In the matter of Shinji Pty Ltd

[2021] NSWSC 995

Supreme Court

New South Wales

Medium Neutral Citation:

In the matter of Shinji Pty Ltd [2021] NSWSC 995

Hearing dates:

24 May 2021

Date of orders:

9 August 2021

Decision date:

09 August 2021

Jurisdiction:

Equity - Corporations List

Before:

Williams J

Decision:

See orders at [84].

Catchwords:

Client legal privilege – no issue of principle.

Legislation Cited:

Corporations Act 2001 (Cth), ss 461(1)(k), 471B, 530B, Part 5.7B, Division 2

Evidence Act 1995 (NSW), s 118

Cases Cited:

Cook v Pasminco (No. 2) (2000) 107 FCR 44; [2000] FCA 1819

Grant v Downs (1976) 135 CLR 674

Hancock v Rinehart [2016] NSWSC 12

Hancock v Rinehart [2017] NSWSC 530

In the matter of Optimisation Australia Pty Ltd [2016] NSWSC 1581

Category:

Procedural rulings

Parties:

Simon John Cathro (in his capacity as liquidator of Shinji Pty Ltd (in liq) (ACN 070 125 263) (Applicant)
Mariko Imaeda (First Respondent)
Shinji Imaeda (Second Respondent)
Masaaki Enterprises Pty Ltd (Third Respondent)

Representation:

Counsel:
Mr M Condon SC with Mr M Noakhtar (Applicant)
Mr S Golledge SC (Respondents)

Solicitors:
Wendy Blacker Lawyers (Applicant)
Foulsham & Geddes (Respondents)

File Number(s):

2020/307578

Publication restriction:

N/A

Judgment

Introduction

1. The plaintiff in these proceedings, Mr Simon Cathro, is the liquidator of Shinji Pty Limited (in liq) (ACN 070 125 263) (the Company).

2. Mr Jacob Carswell-Doherty, who is a solicitor and the principal of the firm Foulsham & Geddes, produced documents pursuant to an order for production made by the Court on 26 November 2020 in connection with examinations to be conducted by the liquidator. Mr Carsell-Doherty claimed that some of those documents were the subject of client legal privilege, but did not provide any information about the basis of the claim or the identity of the persons or entities said to be entitled to the privilege.

3. In subsequent correspondence, Mr Carswell-Doherty identified Ms Mariko Imaeda, Mr Shinji Imaeda and Masaaki Enterprises Pty Ltd as the privilege claimants. Those persons and entities are the respondents to the liquidator’s amended interlocutory process filed on 6 April 2021 seeking an order granting him access to the documents produced by Mr Carswell-Doherty.

4. Ultimately, the respondents maintained the privilege claim in relation to the 28 documents referred to in items 1, 1A, 2-4, 6-15, 17-26, 28, 30, and 32 in Annexure A to these reasons, which is a copy of a list prepared by the respondents and marked for identification during the hearing of the liquidator’s interlocutory process.

5. For the reasons that follow, the respondents have failed to establish client legal privilege in respect of the 28 documents in issue.

Uncontroversial matters

The Company and other entities

6. The Company was incorporated on 29 June 1995.

7. Mr Masaaki Imaeda and Ms Mariko Imaeda were the directors of the Company at all times prior to its deregistration on 20 March 2015.

8. Mr Shinji Imaeda is the eldest son of Masaaki and Mariko Imaeda.

9. To avoid confusion between members of the Imaeda family, I will refer to them by their first names, Masaaki, Mariko and Shinji. No disrespect is intended.

10. At all relevant times prior to 5 December 2014, the Company was the trustee of the Shinji Unit Trust.

11. The initial unit holders of the Shinji Unit Trust at the time of its establishment in July 1995 were Masaaki, Mariko and Masaaki Enterprises Pty Ltd.

12. At all relevant times prior to 30 June 2015, Masaaki Enterprises Pty Ltd (Enterprises) was the trustee of the Masaaki Super Fund, of which Masaaki and Mariko were the only beneficiaries. Masaaki and Mariko were also the directors of Enterprises.

13. During the period in 2014 in which the documents the subject of the privilege claims were created, it is not clear whether, the units in the Shinji Unit Trust were held solely by Enterprises (as trustee for the Masaaki Super Fund), or whether Masaaki and Mariko also held units. Nothing turns on this.

Alexandria property

14. At all relevant times prior to 4 December 2014, the Company (as trustee for the Shinji Unit trust) owned property at 90 Burrows Road, Alexandria (the Alexandria property).

15. On 2 July 2014, a fire broke out at the Alexandria property. The fire spread and damaged the adjacent property owned by the Minister for Public Works of New South Wales.

16. By no later than 5 November 2014, Foulsham & Geddes were engaged to act as the Company’s solicitors on the sale of the Alexandria property.

17. The sale of the Alexandria property from the Company to European Kitchen Appliances settled on 4 December 2014. The sale price was $4,246,000. The property was unencumbered by mortgage.

18. Trust account records of Foulsham & Geddes for the Shinji Unit Trust in relation to “Shinji P/L sale @ Alexandria” record that the sum of $3,818,058 was paid into the firm’s trust account on 4 December 2014 following the settlement of the sale of the Alexandria property. On 5 December 2014, that sum was paid out to an account in the name of Masaaki Super Fund.

Sydney property

19. At all relevant times prior to 15 January 2015, the Company (as trustee of the Shinji Unit Trust) owned Unit 2510 at 393 Pitt Street, Sydney (the Sydney Property).

20. On 24 September 2014, the Company engaged selling agents to market and sell the Sydney property. The agency agreement named Foulsham & Geddes as the vendor’s solicitors. On 24 October 2014, the agents requested Foulsham & Geddes to prepare a contract for sale.

21. On 26 November 2014, contracts were exchanged for the sale of the Sydney property from the Company to Shu-Fen Lu for $990,000.

22. The sale of the Sydney property was settled on 15 January 2015. On settlement, the deposit (less the selling agent’s fee) was paid into Foulsham & Geddes trust account, as was the balance of the purchase price (save for three cheques for small amounts drawn at the vendor’s direction in favour of the City of Sydney, Sydney Water and the owners corporation).

23. Trust account records of Foulsham & Geddes for the Shinji Unit Trust in relation to “Shinji P/L sale @ Sydney” record that the sums of $890,376 and $79.456 were paid into the firm’s trust account between 15 and 19 January 2015 representing the sale proceeds and balance of deposit for the Sydney property. On 22 January 2015, those funds were paid to Moumoko Pty Ltd, Shinji Family Trust and Masaaki Super Fund, save for $3,216 which was paid to Foulsham & Geddes’ office account.

The Company ceases to be the trustee of the Shinji Unit Trust

24. On 5 December 2014, Moumoku Pty Ltd replaced the Company as the trustee of the Shinji Unit Trust. Moumoku Pty Ltd was incorporated on 28 November 2014. Shinji was its sole shareholder and director at all relevant times.

Deregistration of the Company

25. The Company was deregistered on 20 March 2015 on the application of Masaaki.

Reinstatement and liquidation of the Company

26. On 29 June 2020, this Court made an order in proceeding 2020/188203 for the reinstatement of the Company’s registration together with orders that it be wound up pursuant to s 461(1)(k) of the Corporations Act 2001 (Cth) and that Mr Cathro be appointed as liquidator.

27. The Court also made an order pursuant to s 471B of the Corporations Act granting leave to the State of New South Wales to commence proceedings against the Company relating to the fire at the Alexandria property. Those proceedings were commenced the following day against the Company and Masaaki but are presently stayed as against the Company. The liquidator anticipates that the State of New South Wales will lodge a proof of debt in the winding up of the Company.

28. The liquidator is investigating how and to whom the proceeds of sale of the Alexandria property and the Sydney property were distributed in order to determine whether those transactions are voidable pursuant to Part 5.7B, Division 2 of the Corporations Act.

Mr Carswell-Doherty’s response to the liquidator’s request for documents

29. In July 2020, the liquidator’s office wrote to Mr Carswell-Doherty requiring delivery of documents relating to the sale of the Alexandria property and the Sydney property pursuant to s 530B of the Corporations Act.

30. Mr Carswell-Doherty delivered the files for those two conveyancing matters by emailing an electronic link to those files to the liquidator’s office on 17 August 2020.

31. Later that same day, the liquidator’s office replied by email to Mr Carswell-Doherty seeking documentary evidence with respect to the movement of funds in the amounts of $890,376.25 and $3,818,058.00 from Foulsham & Geddes’ trust account.

32. On 21 August 2020, Mr Carswell-Doherty replied in the following terms:

“Shinji Pty Ltd was removed as trustee of the Shinji Unit Trust on 5 December 2014. All the documents you seek in your email below fall after that date and as such I take the view that they are not books and records of the company and outside the scope of the liquidator’s purview.”

Orders for production

33. The order for production made on 26 November 2020 required Mr Carswell-Doherty to produce:

All documents comprising the files and records held by Foulsham & Geddes relating to work performed for Shinji Pty Limited (in liquidation) ACN 070 125 263 (the Company).

All documents associated with the conveyance of property located at 90 Burrows Road, Alexandria, described as Folio identifier 2/867774, in around mid-2014, from the company to European Kitchen Appliances Pty Ltd.

All documents associated with the conveyance of property located in Sydney described as Folio Identifier 7/SP60341 on around 24 January 2015 from the Company to Shi-Fen Lu.

All emails passing between Foulsham & Geddes and any of:

the Company, Masaaki Imaeda, and Mariko Imaeda, relating to the conveyance of the properties referred to in paragraphs 2 and 3 above; and

purchasers or potential purchasers (or their representatives) relating to the conveyance of the properties referred to in paragraphs 2 and 3 above.

Extracts of the Foulsham & Geddes trust ledger relating to the disbursement of funds from the sale of Folio Identifier 2/867774 and Folio Identifier 7/SP60341.

To the extent not caught in paragraphs 1-5 above, all documents recording the identify and bank account details of the recipient(s) of the sale of proceeds in relation to the sale of Folio Identifier 2/867774 and Folio Identifier 7/SP60341.

Privilege claims

34. On 29 January 2021, Mr Carswell-Doherty produced documents in response to the order, including a bundle of documents in a separate envelope marked “privileged”. No information was provided concerning the basis of the privilege claims or the identity of the persons or entitles claiming the privilege.

35. On 2 February 2021, the liquidator’s solicitors wrote to the solicitors acting for Mr Carswell-Doherty requesting an explanation of the categories of documents in respect of which privilege was claimed and the identity of the person or entities on behalf of whom privilege was claimed.

36. Mr Carswell-Doherty’s solicitors replied on 16 February 2021, stating that he did not personally assert a claim of privilege but “consistent with his professional obligations and mindful that he has no authority to waive privilege where it exists, he has claimed privilege on behalf of those who have or may have, the benefit of such privilege. That being the case it is unclear as to the basis on which he should, whether in summary form or otherwise, identify the categories of documents (whatever that may mean) in respect of which privilege is claimed by others.”

37. The letter continued by stating that the documents include confidential communications between Mr Carswell-Doherty’s former clients and their legal advisers in respect of the Shinji Unit Trust and the Masaaki Superannuation Fund and confidential communications between legal advisers of those former clients, and between those legal advisers and other advisers, in relation to those trusts and the property of those trusts. The letter stated that the communications were prepared for the dominant purpose of the legal advisers providing legal advice to Mr Carswell-Doherty’s former clients. The letter did not identify the former clients.

38. The letter then continued:

“We are instructed that since receiving your letter of 2 February 2021, our client has been informed that Mrs Mariko Imaeda and a Mr Shinji Imaeda assert privilege over the documents marked as privileged. Massaki Enterprises Pty Limited ACN 003 001 278, may also be entitled to maintain a claim for privilege over some or all of the documents. Our client is now taking steps to notify that entity of the production of documents and that it may have the right to claim privilege over some of the documents.

We note that at present, our client does not hold instructions to act for Mrs Mariko Imaeda, Mr Shinji Imaeda or Massaki Enterprises Pty Limited.”

39. As I have stated above, the letter did not identify the former clients. The two paragraphs quoted immediately above convey the clear impression that the persons and entities named therein as “asserting” a claim of privilege are not the former clients referred to in the letter. One would expect very different language to have been used if the Mariko, Shinji or Enterprises were the “former clients” who were said to have sought and had received legal advice for the dominant purpose of which the documents were claimed in the earlier part of the letter to have been prepared.

40. On 17 February 2021, the Court made an order in the following terms:

“Whoever claims privilege … to substantive privilege claim by correspondence with liquidator by 22/2/2021.”

41. On 22 February 2021, Foulsham & Geddes wrote to the liquidator’s solicitor in response to the order made on 17 February 2021. The letter advised that Foulsham & Geddes now acted for Mariko, Shinji and Enterprises. The letter stated:

“By way of background, Mariko Imaeda and Masaaki Enterprises Pty Ltd were or are beneficiaries of the Shinji Unit Trust. Shinji Imaeda was at one time the sole director and shareholder of the latest trustee for the Shinji Unit Trust, Moumoku Pty Ltd.

We confirm our clients’ claim for privilege over the documents and/or communications produced by Jacob Carswell-Doherty pursuant to the order for production that are contained in the bundle marked privileged, which were made and/or prepared for the dominant purpose of the provision of legal advice. Our clients hold the benefit of the privilege over those documents and/or communications in accordance with the below principles.

We note that in Hancock v Rinehart (Privilege) [2016] NSWSC 12 at [6], legal advice obtained by a trustee [i.e. Shinji Pty Ltd] for guidance in the administration of the trust or the proper exercise of trust powers belongs to the trust, not to the trustee personally. Shinji Pty Ltd was removed as trustee of the Shinji Unit Trust on or about 5 December 2014.

Further, in Farrow Mortgage Services Pty Ltd (In Liq) v Webb (1996) 39 NSWLR 601 (and Krok v Szaintop Homes Pty Ltd [2011] VSC 16) the privilege held by a trustee in its capacity as trustee (rather than its personal capacity) is jointly held with the beneficiaries of the trust.

In other words, it is our clients’ position that:

1.   As Shinji Pty Ltd was removed as trustee of the Shinji Unit Trust, your client has no right to or right to access privileged documents even though advice may have been provided to Shinji Pty Ltd in the past. Any entitlement ceased once it was removed as trustee.

2.   Our clients, together or individually, are entitled to claim privilege over the documents produced by Jacob Carswell-Doherty as per above.”

42. The letter was signed by Mr Carswell-Doherty.

43. As I have already mentioned, Mariko, Shinji and Enterprises are the respondents to the liquidator’s application for access to the documents. Where it is not necessary to distinguish between them, I will refer to them as the respondents.

Evidence relied on in support of privilege claims

44. The respondents claim privilege in respect of the 28 documents referred to in items 1, 1A, 2-4, 6-15, 17-26, 28, 30, and 32 in Annexure A to these reasons. Those documents were created during the period from 7 November 2014 to 5 December 2014.

45. It was common ground that the privilege claims fall to be determined in accordance with s 118 of the Evidence Act 1995 (NSW) and that it is for the respondents to show that the documents are privileged: Grant v Downs (1976) 135 CLR 674 at 689; Hancock v Rinehart [2016] NSWSC 12 at [7], [27] and [35] and the authorities there referred to.

46. The respondents relied on:

1. an affidavit affirmed on 12 May 2021 by Mr Dylan Chan, a director of Ark Accounting and a financial adviser at Ark Total Wealth during the period in which the documents were created;

2. an affidavit sworn on 11 May 2021 by Mariko;

3. an affidavit sworn on 11 May 2021 by Shinji; and

4. affidavits sworn on 12 May 2021 and 24 May 2021 by Mr Carswell-Doherty.

47. Mr Chan deposed that, from 2013, Ark Accounting provided tax services to Masaaki, Mariko, the Shinji Unit Trust, Enterprises and the Masaaki Superannuation Fund.

48. Following the fire at the Alexandria property in July 2014, Masaaki informed Mr Chan that he and Mariko were divorcing. Masaaki told Mr Chan that:

“I need help separating my assets so I don’t need to pay for Mariko anymore. We don’t have any income so we need to sell these properties quickly.”

49. Mr Chan deposed that he made contact with Mr Geoffrey McDonald, a barrister, in early November 2014. Mr Chan told Mr McDonald about the fire at the Alexandria property and said:

“I am helping the family who own that property. They are in trouble and need help. There is a complicated trust structure, but the ultimate beneficiary is a self managed superfund and the husband and wife who are the members of the SMSF. They need to liquidate their assets and are looking for some advice to ensure they do it legally.”

50. According to Mr Chan, Mr McDonald asked for the name of the client and Mr Chan replied:

“The husband and wife’s names are Masaaki and Mariko Imaeda and the SMSF is the Masaaki Superannuation Fund. The trustee is called Masaaki Enterprises Pty Ltd.”

51. Mr McDonald then said that he would send a costs agreement to Mr Chan and they should meet to discuss the matter further.

52. Mr Chan deposed that he did not mention the Company to Mr McDonald because he (Mr Chan) did not consider that he was assisting the Company. As far as Mr Chan was concerned, his clients were Masaaki and Mariko and the Masaaki Super Fund.

53. I interpolate to note that Mr Chan’s evidence referred to at [50]-[52] above explains why Mr McDonald’s costs agreement issued on 10 November 2014 (item 2 in the list at Annexure A) names Enterprises as trustee for the Masaaki Super Fund as the client.

54. Mr Chan deposed that, in November 2014, a number of emails were exchanged between Ark Accounting, Foulsham & Geddes and Mr McDonald. According to Mr Chan, these emails discussed “advice and processes involved in dealing with the proceeds of the sales of” the Alexandria property and the Sydney property. It will be recalled that, by November 2014, Foulsham & Geddes were acting for the Company in relation to the sale of those properties. Mr Chan’s evidence is that, in discussing these matters with Mr Carswell-Doherty and Mr McDonald, he believed that he was discussing the interests of Masaaki and Mariko and the Masaaki Super Fund who he considered to be the beneficial owners of the Alexandria and Sydney properties. Mr Chan was not asked by Masaaki or any member of the Imaeda family to provide advice to the Company.

55. Mr Chan deposed that he attended a meeting about these matters with Mr Carswell-Doherty and Mr McDonald on 28 November 2014. Mr McDonald’s involvement did not continue beyond that meeting, and Mr McDonald did not issue any invoice.

56. Throughout November and December 2014, Mr Chan communicated increasingly with Shinji, who Mr Chan says took over the management of “the family’s assets” from Masaaki.

51. Mr Chan’s evidence is that he regarded Masaaki and Mariko as Ark’s clients in respect of the work referred to at [49]-[56] above, as they were the “the ultimate beneficiaries” of the Shinji Unit Trust, irrespective of whether they held units in that trust or whether all of those units were held by Enterprises as trustee of the Masaaki Super Fund of which Masaaki and Mariko were the beneficiaries. However, the work was billed to Enterprises.

52. Mr Chan does not give evidence of having had any conversations with Mariko about these matters. However, Mariko deposed that she had a conversation with Mr Chan in October or November 2014 in which he observed that her income had been greatly reduced because no income was being received from the Alexandria property and said:

“I intend to provide you financial advice about your options to maximize your income for retire but first I need you to obtain legal advice about selling assets so we can merge them into your superannuation. I will put you in touch with a lawyer who can assist with this.”

59. Mariko deposed that Mr Chan then put her in touch with Mr Carswell-Doherty and Mr McDonald. She does not recall meeting with Mr McDonald, but says that she did meet with Mr Carswell-Doherty on two or three occasions during the period July to December 2014. Mariko did not give evidence about the purpose or subject matter of those meetings. It will be recalled that Foulsham & Geddes was acting on the sale of the Alexandria and Sydney properties during that period.

60. Although Mr Chan gives evidence of having communicated increasingly with Shinji during November and December 2014, Shinji’s affidavit refers to only one conversation with Mr Chan in November 2014 in which Shinji agreed to take over as trustee of the Shinji Unit Trust until the division of assets between Masaaki and Mariko following their divorce was finalised. Shinji does not give evidence of having sought or received legal advice from Mr McDonald or Foulsham & Geddes.

61. The whole of Mr Carswell-Doherty’s affidavit sworn on 12 May 2021 reads as follows:

“1.   I am the principal of Foulsham & Geddes.

2.   I produced documents in response to an order for production in these proceedings.

3.   My clients, Mariko Imaeda, Shinji Imaeda and Masaaki Enterprises Pty Ltd have made a claim of privilege in respect of some of those documents.

4.   One such document is a memorandum dated 12 November 2014. This document was created internally by a solicitor employed by Foulsham & Geddes for the purposes of providing legal advice to our clients.”

62. In relation to paragraph 3, it is not controversial that Mr Carswell-Doherty is acting for the respondents in opposing the liquidator’s application for access to the documents listed in Annexure A to these reasons.

63. The reference to “our clients” in paragraph 4 can only be a reference to the clients to whom Foulsham & Geddes were providing legal advice as at 12 November 2014. Mr Carswell-Doherty’s affidavit does not identify those clients. It will be recalled that his letter to the liquidator’s solicitors dated 22 February 2021 had stated that the Company was the firm’s client and that the Company had sought the firm’s legal advice in its capacity as trustee of the Shinji Unit Trust for guidance in the administration of the trust or the proper exercise of trust powers.

64. In his affidavit of 24 May 2021, Mr Carswell-Doherty refers to two file notes included in the list of documents in respect of which privilege is claimed. Mr Carswell-Doherty’s evidence is that he prepared those file notes on 3 December and 5 December 2014 and that they “contain records of legal advice provided by Geoffrey McDonald” and that the file notes were “incorporated into the advice given to the members of the Masaaki Superannuation Fund”. That bare assertion is the first occasion on which Mr Carswell-Doherty has suggested that the basis of the claims for privilege are that the documents record communications for the purpose of legal advice to the members of the Masaaki Super Fund, as opposed to the Company in its capacity as trustee of the Shinji Unit Trust. Mr Carswell-Doherty offered no explanation for the inconsistency between the bare assertion and his more detailed letter to the liquidator’s solicitor dated 22 February 2021. Nor did senior counsel for the respondents address this in submissions.

65. Mr Chan’s affidavit includes a table in which he describes the circumstances in which 19 of the 28 documents in Annexure A to these reasons were created. Mr Chan describes each of the documents as a communication between himself (or an employee of Ark Accounting) and one or more of Mr Carswell-Doherty and Mr McDonald and, sometimes, Enterprises. It is not clear from Mr Chan’s table whether Enterprises is said to have been a party to the communication merely because the email was directed to a person using an email address associated with Enterprises or for some other reason. Mr Chan describes the purpose of each communication as being the legal advice sought from Mr McDonald and Mr Carswell-Doherty on behalf of the “clients”. Mr Chan identifies “the clients” as Masaaki, Mariko and the members of the Masaaki Super Fund.

66. As referred to at [61]-[64] above, Mr Carswell-Doherty gave evidence concerning three of the other documents in Annexure A.

67. The respondents did not adduce any evidence identifying the circumstances in which the remaining six documents in Annexure A were created.

68. As I have already mentioned, all of the documents were created during the period from 7 November 2014 to 5 December 2014.

69. Senior counsel for the liquidator submitted that I should inspect the 28 documents for the purpose of determining the respondents’ privilege claims. Senior counsel for the respondents accepted that the Court has a discretion to inspect the documents, but submitted that the Court is under no obligation to do so and should exercise caution before doing so, referring to Rinehart v Rinehart [2016] NSWCA 58 at [29]-[32]. The respondents do not consent to the Court inspecting the documents as any such consent would be inconsistent with the claim of privilege.

Consideration and determination

70. The respondents opposed the orders sought by the liquidator insofar as they relate to the 28 documents referred to in items 1, 1A, 2-4, 6-15, 17-26, 28, 30, and 32 in Annexure A to these reasons. The sole basis of opposition was the respondents’ contention that those documents were created in the course of a retainer of Mr Carswell-Doherty and Mr McDonald to provide legal advice to Masaaki, Mariko and Enterprises (as trustee of the Masaaki Super Fund) and for the dominant purpose of those clients being provided with such legal advice. It was submitted that the Company was not a party to this retainer, which was separate from the retainer of Foulsham & Geddes to act for the Company on the sale of the Alexandria and Sydney properties.

71. The respondents made no submissions in support of the notion that Shinji had a claim of privilege, which it will be recalled originated in Mr Carswell-Doherty’s 22 February 2021 letter.

72. The respondents relied on the evidence of Mr Chan, Mariko, Shinji and Mr Carswell-Doherty referred to above as establishing that the documents in respect of which privilege is claimed were created for the dominant purpose of Mr Carswell-Doherty and Mr McDonald providing legal advice to Masaaki, Mariko and Enterprises. Particular reliance was placed on the table in Mr Chan’s affidavit to which I have referred above. It was submitted that it was not relevant that the advice said to have been sought by and given to Masaki, Mariko and Enterprises might affect the Company and dealings with the proceeds of sale of the Alexandria and Sydney properties.

73. Senior counsel for the respondents relied on In the matter of Optimisation Australia Pty Ltd [2016] NSWSC 1581, in which Brereton J (as his Honour then was) held (at [22]-[24]) that legal advice was sought and obtained by the two majority shareholders of a company rather than by the company itself, notwithstanding that the advice concerned proposed action which could only be taken by the company. However, his Honour’s decision turned on the facts of that particular case, including that the correspondence contained indicia that the advice was being sought on behalf of the shareholders personally and the solicitors acted on the basis that the individuals, and not the company, were their client. The individuals paid for the advice personally. The advice sought related to a dispute that concerned the company but was in fact a dispute between the majority shareholders and the minority shareholder. Brereton J took all of those matters into account in concluding that the majority shareholders, and not the company, were the client in that case.

74. The facts of the present case are very different.

75. Mr Carswell-Doherty wrote to the liquidator’s solicitor on 22 February 2021 setting out in very clear terms that the Company was the client in relation to the legal advice relied upon as the basis for the privilege claims. Mr Carswell-Doherty’s letter characterised the legal advice as relating to the administration of the Shinji Unit Trust or the proper exercise of trust powers.

76. The 22 February 2021 letter was written for the purpose of identifying the privilege claimants and substantiating the basis of their claims as required by the order made on 17 February 2021. The letter was written at a time when Mr Carswell-Doherty had received instructions to act for the respondents in relation to the privilege claims. I infer from those matters that the letter was written after Mr Carswell-Doherty had given careful consideration to the identity of the client for whom he and Mr McDonald had been retained to provide and had provided the legal advice relied upon as the basis for the privilege claims, and to the grounds of the privilege claims made by the respondents.

77. In his affidavit sworn on 12 May 2021, Mr Carswell-Doherty did not attempt to resile from or qualify the matters stated in his 22 February 2021 letter.

78. Mr Carswell-Doherty asserted for the first time in his affidavit sworn on the morning of the hearing of the liquidator’s amended interlocutory process that the legal advice was given to the members of the Masaaki Super Fund. I decline to give that bare assertion any weight in the absence of any explanation by Mr Carswell-Doherty for seeking to resile from the position set out in detail in his 22 February 2021 letter and in the absence of any evidence of a retainer or costs agreement between Foulsham & Geddes and Masaaki, Mariko or Enterprises. As the liquidator submitted, any such retainer or agreement would not itself be the subject of privilege and could have been tendered by the respondents in support of their privilege claims if it existed: Cook v Pasminco (No. 2) (2000) 107 FCR 44; [2000] FCA 1819 at [47]-[48]; Hancock v Rinehart [2017] NSWSC 530 at [42]. Even if the retainer or costs agreement had contained material within it that was privileged, Mr Carswell-Doherty could have given evidence that he entered into a retainer with the respondents (or with Masaaki and Enterprises) in the course of which the 28 documents the subject of the privilege claim, or at least those documents generated by his firm, were created. He did not give that evidence.

79. Mr Chan’s evidence does not rise higher than establishing the identity of the clients to whom he was providing financial advice. His financial advice was directed to Masaaki and Mariko, who were divorcing, and concerned their individual financial positions. That financial advice was to be informed by the legal advice sought from Mr McDonald and Mr Carswell-Doherty. However, it does not follow that their legal advice was provided to Masaaki and Mariko, or to Enterprises, rather than to the corporate entity that owned and was in the process of selling the properties. The legal advice concerning the distribution of the proceeds of sale of the Alexandria and Sydney properties was required by the Company, which held those properties on trust for the Shinji Unit Trust. That is reflected in Mr Carswell-Doherty’s 22 February 2021 letter. It is clear from Mr Chan’s evidence that he simply did not turn his mind to the identity of the entity that required the legal advice. He did not regard the corporate and trust structure as relevant to the identity of his financial advice clients, being the individuals who were the ultimate beneficiaries of the Alexandria and Sydney properties that were being sold by the Company.

80. The fact that Mr McDonald’s costs agreement was addressed to Enterprises merely reflects what Mr Chan told him about the identity of the client in their initial telephone conversation, which in turn reflects the identify of Mr Chan’s financial advice to clients. It casts no light on who Mr McDonald identified as his client once he had a more detailed understanding of the nature of the legal advice required. Mr McDonald did not issue an invoice that might have shed more light on the matter. I regard Mr McDonald’s costs agreement as a neutral factor in my assessment of the evidence.

81. The evidence of Mariko and Shinji sheds no light on the identity of the clients by whom Mr Carswell-Doherty and Mr McDonald were retained when the documents the subject of the privilege claims were created. Mariko’s evidence is that Mr Chan said in October or November 2014 that he would put her in touch with a lawyer who could assist with “legal advice about selling assets”. By that time, the Company was already in the process of selling the assets. The legal issues (as opposed to the taxation and financial issues) concerning the distribution of the proceeds of sale were a matter for the Company as trustee of the Shinji Unit Trust, rather the unit holders of that trust. Neither Mariko’s evidence, nor the evidence of Mr Chan or Mr Carswell-Doherty, provides any support for the proposition alluded to in the respondents’ submissions that Masaaki and Mariko sought advice personally in their capacity as directors of the Company. As the liquidator submitted, Mariko’s evidence does not support the proposition that she or Masaaki appointed Mr Chan as their agents to obtain legal advice on their behalf in their capacity as members of the Masaaki Super Fund.

Conclusion and orders

82. For the reasons above, the respondents have failed to establish that the 28 documents in respect of which privilege is claimed were confidential communications of the kind referred to s 118 of the Evidence Act made for the dominant purpose of Masaaki, Mariko and Enterprises (or any of them) seeking or being provided with legal advice by Mr Carswell-Doherty and/or Mr McDonald. Having regard to the state of the respondents’ evidence referred to above, this is not a case in which it would be appropriate for the Court to exercise its discretion to examine the documents in order to determine the privilege claim.

83. There is no reason why the costs of the liquidator’s application for access to the documents should not follow the event.

84. I make the following orders:

1. Order that the plaintiff (being the applicant on the amended interlocutory process filed on 6 April 2021) have access to the documents produced by Jacob Carswell-Doherty pursuant to orders for production made on 2020 placed in a bundle marked “privileged”.

2. Order that the respondents to the amended interlocutory process filed on 6 April 2021 pay the applicant’s costs of that interlocutory process, as agreed or assessed.

**********

ANNEXURE A

Documents				Claimed
1	Email	Email Chain ending date 10/11/14 8:47AM.	From: Dylan Chan (DC) To: Jacob Carswell Doherty (JCD) Attachments: Geoffrey McDonalds (GM) Cost Agreement and Disclosure Notice	Yes
1A	Letter	10/11/14	Cost agreement/disclosure issued by GM	Yes
2	Email	Email on 08/11/14 11:43AM	From GM to DC; cc in Andrew Crawley (AC).	Yes
3	Email	08/11/14 8:44AM	From DC to GM	Yes
4	Email	07/11/14 6:53PM	From GM to DC	Yes
5	Email	7/11/14 10:02AM	From AC to GM	No
6	Email	28/11/14 9:26AM	From DC to GM, cc JCD.	Yes
7	Email	27/11/14 4:28PM	From GM to DC.	Yes
8	Email	12/11/14 11:12AM	From JCD to DC; copied in Natasha Denisenko (ND)	Yes
9	Email	12/11/14 11:08AM	From DC to JCD; copied in ND forwarding an email chain of emails below	Yes
10	Email	12/11/14 9:17AM	Part of email chain referred to at 9 above containing an email from ND to DC	Yes
11	Email	12/11/14 8:21AM	Part of email chain referred to at 9 above containing an email from TF to ND	Yes
12	Email	11/11/14 4:55PM	Part of email chain referred to at 9 above containing an email from ND to TF	Yes
13	Email	17/11/14 3:16PM	From DC to JCD and Masaaki Enterprises Pty Ltd; copied in Geoffrey McDonald.	Yes
14	Email	17/11/14 2:41PM	From DC to JCD and Masaaki Enterprises Pty Ltd; copied in GM	Yes
15	Email	17/11/14 1:30PM	From JCD to DC and Masaaki Enterprises Pty Ltd	Yes
16	Email	17/11/14 1:22PM	From Nicholas Angelos & Co (Law Firm) to JCD	No
17	Email	26/11/14 8:54PM	Email from GM to DC, JCD and Masaaki Enterprises Pty Ltd	Yes
18	Email	28/11/14 7:51 am	From DC to GM, JCD and ND; Copied in Shinji Imaeda and Masaaki Enterprises Pty Ltd.	Yes
19	Email	28/11/2014 8:07 am	From GM to DC, JCD and ND. Copied in SI and Masaaki Enterprises Pty Ltd.	Yes
20	Email	27/11/14 11:41AM	Email from DC to GM; copied in JCD	Yes
21	Email	27/11/14 9:32AM	Email from GM to DC	Yes
22	Email	28/11/14 8:57 AM	Email from DC to GM, JCD, ND. Copied in SI and Masaaki enterprises Pty Ltd	Yes
23	Email	27/11/14 12:43PM	From GM to DC. Copied in JCD	Yes
24	Email	28/11/14 10:52AM	From ND to DC and JCD. Copied in SI and Masaaki Enterprises Pty Ltd	Yes
25	File Note	3/12/14 4:22PM	From JCD regarding Fire at Burrows road Alexandria	Yes
26	File Note	5/12/14 4:23PM	From JCD regarding Fire at Burrows toad Alexandria	Yes
27	Email	12/11/14 5:27PM	From JCD to Sarah Hendry (SH)	No
28	Email	11/11/14 2:51PM	From DC to JCD	Yes
29	Email	10/11/14	From ND to DC	No
30	Memo	12/11/14	From SH to JCD regarding amendments to SUT	Yes
31	Document	28/07/95	Deed of SUT	No
32	Email	1/12/14 6:22PM	From JCD to Ark Total Wealth and GM.	Yes
33	Document	30/06/10	Financial Statements of SUT financial year ending 2010.	No
34	Document	2010	Trust Tax Return for SUT	No

Decision last updated: 09 August 2021