Hodges v Waters (No 1) - [2013] FCA 737

FEDERAL COURT OF AUSTRALIA
Hodges v Waters (No 1) [2013] FCA 737

Citation: Hodges v Waters (No 1) [2013] FCA 737

Parties:
CHARLES HODGES & MARK HODGES AS TRUSTEES OF THE CHARLES HODGES SUPERANNUATION FUND v ANDREA JANE WATERS, KPMG, WELLINGTON INVESTMENT MANAGEMENT LIMITED, OCTAVIA LIMITED (ADMINISTRATOR APPOINTED), GUY HUTCHINGS, JOHN ARTHUR WHATELEY, JACK SIMON DIAMOND, CRAIG ROBERT WHITE, DEBORAH BEALE, STEVEN KRIS KYLING, STUART ROBERTSON PRICE, MICHAEL GORDON HISCOCK, MICHAEL CHRISTODOULOU KING and PAUL JOSEPH MANKA

WELLINGTON CAPITAL LIMITED (ACN 114 248 458) AS RESPONSIBLE ENTITY OF THE PREMIUM INCOME FUND (ARSN 090 687 577) v ANDREA JANE WATERS, KPMG

File numbers: NSD 324 of 2009
NSD 557 of 2013

Judge: PERRAM J

Date of judgment: 29 July 2013

Catchwords: PRACTICE AND PROCEDURE – Subpoenas – Legal professional privilege – Whether Court can compel a party to reveal privileged material

Legislation:
Evidence Act 1995 (Cth) Pt 3.10
Federal Court of Australia Act 1976 (Cth) ss 37M, 37N, 37P

Federal Court Rules 2011 (Cth) r 24.22(1)

Date of hearing: 26 July 2013

Place: Sydney

Division: GENERAL DIVISION

Category: Catchwords

Number of paragraphs: 12

Solicitor for the Applicant: Ms F M Dreyer of Johnson, Winter & Slattery

Counsel for the First and Second Respondents: Mr J A Arnott

Solicitor for the First and Second Respondents: Allens

Counsel for the Eleventh Respondent: Mr S A Goodman

Solicitor for the Eleventh Respondent: Kelly & Co Lawyers

Counsel for the Third Party: Ms A Rao

Solicitor for the Third Party: Henry Davis York

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 324 of 2009

BETWEEN:
CHARLES HODGES & MARK HODGES AS TRUSTEES OF THE CHARLES HODGES SUPERANNUATION FUND
Applicant

AND:
ANDREA JANE WATERS
First Respondent

KPMG
Second Respondent

WELLINGTON INVESTMENT MANAGEMENT LIMITED
Third Respondent

OCTAVIA LIMITED (ADMINISTRATOR APPOINTED)
Fourth Respondent

GUY HUTCHINGS
Fifth Respondent

JOHN ARTHUR WHATELEY
Sixth Respondent

JACK SIMON DIAMOND
Seventh Respondent

CRAIG ROBERT WHITE
Eighth Respondent

DEBORAH BEALE
Ninth Respondent

STEVEN KRIS KYLING
Tenth Respondent

STUART ROBERTSON PRICE
Eleventh Respondent

MICHAEL GORDON HISCOCK
Twelfth Respondent

MICHAEL CHRISTODOULOU KING
Thirteenth Respondent

PAUL JOSEPH MANKA
Fourteenth Respondent

JUDGE:

PERRAM J

DATE OF ORDER:

31 JULY 2013

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:
Review & Production of Hard Copy Documents
1.The solicitors for the Liquidators (‘HDY’) conduct a preliminary review of the Potential Hard Copy Documents to exclude those folders or bundles that on their face are not responsive to the Subpoenas.
2.HDY review the remaining Potential Hard Copy Documents, if any, to identify documents that are responsive to the Subpoenas.
3.On or before 30 August 2013, the Liquidators:
3.1advise the solicitors for the first and second respondents (Allens) whether there are any Hard Copy Documents responsive to the Subpoenas;
3.2produce to the Court the Hard Copy Documents that are responsive to the Subpoenas (if any), together with a list documents over which privilege is claimed, and the basis of that claim.

4.Unless the Court otherwise orders, or the first and second respondents and the Liquidators otherwise…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Hodges v Waters (No 1)

Details

AGLC: Hodges v Waters (No 1) [2013] FCA 737
Case: [2013] FCA 737
Decision Date

CaseChat Overview and Summary

This case involves investors in the former MFS Premium Income Fund seeking to recover their losses from the partners of KPMG, a firm of accountants. The dispute centers on the management of the production of documents pursuant to subpoenas issued by KPMG to the liquidators of Octaviar Ltd and Octaviar Administration Pty Ltd. The liquidators have already spent approximately $195,000 in dealing with the subpoenas and anticipate spending between $93,000 and $300,000 to fully respond.

The primary legal issue before the court was whether KPMG could compel the liquidators to allow KPMG's solicitors to inspect the documents first, in order to reduce costs and avoid duplication. The court held that this proposal was not feasible due to the risk that KPMG's solicitors would be exposed to privileged documents belonging to the liquidators. This could potentially lead to conflicts of interest and legal action to restrain KPMG's solicitors from acting.

The court found that it did not have the power to order the liquidators to produce privileged documents to KPMG for inspection. While the court has case management powers under the Federal Court of Australia Act 1976, these do not extend to overriding legal professional privilege. The existence of legal professional privilege is an important common law immunity that cannot be abrogated without clear statutory language.

The court therefore refused KPMG's proposal and ordered that the liquidators' solicitors first review the documents to identify those responsive to the subpoenas and any documents over which privilege may be claimed. This decision ensures that the liquidators' privilege rights are protected while still allowing the production of relevant documents.

Orders