IO Group Inc v Prestige Club Australasia Pty Ltd (No 3)

[2008] FCA 1223

FEDERAL COURT OF AUSTRALIA

IO Group Inc v Prestige Club Australasia Pty Ltd (No 3) [2008] FCA 1223

PRACTICE AND PROCEDURE – common interest privilege – common interest in defence and outcome of proceeding

Evidence Act 1995 (Cth), s 122

Ampolex Ltd v Perpetual Trustee Co (Canberra) Ltd (1995) 37 NSWLR 405 considered
Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (1998) 81 FCR 526 followed
Farrow Mortgage Services Pty Ltd (in liq) v Webb (1996) 132 FLR 466 followed
Network Ten Ltd v Capital Television Holdings Ltd (1995) 36 NSWLR 275 followed
University of Western Australia v Gray (No 12) [2007] FCA 396 followed

Heydon J D, Cross on Evidence (7^th Australian ed, 2004)

IO GROUP INC T/AS TITAN MEDIA AND ORS v PRESTIGE CLUB AUSTRALASIA PTY LTD (ACN 088 953 566) AND ORS

NSD 1940 OF 2006

FLICK J
13 AUGUST 2008
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NSW DISTRICT REGISTRY	NSD 1940 OF 2006

BETWEEN:

IO GROUP INC T/AS TITAN MEDIA
First Applicant

PW PRODUCTIONS INC T/AS ACID RAIN PRODUCTIONS
Second Applicant

THIRD DEGREE FILMS INC
Third Applicant

CHANDLER TOLUCA LAKE STUDIOS INC T/AS COLOSSAL ENTERTAINMENT
Fourth Applicant

DIGITAL SIN INC
Fifth Applicant

CONWEST RESOURCES INC T/AS FALCON STUDIOS
Sixth Applicant

NEW SENSATIONS INC
Seventh Applicant

WORLD WIDE RED LIGHT DISTRICT INC
Eighth Applicant

VIVID ENTERTAINMENT LLC
Ninth Applicant

ZERO TOLERANCE ENTERTAINMENT INC
Tenth Applicant

DIGITAL PLAYGROUND INC
Eleventh Applicant

CALVISTA AUSTRALIA PTY LTD (ACN 091 673 559)
Twelfth Applicant

GALLERY ENTERTAINMENT PTY LTD (ACN 079 213 924)
Thirteenth Applicant

GREENWHICH TECHNOLOGIES PTY LIMITED (ACN 100 519 177)
Fourteenth Applicant

AND:

PRESTIGE CLUB AUSTRALASIA PTY LTD (ACN 088 953 566)
First Respondent

TOP END MEDIA PTY LIMITED (ACN 105 182 670)
Second Respondent

KAOSSHOP PTY LIMITED (ACN 105 651 652)
Third Respondent

JORDAN KIRIAKIDIS
Fourth Respondent

ELIAS ARMENIS
Fifth Respondent

THEO ARMENIS
Sixth Respondent

JUDGE:	FLICK J
DATE OF ORDER:	13 AUGUST 2008
WHERE MADE:	SYDNEY

THE ORDERS OF THE COURT ARE:

1.The parties are to bring in Short Minutes of Orders to give effect to these reasons at 9.30am on 20 August 2008.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NSW DISTRICT REGISTRY	NSD 1940 OF 2006

BETWEEN:

IO GROUP INC T/AS TITAN MEDIA
First Applicant

PW PRODUCTIONS INC T/AS ACID RAIN PRODUCTIONS
Second Applicant

THIRD DEGREE FILMS INC
Third Applicant

CHANDLER TOLUCA LAKE STUDIOS INC T/AS COLOSSAL ENTERTAINMENT
Fourth Applicant

DIGITAL SIN INC
Fifth Applicant

CONWEST RESOURCES INC T/AS FALCON STUDIOS
Sixth Applicant

NEW SENSATIONS INC
Seventh Applicant

WORLD WIDE RED LIGHT DISTRICT INC
Eighth Applicant

VIVID ENTERTAINMENT LLC
Ninth Applicant

ZERO TOLERANCE ENTERTAINMENT INC
Tenth Applicant

DIGITAL PLAYGROUND INC
Eleventh Applicant

CALVISTA AUSTRALIA PTY LTD (ACN 091 673 559)
Twelfth Applicant

GALLERY ENTERTAINMENT PTY LTD (ACN 079 213 924)
Thirteenth Applicant

GREENWHICH TECHNOLOGIES PTY LIMITED (ACN 100 519 177)
Fourteenth Applicant

AND:

PRESTIGE CLUB AUSTRALASIA PTY LTD (ACN 088 953 566)
First Respondent

TOP END MEDIA PTY LIMITED (ACN 105 182 670)
Second Respondent

KAOSSHOP PTY LIMITED (ACN 105 651 652)
Third Respondent

JORDAN KIRIAKIDIS
Fourth Respondent

ELIAS ARMENIS
Fifth Respondent

THEO ARMENIS
Sixth Respondent

JUDGE:	FLICK J
DATE:	13 AUGUST 2008
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1. A series of Notices of Motion were heard in this matter on 11 August 2008. An ex tempore judgment was delivered in respect to two of those matters.

2. The third of the matters was reserved. This matter concerned whether or not a number of documents were privileged from production, particularly by reason of an asserted “common interest privilege”.

3. Those documents fell within the terms of a Subpoena issued to the solicitor for the Fifth Respondent and (subject to one reservation) can adequately be described as documents recording communications as between the solicitor for the Fifth Respondent and the solicitor for the First, Second and Fourth Respondents, Mr Jordan. The description of each of the documents states that the solicitors were “communicating on evidence to be used in the proceedings”. These are the documents identified as being document 2 and documents 41–55 in the Affidavit of Ms Chylek sworn on 8 August 2008.

4. The First, Second and Fourth Respondents have consented to declaratory and injunctive relief; outstanding insofar as those Respondents are concerned is an assessment as to damages (if any). Mr Jordan, it should be noted, sought to withdraw from the proceeding on 11 August 2008 and informed the Court that he was no longer instructed to appear. The Fifth Respondent denies any entitlement to relief.

5. One of the issues being pursued by the Applicants is the role in fact being played by the Fifth Respondent in this proceeding — it being alleged that it is the Fifth Respondent who is in fact controlling the proceeding. One of the contentions similarly being pursued by the Applicants in their Further Amended Statement of Claim is the contention that the Fifth Respondent is the “controller of PCA”, the First Respondent. This is put in issue by the Defence as filed by the Fifth Respondent.

6. The Applicants contend, in summary form, that there can be no common interest privilege — that commonality being denied principally by the admission of liability of the First, Second and Fourth Respondents.

7. Heydon J D, Cross on Evidence (7^th Australian ed, 2004) sets forth as follows the circumstances in which a common interest privilege may arise (at [25265]):

   Where in circumstances of a mutual interest in a particular transaction or transactions the recipient of legal advice relating to such transactions passes documents or information containing that advice to someone who shares that interest, the essential question in each case is whether the nature of their mutual interest in the context of their relationship is such that the party to whom the documents are passed receives them subject to a duty of confidence which the law will protect in the interests of justice. Two persons interested in a particular question will not have a common interest if their individual interests in the question are selfish and potentially adverse to each other. …

   See also: University of Western Australia v Gray (No 12) [2007] FCA 396 at [4] per French J. Potential differences in the respective positions of parties may lead to their not having a “common interest”: eg, Ampolex Ltd v Perpetual Trustee Co (Canberra) Ltd (1995) 37 NSWLR 405 at 410. Thus, in Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (1998) 81 FCR 526, no common interest privilege arose as between the Commission and entities providing witness statements to the Commission in circumstances where the Commission was asserting that those entities had been involved in breaches of the Trade Practices Act 1974 (Cth). “In that respect they each had interests which were either adverse, or potentially adverse, to each other. In such circumstances common interest privilege cannot arise as there is no common interest”: (1998) 81 FCR at 564 per Goldberg J.

8. In the circumstances of the present proceeding, it is considered that there is a sufficient common interest such that each of the documents is privileged. Common interest privilege is not a concept “rigidly defined” and it is a question of fact in each case whether there is a sufficient mutual interest: Network Ten Ltd v Capital Television Holdings Ltd (1995) 36 NSWLR 275 at 280.

9. Common to the position of the Respondents is their alleged factual involvement in the breaches of copyright being pursued by the Applicants. The fact that one or other of them has decided not to put in issue an entitlement of declaratory and injunctive relief does not otherwise deny a common involvement. All resist relief in the form of damages or an account of profits. All of the relevant Respondents also have in common a Defence asserting the illegality of the sales of the films the subject of the proceeding. And there has been no Cross-Claim filed as between any of the Respondents.

10. A “mere common interest in the outcome of litigation will be sufficient to enable any party with that interest to rely on” common interest privilege: Farrow Mortgage Services Pty Ltd (in liq) v Webb (1996) 132 FLR 466 at 472 per Sheller JA (Waddell A-JA agreeing). No submission was advanced that for a common interest privilege to be sustained there had to be such an identity of interests that the parties concerned could (had they chosen to do so) have used the same solicitor.

11. It is not considered that such a clear distinction can be drawn between those issues going to liability as opposed to quantum as is contended by the Applicants.

12. Although not of immediate relevance, s 122(2) and (4) of the Evidence Act 1995 (Cth), it may be noted, provides for circumstances in which “client legal privilege” may be lost by reason of the disclosure of evidence. An exception to that provision is that set forth as follows in s 122(5)(b):

    Loss of client legal privilege: consent and related matters

    …

    (5)Subsections (2) and (4) do not apply to:

    …

    (b)     a disclosure to a person with whom the client or party had, at the time of the disclosure, a common interest relating to a proceeding or an anticipated or pending proceeding in an Australian court or a foreign court.

13. Nor is there considered to be anything “unfair” in maintaining the privilege otherwise attaching to such legal advice or views as were being exchanged between the solicitors for the Respondents: Network Ten Ltd v Capital Television Holdings Ltd (1995) 36 NSWLR 275. The limited exchange of views as between the solicitors on a confidential basis could not be construed as a waiver of privilege: (1995) 36 NSWLR 275 at 286.

14. There remains outstanding those documents the subject of the reservation. These documents were described as “copies of tax invoices from Tzovaras Legal to the Fifth Respondent, including detailed narration of work undertaken by Tzovaras Legal on behalf of the Fifth Respondent in relation to the proceedings, including communications between Mr Tzovaras and Mr Armenis”. This is the document of 108 pages identified in the Affidavit of Ms Chylek as falling within paragraph [4] of the Subpoena.

15. Tzovaras Legal were lawyers formerly acting on behalf of the Fifth Respondent.

16. During the course of the hearing on 11 August 2008 it emerged that agreement had substantially been reached that these documents were to be produced, with some parts of those documents redacted. Reservation was expressed by Counsel for the Applicants as to what was in fact to be redacted. Future difficulties in respect to these documents (if any) can be resolved if and when they arise.

    ORDERS

17. The orders of the Court are:

    1.The parties are to bring in Short Minutes of Orders to give effect to these reasons at 9.30am on 20 August 2008.

I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Flick.

Associate:

Dated:        13 August 2008

Counsel for the Applicants:	J M Hennessy
Solicitor for the Applicants	Gilbert + Tobin
Solicitor for the First, Second and Fourth Respondents:	Jordan Djundja Lawyers
Counsel for the Fifth Respondent:	M Dempsey SC with C D Wood
Solicitor for the Fifth Respondent:	Simpsons Solicitors

Date of Hearing:	11 August 2008
Date of Judgment:	13 August 2008