Kingsfield Holdings Pty Ltd v Rottnest Island Authority - [2019] WASC 134

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   KINGSFIELD HOLDINGS PTY LTD -v- ROTTNEST ISLAND AUTHORITY [2019] WASC 134
CORAM:   MASTER SANDERSON
HEARD:   18 MARCH 2019
DELIVERED          :   2 MAY 2019
FILE NO/S:   CIV 2660 of 2015
BETWEEN:   KINGSFIELD HOLDINGS PTY LTD
First Plaintiff
JEFFREY STEWART LEE
Second Plaintiff
AND
ROTTNEST ISLAND AUTHORITY
First Defendant
STATE OF WESTERN AUSTRALIA
Second Defendant
PAOLO FILLIPO AMARANTI
Third Defendant
COLIN ROWLEY BRANDIS
Fourth Defendant

Catchwords:

Practice and procedure - Application for inspection of document over which legal professional privilege claimed - Operation of 'fraud exception' - Turns on own facts

Legislation:

Nil

Result:

Application refused

Category: B

Representation:

Counsel:

First Plaintiff	:	Mr T O Coyle
Second Plaintiff	:	Mr T O Coyle
First Defendant	:	Ms P A Aloi
Second Defendant	:	Ms P A Aloi
Third Defendant	:	Ms P A Aloi
Fourth Defendant	:	Ms P A Aloi

Solicitors:

First Plaintiff	:	Cooper Legal
Second Plaintiff	:	Bayview Legal
First Defendant	:	State Solicitors Office
Second Defendant	:	State Solicitors Office
Third Defendant	:	State Solicitors Office
Fourth Defendant	:	State Solicitors Office

Case(s) referred to in decision(s):

Freeman v Health Insurance Commission (1997) 78 FCR 91
Kang v Kwan [2001] NSWSC 698
Rose Angela Caffey ATF the Caffey Family Trust v Leatt‑Hayter [2013] WASC 255

MASTER SANDERSON:

These reasons concern an application by the plaintiffs to inspect certain documents which have been subpoenaed. The subpoena was directed to the law firm Tottle Partners who were the former solicitors for the first defendant in State Administrative Tribunal (SAT) proceedings. At issue is the defendants' right to maintain a claim for privilege in respect of these documents. Before setting out the nature of the dispute between the parties it is appropriate to trace the administrative history.
The plaintiffs issued a subpoena to Tottle Partners on 20 July 2018.[1] That prompted a letter dated 4 August 2018 from the State Solicitor's Office (the defendants' current solicitors) to the Principal Registrar of this court: Relevantly the letter reads as follows:
[1] Plaintiffs' subpoena to produce documents filed 20 July 2018.
Dear Principal Registrar
CIV 2660 OF 2015 – KINGSFIELD HOLDINGS PTY LTD & ANOR V ROTTNEST ISLAND AUTHORITY & ORS
1.I refer to the subpoena to produce dated 20 July 2018 issued in these proceedings on the application of the Plaintiffs to Tottle Partners, formerly solicitors for the First Defendant, the Rottnest Island Authority. I enclose a copy for reference.
2.This Office acts for the Defendants in the current action.
3.By the Schedule of Documents contained in the subpoena, the Plaintiffs' seek production of:
All documents and records of information … created or received at any time in the course of the representation by Tottle Partners of the Rottnest Island Authority (RIA) in … State Administrative Tribunal proceedings CC 1126 of 2008 (CC 1126) and CC 1305 of 2009 (CC 1305), pertaining to or recording or referring to… [nine enumerated categories of documents]
4.In the Defendants' view most, perhaps all, of the documents sought by the subpoena, being documents created or received in the course of the representation by Tottle Partners of the First Defendant in proceedings in the State Administrative Tribunal, will be subject to legal professional privilege held by the First Defendant.
5.The First Defendant has not waived and does not waive privilege.
6.Accordingly, on the ground that any inspection, copying or removal by the Plaintiffs of any documents produced pursuant to the subpoena may infringe the First Defendant's legal professional privilege, and pursuant to Order 36B rules 8A and 8B of the Rules of the Supreme Court 1971, the First Defendant respectfully requests the Court, by order, direct:
a.that, until further order, the Plaintiffs and their representatives, including their solicitors and counsel, not be permitted to inspect, copy or remove any documents produced in compliance with the subpoena;
b.the First Defendant and its representatives, including its solicitors and counsel, be permitted to inspect and copy any documents produced in compliance with the subpoena upon their production; and
c.the First Defendant have leave, if leave is required, to apply within 21 days of its inspection of the documents, for an order permanently restraining the Plaintiffs and their representatives, including their solicitors and counsel, from inspecting, copying or removing any documents produced in compliance with the subpoena.
7.Pursuant to Order 36B rule 8B(3)(b) of the Rules of the Supreme Court 1971, a copy of this letter, once filed, will be served on the solicitors for the Plaintiff. As a courtesy, a copy will also be served on Tottle Partners, the respondent to the subpoena.
Yours faithfully
A further subpoena was issued by the plaintiffs to Tottle Partners on 3 October 2018.[2] The documents sought in that subpoena were slightly different to the documents in the earlier subpoena but nothing turns on the difference. The parties agreed there should be a special appointment to deal with the issue of whether or not the claim for privilege could be maintained. Programming orders were made and as a consequence of those orders certain affidavits were filed. I will refer to a number of those affidavits later in these reasons.
[2] Subpoena to produce documents filed 3 October 2018.
During a hearing on 31 January 2019 considering the question of inspection of the subpoenaed documents, the parties decided a relevant SAT file should be produced to the court.[3] I made an order to that effect by consent. The plaintiffs then sought leave to inspect the notes made by the mediator during the course of a mediation in the SAT proceedings. Acting Master Whitby refused that order. So what has to be determined by this application is whether or not the claim for privilege maintained by the defendants over the subpoenaed documents can stand.
[3] State Administrative Tribunal file CC1126 of 2008 (parties being Jeff Lee and Kingsfield Holdings Pty Ltd (applicants) and Rottnest Island Authority (respondent)).
By par 1 of their written submissions the plaintiffs say that in these proceedings they seek damages for misfeasance in public office against all four defendants.[4] At all relevant times the third defendant was the Chief Executive Officer of the first defendant and the fourth defendant was the first defendant's contract officer. The liability of the first and second defendants is derivative.
[4] Plaintiffs' submissions filed 10 December 2018.
The statement of claim, filed on 24 April 2017, is a long and complex document. For the purposes of this application it is not necessary to set out the plaintiffs' claims in detail. The following background facts drawn from the statement of claim are necessary to understand the nature and extent of the present application.
In 2005 the first defendant called for tenders for a 'wellness centre' in the central mall of Thomson Bay at Rottnest Island. The second plaintiff is a pharmacist and through the first plaintiff he bid for and was awarded the lease of the wellness centre. Subsequently a dispute arose between the parties as to the scope of stock which could be sold at the wellness centre. This led to proceedings in the SAT (defined in the statement of claim as 'first SAT proceedings'). That dispute was settled by a deed of compromise, settlement and release dated 31 March 2009 (defined in the statement of claim as 'Settlement Deed'). Pursuant to this deed on 1 April 2009 the SAT made orders for the application in the first SAT proceedings to be dismissed with no order as to costs.
Unhappily this did not resolve all the issues between the parties. On or around June 2009 the plaintiffs filed an application in the SAT (defined in the statement of claim as 'second SAT proceedings') for declarations and other relief in connection with a dispute between the plaintiffs and the first defendant as to the proper construction of rent review provisions of the lease. On 5 October 2009 a SAT member made orders (Production Orders) for the first defendant to produce copies of contemporaneous notes made at the meeting in the first defendant's boardroom in or around November 2006 between the second plaintiff and the third and fourth defendants. Paragraphs 90 through to 92 of the statement of claim then pleads as follows:
90.By way of purported compliance with the Production Order, on 17 October 2009 Mr Amaranti swore an affidavit (Amaranti October 2009 Affidavit) in which he deposed as follows:
a.He had no recollection of a meeting with Mr Lee and others on 8 December 2005 (paragraph 4);
b.He had no recollectionof having attended any other formal meeting with Mr Lee in connection with the proposed lease of the Wellness Centre (paragraph 5);
c.He had instructed officers of the RIA to conduct searches for documents referred to in the Production Order, but no such documents had been located (paragraphs 6 to 9).
91.Mr Amaranti deposed to those parts of his affidavit referred to in paragraphs 90(a) and (b) above in the following circumstances:
a.He did attend at the 8 December 2005 Meeting;
b.He had informed the RIA board that he had held a meeting with Mr Lee prior to 16 December 2005 as pleaded in paragraph 29 above;
c.He had previously admitted his attendance at such a meeting to Mr Lee and others at the meeting referred to in paragraph 48 above, although he had subsequently instructed the RIA's solicitors that he had not attend at such a meeting as pleaded in paragraph 51 above.
d.He had met with Mr Lee, Ms Howard and Mr Emile Nicholas, the RIA's director commercial operations, on 9 November 2005 as pleaded in paragraph 23 above.
92.By way of purported compliance with the Production Order, on Saturday 17 October 2009 Mr Brandis swore an affidavit (Brandis October 2009 Affidavit) in which he deposed as follows:
a.Mr Amaranti was introduced to Mr Lee and Ms Howard prior to the meeting, but was not present during the Meeting (paragraph 3);
b.He had no recollection of taking any notes at the Meeting (paragraph 3);
c.He attached copies of the only diary notes that were available to him on the day he swore the affidavit (paragraph 5).
By pars 2 through to 11 of their written submissions the plaintiffs set out the background to this application. I can do no better than quote these paragraphs in full:
2.On 20 July 2018, the plaintiffs issued a subpoena (First Subpoena) to Tottle Partners, seeking production of documents described in the schedule by reference to 9 categories.
3.On around 1 August 2018, two sets of documents were delivered to the court in response to the First Subpoena.
4.On 29 August 2018, the solicitors for the defendants filed an affidavit sworn by Lauren Mae Bultititude-Paul which sets out matters pertaining to the First Subpoena, which is Annexure LMB2 to the affidavit.
5.Ms Bultititude-Paul says that Tottle Partners acted for the RIA in State Adminstrative Tribunal proceedings CC 1126 of 2008 (CC 1126) from 23 July 2008 and in SAT proceedings 1305 of 2009 (CC 1305) from 2 to 30 September 2009. The claims in CC 1126 and CC 1305 were brought by Kingsfield and Mr Lee. Ms Bultititude-Paul’s affidavit sets out various matters in support of the claim for legal professional privilege in relation to the second set of documents, which are listed in annexure LMB1 to the affidavit (First List).
6.On 27 September 2018, Registrar Dixon made orders which made provision for the plaintiffs to make a request pursuant to Order 36B rule 8A for directions in relation to the inspection of privileged documents produced under the First Subpoena, ie as described in the First List.
7.On 3 October 2018, the plaintiffs issued another subpoena (Second Subpoena) to Tottle Partners, seeking production of further documents as described in the schedule to that subpoena.
8.On around 22 October 2018, Tottle Partners produced two further sets of documents to the court in response to the Second Subpoena, and provided the parties’ solicitors with a list of 63 documents (Second List) produced pursuant to the Second Subpoena, in respect of which legal professional privilege is claimed.
9.By letter dated 5 November 2018 to the principal registrar, the plaintiffs made a request for inspection of the documents for which privilege is claimed.
10.On 5 December 2018, the defendants’ solicitors provided the plaintiffs’ solicitors with a further affidavit sworn by Ms Bultititude-Paul, which set out the basis of the claims for legal professional privilege in relation to the documents referred to in the Second List.
11.The plaintiffs seek orders permitting inspection of the documents set out in the First and Second Lists on the basis that that they comprise communications in aid of or in furtherance of fraudulent or other wrongful conduct in connection with matters alleged against Mr Amaranti and Mr Brandis in the statement of claim filed on 24 April 2017 (SOC) as constituting misfeasance in public office, so as to displace the claims of legal professional privilege.
The plaintiffs go on to say that were I to find that the documents are not covered by legal professional privilege then I should inspect the documents to determine whether they should be made available for inspection by the plaintiffs. It was the defendants' position there was no basis for a conclusion the documents were not covered by legal professional privilege and therefore inspection was not necessary. It is worthy of note however that the plaintiffs do not seek direct access to the documents. They seek access only if I were satisfied the documents should be made available for inspection.
The legal principles applicable to this application were not in dispute between the parties. Between pars 14 and 25 of their written submissions the plaintiffs go into some detail as to the history and scope of the existence of the exception to legal professional privilege based on fraud or other wrongful conduct. Reference is made to the decision of Finkelstein J in Freeman v Health Insurance Commission (1997) 78 FCR 91 [94] and by Allanson J in Rose Angela Caffey ATF the Caffey Family Trust v Leatt‑Hayter [2013] WASC 255 [28] ‑ [30]. Other than to say it is clear the cases establish the 'fraud exception' is not really an exception at all; the privilege simply does not arise. For the exception to apply a party seeking to resist a claim for legal professional privilege needs to show reasonable grounds for believing the communication between solicitor and client was one made in the furtherance of an illegal or improper purpose, including fraud. Standards for establishing reasonable grounds will depend on the circumstances though must still be sufficient to 'give colour to the charge' that is at a prima facie level.[5]
[5] Kang v Kwan [2001] NSWSC 698 [37] (Santow J).
The difficulty the plaintiffs face in this case is to establish what it is that the third and fourth defendants did which would lead to a conclusion legal professional privilege cannot be claimed over the subject documents. In pars 30 through to 38 of their written submissions the plaintiffs put their position as follows:
30.The specific conduct said to involve misfeasance in public office was the sending of similarly worded letters by Mr Brandis on 16 January 2007 (Brandis Letter) and Mr Amaranti on 25 June 2009 (Amaranti Letter) to the chief pharmacist in response to queries from the chief pharmacist as to whether there was a continuing need for the Geordie Bay General Store to be able to sell Schedule 2 poisons products, given that Mr Lee’s pharmacy at Thompson Bay commenced operations in November 2006.
31.The chief pharmacist’s queries were made in light of a policy by which a Schedule 2 licence will be cancelled if a pharmacy opens for business within a 25 kilometre radius of the business holding the Schedule 2 licence. The plaintiffs say that these letters contained inaccuracies and errors and were misleading or deceptive as to matters of fact including opinions held by Messrs Brandis and Amaranti.
32.The plaintiffs allege that these letters induced the chief pharmacist not to cancel the Geordie Bay Schedule 2 licence, despite the policy referred to in paragraph 32 above. The Geordie Bay Schedule 2 licence was eventually cancelled in mid-2011. The plaintiffs claim damages (including exemplary damages) based on the loss of the opportunity of increased trading that would have resulted from the cancellation of the Geordie Bay licence in around mid 2007 (in the case of the Brandis Letter) or late 2009 (in the case of the Amaranti Letter).
33.The plaintiffs allege that in writing their letters, Mr Brandis and Mr Amaranti acted in bad faith and with:
33.1.the intention of causing harm to the plaintiffs; alternatively
33.2.knowledge that they knew they had no power to engage in that conduct which was calculated to cause harm or injury to the plaintiffs; alternatively
33.3.with reckless indifference as to the availability of power to support the sending of the letters and as to the harm and injury that the sending of the letters was calculated to produce.
34.The plaintiffs rely on various matters by way of inferential support for the allegations about the states of mind of Mr Brandis and Mr Amaranti when sending their letters.
35.Some of these matters relate to the conduct of Mr Brandis and Mr Amaranti subsequent to a meeting held on or around 8 December 2005 (Meeting) concerning the draft lease of the Wellness Centre attended by Mr Amaranti, Mr Brandis, Mr Lee and Ms Howard.
36.The plaintiffs say during the meeting Mr Brandis took detailed notes of the discussions, and that various representations (Representations) were made to Mr Lee including as to Mr Lee being able to utilise RIA vehicles from its car pool and that Mr Lee would have exclusive rights in relation to the provision of beauty, massage and hairdressing services on the Island.
37.The plaintiffs say that:
37.1.The RIA resiled from the representation about using RIA car pool vehicles;
37.2.Mr Amaranti subsequently denied being present at the Meeting, and gave instructions to the RIA’s solicitors (Tottle Partners) to that effect when he approved the RIA’s response to the applicants’ grounds in CC 1126 (referred to in paragraph 41 below);
37.3.The Deed of Compromise Settlement and Release signed on around 31 March 2009, by which CC 1126 was compromised, contained further denials by the RIA that it made any of the Representations. The Deed is included in the non‑privileged documents produced in response to the First Subpoena;
37.4.Mr Amaranti and Mr Brandis swore false affidavits in CC 1305 about the Meeting.
38.In their defence dated 15 May 2017 the defendants deny that Mr Amaranti was present 'for the duration of the meeting', deny that Mr Amaranti made any of the Representations at the Meeting, deny that Mr Brandis made detailed notes during the Meeting, do not admit the allegations about the meeting held on 23 January 2007 (see paragraph 41 below), and deny that the Brandis and Amaranti Letters were written with any of the alleged mental states.
The defendants in their submissions emphasised the fact that in applications of this type the privilege does not arise if the communications were made in furtherance of some criminal, fraudulent or dishonest purpose.[6] The defendants say, correctly in my view, the plaintiffs have not actually asserted that there was any criminal, fraudulent or dishonest purpose pursued by the challenged communications. As there is an absence of a clearly articulated improper purpose the defendants say they have assumed two possible lines of argument by the plaintiffs – 'misfeasance' and 'denials and false affidavits'.
[6] Defendants' submissions filed 18 December 18, par 12.

The defendants submit that even if it is accepted (for the sake of the application) that sending of certain letters constituted misfeasance, and accept that misfeasance may be a fraudulent or dishonest purpose, there is no logical connection between the communications in the documents and the letters. The defendants say, and I accept, no connection is advanced by the plaintiffs in their submissions or affidavits.
As to the so‑called 'denials' and 'false affidavits' there does not appear to be anything in the evidence which suggests either. It is the case that the third defendant swore an affidavit 17 October 2009 in which he denied a meeting on 8 December 2005 took place.[7] It seems clear in fact that meeting did take place and the third defendant was present. It may be the affidavit was in error and the third defendant's recollection was faulty. But that does not lead to a conclusion of fraud or dishonesty. I can see nothing in the evidence which would suggest any of the documents over which privilege is claimed were brought into existence for some illegal or fraudulent purpose.
[7] Affidavit of Paolo Fillipo Amaranti sworn 17 October 2009 appearing as annexure 'SH9' in the affidavit of Susan Howard sworn 8 January 2014 Supreme Court of Western Australia on file CIV 1178 of 2014.
At the commencement of the hearing counsel for the plaintiffs sought leave to cross‑examine two witnesses who swore affidavits in opposition to the application. After hearing argument I refused leave to cross‑examine the witnesses. I reached that conclusion for two reasons. First, cross‑examining witnesses in interlocutory proceedings, while permissible, is extraordinary. Good reason needs to be shown. Perhaps that can be expressed by saying it is necessary for a party seeking leave to cross‑examine to establish it is in the interests of justice cross‑examination should take place. Leading on from that there must be some obvious forensic purpose in the cross‑examination. In this case the affidavits were simple and straightforward. Indeed, the affidavit sworn by Ms Lauren Mae Bultitude‑Paull is simplicity itself.[8] In fact as his submissions progressed, counsel for the plaintiffs seemed to accept no purpose would be served by cross‑examination of Ms Bultitude‑Paull. But I could see no forensic reason why cross‑examination of either witness was necessary. Accordingly, I refused the application.
[8] Affidavit of Lauren Mae Bultitude‑Paull affirmed 29 August 2018.
For these reasons I would dismiss the plaintiffs' application to inspect the documents over which legal professional privilege is claimed. The plaintiffs ought pay the costs of this application including the reserved costs.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
DG
Associate to Master Sanderson
2 MAY 2019