In the matter of Global Contracting Pty Ltd (in liquidation)
[2016] VSC 409
•21 July 2016
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST
S CI 2015 3441
| In the matter of Anthony Robert Cant and Simon Patrick Nelson (in their capacity as liquidators of Global Contracting Pty Ltd (In Liquidation) (ACN 094 055 811)) | |
| Anthony Robert Cant and Simon Patrick Nelson (in their capacity as liquidators of Global Contracting Pty Ltd (In Liquidation) (ACN 094 055 811)) | Plaintiffs |
---
JUDICIAL REGISTRAR: | Hetyey, JR |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 23 June 2016 |
DATE OF RULING: | 21 July 2016 |
CASE MAY BE CITED AS: | In the matter of Global Contracting Pty Ltd (in liquidation) |
MEDIUM NEUTRAL CITATION: | [2016] VSC 409 |
PRACTICE AND PROCEDURE – Evidence Act 2008 (Vic) ss 117 and 119 – privilege – client legal privilege – litigation privilege – existence of general retainer.
CORPORATIONS ACT 2001 (Cth) - Corporations Act 2001 (Cth) section 597(9) – direction to produce documents - objection to inspection on grounds of legal professional privilege.
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr C. Möller | White Cleland Lawyers |
| For the Examinee | Mr A. Herskope | Kalus Kenny Intelex Lawyers |
JUDICIAL REGISTRAR :
Introduction
1 Global Contracting Pty Ltd (“the Company”) was a company in the business of designing and undertaking roadworks, principally on behalf of local councils and public authorities.
2 On 24 February 2014, the Company’s members resolved that it should be wound up and liquidators appointed. On 24 March 2014, the original liquidators were replaced with the plaintiffs in this proceeding.
3 Since that time, the plaintiffs have conducted detailed investigations into the Company’s affairs. Those investigations have revealed substantial claims by creditors and potentially voidable transactions under Part 5.7B of the Corporations Act 2001 (Cth) (“the Corporations Act”).
Issue of summonses and examinations
4 On 3 July 2015, the plaintiffs filed an originating process seeking the issue of summonses for public examination against various individuals involved in the Company’s affairs.
5 On 15 September 2015, the Court issued a raft of summonses pursuant to ss 596A and 596B of the Corporations Act requiring each examinee to attend for public examination and to produce certain documents in their possession, custody or power. Those examinees included: Mr Neil David (as Company director), Mrs Penelope David (as General Manager of the Company and a former director), Mr Robert Prasad (as the Company’s financial controller), Mr Joseph Buccheri and Mr Mark Harris, who provided legal advice to the Company through the firm Impex Lawyers, and Mr Stephen Mark O’Neill (also known as Stephen Marks), who is the sole director of the company SMEs R Us Pty Ltd (“SMEs R Us”). For the sake of consistency, I will refer to Mr Stephen O’Neill as Mr Marks throughout these reasons.
6 Since the time the Court issued the summonses, the matter has occupied a considerable number of hearing dates devoted to the examinations themselves and to various interlocutory matters. The examinations have been wide-ranging in scope and traversed numerous issues pertaining to the Company’s affairs. Those issues have relevantly included:
(a) The Company’s response to legal proceedings brought by creditors of the Company prior to its liquidation;
(b) The engagement of Impex Lawyers in connection with those proceedings;
(c) The nature and source of instructions provided to Impex Lawyers in relation to those proceedings;
(d) The engagement by the Company of SMEs R Us and/or Mr Marks as advisors and the scope of their engagement;
(e) The payments made to Impex Lawyers by or on behalf of the Company; and
(f) The solvency of the Company at various stages prior to its eventual liquidation.
Privilege claim
7 On 10 December 2015, pursuant to s 597(9) of the Corporations Act, Mr Buccheri was directed to produce to the Court, among other things, “any correspondence received from, or on behalf of, Mr Stephen Marks…regarding any offer by [Mr Marks] or [SMEs R Us] to pay the legal costs of Mr Harris and/or Mr Buccheri incurred in compliance with their respective summonses for examination dated 15 September 2015”.
8 In answer to this direction, Mr Buccheri, through his solicitors, delivered to the Court on or about 23 December 2015 certain documents which were sealed in an envelope and said to be the subject of a potential claim for legal professional privilege by Mr Marks and/or SMEs R Us. The documents contained in the envelope comprise four emails sent over the course of a 24 hour period in late September 2015 (“the emails”). Mr Marks and SMEs R Us have since made the foreshadowed claim of privilege over the emails.
9 For reasons not presently relevant, the determination of the privilege claim was deferred until after the examinations had further progressed. On 1 April 2016, the Court made orders, among other things, that Mr Marks and/or SMEs R Us file and serve any affidavit upon which they proposed to rely “setting out with sufficient particularity the basis of any claim for legal professional privilege in the [emails]… including: (a) the author of the [emails] and the circumstances of [their] creation; (b) the identity of the client to whom legal advice was provided; and (c) the facts supporting the claim for privilege”.
10 Two affidavits have been filed and served in support of the asserted claim of privilege. Each affidavit is relied upon to resist the inspection of the emails by the plaintiffs.
11 By affidavit affirmed on 9 May 2016, Mr Buccheri deposes to the following matters:
“…
2.Since in or about 2007 my firm has been generally retained by [Mr Marks] and [SMEs R Us] to act on his and [SMEs R Us’] behalf. This retainer has extended to many matters, both where a file has formally been opened, or not, where the instructions received or advice given might be formal, or informal, express or implied. As a result, my interactions with [Mr Marks] in his own right or on [SMEs R Us’] behalf, whether in a social setting or a business setting have been under the umbrella of the general retainer and trust between solicitor and client. Among many other matters, this extends to matters concerning the Summons for Examination addressed to [Mr Marks] by Global Contracting Pty Ltd (in Liquidation) in respect of which he sought my advice.
3.It was in the context of that general retainer that each of the emails … were sent by him and received by me and/or Mr Harris either as the recipients of those emails or in the case of the email dated 23 September 2015 and sent at 9.28 pm being cc’ed into that email also as part of that general retainer.”
12 By affidavit sworn on 2 May 2016, Mr Jonathan Kenny, solicitor for Mr Marks (and also presumably SMEs R Us), relays various instructions received from Mr Marks in relation to the emails. Those instructions relevantly include:
“…
2. …I am instructed by Mr [Marks] that:
…
(ii) He is the author and sender of each of the emails…;
(iii)Each of the emails … were created by him for the dominant purpose of raising legal issues, providing instructions to Impex Lawyers and seeking advice from that firm in relation to anticipated litigation arising out of matters concerning and relating to Global Contracting (in Liquidation) – Summons for examination addressed to him;
(vii)At the time [Mr Marks] sent each of the emails … Impex Lawyers were generally retained by him and [SMEs R Us] to act on his and [SMEs R Us’] behalf; and
(viii)It was in the context of the general retainer by him of Impex Lawyers that each of the emails … were created and sent by him.”
Legal principles
13 In support of their privilege claims, Mr Marks and SMEs R Us rely on s 119 of the Evidence Act 2008 (Vic) (“Evidence Act”) which provides:
“Litigation
Evidence is not to be adduced if, on objection by a client, the court finds that adducing the evidence would result in disclosure of—
(a)a confidential communication between the client and another person, or between a lawyer acting for the client and another person, that was made; or
(b)the contents of a confidential document (whether delivered or not) that was prepared—
for the dominant purpose of the client being provided with professional legal services relating to an Australian or overseas proceeding (including the proceeding before the court), or an anticipated or pending Australian or overseas proceeding, in which the client is or may be, or was or might have been, a party.”
14 The term “confidential communication” is defined by s 117(1) of the Evidence Act as follows:
“…
"confidential communication" means a communication made in such circumstances that, when it was made—
(a) the person who made it; or
(b) the person to whom it was made—
was under an express or implied obligation not to disclose its contents, whether or not the obligation arises under law;”
15 The term “client” is also relevantly given the following meaning by s 117(1) of the Evidence Act:
“…
"client" includes the following—
(a)a person or body who engages a lawyer to provide legal services or who employs a lawyer (including under a contract of service);
(b) an employee or agent of a client;”
16 Counsel for the plaintiffs did not dispute that s 119 of the Evidence Act has application to a public examination conducted under Part 5.9 of the Corporations Act in the Supreme Court of Victoria. Further, I note that s 79(1) of the Judiciary Act 1903 (Cth), which is in the following terms, also suggests that s 119 of the Evidence Act is the applicable legislative provision in matters arising under the Corporations Act:
“State or Territory laws to govern where applicable
(1) The laws of each State or Territory, including the laws relating to procedure, evidence, and the competency of witnesses, shall, except as otherwise provided by the Constitution or the laws of the Commonwealth, be binding on all Courts exercising federal jurisdiction in that State or Territory in all cases to which they are applicable.”
17 Whilst I will proceed on the basis that s 119 of the Evidence Act, rather than the corresponding provision of the Commonwealth statute,[1] applies in this instance, I note that the relevant legislative provisions are identical in any event.
[1] Section 119 of the Evidence Act 1995 (Cth).
18 The principles relating to the existence and assertion of legal professional privilege are well-established in the authorities. Set out below are those principles most applicable to the present claim:
(a) Legal professional privilege protects communications between a client and his or her legal adviser.[2] Accordingly, the test for privilege is anchored to the purpose for which the communication was undertaken or the document was brought into existence.[3]
[2]Esso Australia Resources Ltd v Commissioner of Taxation 201 CLR 49 (“Esso Australia”) at 107.
[3] Grant v Downs (1976) 135 CLR 674, 688 and 694; AWB Ltd v Cole (No 5) (2006) 155 FCR 30 (“AWB Ltd”) at 44; Carter Holt HarveyWood Products Australia Pty Ltd v Auspine Limited [2008] VSCA 59 at [2].
(b) The purpose for which a document was brought into existence is a question of fact that needs to be determined objectively.[4]
[4] Esso Australia at 107 per Callinan J, citing Guinness Peat Properties Ltd v Fitzroy Robinson Partnership [1987] 1 WLR 1027.
(c) The person resisting inspection by claiming the privilege has the onus of establishing that privilege attaches to the relevant documents.[5] The person must prove that the communication was undertaken, or the document was brought into existence, for the dominant purpose of giving or obtaining legal advice or with reference to litigation that was actually taking place, or in contemplation at the time.[6]
[5]Walsh v WorleyParsons Limited (No. 2) [2015] VSC 310 at [9].
[6]AWB Ltd at 44.
(d) This includes establishing each factual element necessary to demonstrate the requisite dominant purpose so that “focused and specific evidence is required in respect of each communication, rather than mere generalised assertion let alone opaque and repetitious verbal formulae”.[7]
[7] HRF Nominees Pty Ltd (in liq) v Man Civil Constructions Pty Ltd (No 2) [2014] VSC 613 at [60]; See also Krok v Szaintop Homes Pty Ltd (No 1) [2011] VSC 16 (“Szaintop Homes”) at [15].
(e) The evidence must set out the purpose for which a document was made, identify the maker and the party for whom the document was prepared and establish the elements of confidentiality.[8]
[8]Szaintop Homes at [17].
(f) Evidence of the intention of the “document-maker” will not be necessarily conclusive.[9]
[9]AWB Ltd at 44.
(g) The evidentiary foundation may be augmented by inspection, although inspection alone can rarely, if ever, establish a claim.[10]
(h) It cannot be assumed that simply because a communication took place between a lawyer and client, that it was made pursuant to an express or implied obligation that it should remain confidential.[11]
(i) The public examination process set out in s 597 of the Corporations Act does not abrogate legal professional privilege.[12]
[10]Szaintop Homes at [15]. See also section 133 of the Evidence Act 2008 (Vic).
[11]Szaintop Homes at [25].
[12] Re Compass Airlines Pty Ltd (1992) 35 FCR 447, 459 and 464. See also Daniels Corporation International v ACCC (2002) 213 CLR 543, 553.
Are the emails privileged?
19 In determining whether privilege inheres in the emails, I have not only considered the contents of the two affidavits filed in support of the privilege claim but I have also examined the emails themselves. That was the approach adopted by Judd J in Krok v Szaintop Homes Pty Ltd (No 1)[13] and also Almond J in Walsh v WorleyParsons Limited (No 2).[14]
[13] [2011] VSC 16.
[14] [2015] VSC 310. See also McNicol, Law of Privilege (the Law Book Company Limited, 1992), page 53.
20 For the sake of clarity, I will separately refer to each of the emails as follows:
(a) email sent 23 September 2015 at 8:48 pm (“email 1”);
(b) email sent 23 September 2015 at 9:28 pm (“email 2”);
(c) email sent 23 September 2015 at 9:29 pm (“email 3”); and
(d) email sent 24 September 2015 at 7:36 pm (“email 4”).
21 In examining each email, it is necessary to allude generally to its contents and distinguishing features, whilst being necessarily oblique.
Were Mr Marks and SMEs R Us clients?
22 The affidavit material suggests there was a general retainer in place between Impex Lawyers, Mr Marks and SMEs R Us at the time the emails were sent. However, the plaintiffs have cast doubt on the existence of such a relationship at that time. Firstly, Mr Möller for the plaintiffs submits that Mr Buccheri’s characterisation of the general retainer as having extended to “interactions with [Mr Marks]…in a social setting” as well as a business setting is somewhat strained. I agree. However, there is nothing to suggest that the emails were sent in a social and not a business context. The plaintiffs’ counsel also points to seemingly inconsistent evidence given by Mr Buccheri at his examination on 1 December 2015. At that time, the following exchange took place between Mr Buccheri and Mr Möller for the plaintiffs:
“Is there still a – is it fair to describe it as a referral relationship between SME’s and Impex? --- No, we have no – no matters, no files, no nothing that our firm acts on anything to do with SME’s anymore.
…
When did it come to an end? --- Ah earlier this year. When we were examined – investigated by the Law Institute and part of the report that came out of the – of the investigation or the audit on the practices was a – a real or implied or perceived conflict of how a member of the public may view the relationship or close working relationship of Impex to SME’s. As a result I took steps to ensure that that perception was no longer the case.
…
How many times did you meet Penny David? --- Probably three or four times the last of which was just recently.
When was that? --- At [Mr Marks’] wedding I think a month or so ago.
That was prior to the schism, no it must’ve been after the schism? --- Which schism?
The schism between you and [Mr Marks] or the relationship between the - - - ? --- Ah yeah after, yeah after.”[15]
[15] Transcript of Proceedings, In the matter of Anthony Robert Cant and Simon Patrick Nelson (in their capacity as liquidators of Global Contracting Pty Ltd (In Liquidation) (ACN 094 055 811)) (Supreme Court of Victoria, S CI 2015 3441, Judicial Registrar Hetyey, 1 December 2015), pages 93-94.
23 In my view, whilst somewhat confusing, the evidence of Mr Buccheri is not entirely inconsistent. It may well be that a general retainer was in existence at the time the emails were sent (in late September 2015) but that it came to an end at a time prior to Mr Buccheri’s examination (in early December 2015). For example, it may be the case that Impex Lawyers and SMEs R Us / Mr Marks had ceased their professional relationship immediately prior to Mr Marks’ wedding which, on Mr Buccheri’s oral evidence, apparently took place a “month or so” before his examination in early December 2015. Accordingly, I am prepared to accept that Mr Marks and SMEs R Us were potentially clients of Impex Lawyers at the time the emails were created.
Were the emails confidential communications?
24 The plaintiffs submit that there is nothing to suggest the emails were subject to an obligation of confidentiality. However, given I have found that the general retainer was conceivably in existence at the time the emails were created, it is reasonable to conclude that the emails themselves were subject to at least an implied obligation of confidentiality.
25 This is also borne out from an inspection of the emails themselves. Email 1 and email 4 were communications solely between Mr Marks and Messrs Buccheri and Harris. Email 2 was sent by Mr Marks to Mr Alan Herskope of counsel and copied to Messrs Buccheri and Harris. Email 3 was sent by Mr Marks to Messrs Buccheri and Harris and copied to another examinee, Mr Prasad. The subject line of each email was “Global Contracting P/L (in liq) – Summons for Examination”. Each email contains a footer suggesting it may be “confidential and/or privileged” and that it should be treated accordingly (although, I note that the inclusion of such an apparently generic statement, of itself, would not necessarily render the document confidential).
26 Further, the content of each email, save for email 3, appears on its face to be confidential in nature. When considered in isolation, email 3 does not appear to be confidential. However, when it is read as part of a continuum of emails sent over a 24 hour period, it appears to relate to the same subject matter as the other emails and, in all likelihood, was intended by Mr Marks to be treated in confidence.
27 It is now necessary to consider whether the emails were created for the dominant purpose of the clients being provided with professional legal services relating to existing or anticipated proceedings in which the clients relevantly are or may be parties.
Were the emails created for the relevant dominant purpose?
28 Mr Buccheri does not explicitly address in his affidavit the question of the dominant purpose behind the creation of the emails. Instead, he simply points to the emails being created in the context of a general retainer with his firm which extended to “matters concerning” Mr Marks’ summons, in respect of which Mr Marks had sought advice. Put at its highest, Mr Buccheri may be suggesting that the emails were created to enable Mr Marks to obtain advice about his summons for examination.
29 Mr Kenny goes further in his affidavit when deposing to instructions he has received from Mr Marks about the creation of the emails. It will be recalled that he relevantly says:
“Each of the emails…were created by [Mr Marks] for the dominant purpose of raising legal issues, providing instructions to Impex Lawyers and seeking advice from that firm in relation to anticipated litigation arising out of matters concerning and relating to Global Contracting Pty Ltd (In Liquidation) – Summons for Examination addressed to him”.
30 Whilst Mr Kenny’s affidavit is objected to on the basis of hearsay, I consider that the privilege claim by Mr Marks and SMEs R Us over the emails is necessarily interlocutory in nature and, accordingly, the usual exceptions would apply.
31 However, following a close and objective examination of the emails, separately and as part of a set, I am not satisfied that they were created for the dominant purpose contemplated by s 119 of the Evidence Act. Instead, I am of the view that each of the emails may have been created for either or both of the following purposes:
(a) Discussing the response by Messrs Buccheri and Harris to their own respective summonses for examination issued at the same time as the summons addressed to Mr Marks; and
(b) Relaying an offer by Mr Marks and/or SMEs R Us to pay or contribute towards the legal costs Messrs Buccheri and Harris might incur in compliance with their respective summonses.
32 Alluding generally to the contents and distinguishing features of each email, whilst being necessarily oblique, I note the following matters which lead me to this conclusion:
Email 1
(a) Email 1 appears to be a response to an earlier unsighted email from Mr Buccheri, also presumably with the subject matter – “Global Contracting P/L (in liq) – Summons for Examination”.
(b) It appears to refer to categories of documents sought in Messrs Buccheri and Harris’ respective summonses for examination but not in Mr Marks’ summons. For example, it refers to a company in respect of which Mr Buccheri was the sole director, secretary and shareholder and which is mentioned in Mr Buccheri’s summons.
(c) It seems to concern the question of legal professional privilege in respect of documents held by Impex Lawyers. The raising of that issue is more consistent with the terms of the summonses addressed to Messrs Buccheri and Harris which clearly called for production of documents concerning legal work undertaken by Impex Lawyers on behalf of the Company.
(d) In addition, email 1 contains an offer to cover legal costs to be incurred by Messrs Buccheri and Harris in connection with their respective summonses.
Email 2
(a) Email 2, which is sent to Mr Herskope but copied to Messrs Buccheri and Harris, appears to predominantly relate to the summonses served on Messrs Buccheri and Harris and the response to those summonses.
(b) Additional content in email 2 also suggests an offer to pay the legal costs of Messrs Buccheri and Harris in connection with their respective summonses.
Email 3
(a) Email 3 comprises one line of text. It also suggests an offer to transfer funds to cover the costs of engaging counsel to represent Messrs Buccheri and Harris. However, counsel for Mr Marks and SMEs R Us submits that the text in question should instead be construed as a reference to the costs of engaging counsel on behalf of another person (I can only assume that counsel is referring to Mr Prasad, the other examinee who is copied into the email). That characterisation may be open when the email is read in isolation. However, the mere fact that another examinee is copied into this email does not, without more, suggest the existence of an entirely separate line of communication about the legal costs of that other examinee.
(b) Further, when read as part of a set, and particularly in the context of the last line of email 4, it is more likely that the reference is to barrister fees to be incurred by Messrs Buccheri and Harris in their personal capacity.
Email 4
(a) Like email 1, email 4 appears to refer to categories of documents sought in Messrs Buccheri and Harris’ respective summonses for examination but not in Mr Marks’ summons. This includes reference to a company in respect of which Mr Buccheri was the sole director, secretary and shareholder and which is also mentioned in email 1.
(b) The email also touches upon the question of whether Messrs Buccheri and Harris should be separately represented from another examinee (or examinees). Again, this is consistent with discussing the response by Messrs Buccheri and Harris to their respective summonses.
(c) Further, email 4 suggests an offer by Mr Marks and / or SMEs R Us to transfer funds to cover the legal costs to be incurred by Messrs Buccheri and Harris in responding to their summonses.
33 Critically, and in addition to the above observations, I cannot identify anything in the emails which directly refers to the summons for examination addressed to Mr Marks or to anticipated litigation against Mr Marks and/or SMEs R Us arising out of the public examination process or the Company’s affairs.
34 It may well be that advice was sought and given along the lines of what is stated in the affidavit material of Messrs Buccheri and Kenny. Communications of this nature may be found in documents unsighted by the Court. However, I am not confident that the emails evidence such communications.
35 Given the relevant dominant purpose behind the creation of the emails has not been satisfactorily demonstrated, it follows that the emails are not privileged from inspection pursuant to s 119 of the Evidence Act.
Remaining issue
36 In addition to resisting inspection of the emails on the ground of legal professional privilege, it is also argued that two of the emails should not be inspected by the plaintiffs because they fall outside the scope of the relevant direction for production made by the Court on 10 December 2015. The emails in question are email 3 and email 4.
37 I am not persuaded by this argument for the following reasons:
(a) Aside from raising issues of privilege or confidentiality, it is not for a party, witness, examinee or other non-party to complain that another person has produced documents to the Court outside the terms of a direction, summons, subpoena or other compulsory process requiring them to do so.
(b) Mr Buccheri has produced documents to the Court the subject of the relevant direction, but he has not said in his affidavit, or elsewhere, that he produced any documents by mistake or inadvertence.
(c) I have already noted that email 3 and email 4 contain content which appears, on balance, to convey an offer to cover certain legal costs to be incurred by Messrs Buccheri and Harris in responding to their respective summonses (notwithstanding that email 3 was, for whatever reason, copied to another examinee). The production of these two emails by Mr Buccheri is therefore within the scope of the direction made on 10 December 2015.
Conclusion
38 Having regard to the above matters, there is no basis for the Court to prevent the uplift, inspection and copying of the emails by the plaintiffs. Appropriate orders will follow accordingly.
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