British American Tobacco Australia Ltd v Gordon (No 3)

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

No. 5617 of 2007

BRITISH AMERICAN TOBACCO AUSTRALIA LIMITED (ACN 000 151 100)	Plaintiff
v
PETER GORDON & ORS	Defendants

No. 5618 of 2007

BRITISH AMERICAN TOBACCO AUSTRALIA SERVICES LIMITED (ACN 004 069 649)	Plaintiff
v
SLATER & GORDON LTD (ACN 097 297 400) and ROXANNE JOY COWELL	Defendants

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JUDGE:	KAYE J
WHERE HELD:	Melbourne
DATE OF HEARING:	15, 16 December 2009
DATE OF JUDGMENT:	24 December 2009
CASE MAY BE CITED AS:	BATAL v Gordon (No 3)
MEDIUM NEUTRAL CITATION:	[2009] VSC 619

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PRACTICE AND PROCEDURE – Applications to deliver amended defences – Claims for injunction to restrain use of confidential information given by plaintiff to its solicitors – Documents containing information given to defendant – Intended use by defendant to re-open unsuccessful appeal to Court of Appeal – Defence that information discloses iniquity upon which defendant wishes to rely – Whether public interest defence recognised – Pleading of civil conspiracy between plaintiff and others as iniquity – Defence of public policy to claims based on contract – Adequacy of proposed pleading – Whether proposed pleading sufficiently particularised.

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APPEARANCES:	Counsel	Solicitors
No 5617/2007
For the Plaintiff (British American Tobacco Australia Ltd)	Mr M Connock SC and Mr D Bennett	Baker & McKenzie
For the Third Defendant	Mr J Burnside QC and Dr M Collins	Arnold Bloch Leibler
No 5618/2007
For the Plaintiff (British American Tobacco Australia Services Ltd)	Mr M Wheelahan SC and Mr M O’Meara	Corrs Chambers Westgarth
For the Third Defendant	Mr J Burnside QC and Dr M Collins	Arnold Bloch Leibler

TABLE OF CONTENTS

Defence to BATAL proceeding................................................................................................... 3
The BATAS defence...................................................................................................................... 7
Amendment – principles.............................................................................................................. 8

The pleading of the conspiracy................................................................................................... 9

The conspiracy claim rejected by Byrne J.................................................................................. 9
The objects of the conspiracy..................................................................................................... 10
The parties to the conspiracy..................................................................................................... 18

BATAL defence paragraph 48: BATAS defence paragraph 187......................................... 21

Elements of the tort of conspiracy: pleading of predominant purpose............................. 22
Essential elements of the tort of conspiracy: pleading of agreed unlawful means.......... 23
Pleading of overt acts against BATAS..................................................................................... 23
The role of the conspiracy allegation against BATAS........................................................... 28
Allegations against Wilson – proposed BATAS defence paragraphs 170-177................... 29
Allegations of criminal liability against BATAS: identification of the individual(s) who represented BATAS.................................................................................................................... 33
Allegations of accessorial criminal liability against BATAS – paragraphs 127, 135 and 157 of the proposed defence........................................................................................................................ 35
Allegations against BATAS of perverting the course of justice: proposed defence paragraphs 112 to 121, 167.1 and 167.2................................................................................................................ 38
Paragraph 122 of the proposed BATAS defence.................................................................... 39
Paragraph 147 of the proposed BATAL defence and paragraphs 151 of the proposed BATAS defence.......................................................................................................................................... 40
The public interest defence........................................................................................................ 41

The pleading of the iniquity rule.............................................................................................. 49

Public policy defence to contractual claims by BATAS for confidence.............................. 51
Defence to BATAS proceeding based on implied contractual terms of confidentiality subject to public interest.............................................................................................................................. 55
Public interest defence to claims by BATAS for maintenance of professional confidence 56
The “unclean hands” defence.................................................................................................... 57
Crimes – fraud exception to legal professional privilege...................................................... 65
Paramount obligations............................................................................................................... 69
Conclusions.................................................................................................................................. 72
Proposed orders.......................................................................................................................... 76
The plaintiff’s statements of claim............................................................................................ 77

HIS HONOUR:

In each of these proceedings, the third defendant makes application to file and serve an amended defence. A previous such application, on behalf of the third defendant, was refused by Byrne J in a ruling delivered by his Honour on 27 March 2009.[1]
[1]BATAL v Gordon (No 2) [2009] VSC 77.

The application is made by the third defendant in two proceedings. In the first proceeding (No 5617 of 2007) British American Tobacco Australia Limited (“BATAL”) is the plaintiff, and the defendants are Mr Peter Gordon, Slater & Gordon Limited, and the third defendant, Mrs Roxanne Cowell. In the second proceeding (No 5618 of 2007) British American Tobacco Australia Services Limited (“BATAS”) is the plaintiff, and Slater & Gordon Limited and Mrs Cowell are each the defendants. The claims against Slater & Gordon and Mr Gordon have been settled, and the sole defendant, to each proceeding, is now the third defendant, Mrs Cowell.

The background of these proceedings is set out in the previous ruling of Byrne J, and I shall not repeat it in detail. A short summary is sufficient for present purposes. The third defendant is the executrix of the estate of the late Rolah McCabe. In October 2001, Slater & Gordon issued proceedings on behalf of Mrs McCabe against BATAS, claiming damages for personal injury caused to her as a result of having been a smoker of cigarettes manufactured and distributed by BATAS and its predecessor. In March 2002, the trial judge (Eames J) made a ruling striking out the defence pleaded on behalf of BATAS, on the basis that BATAS had subverted the discovery process by its destruction of relevant discoverable documents. His Honour entered interlocutory judgment against BATAS. The jury awarded Mrs McCabe damages in the sum of $687,560, and the trial judge entered judgment in her favour for that amount, together with interest and costs. Subsequently, the appeal by BATAS against those decisions was successful, and the Court of Appeal set aside the judgment and directed a new trial.[2]
[2]British American Tobacco Australia Services Limited v Cowell(Representing the estate of McCabe deceased) (2002) 7 VR 524.

In those proceedings, Clayton Utz had been retained to act on behalf of BATAS. At the same time, Clayton Utz had been retained to act generally on behalf of BATAS, and to provide legal services to companies in the British American Tobacco Australasia group. Following the judgment at trial in the McCabe proceeding, Clayton Utz undertook an internal review in 2002 of the events, which were the subject of the trial judge’s criticisms. In the course of that review, a number of documents were brought into existence and placed before the board of Clayton Utz. In the current proceedings, BATAS claims that the documents, which are the subject of this proceeding, include information which Clayton Utz received in circumstances of confidence from it. In the BATAL proceeding, the plaintiff similarly claims that other documents, created by Clayton Utz, contain information received in confidence by Clayton Utz from BATAL.

Subsequently, after completion of the review, Mr Christopher Dale, a partner of Clayton Utz, in September 2006, provided copies of the documents, which are the subject of these two proceedings, to Mr Peter Gordon, a partner of Slater & Gordon. In turn, Mr Gordon provided copies of those documents to a number of persons, including the third defendant, Mrs Cowell. In each of the two proceedings, the claim against the third defendant is pleaded in a similar manner. It is pleaded that the information contained in the documents is confidential to the plaintiff, and further or alternatively discloses communications between the relevant plaintiff and its legal advisors which are subject to legal professional privilege. In each case, the statement of claim pleads that the confidentiality of the information derived from fiduciary duties of the solicitors, and also from express or implied terms of the retainer of the solicitors by the plaintiff. It is pleaded that when Dale provided the documents to Gordon, he did so in breach of the contractual, equitable and professional obligations, which Clayton Utz, and he, as a member of Clayton Utz, owed to their client, and that Gordon, in receiving them, knew or ought to have known that that was so. The plaintiffs allege that, in receiving the documents, Gordon was acting as the solicitor for the third defendant, and as such the conduct of Slater & Gordon (and Gordon) should be attributed to the third defendant. It is thus pleaded that, by Gordon receiving the documents from Dale, Mrs Cowell knowingly participated in the breach by Dale of his contractual and equitable obligations to the plaintiff.

Defence to BATAL proceeding

The defence in each proceeding relates, in a broad sense, to the effect of the destruction of documents, said to have been discoverable in the McCabe proceeding, by the plaintiffs, and evidence given in that case before the trial judge, and to the Court of Appeal, in relation to that matter. In each of the present proceedings, the third defendant, in one form or another, pleads that that conduct has the effect that the information, which is the subject of these proceedings, is not confidential, or, alternatively, that the plaintiffs are not entitled to bring proceedings against the third defendant to enforce the confidential nature of that information.

In the BATAL proceeding, the third defendant relies on six defences, pleaded in paragraphs 10.2 and 13.1. They may be paraphrased as follows:

(a)That the information is in the public domain;
(b)That the information was not privileged, the information disclosed the existence, or real likelihood of the existence of, a crime, fraud or civil offence, and the duties of confidence attaching to the information do not operate to preclude the use or dissemination of the information to a third party with a real and distinct interest in redressing the crime, fraud or civil offence;
(c)That confidentiality did not attach to information which was not privileged, and the use or dissemination of which was in the public interest;
(d)Confidentiality did not attach to information which was imparted for the purpose of facilitating or furthering the commission of a crime, fraud or civil offence;
(e)The professional duties of Clayton Utz did not operate to impose on the members of that firm an obligation to keep information confidential if an attempt by BATAL to restrain the dissemination of that information could be met by a defence of unclean hands.
(f)The professional duties of the members of Clayton Utz were subject to paramount obligations pleaded in paragraph 10.3 of the defence, namely, obligations of candour to the Court and similar professional obligations of legal practitioners.

Schedule 1 of the defence identifies each document held by the third defendant, and the information contained in that document, which the third defendant contends corresponds with the defences which I have just outlined. Paragraphs 14, 31.1 and 51 of the defence seek to link those six defences with the information in the documents set out in Schedule 1, using a code or index of different letters of the alphabet and numbers.

The crime or fraud, which is referred to in the defence, is spelt out in paragraphs 43 to 169 of the BATAL defence. Paragraph 46 pleads that BATAL, BATAS, Graeme Maher (the solicitor employed by BATAS), Robin Chalmers (a partner of Mallesons acting for BATAS), Brian Thomas Wilson (a partner of Clayton Utz acting for BATAS), Glenn David Eggleton and Richard Clayton Travers (each of whom were members of Clayton Utz acting for BATAL and BATAS), and “other persons not presently known to Mrs Cowell”, in or from about 1999 agreed and combined, and thereby conspired:

(i)To conceal or destroy documents in their possession which would or might be prejudicial to any defence of BATAS and/or BATAL in proceedings which those parties (referred to as “the conspiracy parties”) contemplated were likely to be, or might be, brought involving claims against BATAS and/or BATAL for damages for personal injury caused by smoking their products.
(ii)Not to disclose the identity of those documents, and the fact of their concealment or destruction, in the course of discovery to litigants in such contemplated litigation.
(iii)To conceal from prospective plaintiffs, and the courts in such contemplated litigation, the existence of such a conspiracy in combination, and the acts done in furtherance of it.

Paragraph 46A pleads that the conspiracy was made:

(a)With the sole or predominant purpose of injuring the prospective plaintiffs; and/or
(b)With the intention of using unlawful means.

Paragraph 47 of the BATAL defence pleads that pursuant to and in furtherance of the conspiracy, the conspiracy parties, between 1987 and 2002 (inclusive) did the following overt acts (which I summarise):

(a)BATAS and BATAL established and implemented document retention policies with the purpose of falsely providing an innocent explanation for the concealment or destruction of documents in their possession, which might be, or would be, prejudicial to any defence in the contemplated litigation.
(b)BATAS and BATAL destroyed documents for the purpose of depriving prospective plaintiffs, and the courts in contemplated litigation, of documents in their possession, which might be prejudicial to the defence of BATAS and/or BATAL in that litigation.
(c)The lawyers for BATAS and BATAL, namely Clayton Utz, established, and BATAS and BATAL funded, a database of tobacco related documents in preparation for anticipated tobacco litigation, in a manner which was contrived to ensure that the database would not appear to be within BATAS’s or BATAL’s possession, custody, power or control.
(d)BATAS and BATAL colluded to limit their discovery obligations and/or to prevent discovery in respect of prejudicial documents, and then colluded so as to avoid the appearance of collusion. As particulars of that allegation, an agreement referred to as “the Cremona agreement” is pleaded, in relation to litigation against BATAL by Mrs Cremona in the Supreme Court of Victoria.
(e)Pursuant to the Cremona agreement the lawyers acting for BATAS and BATAL subsequently entered into a further agreement, the objective of which was to conceal that they were cooperating in relation to discovery in the litigation.
(f)BATAS and BATAL subsequently agreed that in relation to documents, which were once in their possession but no longer in their possession, those documents would be discovered by a general description in affidavits of documents in the Cremona proceeding, and, in the event of challenge to that approach, the document retention policies could be relied upon by BATAS and BATAL.
(g)The database, and the documents disclosing its existence, were not discovered by BATAS and BATAL in the Cremona proceeding or in the McCabe proceeding.
(h)In September 1999, Travers proposed a strategy for BATAS and BATAL to cooperate on discovery strategies in another proceeding (the “Nixon proceeding”) in order to limit their discovery obligations in that proceeding.
(i)BATAS and BATAL prepared for anticipated litigation at the same time as they destroyed documents.

As a further overt act, paragraph 47(j) pleads that pursuant to and in furtherance of the conspiracy, BATAS, Maher, Wilson, Chalmers and Eggleton engaged in acts which are alleged in paragraphs 55 to 169 of the defence. Those paragraphs are divided into five sections, each representing an alleged crime or offence committed by one or more of the members of the conspiracy pleaded in the defence. In brief compass, those overt acts consist of the following:

(1)An attempt to pervert the course of justice in the giving of evidence concerning discovery in the McCabe proceeding (paragraphs 55 to 86). Each of Chalmers, Travers and BATAS are alleged to be parties to that offence.
(2)An attempt by BATAS to pervert the course of justice by devising and implementing the document retention policy (paragraphs 116 to 121).
(3)An attempt by Eggleton to pervert the course of justice in evidence given by him in relation to the document retention policy in the McCabe proceeding (paragraphs 122 to 136). It is pleaded that BATAS aided, abetted, counselled or procured the commission by Eggleton of that offence, and accordingly is responsible for it.
(4)An attempt by Eggleton to pervert the course of justice in the McCabe proceeding by giving misleading evidence in that proceeding. It is alleged that BATAS aided, abetted, counselled or procured the commission by Eggleton of that offence, and is thus responsible for it (paragraphs 137 to 154).
(5)An attempt by Wilson and BATAS to pervert the course of justice, both by Wilson’s role in the destruction of documents, and, subsequently, by submissions which he made, and evidence which he gave, to the Court of Appeal in the McCabe proceeding (paragraphs 155 to 169).

The BATAS defence

The BATAS defence is based on the same propositions as are contained in the BATAL defence, but it is differently constituted. In paragraphs 12, 13 and 13A, it is pleaded that the obligations of confidentiality of Clayton Utz to its client did not attach to the information, by reason of the first five of the six bases pleaded in paragraphs 10.2 and 13.1 of the BATAL defence. (See also paragraph 32C). Paragraphs 42 to 181 plead, in almost identical form, the same five crimes or offences alleged (as overt acts) in paragraphs 55 to 169 of the BATAL defence. Paragraphs 182 to 193 then plead the conspiracy, which is set out in paragraphs 43 to 46, of the BATAL defence.

In each of the two proceedings, the third defendant, in her defence, maintains that she intends to use the documents, which are the subject of the two proceedings, solely for the purposes of making an application, as executrix of the McCabe estate, to the Supreme Court of Victoria, or to the High Court of Australia, for orders setting aside the judgment and orders of the Court of Appeal in the McCabe proceeding of December 2002, and reinstating the judgment of Eames J at first instance in the McCabe proceeding. Thus, the basic issue in each case is whether the plaintiffs have the right to preclude Mrs Cowell from using the information, contained in the documents, in the application which she wishes to make in respect of the judgment and orders of the Court of Appeal.

Amendment – principles

In considering the application by the third defendant, in each proceeding, for leave to amend her defence, it is important to bear in mind the basic purposes served by pleadings in a proceeding such as this. First, the pleading must be so couched as to fairly inform the opposing parties of the matters upon which the defendant seeks to rely at trial. In other words, the pleading must put the opposing party on appropriate notice as to the issues being raised. Secondly, the pleading must be sufficiently precise so as to define adequately the issues in the case. In cases such as these, it is important that the pleadings define the issues with sufficient clarity, for the purposes of resolving interlocutory disputes in the case, and, significantly, in order to ensure that matters raised at trial are relevant to the issues between the parties. Thirdly, the proposed defences each contain allegations of criminality, fraud and serious wrongdoing against a number of persons, all but two of whom are not parties to the present proceeding. Serious allegations such as those must be pleaded with some precision and with sufficient supporting particularity.[3]
[3]Three Rivers District Council and Others v Governor and Company of the Bank of England (No 3) [2003] 2 AC 1,291-2 (Lord Millett); Minister Administering the Crown Lands (Consolidation) Act and Western Lands Act v Tweed Byron Aboriginal Land Council (1990) 71 LGRA 201, 203-5.

Further, an amended defence may only be permitted, if it discloses a triable answer to the claim by the plaintiff. However, an application for leave to amend a defence is not an occasion upon which the court ought to assess the merits or otherwise of the proposed defence. Provided that the proposed defence is not demonstrably futile or untenable, the court should not disallow it.[4]
[4]Dey v Victorian Railways Commissioners (1948) 78 CLR 62, 92 (Dixon J); General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125, 129 (Barwick CJ); Webster v Lampard (1993) 177 CLR 598, 603 (Mason CJ, Deane and Dawson JJ).

In approaching the third defendant’s application in each proceeding, I adopt the principles stated and applied by Byrne J in his previous ruling[5], including his Honour’s helpful observations, in the concluding paragraph of his ruling[6], as to what appears to be the fundamental issues between the parties.
[5]Para [8].
[6]At paragraph [71].

The pleading of the conspiracy

Both plaintiffs have submitted that there are a number of deficiencies in the manner in which, in each proposed defence, the third defendant seeks to allege the existence of the conspiracy, relied on. In particular, the following objections have been raised to that section of each proposed defence:

(1)The conspiracy claim now sought to be pleaded is not materially different to the allegations of conspiracy which were disallowed by Byrne J in his previous ruling.
(2)The objects of the conspiracy have not been adequately identified.
(3)The parties to the conspiracy have not been adequately defined.
(4)The essential elements of the tort of conspiracy, for the predominant purpose of injuring the plaintiff, have not been properly pleaded.
(5)The essential elements of the tort of conspiracy, to injure by unlawful means, have not been adequately pleaded.
(6)The overt acts relied on are not capable of supporting the existence of the alleged conspiracy.
(7)On behalf of BATAS, it is also submitted that the conspiracy claim serves no legitimate purpose in the BATAS proceeding.

The conspiracy claim rejected by Byrne J

In paragraphs 51 to 53 of his ruling, Byrne J held that the conspiracy claim, sought to be pleaded in the proposed amended defences then before him, was unacceptable because it was unspecific in a number of respects. The plaintiffs contend that the conspiracy claims, now sought to be pleaded in the proposed defences which are before me, are not materially different. For that purpose, I was provided with a table which compares the previous pleading of the conspiracy claim with that now contained in each proposed defence.

There is, of course, one material respect in which the conspiracy claims are now different to those previously pleaded. In paragraph 51 of his ruling, Byrne J noted that the previous pleading did not specify whether the plea was of a criminal conspiracy, or of the civil tort of conspiracy. His Honour noted that “the pleaders must therefore make their allegation specific”. By contrast, the third defendant has made it clear, both in the proposed amended defence, and in communications with the plaintiffs, that the conspiracy claim now sought to be pleaded is based on a civil tort of conspiracy, and does not allege a criminal conspiracy.

There are some other, lesser, differences between the previous expositions of the conspiracy claim and that now sought to be made in the proposed amended defence. The reasons for decision of Byrne J do not expressly state the other respects, in which his Honour criticised the previous pleadings as being unspecific. It was unnecessary for his Honour to do so in his ruling, since, in substance, his Honour was responding to submissions then made to him, and the parties to whom those remarks were directed, would have understood his Honour’s reasons in that light. However, in that respect, I am unable to make a useful comparison between the proposed defences, which were before his Honour, and those which are now proffered to me, in order to determine whether the differences in the current draft pleading address the deficiencies to which his Honour was referring. I am therefore not prepared to disallow the current proposed pleading on the basis, contended for by the plaintiffs, namely, that they have been previously disallowed.

The objects of the conspiracy

Both plaintiffs have submitted that the pleading of the conspiracy is defective, because it does not adequately, or properly, identify the objects of the alleged conspiracy. The submissions in this respect raise issues of both the form of the pleading, and of a matter of substance as to whether, properly construed, the pleading does adequately define the objects of the conspiracy.

Both plaintiffs correctly point out that it is an essential element of both forms of the tort of conspiracy that the alleged conspirators intend to injure a person, or persons, by their acts.[7] In the proposed pleading, the third defendant has pleaded that the objects of the conspiracy were “prospective plaintiffs”. In each pleading, those persons are defined as “litigants in the contemplated litigation”. In turn, the phrase “contemplated litigation”, is defined as “proceedings which the conspiracy parties contemplated were likely to be or might be brought involving claims against BATAS and/or BATAL for damages for personal injury caused by smoking their products”.
[7]Australian Wool Innovation Ltd v Newkirk [2005] FCA 290, [64] (Hely J).

The plaintiffs each submit that that pleading is defective, because it defines the objects of the conspiracy by reference to the individual states of mind of a number of alleged conspirators. In each case, the conspirators are pleaded to be BATAS, BATAL, Maher, Wilson, Chalmers, Eggleton, Travers and “other persons not presently known to Mrs Cowell”. Thus, it is submitted, the identification of the objects of the conspiracy, in the pleading, is by reference to the states of mind of two corporations, a number of named individuals and others unnamed. Accordingly, it is submitted, the question of whether any person is an object of the “conspiracy” could only be ascertained by inquiring into the varying states of mind of the various conspiracy parties over a fifteen year period.

Pausing there, in my view that construction of the proposed amended defence tends to overstate the degree of uncertainty deriving from the concept of “contemplated litigation” in both proposed pleadings. The pleading makes it clear that the persons, who are intended to be the objects of the conspiracy, are persons who either are, or will become, litigants against BATAL or BATAS in claims for damages for personal injury caused by smoking their products. The use of the word “contemplated”, in the definition of the “contemplated litigation”, is not used to describe any particular individual piece of contemplated litigation. Rather, it is used generically, to describe the nature of the litigation, which it is contemplated might be brought against BATAS and/or BATAL, namely, litigation for damages for personal injury caused by smoking their products. Thus, the relevant class of individuals, who are to be the objects of the conspiracy, are those who, from time to time, commence that type of litigation against BATAS and/or BATAL. That much is made clear by the use of the noun “litigants” in the proposed defence. It is also made clear by the pleading of the intended purpose of the conspiracy, namely, to impair the rights of discovery of those persons who become litigants in such contemplated litigation.

It is with that understanding of the proposed pleading that I turn to the more difficult issue of substance raised by the submissions of both BATAS and BATAL. In short, it is submitted that it is an essential element of both species of the tort of conspiracy that the parties to the conspiracy intend to injure the object or objects of the conspiracy. It is insufficient that the acts in question necessarily involved injury to the plaintiff, or that the plaintiff was likely to suffer injury as a result of the acts of the conspirators.[8] Thus, it is submitted that the objects of the conspiracy must be identified and pleaded with sufficient clarity and precision, and that descriptions of the objects which are “amorphous” or “nebulous” are inadequate.[9] The plaintiffs acknowledge that a conspiracy may be directed at a class of persons, rather than at an individual, but the members of the class must be capable of being readily ascertained.[10] They submit that, in this respect, the class of objects of the alleged conspiracy in these proceedings is less definite than the class of objects of the conspiracy, the pleading of which was disallowed, both by Weinberg J[11], and by the Full Court of the Federal Court[12], in Dresna Pty Ltd v Misu Nominees Pty Ltd.
[8]See for example Dresna Pty Ltd v Misu Nominees Pty Ltd [2004] FCAFC 169, [9].
[9]Australian Wool Innovation Limited v Newkirk [2005] FCA 290, [68].
[10]Dresna Pty Ltd v Misu Nominees Pty Ltd (above) [9]-[12]; Stanley v Layne Christensen Company & Ors [2006] WASCA 56, [43]-[48].
[11][2003] FCA 1537.
[12][2004] FCAFC 169.

In order to determine this issue, it is necessary to examine the decisions, both of Weinberg J, and the Full Court, in Dresna in a little detail, and to compare them with the subsequent decision of the Court of Appeal of Western Australia in Stanley v Layne Christensen Company[13].
[13][2006] WASCA 68.

In Dresna, the applicant had entered into an agreement with Franklins to purchase the Franklins Mentone Store. That acquisition was part of a sell down of assets by Franklins, for the purposes of which Franklins had given an undertaking to the Australian Consumer and Credit Commission to sell its assets to independent operators. Subsequent to the sale of the store to Dresna, difficulties were encountered with obtaining the consent of the lessor to the assignment of the lease. In November 2001, Franklins rescinded the agreement, and sold the store to Coles. In his proposed amended statement of claim, the applicant (inter alia) sought to plead that Franklins and Coles had conspired, by unlawful means, to injure the applicant. Weinberg J refused to grant leave to Dresna to plead the conspiracy, because the amended statement of claim did not adequately plead an intention by the respondents to injure the applicant.

In reaching that decision, his Honour reviewed the general principles relating to the tort of conspiracy. His Honour observed that it is an essential element of the tort of conspiracy that there be an intention to injure the plaintiff, whether the conspiracy is in the form of an “unlawful means” conspiracy, or, alternatively, whether it is a combination of acts the sole or predominant purpose of which is to injure the claimant. In respect of an “unlawful means” conspiracy, he considered that the correct test of the requisite intention was that it be “aimed or directed” at the claimant.[14] In preferring that formulation of the test, his Honour adopted the previous statement of it by Lord Denning MR in the Court of Appeal decision in Lonrho Ltd v Shell Petroleum Co Limited[15], and in his own previous decision in McKellar v Container Terminal Management Services Limited[16]. In particular, his Honour noted that it is insufficient that damage to the plaintiff, as a result of the unlawful means, be reasonably foreseeable. Weinberg J further noted that the target may be a “general one”, in the sense that it may be a group[17], but the conspiracy must be directed at all members of that class or group.
[14][2003] FCA 1537, [108].
[15][1981] Com LR 74, 75.
[16](1999) 165 ALR 409, 435.
[17][109], [123].

In Dresna, the conspiracy, proposed to be pleaded by the applicant, was alleged to be constituted by an:

“… intention to deprive the independent operator that entered into an agreement to purchase the Franklins business at Mentone, of the benefit of that agreement, and thereby cause it harm.”

His Honour noted that the applicant had not pleaded (nor could it plead) that either the lessor or Coles intended to injure the entire class of persons known as “independent operators”. Thus, his Honour rejected the formulation of the conspiracy proposed by Dresna, stating:

“The degree of precision required by the authorities tells strongly against Dresna’s somewhat amorphous formulation, where the intent to injure is expressed in terms that are nebulous at best. This part of the (Proposed Further Amended Statement of Claim) does not identify any specific targets, or any group within which such a target could readily be ascertained. In these circumstances, I am of the view that Dresna should not be granted leave to plead a conspiracy, by unlawful means, to injure ‘the independent operator’, in the form contemplated.”[18]

[18][129].

Pausing there, it is important to note that the observations of Weinberg J were directed to the particular pleading proposed in that case. In the context of the facts asserted in the proposed statement of claim, the pleading failed to identify, with specificity, a class, to all members of which the pleaded intention was directed.

On appeal, the Full Court of the Federal Court in Dresna Pty Ltd v Misu Nominees Pty Ltd[19] upheld the decision of Weinberg J, basically for the same reasons as those enunciated by his Honour. In particular, the Court accepted that a conspiracy might be directed to all members of a class. However, in the instant case, the difficulty was that the only conceivable class could be any member of the public at large. The Court rejected the submission of the applicant that it was sufficient to establish that the lessor intended to injure whichever independent operator was awarded the contract to the Franklins Mentone business. Such a person was not a member of a class, other than the class of the members of the general public.[20]
[19][2004] FCAFC 169.
[20]Para [7]-[13].

The decision of the Federal Court in Dresna is to be contrasted with the decision of the Court of Appeal of Western Australia in Stanley & Ors v Layne Christensen Co & Ors[21]. In that case, the first defendant (Stanley) sold his shares in a number of companies, including the second plaintiff (Stanley Mining Services Pty Ltd) (“SMS”), to the first plaintiff, Layne Christensen Company (“Layne”). Stanley entered into a consultancy agreement with Layne and SMS, by clause 10 of which he undertook not to solicit for himself or for any other person any business, which would be in competition with SMS or any related or affiliated corporation. Notwithstanding that covenant, Stanley then proceeded to assist and organise a business conducted by the second, third and fourth defendants in competition with SMS. In the meantime, SMS assigned its assets to the third and fourth plaintiffs (“WADS 1” and “WADS 2”).
[21][2006] WASCA 56.

In its amended statement of claim, the plaintiffs pleaded (inter alia) a cause of action in conspiracy, whereby the defendants had agreed and combined in a course of action to commit unlawful acts with the intention of injuring WADS 1 and WADS 2. The defendants submitted that no material facts had been pleaded in the statement of claim, which would indicate that the defendants had been given notice of the assignment of the assets to WADS 1 or WADS 2, or by which they would otherwise have been aware of the existence of those two companies. Accordingly, it was submitted that it could not be arguable that the defendants had conspired to injure those two companies. That submission was rejected by the Court of Appeal. Wheeler JA (who delivered the leading judgment) referred to the decision of the Federal Court in Dresna, and stated:

“[47] Although I would accept the analysis in [11] of Dresna, it seems to me to be arguable that it does not determine the issue in this case. That is to say, it is arguable that there may be a conspiracy directed at every member of a group, being the group having the benefit of clause 10 in the consultancy agreement. The members of that group may vary over time, but its membership would be ascertainable at any particular date. Of course, only those members who actually suffered loss as a result of a conspiracy directed at the group would be able to bring an action founded on the conspiracy. Alternatively, and more narrowly, it may be the category or group of entities having the benefit of that clause and operating the business of drilling and contracting in either Africa generally, or in Ghana.”

The precise point of distinction between Dresna and Stanley is arguable. However, it would seem that the difficulty with the pleading in Dresna was that, ultimately, only one person could be injured as a result of the conspiracy sought to be pleaded, that person being the individual operator who purchased the Mentone store. At the time of the alleged conspiracy, there was no identifiable class of such persons. Rather, such person would come from an amorphous group, being the members of the public at large. On the other hand, in Stanley, it was considered that the group, to which the conspiracy was arguably directed, was the group of persons having the benefit of clause 10 of the consultancy agreement from time to time. While members of that group might vary over time, its membership could be ascertained at any particular date.

The application of that fine distinction in the present case is not without difficulty. However, I consider that the distinction between Dresna and the present case, contended for by Mr Burnside QC (who appeared with Dr M Collins for the third defendant) is at least arguably sound. In the present case, it is not pleaded that the conspiracy was directed at members of the public. Rather, it is pleaded that the conspiracy was directed (“aimed”) at such persons who, from time to time, issued proceedings against the two plaintiffs, claiming damages for injury caused by smoking their products. Although the members of such a group may vary over time, the membership of that group could be ascertained at any particular date. Further, it is clear that the conspiracy, sought to be pleaded in this case, was one directed at each member of that group, because the pleaded intention was to deprive any person, who instituted such litigation, of that person’s rights to obtain discovery against one or other of the plaintiffs in the present proceeding. At the very least, in my view the proposition relied on by Mr Burnside is sufficiently arguable, so that it could not be concluded that any conspiracy, which is pleaded in the two defences, would necessarily be doomed to failure at trial.

In reaching those conclusions, I consider that the decision of Hely J in Australian Wool Innovation Limited v Newkirk[22] might, at least arguably, be distinguished. The applicant in that case was Australian Wool Innovation Limited, which represented 30,000 Australian wool growers. It brought proceedings against four respondents, who had announced and implemented a boycott of Australian wool, until the industry discontinued using the veterinary surgical technique known as “mulesing”, and until it ceased the exploit of live sheep for sale as meat. The applicant sought leave to amend the claim to add 103 companies and persons as applicants, and (inter alia) to plead a cause of action in conspiracy. The conspiracy sought to be pleaded in the amended statement of claim was a combination to commit unlawful acts with the intention of harming the first to 104^th applicants “and/or the persons represented by the first applicant”. Unsurprisingly, Hely J held that such a conspiracy failed to identify the object or objects of the conspiracy. His Honour observed that a pleading of a single conspiracy, the objects of which may be 104 people, or 30,104 people, was embarrassing “… as a conspiracy takes its shape and scope from its objects and a conspiracy defined in that way is shapeless”.[23]
[22][2005] FCA 290.
[23][68].

It is thus evident that the conspiracy, sought to be pleaded in Newkirk, lacked any precise definition of the objects of the alleged conspiracy, they being pleaded to be 104 persons “and/or 30,104 persons represented by the first plaintiff”. By contrast, in the present case the conspiracy is pleaded to be directed to each person who is, or becomes, a litigant against one of the two plaintiffs in proceedings claiming injuries arising out of smoking the products of the plaintiffs. In that way, in my view the two cases are distinguishable, or at least arguably so.

For those reasons, I do not consider that the proposed pleading of the objects of the conspiracy is deficient.

The parties to the conspiracy

The defendants next contend that the proposed pleading of the conspiracy is defective, because it does not adequately identify the parties to the conspiracy. In essence, two principal complaints are made.

First, BATAS submits that the third defendant has failed to identify the person or persons, who directed the minds of the two corporate parties to the conspiracy, namely BATAS and BATAL. It is pointed out that, as companies, BATAS and BATAL could only commit a conspiracy through the acts and intentions of persons who, for their relevant purpose, constituted their directing mind and will.[24] The proposed defence does not identify the individuals who are alleged to have constituted, for this purpose, the relevant mind and will of BATAS and BATAL. Accordingly, it is submitted that the pleading fails to properly identify the parties to the conspiracy in that way.
[24]Presidential Securities Services of Australia Limited v Brilley [2008] NSWCA 204, [16]-[17] (Allsop P, [144]-[145] (Ipp J).

I do not consider that the matter relied upon by BATAS in this regard constitutes a defect in the proposed pleading. I agree with the submission, made on behalf of the third defendant, that the complaint by BATAS relates to matters of particularity. In the proposed defences, the actions attributed to the solicitors Wilson, Eggleton, Travers and Chalmers are pleaded as acts carried out in the course of their retainers by the plaintiffs. The pleading, in each case, is that those solicitors performed those acts in the course of their professional retainers by BATAS and/or BATAL. It is the actions of those solicitors, in the course of those retainers, which are relied on as constituting the overt acts pleaded in the proposed defences. It is understandable that the third defendant is not presently placed to identify the particular individuals, constituting the relevant directing mind and will of the corporate plaintiffs, who were responsible for the instructions given to the solicitors relating to the overt acts, which were alleged to be carried out in the course of their retainer by the plaintiffs.

In a case such as this, in which the party alleging the conspiracy relies on a process of inferential reasoning from overt acts, it has been accepted as appropriate to defer the provision of particulars, until after the completion of discovery. Thus in Stanley’s case, Wheeler JA accepted that it was appropriate to defer, until after discovery, the requirement that the plaintiffs provide particulars of the facts, from which an inference could be drawn that the defendants were aware of the existence of WADS 1 and WADS 2, either as individual entities or as members of the relevant class. Her Honour stated[25]:

“I note in this connection that in claims of conspiracy which are sought to be proved by inference from facts done in pursuance of the apparent common purpose, it may be appropriate to defer the provision of particulars until after discovery: Porteous v Rinehart (1996) 22 ACSR 364, 376. Similarly, there will be occasions when a plea will not be struck out for want of particularity if the necessary particulars are within the knowledge of the defendant: see Jingellic Minerals NL v Abigroup Limited (1992) 7 WAR 566, 570, 575. It appears to me that it is necessary in this case that the pleadings either make it clear that the intention pleaded was to injure WADS 1 and WADS 2 specifically, or members of a class, and if the latter, how that class may be identified. However, the question of what particulars should be provided at this stage, as opposed to after discovery and after further amendment of the defence, is a matter which, it seems to me, should be dealt with by the master.”

[25]Above [50].

The second criticism, made by both BATAS and BATAL, of the pleading of the parties to the conspiracy, relates to the dates, upon which it is alleged that the particular individuals became members of the conspiracy.

The particulars to paragraph 46 of the BATAL defence, and to paragraph 185 of the BATAS defence, plead that BATAS, BATAL and Eggleton entered into the conspiracy on or about 7 April 1987; that Wilson and Travers joined the conspiracy in about 1990; that Chalmers joined the conspiracy in about 1991; and that Maher joined it in about 1996. The dates on which Travers, Wilson, Chalmers and Maher are each alleged to have joined the conspiracy correspond with the dates, on which they are alleged to have commenced working on matters involving BATAS and/or BATAL. However, in each case, no overt act has been pleaded in respect of such an alleged conspirator until a later date. For example, the first overt act pleaded in relation to Ms Chalmers seems to be 6 December 2001, when (it is pleaded) she swore an affidavit on behalf of BATAS in the McCabe proceeding (BATAS defence paragraph 55; BATAL defence paragraph 67).

I consider that the contention made on behalf of the plaintiffs in this respect is correct. In each case, the third defendant will rely on the overt acts, pleaded by her, to establish the conspiracy. The fact that a solicitor commenced to act for one or other of the plaintiffs on a particular date could not, standing alone, or in combination with any of the pleaded overt acts, logically lead to an inference that, on that date, or shortly thereafter, the solicitor became a party to the alleged conspiracy. It is trite law that the constituent parties to a conspiracy may change over a period of time. However, ultimately it will need to be proven how and in what circumstances a particular alleged conspirator joined the conspiracy. At present, there is a clear disconformity, in that respect, between the dates pleaded in the proposed further amended defence, and the dates of the overt acts, from which the conspiracy is to be inferred, and from which the membership of the conspiracy, by the named persons, is to be inferred. The conspiracy alleged in this case is a serious one, namely, a conspiracy which involved acts described as attempts by the named persons to pervert the course of justice. Insofar as the third defendant seeks to allege that any particular member of the conspiracy joined it, that allegation must be made on the basis of a pleaded overt act. I would only permit the pleading of the conspiracy to be made, if the disconformity between the overt acts alleged, and the dates on which it is said that the particular conspirators joined the conspiracy, is cured.

BATAL defence paragraph 48: BATAS defence paragraph 187

While I am dealing with the topic of the parties to the alleged conspiracy, it is useful to address a point made by Mr Connock, SC, who appeared with Mr D Bennett on behalf of BATAL, in respect of paragraph 48 of the proposed BATAL defence. That paragraph is in identical terms to paragraph 187 of the proposed BATAS defence. As I stated, paragraph 47 of the BATAL defence (and paragraph 186 of the BATAS defence) plead the overt acts to the alleged conspiracy. Paragraph 48 of the BATAL defence (and paragraph 187 of the BATAS defence) then plead:

“The acts done by the conspiracy parties were done on behalf of and for the interests of BATAL (BATAS).”

It is correctly pointed out on behalf of the plaintiffs that, generally, a company may not be found guilty for a criminal offence on the basis of vicarious liability.[26] In their written submissions, and in Mr Burnside’s oral submissions before me, counsel for the third defendant disavowed any intention to plead vicarious liability of BATAS and BATAL for the acts specified as overt acts in the proposed defences. In his oral submissions, Mr Burnside stated that the purpose of paragraph 48 of the BATAL defence (paragraph 187 of the BATAS defence) is to allege that the overt acts were carried out “for the benefit” of BATAS and BATAL, so as to lay a basis for reliance on the doctrine of unclean hands, in response to the claim for equitable relief by way of injunction. If that is the intention of the third defendant, then the paragraphs should be re-drafted to ensure that such an intention is clearly expressed in the language of the pleading. Further, in those circumstances, the positioning of the relevant paragraphs, immediately after the overt acts, and somewhat remote from the pleading of unclean hands, tends to obscure, rather than assist, in an understanding of the intended purpose of the plea. I would therefore not permit the pleading to go forward without appropriate amendment being made to paragraph 48 of the proposed defence in BATAL and paragraph 187 of the proposed defence in BATAS.

Elements of the tort of conspiracy: pleading of predominant purpose

[26]Presidential Security Services of Australia Limited v Brilley (above) [147] and following (Ipp J).

BATAS submits that the pleading of the predominant purpose alternative of the conspiracy is defective. Paragraph 185A(a) of the BATAS defence alleges: “The conspiracy was made with the sole or predominant purpose of injuring the prospective plaintiffs”. It is submitted on behalf of BATAS that a conspiracy may not have an intent; rather what is relevant is the intent of the conspirators. In support of that proposition, counsel relied on the statement by Dixon J in McKernan v Fraser[27]:

“It appears now to be settled that, for a combination or acts done in furtherance of the combination to be actionable in such circumstances, the parties to the alleged conspiracy must have been impelled to combine, and to act in pursuance of the combination, by a desire to harm the plaintiff, and that this must have been the sole, the true, or the dominating, or main purpose of their conspiracy.”

[27](1931) 46 CLR 343, 362.

In my view, the point made by BATAS is without substance. A conspiracy is actionable if either it constitutes an agreement to injure a plaintiff by unlawful means, or if the predominant purpose of the conspiracy was to injure the plaintiff. That formulation of the tort brings into focus the purpose or object of the conspiracy. Not uncommonly, the authorities speak in terms of the purpose or intent of “the conspiracy”.[28] Of course, the conspiracy does not exist as an independent entity; rather it is brought into being by the combined intentions of each of the parties. Nevertheless, a pleading of the common purpose of the conspiracy necessarily involves an allegation of the purpose and intention of each of the constituent members of the conspiracy. I consider that the shorthand expression of that intention, adopted in paragraph 185A(a) of the BATAS defence is adequate.

Essential elements of the tort of conspiracy: pleading of agreed unlawful means

[28]Maritime Union of Australia v Geraldton Port Authority (1999) 93 FCR 34, 102 [421] (R D Nicholson J); Dresna Pty Ltd v Misu Nominees Pty Ltd [2003] FCA 1537, [99] and following; Fatimi Pty Ltd v Bryant [2004] NSWCA 140, [13] (Handley JA); Lonrho Limited v Shell Petroleum Co Limited [1981] Com LR 74, 75 (Lord Denning MR).

Both BATAS and BATAL contend that the pleading of the second type of conspiracy, namely a conspiracy with the intention of using unlawful means, is inadequate. In particular, it is submitted that the bare pleading that the conspiracy was made with the intention of using unlawful means (BATAS proposed defence paragraph 185A(b); BATAL proposed defence paragraph 46A(b)) is defective, because the pleading fails to identify the unlawful means, which the conspirators agreed would be adopted for the purpose of injuring prospective claimants in tobacco litigation against BATAS and/or BATAL.

I consider that the submission made by both BATAS and BATAL is valid. Clearly, it is an essential element of the alternative type of conspiracy, sought to be pleaded, that the parties to the conspiracy agree to use unlawful means in order to injure the plaintiff.[29] In Elliott v Seymour[30], Ryan J held that the proposed pleading, of an unlawful means conspiracy, was objectionable, because the pleading had failed to properly identify the unlawful means agreed between the conspirators.
[29]Fatimi Pty Ltd v Bryant [2002] NSWSC 750, [176] (Campbell J); Maritime Union of Australia Limited v Geraldton Port Authority (above), [421].
[30][2000] FCA 694, [58]-[59].

In the course of argument, Mr Burnside stated that the agreed unlawful means were the overt acts alleged in the proposed defence. Those overt acts occurred at various times over an alleged fifteen year period. In such a pleading, it is necessary for the third defendant to identify properly the unlawful means, which it is alleged were agreed to be employed in the conspiracy. The pleading in each proposed defence is deficient in that regard, and I would not accept it in its current form.

Pleading of overt acts against BATAS

BATAS relies on three grounds, upon which to submit that the pleading of overt acts of the conspiracy, in paragraph 186 of the proposed defence, is defective.

First, it is submitted that the overt acts, in large part, do not disclose overt acts at all. It is contended that they are not allegations of “outward acts or conduct but are allegations of conduct combined with, and tendentiously coloured by, allegations about the alleged purpose with which the conduct was carried out”. I do not consider that that criticism is fairly made out. Each of the subparagraphs of paragraph 186 refer to particular categories of conduct alleged to be overt acts. Each of the paragraphs refer to specific conduct and, where necessary, set out, seriatim, specific acts constituting the conduct alleged. In my view, the pleading is not defective in the respect contended for by BATAS.

Secondly, it is submitted on behalf of BATAS that the overt acts, pleaded in paragraph 186, are incapable of supporting the allegation of conspiracy.

The submission made on behalf of BATAS involves, in the first instance, a rephrasing of each of the overt acts in a way which proceeds beyond simply removing from the third defendant’s pleading “spurious allegations of purpose” and “conclusionary language”. For example, paragraph 186 subparagraph (a) of the proposed defence pleads the establishment and implementation by BATAS and BATAL of a policy for the purpose of falsely providing an innocent explanation for the concealment and destruction of documents in their possession, which would or might be prejudicial to any defence in the contemplated litigation. It then provides three particulars, namely: that each of BATAS, BATAL and the Tobacco Industry Association, devised and implemented a document retention policy; that Wilson gave advice to BATAS in April 1990 to destroy all documents, other than those in the public domain, so that plaintiffs would be limited to oral evidence from persons who used to handle such documents; and that each of BATAS and BATAL destroyed documents in purported reliance on the document retention policies. That overt act is reduced, by BATAS in its submissions, to the following:

“(a) BATAS and BATAL established and implemented document retention policies.”

The submission then proceeds, in a similar way, to reduce and neuter each of the overt acts pleaded in paragraph 186, in a manner which, in my view, does not accurately or fairly reflect the import of the factual allegations made in each subparagraph of paragraph 186 of the proposed defence. Further, and as pointed out on behalf of the third defendant, the contention advanced on behalf of BATAS fails to take into account the united and combined effect of the overt acts in giving rise to the implication of the conspiracy contended for. As is common in a case of conspiracy, the party alleging the conspiracy (here the third defendant) relies on a process of inference, by which to establish the alleged conspiracy, that inference being based on a number of overt acts pleaded by the third defendant. The drawing of an inference does not take place by a series of independent judgments based on individual facts taken in isolation. Rather, the process of inferential reasoning involves a consideration of the united and combined force and effect of the overt acts, when taken together.[31] It is the relevant coincidence of a number of facts, considered in combination, which may or may not be sufficient to give rise to the inference contended for. In R v The Associated Northern Collieries[32], Isaacs J stated:

“Community of purpose may be proved by independent acts, but it need not be. If the other defendant is shown to be committing other acts, tending to the same end, then though primarily each set of acts is attributable to the person whose acts they are, and to him alone, there may be such a concurrence of time, character, direction and result as naturally to lead to the inference that these separate acts were the outcome of pre-concert, or some mutual contemporaneous engagement, or that they were themselves the manifestations of mutual consent to carry out a common purpose, thus forming as well as evidencing a combination to effect the one object towards which the separate acts are found to converge.”

[31]Chamberlain v R (No 2) (1984) 153 CLR 521, 536 (Gibbs CJ, Mason J).

[32](1911) 14 CLR 387, 400.

It must also be borne in mind that the drawing of inferences from admissible evidence is essentially a question of fact, to be determined on the evidence.[33] The relevant inferences to be drawn, and the question whether ultimately the evidence to be adduced in support of the overt acts support an inference of the existence of the alleged conspiracy, will significantly depend on the nature and quality of the evidence given at trial. The submission made on behalf of BATAS is, in effect, that at trial a court could not reasonably infer, on the balance of probabilities, the existence of the conspiracy contended for, from the overt acts pleaded in the proposed defence.
[33]Compare R v Cengiz [1998] 3 VR 720.

At this preliminary stage, I do not consider that it could be properly concluded that the combination of the overt acts, pleaded in paragraph 186 (even when the “tendentious” language is removed from them), could not, in combination, give rise to the implication of the conspiracy contended for on behalf of the third defendant. Thus, I do not consider that the pleading of the conspiracy is “hopeless” in the manner contended for by BATAS. In other words, in my view, the allegation of conspiracy, as thus pleaded, is not so untenable, implausible or improbable as to not give rise to a real question to be tried in the proceeding.[34]
[34]Fancourt v Mercantile Credit Limited (1983) 154 CLR 87, 99; Webster v Lampard (1993) 177 CLR 598, 602; Dey v Victorian Railways Commissioners (1949) 78 CLR 62, 91 (Dixon J).

The third basis upon which BATAS attacks the pleading of overt acts, in the proposed defence, is that paragraph 186 does not allege the overt acts with sufficient particularity, given the nature of the serious allegation for which they are pleaded in aid.

In particular, it is submitted that paragraphs 186(a), (b), (d) and (i) do not contain sufficient particularity. In support of that proposition, reliance was placed on the principle that where a conspiracy is alleged, sufficient particulars of the overt acts, relied on, must be pleaded, so as to clearly define the issues which are before the court.[35]
[35]R v Partridge (1930) 30 SR(NSW) 410, 412 (Ferguson J); R v Weaver (1921) 45 CLR 321, 333 (Gavan Duffy CJ, Starke and McTiernan JJ).

Each of the subparagraphs in question contain particulars. In addition, it would seem that the overt acts pleaded in subparagraphs (a) to (c) of paragraph 186 are largely related to the first and third alleged “crimes, frauds and civil offences” pleaded, in some detail, in paragraphs 42 to 121 of the amended defence. While the particulars of the overt act, pleaded in paragraph 186(d) standing alone, may not support the allegation of “collusion”, the question whether the alleged agreement referred to in paragraph 186(d)(iv) amounted to “collusion”, will depend on the relationship between the agreement referred to in that subparagraph and the other overt acts which are pleaded. On its own, paragraph 186(d) does, in any event, identify, with sufficient particularity, the nature of the agreement which is alleged to be the “collusion”. The same observations may be made relating to the overt act pleaded in paragraph 186(i). Thus, I do not consider that the overt acts, in paragraph 186, are deficient, for lack of particularity.

BATAS also objects to paragraph 186(j), which pleads that pursuant to and in furtherance of the conspiracy, BATAS, Maher, Wilson, Chalmers and Eggleton engaged in the specific acts of wrongdoing alleged in paragraphs 42 to 181. It is submitted that such a pleading is an unacceptable method of identifying the overt acts relied on to support the allegation of conspiracy. In particular, it is contended that the third defendant has failed to attempt a meaningful identification of the matters contained in paragraphs 42 to 181, which are said to be “overt acts”, and which support the inference of a conspiracy. Rather, it is submitted, the third defendant has deployed those 139 paragraphs in a “blanket fashion”, in the hope that ultimately some of them might prove useful.

In my view, the reference in 186(j), to each of the five alleged acts of wrongdoing, specifically pleaded in paragraphs 42 to 181, is sufficient. This case is quite distinct from the decision of the High Court in R v Weaver[36], relied on by BATAS. In that case, the High Court held that particulars of a criminal conspiracy, which referred, in globo, to all exhibits and documents tendered at the committal proceeding, did not sufficiently particularise the overt acts. By contrast, in this case the third defendant, in paragraphs 42 to 181, has pleaded five different acts of alleged wrongdoing, with supporting paragraphs in respect of each of them. I do not consider that such a pleading constitutes a “blanket” pleading of overt acts. The acts specified in paragraphs 42 to 181 have sufficient specificity to inform the plaintiff of the case which the third defendants will seek to make at the trial of the proceeding.
[36]Footnote above.

The role of the conspiracy allegation against BATAS

BATAS also contends that the proposed conspiracy plea serves no legitimate purpose, as it is based on allegations of overt acts, which themselves are alleged, in the defence, to be criminal acts performed by the plaintiff. No corresponding contention is directly advanced on behalf of BATAL in its written submissions, although I note that BATAL seems to make the same point, in those submissions, albeit on behalf of BATAS.

In criminal prosecutions, it is generally not permissible to combine a charge of conspiracy, on the same presentment, with a charge of the substantive offence, which is the subject of the conspiracy.[37] There is authority which suggests that the same approach, generally, is adopted in civil proceedings, where a pleading seeks to rely on both a conspiracy to commit a wrong, and also on the wrong itself, as separate causes of action.[38] On the other hand, in State of Queensland v Pioneer Concrete (Queensland) Limited[39] Drummond J expressed doubts whether the principle, which is applied in the criminal law, is also applicable to the pleading of alternative causes of action in a claim for civil damages.
[37]R v Hoar (1981) 148 CLR 32, 38 (Gibbs CJ, Mason, Aickin and Brennan JJ); 40-41 (Murphy J).
[38]McKellar v Container Terminal Management Services Limited (1999) 165 ALR 409, [195] (Weinberg J); Australian Wool Innovation Limited v Newkirk [2005] FCA 290, [63] (Hely J); Galland v Mineral Underwriters Limited [1977] WAR 116, 119 to 120 (Burt CJ).
[39][1999] FCA 499, [113]-[116].

In any event, I do not consider that the proposed pleading offends the principle, if it does apply to civil proceedings. The allegations of specific wrongdoing, contained in the BATAS defence, do not make a direct allegation against BATAL. In that defence, the only wrongdoing pleaded against BATAL is that it is alleged to have been a party to the conspiracy pleaded in paragraphs 185 to 188. Thus, an additional wrong is pleaded against BATAS in paragraphs 185-188 of the BATAS defence, namely, the act of combining, with BATAL and others, with the intention of injuring prospective plaintiffs in tobacco-related litigation. In that way, the conspiracy claim does plead an additional substantive wrongdoing against BATAS.

Further, the act of wrongdoing, pleaded in the BATAL defence, is confined to an allegation of conspiracy, pleaded in paragraphs 46 to 155 of that defence. In that defence, BATAS is pleaded to be a party to the conspiracy. The conspiracy so pleaded is the same conspiracy alleged in paragraphs 185 to 188 of the BATAS defence. It is highly likely, if not inevitable, that the two proceedings will be heard together. Thus, the allegation, that BATAS was party to the conspiracy, will be heard at the same trial, whether or not it is made in the pleading against BATAS.

Allegations against Wilson – proposed BATAS defence paragraphs 170-177

In paragraphs 163 to 168 of the proposed defence in the BATAS proceeding, the third defendant pleads that in 1990 Wilson gave advice to BATAS to destroy all documents, other than those in the public domain, so that potential plaintiffs would be limited to oral evidence from persons who used to handle such documents. The defence pleads that by giving such advice, Wilson committed the common law offence of attempting to pervert the course of justice. In paragraph 169, it is pleaded that BATAS did not call Wilson to give evidence in the hearing before Eames J in the McCabe proceeding. Paragraph 170 pleads findings made by Eames J, in those proceedings, concerning the conduct of Wilson. Paragraph 171 pleads that each of those findings was true.

Paragraph 172 of the proposed defence pleads that Wilson “made submissions, and gave evidence”, to the Court of Appeal in the McCabe proceeding to the effect:

(a)that he had not been involved in the representation of BATAS in that proceeding; and
(b)that the allegations made against him in the proceeding, and the findings made by Eames J in respect of him, were unsupported by evidence, and were untrue.

Paragraphs 174 and 175 allege that the submissions made, and evidence given, by Wilson in the Court of Appeal were intentionally misleading. Paragraph 176 alleges that Wilson thereby committed the common law offence of attempting to pervert the course of justice, and in paragraph 177 it is alleged that, accordingly, Wilson committed a crime or a fraud.

BATAS submits that the allegation in paragraphs 172(a) and (174) – that Wilson gave misleading evidence to the Court of Appeal that he had not been involved in the representation of BATAS in the McCabe proceeding – is identical to the allegation contained in paragraph 18V(a) and paragraph 18VB(a) of the previous proposed defence, which Byrne J rejected as unsupported on the facts pleaded in the proposed defence.[40] In my view, the same criticism could not now attach to the proposed defence. The particulars, provided under paragraph 172, include a reference to an affidavit sworn by Wilson in the Court of Appeal proceeding, in which he deposed that he was not involved in the representation of BATAS in those proceedings. Paragraph 171(b) alleges, with three specifics, that Wilson was involved in the representation of BATAS in the McCabe proceeding. The relevant issue of fact is thus sufficiently identified and defined in the pleading. The criticism, made by Byrne J of the previous pleading, was that the facts, upon which the misleading statement were made, do not support it. Particulars have now been provided as to the statements and evidence given by Wilson to the Court of Appeal. As I stated, paragraph 171(b) sufficiently identifies what are said to be the true facts. It will be a matter at trial to determine whether the evidence, given by Wilson to the Court of Appeal, was misleading. I consider that the particulars thus provided at paragraph 172 sufficiently cure the defect, which was referred to by Byrne J, to permit the allegation in the pleading before me to go forward.
[40][48].

It is further submitted on behalf of BATAS that the matters alleged in paragraph 171(b) do not have the capacity to demonstrate that the evidence and submissions of Mr Wilson, referred to in paragraph 172(a), were misleading in any sense. In my view, that proposition, insofar as it relates to the evidence given by Wilson to the Court of Appeal, is a matter to be assessed at trial. On the face of it, paragraph 171(b) alleges: involvement of Wilson, in February 2002, in a meeting relating to the documents which had been subpoenaed in the McCabe trial, including the Oxland file notes; a telephone call by Wilson to Travers during that meeting; and, subsequently, Wilson spending some time reading submissions filed on behalf of Mrs McCabe in those proceedings, and advising Travers that he was content with BATAS’s draft submissions in those proceedings. Those facts, if established, are capable of demonstrating that the evidence given by Wilson to the Court of Appeal, in his affidavit in support of his application for leave to appear on the appeal, was misleading in the sense alleged in the proposed amended defence.

On the other hand, I am not persuaded that the extracts from the submissions, made on behalf of Wilson to the Court of Appeal as to his involvement in the McCabe proceeding, and set out in the particulars to paragraph 172 of the proposed defence, could be characterised as misleading, in such a manner as to constitute an attempt to pervert the course of justice. The extracts of the submissions, in the particulars, demonstrate that the submissions were made in relation to the state of the evidence in the McCabe trial, and which was then before the Court of Appeal. Not surprisingly, the submissions did not, themselves, seek to put before the court any evidence from “the Bar table”. The suggestion that a submission, of the kind set out in subparagraphs (v) and (vi) of the particulars under paragraph 172, could be characterised as an attempt to pervert the course of justice, is unsupported by authority and principle. It runs counter to the adversarial nature of the court processes. I therefore would allow paragraph 172(a) of the proposed BATAS pleading (paragraph 164(a) of the BATAL proceeding), but subject to the deletion from it of the words “made submissions and”.

Paragraph 172(b) pleads that Mr Wilson made submissions, and gave evidence, to the Court of Appeal in the McCabe proceeding, that the allegations against him in those proceedings, and the findings by Eames J, were unsupported by evidence and/or untrue. Paragraph 171(a) of the proposed defence pleads that each of the findings of fact made by Eames J (as summarised in paragraph 170) were true.

BATAS takes exception to that pleading on three grounds. First, Mr Wheelahan SC, who appeared for BATAL with Mr D O’Meara, submitted that the plea, in paragraph 171(a), that the findings of Eames J were correct, is no more than a “bald assertion”. In my view, that criticism is valid. The allegation contained in the defence is a serious one. In order to support it, full particulars would be required, setting out the material facts relating to the state of the evidence before Eames J, and specifying how, given that state of the evidence, it would be intentionally misleading for Mr Wilson to have submitted (and stated on affidavit) that his Honour’s findings were unsupported by evidence. The complexity of that task itself raises a real issue as to the legitimate purpose to be served by paragraph 172(b) of the proposed defence. The global nature of the submission and the alleged evidence, made and given, to the Court of Appeal – that the allegations against Wilson, and the findings in respect of him, were unsupported and untrue – raises a real question as to the viability of an allegation that such a representation could be intentionally misleading. At best, such a representation to the court would be tendentious, when expressed in such general and global terms. In the absence of appropriate and specific particularisation, I would not permit the pleading to contain paragraph 172(b).

The second argument made by Mr Wheelahan, concerning paragraph 172(b), points to a further difficulty. The particulars under paragraph 172 only contain one item (subparagraph (iii)) in which Wilson is said to have claimed, in evidence to the Court of Appeal, that the findings and allegations (in the proceedings before Eames J) were untrue. That allegation was contained in an article in the Australian newspaper, exhibited to Wilson’s affidavit before the Court of Appeal. Without more, the placing of such an exhibit before the court could not constitute a submission and evidence, given to the court, to the effect alleged. In particular, it is not sensible to suggest that such an exhibit could have been intended to have the effect of intentionally misleading the Court of Appeal (or Mrs McCabe) as to the state of evidence before Eames J.

Thirdly, I agree with the submission by Mr Wheelahan that it could not be tenably contended that the offence of attempting to pervert the course of justice would be committed by a party to a proceeding, through his counsel, submitting to the Court of Appeal that particular findings, by a trial judge, were unsupported by evidence, even where such a submission lacked merit. Again, such a proposition is unsupported by authority and principle, and is inconsistent with the adversarial nature of our court process.

BATAL has not taken an objection to the same pleading against it in paragraph 164(b) of the proposed defence in the BATAL proceeding. However, for the same reasons which I have just enunciated, I would not permit the defence to go forward with paragraph 164(b).

In summary, then, I would allow paragraph 172(a) of the proposed BATAS defence, but by deleting from it the reference to Wilson “made submissions and”. I would disallow paragraph 172(b) of the proposed BATAS defence. It follows, from what I have stated, that subparagraphs (iii) to subparagraphs (vi) of the particulars under paragraph 172 are irrelevant, and should be deleted. Paragraph 173, 174 and 175 will need to undergo amendment, to delete reference to “submissions made” by Wilson to the Court of Appeal. The same conclusions apply, mutatis mutandis, to the relevant parts of the BATAL defence. In that defence, I would allow paragraph 164(a), subject to the deletion from it of the reference to Wilson “made submissions and”. I disallow paragraph 164(b). Subparagraphs (iii) to (vi) of the particulars under paragraph 164 are irrelevant and should be deleted. Paragraphs 165, 166 and 167 will need to be amended, to delete reference to the submissions made by Wilson to the Court of Appeal.

Allegations of criminal liability against BATAS: identification of the individual(s) who represented BATAS

In paragraphs 73, 116, 127, 135, 157, 167.1 and 167.2 of the proposed defence, the third defendant alleges criminal liability, both accessorial and direct, against BATAS. Objection is taken to those allegations, on the grounds that the proposed defence does not identify the individual(s), who is or are alleged to have committed the acts, and have had the relevant knowledge and intention, by which BATAS is alleged to have committed the offences, of which it is accused.[41] I note that BATAL does not make a similar objection.
[41]Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 2 AC 500, 506-507.

Paragraphs 116 and 167.1 and 167.2 plead direct liability of BATAS in relation to the implementation of the document retention policy and the destruction of discoverable documents. It would be unrealistic to expect the third defendant to know the precise identity of the individual, or individuals, who represented the relevant mind and will of BATAS in performing those acts. Paragraphs 127, 135 and 157 plead accessorial liability of BATAS in respect of evidence given by Eggleton in the McCabe proceeding. Essentially, the accessorial liability would be based on the proposition that the officer or employee of BATAS, responsible for instructing counsel in the McCabe trial, possessed the relevant intent, and performed the relevant acts. That knowledge would be peculiarly in the possession of BATAS, and not the third defendant. For the reasons which I have already set out earlier in this decision, I consider that the third defendant should be entitled to defer providing particulars, of the relevant individual or individuals, within each of the two plaintiffs, who directed their mind and will in respect of the acts which are alleged, until completion of discovery.

In this context, I observe that paragraph 73 of the BATAS defence is, on its face, rather curious. It alleges direct, as distinct from accessorial, liability of BATAS in respect of Travers filing an affidavit sworn by Chalmers in the McCabe proceeding. BATAS has not made a point about this aspect of the pleading in its submissions, and it was not the subject of argument before me. The direct liability is postulated on the rather surprising allegation, in paragraph 72, that BATAS filed the affidavit. Notwithstanding the curiosity of that proposition, I consider that, as with the other allegations, the third defendant should be entitled to defer providing particulars in relation to it until the completion of discovery.

Allegations of accessorial criminal liability against BATAS – paragraphs 127, 135 and 157 of the proposed defence

[86](1787) 1 Cox 318, 319.

In this case, both plaintiffs contend that the proposed defences do not plead any facts which would constitute a sufficient connection between the wrongdoing alleged in the proposed defence and the relief sought by the plaintiff. The requisite connection has been discussed in a number of authorities. A leading case is Meyers v Casey, to which I have referred above. In that case, the plaintiff was a member of the Victoria Racing Club. The stipendiary stewards disqualified him for twelve months for “suspicious practices”, in relation to the running of a horse at the Moonee Valley Club’s race meeting in December 1912. The plaintiff appealed against that decision to the Committee of the Victoria Racing Club, who dismissed the appeal. The plaintiff claimed relief on the ground that the stewards or the committee had no power to disqualify him for “suspicious practices”. The majority in the High Court held that although the stewards had no such power, the committee did, and that the decision of the committee was valid. However, a majority of the High Court also held that an injunction should be granted, restraining the expulsion of the plaintiff from the Victoria Racing Club, because the plaintiff had not been accorded natural justice.

In Meyers v Casey, the defendants contended that the plaintiff should not be entitled to equitable relief, because of his lack of clean hands which, it was argued, consisted of the “suspicious conduct” of the plaintiff in the running of the horse. That contention was rejected by the High Court, because the merits of the conduct of the plaintiff were not in issue in his application for relief; rather, what was in issue was the legality of the decision making processes of the stewards and the committee. Thus, Barton ACJ stated:

“His Honour who tried the case dismissed the action on the ground that the plaintiff, in seeking the assistance of equity, did not come into Court with clean hands. I do not think that his case can be met by the application of the maxim. The merits of the plaintiff’s conduct were not in issue before his Honour. The case raised by the claim and met by the defence was based purely on the asserted illegality of the decision against him. It was not its correctness, but its validity, that was contested in the Supreme Court. Its correctness was assumed for the purpose of the argument, but was not admitted as a fact. The plaintiff could not have been heard to declare his innocence in that proceeding. Evidence as to the turpitude or integrity of his conduct was not admissible on the case made.”[87]

[87]Page 111 to 112; see also 124 (Isaacs J, with whom Rich J agreed).

That principle has been considered and applied in a number of leading cases, including Moodie v Cox[88], Argyll v Argyll[89], and Hubbard v Vosper[90]. The authorities were examined, in some detail, by Campbell J in Black Uhlans Incorporated v New South Wales Crime Commission & Ors[91]. The question, then, is whether the pleading in each defence in this case sufficiently identifies the relevant connection between the alleged wrongful conduct of the plaintiff, and the relief sought by the plaintiff.
[88][1917] 2 Ch 71.
[89][1967] 1 Ch 302.
[90][1972] 2 QB 84, 101.
[91][2002] NSWSC 1060, [164]-[183].

I turn first to the BATAS defence. As I stated, the defence of “unclean hands” is specifically pleaded in respect of each of the six “crimes, frauds and civil offences” alleged in paragraphs 42 to 193 of the proposed defence. In respect of each such matter, the pleading is the same. I shall take, by way of example, the first “crime, fraud or civil offence” pleaded, in paragraphs 42 to 78. That pleading sets out a number of facts relating to what is alleged to be an attempt to pervert the course of justice, in respect of the destruction of documents discovered in the “Cremona” proceeding, and an affidavit sworn by Ms Chalmers, in the McCabe proceeding, relating to the documents discovered in the Cremona proceeding. In essence, the allegation is that the filing of Ms Chalmers’ affidavit, in the McCabe proceeding, constituted an attempt to pervert the course of justice by BATAS. Paragraph 75 pleads that information in Schedule 1 marked “1(b)” was not privileged, and disclosed the real likelihood of the existence of crimes or frauds. Paragraph 76 (which I have disallowed) states that some of the information in the Schedule 1 is information which is in the public interest to be disclosed. Paragraph 77 pleads that information marked 1(d) is information contained in communications which facilitated or furthered the commission of crimes or frauds, which is derived from a communication or communications which facilitated or furthered the commission of the crimes or frauds, or is information from which the existence of such a communication may be inferred. Paragraph 78 then seeks to plead the unclean hands principle. It states “… in the circumstances equity would not restrain the disclosure of the information set out in Schedule 1 to the substituted defence and marked ‘1(b)’ and ‘1(c)’ on the ground that BATAS has unclean hands”.

As I have stated, I have disallowed paragraph 76, and thus the reference to “1(c)” is irrelevant. What would remain is the reference to “1(b)”. However the plea, in paragraph 78, does not specify whether “the circumstances”, referred to in paragraph 78, are the same circumstances as those referred to in paragraph 75 (that is that the information is not privileged and discloses the existence or real likelihood of the existence of crimes or frauds), or whether paragraph 78 seeks to rely on a broader principle, in order to invoke the doctrine of unclean hands. That is, the pleading does not identify, even in a general form, the basis upon which the “unclean hands” doctrine is invoked. Thus, the pleading fails to inform both the plaintiff, and the Court, of the link between the information contained in the documents, and the wrongdoing alleged in paragraphs 42 to 78, of the proposed defence. One is left to guess whether that link is the same one spelt out in paragraph 75, or some other, and if so, what link. The same deficiency occurs in each of the other paragraphs in which the unclean hands doctrine is sought to be pleaded – paragraphs 111, 121, 140, 162, 181 and 193. That defect should be capable of reasonably simple rectification. What is necessary is that the third defendant specify how and in what manner it is alleged that, by reason of the wrongdoing specified in each of the sections of the pleading, equitable relief in respect of the information, which is the subject of the proceeding, should be denied to the plaintiff, under the doctrine of clean hands.

The same deficit occurs in the pleading of the unclean hands doctrine in paragraph 54 of the BATAL defence. It is insufficient for the third defendant to plead simply that “in the circumstances” equity would not restrain the disclosure of information set out in the schedule marked “b” or “c” on the ground that BATAL has unclean hands. The link between the information contained in the schedule, the wrongdoing alleged in the pleading, and the relief sought by BATAL, must be spelt out, in sufficient terms to enable both the plaintiff and the court to understand the ambit of the defence relied on. Again, the pleading begs the question as to whether it is being alleged that the plaintiff should be denied relief, for example, because it reveals a communication which facilitated or furthered the commission of the crimes or frauds alleged in the pleading, or some other broader basis.

A second deficiency, in the unclean hands plea in the BATAL defence, was correctly pointed out by Mr Connock in his submissions to me. Unlike the BATAS defence, the schedule in the BATAL defence does not identify, with any particularity, the particular overt act, or overt acts, constituting the wrongdoing, which it is alleged is or are the basis for pleading unclean hands in respect of that item of information. It is true, as submitted by Mr Burnside, that only one allegation of wrongdoing is made against BATAL, namely, involvement in the conspiracy which is alleged in the pleading. However, that conspiracy itself is said to be implied from a substantial number of overt acts pleaded in the proposed defence. The pleading of unclean hands lacks point, unless it is connected, in a sensible way, to the items of wrongdoing, which are pleaded in the defence. If more than one of the overt acts are referred to, or if there is an overlap, that can be sufficiently dealt with, as it is in the BATAS defence. However, BATAL is entitled to know which aspects of the overt acts (which by implication constituted the conspiracy) are so connected, in a relevant way, to the information, the dissemination of which BATAL seeks to restrain, as to entitle the third defendant to plead the clean hands defence, in response to the relief sought by BATAL.

For those reasons I shall not allow the clean hands defence pleaded in paragraph 54 of the BATAL defence, or in paragraphs 78, 111, 121, 140, 162, 181 and 193 of the BATAS defence, unless the deficiencies in the pleading of them, to which I have just referred, are appropriately remedied.

Crimes – fraud exception to legal professional privilege

In each proposed defence, the third defendant has pleaded the “crime, fraud” exception to legal professional privilege, which was enunciated by Stephen J in R v Cox & Railton[92]. In that case, Stephen J excepted, from the operation of legal professional privilege, a communication between a solicitor and a client, being a communication which is “… intended to further any criminal purpose”. That proposition has had many explications in the authorities. In Varawa v Howard Smith & Co Limited[93], Griffith CJ[94] expressed it in terms of a communication made for the purpose of enabling the client to carry out an unlawful enterprise. O’Connor J[95] stated the exception as applying to a communication constituting a step in, or preparatory to, or in aid of, the commission of a crime or a “civil fraud”. Isaacs J[96] stated that the communication must either be part of the commission of the crime, or incidental to it, in the sense that it must be a communication in furtherance of the illegal object. In this context, the exception is not confined to cases of crime and fraud, but also extends to communications made with the intention of frustrating the processes of law, and which may be described as a “fraud on justice”[97].
[92](1884) 10 QBD 153, 167.
[93](1910) 10 CLR 382; see also O’Rourke v Darbyshire [1920] AC 581, 604 (Viscount Finlay), 633 (Lord Wrenbury); Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501, 521-522 (Dawson J), 550-556 (McHugh J), 575-576 (Gummow J).
[94]Page 385.
[95]Page 386.
[96]389 to 390.
[97]Attorney-General for the Northern Territory of Australia v Kerney (1985) 158 CLR 510, 514 (Gibbs CJ); R v Bell; ex parte Lease (1980) 146 CLR 141, 156 (Stephen J).

In the BATAS defence, the exception is pleaded in respect of each of the six “crimes, frauds and civil offences” alleged in paragraphs 42 to 193 of the proposed defence. In each section, it is pleaded that the information, set out in Schedule 1 to the proposed defence and marked “1(d),” is either information contained in a communication, which facilitated or furthered the commission of the alleged crime or fraud, or is information which is derived from a communication or communications which facilitated or furthered the commission of the crime or fraud, or, alternatively, is information from which the existence of a communication or communications, which facilitated or furthered the commission of the crime or fraud, may be inferred.

The complaint made by BATAS, in respect of that pleading, is that it makes no attempt to identify the communications which are said to have been made to facilitate or further the relevant crime or fraud. That argument was illustrated to me by reference to document number 7 in the schedule, which was tendered on the application before me as a confidential exhibit. In relation to that document, it is submitted that, first, the pleading begs the question as to what is the communication alleged to have been contained in the advice, or from which the information contained in the advice is derived, or the existence of which can be inferred from the information contained in the advice. Further, in relation to any such communications, it is submitted that no material facts have been pleaded to demonstrate that it was the purpose of the communication to facilitate or further the relevant crime or fraud.

In response, it is pointed out on behalf of the third defendant that the information, referred to in Schedule 1, is contained in internal Clayton Utz documents, including board memoranda, draft board memoranda, chronologies and advices. The third defendant’s case is that it is to be inferred, from the character of the individual pieces of information, that it must have been derived from other communications, or alternatively that the existence of other communications can be inferred from the information. Those communications are, of their nature, peculiarly within the knowledge of BATAS. It is therefore unrealistic to expect a party in the position of the third defendant to be able to identify the antecedent communications with precision.

It is difficult to determine the competing contentions, which I have just recited, without regard to the documents referred to in the schedule. Taking document number 7 which, as I stated, was tendered on the application, two short observations can be made, which are pertinent to those submissions. First, the parts of the document, which contain information of the type to which the R v Cox & Railton exception is sought to be applied, could, I consider, be readily identified by the third defendant. For example, as pointed out by Mr Burnside in his submissions, paragraphs 22 and 24 point to particular communications to which, as I understand it, the third defendant claims that the exception to the privilege applies. That being so, I consider that the schedule to the defence should properly identify the part or parts of the document, to which it is said that the exception to the privilege applies. Indeed, I note that that process seems to have been undertaken in respect of nearly all of the other documents referred to in Schedule 1.

The second point, as contended by Mr Burnside, and as indeed confirmed by my reference to the confidential exhibit, is that the relevant communication, relied on by the third defendant, would, of necessity, be a communication which is peculiarly within the knowledge of BATAS. Taking document number 7 as a guide, there is no embarrassment, I consider, to BATAS if the third defendant does not, at this stage, give particulars as to the particular communications referred to.

In its submissions, BATAL makes two complaints. First, it is pointed out paragraph 53 of the proposed defence is pleaded so as to apply the R v Cox & Railton exception to communications facilitating the commission of crimes or frauds, but, on the other hand, other parts of the defence, referring to the same exception, seek to apply to “information” facilitating crimes or frauds, rather than to communications. In particular, reference is made to paragraph 31.1(d) of the proposed defence. In response, it is submitted on behalf of the third defendant that the matter is clarified by linking paragraph 31.1(d) to paragraph 53. While that response may clarify what is intended by paragraph 31.1(d), nevertheless the pleading in that paragraph should be consistent with paragraph 53 and, more importantly, should properly state the basis of the exception to legal professional privilege, upon which the third defendant seeks to rely.

The second criticism made by BATAL of this aspect of the pleading is that the schedule fails to identify the particular crime or fraud, which it is asserted that the information, contained in the schedule, facilitated or furthered. As Mr Connock pointed out in submissions, the proposed BATAL defence pleads (in paragraphs 55 to 169) some five overt acts, each of which are alleged to constitute crimes or frauds, together with a civil conspiracy. Paragraph 31.1(d) pleads that they are the crimes or frauds, which were facilitated or furthered by the relevant communications. Paragraph 53 is in similar terms, referring to “the said crimes or frauds”. The denotation, alongside each relevant piece of information in the schedule, of the letter “d”, thus does not identify which crime or fraud, or which crimes or frauds, were the subject of the relevant communications, which are contained in the information, or from which the information is derived, which is referred to in Schedule 1. By contrast, such specificity has been applied to the pleading of the exception in Schedule 1 of the proposed defence in the BATAS proceeding. I agree with Mr Connock’s submission in this respect. I would therefore require that the schedule to the BATAL defence contain a similar specification (by reference to the allegations in the defence) of the particular crime(s) or fraud(s) which is or are relied on for the R v Cox & Railton exception in respect of the pieces of information referred to in the schedule.

Finally, it is useful, in the present proceeding, to note the relevance of the issues relating to the R v Cox & Railton exception to privilege in their proper context. The plaintiffs do not seek to enjoin the use of privileged information by the third defendant. Nor would they be entitled to do so. It is well established that a claimant may not enjoin the use, by a third party, of documents, on the basis that the information contained in the documents is privileged, and that the claimant would be entitled to claim privilege, if the information was sought to be obtained from the claimant’s legal advisor.[98] Rather, as I stated, the claim by the plaintiffs in each case is to restrain the wrongful use, by the third defendant, of information claimed by them to be confidential, and which is in the hands of the third defendant. The issues raised in the claim include issues as to whether the alleged confidentiality is either negated by, or yields to, considerations such as the iniquity principle pleaded by the third defendant, and whether there has been conduct by the plaintiffs, sufficiently connected with that information, which would disentitle them to equitable relief by way of injunction or otherwise. In either case, the Court of Appeal, in Cowell v British American Tobacco Services Australia Ltd[99], stated that the remedy of injunction would not be withheld for want of clean hands, or because of iniquity, unless it amounts to the furtherance of crime or fraud or abuse of power (or other recognised exceptions to legal professional privilege). It is for that reason that it is important that the exception to the privilege, relied on by the third defendant, be adequately pleaded.
[98]Calcraft v Guest [1898] 1 KB 759, 763 to 764; Baker v Campbell (1983) 153 CLR 52, 67 (Gibbs CJ, dissenting), 80 (Mason J, dissenting), 109 to 110, (Brennan J dissenting) 129 (Dawson J); Cowell v British American Tobacco Australia Services Limited [2007] VSCA 301, [32].
[99][2007] VSCA 301, [35].

Paramount obligations

In its submissions, BATAL has taken issue with the plea by the third defendant, in the proposed defence, of a reliance on “paramount obligations” of Clayton Utz and Dale. Those obligations are contained in paragraph 10.3 of the proposed defence, which itself responds to paragraph 10 of the statement of claim. That paragraph pleads that there were implied terms of the retainers by BATAL of Clayton Utz that the solicitors not disclose information confidential to the plaintiff, which Clayton Utz held, obtained or used for the purposes or by reason of the retainer.

In response, in paragraph 10.3, the proposed defence pleads that the retainers were subject to five paramount obligations imposed on Clayton Utz and its partners. The first two obligations (subparagraphs (a) and (b)) are obligations of candour; the third (subparagraph (c)) is an obligation not to engage, or be involved in, conduct which is dishonest, prejudicial to the administration of justice or likely to diminish public confidence in the legal profession or the administration of justice; the fourth (subparagraph (d)) is an obligation to disclose to the Law Institute and the Legal Practice Board the occurrence of any conduct which might be dishonest, prejudicial to the administration of justice, or likely to diminish public confidence in the legal profession of the administration of justice; and the fifth (subparagraph (e)) is an obligation to disclose information in circumstances in which the law would compel its disclosure, and for the sole purpose of avoiding the probable commission or concealment of a serious criminal offence. The particulars to paragraph 10.3 state that the obligations arise under common law, or alternatively are to be implied from ss 64 and 137 of the Legal Practice Act 1996 and rules 1A(2) and (3) of the Professional Conduct and Practice Rules 2000.

I note that the BATAS defence does not appear to contain a similar plea relying on the paramount duties alleged in the BATAL defence.

It is submitted on behalf of BATAL that there is nothing in ss 64 and 137 of the legal Practice Act, or in Rules 1A(2) and (3), which gives rise to or supports the implication of the obligations alleged in paragraphs 10.3(d) or (e). I agree with that contention. While, at a preliminary stage, I would be slow to disallow alleged implied terms, nevertheless, nothing has been put on behalf of the third defendant which could conceivably support obligations of the type alleged in paragraph 10.3(d) and (e) of the proposed defence, and I shall therefore disallow those two subparagraphs.

Paragraph 31.1(e)(ii) of the proposed defence pleads that the information, set out in Schedule 1 to the proposed defence, and marked “b”, “c” and “d”, is information which discloses the existence, or the real likelihood of the existence, of a breach of the paramount obligations referred to in paragraph 10.3 of the defence. Mr Connock submitted that that pleading is deficient, because it fails to properly identify the alleged breach of the paramount obligations, which are sought to be relied on. In particular, he submitted that Schedule 1, in combination with paragraphs 31.1(e)(ii), fails to identify which of the paramount obligations, alleged in paragraph 10.3, on each defence, were breached. Further, he submitted that it does not identify the facts constituting the breach of the paramount obligations, which it is alleged that the information, referred to in Schedule 1, discloses. In particular, no plea has been made identifying which act is alleged to have breached the relevant paramount obligation, being the breach which is said to be disclosed by the information contained in Schedule 1.

I consider that there is merit in the second aspect of the objection raised by the plaintiff BATAL. Presumably, the conduct, constituting the breach of the paramount duties alleged in paragraph 10.3, is conduct which is alleged in the proposed defence. It should be possible, however, by reference to paragraphs of the defence, to identify the facts constituting the breach of the paramount duties, which it is alleged the information, contained in Schedule 1, discloses. In the absence of such specification, the plaintiff and the Court are left to speculate as to what conduct is relied on, in each case, as the breach of the paramount duty which it is said is revealed by the information. On the other hand, I do not consider that it is necessary for the third defendant to identify which of the paramount duties, pleaded in paragraph 10.3, were the subject of the breach. The three duties which have been properly pleaded – in subparagraphs (a), (b) and (c) – are all interrelated duties of candour and honesty. I do not consider it would be necessary, or indeed useful, for the third defendant to be required to specify which of those duties were the subject of the alleged breach.

Before passing from this topic, I do make one observation about the manner in which the paramount duties are relied on in the BATAL defence. As I stated, paragraph 10.3 of that defence pleads that the contractual duty of confidentiality by Clayton Utz to its client was subservient to, and yielded to, the higher duties of candour and probity of the solicitors. That qualification, to the solicitor’s duties of confidentiality, may, in an appropriate case, justify the practitioner revealing to the court information, which may not necessarily be in the client’s interest. However, paragraph 31.1(e)(ii) does not directly rely on that qualification to the contractual duty of confidentiality, as a justification for the use and dissemination of the information by the third defendant. Rather, paragraph 31.1(e)(ii) pleads that the information reveals breaches by the practitioners of the paramount duties specified in paragraph 10.3, apparently as a defence to the plaintiff’s claim that the third defendant is not entitled to use, or disseminate, the information because it is confidential. The proposed defence does not, it seems to me, identify why it is that the disclosure, of breaches by the solicitors of their paramount duties in the information, operates by way of a defence to a claim by BATAL that the third named defendant is not entitled to disseminate or use the information. In other words, it seems to me that the proposed defence does not plead why the fact, that the information reveals breaches by the solicitors of their paramount duties, negates the confidentiality of the information, or is a defence to the claim by the plaintiff to enforce that confidentiality. This point has not been raised by BATAL. The observations which I have just made may be due to the fact that I have only recently taken over the management of this matter, and thus I may not fully understand the pleadings. However, I see fit to make the observation, in order to ensure that the pleadings are properly directed to the claim for confidentiality, and thereby serve a useful purpose in the proceeding.

Conclusions

It is evident from the foregoing that there are a number of defects in the proposed pleadings which require attention, before the proposed pleading could stand as the third defendant’s defence in each proceeding. I have explained those matters in some detail in these reasons. For convenience I summarise them (by reference to the paragraphs in these reasons in which they are stated) as follows:

(1)The date upon which it is alleged that particular persons or companies joined the conspiracy (BATAL defence paragraph 46; BATAS defence paragraph 185) must be consistent with the overt acts and particulars (see paragraph 47 above).
(2)The pleading in each defence (BATAL defence paragraph 48; BATAS defence paragraph 187) that “the acts done by the conspiracy parties were done on behalf of and for the interests of BATL (BATAS)” must be amended in accordance with paragraph 49 of these reasons.
(3)The pleading in each defence (BATAS defence paragraph 185A(b) and BATAL defence paragraph 46A(b)), that the conspiracy was made “with the intention of using unlawful means”, must properly identify the unlawful means, which it is alleged were agreed to be employed in the conspiracy (paragraph 54, above).
(4)In respect of the allegations that Wilson attempted to pervert the course of justice in evidence given, and submissions made, before the Court of Appeal, the phrase “made submissions and” should be deleted from paragraph 172(a) of the proposed BATAS defence, and paragraph 164(a) of the proposed BATAL defence. Paragraph 172(b) of the proposed BATAS defence, and subparagraphs (iii) to (vi) of the particulars, are to be deleted from the BATAS defence. Paragraphs 173, 174 and 175 of the BATAS defence are to be amended to delete reference to submissions made by Wilson to the Court of Appeal. The same conclusions apply to the relevant parts of the BATAL defence. Accordingly, the phrase “made submissions and” is to be deleted from paragraph 164(a) of that defence. Paragraph 164(b), and subparagraphs (iii) to (vi) of the particulars under paragraph 164, are to be deleted. Paragraphs 165, 166 and 167 are to be amended to delete reference to submissions made by Wilson to the Court of Appeal. (See paragraph 81 above).
(5)The pleading against BATAS and BATAL of accessorial liability, in respect of the evidence given by Eggleton in the McCabe proceeding (BATAS defence paragraphs 126, 134, 156; BATAL defence paragraphs 126, 134, 152) should be amended to properly reflect the formulation of accessorial liability outlined in the course of oral submissions before me (above paragraph 92).
(6)Schedule 3 to each defence will require amendment (paragraphs 100, 101 above).
(7)I have disallowed the “public interest” defence to claims made by the plaintiff based on equitable obligations of confidentiality. On that basis it would seem that the following paragraphs should be deleted from the defences: BATAS defence paragraphs 13.1(c), 26.3(c), 76, 119, 138, 160, 179, 191; BATAL defence paragraphs 11.1(c), 19(b)(iii), 19(h)(vi), 21(a)(vi), 22(c), 31.1(c), 35(b)(iii), 41(b)(iii), 52. (See paragraph 117 above).
(8)Schedule 1 to the BATAL defence needs to be amended to reflect, with specificity, what crime or crimes, or fraud or frauds, are alleged to be disclosed by the information referred to in the schedule, as a basis for the iniquity plea which is made in the defence. (Paragraph 124 above).
(9)I have disallowed the plea relating to the implied contractual term of “public interest” in paragraph 12.2(c) of the BATAS defence and paragraph 10.2(c) of the BATAL defence. Each defence will need to undergo appropriate amendments to reflect that ruling (paragraph 138 above).
(10)I have disallowed the “public interest defence” pleaded to claims by BATAS for maintenance of professional confidence. Accordingly paragraphs 13A(1)(c), 13B.1(c), 26.4(c) and 40D(b)(viii) of the proposed BATAS defence are to be deleted (paragraph 141 above).
(11)I have disallowed those parts of the defences which seek to rely on implied terms or qualifications based on the concept of “unclean hands”. Thus in the BATAS defence I have disallowed paragraphs 12.2(e), 13.1(e), 13A.1(e), 13B.1(e), 26.2(e), and 26.4(e). I have disallowed, in the BATAL defence, paragraphs 10.2(e), 11.1(e), 13.1(e), 19(b)(v), 19(h)(vi), 22(f). (Paragraph 146 above). In each instance, appropriate amendments will need to be made to the two proposed defences.
(12)The pleading of the defence of unclean hands, to the claim for equitable relief, in paragraphs 75, 111, 121, 140, 162, 181 and 193 of the BATAS defence is deficient, because it fails to identify how and in what manner it is alleged that, by reason of the wrongdoings specified in the preceding paragraphs of the pleading, equitable relief should be denied to the plaintiff under the doctrine of unclean hands. The same deficiency affects the pleading of the unclean hands defence in paragraph 54 of the BATAL defence. (Paragraphs 154, 155 above). In addition, the schedule in the BATAL defence should be amended so as to properly link the claim, in respect of the pieces of information referred to in the schedule, to specific aspects of wrongdoing alleged in the defence (paragraph 153 above).
(13)In respect of the pleading of the crime fraud exception to legal professional privilege the following deficiencies are contained in the proposed defences:
(a)       In the BATAS defence, the schedule does not identify, in respect of each of the documents, the part or parts of the document, to which it is said that the exception to the privilege applies (paragraph 162 above).
(b)      Paragraph 31.1(d) of the BATAL defence does not correctly plead the exception, which applies to communications, rather than to information (paragraph 164 above).
(c)       The schedule to the BATAL defence does not specify which crime or crimes were facilitated or furthered by the relevant communications which are revealed by the information. (Paragraph 165 above).
(14)In respect of the plea relating to paramount duties in the proposed BATAL defence:
(a)       I have disallowed the plea of the paramount duties alleged in paragraphs 10.3(d) and (e) of the proposed defence. (Paragraph 170 above).
(b)      Schedule 1 fails to identify the facts constituting the breach of the paramount duties pleaded in the defence. (Paragraph 172 above).

Although the foregoing points to a number of individual matters which require rectification in each defence, nevertheless, my analysis of the proposed defences reveals that, basically, the structure of each defence is sufficiently sound as to form a foundation for a pleading to be put forward on behalf of the third defendant in both proceedings. That being so, I consider that the appropriate orders which I should make in each proceeding is to give leave to the third defendant to file and serve an amended defence in the form of the proposed amended defence in each case which was under consideration by me, but subject to compliance with the matters, which I have stipulated in the conclusions to this judgment.

In expressing those views, I am mindful of the history of the pleading in this case, which has been set out, extensively, in the written submissions by each of the plaintiffs. It is no understatement to describe that history as largely tortured and difficult. Nevertheless the fact remains that the third defendant has now put forward, on her behalf, defences which, as I say, are basically structurally sufficient. It would not be constructive for me simply to disallow the defences, in toto, and to return the third defendant, in each case, “to the drawing board”. Rather I consider that it is in the best interests of all the litigants that orders be made in a manner, which will enable the deficiencies in the pleadings to be repaired, and for the interlocutory steps in the case to proceed, hopefully without undue delay.

Proposed orders

Accordingly, I propose, in each case, to make orders giving leave to the third defendant, in each proceeding, to file and serve an amended defence, in the form of the defence put before me, but complying with the conclusions which I have summarised in paragraph 173 above. I am, however, mindful that I am delivering these reasons for decision on the eve of Christmas. I shall therefore defer pronouncing orders, in accordance with these reasons, until I have given the parties the opportunity to make appropriate submissions as to the form of the orders. I propose to adjourn the case until 1 February next, for the purpose of making orders in accordance with this ruling, and to give directions for the further disposition of the proceeding. For that purpose, I require the practitioners for the third defendant to prepare, and to forward to the practitioners for each plaintiff, and to my Associate, a draft of the orders which the third defendant proposes I should pronounce, and directions which I should give, on 1 February. In that respect I suggest that the directions provide for the delivery of an amended defence by the end of February 2010; the delivery of a reply within three weeks; and the filing and serving of affidavits of documents, by each party, no later than 31 May 2010.

The plaintiff’s statements of claim

As I stated, at the commencement of argument before me, consent orders were made in each of the two proceedings, which had the effect of bringing to an end the claims against Mr Gordon and Slater & Gordon. In each proceeding the amended statement of claim contains allegations against those two defendants, some of which may not now be applicable to the claim made against the third defendant. Accordingly, consideration should be given, by the legal advisers to each plaintiff, to identifying which part or parts of the amended statement of claim in each proceeding is no longer applicable, so as to clarify, with some precision, the claims which are asserted against the third defendant in each proceeding.

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[2009] VSC 619

24 December 2009