Laharum Bulk Handling Company Pty Ltd v National Australia Bank

[2018] SASC 3

Supreme Court of South Australia

(Appeal from a Master)

LAHARUM BULK HANDLING COMPANY PTY LTD & ORS v NATIONAL AUSTRALIA BANK

[2018] SASC 3

Judgment of The Honourable Justice Parker (ex tempore)

18 January 2018

PROCEDURE - DISCOVERY AND INTERROGATORIES - DISCOVERY AND INSPECTION OF DOCUMENTS - PRODUCTION AND INSPECTION - GROUNDS FOR RESISTING PRODUCTION - LEGAL PROFESSIONAL PRIVILEGE - WHAT CONSTITUTES - PARTICULAR CASES

Appeal by the appellants against the ruling of a Master.

A Master made a ruling for non-party disclosure against the liquidators of two companies. The solicitor for the liquidators identified six documents which may be subject to a claim for legal professional privilege. The Master ruled that the documents were subject to the privilege claimed. The appellants appeal this ruling.

Held, per Parker J:

1.  The dominant purpose for the creation of the six documents was the giving of legal advice.

2.  Appeal dismissed.

Barnes v Commissioner of Taxation (2007) 242 ALR 601; DSE (Holdings) Pty Ltd v InterTAN Inc (2003) 135 FCR 151; Balabel v Air-India [1988] 1 Ch 317 ; Delleagles Pty Ltd v Australian Securities and Investment Commission (1991) 4 WAR 325, discussed.

LAHARUM BULK HANDLING COMPANY PTY LTD & ORS v NATIONAL AUSTRALIA BANK
[2018] SASC 3

1. PARKER J: (ex tempore)               This is an appeal by the plaintiffs against a ruling made by Judge Bochner, a Master of this Court, on 21 September 2017.  The background to the ruling made by the Master is that she had previously made an order on 7 July 2017 for non-party disclosure against the liquidators of two companies, those being Megafert Pty Ltd and Interfert Pty Ltd. The documents subject to that disclosure order were communications between employees and advisers of the first defendant, the National Australia Bank, and officers and advisers of the two companies, Interfert and Megafert.

2. The solicitor for the liquidators, Mr Peter Leech, identified six documents that may potentially be subject to a claim for legal professional privilege by the third parties.  Those six documents are communications between Mr Philip Farlam, a solicitor, or documents recording telephone communications between Mr Farlam in his capacity as legal adviser to the third parties and the firm of Blake Dawson.

3. In a letter dated 20 September 2017 addressed to Mr Leech, Mr Farlam has contended that the six documents are in fact subject to legal professional privilege. He has also explained in that letter the circumstances in which he came to prepare those six documents.  The documents comprise one email and five handwritten file notes prepared by Mr Farlam.  Mr Farlam contended that privilege had not been waived.

4. At the time the documents were prepared Mr Farlam and Blake Dawson were acting for the third parties in their capacities as directors and trustees and also in their personal capacity, and, at least at that time only, but not subsequently, Mr Farlam was also acting for the two companies, Megafert and Interfert.

5. Mr Leech informed Judge Bochner that the liquidators do not claim legal professional privilege. In fact, Mr Leech submitted to Judge Bochner that any privilege would have been waived in public examination before the Federal Court.  That matter was originally a ground of appeal in this current matter but it has not been pressed, and as I understand it, that particular point is abandoned.

6. Mr Farlam says in his letter that the liquidators had obtained the six documents by exercise of their powers under the Corporations Act 2001 (Cth) and at that time the third parties had maintained the claim for privilege and it is the same claim for privilege that is obviously maintained to this point.

7. Both Judge Bochner in her reasons and Mr Belperio in his earlier submissions referred to the principles expressed by the Full Federal Court in Barnes v Commissioner of Taxation where the Full Federal Court stated two principles.[1]  Firstly, when determining whether a document is privileged it is necessary to have regard to the circumstances at the time the document was created.[2] Secondly, the relevant question is whether the document was created for the dominant purpose (not as was formerly the case the sole purpose) of seeking or providing legal advice or matters incidental thereto.[3]

   [1] (2007) 242 ALR 601, [2007] FCAFC 88 at [5].

   [2] Ibid.

   [3] Ibid.

8. That statement of principle is consistent with the decision of the High Court in Esso Australia Resources Ltd v Federal Commissioner of Taxation.[4]I also note that the plaintiffs, Laharum Bulk Handling, do not seek the documents if they are in fact privileged. So effectively, they are placing the matter in the hands of the Court.

   [4] (1999) 201 CLR 49.

9. Judge Bochner was provided with a copy of Mr Farlam's letter dated 20 September 2017 and she took the matters referred to therein into account in arriving at her decision. As I have said previously, I will also take into account the explanation provided by Mr Farlam as to the circumstances in which he prepared those documents and the basis upon which he was acting.  I have taken those matters into account.  As I said before I commenced the ex tempore judgment, I have also examined the six documents.  I have had the advantage, in comparison to Judge Bochner, that I have seen unredacted versions. The versions shown to her Honour were very heavily redacted and in essence were simply telephone attendance on X or Y and the date and then Mr Farlam's initials.  There was no content to any of the documents that her Honour saw but I have had the advantage of reading and considering the documents and I act on that basis.

10. An issue that has required me to carefully scrutinise the six documents is the distinction that Mr Belperio seeks to draw between on the one hand, a lawyer giving legal advice as to what prudently and sensibly his or her client can do in the relevant legal framework and on the other hand, the giving of advice as to the commercial wisdom of entering into a particular transaction. That is the crucial issue in the present appeal.

11. I note that Allsop J in DSE (Holdings) Pty Ltd v InterTan Inc noted that:

    … it may often be impossible to disentangle the lawyer's view of the legal framework from the other reasons that all go together to make up the “advice as to what should prudently and sensibly be done in the relevant legal framework”[5]

    [5] (2003) 135 FCR 151 at [45].

12. Also, as Stone J noted in Australian Crime Commission v Stewart, this issue relates to the threshold question of whether the communication in respect of which privilege is being asserted actually involves, or is associated with, the giving or receiving of legal advice.[6]  In deciding that issue I have derived much assistance from the judgment of Taylor LJ in Balabel v Air-India where his Lordship stated (with Parker LJ and Lord Donaldson MR agreeing):

    That where information is passed by a solicitor or client to the other that was part of the continuum aimed at keeping both informed so that advice may be sought and given as required, privilege will attach.[7]

    [6] [2012] FCA 29 at [75].

    [7] [1988] 1 Ch 317 at p 330.

13. The view of Taylor LJ was adopted and applied by Young J of the Federal Court in AWB Ltd v Cole.[8]  I also note that a very similar approach was adopted by Branson J in Wenkart v Commissioner of Federal Police[9] where her Honour adopted the view expressed in Dalleagles Pty Ltd v Australian Securities Commission by Anderson J where his Honour stated:

    Professional discourse in a professional capacity with reference to transactions covered by a retainer to provide legal services will be regarded as prima facie for the purpose of giving and receiving advice.[10]

    [8] (2006) 152 FCR 382 at [86]-[91].

    [9] [1996] FCA 1871.

    [10] (1991) 4 WAR 325.

14. I adopt the approach of Taylor LJ and Anderson J in assessing what is privileged in relation to the six documents before me.

15. I found the description provided by Mr Farlam in his letter of 20 September 2017 in relation to the documents to be accurate.  I also accept, and I have no contrary evidence, his explanation of the circumstances in which those documents came to be prepared.

16. I am satisfied having regard to all of those matters and, in particular, the contents of the documents that privilege does apply.  I note that the email message dated 8 February 2010, which is completely redacted in Mr Farlam's letter that has been provided to the Court, does clearly contain legal advice. That cannot be disputed and I assume that is why Mr Farlam fully deleted or redacted the description of that document.

17. In relation to the other five documents, which all comprise file notes compiled by Mr Farlam, I am satisfied that the contents of the documents and the circumstances in which they were created is sufficient to bring them within the reasoning adopted by Taylor LJ in Balabel v Air-India and by Anderson J in Dalleagles v Australian Securities Commission.  In other words, I am satisfied that the dominant purpose for the creation of the documents was the giving of legal advice by Mr Farlam to his clients and matters incidental to the giving of that advice in the way referred to in the judgments that I have mentioned. I therefore dismiss the appeal against the ruling made by Judge Bochner on 21 September 2017.