Byrne v Production Magic Pty Ltd

[2012] ACTSC 160

BYRNE v PRODUCTION MAGIC PTY LTD & ORS
[2012] ACTSC 160 (9 OCTOBER 2012)

EX TEMPORE REASONS FOR RULINGS AND ORDERS
(REVISED FROM THE TRANSCRIPT)

No. SC of 790 of 2006

Judge:              Foster J
Supreme Court of the ACT

Date:               9 October 2012

IN THE SUPREME COURT OF THE       )
  )          No. SC 790 of 2006
AUSTRALIAN CAPITAL TERRITORY    )          

BETWEEN:SIMON VINCENT BYRNE

Plaintiff

AND:PRODUCTION MAGIC PTY LTD (ACN 093 782 588)

First Defendant

GARYWOODBRIDGE

Second Defendant

GREGORY ALLAN WILLIAMS

Third Defendant

IVAN STEFANCHUK

Fourth Defendant

BETTER MUSIC PTY LTD (ACN 008 626 186)

Fifth Defendant

GREGORY EDWARD SOULSBY

Sixth Defendant

GREG SOULSBY PTY LTD (ACN 085 018 159)

Seventh Defendant

ORDER

Judge:  Foster J
Date:  9 October 2012
Place:  Sydney (via video link to Canberra)

THE COURT:

1. ORDERS that the Subpoena to Produce Documents dated 20 September 2012 issued to the plaintiff at the request of the first defendant be wholly set aside.

1. In respect of each of the Subpoenas to Produce Documents issued at the request of the plaintiff and served upon Production Magic Contract Audio Visual Pty Ltd, Production Magic CS Pty Ltd and Production Magic Audio Visual Solutions Pty Ltd on 18 September 2012, NOTES that:

(a)The arguments advanced by the defendants and the subpoenaed parties that the subpoenas are invalid based upon the Service and Execution of Process Act 1992 and the Rules of Court are now abandoned;

(b)Paragraphs 2(d), 3(d) and 4 of each of the said subpoenas will be answered; and

(c)The defendants and the subpoenaed parties maintain their contention that the subpoenas are expressed too widely and are oppressive; and

ORDERS that each of the said subpoenas be stood over to the commencement of the hearing.

1. ORDERS that production in answer to paragraphs 2(d), 3(d) and 4 of each of the said subpoenas will be achieved if the documents in answer to those paragraphs are produced to the legal representatives of the plaintiff by no later than 5.00 pm on 10 October 2012 upon the undertaking of those legal representatives to bring the documents produced in this fashion to Court at the commencement of the hearing.

1. ORDERS that the defendants produce to the legal representatives of the plaintiff by 5.00 pm on 10 October 2012 the documents listed at paragraphs 3–10 of the list of privileged documents located at pages 58–61 of Exhibit A tendered before the Court this day (9 October 2012).

1. ORDERS that the costs of and incidental to the plaintiff’s application filed on 5 October 2012 be the plaintiff’s costs in the cause.

1. ORDERS that any further argument about the Subpoena to Produce Documents issued to Meyer Vandenberg on 14 September 2012 be adjourned to the commencement of hearing.

1. EXTENDS to 5.00 pm on 10 October 2012 the time for compliance with Order 13 made on 10 August 2012.

1. The plaintiff has applied to the Court on an urgent basis for certain relief in respect of several subpoenas issued by the parties in this proceeding.

1. The defendants issued a Subpoena to Produce Documents dated 20 September 2012 to the plaintiff.  The plaintiff seeks an order setting aside that subpoena.  Counsel for the defendants has informed me that his clients do not resist the making of that order.  Accordingly, I make that order.

1. Counsel for the defendants has also informed me that the parties have agreed a confidentiality regime in respect of documents produced in answer to Subpoenas to Produce Documents issued to the fourth, sixth and seventh defendants.  For that reason, I need not be further concerned to resolve disputation in respect of those subpoenas.

1. Counsel for the plaintiff has informed me that certain other matters in respect of which his client had applied to the Court have also been resolved.  He said that:

(a)        The defendants had abandoned their contentions in respect of the Subpoenas to Produce Documents issued to each of Production Magic Contract Audio Visual Pty Ltd, Production Magic CS Pty Ltd and Production Magic Audio Visual Solutions Pty Ltd to the effect that all of those subpoenas were invalid by reason of non-compliance with the Service and Execution of Process Act 1992 (A.C.T.) and the Rules of Court;

(b)        Agreement had been reached that some additional documents would be produced in answer to those subpoenas; but

(c)        The defendants maintained their contentions that some of the categories of documents called for by the subpoenas are too wide and that the subpoenas should be set aside, at least in part; and

(d)        The parties would continue to discuss the outstanding issues in respect of those subpoenas.

1. Counsel for the plaintiff has suggested that, in light of the matters to which I have referred at [4] above, all three of those subpoenas should be stood over to the commencement of the hearing. Counsel for the defendants does not oppose that course. Accordingly, I propose to do as Counsel for the plaintiff has suggested.

1. Once the concessions and agreements referred to at [2]–[5] above had been made, only one matter remained in contest between the parties. The issue which remained was whether client legal privilege subsisted in 22 documents listed in a four page list headed “List of Privileged Documents produced by Meyer Vandenberg Lawyers under Subpoena”, a copy of which list was tendered in evidence before me at pp 58‑61 of Exhibit SAM-4 to the affidavit of Shelley Anne Mulherin affirmed on 5 October 2012 (which is part of Exhibit A on the present application) (the privilege list). 

1. Those documents comprise communications between the first defendant and Meyer Vandenberg and between Counsel retained by Meyer Vandenberg on behalf of the first defendant and Meyer Vandenberg created in the period from 13 October 2005 to 19 April 2006.

1. It was common ground between the parties that the documents in the privilege list were all privileged when created and that the privilege was that of the first defendant.  Furthermore, Counsel for the defendants conceded that the plaintiff was entitled to inspect those documents created in the period prior to the date of his undisputed resignation as a director:  That is, he was entitled to see those documents created prior to 3 November 2005 (Documents 1, 2, 21 and 22).  He would also be entitled to inspect Documents 19 and 20 in the privilege list if each of them is truly dated 15 February 2005.  There was a suggestion that each of those documents was actually created in February 2006 and misdated.  The documents which it is conceded should now be produced should be produced by 5.00 pm tomorrow (10 October 2012). 

1. The privilege argument was then confined to whether the first defendant had waived privilege in Documents 3–17 in the privilege list.  With the consent of the parties, for the purpose of resolving the disputed privilege claim, I inspected all of the documents listed in the privilege list. 

1. The plaintiff includes within the causes of action relied upon by him in this proceeding a claim for oppression.  That claim focuses on the way in which his co-shareholders in the first defendant conducted themselves in relation to his attempts to terminate his relationship with the first defendant. 

1. The plaintiff and the second, third, fourth and sixth defendants and others had previously entered into a Directors and Shareholders Agreement dated 10 November 2000 (the shareholders agreement) in which, amongst other things, the parties agreed that, should one of the individuals, being directors and shareholders of the first defendant, wish to resign as a director of that corporation, a procedure for offering the retiring director’s shares to the remaining shareholders would automatically be engaged.  In the present case, attempts were made to engage that procedure in late 2005 and there are disputes amongst the parties as to the efficacy of various parties’ attempts to do so. 

1. After an earlier attempt to resign as a director of the first defendant, the plaintiff purported again to resign as a director of the first defendant on 3 November 2005.  The parties accept that, if the earlier resignation was ineffective, the resignation of 3 November 2005 was certainly effective.  As a result of that resignation, the share transfer provisions of the shareholders agreement were engaged in respect of the plaintiff.  This resulted in compulsory transfers of shares being executed on 12 December 2005.  The fact that these transfers had been effected was notified to the Australian Securities and Investments Commission on 22 December 2005.

1. It appears that, from some time in October 2005 until well into 2006, the individual defendants sought and received advice from Meyer Clapham, a firm of solicitors in Canberra, in relation to the meaning of the shareholders agreement and the efficacy of the plaintiff’s attempts to terminate his relationship with the first defendant.  Meyer Clapham is an earlier manifestation of Meyer Vandenberg who are currently the solicitors for the defendants. 

1. Counsel for the plaintiff submits that his client is entitled to Documents 3–9 in the privilege list on two bases.  The first is that the shareholders agreement itself entitles him to see these documents.  In this regard, he relies upon cl 22.4 which is in the following terms. 

Information to Shareholders

The Company will keep each of the Shareholders fully informed regarding its business and financial affairs and provide prompt and adequate particulars of any past, current or intended future transaction or matter in response to written inquiries made by any of the Shareholders. 

1. The second basis is that the defendants have produced without claiming privilege an email dated 18 January 2006 to which is attached a draft letter which the author of the email intended to send to his opposite number representing the plaintiff.  That email is in the following terms:

From:              Philip Clacher
Sent:               Wednesday, 18 January 2006 11:17 AM
To:                  ‘[email protected]’
Subject:          Simon Byrne

Attachments:    PO24.DOC

Dear Gary

I have drafted a reply to yesterday’s fax (see attached).

I need some information from you.  Please confirm the amount of the payment I have calculated is in fact correct.  Please also advise the date on which the directors and the general meeting changed the dividend resolution.  I imagine it was in December sometime, after Byrne’s shares had been transferred and before 31 December when the balance of the dividend payment was due.  Is that correct?

Regards

Philip Clacher
Associate

1. The draft letter attached to this email contains a detailed exposition of the defendants’ reasons and arguments in support of their contention that the November transfer notice was defective but that nonetheless the defendants’ subsequent conduct in effecting transfers of the plaintiff’s shares was effective.  The subject matter of the email and the draft letter was referred to in the earlier communications in respect of which privilege had been claimed then abandoned.  

1. As far as document 10 in the list of privileged documents is concerned, the only basis upon which the plaintiff now seeks production of that document is that privilege has been waived by the production on discovery of the email of 18 January 2006 and the production now of the October 2005 communications.  The plaintiff did not seriously press any argument in support of the proposition that Documents 11–16 in the privilege list should be produced.  These documents are all dated April 2006. 

1. Counsel for the defendants has resisted production, submitting that cl 22.4 is a general clause which was never intended to cover the production of communications of the kind in play here, particularly in circumstances where there may have been disputation among the parties to the shareholders agreement.

1. In addition, Counsel for the defendants submitted that the email of 18 January 2006 did not constitute a disclosure of information or advice of such a character and to such an extent that documents created in November or December 2005 dealing with the same general subject matter should now be required to be produced.  He submitted that, for there to be a waiver of the privilege, the plaintiff needed to demonstrate that there was specific information which had been disclosed which carried with it an obligation to disclose all cognate communications, otherwise unfairness would obtain.

1. It seems to me that, in respect of documents 3–9, cl 22.4 does entitle the plaintiff to see the documents.  Whilst I accept that it is a clause expressed in general terms, nonetheless, having regard to the agreement as a whole, it seems to me that the parties did intend that, in circumstances where the company’s business or financial affairs were the subject of external advice or communications relevant to those affairs, all of the stakeholders would have an entitlement to see the advice or information provided.

1. As far as the question of waiver is concerned, it seems to me also that, once the email of 18 January 2006 was disclosed, in circumstances where the earlier communications in October 2005 are also now to be disclosed, those disclosures carry with them necessarily a need for disclosure of emails and other communications dealing with the same general subject matter in the period post October 2005 up to 18 January 2006.  In the end, that means that documents 3–10 ought to be produced for this reason.

1. For all of the above reasons, I will order that the defendants produce to the plaintiff Documents 3–10 listed in the privilege list by 5.00 pm tomorrow, 10 October 2012. 

   I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Justice Foster.

   Associate: 

   Date:     17 October 2012

Counsel for the plaintiff:  Mr K Andronos
Solicitor for the plaintiff:  DibbsBarker
Counsel for the defendants:  Mr PA Walker
Solicitor for the defendants:  Meyer Vandenberg
Date of hearing:  9 October 2012
Date of judgment:  9 October 2012