Edensor Nominees Pty Ltd v Anaconda Nickel Limited
[2002] VSC 567
•11 December 2002
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. 4381 of 2001
| EDENSOR NOMINEES PTY LTD AND JOSEPH ISAAC GUTNICK | Plaintiffs |
| v | |
| ANACONDA NICKEL LIMITED | Defendant |
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JUDGE: | HARPER J | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 10 DECEMBER 2002 | |
DATE OF JUDGMENT: | 11 DECEMBER 2002 | |
CASE MAY BE CITED AS: | EDENSOR NOMINEES PTY LTD v ANACONDA NICKEL LTD | |
MEDIUM NEUTRAL CITATION: | [2002] VSC 567 | |
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Application pursuant to r.37.01(1) – Inspection of documents – Whether subject to legal professional privilege – Whether privilege waived - Attorney-General (Northern Territory) v Maurice (1986) 161 CLR 475; Giannarelli v. Wraith (No. 2) (1991) 171 CLR 592.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr E.N. Magee QC with Mr P. Willis and Mr R. Harris | Schetzer Brott & Appel |
| For the Defendant | Mr A.J. Myers QC with Mr I. Stewart | Holding Redlich |
HIS HONOUR:
On 17 September 2001, Warren J handed down her judgment following the trial of this proceeding. She found for the plaintiffs. The defendant has instituted an appeal. One of a number of grounds of appeal is that her Honour "misused or did not use her advantage in seeing and hearing the witnesses and paid no or inadequate regard to the established circumstances and accordingly her finding that Mr Forrest [a principal witness for the defendant] was an untruthful witness, and that Mr Gutnick was to be believed in all he said, must be set aside". Another concerns the evidence and credibility of a witness for the plaintiffs, a Mr Paul Ehrlich. The relevant ground is that, in attaching any weight to Mr Ehrlich’s evidence, her Honour erred in not paying any or adequate regard to the fact that he discussed the case with other witnesses for the plaintiffs. One of those witnesses was Mr Joseph Gutnick, the second plaintiff.
According to an affidavit sworn on 2 December 2002 by Ms Samantha Frankenburg, a solicitor employed by the firm of Holding Redlich, the solicitors for the defendant, Mr Ehrlich gave evidence at the trial that (a) he did not see any draft of the witness statement of Mr Gutnick; (b) he "deliberately instructed" the plaintiffs’ solicitors not to send any such draft to him because he "did not want to be asked the question whether [he] had seen them"; and (c) "that instruction was carried out". Ms Frankenburg cited pp.519-520 of the transcript as authority for this portion of her affidavit.
As for Mr Gutnick, he gave evidence the tenor of which (according to an affidavit also sworn on 2 December but on this occasion by Ms Penelope Pengilley, another solicitor employed by Holding Redlich) was that he had a telephone conversation with Mr Forrest in which each committed to an agreement to which the two men then came – after which Mr Gutnick gave Mr Ehrlich instructions to give effect to that agreement. This evidence, the defendant now asserts, is inconsistent with a letter written by Mr Gutnick to Mr Ehrlich's former firm, Clayton Utz. That letter, which is dated 21 May 2001, is among the documents the subject of this application.
The defendant seeks to contend on the appeal that in each case the evidence given in the trial was untrue. But at present it has not much more than a suspicion that this is so. That suspicion is, in part, based upon the letter of 21 May and in part upon what the defendant knows of certain documents the contents of which were alluded to in the taxation of the plaintiffs’ costs of the trial. It wishes to inspect those documents in order to ascertain their true import. The plaintiffs resist such inspection, as well as the application in relation to the 21 May letter. They claim that the documents are covered by legal professional privilege.
The documents in question are now in the custody of the Court. On Wednesday 4 December, on the ex parte application of the defendant, I ordered that the solicitors for the plaintiffs deliver them to my Associate by 3.30 p.m. that day. The order was complied with. The further hearing of the application for inspection was adjourned to Tuesday 10 December. I made other, ancillary, orders designed to enable the plaintiffs to be heard on the application.
The first submissions put on behalf of the plaintiffs were in support of an application for a further adjournment. This I dismissed, for reasons which have been published elsewhere. The defendant’s application was then heard without additional delay.
The jurisdictional basis for an order that the documents the subject of this application be inspected was, it was submitted by the defendant, to be found in r.37.01(1). As I understand the plaintiffs, they did not seek to disagree. That rule provides that, in any proceeding, the Court may make an order for the inspection of any property. It was not suggested that this does not cover documents.
It was submitted on behalf of the plaintiffs that the application ought to have been made in the Court of Appeal. I disagree. It seems to me that I have power to act pursuant to r.37.01 in the circumstances which presently obtain; and the administrative arrangements of the Court are much better served if this, an application of a kind commonly dealt with in the Practice Court, is heard in the Trial Division.
The argument about privilege centred upon whether that privilege could properly be claimed. It was not submitted that the material sought by the defendant could not adversely affect the credit of either Mr Ehrlich or Mr Gutnick, although the plaintiffs urged me to hold that because it went only to credit it was irrelevant to the appeal. Judgments, it was submitted, are not set aside merely on the basis that a witness for the successful party is, after judgment, shown to have given deliberately false evidence.
So much may, for present purposes, be conceded. The defendant makes two points in response. First, the grounds of appeal raise directly the trial judge’s findings of fact, and by so doing introduce into the appeal issues going to the credit of Messrs Gutnick and Ehrlich; and it is for the Court of Appeal, not for me, to pronounce upon the appropriateness or relevance, on the appeal, of these issues. Secondly, the documents the subject of this application may take the matters to be argued on appeal one step further than those relating to credit. They may show, or constitute part of a matrix of facts which show, that (to quote from paragraph 14 of the affidavit of Penelope Pengilley sworn on 2 December 2002):
"… Mr Ehrlich and Mr Gutnick, having regard to the above matters, may have collaborated together in the preparation of their advice; that together, they suppressed evidence of Mr Gutnick's involvement in the … telephone call and that they have a tendency to contrive their evidence and to suppress inconvenient evidence in order to support the plaintiffs' case."
If this allegation could be made out, the defendant would be in a position to argue, on appeal, that the judgment below should be set aside on the basis that it was obtained by fraud.
In my opinion, the defendant’s case on these points is not fanciful. I cannot, therefore, dismiss it at this point. Of course, it may not ultimately succeed. That is a matter for the Court of Appeal.
This brings me to the question of legal professional privilege. The purposes which the privilege is designed to serve were articulated by the High Court in Grant v Downs[1]:
"The rationale of this head of privilege, according to traditional doctrine, is that it promotes the public interest because it assists and enhances the administration of justice by facilitating the representation of clients by legal advisers, the law being a complex and complicated discipline. This it does by keeping secret their communications, thereby inducing the client to retain the solicitor and seek his advice, and encouraging the client to make a full and frank disclosure of the relevant circumstances to the solicitor. The existence of the privilege reflects, to the extent to which it is accorded, the paramountcy of this public interest over a more general public interest, that which requires that in the interests of a fair trial litigation should be conducted on the footing that all relevant documentary evidence is available. As a head of privilege legal professional privilege is so firmly entrenched in the law that it is not to be exorcised by judicial decision."
[1](1976) 135 CLR674 at 685
In Esso Australia Resources Ltd v Federal Commissioner of Taxation[2], the High Court decided that only those documents which are brought into existence for the dominant purpose of submission to legal advisers for advice or for use in legal proceedings are entitled to immunity from production. This clearly does not apply to one of the documents in issue here: the letter dated 21 May 2001 from Mr Gutnick to Clayton Utz. That was a letter of complaint to a firm which had once acted for Mr Gutnick’s interests, but was not then doing so. It did not have the dominant purpose of either seeking advice or being used in litigation - certainly not in litigation in which Clayton Utz were acting for Mr Gutnick. In my opinion, it is not a privileged document.
[2](1999) 201 CLR 49
The privilege does not attach to documents which neither themselves constitute the giving or receiving of advice nor form part of the actual litgation: Cross on Evidence (Australian Edition)[3]. Thus, memoranda of fees, backsheets and the like which do not disclose the nature or extent of privileged material are not privileged even though they may have been made with reference to litigation that was then actually taking place.
[3]para.25210
It seems to me that, apart from the letter of 21 May, another of the documents in question here is not privileged. It had and has nothing to do with advice and, if it was a communication at all, was not a communication forming part of the material constituting the litigation itself. It is a file note. It is dated 11 July 2001. It merely records (a) the attendance, at a meeting with Mr Ehrlich and counsel for Mr Gutnick, of the person who made the note; (b) (in broad terms) the purpose of the meeting; and (c) (in equally broad terms) that the meeting prepared the first draft of Mr Gutnick’s witness statement. None of this, it seems to me, should attract legal professional privilege because, if it did, the rationale of the privilege would not be served while the public interest in the fairness of trials would be adversely affected. In this context, I adopt with respect the words of Mason and Brennan JJ in Attorney-General (Northern Territory) v Maurice[4] where their Honours said:
"Succinctly stated, the privilege protects from disclosure 'communications made confidentially between a client and his legal adviser for the purpose of obtaining or giving legal advice or assistance' …
When the privilege applies, it enables the client to keep the communication from disclosure and interferes with the public's 'right to every man's evidence': Cobbett's Parliamentary History (1812) vol.12, p.675. Because of this conflict between the public interest in ensuring the availability of all relevant evidence in a particular case and the public interest in the administration of justice through effective legal representation, the privilege is confined within strict limits."
[4](1986) 161 CLR 475 at 487
The other document in dispute is a letter dated 17 July 2001. It was sent to Mr Ehrlich. The same letter, with the same date, was sent to Mr Gutnick. In each case, the letter states that, enclosed with it, is a draft witness statement for Mr Gutnick. Neither letter contains any advice. Each is, of course, a communication. Each was brought into existence in relation to this litigation, but neither was intended to be part of the actual litigation: neither was brought into existence for the purpose of assisting in the resolution of the issues with which the litigation was then concerned. Nor does either disclose the nature or extent of privileged material. As is true also of the file note dated 11 July, neither document falls into that class of documents to which legal professional privilege attaches for the reason that they were made as recording "communications which are themselves privileged": TPC v. Sterling[5]. In my opinion, the defendant is entitled to inspect the letters dated 17 July 2001.
[5][1978] 36 FCR 244 at 246
Even if I am wrong about this, privilege in these documents (that is, the file note of 11 July and the letters of 17 July) has in my opinion been waived by the plaintiffs. Each was relied upon on taxation. Accepting for the purposes of this exercise that the affidavits of Ms Frankenburg and Ms Pengilley are accurate, the result is that the plaintiffs were seeking to recover costs for work which Mr Ehrlich told the trial judge was never done. In these circumstances, fairness seems to me to require that the defendant be entitled to inspect the documents in question. And it is clear that fairness is the touchstone against which issues of waiver are to be determined: Attorney-General (Northern Territory) v. Maurice[6]; Giannarelli v. Wraith (No.2)[7].
[6](1986) 161 CLR 475 at 488 per Mason and Brennan JJ
[7](1991) 171 CLR 592
It might be argued that privilege has only been waived for the purposes of taxation. That, even if accurate, would not disentitle the defendant to access to the documents now: see the judgment of McHugh J in Giannarelli v Wraith (No. 2). Whether they can be used on appeal is a matter rather for the Court of Appeal than for me.
The plaintiffs also argued that I ought not to have made the ex parte order which I made on 4 December. It was submitted that there was no basis for the conclusion that the documents in question were endangered by reason of their continued presence in the offices of the solicitors for the plaintiffs.
I accept that no reflection was, during the course of the ex parte proceedings, made or intended against any of the solicitors for the plaintiffs, and particularly not against Mr Appel, the person who I understand is particularly concerned with the relevant file. Nor did I proceed upon the basis that there was any doubt about Mr Appel's integrity. I stress that nothing should be seen in the decision then made, or in anything which I have said subsequently, that should be taken as reflecting adversely in any way upon Mr Appel. Nor, it seems to me, is there in these proceedings any adverse reflection upon the solicitor (a Mr Bond) who made the file note of 11 July. No suggestion was made, either during the hearing on 4 December or during the course of argument yesterday, which might be taken as an adverse reflection upon Mr Bond. Indeed, it was specifically asserted by counsel for the defendant that no imputation whatsoever was made by the defendant against either Mr Appel or Mr Bond. I proceed upon that basis.
It nevertheless seemed to me that, if the defendant is correct and false evidence was given to the trial judge, then proof of that falsity may be contained in the documents in question. In those circumstances, the preservation of the relevant documents in the form in which they presently are is of paramount importance. In saying this, I make no finding about the integrity of either Mr Ehrlich or Mr Gutnick, or anybody else. I simply record that if the circumstances postulated by the defendant are accurately postulated, then there must be an incentive in the persons concerned to prevent the production of the relevant documents to the defendant or its representatives. In those circumstances, it seemed to me then, as it does now, that it was appropriate (and, indeed, perhaps in the interests of Mr Ehrlich and Mr Gutnick) to make an order on the ex parte application. Such an order would necessarily reduce their exposure to accusations that they had tampered with the documents.
For these reasons, it seems to me that the defendant is entitled to inspect each of the documents the subject of the application presently before me. I propose to order accordingly. I add, however, that a witness statement was attached to the letters of 17 July 2001 in the form in which those letters were received by the Court. Whether that witness statement, which purports to be that of Mr Gutnick, was in draft form or otherwise, is not revealed by the material before me. I make no finding either way.
In any event, it seems to me that the witness statement should not be released to the defendant. If it is the original, then the defendant already has a copy and there is no need for a further copy to be furnished to it. If it is a draft, then it seems to me to be clearly covered by legal professional privilege, and for that reason I would refuse its production.
I also take into account the fact that the defendant has not, either in its summons or otherwise, sought production of that document.
I do not propose to allow the defendant its costs at present. It seems to me that even in relation to the letter which Mr Gutnick wrote, and which was dated 21 May, the Court of Appeal will be in at least as good a position to determine a just outcome of the costs application as am I.
The Court of Appeal will be aware that I have found that the letter of 21 May was not privileged. It doubtless should have been discovered; but that issue was not fully argued before me, and it may be that the Court of Appeal will be cognisant of that point and decide it one way or another. In any event, I think that the Court of Appeal will be in at least as good a position as am I to determine the appropriate order as to costs, even in relation to the letter of 21 May.
For these reasons, it seems to me that the costs of this application should be reserved to the Court of Appeal.
The plaintiffs seek a stay of execution of the orders which I have indicated I will pronounce in this matter, such stay to be pending an appeal brought by the plaintiffs against my ruling. That application depends substantially on the proposition that if the stay is not granted the appeal will be rendered nugatory. Save in the case of the letter of 21 May 2001, there is, in my opinion, force in this proposition.
The defendant has already obtained, by other means not here relevant, possession of the letter last mentioned. If the defendant is able to inspect the remaining documents in question then it will have obtained the very advantage which, if the appeal is successful, the Court of Appeal will say that it was not entitled to have.
It might be said that that advantage will not amount to much. If a stay is not granted and the appeal from my decision succeeds, it is true that the defendant will have seen the relevant documents; but it will not be able to use them in any way that is currently relevant. In that sense, the whole issue, it seems to me, is somewhat artificial.
On the other hand, the law should be concerned to protect the confidentiality of documents that are properly confidential; and it should be concerned to protect, as privileged, those documents which are properly privileged. It may be that in a particular case the confidentiality is not of great import. It may be that in a particular case the privilege is not, in reality, a privilege that will affect – one way or another – the position of the party seeking to maintain the privilege. But to say that in a particular case these principles do not in reality count for much is, it seems to me, to place them in a position of vulnerability which is inappropriate. Each principle is important, given its appropriate sphere. Within that sphere each principle should be maintained, even if – in a particular case – the maintenance or otherwise of the principle would not, in reality, affect the rights of one party or the other in any material way.
Given those considerations, it seems to me that my prime object here should be to ensure that if there is privilege in these documents that privilege is not rendered nugatory by the premature release of them to the defendant.
It may in one sense be regrettable that yet another appeal will delay the ultimate outcome of this proceeding; but that is not to reflect adversely on the actions of those who seek to exercise rights of appeal. It is simply a fact of life.
In the circumstances, I think I should accede to the plaintiffs' application for a stay in relation to each of the documents in question, save that of the letter of 21 May 2001 written by Mr Gutnick to Clayton Utz. That letter will be excepted from the stay; but otherwise I will stay the execution of the orders which I am about to pronounce, and I will so stay the execution until the hearing of an appeal from my decision.
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