Bolitho v Banksia Securities Ltd (No 8)
[2020] VSC 174
•30 April 2020
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST
S CI 2012 07185
BETWEEN:
| 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: | Not applicable. Written submissions filed by the parties on 13, 19, 20, 26, 27, 30 and 31 March 2020 |
DATE OF JUDGMENT: | 30 April 2020 |
CASE MAY BE CITED AS: | Bolitho v Banksia Securities Ltd (No 8) |
MEDIUM NEUTRAL CITATION: | [2020] VSC 174 |
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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), (5) and (6) – Challenges to claims for legal professional privilege – Whether common interest established – Whether the provision of a draft statement or like document by one witness to another is conduct inconsistent with the maintenance of confidentiality - Evidence Act 2008 (Vic) s 125 – Whether documents prepared in furtherance of a fraud – Meaning of ‘fraud’ within s 125 of the Evidence Act 2008 (Vic) – Talacko v Talacko [2011] VSC 341 referred to.
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APPEARANCES: | Counsel | Solicitors |
| For the Contradictor | Mr P Jopling QC with Ms J Collins | Corrs Chambers Westgarth |
| For the Second Defendant | Mr S R Horgan QC with Mr C Tran | Arnold Bloch Liebler |
| For the Tenth Defendant | Mr D J Batt QC with Mr M Costello | Minter Ellison |
| For the Twelfth Defendant | Mr C Juebner | Colin Biggers Paisley |
HER HONOUR:
Introduction and background
This proceeding was originally brought as a class action by investors in Banksia Securities Limited, which collapsed in 2012. The applications before me concern disputes between the parties with respect to privilege claims made over documents discovered by the parties, plus a dispute over documents produced by a non-party in response to a subpoena. The background to the proceeding in its current form (‘remitter proceeding’) is summarised in an earlier decision by John Dixon J (‘managing judge’)[1], as follows:
[1]Bolitho v Banksia Securities Ltd (No 6) [2019] VSC 653.
Banksia Securities Limited (Banksia) was a debenture issuer regulated by a trustee under Chapter 2L of the Corporations Act 2001 (Cth). The Trust Company (Nominees) Limited (Trust Co) acted as trustee pursuant to the terms of a trust deed.
On 25 October 2012, receivers and managers were appointed to Banksia. On 24 June 2014, Mr John Ross Lindholm and Mr Peter Damien McCluskey were appointed the liquidators of Banksia and subsequently as the special purpose receivers (SPRs) of Banksia by orders of the Supreme Court of New South Wales. Banksia’s financial collapse left approximately $663 million owing to debenture holders. Following interim distributions, debenture holders were still owed approximately $172 million in outstanding principal and accrued interest under the Banksia Trust Deed.
Mr Bolitho commenced a group proceeding on his own behalf and on behalf of all debenture holders against Trust Co and others to recover losses in respect of the debentures held by them at the time of Banksia’s collapse. Mr Bolitho’s proceeding was funded by Australian Funding Partners Limited (AFPL), which was incorporated for the purpose of funding this group proceeding. Other proceedings that have been issued against Trust Co and others to recover losses of debenture holders were prosecuted by the SPRs (the SPRs proceedings).
...
A settlement of both the group proceeding and the SPRs proceedings was negotiated, and a Deed of Settlement and Release (Deed) was executed by Mr Bolitho, Banksia and Trust Co. Croft J approved the settlement pursuant to s 33V and s 33ZF of the Supreme Court Act 1986 (Vic).
In the Court of Appeal, a debenture holder successfully objected to that approval and the settlement was, in part, set aside. The Court of Appeal upheld the primary judge’s finding that the settlement sum of $64 million was fair and reasonable. However, it concluded that the primary judge had erred in approving distribution to AFPL of its claimed commission and legal costs. Those matters were remitted for determination by a judge of the Trial Division.
The remitter proceeding is an application by AFPL, pursuant to ss 33V and 33ZF of the Supreme Court Act, for approval of the distribution from the settlement sum of the funder’s application for commission (pursuant to clause 3.10 of the Deed), and the funder’s application for legal costs and disbursements (pursuant to clause 3.11 of the Deed) and for approval of the procedure for a Settlement Scheme. A settlement scheme would provide for the payment to group members, as specified in the Deed, of the balance of the settlement sum after taking into account whatever payments are ordered, or are to be ordered, for the benefit of the funder.[2]
[2]Ibid [2]–[8].
On 22 November 2018, the managing judge directed that the parties develop a list of issues for determination in the remitter proceeding, and appointed Mr Peter Jopling AM QC and Ms Jennifer Collins of counsel as Contradictor for the purposes of the remitter proceeding. At the time, Mr Norman O’Bryan AM QC was senior counsel for Mr Bolitho. After the circulation of a list of issues prepared by the Contradictor on or about 29 March 2019, Mr O’Bryan ceased to act for Mr Bolitho, given the nature of the allegations made by the Contradictor against the lawyers acting for Mr Bolitho (including Mr O’Bryan, his junior counsel, Mr Michael Symons, and Mr Bolitho’s solicitor, Mr Anthony Zita of Portfolio Law Pty Ltd (‘Portfolio Law’)) and the litigation funder of Mr Bolitho’s claim in the primary proceeding, Australian Funding Partners Limited (‘AFPL’). On or about that date, the managing judge directed that AFPL (via its founder and principal Mr Mark Elliott, and/or the members of Mr Bolitho’s legal team, being Mr O’Bryan, Mr Symons and Mr Zita) file and serve affidavits in response to a number of questions concerning AFPL’s claim for legal costs and funding commission in the primary proceeding.[3] Mr O’Bryan, Mr Symons, Mr Zita, and Portfolio Law were joined as defendants to the remitter proceeding by the managing judge on 15 November 2019, and are now all separately represented. AFPL was joined as a plaintiff in the remitter proceeding on the same day.
[3]Following an unsuccessful application by Messrs O’Bryan, Symons, and Zita to vacate the orders requiring them to file affidavits in relation to the issues in the remitter proceeding, the orders were made again on 26 September 2019. Since then, the timetable has been varied, such that their evidence is now due by 8 May 2020. (see the orders made by the managing judge on 15 November 2019).
The questions referred to in the above paragraph were as follows:
(a)Why was a summons issued in this court on 7 December 2017 seeking payment out of the settlement to AFPL for “reimbursement” of legal costs?
(b)Why did counsel’s invoices in respect of the post-1 July 2016 period have a “processed date· which made them appear as if they were issued monthly?
(c)Why were invoices stamped as “PAID” when they had not been paid? Who stamped them as “PAID”?
(d)Why were invoices stamped as “PAID” provided to the expert witness Mr Trimbos? Who provided them to Mr Trimbos?
(e)Why did senior counsel for Mr Bolitho inform the expert witness Mr Trimbos that fees had been duly paid, when they had not been paid?
(f)Why were fee agreements created in December 2017 after Mr Trimbos asked for them, and why were they provided to Mr Trimbos?
(g)Precisely what discussions occurred at relevant times between AFPL and Bolitho’s representatives about the costs incurred and to be incurred in the proceeding, and the terms upon which Bolitho’s representatives were asked to act, and the terms upon which Bolitho’s representatives agreed to act?
(h)Why was the Trimbos Report filed with the court annexing invoices stamped as “PAID”?
(i)Why did counsel for Mr Bolitho rely upon and endorse the Trimbos Report, including the annexures in their confidential counsel opinion dated 19 January 2018 filed with the court?
(j)Why did counsel for Mr Bolitho state in their opinion at para 116 that Mr Bolitho’s solicitors and counsel had been engaged on their usual terms? Do· those terms usually include an arrangement to defer the delivery of invoices and the payment of fees?
(k)Why did counsel for Mr Bolitho state in their opinion that AFPL’s commission was justified by the legal costs it absorbed without informing the court that most of those costs had not been paid (and in circumstances where the Trimbos report, which was referred to in the opinion, stated the costs had been paid, and the summons sought payment of legal costs by way of “reimbursement”)?
(l)Why did Mr Bolitho’s representatives and AFPL permit the Trimbos report and confidential counsel opinion to then be relied upon in the Court of Appeal?
On 6 March 2020, following notification of outstanding disputes between the parties concerning the inspection of documents discovered by the parties, and the inspection of documents produced pursuant to a subpoena directed at Mr Peter Trimbos, a costs consultant engaged by AFPL, the managing judge made orders for the filing and service of evidence and submissions, and referred the disputes to me for hearing and determination. As the disputes are amenable to determination upon affidavit evidence and written submissions, and given the restrictions on community activity imposed as a result of the COVID-19 pandemic, I resolved to determine the disputes without an oral hearing.
The disputes before me are as follows:
(a) Mr O’Bryan objects to the inspection of four documents produced upon subpoena by Mr Peter Trimbos (‘Trimbos documents’). Mr Trimbos is a costs consultant, who provided a series of reports with respect to the reasonableness of the legal costs incurred by Mr Bolitho in support of the application for the approval of the settlement of the primary proceeding, on the grounds that that the Trimbos documents are not responsive to the terms of the subpoena served on Mr Trimbos;
(b) Mr O’Bryan’s claim for privilege over a document discovered by Mr Zita (‘draft response’), which appears to be a compilation of two documents Mr O’Bryan provided to Mr Zita in April 2019 (‘constituent documents’), being his preliminary response to the list of issues prepared by the Contradictor and a research note prepared by him concerning the legal issues associated with the remitter proceeding, in the days after he and Mr Zita had been ordered to file affidavits in response to the questions referred to in paragraph 3 above;
(c) AFPL’s claims for privilege over a large number of communications between Mark Elliott (the now deceased founder and principal of AFPL) or his son Alex Elliott (a lawyer with Elliott Legal, Mr Mark Elliott’s legal firm) and one or more or Mr O’Bryan, Mr Symons and Mr Zita between March 2018 and April 2019 relating to:
(i) an appeal brought by Ms Wendy Botsman, a group member, against the decision of Croft J to approve the settlement of the primary proceeding, which ultimately gave rise to the remitter proceeding (‘Botsman appeal’); and
(ii) a proceeding commenced by AFPL against Ms Botsman (‘AFPL v Botsman’); and
(iii) the remitter proceeding.
Prior to turning to the issues in the current disputes, the issues for determination in the remitter proceeding can be summarised as follows:
(a) the validity and the reasonableness of the legal costs and disbursements sought to be recovered by AFPL for its conduct of the primary proceeding;
(b) the validity and enforceability of the costs agreements between AFPL and the various lawyers acting on behalf of Mr Bolitho in the primary proceeding;
(c) whether those legal costs should be assessed by an independent expert or the Costs Court;
(d) whether a common fund order should be made for the payment of a funding commission to AFPL; and
(e) whether there has been any disentitling conduct on the part of AFPL/Mr Elliott, Mr O’Bryan, Mr Symons and/or Mr Zita/Portfolio Law Pty Ltd by reason of which the Court should exercise its discretion to reduce or disallow AFPL’s claims for commission and/or payment of legal costs.
The Trimbos documents
As noted above, Mr Peter Trimbos is a costs consultant, who prepared several reports in support of an application before Croft J for approval of the legal costs and disbursements incurred by AFPL on behalf of group members in the primary proceeding, being primarily fees charged by Mr O’Bryan, Mr Symons, and Portfolio Law. On 20 November 2019, the Court, at the request of the Contradictor, issued a subpoena directed at Mr Trimbos, which required Mr Trimbos to produce the following documents:
…all documents relating to your reports dated 8 July 2016, 18 August 2016, 4 January 2018 and 12 March 2019 (your reports) and filed in this proceeding. This includes, for the avoidance of doubt:
(1)All covering letters or emails enclosing counsel invoices provided to you for the purposes of preparing your reports.
(2)All documents which record or evidence communications between you and any one or more of Mr Norman O’Bryan AM SC, Mr Michael Symons, Mr Mark Elliott, Mr Alex Elliott, AFPL and Mr Anthony Zita in relation to your reports.
(3)All drafts of your reports, and all correspondence attaching such drafts.
(4)All documents which record or evidence comments made in respect of any such drafts.
Mr O’Bryan objects to the inspection of the Trimbos documents. While in correspondence the solicitors for Mr O’Bryan asserted that the Trimbos documents may be subject to a claim by Mr O’Bryan for legal professional privilege, the objection is now maintained on the basis that the Trimbos documents are not responsive to the subpoena, and ought not have been produced by Mr Trimbos.
Mr O’Bryan submitted as follows:
The scope of the subpoena is clear. It is directed to the preparation of the four reports, including, insofar as may concern Mr O’Bryan, material provided to Mr Trimbos for the preparation for the reports (paragraph 1) and any communications made by Mr O’Bryan about the reports or drafts of them (paragraphs 2-4).
The Trimbos documents are four (brief) emails between Mr O’Bryan and Mr Trimbos dated 29 March 2019 and 1 April 2019, two of which have attachments. Accordingly, the Trimbos documents postdate the reports prepared by Mr Trimbos, the last of which was dated 12 March 2019. The Trimbos documents were made available to the Court for inspection.
The Contradictor submitted that there are significant issues in the remitter proceeding regarding the integrity of Mr Trimbos’ evidence including, among other things, the invoices and fee agreements relied upon by Mr Trimbos in preparing his reports. The Contradictor submitted as follows:
Accordingly, communications between Mr O’Bryan AM SC and Mr Trimbos are highly relevant to the issues in this proceeding. The credibility of both Mr O’Bryan and Mr Trimbos will be in focus at the trial of this proceeding commencing on 27 July 2020. Both will be cross-examined about a range of matters. When they give evidence relevant to the matters raised in the List of Issues pertaining to Mr Trimbos’s reports, it will be important for the Court to have access to all documents relevant to the evidence that they may give so that their evidence may be properly understood and property tested against contemporaneous records and accounts of conversations.
In this context Mr O’Bryan AM SC’s objection falls to be assessed. The Contradictors have not seen the documents that are the subject of his objection. However, it is noteworthy that they are said to be emails dated 29 March 2019 (the day on which Mr O’Bryan AM SC informed the court that he had returned his brief, and the day on which the Court made the 29 March 2019 Affidavit Order) and 1 April 2019 (after Mr O’Bryan AM SC had returned his brief). The emails were sent in the context where questions were ordered to be answered by the court as referred to in paragraph 30 above about the conduct of Mr O’Bryan AM SC and others in connection with Mr Trimbos’s reports.
Those questions are yet to be answered. Mr O’Bryan AM SC has been ordered to file his evidence in the proceeding by 3 April 2020. Presumably, the matters set out above will be addressed in his evidence.
Mr Trimbos will also give evidence at the trial of this proceeding on 27 July 2020 as to the reasonableness of the costs claimed by AFPL. His evidence falls to be assessed in the context set out above and as revealed by the documents on his file, which are the subject of the Trimbos Subpoena.
...
The subpoena requires Mr Trimbos to produce “all documents relating to your reports”, including without limitation “all communications between Mr O’Bryan AM SC and you in relation to your reports”. The subpoena seeks Mr Trimbos’s whole file, similar to an order that was made by Dixon J in Huspeth v Scholastic Cleaning and Consultancy Services Pty Ltd (No 8) requiring an expert to produce his file for inspection where issues arose as to the integrity of his evidence.Critically, no objection was taken to the terms of the subpoena by Mr O’Bryan AM SC at the hearing on 13 November 2019 at which (1) he became a party to the proceeding and (2) the Court granted leave to the Contradictors to issue the subpoena.
There is no time constraint in the subpoena limiting the communications between Mr Trimbos and Mr O’Bryan AM SC in relation to communications between them relating to Mr Trimbos’s reports. More particularly, there is no constraint that limits the subpoena to communications prior to or up to the date of delivery of his reports. The subpoena is, in the Contradictors’ submission, wide enough to cover communications between Mr Trimbos and Mr O’Bryan AM SC relating to the Trimbos Reports after the reports were written. The nature of communications between Mr Trimbos and Mr O’Bryan AM SC is clearly in play, as the matters identified above and in Section D of Annexure A to the List of Issues make plain.
As noted above, the Trimbos documents postdate the preparation of the reports. Accordingly, the question is whether the Trimbos documents record or evidence communications ‘in relation to’ Mr Trimbos’ reports.
Having reviewed the Trimbos documents, I am satisfied that they fall within the scope of the subpoena. I accept that the terms of the subpoena do not confine the period of time for which documents were sought to the period up to and including the preparation of Mr Trimbos’ reports. Further, paragraphs 1 to 4 of the schedule to the subpoena are illustrations of what types of documents the drafter expected might be caught by the subpoena, but do not confine the subpoena, noting that the chapeau to the schedule in the subpoena seeks ‘all documents relating to your reports’. That is, while the subject matter of the documents caught by the subpoena is clear, the scope of the subpoena is expressed very broadly. Further, while the target of the subpoena may have been documents which may arguably have influenced the content of Mr Trimbos’ reports, it is not limited to documents of that nature. Without disclosing too much of the contents of the Trimbos documents, it is apparent from the text of the email from Mr O’Bryan to Mr Trimbos dated 1 April 2019 that the subject matter of the communications between Mr O’Bryan and Mr Trimbos was the same subject matter which was traversed by Mr Trimbos in his reports.
The draft response
The second issue concerns the draft response, which was discovered by Mr Zita of Portfolio Law. The draft response was annexed as a confidential exhibit to an affidavit sworn by Mr O’Bryan on 18 March 2020. Mr O’Bryan submitted that the draft response evidenced documents prepared for the dominant purpose of Mr O’Bryan obtaining legal advice in relation to the remitter proceeding, which are immune from disclosure by reason of both ss 118 and 119 of the Evidence Act 2008 (Vic) (‘Evidence Act’).
In his affidavit, sworn on 18 March 2020, Mr O’Bryan deposed as follows:
After receiving a copy of the Revised List[4], I carefully reviewed it and commenced preparing a series of documents dealing with the legal and factual issues raised in the Revised List. I prepared these documents for the purpose of obtaining legal advice from MinterEllison in relation to the allegations and my response to them.
[4]The list of issues prepared by the Contradictor for the purposes of framing the inquiry to be undertaken in the remitter proceeding.
As part of this exercise, on 18 April 2019, I prepared a research note dealing with a particular question of law raised in the Revised List (research note). I emailed a copy of that research note to MinterEllison on the same day.
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Again as part of the exercise referred to in paragraph 8 above, on or about 21 April 2019, I prepared a document which set out my preliminary responses to the allegations raised by the Contradictor in the Revised List. I emailed a copy of that note to Minter Ellison on the same day (preliminary response document). I continued to work on this document and sent a further version of the preliminary response document to MinterEllison on 28 April 2019.
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At the end of April 2019, I had a discussion with Mr Zita in relation to the allegations made against us in the Revised List. At that stage Mr Zita had not engaged solicitors to act on his behalf. I provided Mr Zita with a copy of the research note and preliminary response document at or about this time. I told Mr Zita that I considered we had common interest privilege in respect of the matters addressed in the documents and that the documents were confidential between us and our legal advisers. I emailed a copy of the preliminary response document to counsel for Mr Zita (Mr Juebner) on 1 May 2019. I may also have sent Mr Juebner a copy of the research note, but I cannot recall for certain and I have not been able to identify any email by which I did so, despite searches.
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My solicitors have provided me with a copy of the document discovered by the Zita Parties which is the subject of my claim of privilege as referred to in paragraphs 2 and 3 above.
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It appears to be an amalgam of the research note and the preliminary response document, with some minor additional notes added. These notes reflect my discussion with Mr Zita at or about the time that these documents were provided to him.
The research note, the preliminary response (referred to in these reasons as the ‘constituent documents‘) and the draft response were provided to the Court for inspection. I infer from Mr O’Bryan’s evidence that the constituent documents were provided to Mr Zita directly, either by email or in person,[5] and the preliminary response was provided by email to Mr Juebner.
[5]Mr O’Bryan did not depose in his affidavit as to how he delivered the constituent documents to Mr Zita. Mr Zita has not discovered any email from Mr O’Bryan to him enclosing either or both of the constituent documents, but given the draft response is a compilation of the constituent documents, it seems that Mr Zita must have had soft copies of the constituent documents in his possession, via either or both of Mr Juebner and Mr O’Bryan.
Mr O’Bryan submitted as follows:
It is clear on the face of the research note and the preliminary response document that they were prepared for the purpose of obtaining legal advice in relation to the litigation. Mr O’Bryan’s explanation of the purpose fortifies that conclusion.
It is also clear that the Draft Response embodies those two documents, and that inspection of it would, within the meaning of ss 118 and 119 of the Evidence Act, “result in disclosure” of confidential communications, and the contents of confidential documents, of the types referred to in the sub-paragraphs of those sections which are set out in paragraphs 12 and 13 above.
Further, Mr O’Bryan submitted that the provision of the constituent documents to Mr Zita did not alter their status as confidential communications, or waive any privilege held by him in the draft response. First, Mr O’Bryan deposed that the constituent documents were provided to Mr Zita on an expressly confidential basis, and in any event, the subject matter of the constituent documents and the circumstances in which they were provided make it clear that they were provided to Mr Zita on a confidential basis (see s 122(5)(a)(i)) of the Evidence Act). Further, Mr Zita was a person with whom Mr O’Bryan had a common interest relating to the remitter proceeding (see s 122(5)(c) of the Evidence Act).
Mr O’Bryan’s submissions referred to the decision of the New South Wales Court of Appeal in Marshall v Prescott,[6] where the Court applied a two-step process for determining whether a common interest exists to communications, as follows:
(a) first, would the documents be privileged in the hands of the party communicating the information; and
(b) secondly, is the relationship between the parties sufficiently close that the transmission of the documents should not be held to be an implied waiver of the privilege?[7]
[6][2013] NSWCA 152.
[7]Ibid, [63] – [64].
Mr O’Bryan submitted that the constituent documents were clearly privileged in his hands. Further, the relationship between him and Mr Zita, and the nature and purpose of the communications between them were such that there could be no implied waiver in the draft response, noting that privilege should not lightly be found to have been waived. In particular:
(1)At the time the documents were provided to Mr Zita, he and Mr O’Bryan were both accused of wrongdoing by the Contradictor arising out of the same matters and had a common interest in the allegations made in the proceeding.
(2)Common to the position of Mr O’Bryan and Mr Zita at the time (and now) is their alleged involvement in the ‘disentitling conduct’. Those allegations stem entirely from their respective roles in the proceeding (senior counsel and solicitor for Mr Bolitho).
(3)Many of the allegations in the Revised List were (and are) made against them jointly.
(4)At the time of the disclosure, both were the subject of a compulsive order requiring responses to some of the matters which were alleged against them in the Revised List.
In their written outline of submissions, the Contradictor submitted the following in relation to the draft response:
(a)The evidence does not establish that the dominant purpose of the Response Document was for Mr O’Bryan to obtain legal advice. The evidence of Mr O’Bryan suggests that at least one of the purposes of preparing the Response Document was for Mr O’Bryan to provide Mr Zita with a version of events relevant to the evidence both had been ordered to give.
(b)Even if the Response Document was otherwise privileged, Mr O’Bryan waived privilege by providing it to Mr Zita.....
(c)Section 125 of the Evidence Act 2008 (Vic) is enlivened. There is compelling evidence of misconduct of the kind alleged by the Contradictors in Annexure A to the Revised List of Issues (Annexure A). Mr O’Bryan has not explained in his affidavit why he gave Mr Zita the Response Document in circumstances where he (a senior counsel) and Mr Zita (a solicitor) had both been ordered by the Court to file their own affidavits. In those circumstances, practice dictates that conferring with one another about matters the subject of their respective affidavits should not occur. It is submitted that the inference that arises is that Mr O’Bryan hoped to align Mr Zita’s evidence with his own. To the extent that the Response Document sought to perpetuate or conceal the misconduct that occurred at the First Approval Application, it is not privileged.
In relation to the question of whether the dominant purpose test has been satisfied, the Contradictor submitted that, in his evidence, Mr O’Bryan did not explain why he provided the constituent documents to Mr Zita. However, given that at the time he provided the constituent documents to Mr Zita, both Mr O’Bryan and Mr Zita had been ordered to file affidavits responding to the questions referred to at paragraph 3 above, the Contradictor submitted that the inference arises that Mr O’Bryan provided Mr Zita with the constituent documents with a view to ensuring that their evidence in relation to these questions was aligned: that is, for a non-privileged purpose.
In relation to the question of whether Mr O’Bryan had waived any privilege in the draft response, the Contradictor submitted that even if the draft response was privileged, Mr O’Bryan had acted inconsistently with the maintenance of the privilege by disclosing the constituent documents to Mr Zita. First, the evidence of Mr O’Bryan to the effect that he told Mr Zita to keep the constituent documents confidential was not corroborated by Mr Zita. Secondly, there was no common interest between Mr O’Bryan and Mr Zita within the meaning of s 122(5) of the Evidence Act, because:
(a) they were not parties to the remitter proceeding at the time: their only interest was as witnesses in the remitter proceeding;
(b) as witnesses, they had no legitimate interest in conferring with each other about the evidence they should give, indeed, the professional conduct rules by which Mr O’Bryan was bound by prohibit such conduct; and
(c) the interests of Mr O’Bryan and Mr Zita were (and are) potentially adverse, given that the evidence shows that Messrs O’Bryan and Elliott were engaged in communications of a ‘troubling’ nature, to which Mr Zita was not privy.
Further, the Contradictor submitted that, even if the Court were to hold that Mr O’Bryan had provided the constituent documents to Mr Zita in confidence, and/or Mr O’Bryan and Mr Zita had a common interest in the remitter proceeding, this was not a complete answer to the question of whether Mr O’Bryan had acted inconsistently with the maintenance of the privilege. In particular, the Contradictor referred to Rule 71 of the Legal Professional Uniform Conduct (Barristers’) Rules 2015 (‘Bar Rules’), which provides as follows:
A barrister must not confer with, or condone another legal practitioner conferring with, more than one lay witness including a party or client at the same time:
(a)about any issue which there are reasonable grounds for the barrister to believe may be contentious at a hearing, and
(b)where such conferral could affect evidence to be given by any of those witnesses,
unless the barrister believes on reasonable grounds that special circumstances require such a conference.
The Contradictor submitted that Mr O’Bryan’s provision of the constituent documents to Mr Zita was inconsistent with the maintenance of privilege over the draft response, in circumstances where Messrs O’Bryan and Zita had been ordered to file affidavits with respect to the subject matter of the draft response, as the provision of the constituent documents had the potential to undermine the integrity of the trial of the remitter proceeding. In order to properly evaluate the evidence of Mr Zita, it is necessary to compare his evidence with the draft response.
In relation to their contention that s 125 of the Evidence Act was enlivened in the current case, the Contradictor observed that:
(a) Section 125 of the Evidence Act is a statutory expression of the principle that privilege does not attach to a communication made for some illegal or improper purpose;
(b) ‘fraud’ for the purpose of s 125 is not confined to actual dishonesty; and
(c) proof of fraud to the civil standard is not required.
The Contradictor submitted as follows:
It is submitted that section 125 is enlivened here. There is compelling evidence of deliberate and dishonest conduct by Mr O’Bryan as alleged in Annexure A to the Revised List, including deliberate overcharging, deliberately misleading an expert witness (Mr Trimbos) whose report was relied upon by the Court in approving the costs the subject of the claim, fabricating documents including a costs agreement that Mr O’Bryan created in December 2017, backdated to 30 May 2016, signed, and sent to Mr Trimbos, and advancing AFPL’s interests at the expense of Mr Bolitho and other group members.
It is submitted that this Court should read the Response Document and consider it in light of the documentary evidence summarized in those paragraphs. In particular, the Court should consider whether there is some prima facie evidence that the Response Document may conceal or perpetuate any of the misconduct alleged by the Contradictors in Annexure A. If so, it should follow that section 125 operates to prevent any claim for privilege.
The Contradictor’s submissions then went on to canvass the alleged misconduct said to have been engaged in by AFPL and Messrs O’Bryan, Symons and Zita, and the documents said to support the allegations made to the effect that they engaged in misconduct in connection with the application for approval of costs and commission with respect to their conduct of the primary proceeding. These allegations are discussed further later in these reasons.
Mr O’Bryan did not file any submissions in reply to the Contradictor’s submissions regarding the draft response.
Accordingly, the issues with respect to the draft response are as follows:
(a) whether Mr O’Bryan has established the requisite dominant purpose for the communications with Mr Zita which are evidenced by the draft response;
(b) whether Mr O’Bryan has waived any privilege in the draft response by providing the constituent documents to Mr Zita;
(c) for the purposes of determining the question posed in (b) above, whether there was a sufficient ‘common interest’ in the outcome of the remitter proceeding between Mr O’Bryan and Mr Zita such as to protect the confidentiality of their communications regarding the issues arising in the remitter proceeding; and
(d) whether there has been any conduct on the part of Mr O’Bryan which brings into operation the terms of s 125 of the Evidence Act?
As there is a substantial overlap between the issue referred to in (d) above concerning Mr O’Bryan’s privilege claim over the draft response and AFPL’s claims for privilege, I will discuss that issue and its resolution later in these reasons.
The following provisions of the Evidence Act are relevant to the current dispute. Section 117 of the Evidence Act provides, among other things, as follows:
Definitions
(1) In this Division—
“client” includes the following—
(a)a person or body who engages a lawyer to provide legal services or who employs a lawyer (including under a contract of service);
(b)an employee or agent of a client;
(c) an employer of a lawyer if the employer is—
(i) the Commonwealth or a State or Territory; or
(ii)a body established by a law of the Commonwealth or a State or Territory;
(d)if, under a law of a State or Territory relating to persons of unsound mind, a manager, committee or person (however described) is for the time being acting in respect of the person, estate or property of a client—a manager, committee or person so acting;
(e) if a client has died—a personal representative of the client;
(f)a successor to the rights and obligations of a client, being rights and obligations in respect of which a confidential communication was made;
“confidential communication” means a communication made in such circumstances that, when it was made—
(a) the person who made it; or
(b) the person to whom it was made—
was under an express or implied obligation not to disclose its contents, whether or not the obligation arises under law;
“confidential document” means a document prepared in such circumstances that, when it was prepared—
(a) the person who prepared it; or
(b) the person for whom it was prepared—
was under an express or implied obligation not to disclose its contents, whether or not the obligation arises under law;
...
Section 118 of the Evidence Act provides as follows:
Legal advice
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 made between the client and a lawyer; or
(b)a confidential communication made between 2 or more lawyers acting for the client; or
(c)the contents of a confidential document (whether delivered or not) prepared by the client, lawyer or another person—
for the dominant purpose of the lawyer, or one or more of the lawyers, providing legal advice to the client.
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.
Section 122 of the Evidence Act 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).
In my view, having regard to the evidence of Mr O’Bryan, the terms of s 118 and 119 of the Evidence Act, the contents of the draft response and the constituent documents, and the circumstances in which they were created, the draft response is patently privileged, in that requiring production of the draft response would result in the disclosure of the contents of confidential documents prepared by Mr O’Bryan for the dominant purpose of Mr O’Bryan’s lawyers providing him legal advice, or with professional legal services concerning the remitter proceeding. While at the time of the preparation of the constituent documents Mr O’Bryan was not a party to the remitter proceeding, as events transpired, Mr O’Bryan and his lawyers may well have reasonably anticipated at that time that he might become a party to the remitter proceeding.
However, that is not necessarily the end of the matter. While I accept that the dominant purpose of the preparation of the constituent documents was for Mr O’Bryan to receive professional services from his solicitors in connection with litigation or anticipated litigation, it is trite law that legal professional privilege protects communications, not documents.[8] Accordingly, in order to protect from disclosure the communications by which Mr O’Bryan forwarded the constituent documents (such as the covering email from Mr O’Bryan to Mr Juebner (Mr Zita’s counsel) which is exhibit ‘NOB-3’ to Mr O’Bryan’s affidavit) Mr O’Bryan (or Mr Zita) would need to establish that the purpose of the provision of the constituent documents to Mr Zita was for a privileged purpose.
[8]See Commissioner of the Australian Federal Police v Propend (1997) 188 CLR 501.
In my view, any communication from Mr O’Bryan to Mr Zita (or Mr Zita’s lawyers) would not be privileged in Mr O’Bryan’s hands, because I am not satisfied that the communication was for the purpose of Mr O’Bryan receiving professional legal services with respect to the remitter proceeding. It is not necessary for me to reach a conclusion that Mr O’Bryan gave Mr Zita the constituent documents in an attempt to influence his evidence: indeed, he may have done so to assist Mr Zita and his newly briefed counsel get up to speed on the issues in the remitter proceeding. These communications may well be privileged in Mr Zita’s hands, but to the best of my knowledge Mr Zita has not discovered (or claimed any privilege over) these communications.
However, even if Mr O’Bryan cannot claim any privilege over any emails sent by him to Mr Zita and/or Mr Juebner (subject to the terms of s 122(5) of the Evidence Act), because he has not established that the dominant purpose of the communication was for a privileged purpose, the question remains as to whether the constituent documents, being prepared for the dominant purpose of the remitter proceeding, are severable from the non-privileged communications,[9] so that confidentiality could be maintained over the constituent documents. While I have not received any submissions on that point, it would seem to me that it is likely that the constituent documents would be severable, such that they could remain confidential.
[9]See, for example, Citicorp Aust Ltd v Cirillo [2000] SASC 219 [16], [18]; Optus Communications Pty Ltd v Telstra Corporation Ltd [1995] FCA 1215.
Assuming, for present purposes, that the constituent documents are severable from the communication or communications conveying the constituent documents, the question remains whether, by reason of the terms of s 122 or 125 of the Evidence Act,[10] Mr O’Bryan has waived or lost any privilege he holds in the draft response.
[10]Section 131A of the Evidence Act provides that these provisions apply to pre-trial disclosure processes such as discovery.
The authorities make it clear that the determination of whether there has been a waiver of privilege by inconsistent conduct is dependent upon the facts and circumstances of each case.[11] While such an observation is generally made in the context of disputes as to whether there has been an ‘issue waiver’, rather than the current case, which is largely an application involving an allegation of ‘disclosure waiver’, the particular facts and circumstances of the current case are relevant to question of whether the provision of the constituent documents to Mr Zita was made in confidential circumstances, whether there was a common interest between Messrs O’Bryan and Zita, and/or whether there had been other conduct on the part of Mr O’Bryan inconsistent with the maintenance of the privilege.
[11]See, for example, Viterra Malt Pty Ltd v Cargill Australia Ltd [2018] VSCA 118 [44], [72].
Section 122(5) of the Evidence Act provides that a client or a party is not taken to have acted inconsistently with the maintenance of privilege merely because:
(a) the substance of the evidence has been disclosed in the course of making a confidential communication; or
(b) the person to whom the discourse was made has a common interest relating to a legal proceeding.
In my view, the evidence of Mr O’Bryan, while uncorroborated, establishes that the constituent documents were provided in circumstances where Mr Zita was under an obligation to keep the contents of the constituent documents confidential. While Mr Zita has not given any evidence about any conversation with Mr O’Bryan to that effect, Mr O’Bryan’s evidence in that regard is inherently plausible. First, Mr O’Bryan is an experienced senior counsel, having practiced for many decades in the civil jurisdiction. I can infer that he would be well aware of the risks associated with disclosing his otherwise privileged work product to a third party. For reasons which follow, I do not consider that there is necessarily a common interest between Mr O’Bryan and Mr Zita in relation to the remitter proceeding, but it is not an unreasonable view to arrive at, or an unreasonable assertion for Mr O’Bryan to make. I accept Mr O’Bryan’s evidence that he told Mr Zita that he was providing the constituent documents to him in confidence, and I can infer that Mr Zita would have understood that the constituent documents were provided to him on a confidential basis.
However, as noted above, I do not accept that there was a sufficient common interest between Messrs O’Bryan and Zita with respect to the outcome of the remitter proceeding to attract the operation of s 122(5)(c) of the Evidence Act.
An authoritative statement of the concept of common interest privilege is to be found in the decision of Barrett JA of the New South Wales Court of Appeal in Marshall v Pescott,[12] as follows:
Normally, disclosure of protected content by the holder of the privilege causes the privilege to be lost. This is because of the inherent inconsistency between failing to safeguard the confidentiality essential to privilege and, at the same time, seeking to maintain the immunity that the privilege confers. Where there is, in relation to actual or pending litigation (or its course or outcome), a commonality of interest between, on the one hand, a party to the litigation who is also the holder of the privilege and, on the other, the person to whom disclosure of the privileged content is made by that party for a purpose relevant to that litigation, the commonality of interest supplies a rational basis for inferring an intention that the party's confidentiality should continue and the party's privilege should be maintained, even though the subject matter of the disclosure has passed into the hands of the other person.[13]
[12][2013] NSWCA 152.
[13]Ibid [65].
Barrett JA also stated that:
A presently existing common interest will not be destroyed by the circumstance that there is potential for a future divergence of interests.[14]
[14]Ibid [62].
The class of relationships which might give rise to a common interest is not rigidly defined,[15] but the common interest in the outcome of litigation of both the disclosing party and the party to whom the evidence is disclosed must be direct, not indirect.[16] Accordingly, a creditor of a party has been held not to have a common interest in the litigation with that party.
[15]Todd v Novotny [1999] WASC 28
[16]Spotless Group Ltd v Premier Building & Consulting Pty Ltd (2006) 16 VR 1.
The current case is arguably analogous with the circumstances considered in IO Group Inc v Prestige Club Australia Pty Ltd (No 3),[17] where separately represented defendants were found to have a common interest which protected from disclosure communications between their solicitors, as they had common defences, and no cross-claims had been filed between them. As observed by counsel for Mr O’Bryan in their submissions, both Mr O’Bryan and Mr Zita were accused of wrongdoing by the Contradictor arising out of the same events, and to have been parties to the same ‘disentitling conduct’, with many of the allegations having been made jointly. And, while I am not privy to the contractual relationships between AFPL and each of Mr O’Bryan and Portfolio Law (that is, whether AFPL is liable to pay them regardless of any recovery from the settlement funds through the remitter proceeding), it may well be that the practical effect of any finding of the Court that would result in a reduction in the allowance for Mr Bolitho’s legal costs may reduce the funds available to meet AFPL’s obligations to Mr O’Bryan and Portfolio Law, such that they have a common financial interest in the outcome of the proceeding.
[17][2008] FCA 1223.
However, having considered the list of issues, the particulars of disentitling conduct referred to in the annexure to the list of issues, and the documents annexed to Mr Phillips’ affidavits, it seems to me that there is likely to be, or at least not an insignificant prospect that there will be, a divergence of interests between Mr O’Bryan and Mr Zita in the remitter proceeding. Assuming, for present purposes only, that there is some substance to the allegations, there are substantially more allegations directed at Mr O’Bryan than are directed at Mr Zita and his firm, including allegations of overcharging, preparing misleading documents, and allegations to the effect that Mr O’Bryan insisted upon there being specific terms included in the settlement agreement in the primary proceeding for the benefit of AFPL and Mr Bolitho’s legal team.
While Mr Zita may have been a beneficiary of any disentitling conduct, and presumably is alleged to have taken no steps to restrain any disentitling conduct, it is tolerably clear that the primary targets of the Contradictor in the remitter proceeding are Mr Elliott and Mr O’Bryan, with Mr Zita’s role in any disentitling conduct said to be somewhat tangential. Further, I understand that while Portfolio Law’s legal costs, at least up until late 2017, have been paid by AFPL, a substantial part of Mr O’Bryan’s fees have not been paid, arguably leaving Mr O’Bryan at greater risk of financial loss by reason of the remitter proceeding. It may well be that if some or all of the allegations of disentitling conduct are made out, or look like being made out at the trial of the remitter proceeding, there may well be an incentive for Mr Zita to take a different approach to the other defendants in the remitter proceeding, and he may well be advised to do so. The interests of Mr O’Bryan and Mr Zita in the remitter proceeding may overlap, but they do not align.
Accordingly, while I accept that s 122(5)(a)(i) of the Evidence Act protects Mr O’Bryan’s right to object to disclosure of the draft response, s 122(5)(c) of the Evidence Act is not enlivened.
The question which remains is whether there is any other conduct on the part of Mr O’Bryan which is inconsistent with his maintenance of the privilege in the draft response. The Contradictor relied upon the fact that at the time Mr O’Bryan gave the constituent documents to Mr Zita, Mr O’Bryan and Mr Zita were only witnesses in the remitter proceeding, not parties. The Contradictor relied upon the provisions of the Bar Rules which prohibit barristers conferring with more than one lay witness at a time where the evidence could be contentious, and where that conferral could affect the evidence to given by the witness.
The Contradictor did not refer to any authority where the question of whether by providing to a witness a draft proof of evidence (or like document) of another witness in the same proceeding is inconsistent conduct for the purposes of s 122(2) of the Evidence Act. However, the Contradictor relied upon the statement of the NSW Court of Appeal in Day v Perisher Blue Pty Ltd[18] in support of its contention that:
in order to properly understand and evaluate the evidence to be given by Mr Zita in his affidavit it is necessary to compare his evidence with the draft response.
[18][2005] NSWCA 110.
In Day v Perisher Blue Pty Ltd,[19] the NSW Court of Appeal upheld an appeal against a decision of a District Court judge in a workplace injury proceeding and ordered a new trial, on the grounds that the trial judge had accepted the evidence of the respondent’s witnesses, in circumstances where the Court found that the respondent’s solicitors had conferred with multiple witnesses together, stating as follows.
It has long been regarded as proper practice for legal practitioners to take proofs of evidence from lay witnesses separately and to encourage such witnesses not to discuss their evidence with others and particularly not with other potential witnesses. For various reasons, witnesses do not always abide by those instructions and their credibility suffers accordingly. In the present case, it is hard to see that the intention of the teleconference with witnesses discussing amongst themselves the evidence that they would give was for any reason other than to ensure, so far as possible, that in giving evidence the defendant's witnesses would all speak with one voice about the events that occurred. Thus, the evidence of one about a particular matter which was in fact true might be overborne by what that witness heard several others say which, as it happened, was not true. This seriously undermines the process by which evidence is taken. What was done was improper.
[19]Ibid.
The Contradictor submitted that, by providing the constituent documents to Mr Zita and his counsel, Mr O’Bryan has, using the language of Allsop J in DSE (Holdings) Pty Ltd v Intertan Inc,[20] engaged in conduct which ‘laid open to scrutiny’ the otherwise privileged communication.
[20](2003) 203 ALR 348.
Section 122(2) of the Evidence Act restates the common law position regarding waiver, as stated by the High Court in Mann v Carnell.[21] The test focuses upon the inconsistency of the privilege holder’s conduct. The question of whether it may be unfair to allow Mr O’Bryan to maintain the privilege (because, say, the Contradictor is deprived of an opportunity to cross-examine Mr Zita about the extent to which his evidence mirrored or departed from Mr O’Bryan’s version of events in the preliminary response) will inform, but will not be determinative of the question of whether the necessary inconsistency arises:
[21](1999) 201 CLR 1
In my view, while there is no authority directly on this point, Mr O’Bryan’s conduct in providing, what is in effect, a draft witness statement or outline of evidence to another witness, is conduct inconsistent with the maintenance of confidentiality in that otherwise privileged communication. It is not necessary for me to reach a conclusion that Mr O’Bryan intended that Mr Zita would adopt what was set out in the preliminary response: rather, what renders his conduct inconsistent with the maintenance of confidentiality is the possibility that Mr Zita’s evidence might be influenced by having reviewed Mr O’Bryan’s version of events.
It seems to me the position of the preliminary response in the current case is analogous to the position of letters of instruction and other privileged documents provided to an expert witness for the purposes of preparing a report. While the client on whose behalf the expert has been instructed is entitled to maintain confidentiality in its solicitors’ letter of instructions prior to the service of an expert report, the act of filing and serving the expert report may waive any privilege the client has in the documents relied upon by the expert witness in preparing his or her report, the rationale being that, once an expert report is deployed for forensic advantage, that deployment is inconsistent with the maintenance of privilege in the documents relied upon by the expert witness in his or her reports.[22] My view that the provision of a draft witness statement or like documents to another witness may be conduct inconsistent with the maintenance of the privilege in that draft witness statement is bolstered by the terms of s 122(6) of the Evidence Act, which confirms that documents used by a witness to revive his or her memory are not protected by legal professional privilege. It is difficult to see a material difference between a scenario in which Mr Zita used the preliminary response document to refresh his memory prior to giving evidence in court, and the current case, when Mr Zita has had access to the preliminary response prior to preparing his affidavit for the purpose of the forthcoming trial.
[22]See Australian Securities and Investment Commission v Southcorp Limited (2003) 46 ACSR 438 [4]-[5]; Attorney‑General (NT) v Maurice (1986) 161 CLR 475; Goldberg v Ng (1995) 185 CLR 83; NewCap Reinsurance Corp Ltd (in liq) v Renaissance Reinsurance Ltd [2007] NSWSC 258; Dingwall v Commonwealth (1992) 39 FCR 521; AWB v Cole [2006] FCA 1234 [168]-[178]; Lovegrove Turf Services Pty Ltd v Minister for Education [2003] WASC 213.
It is not necessary for me to conclude that in all circumstances, the provision of a draft affidavit, outline of evidence, or witness statement of one witness to another witness will necessarily amount to a waiver of privilege on the part of the client commissioning the evidence. For example, a party who is also a witness may be provided with a draft witness statement by another person regarding an entirely separate aspect of a transaction or dispute, for a purpose unrelated to informing the evidence that party might give at trial, such as for the purpose of obtaining advice on the strengths and weaknesses of their case. However, in the current case, the circumstances are such that there is a relevant inconsistency in Mr O’Bryan providing the preliminary response to Mr Zita.
Considering the particular circumstances of the current case, I note the following relevant matters:
(a) unlike in an ordinary civil proceeding, the orders for the filing of evidence on behalf of AFPL are very focussed and specific: that is, they seek responses to specific questions, rather than being cast in broad terms, such as ‘any evidence upon which a party intends to rely’. Accordingly, the preliminary response addresses precisely the questions Mr Zita will be required to address in his affidavit;
(b) Mr Bolitho’s legal team is accused of acting in concert with each other, and with AFPL, in breach of their obligations to Mr Bolitho, and other group members;
(c) the knowledge, intentions, and state of mind generally of each of the members of Mr Bolitho’s legal team and Mr Elliott are likely to be central issues in the remitter proceeding. While the ‘centrality’ of an issue is not determinative of the question of whether there has been a waiver of privilege,[23] it is a relevant consideration;
(d) there may be an element of forensic unfairness in the event that Mr Zita gives evidence at the remitter proceeding, and the Contradictor is unable to fully test the extent to which Mr Zita’s evidence has been influenced by the contents of the preliminary response; and
(e) while it appears that it is anticipated that Mr Zita will file and serve an affidavit, it appears that he has not yet done so.[24]
[23]See Viterra Malt Pty Ltd v Cargill Australia Ltd [2018] VSCA 118 [75].
[24]I understand that the members of Mr Bolitho’s legal team are due to file their evidence on 8 May 2020.
The matters referred to in paragraphs (a) to (d) above all point to the conduct of Mr O’Bryan as being inconsistent with the maintenance of confidentiality in the preliminary response. However, exploring further the analogy between the current case and the cases concerning the question of whether a party has waived privilege by filing and serving an expert report prepared by a witness who had been provided with privileged communications, it should be noted that waiver does not occur in every case. As noted by White J in New Cap Reinsurance Corp Ltd (in liq) v Renaissance Reinsurance Ltd[25], referring to the decision of the High Court in Attorney-General (NT) v Maurice [26]:
I have come to the view, upon a close consideration of the judgments in Maurice’s case that it cannot be regarded as authority for a wide principle that, whenever documents are sent to a potential witness as part of material being placed before him in order that he may provide a report of an expert kind to be used as evidence in a case, that those documents, ipso facto, although they had the protection of legal professional privilege, necessarily would lose it because of the doctrine of waiver. Maurice’s case does not go as far as that. It requires, certainly, that there be an indication that the documents were used in the preparation of the evidentiary document in a way that could be said to influence the content of that document.
[25][2007] NSWSC 258.
[26](1986) 161 CLR 475
Similarly, in Dingwall v Commonwealth of Australia,[27] Foster J said, also referring to the decision of the High Court in Attorney-General (NT) v Maurice:[28]
The question is not merely whether it could be said that the privileged materials were used in such a way that they could be said to influence the content of the report, but whether it could be said that they influenced the content of the report in such a way that the use or service of the report would be inconsistent with maintaining the privilege in those materials, such as, where it would be unfair for the party to rely on the report without disclosure of those materials. Where an expert’s report is submitted to a party’s legal advisers so as to be put into a form which will ensure that it is admissible, it can be said that the privileged communications between the expert and the lawyers have influenced the content of the report, in the sense of its form, although not in the sense of the formulation of the substantive opinions expressed by the expert. Likewise, privileged communications between an expert and the party’s lawyers whereby material information is provided to the expert in the form of assumptions or documents may well influence the content of the report. However, an expert’s report is required to state what material and assumptions are relied on. Use of a final report, which refers to such materials and assumptions, is not inconsistent with maintaining confidentiality in the communications which produced the final product.[29]
[27](1992) 39 FLR 521.
[28](1986) 161 CLR 475.
[29](1992) 39 FCR 521, 524.
Once again then, the issue as to whether the filing and service of evidence waives any privilege in any underlying privileged communications is a matter of evaluation and judgment, to be determined on a case by case basis. Of course, it is difficult to make such an evaluative judgment prior to the filing and service of any affidavit by Mr Zita, and perhaps, before Mr Zita is cross-examined about how he came to prepare his evidence. Mere provision of privileged material to an expert witness cannot give rise to an implied waiver of privilege.[30] Rather, it is the conduct of the privilege holder in relying upon the evidence of the witness which has been informed by or has been influenced by the privileged communication.
[30]Ibid.
The necessity of any waiver to be effected by the privilege holder (in this case, Mr O’Bryan) also illustrates the limitations of the analogy between the current case and cases involving the provision of instructions to expert witnesses. In a case involving expert witnesses, the privilege holder has some control over whether to complete the course of conduct amounting to waiver: that is, whether to serve the report and call the witness to give evidence. For example, a party may, through their solicitor, instruct an expert and provide them with privileged documents, but choose not to call that expert and rely upon their report. In those circumstances, there will be no waiver of privilege on the part of the privilege holder. In the current case, Mr O’Bryan has no control over whether Mr Zita files and serves an affidavit in the remitter proceeding, as Mr Zita is a party to the proceeding, and is separately represented.
The fact that Mr O’Bryan cannot control whether Mr Zita gives evidence in the remitter proceeding does not preclude there being a positive answer to the question of whether, by providing a copy of the preliminary response to Mr Zita, Mr O’Bryan has acted inconsistently with the maintenance of the privilege. Rather, it highlights the risk to which Mr O’Bryan is exposed in circumstances where he provided an otherwise privileged document to another witness whose participation in the remitter proceeding is not within the control of Mr O’Bryan, and where Mr O’Bryan cannot control the use to which Mr Zita may put the preliminary response in preparing his own evidence. Accordingly, Mr O’Bryan, in providing the preliminary response to Mr Zita, has in effect empowered Mr Zita to complete the course of inconsistent conduct which gives rise to a waiver of privilege.
The reasoning above raises the question of timing: given that Mr Zita has not yet filed his evidence, the question arises whether it is necessary to allow inspection of the preliminary response now? Given that the evidence of Mr O’Bryan and Mr Zita has been directed at addressing the questions referred to in paragraph 3 of these reasons, I can infer that the subject matter of Mr Zita’s evidence is likely to traverse the same ground as Mr O’Bryan’s evidence. However, it seems to me to be appropriate in the circumstances to defer inspection of the preliminary response until Mr Zita has filed his affidavit (or, has confirmed that he will not file any affidavit, which seems to me to be unlikely, but theoretically possible), and I will seek submissions from the parties as to the appropriate orders to be made upon this part of the application to give effect to my reasoning.
Finally, I cannot see how Mr O’Bryan providing Mr Zita with the research note amounts to conduct inconsistent with the maintenance of the privilege. The research note represents no more than Mr O’Bryan’s opinion as to some of the legal issues in the remitter proceeding: it cannot be relevant to the evidence to be given by Mr Zita. Accordingly, on the assumption that the privileged parts of the draft response are severable from the communication by which Mr O’Bryan provided Mr Zita and/or Mr Jeubner with the constituent documents are severable, the research note may continue to be withheld from inspection.
AFPL’s Claims
The third issue concerns the privilege claims made by AFPL over documents discovered by Mr Zita of Portfolio Law (‘Zita/Portfolio Law documents’), Mr O’Bryan, and Mr Symons (‘challenged documents’).
AFPL’s submissions made the following observations regarding the applicable principles governing AFPL’s claims for privilege over the challenged documents:
(a) the onus of proving privilege may be met in different ways;
(b) the Court should not hesitate to inspect the claimed documents to satisfy itself that the privilege has been properly claimed;
(c) section 119(b) of the Evidence Act extends to documents prepared by third parties for the relevant dominant purpose; and
(d) a common interest in the outcome of the litigation is sufficient for the purpose s 122(5) of the Evidence Act, and that common interest can include a financial interest in the outcome of the litigation.
In relation to the Zita/Portfolio Law documents, AFPL noted that it appears that some redactions appear to have been made by Mr Zita to conceal confidential information concerning other clients of Portfolio Law. The other redactions for which privilege has been claimed concern other class action proceedings involving Mr Zita, Portfolio Law, and either AFPL or Elliott Legal apart from the primary proceeding. [31]
[31]Portfolio Law claims privilege over the information concealed by these redactions, along with a File Management spreadsheet. The Contradictor accepted these claims, and nothing further needs to be said about the Zita/Portfolio Law documents.
The challenged documents discovered by Mr O’Bryan and Mr Symons fall into the following categories:
(a) documents seeking the views of Mr O’Bryan and/or Mr Symons in respect of AFPL v Botsman;
(b) documents providing the views of Mr O’Bryan and/or Mr Symons in respect of AFPL v Botsman;
(c) other exchanges of views regarding AFPL v Botsman;
(d) documents concerning the Botsman appeal; and
(e) documents concerning the remitter proceeding.
AFPL relied upon the unsworn affidavits of its solicitors, John Mengolian and Lara O’Rorke of Arnold Bloch Leibler (‘ABL’) dated 25 March 2020.[32]
[32]The unsworn affidavits of Mr Mengolian and Ms O’Rorke were accepted on the basis of an undertaking by Mr Mengolian that particulars of jurat will be provided once available, by reason of the restrictions on community movement imposed by reason of the COVID-19 pandemic.
In her affidavit, Ms O’Rorke exhibited an electronic file containing the challenged documents, and deposed as follows:
On 29 March 2018 AFPL commenced proceedings against Mrs Botsman in the Supreme Court of Victoria seeking an injunction restraining her from proceeding with an application for leave to appeal from approval orders made by Croft J and damages on the grounds that she had breached a funding agreement with AFPL (AFPL v Botsman).
Based on my review of the Documents, during the period from 20 March 2018 to the commencement of AFPL v Botsman on 29 March 2018, and then after the commencement of AFPL v Botsman up until the hearing and determination of that proceeding on 6 September 2018 and then the application for leave to appeal the trial judge’s decision in that proceeding on 14 January 2019:
(a)AFPL had confidential communications with the legal team for Mr Bolitho (comprising Mr Zita / Portfolio Law as solicitors, Mr O’Bryan as Senior Counsel and Mr Symons as Junior Counsel) for the dominant purpose of AFPL being provided with professional legal services and advice (by ABL, Mr Horgan QC and Mr Tran of Counsel) in relation to AFPL v Botsman; and
(b)a number of the communications referred to in the preceding subparagraph (a) were made in, or comprise, emails from Mark Elliott of AFPL to Mr Zita of Portfolio Law, Mr O’Bryan and/or Mr Symons (in their capacity as the legal representatives for Mr Bolitho) which:
(i)forward or attach emails from ABL, Mr Horgan QC or Mr Tran of Counsel;
(ii)refer to advice from ABL or Mr Horgan QC or Mr Tran of Counsel;
(iii)attach documents prepared by ABL, Mr Horgan QC or Mr Tran of Counsel; or
(iv)attach documents showing tracked changes made by ABL, Mr Horgan QC or Mr Tran of Counsel,
and which, in my professional opinion, were prepared or made for the dominant purpose of ABL, Mr Horgan QC or Mr Tran of Counsel providing professional legal services to AFPL in relation to AFPL v Botsman.
Ms O’Rorke deposed that eleven of the Zita/Portfolio Law documents and one document discovered by Mr O’Bryan relate to one or more of several class actions unconnected with the primary proceeding or the remitter proceeding, which do not fall within the scope of the discovery orders made on 20 December 2019.[33]
[33]See footnote 31 above.
Ms O’Rorke also deposed as follows:
Mr Symons’ list of documents dated 12 February 2020 lists a number of emails and documents exchanged between AFPL on the one hand, and Mr Symons, Mr O’Bryan and/or Mr Zita / Portfolio Law on the other, in connection with the Remitter during the period from 4 December 2018 to 6 April 2019 which:
(a) forward emails from ABL or Mr Horgan QC;
(b) refer to advice from ABL or Mr Horgan QC;
(c)attach documents prepared by ABL, Mr Horgan QC or Mr Christopher Tran of Counsel; and
(d)attach documents showing tracked changes made by ABL, Mr Horgan QC or Mr Tran of Counsel,
and which, in my professional opinion, were prepared for the dominant purpose of ABL, Mr Horgan QC or Mr Tran of Counsel providing professional legal services to AFPL in relation to the Remitter.
In his affidavit, Mr Mengolian deposed to the background to AFPL v Botsman, which was a proceeding issued on 29 March 2018 to restrain Ms Wendy Botsman, a group member, from breaching the terms of her litigation funding agreement with AFPL by bringing the Botsman appeal. The representative plaintiff, Mr Bolitho, was a party to the Botsman appeal. AFPL’s application in AFPL v Botsman was dismissed by Robson J on 6 September 2018, on the basis that AFPL had waived its rights under the litigation funding agreement by not challenging Ms Botsman’s right to object to the settlement of the primary proceeding. An application by AFPL for leave to appeal was dismissed by Court of Appeal on 14 January 2019, with no order as to costs.
Mr Mengolian deposed as follows:
I am informed by Ms O’Rorke, and I understand from email correspondence that I have reviewed during the course of this proceeding, that during the period from 20 March 2018 to the commencement of AFPL v Botsman on 29 March 2018, and then after the commencement of AFPL v Botsman up until the hearing and determination of that proceeding on 6 September 2018 and then the application for leave to appeal the trial judge’s decision in that proceeding on 14 January 2019:
(a)AFPL had confidential communications with the legal team for Mr Bolitho (comprising Portfolio Law, Mr O’Bryan as Senior Counsel and Mr Symons as Junior Counsel) for the dominant purpose of AFPL being provided with professional legal services and advice (by ABL, Mr Horgan QC and Mr Tran of Counsel) in relation to AFPL v Botsman; and
(b)a number of the communications referred to in the preceding subparagraph were made in, or comprise, emails from Mark Elliott of AFPL to Mr Zita of Portfolio Law, Mr O’Bryan and/or Mr Symons (in their capacity as the legal representatives for Mr Bolitho) which:
(i)forward or attach emails from ABL, Mr Horgan QC or Mr Tran of Counsel;
(ii)refer to advice from ABL or Mr Horgan QC or Mr Tran of Counsel;
(iii)attach documents prepared by ABL, Mr Horgan QC or Mr Tran of Counsel; or
(iv)attach documents showing tracked changes made by ABL, Mr Horgan QC or Mr Tran of Counsel,
and I verily believe (on the basis of my review of emails, and advice and information provided to me by Ms O’Rorke regarding the content of the Documents) that those documents were prepared and the communications were made for the dominant purpose of ABL, Mr Horgan QC or Mr Tran of Counsel providing professional legal services to AFPL in relation to AFPL v Botsman.
In my professional opinion, the communications and documents described in the preceding paragraph are:
(a) privileged under:
(i)section 119(1) of the Evidence Act 2008(Vic) in respect of AFPL v Botsman; and/or
(ii)section 118 of the Evidence Act 2008 (Vic), insofar as the communications or documents record confidential communications between ABL, Mr Horgan QC, Mr Tran of Counsel and representatives of AFPL made for the dominant purpose of ABL, Mr Horgan QC and/or Mr Tran providing legal advice to AFPL; and
(b)for the reasons referred to in the preceding paragraph, were made or provided on a confidential basis and on AFPL’s understanding and belief that, at the time of preparation, provision or making of the documents and communications:
(i)AFPL and Mr Bolitho (the client of Portfolio Law, Mr O’Bryan AM SC and Mr Symons) shared a common interest in the outcome of the Botsman Appeal and the AFPL v Botsman proceeding, namely, ensuring that the settlement with TrustCo was not overturned; and
(ii)AFPL understood and made the communications, and provided the documents, on the basis that Mr Bolitho had a contractual obligation under the LFA to keep all communications and documents exchanged between him, his lawyers and AFPL confidential and legally privileged.
Mr Mengolian also deposed as to the terms of the litigation funding agreement between AFPL and Mr Bolitho, which contained a term by which the parties acknowledged that all communications between AFPL, Mr Bolitho, and the lawyers representing the group members in the primary proceeding are confidential communications within the meaning of the Evidence Act.
Mr Mengolian also deposed as to the background facts giving rise to the communications between AFPL, its lawyers (ABL and Messrs Horgan and Tran), and the members of Mr Bolitho’s legal team (Messrs O’Bryan and Symons, and Mr Zita) regarding the key steps taken, or to be taken, by AFPL in relation to the remitter proceeding, including updates from ABL, which he believed were prepared for the dominant purpose of the remitter proceeding. Mr Mengolian deposed as follows:
On 16 April 2019 the Contradictor served the parties to the Remitter with a document providing particulars of alleged conduct that is said by the Contradictor to disentitle AFPL from payment of its legal costs and disbursement and its funding commission.
Since 5 February 2019, there have been a number of directions hearings and hearings of interlocutory applications in the Remitter.
On 13 February 2019 and 8 March 2019, AFPL and Mr Bolitho filed and served joint lists of discoverable documents.
On or about 29 March 2019 Mr O’Bryan returned his brief to act for Mr Bolitho in this proceeding, and some time after that (on dates I do not recall and cannot readily ascertain), Mr Symons also returned his brief and Mr Zita / Portfolio Law ceased to act for Mr Bolitho in this proceeding.
On or about 17 April 2019, I became aware from email correspondence from Corrs, King & Collins and Minter Ellison that King & Collins had been engaged to act for Mr Symons in the Remitter and that Minter Ellison had been engaged to act for Mr O’Bryan in the Remitter.
On or about 24 May 2019 I was informed by an email from Colin Biggers & Paisley that Colin Biggers & Paisley had been engaged to act for Mr Zita / Portfolio Law.
I am informed by Ms O’Rorke that Mr Symons’ list of documents dated 12 February 2020 lists a number of emails and documents exchanged between AFPL on the one hand, and Mr Symons, Mr O’Bryan and/or Mr Zita / Portfolio Law on the other hand, in connection with the Remitter during the period from 4 December 2018 to 6 April 2019 which:
(a) forward emails from ABL or Mr Horgan QC;
(b) refer to advice from ABL or Mr Horgan QC;
(c)attach documents prepared by ABL, Mr Horgan QC or Mr Tran of Counsel; and
(d)attach documents showing tracked changes made by ABL, Mr Horgan QC or Mr Tran of Counsel, and, in her professional opinion, were prepared for the dominant purpose of ABL, Mr Horgan QC or Mr Tran of Counsel providing professional legal services to AFPL in relation to the Remitter.
It was not necessary for Elliott J to determine whether the definition of ‘fraud’ within s 125 of the Evidence Act extended, as held by Kyrou J in Amcor Ltd v Barnes,[37] ‘to apply to all categories of fraud known to the law irrespective of whether dishonesty is a necessary element of such a fraud’,[38] rejecting the views expressed in New South Wales that dishonesty is a necessary element of fraud for the purposes of s 125 of the Evidence Act. On the basis of the applicable facts in Talacko v Talacko,[39] it was not necessary for Elliott J to reconcile the conflict in the authorities, stating that:
… I could only differ in approach if I were to form the view that Kyrou J is plainly wrong. Having considered his Honour’s reasons, I form no such view.[40]
[37]Ibid [15]-[16].
[38]Ibid [47].
[39][2014] VSC 328.
[40]Ibid [79].
Recently, in Fonterra Brands Australia Pty Ltd v Bega Cheese Ltd (No 4),[41] I held that a finding that when there were reasonable grounds to find that a party had engaged in unconscionable conduct sufficient to give rise to a right to rectification of an agreement on the grounds of unilateral mistake, the terms of s 125 of the Evidence Act were enlivened.[42] Relevantly, I also observed that the use of the phrase ‘reasonable grounds for finding’ in s 125 of the Evidence Act impliedly abrogates the operation of the Briginshaw[43] principle with respect to findings of fraud and other serious allegations.[44]
[41][2020] VSC 16.
[42]Ibid [58].
[43]Briginshaw v Briginshaw (1938) 60 CLR 336.
[44][2020] VSC 16 [56]. See also Franks v Warringah Council [2010] NSWSC 1318, where RA Hulme J stated at [41] that ‘The threshold for finding a prima facie case [of fraud or abuse of process] is not necessarily a stringent one …’.
In any event, it seems to be accepted by both parties that, in this jurisdiction at least, conduct which falls short of dishonest conduct may be held to be ‘fraud’ for the purpose of attracting the operation of s 125 of the Evidence Act. In my view, the type of conduct said to have been engaged in by AFPL and the members of Mr Bolitho’s legal team could, if proved, amount to fraud within the extended definition within s 125 of the Evidence Act, including conduct which is said to be a breach of fiduciary duty.
In Bolitho v Banksia Securities Ltd (No 6),[45] the managing judge described the allegations against AFPL and members of Mr Bolitho’s legal team as follows:
I am satisfied that serious questions are raised that:
(a)The Special Purpose Receivers undertook a substantial amount of the work necessary to advance the proceedings towards trial, and to the point where a settlement was achieved. For example, in the relevant period, Mr Bolitho’s legal team appears to have filed one 12 page expert report and the SPRs have filed a total of 26 expert reports, witness outlines and witness statements.
(b)The work of the SPRs was not an expense borne by AFPL. That work was funded from the resources available in the liquidation of Banksia that, if not so expended, would have been available for distribution to debenture holders.
(c)There are questions apparent from the face of invoices and fee slips for counsel’s fees that may support an inference that those documents are not what they appear to be, which, in turn, may undermine the reliability of expert opinion from the costs consultant.
(d)Senior counsel appeared to have charged very substantial sums in fees related to ‘reading documents’ that may be inconsistent with other documentary evidence and with the stage that the proceedings had reached when such reading fees were apparently incurred. Significant time also appears to have been charged for work in respect of cross-examination when evidence was yet to be exchanged and the proceedings had not been listed for trial.
[45][2019] VSC 653.
I accept that there is a live issue as to whether the fiduciary duty owed by the lawyers for a lead plaintiff in a class extends to all group members. Nevertheless, I accept that if there is a prima facie case that members of Mr Bolitho’s legal team engaged in serious contravention of their professional and fiduciary duties, and their duties to the Court, as described by the managing judge, then such conduct would amount to ‘fraud’ within the meaning of s 125 of the Evidence Act. Under the common law fraud exception which applied prior to the enactment of the Evidence Act, ‘fraud’ has been held to include:
‘any unlawful or wicked act’ (Annesley v. Anglesea (1743) 17 St. Tr. 1139, at p 1229); ‘a criminal or unlawful proceeding’, ‘fraudulent contrivance, or ... any illegal proceeding’, ‘an improper or an illegal act’, ‘illegality or fraud or trickery’ (Bullivant v. Attorney- General for Victoria (1901) AC 196, at pp 201, 203, 205 and 206); ‘crime or civil fraud’, ‘wrong-doing’, ‘illegal object’ (Varawa v. Howard Smith & Co. Ltd., at pp 386, 387 and 390); ‘any illegal or improper purpose’, ‘to frustrate the processes of law’, ‘taint of illegality’, (Reg. v. Bell; Ex parte Lees [1980] HCA 26; (1980) 146 CLR 141, at pp 145, 156 and 162); ‘crime or fraud or civil offence’ (Baker v. Campbell [1983] HCA 39; (1983) 153 CLR 52, at p 86).[46]
[46]Attorney-General (NT) v Kearney (1985) 158 CLR 500, 528-9.
It is tolerably clear from the passage above that the definition of fraud extends to improper conduct falling short of criminal conduct, and includes conduct of the kind which is the subject matter of the remitter proceeding.
Accordingly, the issues in the current application are whether:
(a) the Contradictor has adduced sufficient evidence to ‘add colour to the charge of fraud’; and
(b) the Contradictor has established that the challenged documents, or any of them, were brought into existence ‘in furtherance of any fraud’.
I shall deal with the position of the draft response later in these reasons.
The Contradictor submitted that a central issue in the remitter proceeding was whether there had been any disentitling conduct on the part of AFPL, Mr O’Bryan, Mr Symons and Mr Zita in connection with AFPL’s application for approval of legal costs and commission. The Contradictor submitted that Mr O’Bryan breached his paramount duty and overarching obligations under the Civil Procedure Act 2010 (Vic) not to mislead or deceive, to act honestly, and to ensure that legal costs were reasonable and proportionate, by:
(a) recovering excessive legal fees, and overstating AFPL’s entitlement to a funding commission;
(b) settling a summons filed with the Court and a notice to group members which referred to AFPL seeking ‘reimbursement’ of legal costs, which had not in fact been paid;
(c) misleading an expert witness (Mr Trimbos) and the Court by fabricating fee agreements and tax invoices;
(d) providing misleading opinions to the Court in respect of the settlement agreement, which, among other things, overstated the true value of AFPL’s claim for its funding commission;
(e) submitting to the Court that there were no conflicts of interest which warranted the appointment of a contradictor;
(f) improper conduct with respect to the Botsman appeal;
(g) serious breaches of fiduciary duty by pursuing his own and/or AFPL’s interests at the expense of group members in procuring Mr Bolitho’s agreement to the settlement of the primary proceeding; and
(h) misleading and deceptive conduct in connection with discovery of backdated invoices and fee agreements.
In response, AFPL submitted as follows:
The contradictors submit at [38]-[39] that the documents over which AFPL has claimed privilege are not privileged by reason of s 125 in that they are said to have been made in furtherance of Mr O’Bryan, Mr Symons and Mr Zita’s breach of fiduciary duty to Mr Bolitho and other group members. There is no suggestion that these are in furtherance of any fraud by AFPL.
It may be accepted that Mr O’Bryan, Mr Symons and Mr Zita owed a fiduciary duty to Mr Bolitho. It is not clear whether they owe a fiduciary duty to group members, or whether Mrs Botsman was their client.
In any event, paragraph [87] of the contradictors’ submissions assumes that it was Mr O’Bryan and Mr Symons who, at the time of AFPL v Botsman, breached their fiduciary duty by assisting AFPL in AFPL v Botsman. But that cannot be so. Until Robson J dismissed AFPL’s proceeding against Mrs Botsman, there was a bona fide and legitimate claim on its part that the Funding Agreement precluded Mrs Botsman’s actions. Robson J did not, for example, award indemnity costs against AFPL. It would be inappropriate to evaluate their conduct as if AFPL v Botsman was not a legitimate claim submitted for judicial determination in the interests of protecting the TrustCo settlement approval from appeal by Mrs Botsman, for the benefit of all debenture holders (including, then, Mr Bolitho and all group members).
Finally, the allegations in paragraph [87] are limited. It is not at all apparent that privilege in all the documents should be waived on this account. For example, there is no credible or logical basis to treat the privilege in any documents concerning the remitter as waived on the basis of those allegations.
In their submissions in rejoinder, the Contradictor submitted as follows (omitting footnotes):
Fiduciary duties are duties of ‘absolute and disinterested loyalty’. A fiduciary must not permit any conflict to arise between their loyalty to their principal and their own personal interests (or duties owed to others).
Knowing participation in a dishonest and fraudulent breach of fiduciary duty includes knowingly assisting the fiduciary in the execution of a ‘dishonest and fraudulent design’ on the part of the fiduciary to engage in the conduct that is in breach of fiduciary duty. The requisite element of dishonesty and fraud on the part of the fiduciary is met where the conduct which constitutes the breach transgresses ordinary standards of honest behaviour. Correspondingly, the requisite element of knowledge on the part of the participant is met where the participant has knowledge of circumstances which would indicate the fact of the dishonesty on the part of the fiduciary to an honest and reasonable person.
The Contradictors allege that the conduct of the Bolitho Lawyers transgressed ordinary standards of honest behaviour, and all the more alarmingly so when one remembers that those fiduciaries are officers of the Court. The Contradictors allege that AFPL had sufficient knowledge of circumstances that would indicate the fact of dishonesty on the part of the Bolitho Lawyers to an honest and reasonable person. It must be remembered that the managing director and controlling shareholder of AFPL, Mr Elliott, was a solicitor – the principal of Elliott Legal – and an officer of this Court.
The Contradictors allege that, in the circumstances of this case, the conduct of AFPL and the Lawyer Parties contravened the Paramount Duty, including because it undermined the Court’s expectation that it should have the assistance of independent legal representation for the litigating parties, acting with good faith, untainted by divided loyalties, which is central to the preservation of public confidence in the administration of justice, and denied the group members the benefits and protections of the procedure established by Part 4A of the Supreme Court Act 1986 (Vic), in that it resulted in Mr Bolitho – a representative plaintiff with duties to represent the interests of 16,000 debenture holders/group members – failing to discharge those duties by (1) agreeing to the Adverse Settlement Terms that were not in the interests of group members as a whole and (2) seeking to recover excessive payments from group members.
Communications made in furtherance of serious breaches of fiduciary duty by the Bolitho Lawyers attract the operation of s 125 of the Evidence Act 2008 (Vic).
The Court is well placed to inspect the communications and draw such inferences as are available from the documents, informed by the evidence relied upon by the Contradictors in this application, and determine whether the communications were made in the furtherance of a course of conduct that was contrary to the interests of Mr Bolitho and group members. Accordingly, it should follow that the communications are not privileged.
The Contradictor’s submissions are thus founded on the proposition that the purpose of AFPL in defending the Botsman appeal, issuing and prosecuting AFPL v Botsman, and in pressing its application for costs and commission in the remitter proceeding, was to perpetuate and conceal its fraudulent conduct (and the conduct of members of Mr Bolitho’s legal team) in relation to AFPL’s application for the payment of fees and commission as part of the settlement of the primary proceeding, and the fraudulent conduct of members of Mr Bolitho’s legal team, such that all of the documents relevant to AFPL’s conduct of these proceedings must be disclosed to the Contradictor by reason of the operation of s 125 of the Evidence Act.
I accept, for present purposes, without going into too much detail given the pending trial, that the evidence adduced by the Contradictor ‘lends colour to the charge’ that AFPL and the numbers of Mr Bolitho’s legal team had engaged in misconduct which would amount to fraud within the meaning of s 125 of the Evidence Act. I agree with the managing judge that there is a serious question to be tried that the members of the Bolitho legal team overcharged for their work in the primary proceeding, and procured terms of settlement advantageous to them and AFPL. The question remains whether the challenged documents, or any of them, were made ‘in furtherance of a fraud’. In order to attract the operation of s 125 of the Evidence Act, the privileged communications must being themselves steps in the commission of, or preparatory to, or in aid of, a crime or civil fraud.[47] That privileged communications merely evidence, or include advice to a client how to defend themselves against allegations of fraud is insufficient to cause the privilege to be lost.
[47]Varawa v Howard Smith & Co Ltd (1910) 10 CLR 382.
Having regard to the subject matter and contents of the challenged documents (which are patently privileged), s 125 of the Evidence Act would only be engaged if I were to form the view that the primary purpose of AFPL in defending the Botsman appeal, issuing and prosecuting AFPL v Botsman, and pursuing its claim for legal costs and funding commission in the remitter proceeding was to conceal its past misconduct (and that of the members of Mr Bolitho’s legal team), given that each of these proceedings (save, to a limited extent, the Botsman appeal) postdate the conduct which is the focus of the Contradictor in the remitter proceeding, and most of the challenged documents concern the nuts and bolts of conducting litigation. With some limited exceptions, which I will discuss later in these reasons, while there are some communications regarding litigation strategy and tactics, none of the challenged documents could be considered as communications for the furtherance of a fraud, on the face of the challenged documents. Accordingly, they would only attract the operation of s 125 as a class if there were reasonable grounds to consider that the proceedings were being utilised as a vehicle to perpetrate or conceal misconduct.
Taking the Botsman appeal first (the documents concerning which make up a relatively small proportion of the challenged documents), it is difficult to see how defending an appeal brought by a group member against an approval of a settlement, particularly in circumstances where the judge approving the settlement had notice of Ms Botsman’s objections to the settlement of the primary proceeding, could amount to fraudulent misconduct, noting that, in the circumstances (where there was a limit to the funds available from the insurer of one of the defendants in the primary proceeding), there were clear benefits to group members of the settlement.
Taking the remitter proceeding next, it is also difficult to see how communications between AFPL and members of Mr Bolitho’s legal team regarding the remitter proceeding can, merely by reason of being concerned with the conduct of and steps to be taken in the remitter proceeding, attract the operation of s 125 of the Evidence Act. While there will no doubt be robust argument about the characterisation of the parties’ conduct, the conduct of AFPL and members of Mr Bolitho’s legal team is well and truly exposed for examination in the remitter proceeding. In my view, the only communications concerning the remitter proceeding which could conceivably attract the operation of s 125 of the Evidence Act are documents which evidence some attempt on the part of AFPL and members of Mr Bolitho’s legal team to conceal relevant matters concerning the subject matter of the remitter proceeding from the Contradictor and the Court. Having inspected the challenged documents, while there are some communications concerning the scope of the parties’ discovery obligations in the remitter proceeding, there are no documents which seem to me to fall within that description.
In my view, the proceeding which warrants the most scrutiny is AFPL v Botsman, where AFPL sought to restrain Ms Botsman from pursuing her appeal against the approval of the settlement of the primary proceeding. This proceeding was dismissed on the basis that AFPL had waived its rights under the relevant provisions of its litigation funding agreement with Ms Botsman by not submitting before Croft J that Ms Botsman had no right to object to the settlement. However, while bringing that proceeding might be viewed by some as heavy handed in the circumstances, it could not be said that AFPL had no legitimate basis for bringing the proceeding.
It is apparent from the judgments of Robson J in AFPL v Botsman concerning the substantive issue and Ms Botsman’s application for costs that the issues in AFPL v Botsman were contestable. While s 91 of the Evidence Act precludes me from relying upon Robson J’s findings in the proceeding to prove a fact in issue in the current application, his Honour’s judgments were informative in providing further colour to AFPL’s submissions that AFPL had a bona fide claim to litigate in AFPL v Botsman. Further, while this is not conclusive, it is noteworthy that AFPL was represented by solicitors and counsel who were not members of Mr Bolitho’s legal team, who had their own obligations not to facilitate the bringing of claims in a proceeding without a proper basis and/or for an improper purpose. Accordingly, there is no loss of privilege with respect to the challenged documents concerning AFPL v Botsman.
That said, there are a small handful of challenged documents which in my mind raise some concerns as to whether they go beyond dealing with the routine business of litigation to evidence conduct on the parts of AFPL and members of Mr Bolitho’s legal team which could be viewed as conduct directed at avoiding scrutiny of AFPL’s claims for costs and commission. These documents are document number NOB.500.004.6582 in Mr O’Bryan’s list, and documents 1095, 1096, 1097 in Mr Symons’ list. The latter documents are shaded pink in the schedule listing Mr Symons’ documents, but it is not clear from the evidence how they are said to fall into a different category than the remaining documents in Mr Symons’ list, and I would seek an explanation from ABL in that regard. Further, given that (quite understandably), AFPL’s submissions did not descend to a document by document level, I will allow AFPL to (promptly) file submissions as to why these documents (or any of them) should not be produced for inspection pursuant to s 125 of the Evidence Act. No further submissions from the Contradictor will be required.
Turning now to the draft response, while I have found that Mr O’Bryan’s privilege in the preliminary response will be waived upon the filing and service of any affidavit by Mr Zita, in order to find that the draft response (or, more accurately, the preliminary response) was a document prepared in furtherance of fraud, I would need to find, on the balance of probabilities, that the dominant purpose of Mr O’Bryan in providing Mr Zita with the preliminary response was to ensure that Mr Zita’s evidence aligned with his own evidence. While, in my view, a less stringent standard of proof applies with respect to finding whether there has been conduct which amounts to fraud for the purposes of s 125 of the Act, the usual principles underpinning Briginshaw v Briginshaw,[48] (and, s 142 of the Evidence Act) apply to an allegation that a lawyer has sought to improperly influence the evidence of a witness in a proceeding. That this was Mr O’Bryan’s purpose is not evident from the face of the documents themselves, or from the communication between Mr O’Bryan and Mr Jeubner. In those circumstances, I am not prepared to make such a finding.
[48](1938) 60 CLR 336.
Conclusion
Accordingly, I propose to order that the Trimbos documents be produced for inspection by the Contradictor, and seek submissions as to how best give effect to my reasons in paragraph 66 above. I shall also seek submissions from AFPL as to why the following documents should not be produced to the Contradictor pursuant to s 125 of the Evidence Act:
(a) document NOB.500.004.6582 (Mr O’Bryan’s documents); and
(b) documents numbered 1095, 1096 and 1097 in Mr Symons’ list of documents.
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SCHEDULE OF PARTIES
S CI 2012 07195
| LAURENCE JOHN BOLITHO | First Plaintiff |
| AUSTRALIAN FUNDING PARTNERS LIMITED | 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 |
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| NORMAN O’BRYAN AM SC | Tenth Defendant |
| MICHAEL SYMONS | Eleventh Defendant |
| ANTHONY ZITA AND PORTFOLIO LAW PTY LTD | Twelfth Defendant |
| RSD CHARTERED ACCOUNTANTS (ABN 60 610 244 309) (formerly known as Richmond Sinnott and Delahunty) | Third Party – 1st Third Party Claim |
| NICHOLAS LIVINGSTONE CARR | Third Party – 1st Third Party Claim |
| PETER WILLIAM KEATING | Third Party – 1st Third Party Claim |
| GEOFFREY GRENVILLE SKEWES | Third Party – 1st Third Party Claim |
| GEOFFREY S A LIPSHUT | Third Party – 1st Third Party Claim |
| MAXWELL BROWN AND MOUNTJOY (A PARTNERSHIP) (MB&M) | Third Party – 1st Third Party Claim |
| LANTERN LEGAL GROUP (t/as Harwood Andrews) | Third Party – 1st Third Party Claim |
| CHAUCER SYNDICATES LIMITED | Third Party – 1st Third Party Claim |
| RSD CHARTERED ACCOUNTANTS (formerly Richmond Sinnott & Delahunty) | Third Party – 2nd Third Party Claim |
| INSURANCE HOUSE PTY LTD (ACN 006 500 072) | Third Party – 2nd Third Party Claim |
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