In the matter of Bauhaus Pyrmont Pty Ltd (in liq)

Bauhaus Pyrmont Pty Ltd (in liquidation) was the subject of proceedings in the Federal Court, where a liquidator sought to enforce subpoenas issued under the Corporations Act to compel the production of documents. The liquidator aimed to obtain documents from the company's former directors and officers, including those related to a litigation funding agreement. The directors resisted the subpoenas, claiming that the documents were protected by legal professional privilege. The primary issue for the court was to determine the extent of the privilege claims and whether the liquidator could compel the production of the documents.

The court considered whether the documents were protected by client legal privilege under sections 118 and 119 of the Evidence Act. It examined whether the privilege was waived under sections 122(2) and (4) of the Act and whether there was a common interest privilege under section 122(5)(b). The court also assessed whether the privilege was lost through an abuse of power under section 125 of the Act, particularly if the liquidator's actions were influenced by an improper purpose. The liquidator argued that the privilege was lost due to the funder's involvement in strategic decision-making and communication with the lawyers, which the court needed to consider in the context of the liquidator's role and duties.

The court held that the documents related to the litigation funding agreement were privileged as they were prepared for the purpose of legal advice. However, it found that the privilege was lost due to the funder's improper purpose, which was attributed to the liquidator through the funder's significant involvement in the litigation strategy. The court determined that the liquidator's actions, influenced by the funder's involvement, amounted to an abuse of power, leading to the loss of privilege. Consequently, the court ordered the production of the documents, finding that the liquidator's interest in obtaining the information outweighed the privilege claims.