Carey v Korda
[2012] WASCA 228
•15 NOVEMBER 2012
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT : THE COURT OF APPEAL (WA)
CITATION: CAREY -v- KORDA [2012] WASCA 228
CORAM: MARTIN CJ
NEWNES JA
MURPHY JA
HEARD: 8 AUGUST 2012
DELIVERED : 15 NOVEMBER 2012
FILE NO/S: CACV 132 of 2011
BETWEEN: NORMAN PHILLIP CAREY
First Appellant
QUARTZ NOMINEES PTY LTD
Second AppellantAND
MARK ANTHONY KORDA As Receiver and Manager of Huntingdale Village Pty Ltd (Receivers and Managers Appointed), Silkchime Pty Ltd (Receivers and Managers Appointed), Vannin Pty Ltd (Receivers and Managers Appointed), Warwick Entertainment Centre Pty Ltd (Receivers and Managers Appointed), Paragon Apartments Ltd (Receivers and Managers Appointed), Westpoint Corporation Pty Ltd (Receivers and Managers Appointed (In liq), Bayview Port Melbourne Ltd (Receivers and Managers Appointed) (In liq) and Westpoint Management Ltd (Receivers and Managers Appointed) (In liq)
First named First RespondentDAVID JOHN WINTERBOTTOM As Receiver and Manager of Huntingdale Village Pty Ltd (Receivers and Managers Appointed), Silkchime Pty Ltd (Receivers and Managers Appointed), Vannin Pty Ltd (Receivers and Managers Appointed), Warwick Entertainment Centre Pty Ltd (Receivers and Managers Appointed), Paragon Apartments Ltd (Receivers and Managers Appointed), Westpoint Corporation Pty Ltd (Receivers and Managers Appointed) (In liq), Bayview Port Melbourne Ltd (Receivers and Managers Appointed) (In liq) and Westpoint Management Ltd (Receivers and Managers Appointed) (In liq)
Second named First RespondentPERPETUAL NOMINEES LTD
Second Respondent
ON APPEAL FROM:
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram :EDELMAN J
Citation :CAREY -v- KORDA & WINTERBOTTOM [No 2] [2011] WASC 220
File No :COR 147 of 2010
Catchwords:
Evidence - Privilege - Legal professional privilege - Receivers and managers - Whether solicitors engaged by receiver and manager are engaged to act for company - Whether sufficient basis to maintain claim for legal professional privilege over bills of costs and recharge schedules - Whether legal professional privilege waived - Whether privilege abrogated by statute
Legislation:
Corporations Act 2001 (Cth), s 290, s 419, s 420A, s 421, s 423
Legal Profession Act 2008 (WA), s 467, s 468, s 469
Legal Practice Act 2003 (WA), s 201, s 228, s 232, s 234
Result:
Appeal allowed in part
Category: A
Representation:
Counsel:
First Appellant : Mr A Metaxas
Second Appellant : Mr A Metaxas
First named First Respondent : Mr J Stoljar SC & Mr M J Feutrill
Second named First Respondent : Mr J Stoljar SC & Mr M J Feutrill
Second Respondent : Mr J Stoljar SC & Mr M J Feutrill
Solicitors:
First Appellant : Metaxas & Hager
Second Appellant : Metaxas & Hager
First named First Respondent : King & Wood Mallesons
Second named First Respondent : King & Wood Mallesons
Second Respondent : King & Wood Mallesons
Case(s) referred to in judgment(s):
AGL Victoria Pty Ltd v Lockwood [2003] VSC 453; (2003) 10 VR 596
Ainsworth v Wilding (1900) 2 Ch 315
Allmark v Mossensons (a firm) [2006] WASCA 127
Apple v Wily [2002] NSWSC 855
Australian Mutual Provident Society v Geo Myers & Co Ltd (in liq) [1931] HCA 31; (1931) 47 CLR 65
AWB Ltd v Cole (No 5) [2006] FCA 1234; (2006) 155 FCR 30
AWB Ltd v Cole [2006] FCA 571; (2006) 152 FCR 382
Boulos v Carter (as recs & mgrs of Tarbs World TV Australia Pty Ltd) [2005] NSWSC 891; (2005) 220 ALR 572
Bride v Freehill Hollingdale & Page (Unreported, WASCA, Library No 950548, 16 October 1995); (1996) ANZ Conv R 593
Brookfield Multiplex Ltd v International Litigation Funding Partners Pte Ltd (No 2) [2009] FCA 449; (2009) 180 FCR 1
Carey v Korda & Winterbottom [2010] WASC 362
Carey v Korda & Winterbottom [No 2] [2011] WASC 220
Chant v Brown (1852) 9 Hare 790; 68 ER 735
Commissioner of Australian Federal Police v Propend Finance Pty Ltd [1997] HCA 3; (1997) 188 CLR 501
Cook v Pasminco Ltd (No 2) [2000] FCA 1819; (2000) 107 FCR 44
CTC Resources NL v Australian Stock Exchange Ltd [2000] WASCA 19; (2000) 22 WAR 48
Daily Express (1908) Ltd v Mountain (1916) 32 TLR 592
Dalleagles Pty Ltd v Australian Securities Commission (1991) 4 WAR 325
DSE (Holdings) Pty Ltd v InterTAN Inc [2003] FCA 1191; (2003) 135 FCR 151
Esso Australia Resources Ltd v Commissioner of Taxation of the Commonwealth of Australia [1999] HCA 67; (1999) 201 CLR 49
Gaskell v Gosling [1896] 1 QB 669
Giannarelli v Wraith (No 2) [1991] HCA 2; (1991) 171 CLR 592
Gomba Holdings UK Ltd v Minories Finance Ltd [1988] 1 WLR 1231
Gosling v Gaskell [1897] AC 575
Hodgson v Amcor Ltd (No 2) [2011] VSC 204
Kadlunga Proprietors v Electricity Trust of South Australia (1985) 39 SASR 410
Lake Cumbeline Pty Ltd v Effem Food Pty Ltd (t/as Uncle Ben's of Australia) (1994) 126 ALR 58
Mann v Carnell [1999] HCA 66; (1999) 201 CLR 1
Packer v Deputy Commissioner of Taxation [1985] 1 Qd R 275
Pegrum v Fartharly (1996) 14 WAR 92
R v Manchester Crown Court, Ex parte Rogers [1999] 1 WLR 832
Schreuder v Murray [No 2] [2009] WASCA 145; (2009) 41 WAR 169
Sheahan v Carrier Air Conditioning Pty Ltd [1997] HCA 37; (1997) 189 CLR 407
State Bank of New South Wales Ltd v Chia (2000) 50 NSWLR 587
The Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission [2002] HCA 49; (2002) 213 CLR 543
Visbord v The Federal Commissioner of Taxation [1943] HCA 4; (1943) 68 CLR 354
MARTIN CJ: This appeal should be allowed in part, and the matter proceed in the manner foreshadowed in the reasons of Murphy JA, with which I agree.
NEWNES JA: I agree with Murphy JA.
MURPHY JA:
Introduction
This matter concerns a decision by the primary judge to dismiss an application by the appellants for the production and inspection of documents of certain companies within the Westpoint group of companies. The companies were, and still are, in receivership. Certain of the documents related to legal work undertaken by a legal firm (Corrs) upon instructions from the receivers. The first appellant was a director and member of certain of the companies and the second appellant was a member of another company, and they claimed statutory rights of inspection in those capacities pursuant to certain provisions of the Corporations Act 2001 (Cth) (referred to later). Inspection had been resisted by the first respondents (the Receivers) and the second respondent (the Lender).
The primary judge found, in effect, that the documents in issue were not amenable to production because they were subject to legal professional privilege: Carey v Korda & Winterbottom [No 2] [2011] WASC 220 (Carey (No 2)).
In this court, the appellants contend that the Receivers could not claim privilege over the documents; alternatively that the claim for privilege had not been established on the evidence; alternatively that the privilege (if it existed) had been waived; and finally that, in any event, the privilege had been abrogated by statute by virtue of certain provisions of the Legal Practice Act 2003 (WA) and its successor statute.
Although the appellants applied for leave to appeal, they contended that the primary judge's orders were final, and that leave is not required.
The underlying proceedings
The question of privilege, which was determined by the primary judge (Edelman J), arose within proceedings which had been case‑managed by Le Miere J in the CMC List, referred to below.
The originating process
By an originating process dated 30 August 2010, the first appellant commenced proceedings against the Receiver and the Lender, seeking with respect to certain Westpoint companies:
(a)an inquiry into the refusal of the Receivers to permit the first appellant to inspect and copy all financial records after 24 January 2006, relating to the companies which 'correctly record and explain payments':
(i)to the Receivers for their fees, as receivers and managers of the companies; and
(ii)to Corrs for their services to the Receivers as receivers and managers of the companies;
(b)an order that the Receivers produce the financial records for inspection and copying;
(c)an order that the Receivers be removed as the receivers and managers of the companies, or in the alternative, that the Receivers be restrained from taking any steps as receivers and managers of the companies.
By its terms, the originating process was said to be an application under s 290, s 421(2) and s 423(1)(b) of the Corporations Act, and 'at law'.
The interlocutory process
On the same day, the first appellant filed an interlocutory process seeking:
(a)orders for production and inspection of the kind sought in the originating process; and
(b)an order that the Receivers be restrained from taking any steps as receivers and managers of the Westpoint companies pending the inquiry sought in the originating process.
Sections 421 and 423 of the Corporations Act
Sections 421 and 423 of the Corporations Act provided relevantly:
421Managing controller's duties in relation to bank accounts and financial records
(1)A managing controller of property of a corporation must:
...
(d)keep such financial records as correctly record and explain all transactions that the managing controller enters into as the managing controller.
(2)Any director, creditor or member of a corporation may, unless the Court otherwise orders, personally or by an agent, inspect records kept by a managing controller of property of the corporation for the purposes of paragraph (1)(d).
423Supervision of controller
(1)If:
...
(b)a person complains to the Court or to ASIC about an act or omission of a controller of property of a corporation in connection with performing or exercising any of the controller's functions and powers;
the Court or ASIC, as the case may be, may inquire into the matter and, where the Court or ASIC so inquires, the Court may take such action as it thinks fit.
The decision of Le Miere J
The matter was case managed by Le Miere J who ordered that a number of issues be tried separately. Le Miere J identified seven separate issues which were heard and determined before him: Carey v Korda & Winterbottom [2010] WASC 362 (Carey (No 1)). Most relevantly for present purposes, the issues concerned whether the Receivers were required to produce two categories of documents:
(a)recharge schedules - documents detailing the Receivers' fees and expenses, for their work in the course of the receiverships, which had been charged to the companies in receivership;
(b)Corrs' bills of costs - concerning legal costs for work done by the solicitors on instructions from the Receivers.
Le Miere J determined, in effect, that documents in both categories were amenable to inspection under s 421(2) of the Corporations Act, subject to any claim for legal professional privilege which the Receivers might make. A claim for privilege had been foreshadowed, but not made, in the hearing before Le Miere J.
On 21 December 2010, Le Miere J ordered that the Receivers' claim for legal professional privilege be referred to a Judge of the Supreme Court other than himself for determination. The Receivers were ordered to file and serve affidavits in relation to their claims of privilege in respect of:
(a)the invoices issued by Corrs and narratives provided with those invoices; and
(b)a sample of the recharge schedules.
The Receivers were required to file with the court the documents in both redacted and un-redacted form.
It was pursuant to these orders that the matter came before Edelman J. Before Edelman J, the Receivers adduced further evidence comprising two affidavits by Mr Morgan, a senior consultant employed by Korda Mentha, and an affidavit by Mr Emmett, a partner of Corrs.
The two categories of documents
Le Miere J found, in effect, that the receivers' billing system was as follows (Carey (No 1) [13], [14], [23] ‑ [26]).
Receivers' fees and recharge schedules
Westpoint Corporation Pty Ltd (Westpoint Corp) was the immediate recipient of billing invoices for other companies in the Westpoint group. In relation to their fees and expenses, the Receivers would render a single tax invoice to Westpoint Corp in respect of all charges for Westpoint companies during a relevant period. The invoice would then be presented to the Lender for approval. Once approved, it was then issued to Westpoint Corp for payment. After Westpoint Corp had paid the invoice, Westpoint Corp would periodically 'recharge' the relevant amount to each of the Westpoint companies which had relevantly incurred the fees, by issuing to each such company a one page invoice called a 'recharge invoice'. Each such Westpoint company would then pay Westpoint Corp the amount invoiced in the recharge invoice.
Each recharge invoice was supported by a 'recharge schedule' which provided the detail of the transaction and the work done by the Receivers.
The Receivers' principal witness, Mr Morgan, deposed that the Receivers' invoices did 'not distinguish between work undertaken for the benefit or protection of the Receivers (in respect of their obligations at law and under statute) and work undertaken by the Receivers in their capacity as agents of the Westpoint companies in the conduct of the business of the companies or the disposal of assets'. (Paragraph 41 of Morgan affidavit, 12 October 2010: GAB 26).
Corrs' fees
Where Corrs performed work that related to Westpoint Corp directly, or to receivership issues that crossed over a number of the Westpoint companies, they would issue an invoice to Westpoint Corp. If Corrs performed work for a particular Westpoint entity, they would issue an invoice to that entity directly.
The Corrs' invoices comprised a front page, in the form of a tax invoice, which identified the amount invoiced for the relevant period. Annexed to the tax invoice was a summary of the work done, including a narrative explaining the nature and scope of the work undertaken by Corrs.
Mr Morgan had also deposed, in effect, that Corrs' invoices did not distinguish between work undertaken for the benefit or protection of the Receivers and work undertaken by the Receivers in their capacity as agents of the Westpoint companies in the conduct of the business of the companies or the disposition of assets. (Paragraph 42 of Morgan affidavit, 12 October 2010: GAB 26).
The appointment of the Receivers and the retainer of Corrs
The relevant charges which secured the financial accommodation provided by the Lender contained terms to the effect that the Lender could, in the event of default, appoint a receiver and manager, and that a receiver and manager so appointed was the agent of the chargor, who alone was responsible for the receivers' acts and omissions and remuneration (cls 11.11, 12.1 and 17.3). The rate of remuneration and the manner of payment of the receiver were to be determined by the Lender (cl 17.3).
On 24 January 2006, pursuant to the relevant charges, Mr David Winterbottom, Mr Oren Zohar and Mr Mark Korda of Korda Mentha were appointed receivers and managers of the relevant Westpoint companies.
At the hearing before Edelman J, a partner of Corrs (Mr Emmett) deposed, in an affidavit sworn 23 February 2011, to the effect that on 24 January 2006, the day of the appointment of the Receivers, he was telephoned by Mr Zohar who instructed him 'to act on behalf of the Receivers in respect of the receivership' of Westpoint Corp and the other relevant Westpoint entities.
Also before Edelman J, there was evidence of the relevant engagement letters.
The engagement letters
The typical engagement letter for Corrs was as follows.
The letter was printed on Corrs' letterhead, and dated 10 February 2006. It was addressed:
Oren Zohar and Mark Korda [Westpoint entity] (Receivers and Managers appointed) care of Korda Mentha Pty Ltd.
The letter read:
Dear Oren and Mark
Engagement Letter
Thankyou for instructing us to provide general advice on this receivership.
This letter sets out the scope of legal services we are to provide and other important information about our legal costs.
This letter and the attached Engagement Terms and Schedule of Rates and Expenses state the terms of our offer to enter into a client agreement (including a costs agreement) with the client stated below in this matter.
Client and matter details
Client:[Westpoint entity] (Receivers and Managers appointed)
Matter name: General Advice
Matter no: ...
Scope of legal services
General advice
The letter then listed the various professional staff who might provide legal services for the matter and their current hourly rates. The letter stated:
You can accept our offer to enter into a client engagement agreement (including a costs agreement) in writing by signing and returning the attached copy of this letter.
A box on the next page contained Mr Zohar's signature underneath the words 'Acceptance and receipt of Engagement Terms (December 2005 Version) and Schedule of Rates and Expenses is acknowledged'.
The work undertaken by the Receivers and Corrs
In his affidavit dated 12 October 2010, Mr Morgan deposed that the immediate tasks of the Receivers and Corrs included reviewing all facility documents and considering priority issues with other secured financiers and the Lender; establishing procedures for trading during the receivership period; resolving issues regarding various retention of title claims; liaising with employees, landlords and creditors in relation to ongoing trading and employment issues; analysing financial records and ascertaining the various companies' financial positions; identifying assets; and devising and implementing realisation strategies.
He also identified a number of other categories of work undertaken by the Receivers and Corrs throughout the receivership and provided a broad description of the work undertaken within each category. These categories of work were described as employee issues; documents, books and records; interaction with other appointees; property realisations; other property‑related assets; Westpoint litigation; investigations of irregular transactions and recovery of assigned assets; assignment of debts; the realisation of the Warnbro Fair Shopping Centre; asset preservation and dealing with ASIC investigations; related party loans; a claim involving Emu Brewery; recoveries from third parties; distribution of surplus and rights of subrogation; dealing with 'litigation risk'; settlement negotiations and applications for directions.
In his affidavit dated 1 February 2011, Mr Morgan also annexed a schedule summarising in more detail the work done in the receiverships.
The category of 'litigation risk' referred to by Mr Morgan in his affidavit of 12 October 2010 was the subject of further explanation in his affidavit of 1 February 2011. In that affidavit he annexed a schedule summarising the various threats made against the Receivers personally, and the Westpoint companies in receivership. After referring to other threats of litigation, Mr Morgan said:
14.By reason of these threats, throughout the receiverships of the Westpoint Companies Korda Mentha have considered that there is a real risk that Mr Norman Carey and related entities would seek to pursue claims against the Receivers and/or [the Lender]. Accordingly, it was necessary for the Receivers to seek advice from Corrs with a respect to a large amount of the work performed on the receivership of the Westpoint Companies in order to (amongst other issues arising in the course of the receivership) effectively manage the unusually high litigation risk posed by the ongoing threats by the plaintiff and entities related to him (being the threats referred to in the previous paragraphs).
He also said:
17.By reason of:
(a)the threats of litigation;
(b)the large number of proceedings;
(c)the number of irregular transactions identified by the Receivers soon after their appointment;
(d)the need to protect the assets of the Westpoint Companies;
(e)the difficulties in recovering inter company loans recorded in books and records of the Westpoint Companies; and
(f)the various workstreams set out in schedule summarising the categories of work which is attached at RHM 5,
Corrs has had a high level of involvement in many aspects of the receivership of each of the Westpoint Companies.
Evidence relating to the claim for privilege
In his affidavit sworn 12 October 2010, Mr Morgan foreshadowed that a large amount of time would need to be spent in examining the Receivers' invoices and Corrs' invoices for the purposes of claiming privilege and making appropriate redactions in that regard (pars 44 ‑ 63). He said that the Corrs' invoices alone comprised 2,000 pages (par 40). Mr Morgan also said (pars 39 and 47):
39.The Corrs' invoices [have] ... annexed ... a summary of the work performed for that period for that company. The annexure contains narrations (in some cases detailed narrations) for the work done by Corrs in relation to specific issues. In many instances, those descriptions reveal the instructions given ... or identify advice provided or steps taken by Corrs or the Receivers.
47.It may be that there are a number of invoices (Corrs or Receivers) where no redaction or privilege issues arise. To the extent that is the case, the Receivers have no difficulty in providing inspection of those invoices if it is determined that they are obliged to by reason of ... section 421 of the Act. However, it is not possible to identify those 'issue free' invoices without first going through the analysis, advice and redaction process identified above. (emphasis added)
The redaction process foreshadowed by Mr Morgan was ultimately carried out with respect to a sample of six recharge schedules. In relation to the Corrs' invoices, the Receivers redacted all narratives in their entirety. The evidence is discussed below.
Also masked were narrations relating to the companies that were not the subject of the orders of Le Miere J on 21 December 2010.
The six sample redacted Recharge Schedules
In his affidavit dated 1 February 2011, Mr Morgan annexed six sample recharge schedules which had been redacted to mask narrations over which the Receivers claimed privilege.
Mr Morgan divided the redacted narrations in the sample recharge schedules into the following categories:
1.1Narrations which disclose 'the subject matter on which counsel's advice was sought and obtained'.
1.2Narrations which disclose 'the subject matter on which counsel's advice was sought and which was discussed with counsel and Corrs'.
1.3Narrations which disclose 'the subject matter on which advice was sought from, and/or given by, Corrs where the advice was in relation to anticipated, pending or actual litigation'.
1.4Narrations which disclose 'the subject matter on which advice was sought from, and/or given by, Corrs'.
2.1Narrations which disclose 'the subject matter on which advice was sought from, and/or given by, Corrs or counsel, and tasks undertaken by the Receivers for the purpose of anticipated, pending or actual litigation'.
2.2Narrations which would disclose 'the subject matter on which advice was sought from, and/or given by, Corrs or counsel'.
3.1Where the narration 'indirectly discloses the subject matter on which advice was sought from, and/or given by Corrs'.
3.2Where the narration 'indirectly discloses the subject matter on which advice was sought from, and/or given by, Corrs and/or counsel and is for the dominant purpose for use or in relation to anticipated, pending or actual litigation'.
Mr Morgan then identified the category into which each of the redactions in each of the sample recharge schedules fell.
The Corrs invoices
In his affidavit dated 1 February 2011, Mr Morgan stated:
19.Corrs issued invoices with respect to legal work done on behalf of the Receivers as follows:
(a)invoices were issued to Westpoint Corporation where work was done on matters relating to Westpoint Corporation or on matters relating to the receiverships of a number of the Westpoint Companies or all of the Westpoint companies where it was not feasible to divide the legal fees between those companies; and
(b) invoices were issued to a particular Westpoint Company where work was done on matters relating specifically (and only) to that particular Westpoint Company.
20.The invoices issued by Corrs do not distinguish between work undertaken for the benefit or protection of the Receivers (for example in respect of their obligations at law or under statute) and work undertaken by the Receivers in their capacity as agents of the Westpoint Companies (for example in respect of third party charges).
21.The Corrs invoices comprise:
(a)a front page (in the form of a tax invoice) which identifies the amount invoiced for the relevant period;
(b)in some cases annexed to the front page is a summary of the work performed for the relevant period for that company which contains narrations (in some cases detailed narrations) for the work done by Corrs in relation to specific issues;
(c)in some cases annexed to the front page is a detailed list of all narrations for the work done by the individual legal practitioners and articled clerks and the disbursements for the relevant period allocated to that particular company; and
(d)in some cases, annexed to the Corrs invoices are the invoices from counsel, which in turn contain similar narrations, mostly referable to actual or threatened litigation.
…
38.Attached to this affidavit and marked 'RHM 8' are the invoices issued by Corrs and narratives provided with those invoices for the period February 2006 to 22 December 2010. The entire invoices and narratives of the Corrs invoices are redacted to mask the material over which the Receivers make claims for privilege.
Principles
Receivership
The following observations are directed to the position of a receiver appointed out of court.
The essential elements of the law of modern receivership are generally regarded as deriving from the dissenting judgment of Rigby LJ in Gaskell v Gosling [1896] 1 QB 669, which was affirmed in the House of Lords (Gosling v Gaskell [1897] AC 575), and referred to with evident approval in Australian Mutual Provident Society v Geo Myers & Co Ltd (in liq) [1931] HCA 31; (1931) 47 CLR 65, 82, 95. Rigby LJ described the 'almost penal liabilities' imposed on a mortgagee in possession at law and observed that courts favoured 'any means which would enable the mortgagee to obtain the advantages of possession without its drawbacks' (691). In order to overcome the disadvantages, mortgagees began to include, in the mortgage, a covenant requiring the mortgagor to appoint a receiver with wide powers of management, to receive income from the mortgaged property in order to effect payments to the mortgagee. The covenant was enforceable at the suit of the mortgagee.
Mortgage instruments later evolved to include a stipulation that the mortgagee itself, and not the mortgagor, should have the right to appoint the receiver. Though it was the mortgagee who appointed the receiver, the object of the parties was that the receiver should act as agent of the mortgagor. It was a term of the contract that the mortgagor would not revoke the appointment of the receiver. Rigby LJ observed at (692):
Of course the mortgagor cannot of his own will revoke the appointment of a receiver, or that appointment would be useless. For valuable consideration he has committed the management of his property to an attorney whose appointment he cannot interfere with. The appointment so made will stand good against himself and all persons claiming through him, except incumbrances having priority to the mortgagee who appoints the receiver.
Under the general law, the existence of the agency also assisted the receiver by imposing liability in respect of his or her dealings with third parties upon the mortgagor, rather than upon the receiver personally: Sheahan v Carrier Air Conditioning Pty Ltd [1997] HCA 37; (1997) 189 CLR 407, 433; cf the statutory personal liability for certain debts incurred, including for services rendered and property leased, under s 419 of the Corporations Act (Cth).
In Visbord v The Federal Commissioner of Taxation [1943] HCA 4; (1943) 68 CLR 354, 381 ‑ 382, Williams J referred to this 'well‑established legal device' as enabling the mortgagee to obtain the benefits, but without being subject to the liabilities, of the mortgagee in possession. His Honour added:
The appointment of the receiver divests the mortgagee of all powers with respect to the mortgaged property which the receiver is appointed to exercise (Woolston v Ross (1900) 1 Ch 788). The receiver takes complete control of the mortgaged property and the mortgagor is as effectively dispossessed from control as he would be if the mortgagee had entered into possession (Inland Revenue Commissioners v Thompson (1937) 1 KB 290; Meigh v Wickenden (1942) 2 KB 160, at pp 168, 169).
Although the receiver is in law the agent of the mortgagor, he occupies a very special position. He is appointed to and may be removed from office by the mortgagee.
Reference was made by Dawson, Gaudron and Gummow JJ in Sheahan v Carrier Air Conditioning Pty Ltd (432 ‑ 433) to the above observations of Williams J. Dawson, Gaudron and Gummow JJ continued, with respect to the true character of the agency (436):
That character is indicated in the following passage from the judgment of Sir Raymond Evershed MR in In re B Johnson & Co (Builders) Ltd [1955] Ch 634 at 644 ‑ 645:
[A] person appointed as receiver and manager is concerned, not for the benefit of the company but for the benefit of the mortgagee bank, to realise the security; that is the whole purpose of his appointment; and the powers which are conferred upon him, and which I have to some extent recited, are ... really ancillary to the main purpose of the appointment, which is the realisation by the mortgagee of the security.
More recently, in Gomba Holdings UK Ltd v Homan [1986] 1 WLR 1301 at 1305; [1986] 3 All ER 94 at 97; affd [1988] 1 WLR 1231; [1989] 1 All ER 261, Hoffmann J, in referring to this passage, said that a receiver and manager 'is no ordinary agent' and continued:
Although nominally the agent of the company, his primary duty is to realise the assets in the interests of the debenture holder and his powers of management are really ancillary to that duty.
In that regard, there is no general fiduciary relationship between the receiver and the company in receivership: State Bank of New South Wales Ltd v Chia (2000) 50 NSWLR 587 [869] ‑ [870]; Bride v Freehill Hollingdale & Page (Unreported, WASCA, Library No 950548, 16 October 1995) 12 ‑ 13; (1996) ANZ Conv R 593, 596.
Under the general law, a receiver's duties are, in broad terms:
(a)to the mortgagee, to collect and realise the assets, in order to discharge the secured debt;
(b)to the mortgagee, a duty to keep it informed about the progress of the receivership;
(c)as donee of the power, to exercise the powers and duties in good faith and for proper purposes;
(d)to the mortgagor, to act in good faith in the exercise of the powers of sale, in the same way that a mortgagee owes duties of good faith in that regard; and
(e)to the mortgagor, to hold the balance of the proceeds of sale after discharge of the secured debt, on trust for the mortgagor.
See Meagher, Gummow and Lehane, Equity Doctrine and Remedies (4th ed) [28‑225] ‑ [28‑235], and the cases there cited.
Section 419 of the Corporations Act, relevantly provides:
(1)A receiver ... who, whether as agent for the corporation concerned or not, enters into possession or assumes control of any property of a corporation for the purpose of enforcing any security interest is, notwithstanding any agreement to the contrary, but without prejudice to the person’s rights against the corporation or any other person, liable for debts incurred by the person in the course of the receivership, possession or control for services rendered, goods purchased or property hired, leased ... used or occupied.
(2)Subsection (1) does not constitute the person entitled to the security interest a mortgagee in possession.
As to s 419, see AGL Victoria Pty Ltd v Lockwood [2003] VSC 453; (2003) 10 VR 596 [23] ‑ [31].
The general law duties have also been modified by statute to include a duty, in a sale of the property of a corporation, to exercise reasonable care to obtain market value or the best price otherwise reasonably available: s 420A of the Corporations Act, read with the definition of 'controller' in s 9. There are also certain statutory duties, including duties of care and diligence and good faith, imposed under s 180, s 181, s 182, s 183 and s 184 of the Corporations Act, read with the definition of 'officer' in s 9 of that Act.
The Full Court's decision in Bride v Freehills featured prominently in debate in the primary court and in this court, and in the primary judge's reasons for decision. It is appropriate to examine it in some detail. In Bride v Freehills, accountants had been appointed by the mortgagee under the mortgage instruments, as receivers and managers of the mortgaged property. Under the instruments, the receivers were the agents of the mortgagors. The receivers instructed solicitors to give advice in connection with the receivership. Certain assets of the mortgagor were sold. Subsequently, certain properties were sold, apparently by the mortgagee directly exercising its powers of sale as mortgagee. The solicitors acted for the vendor and purchaser in the sales. The mortgagors alleged that the sales were invalid because the receivers had been invalidly appointed and because the properties were in any event, sold at gross undervalue. The mortgagors also sued the solicitors. They alleged that the solicitors owed them a duty as legal advisors, and breached the duty by acting for other parties contrary to the interest of the mortgagors. The claim was put on the basis that under the mortgage instruments the receivers were the agents of the mortgagors, and the receivers had instructed the solicitors, and that accordingly, the solicitors were also acting as agents for the mortgagor. There was an appeal against the master's decision to strike out the statement of claim. The Full Court dismissed the appeal. The Full Court noted (10) that the mortgagors' claim was not put on the basis that they had ever appointed or instructed the solicitors to act for them. Nor was it contended that 'there was a solicitor/client relationship' in the 'conventional sense'. Rather, the mortgagors' contention was that the relationship of solicitor/client was 'of a derivative nature' and that there was something 'in the nature of a sub‑agency agreement' between the mortgagors and solicitors.
The Full Court said (12 ‑ 13) that the legal consequences flowing from the agency relationship constituted by the appointment of receivers, were not 'of a fiduciary nature'. The Full Court observed that the solicitors were the clients of the receivers and that they owed fiduciary duties to the receivers, including the duty of confidentiality. The court also noted the adverse nature of the relationship between the mortgagor and the mortgagee, which attended the receivers' obligation to realise the mortgaged property for the benefit of the mortgagee. The court said that those considerations showed the difficulty of importing a 'deemed relationship between a [mortgagor] and the solicitors to the receiver merely through some form of sub‑agency'. (In quoting this passage, I have substituted '[mortgagor]' for the word 'mortgagee' which appears in the Full Court's reasons, as, in its context, the court plainly intended it to be a reference to the mortgagor).
The Full Court added that, in any event, there was no evidence that the solicitors had acted in the sale of the properties on the instructions of the receivers, and that the properties had been sold by the mortgagee pursuant to its power of sale.
An application for special leave to appeal the decision in Bride v Freehills to the High Court (Dawson, Toohey & Kirby JJ), was dismissed by majority on 23 December 1996, on the basis that the application presented no point of principle and any appeal would have no prospect of success.
Legal professional privilege
Legal professional privilege exists to protect the confidentiality of communications between lawyer and client: Mann v Carnell [1999] HCA 66; (1999) 201 CLR 1 [28]. In Esso Australia Resources Ltd v Commissioner of Taxation of the Commonwealth of Australia [1999] HCA 67; (1999) 201 CLR 49 [35], Gleeson CJ, Gaudron and Gummow JJ said:
Legal professional privilege (or client legal privilege) protects the confidentiality of certain communications made in connection with giving or obtaining legal advice or the provision of legal services, including representation in proceedings in a court. In the ordinary course of events, citizens engage in many confidential communications, including communications with professional advisers, which are not protected from compulsory disclosure. The rationale of the privilege has been explained in a number of cases, including Baker v Campbell (1983) 153 CLR 52, and Grant v Downs itself. The privilege exists to serve the public interest in the administration of justice by encouraging full and frank disclosure by clients to their lawyers. In Waterford v The Commonwealth ((1987) 163 CLR 54 at 64‑ 65. See also Carter v Northmore Hale Davy & Leake (1995) 183 CLR 121 at 128, per Brennan J; at 134, per Deane J; at 147, per Toohey J; at 163, per McHugh J) Mason and Wilson JJ explained that legal professional privilege is itself the product of a balancing exercise between competing public interests and that, given the application of the privilege, no further balancing exercise is required. As Deane J expressed it in Baker v Campbell (1983) 153 CLR 52 at 114, a person should be entitled to seek and obtain legal advice in the conduct of his or her affairs, and legal assistance in and for the purposes of the conduct of actual or anticipated litigation, without the apprehension of being prejudiced by subsequent disclosure of the communication. The obvious tension between this policy and the desirability, in the interests of justice, of obtaining the fullest possible access to the facts relevant to the issues in a case lies at the heart of the problem of the scope of the privilege. Where the privilege applies, it inhibits or prevents access to potentially relevant information. The party denied access might be an opposing litigant, a prosecutor, an accused in a criminal trial, or an investigating authority. For the law, in the interests of the administration of justice, to deny access to relevant information, involves a balancing of competing considerations.
The 'client' in this context is to be regarded as referring to a person who, in respect of some legal matter within the scope of professional services normally provided by lawyers, has, with the consent of the lawyer, come to stand in a relationship of trust or confidence to the lawyer entailing duties of the lawyer to promote the person's interests, to protect their rights and to respect their confidences: Apple v Wily [2002] NSWSC 855 [11]; Brookfield Multiplex Ltd v International Litigation Funding Partners Pte Ltd (No 2) [2009] FCA 449; (2009) 180 FCR 1 [19].
As to the scope and nature of the protected communications, Anderson J in Dalleagles Pty Ltd v Australian Securities Commission (1991) 4 WAR 325, 333 said:
What is protected, of course, is that which is communicated between solicitor and client. It is the communication that is privileged. But this is not to say that material that is not literally a communication or manifestly the record of a communication is never protected. There are many instances of protection being extended to such material. The examples of the draft letter that never leaves the solicitor's office, the draft agreement and the draft statement of claim have already been referred to. The reason why such material is protected is often stated to be that disclosure of it will, or will tend to, reveal the privileged communication: see Attorney‑General (NT) v Maurice, per Dawson J (at 496). Thus a note made by a solicitor of a conference with his client will be privileged in so far as it is a record of the communication from the client (that communication being privileged) but also in so far as it might contain notes of the solicitor's own thoughts in regard to the matters communicated to him. Protection is afforded in the latter case on the ground that disclosure of that material might tend to reveal what had been communicated to the solicitor.
See also in this regard the discussion by Allsop J (as his Honour then was) in DSE (Holdings) Pty Ltd v InterTAN Inc [2003] FCA 1191; (2003) 135 FCR 151 [46] ‑ [71].
Solicitor's bill of costs
The privilege 'may be availed of by a person to resist the giving of information or the production of documents which would reveal communications between a client and his or her lawyer made for the dominant purpose of giving or obtaining legal advice or the provision of legal services': The Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission [2002] HCA 49; (2002) 213 CLR 543 [9]. The privilege is available where the document expressly reveals the privileged communication, or where the content or nature of the privileged communication may be inferred from the document: Commissioner of Australian Federal Police v Propend Finance Pty Ltd [1997] HCA 3; (1997) 188 CLR 501, 569; AWB Ltd v Cole [2006] FCA 571; (2006) 152 FCR 382 [132] ‑ [133].
A solicitor's bill of costs may fall into that category of document: Commissioner of Australian Federal Police v Propend Finance Pty Ltd (569) per Gummow J; Ainsworth v Wilding (1900) 2 Ch 315, 325; Packer v Deputy Commissioner of Taxation [1985] 1 Qd R 275, 282; Lake Cumbeline Pty Ltd v Effem Food Pty Ltd (t/as Uncle Ben's of Australia) (1994) 126 ALR 58, 68; Hodgson v Amcor Ltd (No 2) [2011] VSC 204 [59] ‑ [65]; R v Manchester Crown Court, Ex parte Rogers [1999] 1 WLR 832, 839; Cook v Pasminco Ltd (No 2) [2000] FCA 1819; (2000) 107 FCR 44 [46]. This line of cases emanates from Chant v Brown (1852) 9 Hare 790; 68 ER 735. In that case, Mr Melton had a power of appointment in favour of any one or more of his children with regard to an estate which, in default of appointment, would go to all of the children. Mr Melton appointed the estate to one of his children, who concurred in mortgaging the property to a third party. A solicitor (Mr Brown) had acted for Mr Melton on the appointment, and for Mr Melton and the mortgagee on the mortgage, and had received the proceeds of the mortgage on behalf of Mr Melton. The proceeds of the mortgage were applied for Mr Melton's benefit. Mrs Chant, one of Mr Melton's other children, brought an action to set aside both the appointment that had been made, and the mortgage that had been entered into, on the grounds that the appointment was a fraud upon the power and the mortgagee had notice of the fraud. Mrs Chant also sued the solicitor. The plaintiff sought to interrogate the solicitor's clerk about a document, a bill of costs, which the clerk had copied from a draft bill of costs which itself had been prepared from the attendance books of the solicitor. The plaintiff sought to tender the evidence to impeach the title of the mortgagee, which rested upon, ultimately, the validity of the appointment. The bill of costs made reference, amongst other things, to both the appointment and the mortgage. The Vice‑Chancellor, Sir G J Turner, found that the solicitor's bill of costs was privileged. His Lordship reasoned that the appointment and the mortgage were, in effect, one transaction and that the solicitor (who had acted for Mr Melton and the mortgagee) could not have been compelled to give evidence which could be used against the mortgagee. His Lordship stated that '[a]n attorney's bill of costs is, in truth, his history of the transactions in which he has been concerned; and if he cannot be called to prove the facts I think his clerk cannot be called to prove the history of them' (9 Hare 790, 794; 68 ER 735, 737). It appears that his Lordship was referring to the solicitor's history, revealed in the bill of costs, of the instructions received and the advice given.
Whether, and to what extent a bill of costs is privileged, will depend upon a consideration of the circumstances in which the claim for privilege occurs, and the nature and details of the entries made in the bill in question.
An example of potential relevance to this case may be given. If the solicitor in a bill of costs recorded no more than 'to my attending at settlement on X date in the sale of Y property to Z', the entry would not ordinarily be privileged as it would not reveal the content or nature of legal advice sought or given. The attendance of the solicitor at settlement is, on this hypothesis, a matter to which no confidentiality attaches. The inference that the solicitor was instructed by the client to attend at settlement, and to give any consequential advice in connection with the settlement, would be drawn from the fact that the solicitor had attended at settlement. By the time the bill came to be issued, insofar as the client had instructed the solicitor to attend settlement and (it may be inferred) to give any necessary consequential advice in that regard, those instructions (at that level of generality), could no longer be regarded as a confidential communication.
In my view, at least where the existence of the retainer is no longer confidential, a useful guide in determining whether the bill of costs would reveal privileged communications, will often be whether disclosure of the bill would be tantamount to waiving privilege in the underlying communications with which the bill expressly or implicitly deals. The relationship between the two was observed by Tamberlin J in Lake Cumbeline v Effem Foods; cf AWB Ltd v Cole [135] ‑ [139].
In Lake Cumbeline v Effem Foods, the applicants sued the respondents for misrepresentation, and part of the damages claimed included costs incurred by the applicants in other litigation. The nature of the applicants' claim meant that, in general terms, the retainer of the solicitors in the other litigation was not, in itself, a matter of subsisting confidentiality. One of the questions before Tamberlin J was whether the applicants, by providing memoranda of fees and similar material in support of their damages claim, impliedly waived legal professional privilege in the underlying documents to which the memoranda of fees and the like referred. His Honour found that the privilege had not been waived by the disclosure of the memoranda of fees and other documents, and observed (68):
In Packer a distinction is drawn between detailed bills of costs and the ledger cards there under consideration which were made simply for the purpose of recording movements of money and which did not necessarily relate to matters referable to the relationship of solicitor and client. It is pointed out, for example, that a bill of costs sometimes embodies a solicitor's history of the transaction and recites the nature of the professional service in respect of which it is proposed to charge fees. In such a case, if a bill of costs shows the nature of the instructions or the advice it will be privileged and disclosure of it may waive privilege. If it does not disclose such information then it will not be privileged and production of it will not amount to waiver.
…
The memoranda ... are simply recording, in outline form, the work which has been undertaken by the solicitors and in respect of which the charges are raised and do not disclose the content of the communications, advices, briefs or conferences.
It is also conceivable that whilst none of several entries in a bill of costs might itself reveal, directly or by implication, the content or nature of legal advice given or received, the entries might, when read together and in sequence, enable an inference to be drawn as to the nature or content of some privileged communication. It is, at least in that sense, as I would understand it, that the solicitor's chronological history of the transactions in a bill of costs may be 'valuable' to the party seeking disclosure: cf Daily Express (1908) Ltd v Mountain (1916) 32 TLR 592, 593; Packer v DCT (282, 285 ‑ 286). However, insofar as individual entries in a bill of costs, in themselves, would disclose privileged communications, it would ordinarily be unnecessary to consider further whether the 'history' narrated by the bill would yield an inference in that regard.
Claiming privilege
In Schreuder v Murray [No 2] [2009] WASCA 145; (2009) 41 WAR 169, Buss JA (McLure JA concurring) said [60] ‑ [62]:
The person claiming legal professional privilege must prove that the information or documents in question are privileged. See Grant v Downs [1976] HCA 63; (1976) 135 CLR 674, 689 (Stephen, Mason & Murphy JJ).
A claim of legal professional privilege is not established conclusively by the use of a verbal formula. See Esso [52]. A court may examine documents where there is a disputed claim. It should not be hesitant to exercise the power. Also, in appropriate cases, a court may permit cross‑examination of a deponent of an affidavit claiming privilege. See Esso [52]; Grant, 689.
However, a party who claims legal professional privilege must properly identify the basis on which the privilege is claimed. It is not appropriate for the party merely to assert the existence of the privilege, deliver the documents to the presiding judicial officer and request him or her to analyse them and determine whether there is a proper basis for the claim. In the present case, the learned judge, appropriately, refused the invitation of counsel for the appellant to embark on this task.
Whilst the ultimate legal onus remains on the party claiming privilege, an evidential onus may be cast upon the party seeking inspection if the claim for privilege is 'apparently proper': CTC Resources NL v Australian Stock Exchange Ltd [2000] WASCA 19; (2000) 22 WAR 48 [33] - [34]. In that case the party claiming the privilege had, in affidavits, 'clearly address[ed] all the issues required for such a claim'. The court is not confined to considering a contentious affidavit of the party seeking inspection, and is entitled to look at any evidence before the court which may be capable of raising doubts as to the authenticity of the privilege claim: CTC v Australian Stock Exchange [39].
What is required, for the purposes of establishing a privilege claim, will vary depending on the nature of the document and the particular ground on which privilege is claimed: Kadlunga Proprietors v Electricity Trust of South Australia (1985) 39 SASR 410, 415. Thus, for example, if in an affidavit claiming privilege, a document were described as a confidential communication from the lawyer to the client, it would be readily capable of sustaining a claim for legal professional privilege on the ground that it was made for the dominant purpose of giving legal advice. On the other hand, eg, a claim would not, generally, be apparently proper if it involved a bare assertion of a protected dominant purpose, in relation to a document which, by the description given to it in the affidavit, had no apparent connection with giving or receiving legal advice or actual or anticipated litigation. Each claim will need to be considered on its merits. Also, the sufficiency of the evidence relied on by a party disputing the claim for privilege for the purpose of meeting its evidential onus will no doubt vary according to the ground of privilege claimed and the description of the document given.
Waiver
It is inconsistency between the conduct of the client and the maintenance of the confidentiality which effects a waiver of the privilege: Mann v Carnell [28]. The assessment of whether a party has waived privilege is determined by considering whether, viewed objectively, the conduct of the privilege holder is inconsistent with the maintenance of a claim for confidentiality. Waiver is not governed by the subjective intention of the party claiming privilege: Mann v Carnell [29] ‑ [30]. Depending on the circumstances of the case, considerations of fairness may be relevant to a determination of whether, objectively, there is inconsistency: Mann v Carnell [29], [34]; AWB Ltd v Cole (No 5) [2006] FCA 1234; (2006) 155 FCR 30 [130] ‑ [131]. In Mann v Carnell, the circumstances relevant to fairness were that the disclosure of a legal opinion was to a member of the Parliament of the Australian Capital Territory, in relation to litigation involving the Australian Capital Territory, and that access was provided on a confidential basis. Disclosure in those circumstances, and to that person, who was not, relevantly, a 'third party', was not inconsistent with the purpose of maintaining confidentiality as against the prospective plaintiff.
Ground 1 - the solicitor/client relationship
By the first ground of appeal, the appellants contend that the judge erred in finding that the Receivers, and not the Westpoint entities in receivership, were the clients of Corrs. Various express errors are alleged. In substance, the appellants contend that the Westpoint companies, through the agency of the Receivers, retained Corrs to advise them, at least in relation to property sales.
The starting point for the analysis must be a consideration of the relevant retainers. The effect of the Receivers' evidence is that there was a separate engagement for the receivership of each of the relevant Westpoint entities, which, with respect to each company, operated as an 'umbrella' retainer pursuant to which instructions on specific issues or matters were subsequently given to Corrs.
Evidence as to the engagement of Corrs is referred to in [26] ‑ [31] above. The following observations may be made. First, the letters were written by Corrs and addressed to the Receivers of the company in receivership, care of the Receivers' accounting firm. Secondly, they were written in response to earlier oral instructions, dated 24 January 2006, from the Receivers to Corrs to 'act on behalf of the Receivers in respect of the receivership of' the Westpoint entities. Thirdly, the letters recorded the instructions to provide general advice 'on this receivership'. Fourthly, the letters referred to the terms of Corrs' offer to 'enter into a client agreement (including a costs agreement) with the client stated below'. The 'client stated below' is the relevant Westpoint company (receivers and managers appointed). Sixthly, the letter concluded with the words 'you' can accept the offer to enter into a client engagement agreement (including a costs agreement) by signing and returning the copy. The acknowledgement is signed by the Receiver, who has written his name underneath his signature. In signing the document, he has not designated that he is signing as agent for the company in receivership. Next, the scope of the 'legal services' is expressed to be general advice. Finally, the letter is to be construed against the legal and commercial background to receiverships appointed out of court referred to earlier in these reasons.
The correct conclusion to draw is that it was the Receivers, as principals, who retained Corrs to advise them in relation to their realisation of the Company's assets on behalf of the mortgagee, and in the exercise of their powers and the performance of their duties, as receivers and managers of the companies in question. The reference to the 'client' in the letter must, properly construed, be read as a reference to the person who Corrs and the Receivers agreed should pay Corrs' fees (subject to s 419 of the Corporations Act). The arrangement between the parties as to who should pay for the work done by the solicitors is seldom material to the question for whom the work is done and to whom the professional duties are owed: Pegrum v Fatharly (1996) 14 WAR 92, 105.
That is not to say that the Receivers, having obtained and received advice in that capacity, would not thereafter be acting as agents for the company in effecting the sale of assets. When, for example, they (directly or through the solicitors) negotiated with third parties, entered into contracts for sale, corresponded with local authorities or undertook searches and the like, the Receivers clearly would be acting as agents of the company in question.
Turning now to the particular matters referred to by the appellants in ground 1, the first allegation is that the primary judge erred in deciding that he was 'bound by' the decision in Bride v Freehills, when that decision did not bind him. The appellants contended error on the basis that the Full Court had decided that case on the ground that the plaintiffs had failed to establish that the land in question had been sold by the receivers rather than the mortgagee in possession. There is no substance in this point. An important aspect of the reasoning in Bride v Freehills was that there was no relationship of solicitor/client between the solicitors retained by the receivers and the mortgagor, arising in consequence of the special agency relationship between mortgagor and receiver. The finding that the plaintiffs had not proved that the receivers had sold the property in question was an additional element to the court's reasons. Whether or not the court's reasoning on the absence of a solicitor/client relationship was ratio, there was no error in the judge applying the reasoning to reject an argument that merely by virtue of the agency under the charge in this case, the companies in receivership must be regarded as the clients of Corrs.
Next, the appellants contend, in effect, that the primary judge erred in finding that the Receivers were not fiduciary agents of the Westpoint companies, when the Receivers were officers of the Westpoint companies pursuant to s 9 of the Corporations Act and 'thereby' owed fiduciary duties to the company. The submission is made in the context, and for the purpose, of contending that the companies in receivership were the clients of Corrs, to the exclusion of the Receivers. It is unnecessary to explore all the implications and ramifications arising from the statutory definition of receivers as 'officers' of a company under the Corporations Act. For the reasons explained earlier, the duties imposed by the Corporations Act are additional to those imposed in equity under the general law. For present purposes, it is sufficient to note that the primary judge correctly observed that the existence of those additional statutory duties provided a further reason why the advice sought and obtained by the Receivers, in relation to their duties, would be referable to their position as principals, rather than as mere agents of the company.
To the extent that the judge (at [46]) appears to have supported his reasoning by reference to authorities to the effect that a receiver is an officer of the court and, not thereby, the agent of the company, his Honour, with respect, seems to have conflated the position of the Receivers here with court appointed receivers. As to the difference between the two, see generally Meagher, Gummow & Lehane, Equity Doctrine and Remedies (4th ed) [28‑155] ‑ [28‑205]. However, for the reasons given above, his Honour did not err in concluding that the advice sought and received from Corrs by the Receivers was sought and received in their capacity as principals, rather than merely as agents of the company.
Next the appellants allege that the primary judge incorrectly decided that insofar as the Receivers acted on the sale of assets of the Westpoint companies, they did not act on behalf of the Westpoint companies. The judge did not decide that, as his reasons at [47] indicate. His Honour recognised that the 'actual sales and property realisations' would all have been performed by the companies, but in considering the proper exercise of their powers, the Receivers were acting in their personal capacity and not as agents of the companies. No error is shown.
The appellants also allege that the judge erred in placing weight on the finding (at [49] and [80] ‑ [81]) that the Receivers conducted the receiverships under a threat of litigation from 30 March 2006. In my view, it was open to his Honour to infer that at least from 30 March 2006, the threat of litigation tended to confirm that the Receivers, insofar as they sought advice throughout the course of property realisations, retained Corrs in their capacity as principals, rather than merely as agents of the companies in question.
Finally, the appellants allege that the judge incorrectly decided that Corrs did not advise the Receivers as agents of the Westpoint companies because the engagement letters, properly construed, showed that the Westpoint companies, through the agency of the Receivers, retained the solicitors. For the reasons given earlier, this allegation is not made out.
I would dismiss ground 1.
Ground 2 - the claim for privilege
It was not in dispute that the recharge schedules and the Corrs' invoices were not, in themselves, documents prepared for the dominant purpose of obtaining or giving legal advice or for use in actual or reasonably anticipated litigation. Rather, the question centred upon whether the documents would, if produced, reveal communications between the Receivers and Corrs for the dominant purpose of giving or obtaining legal advice or the provision of legal services, including litigation.
Mr Morgan set out in broad terms the particular matters and issues on which the Receivers sought advice and instructed the solicitors. The fact that Corrs were instructed on the various matters identified by Mr Morgan, is not in itself confidential. It is in this context that the claims for privilege were made.
The sample recharge schedules
It is apparent from Mr Morgan's evidence referred to in [41] above, that he does not depose to the fact that the redacted items in categories 1.1 to 3.1 would reveal (in the sense discussed earlier) communications which were made for the dominant purpose of giving or receiving legal advice or for the dominant purpose of use in actual, or reasonably anticipated, litigation. Also, as in Ainsworth v Wilding (325), this is a case where there is 'not a word in the affidavit that the [materials] which are referred to are confidential'. Rather, in each category Mr Morgan says, in effect, that the redacted entry would disclose the 'subject matter' of legal advice or litigation. However, in this context it is the content or nature of a confidential communication, rather than just the 'subject matter' of advice or litigation which the privilege is designed to protect. For example, if the subject matter of the redacted entry was 'attendance on ASIC', the fact that the Receivers had obtained legal advice in relation to the attendance, would not in itself mean that the entry 'attendance on ASIC' would disclose the nature or content of any privileged communication. As noted above, Mr Morgan makes no express mention of confidential communications. Confidentiality is presumably intended to be inferred. Having looked at the unredacted versions of the schedules, whilst many, if not most, would seem to be arguably capable of supporting a claim for privilege, there would appear to be at least one item, apparently including a meeting with a third party, in relation to which it is difficult presently to see why confidentiality should necessarily be inferred.
Moreover, in the ordinary course, the elements of the claim to legal professional privilege should not be left to implication. Ordinarily it would be expected that they would be the subject of direct evidence by someone who is familiar with the nature and purpose of the underlying communications over which privilege is claimed.
For these reasons, in my view, the Receivers' affidavit evidence was insufficient to ground properly the claims for privilege.
The judge in his reasons did not find as a fact, on the basis of Mr Morgan's evidence, that the entries in the recharge schedules would disclose confidential communications of a protected nature. His Honour did say however, that the receivers did not need to 'particularise the details of the their claim for privilege in relation to the sample Recharge Schedules any further than is contained in Mr Morgan's affidavit'. It follows from what I have written above, that in my respectful view, his Honour erred in that regard. His Honour also said that he had inspected all the unredacted versions of the recharge schedules in Mr Morgan's affidavit and said that the claims for privilege which had been redacted were properly made (reasons [90] ‑ [91]). As noted in [87] above, there is at least one narration which calls that conclusion into question.
The Corrs' invoices
The evidence for the claim for privilege in relation to the Corrs' invoices is referred to in pars 19 ‑ 21 and 38 of Mr Morgan's affidavit, referred to in [43] above. The evidence suffers from the same defects as the evidence in relation to the recharge schedules.
Paragraph 19 of Mr Morgan's affidavit does no more than state how, in practical terms, the invoices were issued.
Paragraph 20 of his affidavit indicates that the Corrs' invoices cover work done by Corrs as agents for the company, including, presumably, attending settlements on sale and ASIC searches and the like. Having sworn to that fact, it is difficult to see any basis for asserting that all of the items in all of the invoices would reveal confidential communications of a protected nature.
Paragraph 21(a) of Mr Morgan's affidavit, which refers to the fact that the invoices refer to the period the subject of the charges, cannot itself support a claim for privilege. Paragraph 21(b) refers to narrations, but only in 'some' cases, detailed narrations, for 'work done' on specific issues. That cannot support a blanket claim for privilege. The narrations with no detail may not reveal privileged communications, and 'work done' may be of a non‑privileged kind. Paragraph 21(c) refers to a 'detailed list of all narrations for the work done', but again does not suggest that the narrations would reveal privileged communications. Paragraph 21(d) refers to 'similar' narrations by counsel, 'mostly' referable to actual or threatened litigation. It is difficult to see how this would support a blanket claim for privilege in respect of the invoices as counsel may do no more than refer, for example, to an attendance at a mediation at which all parties were present (although that type of entry might raise other questions of without prejudice privilege). Similarly, a memorandum of fees, sent after counsel has appeared at, for example, a directions hearing in open court, which recorded no more than 'appearance at directions hearing' would not in itself ordinarily be privileged.
Paragraph 38 of Mr Morgan's affidavit is conclusionary in nature and merely asserts that 'entire invoices and narratives of the Corrs' invoices are redacted to mask the material over which the Receivers make claims for privilege'. It does nothing to advance the lack of evidentiary support for the claims of privilege.
The judge, in his reasons, said that, having inspected the unredacted versions of the Corrs' invoices, he was satisfied that all the redactions fell within, in effect, three categories of 'work done' by solicitors or counsel (reasons [76] and [79]). Insofar as his Honour was satisfied that the redacted material fell into those three categories, the finding does not, with respect, address the real issue. Work done by a solicitor will often be of the non‑privileged kind, such as writing letters to the other side. His Honour also, however, found in terms that all the redactions would reveal, directly or indirectly, the content of privileged communications.
It is not necessary for this court to examine the voluminous material comprising the bills of costs in this case in order to discern if the claims for privilege can be made out notwithstanding the insufficiency of affidavit evidence. It is sufficient to say that a brief review of a number of the Corrs' invoices (eg confidential Red Book vol 1, 63, 66, 79, 183, 211; vol 4, 807, 842, 950 and 988) indicates that it is difficult to see how a number of entries could arguably be said to reveal confidential communications made for the dominant purpose of giving or receiving legal advice or for use in actual or reasonably anticipated litigation. At this stage, however, it is to be recalled that there is no sworn claim that any privileged communications would be revealed.
In my view the second ground of appeal should be upheld.
Ground 3 - waiver
The appellants, by this ground, contend that there has been a waiver of privileged material. In particular, they contend in effect that:
(a)by forwarding Corrs' invoices and the recharge schedules to the individual Westpoint companies for payment, the Receivers waived the privilege;
(b)the recharge schedules were documents created by the Receivers in the course of acting for the Westpoint companies and must be regarded as being owned by the Westpoint companies;
(c)the Corrs' invoices are documents received by the Receivers in the course of acting for the Westpoint companies and must be regarded as being owned by the Westpoint companies.
Although the ground in general terms alleges waiver, it is only the first of these allegations which, strictly speaking, concerns waiver.
As to the first allegation, in my view the recharge schedules and the Corrs' invoices, were sent by the Receivers in their capacity as receivers and managers, and received by the Receivers in their capacity as receivers and managers of the particular Westpoint company, for the purpose of arranging the payment of the account. The documents were not relevantly disclosed to a 'third party', and that conduct is not, objectively, inconsistent with the maintenance of a claim for confidentiality. Accordingly, it could not be said that there was any waiver of privileged material.
As to the second allegation, the observations of Fox LJ (Stocker LJ and Butler‑Sloss LJ agreeing) in Gomba Holdings UK Ltd v Minories Finance Ltd [1988] 1 WLR 1231, 1234 ‑ 1235 are pertinent:
It is also said that the receivers have a duty to maintain the records of the companies. But that does not help one to decide what are the records of the companies, ie whether a document belongs to the companies or someone else ...
The test cannot be whether a document relates to the companies' affairs - as the judge said, this is not a claim for discovery - but must depend upon the capacity in which the receivers were acting when they brought the documents into existence. (emphasis in original)
The decision in Gomba at first instance and on appeal, was referred to with approval by Barrett J in Boulos v Carter (as recs & mgrs of Tarbs World TV Australia Pty Ltd) [2005] NSWSC 891; (2005) 220 ALR 572 [48].
It is not correct to say that the recharge schedules were created by the Receivers in the course of acting for the Westpoint companies. The Receivers were managing the property of the Westpoint companies, primarily on behalf of the mortgagee. The recharge schedules which they created in support of the invoices were created in their personal capacity as receivers and managers, and not in their capacity as agents of the companies in receivership.
As to the third allegation, for the reasons given earlier, the Receivers were the clients of Corrs. The invoices issued by Corrs were received by the Receivers in their capacity as principals, and not as agents of the company in receivership.
I would dismiss ground 3.
Ground 4 : Statutory waiver
By ground 4, the appellants allege that the judge erred in holding that the Legal Practice Act 2003 (WA) and the Legal Profession Act 2008 (WA) did not operate to abrogate legal professional privilege. The appellants also alleged that the judge erred in fact in finding that no application for the taxation of costs had been made, where an application to extend time for taxation had been filed in January 2010 by the Westpoint companies.
The appellants contended, in effect, that a 'party charged' under the Legal Practice Act includes a person who has paid a solicitor's bill (s 228(2)(a)(i)) and a person liable to pay or to reimburse another for costs in a solicitor's bill (s 228(2)(a)(iii)). It was alleged that as the companies had paid Corrs' invoices, then the companies were parties charged under the Legal Practice Act, and had a right to require Corrs to tax their bills of costs pursuant to s 232. Under s 234 of the Legal Practice Act, if the bill of costs does not contain sufficient material to enable the taxing officer to tax the bill, the taxing officer may order the solicitor to lodge a more detailed bill of costs. The contention was that as the Westpoint companies had a right to require the bills of costs be taxed, the Legal Practice Act must have abrogated legal professional privilege. Similar provisions in the Legal Profession Act were also referred to: s 253(1)(c) and s 295.
A statute will only be taken to have abrogated an important right such as legal professional privilege, if it clearly indicates that it has done so: Daniels Corporation v Australian Competition and Consumer Commission [11].
As the primary judge observed, there is no clear indication in the Legal Practice Act or the Legal Profession Act that legal professional privilege is to be abrogated. Section 201(1) of the Legal Practice Act expressly provided, in effect, that a claim for privilege cannot operate to resist disclosure of any information to the Complaints Committee in relation to disciplinary matters. Section 201(3) provided that a notice by the Committee requiring a practitioner to provide information and documents does not operate as a waiver of legal professional privilege. There are broadly corresponding provisions in the Legal Profession Act (see s 467 and s 468). Also s 469 of the latter Act provides:
469.Waiver of privilege or duty of confidentiality
(1)If a client of an Australian legal practitioner makes a complaint about the practitioner, the complainant is taken to have waived legal professional privilege, or the benefit of any duty of confidentiality, to enable the practitioner to disclose to the Complaints Committee or the State Administrative Tribunal any information necessary for dealing with or investigating the complaint.
(2)Without limiting subsection (1), any information so disclosed may be used in or in connection with any procedures or proceedings relating to the complaint.
In my view the judge's reasoning is, with respect, correct. The legislature has directed specific attention to the question of legal professional privilege and made express provision for the circumstances in which it is not to apply to resist a claim for disclosure, and the circumstances in which the disclosure would not operate as a waiver. In light of the specific attention directed to those matters, there can be no basis for construing the statutes as otherwise interfering with the right to legal professional privilege. As in the case of party/party taxation, where costs are taxed in the context of adversarial litigation, questions of waiver may arise for consideration in the course of the taxation: see Giannarelli v Wraith (No 2) [1991] HCA 2; (1991) 171 CLR 592. However, there is nothing in either statute which provides expressly, or by necessary implication, that the taxing party has no right to claim legal professional privilege, or must be taken to have waived that right once the party charged requires taxation of the bill.
It is unnecessary to deal with the alleged error of fact made by the judge as, in the circumstances, it can have no bearing upon the proper construction of the statutes.
I would dismiss ground 4.
The question of leave
In Allmark v Mossensons (a firm) [2006] WASCA 127 [23], Pullin JA (Buss JA agreeing) said:
An interlocutory judgment is not a final judgment. An interlocutory judgment is one which involves no final adjudication of substantive rights but deals with ancillary questions of procedure. The fact that such a procedural decision may effectively prevent a party from proceeding with an action does not alter the classification of its character or nature. See Dousi v Colgate Palmolive Pty Ltd (1987) 9 NSWLR 374 at 379 per Kirby P and Glass JA. See also Licul v Corney (1976) 50 ALJR 439 and Carr v Finance Corporation (No 1) (1981) 147 CLR 246.
In relation to interlocutory orders, his Honour observed [26]:
Leave will usually only be granted where the decision below was wrong, or at least attended with sufficient doubt to justify the granting of leave, and if in addition substantial injustice would be done by leaving the decision unreversed. See Wing Luck Foods v Lay Choo Lim [1989] WAR 358 at 360 and Friday v Australian National Airlines Commission, unreported; FCt SCt of WA; Library No 8502; 24 September 1990; Stanley v Layne Christensen [2006] WASCA 56 at [15] and [58]. These are not rules but guidelines. The Court has a residual discretion to do justice in any case requiring leave even if the guidelines are not satisfied. See Sanderson v Metropolitan (Perth) Passenger Transport Trust, unreported; FCt SCt of WA; Library No 950185; 22 March 1995.
In the notice of appeal filed in this court, the appellants stated that leave to appeal was required. However, at the hearing, the appellants belatedly contended that leave to appeal was not required as Edelman J's orders were final.
There may be some doubt in this case as to whether the orders made by the primary judge were interlocutory or final. In the proceedings managed by Le Miere J, inspection of the relevant documents was sought both in the interlocutory process and as final relief. In his reasons for judgment, pursuant to which the matter was referred to the primary judge, Le Miere J referred to both the interlocutory application and the final relief sought by the appellants (Carey (No 1) [3] ‑ [4]) and concluded his judgment in these terms (Carey (No 1) [48]):
I will hear from the parties in relation to the further hearing of the plaintiffs' interlocutory application. (emphasis added)
Whilst his Honour's concluding remarks are not determinative, they do provide some indication that orders arising from the determination of the privilege issue by Edelman J were intended to be interlocutory in nature by the judge managing the overall litigation. The orders made by Edelman J do not shed a great deal of light on the question as they refer to a dismissal of the appellants' application to inspect the Corrs' invoices and the sample recharge schedules, without indicating whether it was the interlocutory process or the application within the originating process which was being dismissed.
If interlocutory in nature, I would grant leave to appeal in this case. The appellants were exercising statutory rights of inspection. The primary judge's finding that privilege inhered in the documents results, practically speaking, in the appellants being unable to inspect the documents in question. The primary judge's decision has been shown to be in error. There is no contention that the appellants seek the documents for collateral or improper purposes. The interests of justice would be served by the grant of leave.
Conclusion
I would grant leave to appeal, to the extent necessary, and would uphold the appeal with respect to ground 2. Each of the other grounds should be dismissed.
In the circumstances, and subject to hearing further from the parties, it would seem to me to be appropriate that the Receivers should have the opportunity of putting on further evidence in support of their claim for privilege and that the matter should be remitted to the General Division for directions in that regard and further determination by another CMC judge.
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT : THE COURT OF APPEAL (WA)
CITATION: CAREY -v- KORDA [2012] WASCA 228 (S)
CORAM: MARTIN CJ
NEWNES JA
MURPHY JA
HEARD: 8 AUGUST 2012 & ON THE PAPERS
DELIVERED : 6 FEBRUARY 2013
FILE NO/S: CACV 132 of 2011
BETWEEN: NORMAN PHILLIP CAREY
First Appellant
QUARTZ NOMINEES PTY LTD
Second AppellantAND
MARK ANTHONY KORDA As Receiver and Manager of Huntingdale Village Pty Ltd (Receivers and Managers Appointed), Silkchime Pty Ltd (Receivers and Managers Appointed), Vannin Pty Ltd (Receivers and Managers Appointed), Warwick Entertainment Centre Pty Ltd (Receivers and Managers Appointed), Paragon Apartments Ltd (Receivers and Managers Appointed), Westpoint Corporation Pty Ltd (Receivers and Managers Appointed (In liq), Bayview Port Melbourne Ltd (Receivers and Managers Appointed) (In liq) and Westpoint Management Ltd (Receivers and Managers Appointed) (In liq)
First named First RespondentDAVID JOHN WINTERBOTTOM As Receiver and Manager of Huntingdale Village Pty Ltd (Receivers and Managers Appointed), Silkchime Pty Ltd (Receivers and Managers Appointed), Vannin Pty Ltd (Receivers and Managers Appointed), Warwick Entertainment Centre Pty Ltd (Receivers and Managers Appointed), Paragon Apartments Ltd (Receivers and Managers Appointed), Westpoint Corporation Pty Ltd (Receivers and Managers Appointed) (In liq), Bayview Port Melbourne Ltd (Receivers and Managers Appointed) (In liq) and Westpoint Management Ltd (Receivers and Managers Appointed) (In liq)
Second named First RespondentPERPETUAL NOMINEES LTD
Second Respondent
ON APPEAL FROM:
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram :EDELMAN J
Citation :CAREY -v- KORDA & WINTERBOTTOM [No 2] [2011] WASC 220
File No :COR 147 of 2010
Catchwords:
Practice and procedure - Legal professional privilege - Claim for privilege not properly made - Remitter - Whether party claiming privilege should have opportunity to adduce further evidence
Costs - Special costs orders - Turns on own facts
Legislation:
Supreme Court Act 1935 (WA), s 37, s 59
Legal Profession Act 2008 (WA), s 280
Result:
Leave to appeal granted
Appeal allowed in part
Category: B
Representation:
Counsel:
First Appellant : Mr A Metaxas
Second Appellant : Mr A Metaxas
First named First Respondent : Mr J Stoljar SC & Mr M J Feutrill
Second named First Respondent : Mr J Stoljar SC & Mr M J Feutrill
Second Respondent : No appearance
Solicitors:
First Appellant : Metaxas & Hager
Second Appellant : Metaxas & Hager
First named First Respondent : King & Wood Mallesons
Second named First Respondent : King & Wood Mallesons
Second Respondent : Minter Ellison
Case(s) referred to in judgment(s):
Amaca Pty Ltd (Formerly James Hardie & Co Pty Ltd) v Hannell [2007] WASCA 158(S)
Bailey v Director‑General, Department of Land and Water Conservation [2009] NSWCA 100; (2009) 74 NSWLR 333
Barnes v Commissioner of Taxation [2007] FCAFC 88
Carey v Korda [2010] WASC 362
Carey v Korda [2012] WASCA 228
Carey v Korda [No 2] [2011] WASC 220
Carter v The Managing Partner, Northmore Hale Davy & Leake [1995] HCA 33; (1995) 183 CLR 121
Devereaux‑Warnes v Hall [2006] WASCA 268
McLennan v McCallum [2010] WASCA 45
Michael Kellaway International Pty Ltd v Shark Bay Airport Pty Ltd (Unreported, WASCA, Library No 970604, 13 November 1997)
Mount Lawley Pty Ltd v Western Australian Planning Commission [No 3] [2008] WASCA 158
Rayney v AW [2009] WASCA 203
Southern Properties (WA) Pty Ltd v Executive Director of the Department of Conservation and Land Management [2012] WASCA 79(S)
The Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission [2002] HCA 49; (2002) 213 CLR 543
Town of Port Hedland v Hodder [No 2] [2012] WASCA 212(S)
West Boat Builders Pty Ltd v Cull Holdings Pty Ltd [1999] WASCA 72
Westgate Finance v May [2012] NSWSC 806
Wookey v Radio 6PR Perth Pty Ltd [2012] WASC 132
JUDGMENT OF THE COURT:
Introduction
These supplementary reasons address the question of final orders in relation to the appellants' application for leave to appeal, and the appeal, in this matter. Much of the relevant procedural background is outlined in [3] ‑ [16] of the court's principal reasons for judgment in Carey v Korda [2012] WASCA 228. In summary, the proceedings below involved an application by the appellants for the production of certain documents over which the first respondents (the Receivers) had claimed legal professional privilege.
On 7 December 2010, Le Miere J delivered reasons in the matter Carey v Korda [2010] WASC 362, where the judge found that that two categories of documents, the Receivers' recharge schedules and Corrs' bills of costs, were amenable to inspection under s 421 of the Corporations Act 2001 (Cth), subject to any claim for legal professional privilege.
On 21 December 2010, Le Miere J ordered that the Receivers' claim for privilege be referred to a judge of the Supreme Court other than himself for determination, and that the Receivers file and serve affidavits relating to their claims for privilege in respect of Corrs' bills of costs and a sample of the recharge schedules. His Honour also ordered that the Receivers file sealed unredacted copies of Corrs' bills of costs and all of the recharge schedules.
The Receivers made a claim for privilege over identified entries in the sample recharge schedules and, in effect, a 'blanket' claim over the entirety of the bills of costs. The claim for privilege was heard by Edelman J on 26 July 2011.
On 26 August 2011, Edelman J delivered reasons in the matter Carey v Korda [No 2] [2011] WASC 220 in which his Honour found that the claims for privilege in both the sample recharge schedules and the bills of costs were properly made. Edelman J noted that the sampling approach that was undertaken in respect of the recharge schedules had been contemplated by Le Miere J, but did not make any express findings as to whether the sample was a 'representative' sample.
On 10 October 2011, Edelman J ordered that the appellants' application to inspect the redacted portions of the bills of costs and the sample recharge schedules be dismissed, and that the matter be re‑listed before Le Miere J for further directions concerning the production and inspection, subject to any claim for privilege, of the remaining recharge schedules. The judge also ordered that the appellants pay the first and second respondents' costs and that the first respondents' costs be taxed, if not agreed, without regard to the limit in Item 10 of the Legal Practitioners (Supreme Court) (Contentious Business) Determination 2010.
On 15 November 2012, this court delivered its reasons in which the court found that Receivers' affidavit evidence was insufficient to ground properly the claim for privilege in respect of the sample of recharge schedules and the bills of costs (reasons [89], [91]).
The court found that Edelman J had erred in finding that the Receivers did not need to particularise the details of their claim for privilege in respect of the sample recharge schedules any further than that contained in the affidavit material (reasons [90]). In relation to Edelman J's conclusion that his Honour had inspected all the unredacted versions of the recharge schedules and that the claims for privilege which had been redacted were properly made, the court said (reasons [87]):
Having looked at the unredacted versions of the schedules, whilst many, if not most, would seem to be arguably capable of supporting a claim for privilege, there would appear to be at least one item, apparently including a meeting with a third party, in relation to which it is difficult presently to see why confidentiality should necessarily be inferred.
The court found that the evidence in respect of the bills of costs suffered from the same defects as that of the recharge schedules and that it could not support a blanket claim for privilege. In relation to Edelman J's finding that all the redactions would reveal, directly or indirectly the content of privileged communications, the court said (reasons [97]):
It is not necessary for this court to examine the voluminous material comprising the bills of costs in this case in order to discern if the claims for privilege can be made out notwithstanding the insufficiency of affidavit evidence. It is sufficient to say that a brief review of a number of the Corrs' invoices (eg confidential Red Book vol 1, 63, 66, 79, 183, 211; vol 4, 807, 842, 950 and 988) indicates that it is difficult to see how a number of entries could arguably be said to reveal confidential communications made for the dominant purpose of giving or receiving legal advice or for use in actual or reasonably anticipated litigation. At this stage, however, it is to be recalled that there is no sworn claim that any privileged communications would be revealed.
The Court of Appeal is given 'wide' powers under s 59 of the Supreme Court Act 1935 (WA) (the Act) and under the Supreme Court (Court of Appeal) Rules 2005 (WA): Mount Lawley Pty Ltd v Western Australian Planning Commission [No 3] [2008] WASCA 158 [19].
By s 59(1) of the Act, the Court of Appeal may order a new trial or reference, or vary or set aside the verdict or reduce the damages awarded. Section 59(4) provides that the Court of Appeal may, on the hearing of any such application, exercise all such powers as are exercisable by it upon the hearing of an appeal. The court may, if it is satisfied that it has before it all the materials necessary for finally determining the question in dispute, or for awarding any remedy or relief sought, give judgment accordingly. For that purpose, the court may exercise all the jurisdiction, powers, and duties of the court.
In McLennan v McCallum [2010] WASCA 45 [91], the Court of Appeal stated that the exercise of the court's power to order a retrial depends upon the demands of justice.
It is common ground that Edelman J's orders should be set aside. The appellants, however, contend that this court should proceed to order production of the documents over which privilege had been claimed. In their supplementary written submissions, the appellants seek orders, relevantly, that:
Within 14 days the first respondents produce for inspection by the appellants the recharge schedules, Corrs' invoices and narratives to the Corrs' invoices.
At the hearing of the appeal, the appellants' position was somewhat different. Counsel for the appellants said (ts 31):
If as a result of inspecting a range of the invoices or recharge schedules your Honours conclude that the decision below is erroneous, I don't think your Honours have to look at every invoice and every recharge schedule, you just have to say that the decision is wrong and send it back for determination by the court differently constituted …
The respondents seek orders that the matter be remitted to a judge in the General Division, other than the primary judge for:
(a)rehearing and determination of the issue of the validity of the first respondents' objection to production of the documents the subject of the appellants' application;
(b)further directions allowing the first respondents to adduce further evidence on that issue and other matters pertaining to the rehearing of that issue.
There is also a dispute about costs.
The question of remitter
The parties' contentions
The appellants raise four points in support of their submission that the respondents should not be permitted to adduce further evidence on their claims for legal professional privilege. First, the first respondents 'decided to oppose the appellants' application for inspection on the basis of the evidence below notwithstanding that they were warned of its inadequacies'.
On this point, the appellants submit [13]:
In an interlocutory appeal leave to adduce additional evidence is more readily allowed. The first respondent was content to allow the appeal to proceed on the basis of its submissions.
Secondly, the additional evidence would delay the resolution of the originating process in this matter and the application in another related matter. Thirdly, it would be a 'significant departure from accepted practice that a party gets a second chance to remedy a deficiency in its evidence after an appeal or even at first instance'. In support of this proposition, the appellants cite Michael Kellaway International Pty Ltd v Shark Bay Airport Pty Ltd (Unreported, WASCA, Library No 970604, 13 November 1997); West Boat Builders Pty Ltd v Cull Holdings Pty Ltd [1999] WASCA 72; Westgate Finance v May [2012] NSWSC 806; Wookey v Radio 6PR Perth Pty Ltd [2012] WASC 132. Fourthly, the first respondents' conduct has been such that they are not entitled to any 'indulgence' from the court.
The Receivers contend in effect that it would not be an appropriate exercise of the court's discretion to make an order for production of the contested documents in circumstances in which some parts of the contested documents had been held to be at least capable of supporting a claim for privilege; doubt has been cast upon the claim for privilege only in respect of some other parts, although no conclusive determination has been made; and there has been no inspection of the balance of the sample recharge schedules or the Corrs' invoices, nor any determination of the privilege claims.
Disposition
Legal professional privilege is not merely a rule of substantive law but an important common law right or immunity: The Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission [2002] HCA 49; (2002) 213 CLR 543 [11]; see also Carter v The Managing Partner, Northmore Hale Davy & Leake [1995] HCA 33; (1995) 183 CLR 121.
Where there is a claim for legal professional privilege, the only appropriate and proper course is for the court to consider and determine the claim before making any disclosure order: Rayney v AW [2009] WASCA 203 [40].
This court has not made a determination that the documents are not privileged in nature. Rather, the court upheld, in effect, grounds 2.4 and 2.8 of the appellants' grounds of appeal concerning the primary judge's findings as to the adequacy of the Receivers' evidentiary particularisation of the claims for privilege. This court could, no doubt, itself inspect all the documents for the purposes of determining finally the question of privilege: see Bailey v Director‑General, Department of Land and Water Conservation [2009] NSWCA 100; (2009) 74 NSWLR 333 [60] and the cases there cited; Westgate Finance v May [32].
In this case the Corrs' invoices were voluminous, making it practically impossible to examine each one for the purposes of making a final determination. Moreover, having regard to the volume of material involved, it was particularly inappropriate to determine the claim on an evidentiary basis which the appellants would have had no opportunity to meet or test: see Westgate Finance v May [32]; Bailey v Director‑General [60] ‑ [61].
Nevertheless, the court inspected a limited number of the bills of costs and found, in effect, that it was difficult to discern the basis for a claim for privilege in respect of certain entries, although it noted that there was no sworn claim that privileged communications would be revealed by the redacted entries.
The court has not inspected any recharge schedules beyond the six which were the subject of the appeal. Nor has there been any determination that those six are representative of all of the other recharge schedules, of which, again, there is a considerable volume. Accordingly, there is no basis for ordering production of all of the recharge schedules. As to the six inspected, again no final determination has been made although the court found that, for the most part, there appeared to be an arguable basis for the claim.
In these circumstances, the primary judge's orders should be set aside but it seems to us to be inappropriate for this court to grant the final relief sought by the appellants and order the production of the documents. We are not persuaded by the appellants' arguments to the contrary.
As to the appellants' first contention, that argument, that the Receivers should have sought to adduce additional evidence before this court, would have more potency if the materials were less voluminous. However, in this case the Corrs' invoices are said to comprise 2,000 pages (principal reasons [37]). The Receivers' contention in the appeal was, in effect, that the bills of costs were, under the law, privileged in their entirety. Additional affidavit evidence, as an alternative to that contention, which addressed each entry over which privilege was claimed would be expected to be a substantial exercise. The determination of the claim for privilege over each entry, in light of such an evidentiary exercise, is more appropriately done by a judge in the CMC list upon remitter, rather than by this court. Although additional evidence in support of the six recharge schedules would not involve the same logistical difficulty, it is appropriate that one judge should determine all claims of privilege.
As to the appellants' second contention, the delay to the appellants is to be weighed against the fundamental importance which the law attaches to the protection of privileged communications. Further, considerable delay in the prosecution of the appellants' substantive claims would have occurred in any event had the receivers addressed each entry in the bills of costs and gave specific evidence in relation to each entry over which privilege was claimed. The additional delay occasioned by this appeal is not, in our view, a factor which would lead the court to order the production of the documents in question.
In relation to the appellants' third contention, Martin CJ observed in Devereaux‑Warnes v Hall [2006] WASCA 268 [2], that there is a very strong public interest in the finality of litigation. However, in light of all the matters referred to in the foregoing reasons, in the particular circumstances of this case it is, in our view, in the interests of justice that the matter be remitted and that the Receivers have the opportunity to adduce additional evidence on the remitter.
The cases referred to by the appellants provide no real assistance to the appellants in their application for the order of the production of the documents. In both Michael Kellaway v Shark Bay and West Boat Builders v Cull Holdings, the court found that the plaintiff had not proved the damages which it was awarded by the trial judge for breach of contract. The failure to prove damage meant that the plaintiff was not entitled to the damages awarded. Here the Receivers' failure to adduce sufficient evidence to ground their claim for privilege means that the orders dismissing the appellants' application should be set aside. It does not mean, in the circumstances, that the appellants' application should be granted.
In Westgate Finance v May [2012] NSWSC 806, a company produced certain documents in response to a subpoena, but made a number of redactions on the grounds of privilege and confidentiality. McDougall J stated that the evidence on the claim for privilege was 'lamentably deficient' and that there was no evidence to enable the court to form a view as to whether the claim for privilege could be made out in respect of any individual document (reasons [30]). His Honour considered it appropriate, subject to the question of costs, to give the company an opportunity to put on proper and admissible evidence substantiating any claim to privilege (reasons [33]).
The case of Wookey v Radio 6PR Perth Pty Ltd [2012] WASC 132, in which Kenneth Martin J allowed inspection of two documents which were not arguably within a character of documents that could be subject to legal professional privilege, has no relevance to this issue.
The decision of Kenneth Martin J in Wookey v Radio 6PR Perth was consistent with the approach adopted by the Full Court of the Federal Court of Australia in Barnes v Commissioner of Taxation [2007] FCAFC 88 to which the appellants referred in submissions and with the approach taken in Bailey v Director‑General. In the latter case, Tobias JA considered that a failure to file and serve satisfactory evidence in support of a claim for privilege would not, of itself, be fatal to a claim for privilege. However, his Honour noted that such a failure might result in a primary judge adjourning the proceedings until the defect is remedied and ordering the party claiming the privilege to pay costs, and possibly on an indemnity basis, thrown away by the need for that adjournment [39] ‑ [44].
The appellants' fourth point appears to cover similar ground to that covered by their first three points. The appellants refer to a number of exchanges that took place in the appeal hearing between the Chief Justice and the Receivers' counsel which they say support their submission that the Receivers chose to maintain in the appeal the propositions they advanced before Edelman J despite being 'completely unsustainable'. One such exchange to which the appellants refer to is the following (ts 50):
STOLJAR MR: If there were entries which could be readily excised and had no other characterisation of the kind that your Honour has put to me, then it may be difficult to submit that those were protected by privilege, but that - - -
MARTIN CJ: And so if we find any of them in the unredacted invoices you lose.
STOLJAR MR: No, I don't lose, your Honour. I might lose in respect of that particular entry.
As noted above, however, the court has not made a final determination with respect to any of the entries. The court has found that the affidavit evidence was insufficiently particularised to support the claims for privilege and that in relation to the bulk of the materials, namely the Corrs' bills of costs, sufficient doubt is cast upon the primary judge's conclusion that the entirety of the documents are privileged so as to justify the setting aside of the primary judge's orders dismissing the appellants' application.
For these reasons, the appellants' application for production of the documents should be rejected. There should be a remittal to a judge in the CMC list of the General Division on the basis that the Receivers may be given the opportunity to seek to adduce additional evidence to remedy the deficiencies identified by this court.
The question of costs
The appellants contend that the first respondents should pay the appellants' costs, including reserved costs, of and relating to the application heard by Edelman J on 26 July 2011 with such costs to be taxed without regard to the limit in Item 10(a) of the Legal Practitioners (Supreme Court) (Contentious Business) Determination 2010. They also seek an order that the first respondents pay the appellants' costs of and incidental to the taxation of the first respondents' bill of costs dated 3 April 2012 filed pursuant to the orders made by Edelman J on 14 October 2011. They also seek an order that the first respondents pay their costs of the appeal, such costs to be taxed without regard to the limit in Item 23 of the Legal Practitioners (Supreme Court) (Contentious Business) Determination 2010.
In relation to the costs before the primary judge, the first respondents contend that as the question of whether the first respondents' objections to production have been properly made has not been determined, and as the appellants were unsuccessful on nearly every issue raised before the primary judge, it is appropriate to reserve those costs to the judge who ultimately hears the matter on remitter. They contend that if, nevertheless, the court were minded to grant the appellants the costs of the hearing before the primary judge, it would be appropriate to tax those costs without regard to the limit in Item 10(a). In relation to the appeal, the first respondents contend that as the appellants failed on three of four grounds of the appeal and as those grounds occupied significant time and cost in preparation for the appeal, it would be appropriate to make no order as to costs of the appeal. Alternatively, if there were to be an order in favour of the appellants in relation to the costs of the appeal, the matter would not merit an order that the costs be taxed without regard to the limit in Item 23.
Disposition
In relation to the costs of the appeal, the appellants succeeded on one of four grounds. Nevertheless, most of the time in the appeal in oral argument was spent on ground 2, on which the appellants were successful. In relation to the first ground, the appellants failed to identify any error in legal principle, but the factual material canvassed in ground 1 was relevant to some extent to the proper understanding and disposition of ground 2. The success of ground 2 meant that the primary judge's orders in dismissing the appellants' application should be set aside. The appellants were in substance the successful party and any costs order must give proper recognition to that consideration. Accordingly, it is not appropriate to accede to the first respondents' contention that there be no order as to costs in the appeal. Nevertheless, it is also appropriate to recognise that the appellants failed in their arguments on three of the grounds of appeal. Grounds 3 and 4 and the legal issues the subject of ground 1 were separate and discrete issues for resolution which no doubt added to the costs of the proceedings to a limited but nevertheless significant extent in the context of the overall costs of the appeal: Amaca Pty Ltd (Formerly James Hardie & Co Pty Ltd) v Hannell [2007] WASCA 158(S) [7]. Taking a broad view, it would be just, in the circumstances of the case, for the appellants to be awarded 75% of the costs of the appeal.
In relation to the appellants' application that the appellants' costs of the appeal be taxed without regard to the limit in Item 23 of the table to clause 11 of the Legal Practitioners (Supreme Court)(Contentious Business) Determination 2010, item 23 imposes limits upon the amounts which can be awarded in respect of particular aspects of the appeal process.
Special costs orders can be made either pursuant to s 280(2) of the Legal Profession Act 2008 (WA) or s 37(1) of the Supreme Court Act 1935 (WA): see Town of Port Hedland v Hodder [No 2] [2012] WASCA 212(S), in which the court said [14]:
In either case, before the power will be exercised, the court must form the view that the maximum amount allowable under the relevant scale item is inadequate in the sense that there is a fairly arguable case that the bill to be presented to the taxing officer may properly tax at an amount which is greater than the limit which would be imposed by the relevant costs determination (see Heartlink Ltd v Jones As Liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASC 254(S) [11]). If that threshold is crossed, under s 280(2) other questions arise for determination. However, until that threshold is crossed, the power will not ordinarily be exercised.
See also Southern Properties (WA) Pty Ltd v Executive Director of the Department of Conservation and Land Management [2012] WASCA 79(S) [4].
The appellants have not identified any particular limits within item 23 which indicate that the scale amounts are inadequate, and have not furnished any material to suggest that the taxing officer may properly tax an amount which is greater than the limit imposed by the costs determination. The appellants have failed at the 'threshold' stage of the inquiry, and there is no reason to make a special costs order in their favour in this case.
In relation to the costs of the matter below, had the primary judge not erred, he would have found that the first respondents' evidence was insufficient to ground the claims for privilege. That would likely have led to a further hearing, with additional evidence of the kind contemplated by this court as a result of the successful appeal. The appellants would still however have lost on all of the other issues before the primary judge. It would be appropriate, in all the circumstances, for the costs below to mirror the outcome on costs in this appeal, save that the first respondents' have conceded that such costs should be taxed without regard to the limit in item 10(a) of the Legal Practitioners (Supreme Court)(Contentious Business) Determination 2010.
Conclusion
The orders that should be made are:
(1)The appellants be granted leave to appeal;
(2)The appeal be allowed in part;
(3)The orders made by Edelman J on 10 October 2011, as amended on 14 October 2011, be set aside;
(4)The matter be remitted to a judge in the CMC List of the General Division, other than the primary judge, for:
(a)rehearing and determination of the issue of the validity of the first respondents' objection to production of the documents the subject of the appellants' application;
(b)further directions allowing the first respondents to adduce further evidence on that issue and other matters pertaining to the rehearing of that issue;
(5)The first respondents pay 75% of the appellants' costs, including reserved costs, of and incidental to the application heard by Edelman J on 26 July 2011, such costs to be taxed without regard to the limit in Item 10(a) of the Legal Practitioners (Supreme Court)(Contentious Business) Determination 2010;
(6)The first respondents pay 75% of the appellants' costs of and incidental to the taxation of the first respondents' Bill of Costs dated 3 April 2012 filed pursuant to the orders made by Edelman J on 10 October 2011, as amended on 14 October 2011;
(7)The first respondents pay 75% of the appellants' costs of this appeal, such costs to be taxed if not agreed.
Only the first respondents appeared in this appeal. Specific attention is directed to proposed order 3 above, which also affects the second respondent insofar as it affects Edelman J's orders of 10 October 2011, as amended on 14 October 2011, in relation to the second respondent's costs of the proceedings below and the application concerning the special costs order.
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