Fay v Moramba Services Pty Ltd (No 2)

[2008] NSWSC 571

CITATION:	Fay v Moramba Services Pty Ltd (No 2) [2008] NSWSC 571
HEARING DATE(S):	21 May 2008
JURISDICTION:	Equity Division Expedition List
JUDGMENT OF:	Brereton J
EX TEMPORE JUDGMENT DATE:	21 May 2008
DECISION:	Application to set aside notice to produce refused; access granted to advice; access refused to associated documents until further order.
CATCHWORDS:	PROCEDURE – notice to produce – where notice requires production of legal advice from Counsel and related documents – application to set aside notice on ground of client legal privilege – where open letter refers to effect of counsel’s advice – whether privilege lost due to knowing and voluntary disclosure – whether documents related to the advice are “reasonably necessary to enable a proper understanding” of the advice – where privileged document may be shown to be necessary to understanding – whether notice requiring production of privileged documents should be set aside, or production required but access refused.
LEGISLATION CITED:	(NSW) Evidence Act 1995, ss 118, 119, 122, 126
CATEGORY:	Procedural and other rulings
CASES CITED:	ML Ubase Holdings Co Ltd v Trigem Computers Inc [2007] NSWSC 859 Towney v Minister for Land and Water Conservation (NSW) and Others (1997) 76 FCR 401
PARTIES:	3365/07 Garrick E Fay (first plaintiff/first cross defendant) Dallas Fay (second plaintiff) Lisa Fay (second cross defendant) Moramba Services Pty Ltd (defendant/cross claimant) 5032/06 Garrick E Fay (first plaintiff/first cross defendant) Dallas Fay (second plaintiff/second cross defendant) Justinthyme Pty Ltd (third plaintiff/third cross defendant) Henry Kai Tong Au (first defendant/first cross claimant) Hugh Edward Halliday (second defendant/second cross claimant) Allan Ni Kwan Kwok (third defendant/third cross claimant) Stephen Thomas Pollitt (fourth defendant/ fourth cross claimant)
FILE NUMBER(S):	SC 3365/07; 5032/06
COUNSEL:	Mr D E Grieve QC w Ms J F Merkel (plaintiffs) Mr P W Flynn (defendants)
SOLICITORS:	Whittens Lawyers & Consultants (plaintiffs) Corrs Chambers Westgarth (defendants)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
EXPEDITION LIST

BRERETON J

21 May 2008

5032/06 Garrick E Fay & 2 Ors v Henry Kay Tong Au & 3 Ors
3365/07 Garrick E Fay & 1 Or v Moramba Services Pty Ltd

JUDGMENT (ex tempore)

1 HIS HONOUR: The plaintiffs move for an order setting aside a notice to produce served on them by the defendants dated 20 May 2008, which requires production of the following documents:

In relation to the legal advice provided by Mr Grieve QC to you and/or your solicitors at the time, Blessington Judd, in relation to the Cohabitation Agreement (Advice) (as disclosed in the letter from Blessington Judd to the defendants of 9 January 2006):
1. All documents briefing information to or instructing Counsel for or related to the Advice.
2. Copies of documents provided to Counsel for the purpose of briefing or instructing Counsel to provide the advice.
3. Copies of all documents obtained by Counsel from whatever source for the purpose of or for use in the provision of the Advice.
4. All draft advices.
5. Copies of all notes, file notes, working papers, and any other documents created or relied upon by Counsel in preparing the Advice.
6. Copies of all file notes recording, relating or referring to discussions with Counsel in respect of the Advice.
7. A copy of the Advice.

2 Although the notice to produce was served only on 20 May 2008, no point is taken about it being unreasonable in respect of the time allowed for compliance, or the extent of the documents required. The plaintiffs' argument is founded on the contention that the notice requires production of material that is privileged, and therefore has no utility because the material could never be inspected or used by the defendants.

3 In paragraph 23 of the amended statement of claim, the plaintiffs allege that, notwithstanding that the defendants knew or ought to have known that the cohabitation agreement with Ms Tripp was voidable or void, they permitted Moramba Services to allow her to reside without charge in the Connaught Apartment, and to make payments and provide benefits to her in accordance with the agreement. In paragraph 23A, they complain that the defendants, in breach of their duties as directors of Moramba Services, have failed to institute proceedings to have the cohabitation agreement declared void or set aside.

4 Part of the evidence relied on in support of those allegations is a letter dated 9 January 2006 from Blessington Judd Lawyers, who were then acting for the plaintiffs, to the defendants, which contains, relevantly, the following:

We have retained Mr D E Grieve QC to advise our clients of their rights under the Will and generally. He is of the opinion, with which we agree, that the administration of the estate has been unduly and unjustifiably delayed...

5 Subsequently, the letter continues:

For reasons which may be shortly stated, Mr Grieve has advised that the Cohabitation Agreement is unenforceable. First, it fails for want of consideration unless there is cogent evidence that all parties to it intended it to operate as a Deed. We know of no such evidence. Indeed given the apparent irregularities to which Mr Walton referred in paragraphs 5 and 6 of his first opinion, the likelihood that any exists may be regarded as remote.
Secondly it is trite law that the directors of a company are duty-bound to act in good faith and for its benefit as a whole...
Mr Grieve has further advised that in view of the foregoing all of the benefits which have been provided by Moramba Services Pty Ltd to Mrs Tripp and all of the payments which it has made to her or for her benefit are recoverable by it and that she has no right to remain in occupation of the apartment...

6 Prima facie, the material called for by the notice to produce is entitled to client legal privilege under (NSW) Evidence Act 1995, s 118, being or containing confidential communications between a client and a lawyer for the dominant purpose of the lawyer providing legal advice to the client. It may also be entitled to litigation privilege under s 119, but it is unnecessary to determine that at this stage.

7 However, client legal privilege will be lost, under s 122(2), if inter alia a client or party has knowingly and voluntarily disclosed to another person the substance of the evidence (except in certain circumstances not applicable here).

8 In my view, it is plain that the letter of 9 January 2006 is a knowing and voluntary disclosure of the substance of Mr Grieve's advice. It forensically deploys that advice. Accordingly, I would hold that in respect of Mr Grieve's advice referred to in that letter, there has been a waiver under s 122(2).

9 However, the notice to produce goes further than requiring production of Mr Grieve's advice, or documents that evidence it. It also calls for instructions to counsel, documents provided to counsel for the purposes of the advice, draft advices and so on. Those documents could only have lost the privilege they otherwise attract if, for the purposes of s 126, they were “related communications…reasonably necessary to enable a proper understanding” of Mr Grieve's advice.

10 I do not accept that every document bearing some connection or relationship with the principal document is "necessary to enable a proper understanding" of the principal document, as Sackville J explained in Towney v Minister for Land and Water Conservation (NSW) and Others (1997) 76 FCR 401 at 412-414; see also ML Ubase Holdings Co Ltd v Trigem Computers Inc [2007] NSWSC 859, [36]-[40]. It seems to me impossible to say, at least at this stage, that the documents called for by the notice are in that category, although it is conceivable that upon production of the advice it may become apparent that they are.

11 In those circumstances, the appropriate course – privilege being primarily an objection to access, as distinct from production – is not to set aside the notice, but to allow access only to the documents referred to in paragraphs 6 and 7 of the notice, until further order.

12 Accordingly, I decline to set aside the notice to produce. I grant access to the documents produced under paragraphs 6 and 7 of the notice. I refuse access to the documents produced under paragraphs 1 to 5 of the notice until further order.

**********