Iraklis Roussos Nominees Pty Ltd & Anor v Romeso Pty Ltd
[2008] NTSC 9
•12 February 2008
Iraklis Roussos Nominees Pty Ltd & Anor v Romeso Pty Ltd
[2008] NTSC 09
PARTIES:IRAKLIS ROUSSOS NOMINEES PTY LTD AS TRUSTEE FOR THE IRAKLIS ROUSSOS FAMILY TRUST
AND
IRAKLIS ROUSSOS
v
ROMESO PTY LTD AS TRUSTEE FOR THE ROMESO UNIT TRUST & ORS
TITLE OF COURT: SUPREME COURT OF THE NORTHERN TERRITORY
JURISDICTION: SUPREME COURT OF THE TERRITORY EXERCISING TERRITORY JURISDICTION
FILE NO:No 57 of 2003 (20305783)
DELIVERED: 12 February 2008
HEARING DATES: 7 February 2008
JUDGMENT OF: MILDREN J
Statutes:
Corporations Act 2001 (Cth), s 236, s 1318, s 1324
Citations:
Referred to:
Attorney-General for the Northern Territory v Maurice & Ors (1986) 161 CLR 475
AWB Ltd v Cole & Anor (No 5) (2006) 234 ALR 651
Great Atlantic Insurance Co v Home Insurance Co [1981] 1 WLR 529
Jones v Dunkel (1958-1959) 101 CLR 298
Mann v Carnell (1999) 201 CLR 1
Thomas v NSW [2006] NSWSC 30
REPRESENTATION:
Counsel:
Plaintiff:G Clift
Defendant:P Barr QC
Solicitors:
Plaintiff:De Silva Hebron
Defendant:P Maher
Judgment category classification: C
Number of pages: 10
IN THE SUPREME COURT
OF THE NORTHERN TERRITORY
OF AUSTRALIA
AT DARWINIraklis Roussos Nominees Pty Ltd & Anor v Romeso Pty Ltd
[2008] NTSC 09
No. 57 of 2003 (20305783)
BETWEEN:
Iraklis Roussos Nominees Pty Ltd as Trustee for The Iraklis Roussos Family Trust
First Plaintiff
Iraklis Roussos
Second Plaintiff
AND:
Romeso Pty Ltd as Trustee for The Romeso Unit Trust & Ors
Defendants
CORAM: MILDREN J
REASONS FOR JUDGMENT
(Delivered 12 February 2008)
This is an application by summons brought by the plaintiffs for leave to access and copy all documents produced under subpoena directed to Messrs Clayton Utz. The defendants oppose the application because they claim that the documents are protected by legal professional privilege. The plaintiffs submit that privilege has been waived in relation to the documents because the documents are “associated material” in respect of a letter of advice prepared by the defendants’ former solicitors in respect of which privilege has been waived. The defendants submitted that there was no implied waiver, because there was no “deployment” of the letter of advice in respect of which privilege was admittedly waived.
Background
In about June 1992, the second defendant, Nightcliff Builders (NT) Pty Ltd (NBPL) was incorporated with the object of working as a builder in the NT and elsewhere. NBPL was at all times the trustee of the Nightcliff Builders Unit Trust (NBUT). The first plaintiff and three other trustee companies each hold 25 units in NBUT. The directors of NBPL are the second plaintiff, Iraklis Roussos (Roussos), the sixth defendant, Christos Mellios (Christos), the seventh defendant, Nicholos Mellios (Nicholos) and the eighth defendant, Haralambos Mellios (Harry). The plaintiffs claim as against the defendants (inter alia) that certain breaches of trust occurred in respect of the affairs of NBPL, including, so it is alleged, that Christos, Nicholos, Harry and their associated trustee companies arranged without the plaintiffs’ knowledge or consent for NBPL to cease trading, for the business thereafter to be conducted by the ninth defendant, Nightcliff Builders Holdings Pty Ltd (Holdings) (in which the other defendants hold all of the interests and in which the plaintiffs have no interest) and arranged for the assets of NBPL to be transferred to Holdings at an undervalue. The plaintiffs claim various equitable relief as well as damages and/or equitable compensation and relief pursuant to s 236 and s 1324 of the Corporations Act 2001 (Cth).
The defendants deny the allegations made by the plaintiffs and raise of a number of defences both of a contractual and equitable nature. One of the grounds relied upon is that set out in paragraph 32 of Second Amended Defence, viz:
“Further, at all material times the defendants and each of them acted honestly in the matters complained of and alleged against them by the plaintiffs, and in all the circumstances of the case ought fairly to be excused for any default or breach (which is not admitted) in accordance with s 1318 of the Corporations Act 2001 (Cth).”
There are also other claims in relations to a caravan park but these are not relevant to the questions I have to decide at this stage.
A privileged document is waived
By letter dated 9 November 2007, Messrs Cridlands, the solicitors then representing the defendants in these proceedings, sent to the plaintiffs’ solicitors a copy of a letter of advice prepared by Messrs Clayton Utz and addressed to “Chris and Nick Mellios, Nightcliff Builders Holdings Pty Ltd” dated 29 January 2001 (the 2001 letter). The letter, by its terms, is limited to providing legal advice “in relation to the dispute between the shareholders of Nightcliff Builders” and deals with inter alia the possible consequences of NBPL disposing of its assets and ceasing to trade, the possible consequences of carrying on future contracts in the name of Holdings, as well as other matters. It is clear that all of the matters dealt with in the 2001 letter relate to the issues concerning NBPL.
At the hearing, counsel for the plaintiffs tendered parts of two affidavits. The first affidavit was sworn by Christos and related to a meeting held in November 2007 between the solicitors and counsel for the defendants, Christos, Nicholos, Harry, the defendants’ accountant and a friend, Hugh Bradley. Christos states that he was advised that he had no choice but to “hand over” the 2001 letter because “the Clayton Utz file had already been produced”, i.e. privilege in relation to that file had been waived; and relying on this advice, Nicholos instructed his solicitors to produce the letter. The affidavit of Nicholos was to similar effect.
By letter dated 9 November 2007 Cridlands wrote to the plaintiffs’ solicitors in the following terms:
“We refer to the defendants Further Supplementary List of Documents dated 5 June 2006 by which a file maintained by Clayton Utz between August 2000 and August 2004 was discovered.
The file contains documents recording communications as between Clayton Utz and the defendants that ordinarily would be protected by legal professional privilege.
We note in this context that we have in our possession a letter of advice prepared by Clayton Utz and dated 29 January 2001 a copy is enclosed (sic). The letter is not part of the file discovered in the Further Supplementary List of Documents and bears a different Clayton Utz file reference.
It will be discovered in a supplementary list of documents to be served shortly.”
The defendants’ Supplementary List of Documents filed 5 June 2006 disclosed without any claim for privilege:
“The entire file number 73900802/A34429 of Clayton Utz Solicitors in relation to their client number 171080 Nightcliff Builders (NT) Pty Ltd comprising all correspondence and documents enumerated C.U.1 – C.U.350 for the period from August 2000 to August 2004.”
Neither party sought any reliance on this document at the hearing, and I therefore do not take it into account.
On 8 November 2007 the plaintiffs issued a subpoena to Clayton Utz requiring production of their file number A34429 and a further subpoena to Clayton Utz relating to Clayton Utz file 73901021. Both of those subpoenas have been answered by producing the documents to the Court, subject to the claims for privilege.
By letter dated 18 December 2007, Cridlands, the defendants’ then solicitors, sought to claim legal professional privilege over certain of the documents in both files.
At the hearing before me, neither party sought to call any oral evidence or to cross-examine any of the deponents. After Mr Clift closed his case, counsel for the defendants, Mr Barr QC, informed me that the defendants no longer intended to rely upon paragraph 32 of the Second Amended Defence. I note that paragraph 32 first appeared as paragraph 28 of the defendants’ Defence and Counterclaim dated 14 March 2006 and that Cridlands had written to Clayton Utz on 20 February 2006 urgently requesting the defendants’ files which “are needed to draft a Defence and Counterclaim which was due on 2 January 2006”.
The submissions of the parties
It was submitted by Mr Clift that the evidence established that the defendants had expressly waived privilege in relation to the 2001 letter. That was properly conceded by Mr Barr QC. There is no doubt that the waiver was intentional.
Mr Clift next submitted that in the circumstances the plaintiffs were entitled to access the relevant underlying material because the defendants had disclosed the advice for the purpose of providing a foundation for the defence under s 1318 of the Corporations Act 2001.
Before dealing with this contention, I note that the whole of the contents of file A34429 had been disclosed without a claim for privilege in 2006. No submission was made based on a claim that privilege in relation to that file had already been waived. I can only assume that Mr Clift deliberately chose not to argue that point for reasons best known to him. I am not to be taken as implying any criticism of Mr Clift – he may well have had good reasons for not pursuing this point. I will therefore proceed to decide the issue based solely on the contentions of the parties and on the evidence produced on Court.
The difficulty which faces Mr Clift’s argument is that the only evidence which bears directly upon the question of why privilege in relation to the 2001 letter was waived is the assertion by Christos and Nicholos that they were advised that they had no choice but to release the letter because privilege in the “Clayton Utz file” had already been waived. Notwithstanding this difficulty, Mr Clift asked me to draw the inference that the purpose of waiving the privilege was to promote the defence under s 1318 of the Corporations Act 2001. It was submitted that I should not give the same weight to the assertions of Christos and Nicholos as to the reason for waiving the privilege, because the purpose in tendering their affidavits was to prove that the waiver had been deliberate. I accept that the plaintiff could not cross-examine the defendants on their affidavits and that I would not be bound to give every part of their affidavits the same weight. However, I do not accept that I should infer that the reason for waiving privilege in relation to the 2001 letter was more probably because the defendants, or those acting for them, intended to use the advice to promote the defence based on s 1318 of the Corporations Act 2001.
I note that both Christos and Nicholos waived privilege in relation to the meeting in November 2007 when the question of waiver of privilege in relation to the 2001 letter was discussed with their counsel and instructing solicitor and at which others were present. No attempt was made by either party to call any of the other persons present at that meeting. It was not submitted that I should draw any inference one way or the other from this state of affairs based upon the rule in Jones v Dunkel (1958-1959) 101 CLR 298. That being so, I am left to speculate about why Cridlands would have deliberately chosen to waive privilege in relation to the 2001 letter. One possibility is, as Mr Clift contends, to promote the defence based on s 1318 of the Corporations Act 2001, but the other possibility is that the defendants were advised, as they say, that they had no choice. I am unable to say that one possibility is more likely than the other. The burden of proof rests on the plaintiffs and I am not able to draw the inference for which Mr Clift contends.
That being so, Mr Barr QC contended that the defendants had not “deployed” the 2001 letter. I was referred by counsel to the very helpful judgment of Young J in AWB Ltd v Cole & Anor (No 5) (2006) 234 ALR 651 and of the High Court in Attorney-General for the Northern Territory v Maurice & Ors (1986) 161 CLR 475. On the facts which I am asked to assume there has been no deliberate or intentional waiver of the documents for which privilege is now claimed and the case as developed by Mr Clift is one of imputed waiver.
In Mann v Carnell (1999) 201 CLR 1, Gleeson CJ, Gaudron, Gummow and Callinan JJ said at [29]:
“Disputes as to the implied waiver usually arise from the need to decide whether particular conduct is inconsistent with the maintenance of confidentiality which the privilege is intended to protect. When an affirmative answer is given to such a question, it is sometimes said that the waiver is “imputed by operation of law”. This means that the law recognises the inconsistency and determines its consequences, even though such consequences may not reflect the subjective intention of the party who has lost the privilege… What brings about the waiver is the inconsistency, which the courts, where necessary informed by considerations of fairness, perceive, between the conduct of the client and maintenance of confidentiality; not some overriding principle of fairness operating at large.”
In AWB v Cole (supra) at [131] and [132], Young J observed that “the criterion of fairness is readily understandable in the context of inter partes litigation”; and that “fairness presupposes a balancing of interests between parties who are in dispute. In that context, partial disclosures raise a question of fairness because there is the capacity to mislead one party to the dispute to his or her detriment”. This is a case involving an inter partes dispute. It is difficult to see how, it not being proved why an obviously privileged document was disclosed, the letter of advice could be used to mislead the plaintiffs or confer an advantage on the defendants in the circumstances of this case. This is not a case where the defendants waived privilege in relation to part only of a document (such as occurred in Great Atlantic Insurance Co v Home Insurance Co [1981] 1 WLR 529; referred to by Gibbs CJ in Maurice (supra) at CLR 482); nor is there specific reference in the 2001 letter to other documents which it is alleged have not already been discovered and upon which the author of the advice relied: c.f. AWB v Cole (supra) at [168] and [169].
I agree with Mr Clift’s submission that it is not to the point that counsel for the defendants now wish to abandon reliance upon a defence based on s 1318 of the Corporations Act and that the advice has not been tendered as yet. The advice given is still relevant to many of the issues pleaded at trial. However, in the present case I am not satisfied that the purpose of the waiver of privilege was to gain an advantage.
In cases such as the present, the question of whether or not the defendants have sought an advantage is crucial: see Thomas v NSW [2006] NSWSC 30 at [20] per McClellan CJ at CL; AWB v Cole (supra) at [178]. Further, there is no evidence that the plaintiffs have or might have been mislead to their detriment by the disclosure; so there is no unfairness or inconsistency in maintaining the privilege in relation to the files for which privilege is claimed.
Conclusion
In conclusion, the claim for privilege is maintained in relation to both files.
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