G&S Engineering Services Pty Ltd v MACH Energy Australia Pty Ltd

[2024] NSWSC 955

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

G&S Engineering Services Pty Ltd v MACH Energy Australia Pty Ltd (No 16) [2024] NSWSC 955

Hearing dates:

19 July 2024

Date of orders:

05 August 2024

Decision date:

05 August 2024

Jurisdiction:

Equity - Technology and Construction List

Before:

McGrath J

Decision:

Declaration that legal professional privilege attaches to parts of draft witness statement, which is to be redacted accordingly prior to the defendants/cross-claimants inspecting the statement: see [150]

Catchwords:

EVIDENCE — privileges — legal professional privilege — draft supplementary witness statement — where statement produced to court pursuant to subpoena to produce issued by defendants/cross-claimants to witness — where plaintiffs/cross-defendants assert legal professional privilege over whole or alternatively parts of document — dominant purpose test — finding that document was produced for dual equal purposes — finding that document contained reference to confidential communications properly the subject of legal professional privilege — HELD — statement to be redacted in kind and made available for inspection by the defendants/cross-claimants

Legislation Cited:

Court Suppression and Non-publication Orders Act 2010 (NSW)

Evidence Act 1995 (NSW)

Cases Cited:

Armstrong Strategic Management & Marketing Pty Ltd v Expense Reduction Analysts Group Pty Ltd [2012] NSWCA 430

Asahi Holdings (Australia) Pty Ltd v Pacific Equity Partners Pty Ltd (No 2) [2014] FCA 481; (2014) 312 ALR 403

Attorney-General (NT) v Maurice (1986) 161 CLR 475; [1986] HCA 80

Australian Competition and Consumer Commission v Cadbury Schweppes Pty Ltd (2009) 174 FCR 457; [2009] FCAFC 32

Australian Competition and Consumer Commission v NSW Ports Operations Hold Co Pty Ltd [2020] FCA 1232

Barnes v Commissioner of Taxation [2007] FCAFC 88; (2007) 242 ALR 601

Carter v Northmore Hale Davy & Leake (1995) 183 CLR 121; [1995] HCA 33

Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501; [1997] HCA 3

Commissioner of Taxation v Pratt Holdings Pty Ltd [2005] FCA 1247

Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543; [2002] HCA 49

Edwards v Nine Network Australia Pty Ltd (No 4) [2022] FCA 1496

Esso Australia Resources Ltd v Federal Commissioner of Taxation (1999) 201 CLR 49; [1999] HCA 67

G&S Engineering Services Pty Ltd v MACH Energy Australia Pty Ltd (No 9) [2023] NSWSC 1093

Grant v Downs (1976) 135 CLR 674; [1976] HCA 63

Hancock v Rinehart (Privilege) [2016] NSWSC 12

Harmony Shipping Co SA v Saudi Europe Line Ltd [1979] 1 WLR 1380

Kennedy v Wallace (2004) 142 FCR 185; 213 ALR 108; [2004] FCAFC 337

New Reinsurance Corporation Ltd (in liq) v Renaissance Reinsurance Ltd [2007] NSWSC 258

Pratt Holdings Pty Ltd v Commissioner of Taxation (2004) 136 FCR 357; [2004] FCAFC 122

Public Transport Authority of Western Australia v Leighton Contractors Pty Ltd (2007) 34 WAR 279; [2007] WASCA 151

Ritz Hotel Ltd v Charles of the Ritz Ltd (No 22) (1988) 14 NSWLR 132

Sydney Airports Corporation Ltd v Singapore Airlines Ltd [2005] NSWCA 47

TavcolPty Ltd v Valbeet Pty Ltd [2016] NSWSC 1002

Trade Practices Commission v Sterling (1978) 36 FLR 244

Category:

Procedural rulings

Parties:

G&S Engineering Services Pty Ltd (First Plaintiff/Cross-Defendant/Applicant)
DRA Pacific Pty Ltd (Second Plaintiff/Cross-Defendant/Applicant)

MACH Energy Australia Pty Ltd (First Defendant/Cross-Claimant/Respondent)
MACH Mount Pleasant Operations Pty Ltd (Second Defendant/Cross-Claimant/Respondent)
JCD Australia Pty Ltd (Third Defendant/Cross-Claimant/Respondent)

Representation:

Counsel:
TM Mehigan SC and DG Johnson (Plaintiffs/Cross-Defendants/Applicants)
N Kidd SC and E Ball (Defendants/Cross-Claimants/Respondents)

Solicitors:
HFW Australia (Plaintiffs/Cross-Defendants/ Applicants)
Corrs Chambers Westgarth (Defendants/Cross-Claimants/Respondents)

File Number(s):

2019/00071358

Publication restriction:

Nil

JUDGMENT

INTRODUCTION

1. This is an application by the plaintiffs, G&S Engineering Services Pty Ltd and DRA Pacific Pty Ltd, and the cross-defendants, G&S, DRA Pacific, DRA Group Holdings (Pty) Ltd and DRA Global Limited (collectively the cross-defendants), seeking orders, inter alia, upholding their objection to the inspection of the whole of a document, or alternatively parts of the document, on the basis of legal professional privilege. In the proceedings and many of the relevant documents, the cross-defendants are often referred to as the “CDJV” parties.

2. The document in question is a draft supplementary statement which has been produced to the court by its author, Andrew Naude, pursuant to a subpoena to produce filed 21 June 2024 issued at the request of the defendants/cross-claimants, MACH Energy Australia Pty Ltd, MACH Mount Pleasant Operations Pty Ltd, and JCD Australia Pty Ltd (collectively the cross-claimants). The cross-claimants wish to inspect the draft supplementary statement.

3. These proceedings were commenced in March 2019 and arise out of a contract entered in March 2017 between MACH Energy (on the one hand) and G&S and DRA Pacific (on the other hand) for the design, construction and commissioning of a coal handling and preparation plant and train load at Mount Pleasant mine in the Hunter Valley, New South Wales. The proceedings have had a long history of hard-fought interlocutory disputes.

4. The determination of the present application is pressing because the substantive trial of the proceedings is set to commence on 19 August 2024 before Stevenson J with an estimated duration of eight weeks.

5. The draft supplementary statement has been marked confidential and I have made a non-publication order under the Court Suppression and Non-publication Orders Act 2010 (NSW) in relation to it. I have been asked by the cross-defendants to inspect the draft supplementary statement for the purposes of determining the application and the cross-claimants have not objected to me doing so. I have inspected the draft supplementary statement and read its contents.

6. For the reasons set out below, I have determined that the cross-defendants’ claim to legal professional privilege over the whole of the draft supplementary statement should be dismissed and the cross-defendants’ claim to legal professional privilege over parts of the draft supplementary statement should be upheld. Accordingly, the cross-defendants should be permitted to redact the privileged content in the draft supplementary statement before the cross-claimants and their solicitors are permitted to inspect it.

RELEVANT FACTS

DRA, Victoria Hawkins and Andrew Naude

7. DRA Global is the ultimate parent company of the DRA group of companies, which includes the other cross-defendants.

8. Victoria Hawkins is the General Counsel of DRA Global. In 1993, Ms Hawkins was admitted as a legal practitioner. Since January 2020, Ms Hawkins has held the position of General Counsel, in which role her responsibilities include providing legal advice to the cross-defendants and managing these proceedings on behalf of the cross-defendants together with their external solicitors.

9. From around January 2016 to July 2019, Andrew Naude was the Chief Financial Officer and Strategy Director of DRA Group, which at the time was the parent entity of the DRA group of companies, having previously held several roles within the DRA group of companies since 2013.

10. In July 2019, Mr Naude became the Chief Executive Officer of DRA Global, which by then had become the ultimate parent company of the DRA group of companies, after DRA Global acquired DRA Group in July 2018.

11. On 28 April 2021, Mr Naude entered into a written employment agreement with DRA Global (Employment Contract), cl 17 of which relevantly provided as follows:

17.   CONFIDENTIALITY

17.1   During your period of employment and subsequent thereto, you shall not make use of, directly or indirectly, and shall not disclose any of the Company’s and other Group Company’s trade secrets or other confidential information, including, but not limited to, price sensitive information, technical know-how and data, plans, designs, drawings, systems, methods, software, processes, client lists, business affairs, suppliers’ lists, marketing information or financial information, or those of other persons who have made such disclosures to the Company and other Group Companies under conditions of confidentiality, other than to persons authorised by the Company, other Group Companies or those employed by the Company or other Group Companies, who are required to know such secrets or to have such information for the purposes of their employment with the Company and other Group Companies.

…

17.3   Should you be uncertain as to whether any information is confidential, you shall in writing request a ruling from the Board. You shall abide by any ruling made by the Board.

…

17.5   The obligations in this clause will survive the termination of this contract and you shall at no time thereafter disclose any such information until (and the onus shall be on you to demonstrate this) that information has become public knowledge as a result of deliberate disclosure by the Company or other Group Company.

12. In October 2022, Mr Naude ceased to be employed by DRA Global.

13. In about September 2023, Mr Naude commenced proceedings against DRA Global in the Federal Court of Australia in Perth, Western Australia. There are now several proceedings currently on foot in the Federal Court of Australia between Mr Naude and DRA Global (Federal Court proceedings). Mr Naude is represented by the Perth-based law firm, Bennett Litigation and Commercial Law. Martin Bennett and Bernard Lock of Bennett are the primary solicitors from Bennett acting for Mr Naude.

Solicitors for the cross-defendants

14. In 2018, K&L Gates acted as the solicitors for DRA Group in its acquisition of G&S.

15. From March 2019 to May 2023, Jones Day were the solicitors on the record for the cross-defendants. Kenneth Hickman was the partner of Jones Day with carriage of the proceedings on behalf of the cross-defendants.

16. In May 2023, Mr Hickman left Jones Day and became a partner of HFW Australia. Since that time, HFW have been the solicitors on the record for the cross-defendants in the proceedings.

Witness statement of Andrew Naude

17. On 18 February 2022, Mr Naude made a witness statement on behalf of the cross-defendants (Earlier Statement) outlining the evidence he was expected to give in these proceedings, which was served on the solicitors for the cross-claimants. At the time that Mr Naude made the Earlier Statement he was the Chief Executive Officer of DRA Global.

18. The subject matter of the Earlier Statement principally focuses on the events occurring in the first half of 2018 leading up to the acquisition of G&S by DRA Group from Calibre Group Ltd on 4 July 2018.

Events of June and July 2023

19. In June 2023, Mr Naude was served with a subpoena to produce documents issued at the request of the cross-claimants which required him to comply by 21 July 2023 (first subpoena). Bennett acted for Mr Naude in relation to his response to the first subpoena, communicating with the solicitors acting for the cross-claimants, Corrs Chambers Westgarth (CCW).

20. Between 29 June 2023 and 28 July 2023, CCW and Bennett engaged in email correspondence regarding Mr Naude’s compliance with the first subpoena, in which HFW also became involved on behalf of the cross-defendants when they became aware of it.

21. On 29 June 2023, Bennett sent a letter by email to CCW regarding the first subpoena, expressing that Mr Naude was “willing to provide his assistance”, stating that Mr Naude was travelling overseas with his family and requesting an extension of the time for compliance with the first subpoena from 21 July 2023 to 4 August 2023.

22. On 30 June 2023, CCW sent an email to Bennett agreeing to extend the time for compliance with the first subpoena from 21 July 2023 to 4 August 2023.

23. On 18 July 2023, Bennett sent an email to CCW which, amongst other things, stated that Mr Naude was prepared to meet and clarify the handwritten notes that he was to produce in answer to the first subpoena.

24. On 24 July 2023 at 11:43am, CCW sent an email to Bennett asking whether it would be possible to meet with Mr Naude on 14–15 August 2023.

25. On 24 July 2023, Bennett sent a letter by email to CCW referring to the request for a meeting with Mr Naude in August 2023 and stating:

As you will be aware, our client is providing his full cooperation in compliance with the subpoena to produce the requested documents, however any cooperation beyond the scope of the subpoena remains subject to certain ongoing duties he owes towards DRA Global, duties imposed on him as a former employee and officer of DRA. Based on these restrictions, our client declines your request to informally meet.

26. On 25 July 2023, HWL Ebsworth (solicitors acting on behalf of DRA Global) sent a letter by email to Bennett requiring Mr Naude to return all company property to DRA Global as soon as possible and reminding him to abide by his post-contractual obligations under the Employment Contract.

27. On 25 July 2023, HFW sent separate letters by email to each of CCW and Bennett after they were provided with the communications which had passed between CCW and Bennett about compliance with the first subpoena. In the letter to CCW, HFW referred to the contractual, equitable and statutory obligations owed by Mr Naude to DRA Global and its subsidiaries to preserve the confidentiality of confidential information in his possession. In the letter to Bennett, HFW referred to the same obligations and also declined Mr Naude’s request to be provided with a copy of the Earlier Statement.

28. On 26 to 28 July 2023, HFW, CCW and Bennett engaged in lengthy email correspondence about Mr Naude’s confidentiality obligations and the propriety of the actions being taken by each of them while Mr Naude was a witness in the proceedings. Relevantly, Bennett made it clear to HFW that Mr Naude would comply with the first subpoena by providing information from his personal journals which were not the property of DRA Global and CCW provided a download link to Bennett to enable Mr Naude to obtain a copy of the Earlier Statement.

Events of August and September 2023

29. On 3 August 2023, Bennett sent a letter to the Registrar of this court producing documents in compliance with the first subpoena.

30. On 25 August 2023, CCW sent a letter by email to Bennett in relation to the first subpoena and the Earlier Statement with the stated purpose “to identify for Mr Naude’s consideration certain matters”. The lengthy letter then set out sections of the Earlier Statement and attached a schedule of various documents either produced by Mr Naude or disclosed by the cross-defendants and relevantly stated (footnote omitted):

…

7   The documents are relevant to Mr Naude’s evidence in the proceedings (including the evidence identified above) and in particular the time at which DRA became aware of the possibility that Calibre and/or G&S might be insolvent or near insolvent and the possibility that either Calibre and/or G&S could be placed into external administration (i.e. voluntary administration or liquidation).

8   The documents in the schedule, suggest that there is additional important context that the Court should be aware of in understanding Mr Naude’s evidence and the facts that must be found in this matter.

9   To be absolutely clear, our clients are not critical of Mr Naude. We do not know what documents were made available to Mr Naude when his statement was prepared nor do we know how and in what circumstance the statement was prepared. …

…

10   In short, Mr Naude’s statement was prepared and filed at a time which was undoubtedly tumultuous for him personally.

11   We provide the documents in the attached schedule to assist Mr Naude with his recollection of events, their timing, and so that he can consider providing a supplementary witness statement. If Mr Naude recalls other documents that might be relevant, we can conduct searches for those documents and provide them to Mr Naude for his further consideration.

…

14   Given DRA’s correspondence (sent on the letterhead of two large law firms acting for DRA), we can understand why Mr Naude would have reservations about providing his further evidence to us. In light of DRA’s position, Mr Naude may prefer to prepare his own supplementary statement and provide it to DRA’s solicitors in these proceedings (HFW). Our clients would then be able to subpoena the statement. Alternatively, Mr Naude could prepare his supplementary statement and file it with the court or produce it under the existing subpoena. Like any witness, our client would of course compensate Mr Naude for his lost time and out of pocket expenses arising from preparing a supplementary statement.

1.2[sic]   Once you have taken Mr Naude’s instructions, we would be grateful if you could advise whether Mr Naude will provide a supplementary statement.

31. It is clear from this letter that the idea of providing a supplementary witness statement from Mr Naude first came from CCW.

32. On 6 September 2023, Bennett sent a letter by email to CCW in response to their letter of 25 August 2023, stating:

We refer to your letter dated 25 August 2023 and are instructed that valid questions have been raised and there are aspects of our client’s witness statement, dated 18 February 2022, which could benefit from additional important context and clarification. However, as you have rightly noted, our client finds himself in a difficult position having been placed on notice by DRA Global’s lawyers of his ongoing duty of confidentiality and is presently reluctant to invite a dispute concerning his duties of confidentiality.

Our client does not intend breaching his ongoing duty of confidentiality and will therefore not engage with Corrs on issues of his witness statement, unless he is compelled to do so by an order of the Court or with the consent of DRA Global. In this regard we believe it is more appropriate for your client to issue a subpoena compelling our client to give evidence or to secure DRA Global’s consent to speak to our client regarding a potential supplementary witness statement.

33. In short, by this letter Bennett indicated to CCW that Mr Naude would not engage with CCW in relation to a supplementary witness statement without the consent of DRA Global.

Events of November 2023

34. On 1 November 2023, Bennett sent a letter by email to HFW referring to the correspondence concerning the first subpoena, including the suggestion made by CCW that Mr Naude might wish to consider providing a supplementary witness statement and his view that he was not provided with all relevant documents when preparing the Earlier Statement. The letter relevantly continued:

9   Based on the CDJV documents and the documents produced pursuant to the Subpoena, our client is of the firm view that:

9.1   the Court should be made aware that the Statement requires additional important context; and

9.2   A supplementary witness statement be filed that confirms:

9.2.1   Not all CDJV documents were made available to Mr Naude when the Statement was prepared;

9.2.2   The context and circumstances in which the Statement was prepared;

9.2.3   The context and circumstances in which the Statement was filed with the Supreme Court of New South Wales, including that Mr Naude had requested an opportunity to clarify concerns he had raised about the Statement.

9.2.4   Mr Naude’s observations that at the time of the negotiation of the acquisition of G&S Engineering, DRA Global Ltd was aware or reasonably suspected that:

(a)    Calibre was apparently in safe harbour;

(b)    G&S Engineering was dependent on Calibre for working capital; and

(c)    The Mount Pleasant Project being executed by the joint venture was loss-making as a result of a number of serious issues that had affected the execution and schedule of the project.

10   Mr Naude is prepared to meet with HFW, accompanied by a representative of Bennett, for the purpose [of] preparing and compiling the supplementary witness statement.

11   Should HFW refuse to meet and provide the Court with the required supplementary witness statement Mr Naude reserves his position as a witness.

35. The letter concluded with Bennett asking HFW to provide a reply before close of business on Friday 3 November 2023.

36. In summary, this letter contained an indication of Mr Naude’s view that the Earlier Statement was required to be supplemented and an offer by Mr Naude to meet with HFW to prepare a supplementary witness statement, failing which Mr Naude would consider his position in agreeing to appear as a witness for the cross-defendants. I infer from this letter that the draft supplementary statement had not been created at that time because Mr Naude was offering to meet with HFW for the purpose of preparing it.

37. On 3 November 2023, HFW sent a letter by email to Bennett responding to their letter of 1 November 2023, relevantly stating:

…

2   Firstly, our clients wish to clarify that while the Statement has also been served on the Cross-Claimants in the Proceedings, it has not been filed. The Statement was also served before any query was raised by Mr Naude.

3   As you would well know, whether Mr Naude is called as a witness in the Proceedings is a decision for trial, in August 2024.

4   For our clients to properly consider Mr Naude’s request they require the following information.

(a)   Copies of all “CDJV Documents” provided to Mr Naude.

(b)   Copies of all correspondence between Corrs and Mr Naude or your office.

(c)   Mr Naude’s proposed corrections to the Statement.

5   Our clients reserve their position pending receipt of the above information and make no admissions.

38. By this letter, Mr Naude was invited by HFW to provide to them his proposed corrections to the Earlier Statement.

39. On 21 November 2023, Bennett sent a letter by email to HFW noting that the Earlier Statement had been served on the cross-claimants and relevantly stating:

…

2   Our client is and remains of the view that the witness statement, so served, needs to be supplemented.

3   You confirm that your client will consider our client’s request for his statement to be clarified but that they first need to be provided with:

3.1   Copies of all “CDJV Documents” provided to Mr Naude.

3.2   Copies of all correspondence between Corrs and Mr Naude or your office.

3.3   Mr Naude’s proposed corrections to the Statement.

4   The CDJV Documents are in your client’s possession.

5   In so far as the correspondence between Corrs and Mr Naude, we confirm that our client has not directly communicated with Corrs.

6   Mr Naude’s proposed clarifications and additions are contained in the below statement.

7   Our client reaffirms his willingness to meet to finalise a supplement witness statement.

40. This letter and the attached draft supplementary statement were not received by HFW at the date the letter bears because they were sent to the wrong email address. These documents were in fact sent by email from Bennett to HFW on 19 January 2024. This letter evidences that sometime between 1 and 21 November 2023, the draft supplementary statement was prepared.

41. It is the draft supplementary statement attached to Bennett’s letter of 21 November 2023 which is the subject of this application in which the cross-defendants assert legal professional privilege over it.

Events of January and February 2024

42. On 18 January 2024 (the day before HFW received the letter of 21 November 2023 with the draft supplementary statement attached), Bennett sent a letter by email to HFW stating:

We refer to the above and specifically the ongoing concerns raised by our client in relation to the inadequacies of his witness statement dated 18 February 2022 (Evidence).

Our letter of 21 November 2023 reiterated our client’s concerns and provided a draft supplementary witness statement consisting of 22 pages addressing the inadequacies of the Evidence. The letter concluded, as those that proceeded it, with an invitation from our client to meet to finalise the supplementary witness statement. You did not respond to the letter.

On 23 July 2023 you confirmed by email that the Evidence was served by order of the Court on the opposing parties to the above proceedings.

…

HFW, as the firm who has served the Evidence on the opposing side, and our client, as the person in whose name the Evidence stands, have an obligation to take the greatest care to ensure that the Evidence contains the truth. To use the more expressive words of Lord Lightman in the decision ZYX Music GmbH v King (1995) 31 IPR 207 at 216, the obligation is to ensure the witness statement: “…contain(s) the truth, the whole truth and nothing but the truth…”

Our client has, by identifying inadequacies in the Evidence, brought those inadequacies to your and your client’s attention, and presenting a draft supplementary witness statement to address the inadequacies, acted in accordance with his obligation to ensure the Evidence contains the complete truth.

Furthermore, the fact that our client has provided a statement that clearly sets out and corrects the inadequacies of the Evidence is directly relevant to the Proceedings and places an obligation on your client to disclose the supplementary information provided.

In light of the above, and the fact that the current inadequacies of the Evidence are placing our client’s reputation at risk, we are instructed to require your substantive response by 19 January 2024.

43. As I have mentioned, the fact that HFW had not received the letter of 21 November 2023 and the attached draft supplementary statement explains why there was no response from HFW in relation to it.

44. On 23 January 2024, HFW sent a letter by email to Bennett stating:

1.   We refer to our letter dated 3 November 2023, your letter dated 21 November 2023 (received by our office on 19 January 2024), and the email correspondence from Mr Lock of your office dated 19 January 2024.

2.   Our 3 November 2023 letter requested copies of all correspondence passing between: (i) Corrs, the solicitors for MACH Energy in the Proceedings; and (ii) Mr Naude and/or your office. At paragraph 5 of your letter, you state, “In so far as the correspondence between Corrs and Mr Naude, we confirm that our client has not directly communicated with Corrs”.

3.   There have obviously been communications passing between Corrs and your office. We draw your attention to paragraphs 55 and 56 of Mr Naude’s “proposed clarifications” to his signed statement, annexed to your letter dated 21 November 2023, which expressly refer to communications between Corrs and your office.

4.   The unsigned statement attached [to] your letter has obviously been the product of proofing meetings with Mr Naude. Please provide us with copies of all the notes of those meetings and all the drafts of the statement that have been passed between your office and Mr Naude. As this firm has the conduct of the NSW Supreme Court proceedings on behalf G&S Engineering and DRA, we must be provided with all the material that will enable us to assess the accuracy and relevance of Mr Naude’s “proposed clarifications” to his signed witness statement dated 18 February 2022. To state the obvious, Mr Naude signed that statement as an accurate record of his evidence. We must be satisfied that any alteration or “clarification” is required.

5.   As your 19 January 2024 email asserts that the potential impact on Mr Naude’s reputation necessitates that these matters be addressed “as a matter of urgency” your client should have no concern addressing our clients’ request, without any further delay. If your client refuses to meet our clients’ request, then he should explain why.

6.   Your 19 January 2024 email purports to extend the unilateral deadline for our clients to respond to Mr Naude’s “proposed clarifications” to 2 February 2024. Neither we nor our clients are bound by your deadline. Our clients will duly respond when they are able to do so, which of itself depends on your and Mr Naude’s willingness to positively meet the above request.

7.   Our clients’ rights are reserved.

45. On 1 February 2024, Bennett sent a letter by email to HFW in response to HFW’s letter of 23 January 2024, stating:

1   We refer to your letter received on 23 January 2024 and note your client’s ongoing refusal to address our client’s concern as to the inadequacies of his witness statement made in the Proceedings (Statement).

2   Our client has persistently raised his concerns over the inadequacies with you and your client, but instead of engaging with our client, to address those concerns, you have elected to offensively:

2.1   reserve your client’s rights;

2.2   demand production of our notes and our client’s notes that you presume emanates from “proofing meetings”; and

2.3   reach unfounded conclusions of communications between our client and Corrs Chambers Westgarth.

3   There is no basis for you or your client to request privileged communications between our client and ourselves. In any event, the drafts and notes are irrelevant.

4   Your letter seeks (wrongly) to create the impression that it is our client that is withholding or withheld information that is now hindering your ability to assess the need for a supplementary witness statement. We place on the record, that:

4.1   after our client raised concerns over the accuracy of his Statement, it was your client that refused to provide him with a copy of his Statement;

4.2   it is our client that has offered, multiple times, to meet to discuss and address his concern over the inadequacies of the Statement. You have elected not to respond to our client’s offers;

4.3   it is our client that took the proactive step of providing a draft supplementary statement that demonstrates in detail the basis for his concerns. By doing so it is our client that has now enabled you and your client to assess and understand his concerns; and

4.4   it is your client that refuses to correct or supplement the Statement.

5   We reiterate, as noted in our letter of 18 January 2024, that both HFW, as the firm who has served the evidence on the opposing side, and our client, as the person whose proposed evidence is represented by Statement, have an obligation to take the greatest care to ensure that the Statement contains the truth, the whole truth and nothing but the truth. Our client is adhering to this his duty to the Court, serving the proper administration of justice. Respectfully, it is now your duty to do the same.

6   Our client’s rights are reserved.

46. Notably, while emphasising that it was Mr Naude who took the proactive step of providing the draft supplementary statement, Bennett indicated that Mr Naude was still looking to HFW to assess it and decide whether to correct or supplement the Earlier Statement.

47. On 2 February 2024, HFW sent a letter by email to Bennett in response to the letter of 1 February 2024 stating:

1.   We refer to your letter dated 1 February 2024 which amounts to a refusal to provide the information reasonably requested in our letter of 23 January 2024. There is nothing surprising – let alone offensive – in the request made by our clients.

2.   The information sought in our letter of 23 January 2024 is plainly relevant. The communications between your firm and Corrs are not privileged and we do not understand you to assert otherwise. We have reached no conclusions on the contents of those communications. We simply wish to see the communications to fully understand the background to the preparation of the unsigned statement.

3.   To the extent that privilege is claimed over notes of proofing meetings and drafts of the statement (the existence of which you do not dispute), we note that your client is not a party to the NSW Supreme Court proceedings and your firm was not requested by our clients to prepare the statement. In these circumstances, you should clarify whether the privilege claimed is litigation privilege or legal advice privilege or both. In any event, voluntarily providing the statement on the basis that it must be tendered in evidence as a full and accurate record of Mr Naude’s evidence is inconsistent with the maintenance of any privilege.

4.   The refusal to provide the information requested does hinder our assessment of the need for any supplementary statement. The unsigned statement you have provided is not properly focussed on the admissible evidence Mr Naude is able to give that is relevant to the issues in the NSW proceedings and is largely devoted to irrelevant and contentious digressions into the preparation of his signed statement and other privileged communications.

5.   We are well aware of our duties to the Court in presenting evidence in the NSW proceedings. The request for information in our letter of 23 January 2024 was made so that we could properly discharge those duties – particularly where your client is currently involved in litigation with our clients where his credibility and conduct as an officer of our clients will be the subject of close scrutiny.

We invite your client to reconsider his refusal to provide the information.

48. Importantly, in this letter HFW made it plain that DRA Global had not requested Mr Naude to prepare the draft supplementary statement and reiterated that they required further information from Bennett to enable HFW to consider it.

Events of April 2024

49. On 16 April 2024, Mr Lock (a senior associate of Bennett) affirmed an affidavit in the Federal Court proceedings to which DRA Global and Mr Naude are parties (Lock affidavit). In the Lock affidavit, Mr Lock referred to these proceedings, the Earlier Statement, the first subpoena and the draft supplementary statement attached to the letter dated 21 November 2023 from Bennett to HFW. The letter and attached draft supplementary statement were marked as annexure JBL-12 to the Lock affidavit.

Events of May 2024

50. On 31 May 2024, HFW informed CCW that the cross-defendants do not intend to call Mr Naude as a witness to give evidence at the trial.

Events of June and July 2024

51. On 20 June 2024, CCW sent a letter by email to HFW in which they indicated that they had obtained a copy of the Lock affidavit via the Federal Court registry and that from their review of the Lock affidavit they had been made aware of the draft supplementary statement. In the letter, CCW raise their understanding of the circumstances in which the draft supplementary statement was prepared and state that:

…

6   We can appreciate how the circumstances are of concern to Mr Naude and why he considered it necessary to deliver the supplementary witness statement to your client.

7   Naude’s supplementary statement is plainly relevant to the issues in dispute between the parties in these proceedings.

…

12   There can be no question that Mr Naude’s supplementary statement, which Mr Naude has provided to your client to ensure that his evidence is complete, is highly relevant to the allegations in issue in the proceeding. …

…

13   There can similarly be no question that your client is obliged to disclose Mr Naude’s supplementary statement. The fact that your client has not done so already is deeply troubling, as is the apparent conduct of (at least) your client in taking Mr Naude’s first statement.

52. The letter concluded with a demand that HFW confirm by 10am the following day that they would immediately disclose the draft supplementary statement along with related correspondence, failing which that HFW consents to the cross-claimants seeking leave from the court to issue a further subpoena to Mr Naude seeking the production of those documents.

53. On 21 June 2024, at the request of the cross-claimants this court issued a subpoena to Mr Naude (second subpoena) seeking production of:

a copy of your supplementary witness statement as referred to in paragraph 28 (annexed as “JBL–12”) of the affidavit of Mr Johan Bernard Lock affirmed 16 April 2024 in Federal Court of Australia proceedings WAD231/2023 (a copy of which is enclosed with this subpoena).

54. On 24 June 2024, HFW sent an email to Bennett stating that they were aware of the issuing of the second subpoena and asking whether it had been served. HFW stated that the cross-defendants asserted privilege over parts of the documents sought by the second subpoena and that they would be writing to CCW to propose that the cross-defendants be given a reasonable period of first access to assert the privilege before access was given to the cross-claimants. HFW said that if Mr Naude proposed to volunteer the draft supplementary statement to the cross-claimants then the cross-defendants required a proper opportunity to review and redact it for legal professional privilege. HFW asked Bennett to confirm that they would meet the cross-defendants’ request if Mr Naude proposed to volunteer the draft supplementary statement and to confirm whether it had been provided to the cross-claimants.

55. On 25 June 2024 at 10:32am, Bennett sent an email to HFW and CCW confirming that service of the second subpoena on Mr Naude had been effected and that Mr Naude had not yet complied with the second subpoena.

56. On 25 June 2024 at 10:53am, CCW sent an email to Bennett and HFW serving a copy of the second subpoena on HFW and noting that because HFW had been in possession of the draft supplementary statement for more than six months they should be able to readily identify and disclose to CCW the parts of it not the subject of a claim of privilege.

57. On 26 June 2024, Bennett sent an email to CCW and HFW stating that they were instructed by Mr Naude to comply with the second subpoena at 4:30pm that day.

58. On 27 June 2024, HFW sent a letter by email to CCW in response to their letter of 20 June 2024 relevantly stating:

…

3.   Having considered all the circumstances, our client claims privilege over the whole draft supplementary statement. Without waiving privilege over the substance of any privileged communications passing between Mr Naude and/or Bennett and this firm or any communications directly between Mr Naude and our client, the claim for privilege over the draft supplementary statement is based on the following:

(a)   Following receipt of the letter from Bennett dated 1 November 2023 (from which you quote in your letter dated 20 June 2024), we invited Bennett to provide us with details of any clarifications or changes to the witness statement served in the proceedings that Mr Naude considered appropriate.

(b)   The response was the provision of an unsigned draft outline of a supplementary statement that we understand had been prepared by Bennett after interviewing Mr Naude. That document was provided under cover of a letter dated 21 November 2023 but was in fact received by us on 19 January 2024.

(c)   We then sought further information from Bennett which was not provided.

(d)   On the application of orthodox principles, the unsigned draft supplementary statement was undoubtedly a confidential communication provided for the dominant purpose of use in pending litigation. The draft supplementary statement is privileged and our client wishes to maintain that privilege.

(e)   Quite separately, the draft supplementary statement traverses some of the circumstances relating to the preparation of the witness statement that has been served in the proceedings. Those circumstances are also subject to privilege and our client maintains privilege over those communications.

4.   The matters set out above are sufficient to ground our client’s privilege claim. However, given the unparticularised suggestions of impropriety in your letter of 20 June 2024 and your email of 25 June 2024, we make the following additional observations:

…

(g)    Fourth, our client first asserted privilege over the document in January 2024 and restated its claim for privilege when the draft supplementary statement was included in Mr Lock’s affidavit filed in the Federal Court proceedings in April. Mr Lock’s affidavit was subsequently uplifted and re-filed with the draft statement redacted. It has only now become necessary to consider the precise ambit of the material over which privilege is claimed.

…

59. On 5 July 2024, by filing the notice of motion of that date, the cross-defendants made this application claiming legal professional privilege over the draft supplementary statement.

LEGAL PRINCIPLES

60. The parties agree that the principles to be applied in determining the application are those relating to legal professional privilege at common law. I agree, because the issue in these proceedings is being assessed at the pre-trial stage of documents produced by a third party pursuant to a subpoena.

61. Although other nomenclature has developed around this privilege under the Evidence Act 1995 (NSW) (“client legal privilege”, comprised of “legal advice privilege” and “litigation privilege”), it continues to be termed legal professional privilege at common law: see, for example, Armstrong Strategic Management & Marketing Pty Ltd v Expense Reduction Analysts Group Pty Ltd [2012] NSWCA 430, Campbell JA (with whom Macfarlan JA agreed) at [53] and [69].

62. The classic formulation of the test is that stated in Grant v Downs (1976) 135 CLR 674, by Barwick CJ at 677 as follows:

… a document which was produced or brought into existence either with the dominant purpose of its author, or of the person or authority under whose direction, whether particular or general, it was produced or brought into existence, of using it or its contents in order to obtain legal advice or to conduct or aid in the conduct of litigation, at the time of its production in reasonable prospect, should be privileged and excluded from inspection.

63. This statement of principle was approved in Esso Australia Resources Ltd v Federal Commissioner of Taxation (1999) 201 CLR 49; [1999] HCA 67, Gleeson CJ, Gaudron and Gummow JJ at [61].

64. In Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543; [2002] HCA 49, Gleeson CJ, Gaudron, Gummow and Hayne JJ at [9] expressed the principle in this way (footnote omitted):

It is now settled that legal professional privilege is a rule of substantive law which 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, including representation in legal proceedings.

65. The principle is not just a rule of evidence, but plays an important role in the effective and efficient administration of justice by giving a practical guarantee of fundamental, constitutional or human rights by protecting the freedom of the full and unreserved communication between clients and lawyers: Attorney-General (NT) v Maurice (1986) 161 CLR 475, Deane J at 490; [1986] HCA 80; Carter v Northmore Hale Davy & Leake (1995) 183 CLR 121, McHugh J at 161; [1995] HCA 33.

66. The rationale for the protection offered by legal professional privilege is that it promotes the public interest in the administration of justice by encouraging a person to obtain fully informed legal advice. This is given greater weight than the public interest in a fair trial conducted based on all relevant information. In Grant, Stephen, Mason and Murphy JJ at 685 stated the rationale in these terms:

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. None the less there are powerful considerations which suggest that the privilege should be confined within strict limits.

67. This same rationale involving legal professional privilege as the product of balancing those two competing public interests is emphasised in Esso Australia by Gleeson CJ, Gaudron and Gummow JJ at [35].

68. Consistent with this rationale, the subject matter of the legal professional privilege is communications — oral, written or recorded — not documents per se: Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501, McHugh J at 552; [1997] HCA 3. The privilege protects the confidentiality of documents produced for the purpose of communication between a client and lawyer. This confidentiality facilitates the administration of justice: Propend, Brennan CJ at 508.

69. Using the language of “sole” purpose rather than “dominant” purpose (reflecting the previously favoured test), in Maurice, Deane J at 490 expressed the scope of the privilege and its application to more than just communications in the following way:

It is a substantive general principle of the common law and not a mere rule of evidence that, subject to defined qualifications and exceptions, a person is entitled to preserve the confidentiality of confidential statements and other materials which have been made or brought into existence for the sole purpose of his or her seeking or being furnished with legal advice by a practising lawyer or for the sole purpose of preparing for existing or contemplated judicial or quasi-judicial proceedings.

70. The classes of documents to which legal professional privilege extends include (Trade Practices Commission v Sterling (1978) 36 FLR 244, Lockhart J at 245–246, amended to reflect the now accepted dominant purpose test):

1. communications and documents passing between the party’s solicitor and a third party if they are made or prepared when litigation is anticipated or commenced, for the dominant purpose of the litigation, with a view to obtaining advice as to or evidence to be used in it or information which may result in the obtaining of such evidence; and

2. communications passing between the party and a third person (who is not the agent of the solicitor to receive the communication from the party) if they are made with reference to litigation either anticipated or commenced, and at the request or suggestion of the party's solicitor or, even without any such request or suggestion, they are made for the dominant purpose of being put before the solicitor with the object of obtaining his advice or enabling him to prosecute or defend an action.

71. The “dominant” purpose test is one which is described as involving “clear paramountcy”, with its ordinary meaning being the ruling, prevailing or most influential purpose: Sydney Airports Corporation Ltd v Singapore Airlines Ltd [2005] NSWCA 47, Spigelman CJ (with whom Sheller JA and Campbell AJA agreed) at [7]. Neither the primary purpose nor a substantial purpose satisfies the dominant purpose test: Grant, Barwick CJ at 678.

72. The relevant purpose is to be determined objectively but the subjective purpose of the person responsible for the document coming into existence will always be relevant: Sydney Airports, Spigelman CJ at [6], citing Esso Australia, Callinan J at [172].

73. The onus rests on the party asserting the legal professional privilege to establish its claim: Grant, Stephen, Mason and Murphy JJ at 689.

74. Attention must be focused on the purposes of the person who produced the document or the person who directed the production of the document: Grant, Barwick CJ at 677; Pratt Holdings Pty Ltd v Commissioner of Taxation (2004) 136 FCR 357, Finn J (with whom Merkel J agreed) at [35]; [2004] FCAFC 122.

75. The purpose can be found in the intended use of the document, which is a question of fact, the test being to find the purpose for which the document was brought into existence, not the use to which it is put after it was brought into existence: Grant, Jacobs J at 692, approved in Propend, Brennan CJ at 507–508.

76. The fact that the person who produced the document or who directed its production had in mind multiple uses for the document does not prevent it from being privileged so long as it was produced with the requisite dominant purpose: Grant, Barwick CJ at 677.

77. The court can examine the document to determine the purpose for which it was created: Grant, Barwick CJ at 677, Stephen, Mason and Murphy JJ at 689; Esso Australia, Gleeson CJ, Gaudron and Gummow JJ at [52].

78. The examination of the nature of the document to illuminate the purpose for which it was brought into existence or evidence of the circumstances in which it was brought into existence can ground the claim for legal professional privilege, but resort to verbal formula or ritual will not necessarily or conclusively establish it: Grant, Stephen, Mason and Murphy JJ at 689; Esso Australia, Gleeson CJ, Gaudron and Gummow JJ at [52].

79. The evidence of purpose can be direct evidence by the person whose purpose is in question and can also be inferred from the document, although care must be taken to ensure that reliance is not solely placed on material which is not known to the person who challenges the privilege: Hancock v Rinehart (Privilege) [2016] NSWSC 12, Brereton J at [32], applied in Tavcol Pty Ltd v Valbeet Pty Ltd [2016] NSWSC 1002, McDougall J at [24]. Mere assertion of privilege will not suffice: it must be proved on admissible evidence of the facts on which the assertion is based: Hancock, Brereton J at [7], applied in Tavcol, McDougall J at [25].

80. On the question of the evidence required to prove the dominant purpose being beyond bare conclusory assertions, in Barnes v Commissioner of Taxation [2007] FCAFC 88; (2007) 242 ALR 601, Tamberlin, Stone and Siopsis JJ at [18] said:

The authorities emphasise the need for focused and specific evidence in order to ground a claim for legal professional privilege. In Kennedy v Wallace (2004) 142 FCR 185; 213 ALR 108; [2004] FCAFC 337 (Kennedy), Black CJ and Emmett J reiterated the principles that verbal formulae and bare conclusory assertions of purpose are not sufficient to make out a claim for privilege: see also National Crime Authority v S (1991) 29 FCR 203 at 211; 100 ALR 151 at 158–60 (per Lockhart J); Grant at CLR 689; ALR 589 (per Stephen, Mason and Murphy JJ). Where possible the Court should be assisted by evidence of the thought processes behind, or the nature and purpose of advice being sought in respect of, each particular document. The fact that generalised evidence is not challenged in cross-examination does not mean that such evidence must be accepted, particularly when it is as manifestly inadequate as it is in this case. As in Kennedy, mere general assertions of the purpose of creation of the documents are insufficient to discharge this onus. Even though in that case some evidence as to the purpose of particular records was adduced, Allsop J at [168] considered that the onus had not been discharged because the evidence did not permit a conclusion to be drawn as to the dominant purpose of the creation of any particular document or entry in a document. Simply to show that one purpose for creation of the document was to obtain legal advice or assistance is not good enough.

81. In the oft-cited summary of the accepted principles on legal professional privilege collected in Commissioner of Taxation v Pratt Holdings Pty Ltd (2005) 225 ALR 266; [2005] FCA 1247, Kenny J at [30] said (citations and quotations omitted in part):

(1)   [The party claiming the privilege] carries the onus of establishing its claim for privilege, whether by evidence as to the circumstances in which the documents were brought into existence, reference to the nature of the documents, or by argument.

(2)   … where a document is created for the “dominant purpose” of obtaining legal advice, privilege will be attracted.

(3)   The purpose for which a document is brought into existence is a question of fact. Where there are a number of purposes for the creation of a document, it can be difficult to identify the dominant purpose. The dominant purpose must be determined objectively, having regard to the evidence, the nature of the documents and the parties’ submissions. The purpose will ordinarily be that of the maker of the document, but this will not always be the case.

(4)   The evidence of the intention of the document’s maker, or of the person who authorised or procured it, is not conclusive of purpose. Further, the existence of the privilege is “not necessarily or conclusively established by resort to any verbal formula or ritual”. As their Honours said in [Grant] “in many instances the character of the documents the subject of the claim will illuminate the purpose for which they were brought into existence”.

(5)   The dominant purpose for the creation of a document is to be determined at the time of its production. … [T]he privilege attache[s] to the relevant communications rather than the documents ... If the purpose for the making of a document by a third party is to enable another party to make the communication necessary to obtain the legal advice, then the document is protected by the privilege.

(6)   … [T]he fact that a document is provided to solicitors for advice is not determinative of the purpose for which it was created. As Brennan CJ said in Propend:

The test is anchored to the purpose for which the document was brought into existence; the use to which a document is put after it is brought into existence is immaterial.

A document can become privileged from production even if it is a copy of a non-privileged document. Further, the relevant purpose is that for which the document is brought into existence and not that for which the information is obtained.

(7)   The dominant purpose is not the same as the “primary” or the “substantial” purpose. The “dominant” purpose may be described as the ruling, prevailing, paramount or most influential purpose. The “dominant purpose” brings within the scope of the privilege a document brought into existence for the purpose of a client being provided with professional legal services notwithstanding that some ancillary or subsidiary use of the document was contemplated at the time.

(8)   Where two purposes are of equal weight, neither is dominant in the relevant sense. Hence:

(a)   a document is not privileged from production where one purpose for its creation is to obtain legal advice, but there is another equally important purpose; and

(b)   if the decision to bring the document into existence would have been made irrespective of any intention to obtain legal advice, the purpose of obtaining legal advice cannot be the dominant purpose for the making of the document.

(9)   Where the claim is in respect of communications in documents, the Court may examine the documents to ascertain the purpose for their creation.

(10)   A document that records the substance of a privileged communication between client and legal adviser is itself protected, by the privilege, from disclosure unless the privilege has been waived. The relevant inquiry is whether the disclosure of a document would involve disclosure of a privileged communication. [T]his inquiry may involve a question whether privilege, which may have subsisted, has been waived.

(11)   If the Court is satisfied on the balance of probabilities that the entirety of the document was created for the requisite purpose, then the entire document attracts the privilege. If, however, the Court finds that parts but not all of the document were created for this purpose, then those parts attract the privilege.

82. Communications between a solicitor for a party and a potential witness raise particular considerations in the application of the privilege and relevant principles. The fundamental proposition is that stated Harmony Shipping Co SA v Saudi Europe Line Ltd [1979] 1 WLR 1380 by Lord Denning at 1384 (in gendered language):

There is no property in a witness. The reason is because the court has a right to every man's evidence. Its primary duty is to ascertain the truth. Neither one side nor the other can debar the court from ascertaining the truth either by seeing a witness beforehand or by purchasing his evidence or by making communication to him.

83. Legal professional privilege can exist in respect of the confidential communications and the documents which constitute or reflect those communications between the solicitor and the potential witness to enable a witness statement to be drafted but it would not prevent the witness from conveying the information the subject of the witness statement to any other person: Public Transport Authority of Western Australia v Leighton Contractors Pty Ltd (2007) 34 WAR 279; [2007] WASCA 151, McLure JA (as her Honour was then, with whom Steytler P and Miller JA agreed) at [31]–[32]. A draft witness statement can be privileged because it discloses confidential communications, namely what the solicitor asked the witness and what the witness said to the solicitor: Leighton Contractors, McLure JA at [32].

84. The purpose of creating a finalised witness statement to be served on the opposing party in existing litigation is very different from the purpose of preparing a draft witness statement, the latter being privileged in the normal course of events: Australian Competition and Consumer Commission v Cadbury Schweppes Pty Ltd (2009) 174 FCR 457; [2009] FCAFC 32, Mansfield, Kenny and Middleton JJ at [45].

85. Although the subject of ongoing debate (see Cadbury Schweppes at [34]–[38]), it would appear that confidentiality is an essential requirement if a communication between a solicitor and a witness or potential witness is to attract legal professional privilege: Australian Competition and Consumer Commission v NSW Ports Operations Hold Co Pty Ltd [2020] FCA 1232, Wigney J at [46]–[47], citing Ritz Hotel Ltd v Charles of the Ritz Ltd (No 22) (1988) 14 NSWLR 132, McLelland J at 133–134, and Leighton Contractors at [22] and [33]; Edwards v Nine Network Australia Pty Ltd (No 4) [2022] FCA 1496, Katzmann J at [14]–[27]. Whatever the extent of it, one element of confidentiality is essential, which is non-disclosure to the opposing party: Cadbury Schweppes at [37].

86. A final version of a witness statement which is provided to the court and the opposing party is of a different character to drafts of that witness statement which may retain their privileged status: Cadbury Schweppes at [73].

87. In Asahi Holdings (Australia) Pty Ltd v Pacific Equity Partners Pty Ltd (No 2) [2014] FCA 481; (2014) 312 ALR 403, Bromberg J at [37]–[38] summarised the position in relation to the work product of lawyers in this way:

[37]   The work product of the lawyer may be put to a number of different uses. It may be communicated to the client in order for the lawyer to provide legal advice. It may be used by the lawyer to facilitate the investigation, preparation and presentation of the client’s case in anticipated or extant litigation. Legal professional privilege will attach to the documents made in furtherance of those uses.

[38]   However, legal professional privilege does not attach to all the work product of a lawyer produced for the benefit of a client. Relevantly, legal professional privilege will not attach to documents whose purpose is to communicate the work product of the lawyer to persons other than the client, in circumstances where the lawyer/client confidentiality attached to the work product of the lawyer is not to be maintained. Drafts of a pleading, witness statement, affidavit, legal submission or correspondence are all work product of a lawyer to which legal professional privilege will ordinarily attach when those documents are in draft form and in the hands of the lawyer, the client or their agent. Once in final form for the intended use of being provided to others, legal professional privilege will not attach to the non-confidential communication of the finalised document provided to such persons.

SUBMISSIONS

Submissions of the cross-defendants

88. Mr Mehigan SC with Mr Johnson appeared as counsel for the cross-defendants, instructed by HFW.

89. The submissions of the cross-defendants can be summarised as follows:

1. The whole of the draft supplementary statement is subject to legal professional privilege because it is a confidential communication or document prepared for the dominant purpose of use in these proceedings.

2. Alternatively, parts of the draft supplementary statement disclose the substance of privileged communications passing between Mr Naude and the solicitors for the cross-defendants and in-house counsel of the cross-defendants with respect to the preparation of the Earlier Statement. Those parts should be redacted if inspection of the draft supplementary statement is to be permitted.

90. The cross-defendants say that precisely when the draft supplementary statement was brought into existence is not clear but the dominant purpose of it is apparent from the letters exchanged between Bennett and HFW which both preceded and followed the draft supplementary statement being sent to HFW.

91. The cross-defendants submit that it is the objective purpose of Mr Naude in preparing the draft supplementary statement that is the focus of the inquiry. They say it does not matter that HFW did not request that Mr Naude prepare it, nor, they say, does that fact prevent it from being a document brought into existence for the dominant purpose of communication to HFW for use in these proceedings.

92. The cross-defendants assert that the claim to privilege is not one of pure inference, from verbal formulae or mere assertion (as warned against in Barnes at [18]) but is based on the correspondence of Mr Naude’s solicitors, Bennett, which must be presumed to have been written on his instructions and is the specific and focused evidence required to discharge their onus. The cross-defendants accept that they do not have direct evidence from Mr Naude but say that is not an absolute requirement when the dominant purpose is determined objectively, based on Esso Australia at [172] and Sydney Airports at [6].

93. The cross-defendants rely on the letter of 1 November 2023 from Bennett to HFW in which Bennett stated that Mr Naude was of the view that a supplementary statement should be filed addressing further evidence that he wished to give and that he was prepared to meet with HFW for the purpose of preparing and compiling that statement. The cross-defendants also rely on the response of 3 November 2023 in which HFW requested that Mr Naude provide his proposed corrections to the Earlier Statement so that the cross-defendants could properly consider his proposal. The cross-defendants say that as part of their letter of 21 November 2023, Bennett then sent the draft supplementary statement to HFW (which was received by HFW on 19 January 2024).

94. The cross-defendants submit that the dominant purpose of the draft supplementary statement was therefore to communicate to the cross-defendants’ solicitors an outline of further evidence that Mr Naude proposed to give in the proceedings. The cross-defendants concede that although HFW did not ask Mr Naude to prepare the draft supplementary statement, it was sent in response to their request to Mr Naude to inform them of the proposed corrections to the Earlier Statement. According to the cross-defendants, the draft supplementary statement is therefore a “discussion document” of the kind mentioned in Cadbury Schweppes at [73] or a draft statement in the hands of a witness which is privileged (as described in Leighton Contractors at [32]) and which could be evaluated by HFW as the cross-defendants’ solicitors to inform the preparation by them of any finalised witness statement addressing any further evidence by Mr Naude.

95. The cross-defendants contend that the dominant purpose was affirmed in the letter of 1 February 2024 from Bennett to HFW which was provided so that HFW and the cross-defendants could assess and understand Mr Naude’s concerns.

96. According to the cross-defendants, the privilege attaching to the draft supplementary statement is consistent with the way the court deals with claims for legal professional privilege over draft expert reports in the hands of an expert, as demonstrated in New Reinsurance Corporation Ltd (in liq) v Renaissance Reinsurance Ltd [2007] NSWSC 258, White J at [22].

97. The cross-defendants say that any purpose of Mr Naude creating the draft supplementary statement to relieve himself of a duty he considered he was under to ensure that his Earlier Statement was complete by informing HFW of the clarifications needed is consistent with Mr Naude having a dominant purpose of communicating with HFW for use in the proceedings. They say that this is reinforced by the following:

1. Mr Naude had already provided the Earlier Statement and at the time that he prepared the draft supplementary statement, he understood he was to be called as a witness by the cross-defendants.

2. Mr Naude understood he was bound by ongoing confidentiality obligations as evidenced in the letter of 6 September 2023 from Bennett to CCW.

3. Mr Naude is not a party to these proceedings and had no unilateral right to file a further witness statement. Mr Naude plainly understood that any concerns he had about the Earlier Statement had to be raised with HFW and ultimately it was a decision of the cross-defendants whether a supplementary statement from Mr Naude should be filed.

98. The cross-defendants submit that the draft supplementary statement has sufficient confidentiality to attract legal professional privilege because:

1. Mr Naude was and is bound by express obligations of confidentiality arising from cl 17.1 of the Employment Contract. The contents of the draft supplementary statement concern matters which go to the “business affairs” of DRA Global and its subsidiaries.

2. An express obligation of confidentiality is not a perquisite to privilege as stated in NSW Ports Operations and Edwards. It is enough that Mr Naude took steps to keep the matters relating to the Earlier Statement confidential, as demonstrated in the letter of 24 July 2023 from Bennett to CCW (which referred to Mr Naude’s ongoing duties owed to DRA Global and his refusal to meet CCW) and the letter of 6 September 2023 from Bennett to CCW which stated that Mr Naude did not intend to breach his ongoing duty of confidentiality and would not engage with CCW on the issues of the Earlier Statement unless compelled by court order or with the consent of DRA Global. It is enough for Mr Naude to have understood that he was bound by ongoing confidentiality obligations and treated the draft supplementary statement in confidence by refusing to disclose it to the cross-claimants or CCW.

3. Mr Naude asserted privilege over notes of his meetings with Bennett in relation to the preparation of the draft supplementary statement and the earlier drafts of it. This indicates that the drafts of the draft supplementary statement were prepared in circumstances of confidentiality as between Mr Naude and his solicitors.

4. The Earlier Statement is subject to the implied undertaking until the evidence is led at the trial, which ensures that confidentiality is maintained and not waived over the subject matter in it.

99. The cross-defendants say that if the claim to legal professional privilege over the draft supplementary statement is not upheld, then the privilege attaching to parts of it should be redacted before inspection is permitted. The privileged communications contained in the draft supplementary statement are said to comprise the following:

1. Communications during proofing meetings between Mr Naude and Jones Day (then the solicitors for the cross-defendants) and Ms Hawkins (DRA Global’s General Counsel) relating to the preparation of the Earlier Statement. It is said that the paragraphs within this category disclose the substance of discussions between Mr Naude and Jones Day/Ms Hawkins during or in connection with these proofing meetings. It is also said that these passages do not merely repeat the evidence disclosed during the proofing meetings but they identify questions asked by the lawyers and answers given by Mr Naude. The cross-defendants say that these questions and answers fall within the nature of being self-evidently confidential communications to which privilege attaches because they were for the dominant purpose of gathering evidence for use in these proceedings.

2. Communications between Mr Naude and Ms Hawkins in relation to the process for giving evidence and the service of the Earlier Statement. The cross-defendants say that these paragraphs disclose the substance of discussions and text messages passing between Ms Hawkins and Mr Naude which arose in connection with the service of his Earlier Statement and they are confidential communications passing between the company’s in-house lawyer and a witness in relation to the giving of a witness statement in these proceedings.

3. Legal advice provided to the DRA group by K&L Gates in connection with the acquisition of G&S. The cross-defendants submit that these paragraphs disclose the substance of legal advice provided to Mr Naude as one of the primary contacts at DRA group by K&L Gates in May 2018 in relation to matters connected with the acquisition of G&S, the dominant purpose of which was the provision of legal advice from K&L Gates to DRA. The cross-defendants refer to the judgment of Stevenson J in G&S Engineering Services Pty Ltd v MACH Energy Australia Pty Ltd (No 9) [2023] NSWSC 1093 at [28]–[31], which upheld a claim for privilege over such documents.

4. Communications between DRA Global’s board of directors and Ms Hawkins in which Ms Hawkins provided legal advice and updates on the cross-defendants’ litigation strategy for, and the conduct of, these proceedings. The cross-defendants say that these paragraphs disclose the substance of confidential communications between Ms Hawkins and the board of DRA Global at board meetings held on 18 March 2022 and 28 July 2022 in which the in-house lawyer advised on the conduct of these proceedings and the dominant purpose of which was to provide the legal advice or update the board on the conduct of the proceedings.

5. Emails passing between Jones Day and Mr Naude regarding his evidence in these proceedings after the service of his Earlier Statement. The cross-defendants submit that there are two relevant emails, being:

1. An email of 24 October 2022 from Mr Hickman (the cross-defendants’ solicitor, then a partner of Jones Day) to Mr Naude, the purpose of which was to ask a question about his recollection of a factual issue relevant to the proceedings.

2. An email of 26 October 2022 from Mr Naude to Mr Hickman in response.

Both emails are said to be the subject of legal professional privilege because they are communications between the cross-defendants’ lawyers and a witness made for the dominant purpose of the cross-defendants gathering evidence for use in connection with the proceedings and both are marked privilege and confidential.

100. I have been invited to inspect the draft supplementary statement which has been colour-coded to indicate the portions of it which relate to each of the above five categories sought to be redacted.

Submissions of the cross-claimants

101. Mr Kidd SC with Mr Ball appeared as counsel for the cross-claimants, instructed by CCW.

102. The cross-claimants contend that the cross-defendants’ claim of legal professional privilege in the draft supplementary statement should be rejected because it fails the dominant purpose test and there is no confidentiality in the draft supplementary statement. The bases put forward by the cross-claimants for these contentions can be summarised as follows:

1. The cross-defendants and their solicitors, HFW, did not create the draft supplementary statement and disavowed any responsibility or request for it.

2. The author of the draft supplementary statement and the recipient of the second subpoena, Mr Naude, does not claim privilege in it and no evidence has been put on from him in support of the cross-defendants’ claim.

3. The claim for legal professional privilege ignores Mr Naude’s dominant purpose in creating it: that he satisfied what he considered to be a duty on him to ensure his evidence was completely truthful regardless of the position that the cross-defendants might take on the matter.

4. The claim of legal professional privilege ignores the role played by the cross-claimants and their solicitors, CCW, in facilitating the creation of the draft supplementary statement by Mr Naude.

5. Whatever duty of confidentiality Mr Naude might once have owed the cross-defendants in relation to the various matters in connection with the G&S transaction and the project the subject of these proceedings, it cannot have survived the cross-defendants serving the Earlier Statement from Mr Naude about them. Any confidentiality in those matters which might previously have existed does not exist any longer.

103. The cross-claimants say that the second subpoena did not seek Mr Naude’s communication of the draft supplementary statement to HFW and Mr Naude has not produced a document recording that communication, nor was it directed to the copy of the draft supplementary statement possessed by HFW. They say that the second subpoena sought and Mr Naude has produced the draft supplementary statement created and possessed by him. They also say that what the cross-defendants seek to do is to infer the dominant purpose of the draft supplementary statement based upon the use to which it was later put after its creation, namely its communication to the cross-defendants’ lawyers. They submit that this reasoning was rejected in Propend by Brennan CJ at 508 where it was emphasised that privilege depends on the purpose for which the document was brought into existence, and the use to which it was put after it was brought into existence is immaterial. They also refer to Pratt Holdings which states, per Kenny J at [30](6), that the fact the document is provided to solicitors for advice is not determinative of the purpose for which it was created.

104. The cross-claimants submit that the submissions by the cross-defendants ignore the extensive and important factual background to the creation of the draft supplementary statement, which is such that the cross-defendants cannot discharge the steep onus placed upon them to establish the claim for privilege. They assert that those facts tend to contradict the claim for privilege because they tend to show that Mr Naude did not create the draft supplementary statement at the request of the cross-defendants or their solicitors. They also assert that Mr Naude had his own paramount or, at the very least, equally important purpose for creating the draft supplementary statement which was not for the cross-defendants to obtain legal advice or assistance in the proceedings.

105. The cross-claimants attack the basis on which the cross-defendants submit that the draft supplementary statement has a character of confidentiality because Mr Naude was bound by an obligation of confidentiality as to its subject matter, he took steps to keep it private and it was prepared in circumstances of confidentiality between him and his own solicitors.

106. The cross-claimants submit that whatever obligation of confidentiality might have once inhered in the subject matter of the draft supplementary statement, it ceased when the cross-defendants took the positive step of serving upon the cross-claimants the Earlier Statement which traversed that subject matter. They also say that by doing this the cross-defendants have acted inconsistently with the maintenance of the confidentiality.

107. As to the suggestion that Mr Naude has sought to act to keep the draft supplementary statement private, the cross-claimants assert that this overlooks the context in which Mr Naude acted due to various threats being made against him about his alleged duty of confidentiality.

108. The cross-claimants also say that the preparation of the draft supplementary statement by Mr Naude with the assistance of his own solicitors has nothing to do with the cross-defendants, Mr Naude not having claimed any privilege, and it is not for the cross-defendants or HFW to do so on his behalf.

109. The cross-claimants say that the core propositions to be taken from the relevant facts are:

1. It was the cross-claimants and CCW, not the cross-defendants and HFW, who provided relevant documents to Mr Naude and proposed that he then prepare the draft supplementary statement on the basis that it could be obtained by subpoena. Mr Naude agreed that the issuing of the subpoena was the appropriate course in circumstances where threats surrounding his duties had been raised against him, the cross-claimants and CCW.

2. Mr Naude considered the supplementary statement to be necessary to ensure that he fulfilled his duties as a witness to ensure that his evidence was truthful. He did not consider that the cross-defendants and HFW had any say in the matter but were duty-bound to disclose it.

3. The cross-defendants and HFW disavowed any responsibility for the preparation or creation of the draft supplementary statement. In their view, Mr Naude was not requested by them to prepare the draft supplementary statement and they did not accept Mr Naude’s offer to meet so they could have carriage of its preparation. The draft supplementary statement was a frolic of Mr Naude’s own.

4. Mr Naude’s decision to send the draft supplementary statement to HFW after he drafted it followed the multiple threats made against him and CCW by HFW. The reason that Mr Naude did not engage with CCW was because of those threats, although he continued in the view that he could and would provide evidence if subpoenaed to do so.

110. The cross-claimants submit that this is not a case where a litigant’s solicitor has met with a witness to take a proof or a draft statement of evidence for use in the litigation, with the cross-defendants and HFW declining Mr Naude’s invitation to meet with him. The author of the draft supplementary statement was Mr Naude and the cross-defendants and HFW did not request that he prepare it.

111. The cross-claimants submit that the argument raised by the cross-defendants that the draft supplementary statement is analogous to a draft report in the hands of an expert as analysed in New Reinsurance is misplaced because in this case the cross-defendants and HFW declined Mr Naude’s invitation to meet with him to prepare it and therefore the draft supplementary statement was not created on the instruction of or request by the cross-defendants or HFW.

112. The cross-claimants also reject the cross-defendants’ reliance on Cadbury Schweppes and Leighton Contractors in this case as they submit that the draft supplementary statement is not some earlier draft in Mr Naude’s hands of a finalised statement that was prepared by the cross-defendants and HFW and then filed with the court.

113. The analogy on which the cross-claimants rely is from Secretary of State for Trade and Industry v Baker [1998] Ch 356, Richard Scott VC at 366 who put the proposition that an unsolicited communication from a third party, a potential witness, about the facts of the case would not be privileged. They further rely on Sterling to establish that a document created by third party will only qualify for litigation privilege if it is created for the dominant purpose of it being put before the litigant’s solicitor with the object of obtaining advice or enabling the litigant to prosecute or defend an action.

114. The cross-claimants argue that that if the document was not requested to be created by the litigant or the litigant’s solicitor, there is no basis for any inference that it was created for that dominant purpose. They say that there is no direct evidence of Mr Naude’s dominant purpose in this regard as the cross-defendants have not adduced evidence from him of his purpose and are instead left to fall back on the record of correspondence between the parties and Mr Naude which does not support the privilege claim.

110. The cross-claimants submit that the cross-defendants bear the onus of establishing the existence of the privilege and, referring to Barnes and Kennedy, they must discharge the onus by reference to focused and specific evidence that permits a conclusion to be drawn as to the dominant purpose of the creation of the particular document and simply to show one purpose for the creation of the document was to obtain legal advice and assistance is not good enough. Relying on Kennedy at [168], they say that the evidence must be precise as to the weight or preponderance of the stated purpose. They also rely on the statement of principles in Pratt Holdings at [30], particularly those at (3), (6), (7) and (8).

111. The cross-claimants also rely on the principle that legal professional privilege at common law is concerned with communications and not documents per se, and only attaches to documents such as witness statements which embody or reflect the communication, citing Tavcol at [15]–[17] and Leighton Contractors at [31]–[32].

112. The cross-claimants submit that the application of these principles to the circumstances of the draft supplementary statement justifies the rejection of the cross-defendants’ claim for privilege over it because the evidence does not permit a conclusion to be drawn as to the dominant purpose of the creation of the document to the requisite degree of precision or clarity demanded on the authorities. They make the following points:

1. The relevant dominant purpose is of the author of the draft supplementary statement, Mr Naude. Having disavowed responsibility for the document, there is no reason why the cross-defendants’ or HFW’s purposes in receiving the document should matter.

2. Mr Naude’s dominant purpose in creating the draft supplementary statement was to ensure that he satisfied what he considered to be the duty upon him to ensure his evidence was completely truthful. The creation of the draft supplementary statement was a proactive step he took at the suggestion of, and following the provision of documents to him by, CCW. Mr Naude was not requested by the cross-defendants or HFW to prepare it and he did not create the document for the purpose of the cross-defendants being provided with legal advice or services in connection with the litigation. He considered the cross-defendants and HFW duty bound to disclose it.

3. The draft supplementary statement does not embody or reflect any communication by Mr Naude with the cross-defendants or their solicitors, nor any work product of those solicitors. Therefore, the rationale for the existence of litigation privilege does not support such a privilege attaching to the draft supplementary statement.

4. The fact that the draft supplementary statement was sent to HFW after its creation is not determinative of Mr Naude’s dominant purpose in creating it. The factual background supports the conclusion that the dominant reason Mr Naude sent the draft supplementary statement to HFW, rather than provided to CCW, was out of concern for the earlier threats levelled at him in respect of his duties owed to the cross-defendants as distinct from the duties he considered he owed to the court, which he considered paramount and the reason for creating the draft supplementary statement in the first place.

5. Once proper regard is had to the factual background, the highest that the cross-defendants could possibly put its claim is that the draft supplementary statement was created for dual purposes of equal weight, neither of which were dominant, being Mr Naude’s fulfilment of his obligations as a witness and the provision of a record of his position to HFW in order to facilitate this occurring in light of the various threatening letters that had been sent to him. The second purpose was at best ancillary or incidental to the first purpose, and on no view could it be said that the second purpose rose to such a level as to be more than equally important to the first purpose. This is not sufficient to establish a claim of litigation privilege.

6. The privilege claim fails the counterfactual test of whether Mr Naude’s decision to bring the draft supplementary statement into existence would have been made irrespective of any intention that the cross-defendants be provided with legal advice or services. The answer is more likely than not, “yes”.

118. The cross-claimants contend that the draft supplementary statement is not a draft of a final statement that was served in the proceedings but is a new statement authored by Mr Naude which records matters he considers require correction, clarification and context from the Earlier Statement. The cross-claimants cite the preferable view prevailing in New South Wales that an obligation of confidentiality is a precondition for litigation privilege to attach to a document in the hands of a witness as opposed to a party’s solicitors, citing NSW Ports Operations at [46]–[47] and Edwards at [14]–[27]. They also say that because there is no property in a witness, a statement taken from a witness is not confidential in that witness’s hands unless the witness is subject to a duty of confidentiality, relying on Ritz Hotel at 133–134, and the witness is free to share information about the subject of their statement with any other person, citing Leighton Contractors at [31]–[32].

119. The cross-claimants submit that the duty of confidentiality said by the cross-defendants to arise from cl 17.1 of the Employment Contract cannot survive the service of the Earlier Statement on the cross-claimants because the element of non-disclosure to an opponent is essential to the confidentiality in litigation privilege, citing Cadbury Schweppes at [37]. The cross-claimants say that having served the Earlier Statement and revealed Mr Naude’s knowledge of previous confidential matters to the cross-claimants, the cross-defendants cannot now claim that the further exposition by Mr Naude of those same matters by way of correction, clarification and context remain confidential.

120. The cross-claimants submit that if Mr Naude took steps to keep the draft supplementary statement private with the cross-defendants because he considered he was subject to certain ongoing duties, then he was wrong and his mistaken belief, driven by caution, is of no consequence. They further say that the factual background reveals Mr Naude’s primary concern in dealing with the cross-defendants and HFW, to the exclusion of the cross-claimants and CCW, was a result of concern for the threats made against him as opposed to positively establishing, preserving or reviving some duty of confidentiality.

121. The cross-claimants characterise Mr Naude as having gone on a frolic of his own and having created the draft supplementary statement for his own purposes, noting that he did not intend to keep it private and asserting that it should be treated no differently to his personal notes.

122. The cross-claimants highlight that if the draft supplementary statement had been prepared by solicitors at HFW following meetings with Mr Naude, there could be no argument against the document being the subject of legal professional privilege because the author of the document would be a solicitor at HFW, and the relevant inquiry would have concerned the purpose of the solicitor in creating the document and the obligations of confidentiality operating on them. They say that if the statement prepared by the solicitor had then been shared with Mr Naude for comment, the privilege in it would not have been lost or waived. The cross-claimants say that this is not what happened because the cross-defendants and HFW declined to meet with Mr Naude and a solicitor engaged to provide legal services subject to a duty of confidentiality did not prepare the draft supplementary statement.

123. The cross-claimants contend that the confidential circumstances of Mr Naude’s relationship with his own lawyers, Bennett, is of no real relevance because Mr Naude has not claimed any privilege over the draft supplementary statement.

124. Finally, the cross-claimants contend that the privilege claim over the documents sent to HFW is not an issue in the present case because the communication to HFW and the draft supplementary statement in HFW’s possession is not the subject of the second subpoena. The cross-claimants say that the subject of the second subpoena is the draft supplementary statement as authored by Mr Naude in his possession, which the cross-defendants have not established is the subject of legal professional privilege.

CONSIDERATION

125. I am not satisfied that the whole of draft supplementary statement in the hands of Mr Naude is properly the subject of legal professional privilege. I am satisfied that parts of it are properly the subject of legal professional privilege and should be redacted before any inspection of it by the cross-claimants and their solicitors, CCW, may be allowed.

126. I will explain each of these conclusions in turn.

Legal professional privilege over the whole of the draft supplementary statement

127. I will first determine whether I should uphold the cross-defendants’ claim to legal professional privilege over the whole of the draft supplementary statement in the hands of Mr Naude.

128. Applying the tests in Grant at 677 and 689, I need to decide whether the cross-defendants have met their onus of proving that the draft supplementary statement was produced or brought into existence with the dominant purpose of its author, Mr Naude, of using it or its contents in order to obtain legal advice or to conduct or aid in the conduct of litigation. It will not be sufficient if this was the primary purpose or substantial purpose of Mr Naude, as the dominant purpose must be clearly paramount (Grant at 678 and Sydney Airports at [7]).

129. The dominant purpose must be determined to be that of Mr Naude because the evidence is clear that he produced the draft supplementary statement and HFW as solicitors for the cross-defendants made it very clear in their letter of 2 February 2024 that it was not prepared at their request. This is consistent with the evidence that pre-dates the sending of the draft supplementary statement to HFW in which Mr Naude had offered to meet with HFW to prepare and finalise the draft supplementary statement (in the letters of 1 and 21 November 2023 from Bennett to HFW, albeit the latter not received by HFW until 19 January 2024), which was not accepted by HFW (in the letters of 3 November 2023 and 23 January 2024 from HFW to Bennett).

130. The draft supplementary statement was not, therefore, the work product of HFW on behalf of the cross-defendants and does constitute an earlier draft of a later finalised witness statement of the sort described and held to be ordinarily privileged in Cadbury Schweppes at [45] and Asahi at [38].

131. I do not have the direct evidence of Mr Naude’s subjective purpose in creating the draft supplementary statement but in any event, I need to determine his purpose objectively (Sydney Airports at [6]) as a question of fact focusing on the purpose for which it was brought into existence not the use to which it was put afterwards (Propend at 507—508). I consider that I can determine Mr Naude’s objective purpose through the correspondence of his solicitors, Bennett, which I infer was all written on his instructions. I consider the evidence in that correspondence is focused and specific, of the type which could be sufficient to meet the onus on the cross-defendants (Barnes at [18]). It is not necessary for me to have Mr Naude’s direct evidence of his subjective purpose to undertake my assessment of the objective purpose.

132. I have looked at all the correspondence leading up to and after the creation of the draft supplementary witness statement and have examined it to determine the purpose of its creation (Grant at 677 and Esso Australia at [52]).

133. The conclusion I have reached after conducting this exercise is that there were two purposes for which the draft supplementary statement was created.

134. First, the draft supplementary statement was created by Mr Naude for the purpose of supplementing the Earlier Statement because Mr Naude was conscious that he had an obligation to ensure that his evidence to the court was the truth and he considered that there were inadequacies in the Earlier Statement which required correction to make his evidence the truth. This purpose is demonstrated in each of the letters of 1 and 21 November 2023, 18 January 2024 and 1 February 2024 from Bennett to HFW. Those letters express Mr Naude’s purpose in very clear terms, as follows:

1. “… our client is of the firm view that … the Court should be made aware that the [Earlier] Statement requires additional important context; and … [a] supplementary witness statement be filed …” (letter of 1 November 2023);

2. “[o]ur client is and remains of the view that the witness statement, so served, needs to be supplemented” (letter of 21 November 2023);

3. “… the fact that our client has provided a statement that clearly sets out and corrects the inadequacies of the Evidence is directly relevant to the Proceedings and places an obligation on your client to disclose the supplementary information provided” (letter of 18 January 2024);

4. “… both HFW … and our client … have an obligation to take the greatest care to ensure that the Statement contains the truth, the whole truth and nothing but the truth. Our client is adhering to this his duty to the Court, … it is now your duty to do the same” (letter of 1 February 2024).

135. These are quite emphatic expressions of purpose, almost suggesting mandatory directions to HFW in the steps they must take on receipt of the draft supplementary statement to disclose it to the cross-claimants and the court.

136. Secondly, the draft supplementary statement was also created by Mr Naude for the purpose of communicating matters which he considered were inadequacies in the Earlier Statement and how they should be corrected to HFW for their consideration on behalf of the cross-defendants. This purpose is demonstrated in the communications between Bennett and HFW, being the letter of 1 November 2023 from Bennett, the letter of 3 November 2023 from HFW, the letter of 21 November 2023 from Bennett and the letter of 1 February 2024 from Bennett in which the clear expression of the first purpose identified above can be seen, but at the same time that purpose is tempered by statements being made which recognise that it is appropriate for HFW to consider these matters in the form of the draft supplementary statement. This second purpose is revealed in the following:

1. “Mr Naude is prepared to meet with HFW, accompanied by a representative of Bennett, for the purpose [of] preparing and compiling the supplementary witness statement” (letter of 1 November 2023);

2. “For our clients to properly consider Mr Naude’s request they require … Mr Naude’s proposed corrections to the Statement” (letter of 3 November 2023);

3. “Mr Naude’s proposed clarifications and additions are contained in the below statement. … Our client reaffirms his willingness to meet to finalise a supplement witness statement” (letter of 21 November 2023);

4. “[I]t is our client that took the proactive step of providing a draft supplementary statement that demonstrates in detail the basis for his concerns. By doing so it is our client that has now enabled you and your client to assess and understand his concerns; … [I]t is your client that refuses to correct or supplement the Statement” (letter of 1 February 2024).

137. All of these communications reveal that while Mr Naude in creating the draft supplementary statement had the purpose of ensuring his evidence in the proceedings was true, he also had the purpose of communicating the way in which he thought the Earlier Statement needed to be supplemented to HFW so that they could consider those matters in providing legal advice and services to the cross-defendants in the conduct of the proceedings. In this way, the draft supplementary statement is the documentary record of what Mr Naude wished to communicate to HFW as solicitors for the cross-defendants.

138. By proceeding in this way, at a time when Mr Naude knew that he was to be called as a witness on behalf of the cross-defendants, it can be inferred that Mr Naude knew that he had to proceed through HFW to raise his concerns and make his alterations and that he could not unilaterally file a further witness statement in the proceedings. But having the second purpose does not detract from Mr Naude also having the first purpose at the same time.

139. While the second purpose is one which is capable of supporting a claim for legal professional privilege and meets the rationale for the substantive rule of law that protects the confidentiality of communications, it is not one which I consider to be dominant because it exists alongside the first purpose and is not clearly paramount to it. I consider the second purpose to be a substantial purpose (as is the first purpose), but that is not enough on the test I must apply.

140. While the first purpose finds its expression in the second purpose (being the way in which Mr Naude could put into effect the first purpose) I consider that each of these two purposes are of equal importance and neither is dominant (Pratt Holdings at [30](8)). On the evidence, neither is subsidiary to the other but neither exists without the other.

141. My conclusion is that the cross-defendants have not discharged their onus to demonstrate that the second purpose is dominant and, as a result, I consider that it does not support the claim for legal professional privilege over the whole of the draft supplementary statement. This finding disposes of the cross-defendants’ claim for legal professional privilege over the draft supplementary statement.

142. In case I am wrong about that conclusion, I consider that I should also state my reasons in relation to the opposing arguments about the confidentiality of the draft supplementary statement. In my view the parties’ respective principal arguments about this issue are misplaced. On the one hand, the cross-defendants argued that sufficient confidentiality arises with respect to the draft supplementary statement because it contains content about the “business affairs” of DRA Global and is therefore within the terms of the confidentiality obligation in cl 17.1 of the Employment Contract. On the other hand, the cross-claimants submitted that there is no confidentiality in the content of the draft supplementary statement because it seeks to provide correction, clarification and context to the Earlier Statement which was served on the cross-claimants and no longer confidential.

143. In my opinion, the draft supplementary statement was a confidential document at the time when it was created and has remained so since. When Mr Naude was invited to consider providing a supplementary statement in the letter of 25 August 2023 from CCW (“we would be grateful if you could advise whether Mr Naude will provide a supplementary statement”), he declined to do so in direct terms in the letter of 6 September 2023 from Bennett (“[o]ur client does not intend breaching his ongoing duty of confidentiality and will therefore not engage with Corrs on issues of his witness statement, unless he is compelled to do so by an order of the Court or with the consent of DRA Global”). From that point, Mr Naude (through Bennett) only engaged with the cross-claimants (through HFW) on the subject of the draft supplementary statement and it was only ever provided to HFW. CCW and the cross-claimants had no idea that the draft supplementary statement had even come into existence let alone been provided to HFW until it came to light in the form of the reference to it in the Lock affidavit in June 2024, which led to the second subpoena.

144. To my mind, there is sufficient evidence of an obligation of confidentiality in the draft supplementary statement to meet the essential requirement of confidentiality in the communication between a solicitor and a witness to attract legal professional privilege to it (as explained in NSW Ports Operations at [46]–[47] and Edwards at [14]–[27]). The contents of the draft supplementary statement have not been disclosed to the cross-claimants as the opposing party, which is an essential element of confidentiality (Cadbury Schweppes at [37]).

137. While it is true that the Earlier Statement has been disclosed to the cross-claimants, that does not prevent the content of the proposed clarifications and additions to the Earlier Statement contained in the draft supplementary statement from being confidential. They had never been communicated to the cross-claimants, were confidential in fact and were treated as such by Mr Naude.

138. Specifically, I reject the argument of the cross-claimants that the service of the Earlier Statement waived any confidentiality in the contents of the draft supplementary statement.

Legal professional privilege over parts of the draft supplementary statement

147. I have inspected the draft supplementary statement to determine whether it contains reference to confidential communications properly the subject of legal professional privilege which should be redacted before any inspection of it should be allowed.

148. I am satisfied that each of the colour-coded parts of the copy of the draft supplementary statement which was provided to me are properly the subject of the claim for legal professional privilege and should be redacted from any copy of the draft supplementary statement made available for inspection by the cross-claimants and their solicitors in answer to the second subpoena.

149. I find that each of the following parts of the draft supplementary statement should be redacted of privileged material in accordance with the colour coding provided to me in the schedule attached to the written submissions of the cross-defendants filed 12 July 2024:

1. Paragraphs [18], [18.1]–[18.7], [19], [19.8], [19.8.1], [19. 11], [19.11.1]–[19.11.2], [19.12], [19.12.1]–[19.12.2], [20], [20.1], [20.1.1]–[20.1.2], [20.6.4], [20.8], [20.8.1], [21]–[22], [22.1], [22.5], [22.5.1]–[22.5.3], [22.6], [22.6.1], [22.7], [22.7.1]–[22.7.3], [23], [23.1], [23.1.1]–[23.1.2], [23.2], [23.3], [23.3.1] and [40.2], which record confidential communications during meetings between Mr Naude and Jones Day (then the solicitors for the cross-defendants) and Ms Hawkins (General Counsel of DRA Global) relating to the preparation of the Earlier Statement for the dominant purpose of gathering evidence in these proceedings.

2. Paragraphs [24], [24.1], [24.1.1]–[24.1.2], [24.2]–[24.6], [25], [25.1]–[25.4], [25.4.1]–[25.4.6], [26], [27], [28] (partial), [29]–[30], [43.1] (partial), [46.1] (partial), [47] (partial), [47.1]–[47.3] and [48.1]–[48.2], which record confidential communications between Mr Naude and Ms Hawkins as General Counsel of DRA Global in relation to the process for giving evidence and the service of the Earlier Statement for the dominant purpose of gathering evidence in these proceedings.

3. Paragraph [19.5.2] (partial), which records confidential communications for the dominant purpose of K&L Gates providing legal advice to the DRA group in connection with the acquisition of G&S.

4. Paragraphs [31], [31.1], [33]–[35], [35.1], [35.1.1]–[35.1.2], [35.2], [35.2.1]–[35.2.11] and [36]–[39], which record confidential communications between DRA Global’s board of directors and Ms Hawkins as General Counsel of DRA Global for the dominant purpose of Ms Hawkins as in-house counsel providing legal advice in relation to these proceedings.

5. Paragraphs [40] and [40.1]: confidential communications on 24 and 26 October 2022 between Jones Day as the solicitors for the cross-defendants and Mr Naude as a witness made for the dominant purpose of gathering evidence for use in connection with the proceedings.

ORDERS

150. For the reasons set out above, I propose to make the following orders:

1. Declare that legal professional privilege attaches to [18], [18.1]–[18.7], [19], [19.5.2] (partial), [19.8], [19.8.1], [19.11], [19.11.1]–[19.11.2], [19.12], [19.12.1]–[19.12.2], [20], [20.1], [20.1.1]–[20.1.2], [20.6.4], [20.8], [20.8.1], [21]–[22], [22.1], [22.5], [22.5.1]–[22.5.3], [22.6], [22.6.1], [22.7], [22.7.1]–[22.7.3], [23], [23.1], [23.1.1]–[23.1.2], [23.2], [23.3], [23.3.1], [24], [24.1], [24.1.1]–[24.1.2], [24.2]–[24.6], [25], [25.1]–[25.4], [25.4.1]–[25.4.6], [26], [27], [28] (partial), [29]–[30], [31], [31.1], [33]–[35], [35.1], [35.1.1]–[35.1.2], [35.2], [35.2.1]–[35.2.11], [36]–[39], [40], [40.1] [40.2], [43.1] (partial), [46.1] (partial), [47] (partial), [47.1]–[47.3] and [48.1]–[48.2] (Privileged Parts) of the draft witness statement of Andrew Naude (Naude draft statement) produced in answer to the subpoena to produce dated 21 June 2024 in these proceedings.

2. Order that the plaintiffs/cross-defendants are to inspect and copy the Naude draft statement, redact the Privileged Parts and serve the redacted Naude draft statement on the defendants/cross-claimants within 3 days of today.

3. Order that the Naude draft statement is otherwise to be placed in a sealed confidential packet marked “privileged” and no party is to inspect the Naude draft statement.

4. Otherwise dismiss the notice of motion filed 5 July 2024 by the plaintiffs/cross-defendants.

151. I will make directions for hearing the parties before determining the issue of costs in chambers.

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Amendments

05 August 2024 - Case name amended - (No 16)

Decision last updated: 05 August 2024