)Second, the report that informed the enactment of the CP Act describes the proposed sanctions as being “compensatory as well as punitive”, and refers to the sanctions enacted as ss 28 and 29 of the CPA as “penalties” and “penalty provisions”.
Allegations of the kind set out in the List of Issues would, if proven, amount to professional misconduct within the meaning of s 297 of the Legal Profession Uniform Law and expose Alex Elliott to disciplinary proceedings before the disciplinary body. That is not just a matter for future proceedings. The Court has the power to make a declaration of professional misconduct, with or without ordering that the practitioner’s name be struck from the roll of practitioners, and that declaration may be relevant to future disciplinary proceedings.
(g) the Revised List of Issues makes it clear that Alex Elliott is alleged to have accessorial liability for the alleged conduct of Messrs O’Bryan and Symons which might amount to obtaining a financial advantage by deception and perverting the course of justice, and as such, the privilege against self‑incrimination is engaged;
(h) upon examination of the Elliott List, in conjunction with the information in the Price affidavit, it is apparent that the information in the Elliott List may tend to corroborate aspects of the case advanced against Alex Elliott by the Contradictor;
(i) as for whether making discovery would expose Alex Elliott to further jeopardy, Alex Elliott submitted that there is further jeopardy as production of the documents in the Elliott List, and production of the Elliott List would tend to corroborate the allegations already made by the Contradictor, and exposes Alex Elliott to the risk of yet further allegations being made against him; and
(i) as for the question of whether he had waived his right to claim the penalty privilege, Alex Elliott submitted as follows:
On no view could there be suggested to have been waiver. Waiver requires conduct inconsistent or incompatible with the maintenance of the privilege, which in practical terms requires an election to have been made to run a “positive case”. That has plainly not occurred.
In any event, authority makes clear that both penalty privilege and privilege against self-incrimination are privileges from the requirement to produce anything to assist the accuser. Alex Elliott was not put to any election at the point of making discovery; any point about an “election” could arise only in relation to a demand to produce material to assist the accuser.
The Contradictor’s submissions
In response, the Contradictor submitted, in summary, as follows:
Alex Elliott should be required to produce the Elliott List and the documents identified in the Elliott List, because:
(a)The remitter proceeding is not a criminal proceeding or a penalty proceeding.
(b)Accordingly, to properly invoke the privilege to avoid providing discovery by way of a list of documents in the ordinary way, Alex Elliott must show that providing discovery by producing the Elliott List will itself expose him to a penalty or to criminal prosecution. This encompasses a narrow class of cases – eg, “where an otherwise discoverable document had been stolen and disclosure of the fact that it was in the possession, custody or power of the discovering party might tend to incriminate that party”.
(c)Alex Elliott has failed to articulate how providing discovery by producing the Elliott List to the Contradictors will expose him to a penalty or to criminal prosecution; to the contrary, the limited information he has provided confirms that his claim of privilege over the Elliott List is untenable. Accordingly, the Elliott List should be produced in unredacted form.
(d)To properly invoke the privilege in respect of inspection of any document in the Elliott List, Alex Elliott must show that producing the document will expose him to a penalty or to criminal prosecution.
(e)Alex Elliott has failed to articulate how providing inspection will expose him to a penalty or to criminal prosecution. Though it may be accepted that Alex Elliott is exposed to a danger of criminal prosecution for obtaining a financial advantage by deception and/or for perverting the course of justice in relation to the matters relating to the First Approval Application before Justice Croft, it is not apparent how the documents in the Elliott List, which evidently relate to the conduct of the remitter before Justice Dixon, could expose Alex Elliott to that jeopardy. Further, the 16 September 2020 Orders required Alex Elliott to discover “all documents evidencing or recording Alex Elliott’s direct or indirect financial interest in AFP and its shareholders and/or in Elliott Legal” (Financial Documents). The Financial Documents cannot possibly incriminate Alex Elliott or expose him to a penalty.
(f)Even if Alex Elliott were otherwise entitled to claim privilege in respect of the Elliott List, he has waived that privilege by:
(i) consenting to the Court’s orders for discovery;
(ii) providing the documents in the Elliott List to AFP;
(iii) not appealing the orders for discovery.
(g) Alex Elliott is not exposed to any additional jeopardy by reason of:
(i) production of the Elliott List; or
(ii)the Contradictors’ inspection of the documents in the Elliott List.
(emphasis in original)
The Contradictor noted that Alex Elliott produced the Elliott documents to ABL on 30 September 2020. The evidence in the Price affidavit did not establish why it was necessary for the description of the documents in the Elliott List to be completely redacted.
As for the application of the legal principles concerning penalty privilege to the current application, the Contradictor submitted as follows:
In civil actions where no claim for a penalty is made the defendant must show that providing the information requested would tend to subject him to a penalty in separate proceedings before he can rely on the privilege.
In a non-penalty civil proceeding such as this remitter, Alex Elliott must establish that the provision of information or the production of documents in this remitter will lead to a “real and appreciable risk of a criminal prosecution” or “would tend to subject him to a penalty in separate proceedings”
As a general rule, the privilege does not entitle a defendant to a non-penalty civil proceeding to obtain an order in limine excusing him or her from giving discovery.
In a non-penalty civil proceeding an order for discovery will usually be made (as in this case where consent orders were made requiring discovery), and the party claiming privilege must then provide discovery by way of list, but may object to the production of particular documents identified in that list on the ground that production may tend to expose him to a penalty.
The mere fact that the witness swears that he believes that the answer will incriminate him is not sufficient; “to entitle a party called as a witness to the privilege of silence, the Court must see, from the circumstances of the case and the nature of the evidence which the witness is called to give, that there is reasonable ground to apprehend danger to the witness from his being compelled to answer”.
Privilege against self-incrimination may be waived, expressly or impliedly, deliberately or inadvertently. Fairness is central to the question whether a party’s conduct should be construed as waiving their privilege. Waiver may occur when a person who is entitled to claim the privilege voluntarily gives up information. The waiver operates to the extent of the information provided.
(emphasis in original)
In relation to the question of whether the remitter proceeding is a penalty proceeding, the Contradictor submitted that:
(a) the remitter proceeding is not a penalty proceeding. Alex Elliott has identified no authority where the penalty privilege has been invoked in relation to a claim for a personal costs order against a solicitor;
(b) it would be inappropriate to graft the concept of a penalty privilege onto the Court’s jurisdiction to award costs against a solicitor. To find that the Court’s inherent supervisory jurisdiction over its own officers attracts penalty privilege would undermine the duty owed by legal practitioners to the Court, as codified in the CPA;
(c) given that the CPA permits the Court to inquire into and control the conduct of legal practitioners, the CPA implicitly excludes the penalty privilege. The Contradictor referred to the decision of the High Court in Police Service Board v Morris,[27] where the Court held that a police regulation which compelled police officers to answer questions about their performance of their duties impliedly excluded the penalty privilege;
(d) in any event, Alex Elliott’s submissions impermissibly conflate the concepts of ‘discipline’ and ‘penalty’. The claim in the remitter proceeding is and always has been a statutory claim for compensation, not a claim for a penalty; and
(e) in determining the character of the remitter proceeding, the focus of the inquiry should be the relief sought in the proceeding. The Contradictor has sought compensation, not a monetary exaction, or disqualification from office. There is no application afoot to strike Alex Elliott, or for that matter any of the other lawyer parties, off the Roll.
[27](1985) 156 CLR 397.
Further, in response to Alex Elliott’s submission that the allegation in particular O to paragraph 30C of the Revised List of Issues[28] exposes him to a penalty, the Contradictor submitted, in summary, as follows:
[28]Particular O to paragraph 30C of the Revised List of Issues provides as follows: Alex Elliott has been involved in the conduct of the remitter, including involvement in providing AFPL’s response to the 1 February 2019 discovery orders in the remitter. To date, Alex Elliott and AFPL have refused to answer questions and/or provide documents relating to Alex Elliott’s involvement in and/or consent to AFPL’s ‘Factual Admissions’ dated 14 July 2020.
(a) particular O is not an allegation of misconduct, but concerns his role in the conduct of the remitter proceeding for the purposes of the jurisdictional issue;
(b) AFPL has discovered numerous documents revealing that Alex Elliott has been involved in AFPL’s claim for costs and commission, including in the remitter proceeding, such that Alex Elliott is not exposed to any additional jeopardy by production of the Elliott List;
(c) the Contradictor submitted as follows:
Third, the Revised List of Issues advances only one claim of misconduct in relation to the conduct of the remitter, namely, the misuse of the Court’s processes of discovery to discover misleading documents in support of AFP’s claims for costs and commission, in Section N. Alex Elliott’s involvement in that discovery process has already been revealed by documents discovered by the parties to date.
That is not to say that there may not be consequences in terms of exposure to costs arising from other aspects of the conduct of the remitter. But a potential exposure to costs orders does not attract the penalty privilege or the privilege against self- incrimination, for the reasons set out at paragraphs 42 to 54 above.
(emphasis in original)
(d) Alex Elliott’s reliance upon allegations made by the SPR for the purposes of claiming the penalty privilege is misplaced, because the issues to be dealt with in the remitter proceeding are to be found in the Revised List of Issues, not the affidavits filed by the SPR. In any event, the SPR’s allegations of ‘knowing assistance’ does not extend to the conduct of the remitter proceeding, which is apparently the subject matter of the documents described in the Elliott List; and
(e) it is not apparent how documents relating to the conduct of the remitter proceeding can expose Alex Elliott to a risk of a penalty or criminal prosecution.
The Contradictor submitted that, given that the remitter proceeding is not a penalty proceeding, Alex Elliott may not be excused from giving discovery unless there are exceptional circumstances, such as those referred to in Microsoft Corp v CX Computer Pty Ltd, [29] as follows:
(a)where an otherwise discoverable document had been stolen and disclosure of the fact that it was in the possession, custody or power of the discovering party might tend to incriminate that party;
(b)where statute made disclosure of the existence of an otherwise discoverable document an offence or the subject of the imposition of a civil penalty;
(c)where statute made disclosure of a certain fact an offence or the subject of the imposition of a civil penalty, and any description of an otherwise discoverable document would necessarily amount to disclosure of that fact;
(d)where any description of an otherwise discoverable document might tend to incriminate the discovering party or render that party liable to imposition of a civil penalty in respect of other conduct or circumstances.[30]
[29](2002) 116 FCR 372.
[30]Ibid, 389.
The Contradictor submitted that none of the above exceptions apply to the current application by Alex Elliott to be excused from providing discovery.[31]
[31]The Contradictor relies upon the statement of senior counsel for AFPL during the hearing on 8 October 2020, who stated that the Elliott documents were documents ‘in the second year of the conduct of the remitter proceeding. They are not documents the subject of any allegation in the particulars. They are documents in the conduct of the remitter.’ The statement by senior counsel for AFPL is consistent with my review of the Elliott documents.
The Contradictor submitted that, in any event, Alex Elliott has waived his right to object to the production of the Elliott List by consenting to the orders for discovery made on 16 September 2020, and by production of the Elliott documents to AFPL, noting that in the Commercial Court, discovery is provided by way of a list of documents. Alex Elliott did not apply for leave to appeal from the orders made on 16 September 2020.
The Contradictor submitted that Alex Elliott’s submission that a waiver of penalty privilege could only be effected if and when Alex Elliott chose to run a positive case is incorrect: rather, the privilege is waived by inconsistent conduct, such as, in the current case, by Alex Elliott consenting to orders for discovery and providing the Elliott documents to another party, AFPL.
Further, notwithstanding that Alex Elliott and AFPL are now separately represented, the Elliott documents are also discoverable by AFPL.
Finally, the Contradictor submitted that production of the Elliott List would not expose Alex Elliott to any additional jeopardy of exposure to a penalty, in circumstances where:
documents already discovered in the proceeding reveal that:
(a)Alex Elliott was extensively involved in the conduct of the Bolitho Proceeding at all relevant times from March 2016 onwards;
(b)Alex Elliott’s involvement in the conduct of the proceeding encompassed AFP’s claims for costs and commission;
(c)Alex Elliott has been involved in the conduct of the remitter,92 and, in particular, Alex Elliott was involved in providing AFP’s response to the February 2019 discovery orders, which is the subject of Section N of the Revised List of Issues;
(d)Alex Elliott was consulted about AFP’s “Factual Admissions” filed on 14 July 2020, by which AFP admitted that Alex Elliott was involved in the conduct of the Bolitho Proceeding including the Third Trimbos Report, and that by its conduct in connection with the Third Trimbos Report, AFP breached its overarching obligations, including its obligation not to mislead or deceptive, its obligation to act honestly, and its paramount duty.
These documents include the following:
(a) an email from Mr Symons to Alex Elliott dated 11 February 2019, enclosing Barrister’s Disclosure statements and Costs Disclosures, presumably, given the date, for the purposes of discovery in the remitter proceeding;
(b) email correspondence between Mr O’Bryan SC and Mark Elliott, dated in February 2019 and copied to Mr Symons and Alex Elliott regarding AFPL’s discovery in the remitter proceeding; and
(c) email correspondence between Mark Elliott and Anthony Zita/Portfolio Law on 8 February 2019 (copied to Alex Elliott) regarding Mr Trimbos’ reports.
Submissions in reply
In his submissions in reply, Alex Elliott submitted, in summary, as follows:
(a) the Contradictor’s submission that the issues in the proceeding are fixed by the Revised List of Issues ignores the breadth and nature of the issues confronting Alex Elliott in the remitter proceeding, including the SPR’s application to join Alex Elliott to the remitter proceeding;
(b) documents concerning Alex Elliott’s involvement in the remitter proceeding would be probative of any earlier role in the affairs of AFPL, thus increasing his jeopardy of being subject to a penalty or criminal charges;
(c) a penalty sanction is open in this proceeding, or another proceeding;
(d) even if documents evidencing Alex Elliott’s involvement in the remitter proceeding are relevant to the jurisdictional issue, that involvement is the causal link to allegations which may cause a penalty to be imposed upon him in this proceeding, or any other proceeding;
(e) the remitter proceeding is capable of being characterised as a compensatory proceeding and a penal proceeding, as the conduct for which compensation is sought might also expose Alex Elliott to disciplinary sanctions in this proceeding (given the Court’s power to supervise its officers) or another proceeding;
(f) given the principle of legality, the Contradictor’s submission that s 16 of the CPA (which refers to the paramount duty) impliedly abrogates the penalty privilege must be rejected. Such a submission is inconsistent with s 6(b) of the CPA, which provides that:
Nothing in this Act is intended to override –
…
(b)the doctrine of privilege, whether arising by or under the common law, statute, or otherwise.
(g) in circumstances where there is a risk of self-incrimination, in practice, it is very difficult to establish that further disclosure will result in no increase in risk;
(h) if the penalty privilege is engaged, Alex Elliott cannot be compelled to assist the Contradictor. Production of the Elliott List will assist the Contradictor;
(i) if Alex Elliott chooses to advance a positive case, then, but only then, he may need to disclose the Elliott documents;
(j) the Contradictor has not discharged the onus upon him to establish that, by his conduct, Alex Elliott has waived the penalty privilege; and
(k) when considering the ‘increased jeopardy’ issue, the question for this Court is not whether to characterise this proceeding as a penalty proceeding, but whether Mr Elliott is entitled to resist the production of the Elliott List by reason that doing so might expose him to a penalty in this or another proceeding.
Discussion
In summary, my conclusions with respect to the disputes are as follows:
(a) while the remitter proceeding is not, of itself, a penalty proceeding, I accept that Alex Elliott is exposed to the risk of a penalty and/or criminal charges arising out of the allegations made in the Revised List of Issues;
(b) Alex Elliott must produce the Elliott List to the Contradictor, on the grounds that:
(i) by consenting to orders for discovery on 16 September 2020, he waived his entitlement to object to the production of a list of documents in accordance with the Commercial Court Practice Note;[32] and
(ii) in any event, even if there had been no waiver, there are no special circumstances which would excuse Alex Elliott from providing the Elliott List, and Alex Elliott would not be exposed to any further jeopardy by reason of the production of the Elliott List.
[32]Practice Note SC CC Commercial Court (First Revision) December 2017, [9.3.2].
However, no order should be made for the production of the Elliott documents, as in my view, to the extent that the AFPL documents overlap with the Elliott documents, AFPL has established a valid claim for legal professional privilege, and to the extent that the Elliott List refers to documents which have not been discovered by AFPL in the AFPL List, those documents would also almost certainly be subject to a valid claim for legal professional privilege by AFPL, and AFPL should be provided with the opportunity to make such a claim. For completeness, there has been no waiver of privilege on the part of AFPL by reason of Alex Elliott being a party to the confidential communications evidenced by the AFPL documents and the Elliott documents.
My reasons with respect to the conclusions above follow.
Is the remitter proceeding a penalty proceeding?
I accept that, if the remitter proceeding can be properly characterised as a penalty proceeding, Alex Elliott would be, subject to any question of waiver, entitled to make an in limine objection (that is, a threshold objection) for the purpose of being excused from the compulsory disclosure procedures of the Court, in conformity with the principle that a person who is at risk of the imposition of a penalty should not be compelled to assist their accuser. However, if the remitter proceeding cannot be so characterised, a party who has been ordered to give discovery must assert any claims for privilege with respect to individual documents, by way of an affidavit, unless there are special reasons or exceptional circumstances why such a course should not be followed.
The principles relevant to Alex Elliott’s application were summarised by Moskinsky J in Sadie Ville Pty Ltd v Deloitte Touche Tohmatsu (a firm) (No 3),[33] as follows (omitting citations):
[33](2018) 357 ALR 695.
(a)The rule in summary is that “[n]o one is bound to answer any question or produce any document if the answer or the document would have a tendency to expose that person to the imposition of a civil penalty or to conviction for a crime”.
(b)The privilege against self-incrimination and the privilege against exposure to penalties are distinct, although they are often said to be based on the same rationale and are developed into their modern day form by analogy and upon the same principles.
(c)The privilege against self-incrimination is a substantive common law right. The privilege against exposure to penalties serves the purpose of ensuring that those allege criminality or other illegal conduct should prove it.
(d)The privileges are personal in nature. In its modern form, the privilege against self-incrimination is “in the nature of a human right, designed to protect individuals from oppressive methods of obtaining evidence of their guilt for use against them” and to maintain a fair state-individual balance. The penalty privilege is based on substantially the same rationale.
(e)In light of their nature and purpose, both privileges are available only to natural persons and not to artificial entitles such as corporations.
(f)Subject to a possible exception in relation to spouses, one person cannot claim the privilege against self-incrimination on the ground that the answering of a question or the giving of discovery would tend to incriminate another. Only the person who is exposed to the risk of prosecution or the imposition of a penalty can invoke the privileges.
(g)As a general rule, in the absence of exceptional circumstances, a party to non penalty civil proceedings is not to be excused in limine from giving discovery, but should instead be left to object to producing particular documents on the grounds that such production might tend to expose him or her to criminal liability or a civil penalty.
(h)The gist of the privileges is that the giving of answers or the production of documents would tend to expose the claimant to the apprehended consequence.
(i)In the context of the privilege against self-incrimination, a valid claim for the privilege can be made out if the claimant can establish that the act of providing information or documents would give rise to a “real and appreciable” risk of prosecution. By parity of reasoning, a valid claim for the privilege against exposure to penalties can be made out if the claimant can establish that providing the information or documents would give rise to a “real and appreciable” risk of institution of proceedings for a civil penalty...
(i)There can be no real and appreciable risk of prosecution or exposure to a penalty where the limitation period for the commencement of such a proceeding has expired.
(j)The privilege against self-incrimination has been held to not be available where it is clear that the taking of the step in question will not add to the individual’s jeopardy.
(k)In some cases the act itself has provided a basis on which to infer that the act of providing information or documents would give rise to a real and appreciable risk of criminal prosecution.[34]
[34]Ibid [92]-[102].
There is no authority which directly concerns the question of whether the remitter proceeding, being a proceeding where the Contradictor seeks orders for compensation pursuant to ss 28 and 29 of the CPA, is a penalty proceeding.
Black’s Law Dictionary contains the following definition of ‘penalty:
Penalty. 1. Punishment imposed on a wrongdoer, usually in the form of imprisonment or fine; esp., a sum of money exacted as punishment for either a wrong to the state or a civil wrong (as distinguished from compensation for the injured party’s lost). Though usu. For crimes, penalties are also sometimes imposed for civil wrongs.
civil penalty. A fine assessed for a violation of a statute or regulation …
statutory penalty. A penalty imposed for a statutory violation; esp., a penalty imposing automatic liability on a wrongdoer for violation of a statute’s terms without reference to any actual damages suffered.
However, the language used in describing a proceeding, or to describe the consequences which might flow from a proceeding are not necessarily determinative, such that the reference to ‘sanctions’ in the CPA is not conclusive. As stated by the majority in the leading authority concerning what constitutes a penalty proceeding for the purposes of determining whether a defendant must be excused from providing discovery, Rich v Australian Securities and Investment Commission[35](‘Rich’):
But neither the use of the expression ‘civil penalty provisions’, nor the reference to civil consequences conclusively determine whether these proceedings … expose the appellants to penalties.[36]
[35](2004) 220 CLR 129.
[36]Ibid, 141.
In Bolitho (No 6),[37] the trial judge expressed the preliminary view that the remitter proceeding was not a penalty proceeding, stating as follows:
In assessing whether penalty privilege can be claimed, the cases speak of the necessity to distinguish between a civil action to prevent or redress a civil injury on the one hand and a civil action to recover a penalty on the another. In an action of the latter type, where the whole object of the proceeding is to impose a penalty, the defendant need not establish the existence of a risk that he will be subject to the penalty by providing the information sought by the plaintiff.
On the remitter, no claim is made for a penalty, which casts on to the person claiming the penalty, an obligation to show that providing the information requested would tend to subject him to a penalty in separate proceedings before he can rely on the privilege. The Contradictor submitted that the conduct of the non parties was raised defensively in response to AFPL’s claim for costs and commission in order to inform the way in which the court should exercise its discretion under s 33V. The Contradictor submitted that the non parties were not entitled to invoke the penalty privilege in limine, rather to the extent that exposure to a penalty is invoked, that should occur by objection to answering particular questions or producing particular documents with the court being provided with a basis to be satisfied that the objection is well taken.
It is not yet necessary to form a concluded view as to whether the privilege against penalties has any application in the present context and I will reserve consideration of it to an appropriate occasion.[38]
[37][2019] VSC 653.
[38]Ibid [221-[223].
However, those observations need to be read in the context of the timing of the applications before the trial judge, and his reasons and the range of applications before him. Also, he made it clear that his view was only a preliminary view. In Bolitho (No 6),[39] the trial judge was concerned with questions concerning the nature and function of the Contradictor, and an application that the version of the Contradictor’s List of Issues be struck out, as well as an application to set aside the orders compelling the lawyer parties to file affidavits. The question of whether the remitter proceeding was a penalty proceeding was only relevant to the latter application.
[39]Ibid.
Further, it would be an understatement to say that much has happened between the trial judge’s decision on 26 September 2019 and 12 October 2020, when Alex Elliott filed his summons seeking to be excused from making discovery. Most of the evidence has been led, two of the lawyer parties have, in effect, capitulated, and other key protagonists such as Mark Elliott and Peter Trimbos have died. It is fair to say that the presentation of the documents obtained by the Contradictor and referred to in his opening statement, and the actions of Messrs O’Bryan and Symons have brought the potential exposure of the lawyer parties, AFPL, and now Alex Elliott to criminal and disciplinary proceedings into much greater focus. The question is, has anything fundamentally changed about the character of the remitter proceeding since May 2019 (when the applications which were the subject of Bolitho (No 6) was heard), or have additional submissions been advanced which would cause me to reach a different view from the trial judge as to the character of the proceeding, that is, reach a conclusion that the remitter proceeding is indeed a penalty proceeding?
To recapitulate, there have been no pleadings in the remitter proceeding. Rather, the scope of the remitter proceeding is defined and confined by the Revised List of Issues, the preparation of which has been the responsibility of the Contradictor. The relief originally sought by the Contradictor was claimed under s 29 of the CPA, and under s 33ZF of the Supreme Court Act 1986 (Vic) (‘Supreme Court Act’). Given that AFPL no longer maintains a claim for costs (save for certain agreed costs) and commission in the remitter proceeding, the only relevant relief sought by the Contradictor is relief pursuant to ss 28 and 29 of the CPA against the lawyers parties, AFPL, Alex Elliott, and the estate of Peter Trimbos, along with the relief sought by the SPR pursuant to s 33ZF of the Supreme Court Act.
In Rich,[40] the majority of the High Court explained the task facing a court in applications of the current kind, as follows:
Consideration of the issues raised in the appeal must begin from an examination of the statutory provisions that are sought to be engaged in the Commission’s proceedings against the appellants.[41]
[40](2002) 220 CLR 129
[41]Ibid, 137.
Accordingly, one must first turn to the statutory framework governing the remitter proceeding, being the CPA, and the provisions of the Supreme Court Act governing group proceedings. Section 1 of the CPA provides as follows:
Purposes
(1) The main purposes of this Act are—
(a)to reform and modernise the laws, practice, procedure and processes relating to civil proceedings in the Supreme Court, the County Court and the Magistrates' Court and provide for uniformity;
(b) to simplify the language relating to civil procedure;
(c)to provide for an overarching purpose in relation to the conduct of civil proceedings to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute;
(d)to amend various Acts in relation to the conduct of civil proceedings to reflect the new procedures.
(2) Without limiting subsection (1), this Act provides for—
(a)overarching obligations for participants in civil proceedings to improve standards of conduct in litigation;
(b)expanding the powers of the courts in relation to costs in relation to civil proceedings;
(c)the enhancement of case management powers of the courts, including in relation to discovery;
(d)further enhancement of appropriate dispute resolution processes;
(e) reform of the law relating to summary judgment;
(f)clarifying sanctions available to courts in relation to contravention of discovery obligations;
(g)the management and control of expert evidence in civil proceedings.
There is nothing in the language used in s 1 of the CPA to indicate that breaches of the overarching obligations can give rise to penalties. Similarly, the provisions concerning the initiation, management, and finalisation of group proceedings in Part 4A of the Supreme Court Act do not support a conclusion that the powers of the Court under s 33ZF to ‘make any order the Court thinks appropriate or necessary to ensure that justice is done in the proceeding’ confers upon the Court the power to penalise a party.
Sections 28 and 29 of the CPA are to be found in Part 2.4 of the CPA, which is headed ‘Sanctions for contravening the overarching obligations’. Section 28 of the CPA provides as follows:
Court may take contravention of overarching obligations into account
(1)In exercising any power in relation to a civil proceeding, a court may take into account any contravention of the overarching obligations.
(2)Without limiting subsection (1), in exercising its discretion as to costs, a court may take into account any contravention of the overarching obligations.
Section 29 of the CPA provides as follows:
Court may make certain orders
(1)If a court is satisfied that, on the balance of probabilities, a person has contravened any overarching obligation, the court may make any order it considers appropriate in the interests of justice including, but not limited to—
(a)an order that the person pay some or all of the legal costs or other costs or expenses of any person arising from the contravention of the overarching obligation;
(b)an order that the legal costs or other costs or expenses of any person be payable immediately and be enforceable immediately;
(c)an order that the person compensate any person for any financial loss or other loss which was materially contributed to by the contravention of the overarching obligation, including—
(i)an order for penalty interest in accordance with the penalty interest rate in respect of any delay in the payment of an amount claimed in the civil proceeding; or
(ii) an order for no interest or reduced interest;
(d)an order that the person take any steps specified in the order which are reasonably necessary to remedy any contravention of the overarching obligations by the person;
(e)an order that the person not be permitted to take specified steps in the civil proceeding;
(f)any other order that the court considers to be in the interests of any person who has been prejudicially affected by the contravention of the overarching obligations.
(2) An order under this section may be made—
(a) on the application of—
(i) any party to the civil proceeding; or
(ii)any other person who, in the opinion of the court, has a sufficient interest in the proceeding; or
(b) on the court's own motion.
(3)This section does not limit any other power of a court to make any order, including any order as to costs.
Save for the reference to ‘Sanctions’[42] in the heading, and the observations made by the Court of Appeal in Yara Australia Pty Ltd v Oswal[43] (‘Yara’), there is nothing on the face of these provisions to suggest that s 29 of the CPA is a penalty provision, as opposed to a provision empowering the Court to make an order for compensation. The Contradictor makes no claim for anything other than orders for compensation and costs in the remitter proceeding. In Rich,[44] the majority observed that ‘… orders for compensation have been held not to be penalties’.[45]
[42]Black’s Law Dictionary defines ‘sanction’ as including ‘A penalty or coercive measure that results from a failure to comply with a law, rule, or order.’
[43](2013) 41 VR 302.
[44](2004) 220 CLR 129.
[45]Ibid, 144.
However, Alex Elliott relies upon the following matters to contend that the remitter proceeding should be characterised as a penalty proceeding:
(a) the references in the authorities (including Yara[46]) to the jurisdiction of the Court in considering whether to make a personal costs order against a solicitor as being punitive in character, and founded in the disciplinary jurisdiction of the Court; and
(b) the remarks made by the trial judge in the course of the hearing on 30 July 2020, to the effect that the conduct of the lawyer parties, or at least some of them (noting that the allegations of dishonest conduct against Mr Zita/Portfolio Law are limited to their conduct in the administration of the settlement scheme), amounts to conduct which, if proven, gives rise to a risk that the legal practitioners concerned might be removed from the Roll of Legal Practitioners (‘Roll’).
Again, the decision in Gemmell[83] must be read as an orthodox application of principle in the context of its own facts and circumstances, which again are markedly different from the current case. In Gemmell,[84] the conduct inconsistent with the maintenance of the penalty privilege was the failure of the directors to claim the privilege during the course of a compulsory examination. Understandably, the Court held that, to the extent that allegations were made in the civil proceeding that went beyond the subject matter of the examination, there had been no waiver of privilege. In the current case, the inconsistent conduct was not the provision of information, but Alex Elliott’s consent to an order for discovery. Production of the Elliott List does not fall outside the scope of the waiver: indeed, the very conduct which amounted to waiver was, in effect, consenting to provide a list of documents.
[83]Ibid.
[84]Ibid.
Further, I do not accept that there are special circumstances which operate to excuse Alex Elliott from making discovery (see paragraph 31 above). Of course, the question remains whether Alex Elliott is entitled to maintain an objection to producing particular documents, including the Elliott List, by reason of them exposing him to a risk of a penalty in another proceeding.
In Gemmell,[85] the Court held that the disclosure of information other than the matters which were the subject matter of the examination would expose the directors to a ‘real and appreciable risk of that a pleading or the giving of discovery might expose them to … increased jeopardy of exposure to a penalty’.[86] Ashley JA referred to the following statement of Lundgren J in Microsoft Corporation v CX Computer Pty Ltd:[87]
The true scope of the privilege against self‑incrimination must be understood. It cannot, without qualification, be identified simply as a privilege against being compelled to do something which may tend to show that the person has committed an offence. Assume, for example, that [the party] had been already convicted or acquitted of all the offences referred to in [the provisions of the Copyright Act and the Trade Marks Act]. Would he subsequently, in a civil proceeding such as the present one, be excused from the obligation to give discovery or to answer a notice to produce? Clearly not, because the privilege operates to prevent a person from being compelled ‘to answer any question or to produce any document or thing, if to do so ‘may tend to bring him into the peril and possibility of being convicted as a criminal’.
…
Consistently with the understanding of the nature of the privilege against self‑incrimination just adumbrated, the privilege has been held to be not available where it is clear that the taking of the step in question will not add to the individual’s jeopardy. [88]
[85]Ibid.
[86]Ibid [112].
[87](2002) 116 FCR 372.
[88]Ibid [40]-[41].
The question of whether production of the Elliott List would increase the risk of jeopardy of Alex Elliott being exposed to a penalty only arises if I am wrong on the question of waiver. If I had formed a different view on waiver, the question of increased risk of jeopardy needs, again, to be considered in the context of the allegations in the Revised List of Issues, the scope of the orders for discovery made on 16 September 2020, and other developments in the remitter proceeding, including developments since the joinder of Alex Elliott on 20 August 2020.
While the forensic value of the Elliott List is largely concerned with the jurisdictional issue, I accept that, had it not been for the extensive discovery by AFPL pursuant to the orders made on 16 September 2020 and 8 October 2020, Alex Elliott’s contention that production of the Elliott List would expose him to greater jeopardy is strongly arguable, as, without going into detail on this issue, the Elliott List would have some real probative value to the Contradictor and the SPR. However, given the extensive discovery made by AFPL, including the filing and service of the AFPL List, production of the Elliott List will not materially add to the evidence available to the Contradictor in the remitter proceeding.
However, I will not order that Alex Elliott produce the Elliott documents. To the extent that there is an overlap between the Elliott documents, and the AFPL documents, they fall within the boundaries of the dispute between AFPL and the Contradictor regarding AFPL’s claims for legal professional privilege. To the extent they do not overlap, it is apparent from my inspection of those documents that AFPL would almost certainly have a claim for legal professional privilege, and I will give AFPL the opportunity to formally make those claims. Accordingly, for the purposes of the current application, it is not necessary to evaluate each of the Elliott documents to identify whether production of individual documents would be subject to the penalty privilege.
Given my findings regarding the character of the remitter proceeding, and regarding waiver, it is not necessary to refer to the other submissions made by the Contradictor. However, for completeness, I do not accept that s16 of the CPA impliedly abrogates the privilege penalty (by reason of the terms of s 6(b) of the CPA), and I also reject the submission that by providing the Elliott documents to ABL, Alex Elliott waived the penalty privilege over the Elliott documents. His conduct in that regard went no further than facilitating the making of claims for legal professional privilege by AFPL.
AFPL’s privilege claim
On 9 October 2020, ABL filed the AFPL List. By agreement between the parties and the Court, the claims for legal professional privilege in the documents in the AFPL List are to be determined ‘on the papers’.
AFPL relied upon an affidavit sworn by its solicitor, Ms Lara O’Rorke, on 16 October 2020. Ms O’Rorke deposed, in summary, as follows:
(a) as to the process followed by ABL in providing discovery in the remitter proceeding during the course of 2019;
(b) as to the process after the death of Mark Elliott, Ms O’Rorke deposed as follows:
After Mr Mark Elliott’s death on 13 February 2020, ABL did the following, on behalf of AFPL, pursuant to orders made on 6 March 2020, 25 March 2020 and 20 April 2020:
(i)obtained access to Mr Mark Elliott’s computer hard drive and Blackberry mobile device (Devices);
(ii)had the available data on the Devices uploaded to an electronic database by a third party forensic IT provider (Database);
(iii)pursuant to a protocol agreed to by the contradictor (Protocol), had the third party forensic IT service provider search the Database for any additional documents discoverable pursuant to the orders made on 20 December 2019. The Protocol required searches for the email address of Mr Alex Elliott (being “[email protected]”) in the to/from/bcc/cc fields of a document. Now produced and shown to me and marked “LOR- 1” is a true copy of the Protocol;
(iv)ABL reviewed the results of the searches referred to in paragraph 6(c) above for documents discoverable pursuant to the orders made on 20 December 2019;
(v)AFPL filed and served a supplementary list of documents dated 13 May 2020. The supplementary list of documents lists a number of emails to and from Mr Alex Elliott, and to which Mr Alex Elliott was copied.
Having regard to the terms of the Protocol referred to in paragraph 6(c) above and the results of the searches described in paragraph 6(e) above, the searches conducted in accordance with the Protocol ought to have captured all documents (including emails) in AFPL’s power, possession or control relating to Mr Alex Elliott’s engagement in the matters the subject of the Court’s Discovery Orders.
(c) she deposed as to the process followed by ABL in compliance with the orders for discovery made on 30 June 2020, 19 August 2020, and 8 October 2020; and
(d) she deposed as follows as to the further searches and enquiries made on and after 8 October 2020:
Following the orders made on 8 October 2020, for prudence sake, ABL conducted a further search of the Database containing the data from Mr Mark Elliott’s Devices, searching for:
(a)any document on the Database which contains the word or the terms “alex” or “[email protected]”;
(b)which has not previously been coded by ABL as being discoverable or privileged;
(c)which appear responsive to the Discovery Orders or Further Discovery Orders.
The searches described at paragraph 10 above did not identify any additional discoverable documents.
I am informed by Mr Simon Tan, one of the two directors of AFPL, that he has provided ABL with all documents in his power, possession or control relating to Mr Alex Elliott’s engagement in the matters the subject of the Court’s Discovery Orders and Further Discovery Orders.
I am informed by Mr William Crothers, the other director of AFPL, that:
(a)subject to the documents described in paragraph 13(b) below, he has provided ABL with all documents in his power, possession or control relating to Mr Alex Elliott’s engagement in the matters the subject of the Court’s Discovery Orders and Further Discovery Orders;
(b)following the orders made on 8 October 2020 and the filing of AFPL’s list of documents on 9 October 2020, he reviewed his mobile phone to identify whether he had exchanged any text messages with Mr Alex Elliott which might be discoverable pursuant to the Discovery Orders or the Further Discovery Orders and he identified the following text messages which, if considered “documents” within the meaning of the orders made on 8 October 2020, are discoverable pursuant to subparagraphs 5(b)-(c) of the 8 October 2020 orders:
(i)text message from Mr Alex Elliott to Mr William Crothers dated 8 July 2020;
(ii)text message from Mr William Crothers to Mr Alex Elliott dated 8 July 2020;
(iii)text message from Mr Alex Elliott to Mr William Crothers dated 8 July 2020;
(iv)text message from Mr Alex Elliott to Mr William Crothers dated 15 June 2020;
(v)text message from Mr William Crothers to Mr Alex Elliott dated 16 June 2020;
(vi)text message from Mr Alex Elliott to Mr William Crothers dated 16 June 2020; and
(vii)text message from Mr William Crothers to Mr Alex Elliott dated 16 June 2020.
The text messages described in paragraph 13(b) above are privileged on the same grounds as those stated in Schedule 2 of AFPL’s list of documents dated 9 October 2020 and AFPL objects to producing the text messages.
As noted above, on 9 October 2020 ABL filed the AFPL List. The AFPL List included five documents over which no claim for privilege was maintained, eleven documents (largely minutes of the AFPL board) which were partially redacted, and a large number of documents over which claims for privilege under s 118 of the Evidence Act 2008 (Vic) (‘Evidence Act’) and s 119 of the Evidence Act (‘litigation privilege’) are maintained by AFPL.
No challenge is made by the Contradictor to the form of AFPL’s claims for privilege. Put simply, the Contradictor seeks the verification by the Court that the documents in the AFPL List record communications made for the dominant purpose of AFPL being provided with legal advice or professional legal services in connection with litigation. Further, the Contradictor observed that the AFPL List reveals that Alex Elliott has continued to be involved in the conduct of the remitter, and submitted as follows:
The misconduct alleged in Sections B to P of the Revised List of Issues damaged the interests of [AFPL] in recovering a fair and reasonable funding commission. By reason of that conduct, [AFPL] has abandoned its claim for a commission, and substantially abandoned its claim for costs.
To that end, it is not self‑evident that there is any common interest between [AFPL] and Alex Elliott that protected AFP’s privilege in communications with its lawyers which were disclosed to Alex Elliott.
The Contradictor referred to s 122 of the Evidence Act, which concerns the circumstances when waiver of privilege may occur through disclosure, and submitted as follows (omitting footnotes):
Section 122(5) reflects the common law principle of common interest privilege, the rationale of which is that “if two parties with a common interest and a common solicitor exchange information for the dominant purpose of informing each other of the facts, or the issues, or advice received, or of obtaining legal advice in respect of contemplated or pending litigation, the documents or copies containing that information are privileged from production in the hands of each”.
Once a conflict of interest has been identified, there is no scope for common interest privilege to operate. Two persons interested in a particular question will not have a common interest for the purposes of this principle if their individual interests in the question are selfish and potentially adverse to each other.
The Court is well-placed to examine the documents in the AFP List and the Elliott List and determine whether any privilege in the relevant communications has been waived by virtue of disclosure to Alex Elliott.
In its submissions filed on 16 October 2020, AFPL observed that the documents in the AFPL List fall into two categories: the first being communications involving:
(a) ABL seeking instructions from one or more of William Crothers, Simon Tan and Raymond So (‘directors’) on behalf of ABL;
(b) one or more of the directors giving instructions to ABL on behalf of AFPL;
(c) ABL providing legal advice, or otherwise providing information related to this proceeding, to one or more of the directors on behalf of AFPL; and
(d) ABL seeking to arrange a videoconference or phone call with one or more of the directors on behalf of AFPL to discuss this proceeding, including the giving of advice to them and receiving instructions from them.
The second category of documents are said to be documents involving the directors emailing each other about whether and when to meet to discuss developments in this proceeding and any other proceeding in which AFPL was involved.
AFPL submitted as follows:
When the Court inspects these documents, it will see that there is virtually nothing of any utility to anyone in them. In any event, they were clearly created for the requisite dominant purpose: these are internal documents of the second plaintiff created for the dominant purpose of its directors deciding whether to meet to discuss ongoing legal proceedings. The purpose of such discussions, in turn, was to discuss legal developments about which they might wish to seek advice or in respect of which they might wish to give instructions. Being internal documents, the requisite confidentiality can be readily inferred.
AFPL’s submissions also referred to a third category of documents, being meeting agendas and minutes of meetings of the directors, as follows:
To begin: the documents are confidential. They are internal documents recording proposed or actual internal deliberation within [AFPL]. The matters discussed in them are similarly confidential.
1.Then: the documents would result in the disclosure of confidential communications engaged in within [AFPL], being the client, which discussions were for the dominant purpose of one or more of the following:
2. identifying matters upon which to seek legal advice; and
3.discussing developments in proceedings relevant to [AFPL], including for the purpose of identifying what if any instructions to give in connection with the proceedings.
In relation to the Contradictor’s submissions concerning the question of waiver, AFPL submitted as follows:
First, they depend upon there being a conflict of interest between [AFPL] and Alex Elliott. But there is no conflict. When the Court looks at the documents, it will not discern any. All the contradictor points to is that [AFPL] has abandoned its claim for commission and most of its claims for costs. Even assuming the premise of the contradictor’s argument that the conduct of Alex Elliott was detrimental to [AFPL] pursuing those claims, that does not mean that there is any conflict between their interests. For example, if they were just as detrimental to Alex Elliott’s interests, that would reveal a close alignment of interests.
Second, the Court will see no inconsistency at all in Alex Elliott being copied into documents or attending meetings or sending emails about possible meetings or anything of that kind. Alex Elliott is the eldest son of the former managing director of [AFPL]. It is plain from documents tendered in evidence before the trial judge that Alex Elliott had more involvement in events relevant to this remitter than any of [the directors] (which is not to make any admission whatsoever as to the absolute amount of that involvement: it is only to compare it to [the directors]). It is wholly unsurprising, then, that [AFPL] would have an interest aligned with Alex Elliott to seek information from him relevant to the conduct of this litigation and the giving of instructions. If it be necessary to rely upon common interest privilege, then quite clearly it is established.
Further, Alex Elliott was always a potential witness in [AFPL’s] case, in so far as the Contradictor frequently said that he had not been called by [AFPL] to give evidence. There is absolutely nothing inconsistent with the maintenance of privilege in including him on documents.
In their submissions in reply filed on 20 October 2020, the Contradictor criticised AFPL’s failure to advance any privilege claims over the Elliott documents, given the pending resumption of the trial on 30 October 2020. The Contradictor submitted further, in summary, as follows:
(a) insofar as AFPL has identified documents which involve:
(a)“ABL seeking to arrange a videoconference or phone call” with AFP’s directors;
(b)AFP’s directors conferring with each other about “whether and when to meet to discuss developments in this proceeding and any other proceeding in which [AFPL] was involved”.
Communications of that nature are made for administrative purposes. Whilst aspects of the matters discussed during such conferrals might be privileged, the scheduling of the conferral is not itself privileged. The Court should reject AFP’s submission that privilege in the communications identified in paragraph 5.4 of its submissions is established merely because the communications have some connection to ongoing legal proceedings.
(b) a review of agendas and meeting minutes of AFPL directors suggests they have been excessively redacted, in particular:
… AFP’s business is the conduct of legal proceedings; it is after all a litigation funder. Alex Elliott appears to have had a quasi-directorial role within AFP; indeed, the evidence reveals that he was invited to join AFP’s board of directors after the death of Mark Elliott. Numerous purposes could account for communications about legal proceedings in which AFP was involved, including commercial, financial, or administrative purposes.
On the face of the documents, the redacted communications appear to have been made for the dominant purpose of Alex Elliott updating the directors on the status of the proceeding – not necessarily to obtain legal advice. In the absence of adequate substantiating evidence, it is unlikely that examination of the documents alone will answer the question whether they were brought into existence for the dominant purpose of providing or receiving legal advice.
(c) it is difficult to see how AFPL can claim privilege in text messages between Alex Elliott and William Crothers (a director and (indirectly) a shareholder of AFPL);
(d) AFPL should have included the Elliott documents in the AFPL List; and
(e) the Court should reject AFPL’s contention that there is no conflict of interest between Alex Elliott and AFPL. In that regard, the Contradictor submitted as follows:
AFP appears to submit that there is no conflict between the interests of AFP and the interests of Alex Elliott because what hurts AFP hurts Alex Elliott just as much. The Court should reject that submission. AFP is a separate legal entity with shareholders apart from the Elliott family. Its commercial interests were in obtaining a fair and reasonable funding commission, on a proper basis. Any such claim has now been abandoned in running in the hearing.
The tension between Alex Elliott’s personal interests and AFP’s commercial interests crystallised following allegations of misconduct against Mr Mark Elliott. As Mark Elliott’s “right hand man”, Alex Elliott has (and had during the conduct of the remitter) a vested interest in those allegations. That is demonstrated by two examples.
First, on 10 February 2020, the Contradictors notified ABL that they intended to seek orders for personal costs against Mark Elliott – a matter which, it can be expected, would impact Alex Elliott, particularly following the death of Mark Elliott and the potential for such a claim to be made against his estate.
Second, on 12 June 2020, AFP filed a notice of contribution in the remitter which stated that, if AFP’s entitlement to a commission was reduced by reason of the misconduct alleged by the Contradictors in the remitter, “AFPL will seek indemnity for such amounts from that Lawyer Party or Parties”.
This demonstrates the divergence of interests between AFP and Alex Elliott – all the more so given that AFP has now abandoned its claim for commission. Even before he was joined to this proceeding, the Revised List of Issues made factual allegations implicating Alex Elliott in the misconduct alleged against AFP and the Lawyer Parties, exposing him to a similar claim by AFP.
It is far from apparent that there was any common interest between AFP and Alex Elliott during the conduct of the remitter. Just as the Contradictors could seek discovery and inspection of communications between AFP and the Lawyer Parties during the conduct of the remitter, so too should they be able to seek discovery and inspection of communications between AFP and Alex Elliott.
On 12 October 2020, AFPL filed further submissions by way of rejoinder. First, AFPL rejected the Contradictor’s criticisms of its failure to address its privilege claims over the Elliott documents, as AFPL was not required to do so by either the orders made by the trial judge on 8 October 2020, or the orders made by me (by consent) on 13 October 2020. AFPL submitted further as follows:
(a) simply because documents are of an ‘administrative character’ does not preclude them from satisfying the document purpose test, if the dominant purpose of the relevant communication is for AFPL being provided with professional legal services relating to a legal proceeding;
(b) in relation to AFPL being in the business of litigation funding:
Making profit might be the ultimate motivation for what a litigation funder does, which explains why it is pursuing legal proceedings and being provided with legal advice (many non-funder litigants would have the same ultimate motivation in legal proceedings to which they are party). But that does not deny the immediate purpose of being provided with professional legal services or legal advice.
(c) in relation to the Contradictor’s submissions concerning common interest privilege:
It is not apparent why it is that [AFPL] being a separate legal entity [from Alex Elliott] means that there cannot be a common interest.
…
Both [AFPL] and Alex Elliott had an interest in the second plaintiff obtaining commission and costs. They had a shared financial interest in that regard, which is enough.
… [AFPL] is not seeking contribution from Alex Elliott. The document dated 12 June 2020 which the Contradictors refer to … identifies the Lawyer Parties in paragraph [3] as Mr O’Bryan, Mr Symons and Mr Zita/Portfolio Law. [AFPL] did not file any new or amended document in accordance with the Court’s orders made on 9 September 2020 because [AFPL] is not seeking any contribution from Alex Elliott.
AFPL claims that most of the AFPL documents are immune from disclosure on the grounds of litigation privilege. Section 119 of the Evidence Act provides as follows:
Litigation
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 between the client and another person, or between a lawyer acting for the client and another person, that was made; or
(b)the contents of a confidential document (whether delivered or not) that was prepared—
for the dominant purpose of the client being provided with professional legal services relating to an Australian or overseas proceeding (including the proceeding before the court), or an anticipated or pending Australian or overseas proceeding, in which the client is or may be, or was or might have been, a party.
AFPL rejects the Contradictor’s contention that documents of an administrative character (for example, scheduling documents) cannot be protected by litigation privilege, because the test is whether the documents evidence communications which were for the purpose of AFPL being provided with professional legal services in connection with litigation.
I agree. To exclude documents of a routine administrative character if they otherwise record communications for the purpose of AFPL being provided with professional legal services in connection with legal proceedings would involve placing an unwarranted gloss on the language of s 119 of the Evidence Act.
The Contradictor also relies upon s 122 of the Evidence Act, which provides as follows:
Loss of client legal privilege—consent and related matters
(1)This Division does not prevent the adducing of evidence given with the consent of the client or party concerned.
(2)Subject to subsection (5), this Division does not prevent the adducing of evidence if the client or party concerned has acted in a way that is inconsistent with the client or party objecting to the adducing of the evidence because it would result in a disclosure of a kind referred to in section 118, 119 or 120.
(3)Without limiting subsection (2), a client or party is taken to have so acted if—
(a)the client or party knowingly and voluntarily disclosed the substance of the evidence to another person; or
(b)the substance of the evidence has been disclosed with the express or implied consent of the client or party.
(4)The reference in subsection (3)(a) to a knowing and voluntary disclosure does not include a reference to a disclosure by a person who was, at the time of the disclosure, an employee or agent of the client or party or of a lawyer of the client or party unless the employee or agent was authorised by the client, party or lawyer to make the disclosure.
(5)A client or party is not taken to have acted in a manner inconsistent with the client or party objecting to the adducing of the evidence merely because—
(a) the substance of the evidence has been disclosed—
(i)in the course of making a confidential communication or preparing a confidential document; or
(ii) as a result of duress or deception; or
(iii) under compulsion of law; or
(iv)if the client or party is a body established by, or a person holding an office under, an Australian law—to the Minister, or the Minister of the Commonwealth, the State or Territory, administering the law, or part of the law, under which the body is established or the office is held; or
(b)of a disclosure by a client to another person if the disclosure concerns a matter in relation to which the same lawyer is providing, or is to provide, professional legal services to both the client and the other person; or
(c)of a disclosure to a person with whom the client or party had, at the time of the disclosure, a common interest relating to the proceeding or an anticipated or pending proceeding in an Australian court or a foreign court.
(6)This Division does not prevent the adducing of evidence of a document that a witness has used to try to revive the witness's memory about a fact or opinion or has used as mentioned in section 32 (Attempts to revive memory in court) or 33 (Evidence given by police officers).
The Contradictor submits that AFPL has waived any privilege by reason of Alex Elliott being a recipient, or at least being copied into communications between ABL and the directors, as is evident from the AFPL List. Further, AFPL cannot rely upon the ‘common interest privilege’ conferred by s 122(5)(c) of the Evidence Act, because the interests of AFPL and Alex Elliott are in conflict.
I disagree. First, it is apparent from the evidence in the proceeding to date, and the contents of the AFPL List that Alex Elliott has been involved in providing instructions to ABL for the purpose of the remitter proceeding. Whether or not Alex Elliott was formally an employee of AFPL is not immediately clear from the evidence (such as to attract the exception in s 122(4) of the Evidence Act) at least in 2020, but, he was, as the evidence shows, Mark Elliott’s ‘right hand man’. He was potentially a witness for AFPL in the remitter proceeding, and, in any event, the contents of the AFPL documents and the circumstances in which they came into existence demonstrate that the communications were confidential, such as to attract the exception in s 122(5)(a)(i) of the Evidence Act.
Given the above, it is strictly not necessary for me to consider whether AFPL and Alex Elliott had a common interest in the remitter proceeding such as to attract the operation of s 122(5)(c) of the Evidence Act. However, it seems to me that, at least until his joinder on 20 August 2020, there was such a common interest. While the precise nature of his financial interest in AFPL remains unclear, it is at least apparent from non‑privileged documents that his family retains a significant shareholding in AFPL, and, while he is not a director of AFPL, it is tolerably clear that he has been involved in giving information and instructions to ABL on behalf of AFPL in connection with the remitter proceeding.
Further, I accept that AFPL was not required to discover the Elliott documents, by reason of paragraph 7 of the orders made on 8 October 2020.
Having reviewed the AFPL documents, I consider that AFPL’s privilege claims are made good. I will give further consideration to the partially redacted documents in the AFPL List over the next 24 to 48 hours in order to identify whether the redactions are excessive, and will correspond separately with the parties in that regard.
Orders
I will make the following orders:
1.The fifth defendant produce an unredacted copy of the Elliott List forthwith.
2.Subject to any further order, the second plaintiff be excused from producing any of the documents referred to in Parts 2 and 3 of Schedule 1 of the list of documents filed on 9 October 2020.
3.By 4:00pm on 28 October 2020, the second plaintiff notify the other parties and the Court of whether it presses any claims for legal professional privilege over documents in the Elliott List which are not included in the AFPL list, with such claims to be determined on the papers.
4.For the avoidance of doubt, compliance with paragraph 3 of these orders does not require production of a list of documents.
5.The fifth defendant’s summons filed on 12 October 2020 be dismissed.
6.Paragraph 1 of these orders be stayed until 4:00pm on 30 October 2020, or further order.
7.The parties’ costs be reserved for determination on the papers.
SCHEDULE OF PARTIES
S CI 2012 07185
LAURENCE JOHN BOLITHO First Plaintiff AUSTRALIAN FUNDING PARTNERS PTY LTD Second Plaintiff - and - JOHN ROSS LINDHOLM in his capacity as Special Purpose Receiver of Banksia Securities Limited (Receivers and Managers Appointed) (in Liquidation) First Defendant NORMAN O’BRYAN SC Second Defendant MICHAEL SYMONS Third Defendant ALEXANDER CHRISTOPHER ELLIOTT Fifth Defendant PETER TRIMBOS Sixth Defendant
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