Mirabela Nickel Ltd (in Liquidation) (Receivers and Managers Appointed) v Mining Standards International Pty Ltd [No 2]
[2020] WASC 314
•4 SEPTEMBER 2020
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: MIRABELA NICKEL LTD (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED) -v- MINING STANDARDS INTERNATIONAL PTY LTD [No 2] [2020] WASC 314
CORAM: ALLANSON J
HEARD: 18 AUGUST 2020
DELIVERED : 4 SEPTEMBER 2020
FILE NO/S: CIV 1806 of 2019
BETWEEN: MIRABELA NICKEL LTD (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED)
First Plaintiff
MIRABELA INVESTMENTS PTY LTD (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED)
Second Plaintiff
MARTIN MADDEN, SCOTT DAVID HARRY LANGDON AND RICHARD SCOTT TUCKER as joint and several receivers and managers of MIRABELA NICKEL LTD (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED)
Third Plaintiff
MARTIN MADDEN, SCOTT DAVID HARRY LANGDON AND RICHARD SCOTT TUCKER as joint and several receivers and managers of MIRABELA INVESTMENTS PTY LTD (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED)
Fourth Plaintiff
AND
MINING STANDARDS INTERNATIONAL PTY LTD
Defendant
Catchwords:
Practice and procedure - Discovery - Legal Professional privilege - Where plaintiffs plead estoppel by convention - Whether plea waives privilege in advice relevant to plaintiffs' state of mind
Practice and procedure - Discovery - Legal professional privilege - Whether documents produced on discovery waived privilege by disclosing substance of legal advice
Legislation:
Rules of the Supreme Court 1971 (WA), O 26 r 12
Result:
Application granted in part
Category: B
Representation:
Counsel:
| First Plaintiff | : | SC Wong |
| Second Plaintiff | : | SC Wong |
| Third Plaintiff | : | SC Wong |
| Fourth Plaintiff | : | SC Wong |
| Defendant | : | LA Warnick |
Solicitors:
| First Plaintiff | : | Clayton Utz |
| Second Plaintiff | : | Clayton Utz |
| Third Plaintiff | : | Clayton Utz |
| Fourth Plaintiff | : | Clayton Utz |
| Defendant | : | Russells |
Case(s) referred to in decision(s):
Ampolex Ltd v Perpetual Trustee Co (Canberra) Ltd (1995) 37 NSWLR 405
Archer Capital 4A Pty Ltd (as trustee for Archer Capital 4A) v Sage Group Plc (No 3) [2013] FCA 1160; (2013) 306 ALR 414
Arnold v Mann [1957] HCA 64; (1957) 99 CLR 462
Blockbuster Australia Pty Ltd v Karior Pty Ltd [2009] NSWSC 1089
Commissioner of Taxation v Rio Tinto Ltd [2006] FCAFC 86; (2006) 151 FCR 341
Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd [1986] HCA 14; (1986) 160 CLR 226
Council of the New South Wales Bar Association v Archer [2008] NSWCA 164; (2008) 72 NSWLR 236
Dalleagles Pty Ltd v Australian Securities Commission (1991) 6 ACSR 498
DSE (Holdings) Pty Ltd v Intertan Inc [2003] FCA 384, (2003) 127 FCR 499
Grundt v Great Boulder Pty Gold Mines Ltd [1937] HCA 58; 59 CLR 641
Jana Pty Ltd atf Azizi Family Trust v Ezistripdemo Pty Ltd; Azizi v Sharan [2017] NSWSC 1135
Mann v Carnell [1999] HCA 66; (1999) 201 CLR 1
Osland v The Secretary to the Department of Justice [2008] HCA 37; (2008) 234 CLR 275
Ryledar Pty Ltd (t/as Volume Plus) v Euphoric Pty Ltd [2007] NSWCA 65; (2007) 69 NSWLR 603
Sanrus Pty Ltd v Monto Coal 2 Pty Ltd [2019] QSC 144
ALLANSON J:
Title
This action was commenced by writ filed 8 May 2019.
The plaintiffs claim relief, including a declaration that on 22 November 2017, alternatively 23 November 2017, they validly terminated an agreement with the defendant. The agreement is referred to in the statement of claim as the MSI Sale Agreement. In some of the email exchanges, the agreement is referred to as the ASA. I will refer to it as the MSI Sale Agreement, except when directly quoting from correspondence.
The action is set down for trial on 12 October 2020.
Discovery in the action
On 21 August 2019, Hill J ordered discovery on affidavit of 13 categories of documents, including documents referred to in the pleadings, and documents the parties intend to rely on at trial.
On 4 October 2019, the plaintiffs filed an affidavit of Richard Scott Tucker, verifying a list of documents on discovery. List 1B in Mr Tucker's affidavit set out, in table form, a list of communications for which the plaintiffs claimed legal professional privilege. The list includes documents over a date range 1 November 2017 to 4 December 2017. Almost all of the documents are described as emails between the receivers and their solicitors.
On 4 March 2020, her Honour made a further order for discovery of an additional category of documents. Mr Tucker filed a further affidavit on 11 March 2020, giving discovery of documents in that category.
Background to this application
To understand the pleadings and the issues, it is necessary to turn to some relevant clauses of the MSI Sale Agreement.[1]
[1] Set out in the affidavit of Stephen Charles Russell, sworn 7 August 2020 at 5 ff.
The MSI Sale Agreement was for the sale of specified assets.
Mirabela Nickel Limited and Mirabela Investments Pty Ltd[2] were parties to the agreement as Sellers, and Mining Standards International Pty Ltd[3] as Buyer. Other parties were the Receivers and Managers of Mirabela Nickel and Mirabela Investments,[4] and a Brazilian company, Mirabela Mineracao do Brasil, referred to in the agreement as the Company. The Company entered the agreement 'solely for the purpose of acknowledging and consenting to the transactions contemplated', and is not a party to the action.[5]
[2] The first and second plaintiffs.
[3] The defendant.
[4] The third and fourth plaintiffs.
[5] MSI Sale Agreement Recital E.
Clause 2 of the agreement set out Conditions Precedent to the transfer of the assets from the Sellers to the Buyer and the provision of the Consideration. Relevantly, by cl 2.1(f) the following condition was required to be satisfied:
execution of binding finance agreements by the Buyer for an amount equal to the Consideration and satisfaction of all conditions precedent under the finance agreement other than obtaining the Consent and Completion occurring under this agreement.
The conditions precedent could be waived by the Buyer in its absolute discretion, and only by the Buyer.[6]
[6] MSI Sale Agreement cl 2.1 and cl 2.4.
By cl 2.5(a), a party was entitled to terminate the agreement by notice if (relevantly) 'the Condition Precedent in clause 2.1(f) is not satisfied by the date which is 14 days after the date of the exchange of signed copies of this agreement'.
The date of exchange of signed copies was relevant also to cl 3(a), by which the Buyer was required to pay a deposit 'within 7 days of the exchange of signed copies of this agreement'.
Clause 7 provided that completion of the agreement was to take place 10 business days after all Conditions Precedent had been satisfied or waived.
The pleadings
The statement of claim
The plaintiffs plead that on 1 November 2017, the defendant, the Receivers, and the first and second plaintiffs executed and exchanged an asset sale agreement in respect of specified assets (MSI Sale Agreement).[7] By par 9(d), the plaintiffs plead material terms of the agreement, including:
(d)The Sellers are entitled to terminate the agreement by notice to MSI if the Finance Condition is not satisfied by the date which is 14 days after the date of the exchange of signed copies of the MSI Sale Agreement, being 15 November 2017 (clause 2.5(a)) …
[7] Statement of claim [8].
The plaintiffs allege that the defendant did not satisfy the finance condition by 15 November 2017.[8]
[8] Statement of claim [12].
The plaintiffs plead that, between 17 and 18 November 2017, the Sellers and the defendant agreed in writing to extend the date for satisfaction of the finance condition to 22 November 2017.[9] In particulars, the plaintiffs rely on text messages exchanged between Mr Tucker and Mr Milbourne on 17 and 18 November 2017.
The defence
[9] Statement of claim [14].
The defendant admits that it executed the MSI Sale Agreement on 1 November 2017, but pleads that 'the MSI Sale Agreement signed by all parties was exchanged on 10 November 2017, and was entered into on 10 November 2017'.[10] The defendant pleads that the Sellers would not have been entitled to terminate the MSI Sale Agreement under clause 2.5(a) prior to 25 November 2017, being the date which was the day following expiry of the period of 14 days after the date of exchange of signed copies.[11] The defendant admits it had not satisfied the Finance Condition by 15 November 2019 but says it was not required to do so by that date.[12]
[10] Defence [8(f)] ‑ [8(g)].
[11] Defence [9(d)].
[12] Defence [12].
In paragraph 8(h), the defendant pleads (omitting particulars):
… further and in the alternative to sub-paragraph (g) hereof,
(i)on 1 November 2017, the Receivers wrote to MSI stating that none of the Sellers, Receivers and Managers and the Company would be bound by the MSI Sale Agreement unless each of them had signed and exchanged the Agreement with MSI (the representation);
(ii)MSI relied upon the representation;
(iii)by email dated 9 November 2017, MSI wrote to the Receivers asking when the Company would sign and exchange copies of the MSI Sale Agreement;
(iv)on 9 November 2017, Mr Tucker[13] informed Mr Milbourne[14] that the Company was in the process of returning the MSI Sale Agreement to the Receivers;
(v)the Company executed the MSI Sale Agreement on or about 9 November 2017… and sent an image thereof by email to the Receivers for the purpose of exchanging it with the other parties to the MSI Sale Agreement;
(vi)on 9 November 2017, Mr Tucker wrote an email to Mr Milbourne stating, 'We will need to agree on the deadline for when funding needs to be agreed before we provide the copy with Milson's page';
(vii)at about 2.01 pm on 10 November 2017, the Receivers sent to MSI by way of exchange an attached image of the MSI Sale Agreement, made up with counterparts of the pages which had been executed by all parties;
(viii)by reason of the aforesaid the Plaintiffs are precluded from contending:
(a)that the MSI Sale Agreement was signed and exchanged prior to 10 November 2017;
(b)the MSI Sale Agreement was entered into prior to 10 November 2017
[13] One of the Receivers and Managers to the first and second plaintiffs.
[14] Mr Walter Robertson Milbourne, the sole director of the defendant.
In par 13(c) ‑ (e), the defendant pleads that a default notice issued by the receivers on 15 November 2017 'contained and was predicated upon material falsehoods', including that the parties had exchanged signed copies of the MSI Sale Agreement on 1 November 2017 and therefore the Finance Condition was required to be satisfied by 15 November 2017. The defendant pleads that the plaintiffs knew or must have known of the alleged falsehoods. The defendant pleads that the notice was of no force and effect save that by sending it the Sellers had repudiated the MSI Sale Agreement.
The defendant further pleads, in par 14(g) that the alleged agreement on 17 and 18 November 2017 to extend the date for satisfaction of the Finance Condition was not valid because it was procured by the plaintiffs asserting a right to terminate (and therefore manufacturing a dispute) which was false and which the plaintiffs knew or must have known to be false.
By an amendment to the defence dated 23 July 2020, the defendant pleads in par 13(d) that the Sellers and Receivers had sought and obtained legal advice before giving the default notice, and pleads the effect of that advice.
The Reply
In their Reply, par 3(f), the plaintiffs plead that, on a proper construction of cl 2.5(a) of the MSI Sale Agreement, the 14 day period commenced on the date on which signed copies were exchanged by the Sellers and the Buyer, which occurred on 1 November 2017.
In par 3(g), the plaintiffs admit that the Receivers sent an attached image of the MSI Sale Agreement executed by the parties on 10 November 2017 but plead that was done in response to a request by the defendant on 9 November 2017 and not by way of exchange for the purposes of cl 2.5(a). In particulars, the plaintiffs refer to a sequence of emails on 9 November 2017 between Mr Milbourne to Mr Tucker.
By par 3(h), the plaintiffs plead:
… if, which is denied, on a proper construction of clause 2.5(a) of the MSI Sale Agreement the 14-day period commenced on the date the 'Parties' exchanged signed counterparts, from 1 November 2017, the Plaintiffs and the Defendant assumed and conducted their affairs, to the knowledge of the other on the basis that the MSI Sale Agreement was executed on 1 November 2017 and, for the purposes of clause 2.5(a), the date of the exchange of signed copies of the MSI Sale Agreement was 1 November 2017 (Effectiveness Assumption); (emphasis added)
In particulars to par 3(h), the plaintiffs plead matters said to have been done by the Receivers and the defendant between 1 November and 7 November 2017.
The plaintiffs plead that they will suffer detriment if the defendant can resile from the Effectiveness Assumption: the lost opportunity between 1 and 9 November 2017 to negotiate and clarify the position with respect to the commencement of the 14 day period for the purposes of cl 2.5(a); and their change of position by paying $25,000 to Mining Services on 1 November 2017 'on the basis that the MSI Sales Agreement had been executed'.[15] The plea confining the lost opportunity to the period between 1 and 9 November 2017 was only amended on 7 August 2020, the date of filing of the chamber summons but following conferral on the defendant's application.
[15] Reply [3(h)].
ln par 4(e), the plaintiffs plead :
… that MBN, MBI and the Receivers acted on the basis that, on the proper construction of clause 2.5(a) of the MSI Sale Agreement, the 14‑day period commenced on the date on which signed copies of the MSI Sale Agreement were exchanged by the Sellers (in effect, MBN, MBI and the Receivers) and the Buyer (MSI), which occurred on 1 November 2017.
The defendant's chamber summons
By chamber summons filed 7 August 2020, the defendant applied for orders that the plaintiffs:
(a)produce for the defendant's inspection and provide to it copies of such of the documents in Part 1B of their affidavit of documents filed on 4 October 2019 as are communications relating to the Effectiveness Assumption alleged in subparagraph 3(h) of the Second Further Amended Reply filed on 21 February 2020; and
(b)produce for the defendant's inspection and provide to it a copy of the 'draft deed CU provided' referred to in the email from Mr Avijit Dey to Mr Richard Tucker dated 9 November 2017 at 7.41pm (MBN.001.001.5353_0001) and any email or other communication under cover of which the draft deed was sent by Clayton Utz to KordaMentha; and
(c)give discovery on affidavit of any other documents not yet discovered pursuant to orders 1(a) and (j) of the orders made on 21 August 2019, being communications between the plaintiffs and their legal advisors relating to the alleged Effectiveness Assumption.
Although the chamber summons refers to the second further amended reply filed on 21 February 2020, the 'Effectiveness Assumption' was pleaded in the reply of 7 August 2019.
At the hearing of the summons, par (c) was not pursued.
The evidence
The defendant relied on two affidavits of Stephen Charles Russell, solicitor, sworn 7 August 2020 and 12 August 2020.
In his earlier affidavit, Mr Russell attaches copies of the following documents:
(a)an email from Mr Ben Carruthers (of KordaMentha) to Mr Milbourne dated 1 November 2017 (the document pleaded in par 8(h)(i) of the Defence);
(b)a copy of the MSI Sale Agreement, omitting schedules;
(c)an email chain between Mr Carruthers and Mr Tucker dated 7 November 2017, discovered by the plaintiffs;
(d)an email chain between Mr Avijit Dey, Mr Tucker and Mr Carruthers dated 9 November 2017, discovered by the plaintiffs;
(e)an email chain between Mr Tucker and Mr Carruthers dated 10 November 2017, discovered by the plaintiff; and
(f)a document pleaded in par 14A of the further amended statement of claim as a 'Recording Deed'.
The email chain between Mr Carruthers and Mr Tucker, dated 7 November 2017, refers to the Conditions Precedent. In the second email in the series, Mr Carruthers wrote that he had spoken to CU (it is common ground that the reference is to the firm Clayton Utz). The balance of the email is redacted, as are the next two emails in the chain. In the final two emails, Mr Tucker wrote, 'Let's get advice that we know our rights'. Mr Carruthers replied, 'no worries, CU will send through advice in the next couple of days'.
In the first of the emails of 9 November 2017, Mr Dey provided a proposed email, addressed to Mr Milbourne, for Mr Carruthers to review. The proposed email to Mr Milbourne related to a draft deed of an agreement by which the parties would acknowledge that the MSI Sale Agreement was signed and exchanged on 1 November 2017. The last email in the chain is wholly redacted, including the identity of the sender, except for the address at the bottom which is that of KordaMentha.
The last series of emails is, on its face, directed to the payment of the deposit by the defendant. No part of this email exchange has been redacted. It includes a query whether the deposit was 'payable on execution or also exchange', with the response, 'deposit was payable within 7 days of exchange'.
The last of the documents attached to Mr Russell's first affidavit is a draft deed which provided for the plaintiffs and the defendant to agree that either party was entitled to terminate the MSI Sale Agreement by notice to the other parties if, relevantly, the Condition Precedent in cl 2.1(f) was not satisfied by 22 November 2017. The draft deed would expressly take effective as if cl 2.5(a) of the MSI Sale Agreement was amended to substitute 22 November 2017 for the words 'the date which is 14 days after the date of the exchange of signed copies of this agreement'.
In his second affidavit, Mr Russell attaches an email exchange between Mr Tucker and Mr Milbourne between 9 November 2017 and 10 November 2017, and an exchange between Mr Milbourne and Mr Carruthers dated 10 November 2017.
The exchange between Mr Tucker and Mr Milbourne apparently stemmed from Mr Milbourne requesting a fully executed transaction document for provision to the defendant's funder 'as this might impact funding documentation delivery timeframes'. Mr Tucker responded:
We will need to agree on the deadline for when funding needs to be agreed before we provide the copy with [the Company's] signature.
We have acted in nothing but good faith throughout this process and have a strong view the deadline is 15 November. All of your comments and actions to date have accepted this to be the case.
Mr Tucker alleged that the defendant was looking to extend the timeline through 'shifty behaviour'.
In the last email of the series, Mr Tucker contended that the defendant was 'trying to argue that there is a binding agreement but the clock has not started on the 14 days'.
On 10 November 2017, Mr Carruthers forwarded a copy of the 'fully executed ASA following the exchange of the ASA on 1 November 2017'. Mr Carruthers sought to 'confirm' key upcoming dates, including 10 November and 15 November as the dates for payment of the deposit, and the date for unconditional finance. Mr Milbourne responded, 'I recognise there appears to be a different interpretation of the contract in your email than I believe exists in the document itself but I see no need to enter into debate on that point at the moment'.
The plaintiff relied on one affidavit, of Grant Corey Whiteley, partner at KordaMentha, dated 17 August 2020, regarding the inadvertent failure to discover an attachment to one of the emails of 9 November 2017, referred to in Mr Russell's first affidavit. Privilege is claimed for the attachment.
Principles
The decision by the defendant not to press for paragraph (c) of the summons confined the issues for determination. The defendant accepted that if the plaintiffs communicated with Clayton Utz for the dominant purpose of obtaining legal advice as to the date on which the time stipulated in cl 2.5(a) began, then the emails and other documents constituting those communications would have been the subject of legal professional privilege.[16] The issue is whether that privilege has been waived.
[16] Defendant's written submissions [22].
The parties generally agreed that the principles to be applied in considering whether privilege has been waived in a communication that would otherwise be subject to legal professional privilege are those stated by the High Court in Mann v Carnell,[17] and discussed by Allsop J in DSE (Holdings) Pty Ltd v Intertan Inc.[18]
[17] Mann v Carnell [1999] HCA 66; (1999) 201 CLR 1.
[18] DSE (Holdings) Pty Ltd v Intertan Inc [2003] FCA 384, (2003) 127 FCR 499.
Waiver arises by reason of the inconsistency which the court perceives between the conduct of the party claiming privilege and the maintenance of the confidentiality that the privilege is meant to protect.[19] A finding that privilege has been waived
… reflects a judgment that the conduct of the party entitled to the privilege is inconsistent with the maintenance of the confidentiality which the privilege is intended to protect. Such a judgment is to be made in the context and circumstances of the case, and in the light of any considerations of fairness arising from that context or those circumstances. [20]
[19] Mann v Carnell [29].
[20] Osland v The Secretary to the Department of Justice [2008] HCA 37; (2008) 234 CLR 275 [45].
A party entitled to privilege will be held to have waived it where it makes an assertion, express or implied, or brings a case which is about the contents of the confidential communication or which necessarily lays it open to scrutiny.[21] In such a case the party by its conduct has created an inconsistency between its acts and the maintenance of the confidence, informed by the 'forensic unfairness' of allowing that claim to proceed without disclosing the communication.
[21] Commissioner of Taxation vRio Tinto Ltd [2006] FCAFC 86; (2006) 151 FCR 341 [54], [61]; DSE (Holdings) Pty Ltd v Intertan Inc [58].
Waiver may be found where the privilege holder has put either the contents of the communication or the character of the communication in issue by pursuing its own claim or by putting the other party in a situation where it must reasonably do so by way of defence.
It is not sufficient that the making of, or contents of, the privileged communication have become an issue in the proceedings, or that the privileged communications are relevant, or could, as a reasonable possibility, be of relevance and assistance to the other party. That does not give rise to the necessary inconsistency or the unfairness of the type in question.[22]
[22] Council of the New South Wales Bar Association v Archer [2008] NSWCA 164; (2008) 72 NSWLR 236 [47] - [48].
Consideration
To the extent it remains a live issue, with the abandonment of par (c) of the summons, the defendant submitted that there may well be a sub‑category of documents constituting communications between the plaintiffs and their solicitors that were not brought into existence for the purpose of giving or receiving legal advice and are not privileged. The defendant called on the plaintiffs to produce all relevant communications to the court to permit the court to inspect them and decide which of them have never been privileged.
Mr Tucker's affidavit of discovery, sworn 4 October 2019, sets out the documents for which privilege is claimed in Part 1B of the list of documents, and contains a statement of the grounds on which privilege is claimed either for whole documents or documents which have been partially redacted.
By O 26 r 12 of the Rules of the Supreme Court 1971 (WA), on an application for production for inspection or production to the court, the party requiring production or discovery of a document for which privilege has been claimed may traverse the claims to privilege by adducing evidence either that the claim to privilege is unfounded or mistaken, but in the absence of any evidence to that effect the claim to privilege shall be sustained. There is nothing before the court to traverse the claim of privilege in the affidavit of Mr Tucker, simply speculation that some unspecified documents may not properly be within the claim.
I should determine this application on the issue of whether privilege has been waived for documents which otherwise would be privileged. With one exception, discussed below, I will not require production of documents to the court.
The defendant submitted that the privilege which would otherwise attach to communications between the plaintiffs and their solicitors has been lost in two ways. First, by pleading the Effectiveness Assumption, the plaintiffs waived privilege in legal advice on which their state of mind was based. Second, the plaintiffs waived privilege by producing for inspection and providing copies to the defendant of communications exhibited to Mr Russell's first affidavit, that is, the emails between 1 November 2017 and 10 November 2017.
The Effectiveness Assumption
The defendant submitted that the documents it seeks are relevant because they potentially undermine the plaintiffs' case that it assumed that the contracts had been exchanged before 10 November 2017. It is not suggested that the relevance of a document, otherwise privileged, is a sufficient basis to order its production.
The defendant submitted that by pleading the Effectiveness Assumption in par 3(h) of the reply, the plaintiffs put in issue their state of mind, and acted inconsistently with the maintenance of confidentiality in legal advice likely to have contributed to that state of mind, in a manner which causes unfairness to the defendant. [23] Counsel for the defendant submitted that the plea advanced by the plaintiffs was duplicitous.
[23] Ampolex Ltd v Perpetual Trustee Co (Canberra) Ltd (1995) 37 NSWLR 405.
The plaintiffs submitted that, following Mann v Carnell, the correct test is not whether the plaintiffs put in issue their state of mind, being a state of mind to which their legal advice is likely to have contributed. The correct test requires the court to consider whether there is inconsistency between the client's conduct and the confidentiality of the communication.
I accept the plaintiffs' submission. The question is not whether the plaintiffs put their state of mind in issue but whether they have directly or indirectly put the contents of the otherwise privileged communications in issue. With respect, I agree with Wigney J in ArcherCapital 4A Pty Ltd (as trustee for Archer Capital 4A) v Sage Group Plc (No 3) that, 'each matter will turn on its own facts and not much is to be gained by reference to other implied waiver cases unless they arise out of similar facts … generalisations about types of cases, including cases where a party puts its state of mind in issue, should not distract from the primary question'.[24] Accordingly, it is necessary to analyse the content of the plea and to determine whether it has created the necessary inconsistency with the maintenance of confidentiality in the advice.
[24] Archer Capital 4A Pty Ltd (as trustee for Archer Capital 4A) v Sage Group Plc (No 3) [2013] FCA 1160; (2013) 306 ALR 414 [15].
Estoppel by convention is founded on the conduct of relations between the parties on the basis of an agreed or assumed state of facts, which both will be estopped from denying.[25] It is an estoppel based on the conduct of the relations between the parties, not a belief as to the existence of particular rights. The assumption as to the conventional basis of their relationship may depart from the rights and obligation of the parties under the agreement, properly construed. Further, the parties 'may adopt as the conventional basis of a transaction between them an assumption which they know to be contrary to the actual state of affairs.'[26]
[25] Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd [1986] HCA 14; (1986) 160 CLR 226, 244.
[26] Ryledar Pty Ltd (t/as Volume Plus) v Euphoric Pty Ltd [2007] NSWCA 65; (2007) 69 NSWLR 603 [194].
For example, as the plaintiffs submitted, in Grundt v Great Boulder Pty Gold Mines Ltd Dixon J said: 'A tenant may know that his landlord's title is defective, but by accepting the tenancy he adopts an assumption which precludes him from relying on the defect'.[27]
[27] Grundt v Great Boulder Pty Gold Mines Ltd [1937] HCA 58; 59 CLR 641, 676. See also Arnold v Mann [1957] HCA 64; (1957) 99 CLR 462, 474, where Dixon J said that a conventional estoppel may require the parties treat a notice terminating a tenancy 'as if it had never been'.
In determining whether there is a mutual assumption, the court has regard to the parties' objective conduct, how they have conducted themselves towards each other, as opposed to the parties' subjective state of mind as to their rights under the agreement.[28] For example, in Sanrus Pty Ltd v Monto Coal 2 Pty Ltd, Flanagan J considered whether a plea of conventional estoppel resulted in waiver of privilege. The plea, when analysed, was held to raise issues concerning whether the parties had engaged in a course of dealing which would prevent the plaintiffs from insisting upon the 'strict literal terms' of the agreement between them, not their state of mind as to the scope of the contractual rights and obligations under the agreement.[29]
[28] Blockbuster Australia Pty Ltd v Karior Pty Ltd [2009] NSWSC 1089 at [87] ‑ [88]; Jana Pty Ltd atf Azizi Family Trust v Ezistripdemo Pty Ltd; Azizi v Sharan[2017] NSWSC 1135 [90].
[29] Sanrus Pty Ltd v Monto Coal 2 Pty Ltd [2019] QSC 144.
That is how the plaintiffs have pleaded the estoppel: the plea of the Effectiveness Assumption is based upon the conduct specified in the particulars. It does not make any assertion as to the plaintiffs' knowledge or belief as to the proper construction of cl 2.5(a) of the MSI Sale Agreement, so as to put the content of the plaintiffs' legal advice about the construction of the agreement in issue, or in a way that is inconsistent with the maintenance of confidentiality in privileged legal advice.
The waiver by disclosure of emails
The defendant submitted that these emails disclose the substance of instructions given by the plaintiffs to their solicitors. In particular, the defendant submitted that emails of 9 and 10 November 2017 apparently disclose the substance of instruction to the plaintiffs' solicitors, and advice that had been given to them, to the effect that the proposition that the time had commenced to run on 1 November 2017 was either wrong or doubtful, and that it was therefore either necessary or desirable for the plaintiffs to ask the defendant to execute a deed to change the position.
Accepting that a party may waive privilege by voluntarily disclosing the substance of a privileged communication - either instructions given to its solicitors or advice it has received ‑ I accept the submission of the plaintiffs that the emails referred to do not make such disclosure. The emails reveal that the plaintiffs had requested advice on, or by, 7 November 2017. They do not purport to state the substance of any advice received. The emails have fuelled speculation by the defendant about the content of any advice received, and whether it might be relevant to the pleaded claims. That, in my judgment, is not sufficient.
Further, there is no question here of the plaintiffs seeking to rely on a partial disclosure in a way that is inconsistent with maintaining confidentiality in the advice they received.
The draft deed
In par (b) of the chamber summons, the defendant seeks inspection of the 'draft deed CU provided' referred to in the email from Mr Avijit Dey to Mr Richard Tucker dated 9 November 2017 and any email or other communication under cover of which the draft deed was sent by Clayton Utz to KordaMentha. In its written submission, the defendant characterised the 'draft deed' as a transaction document for which privilege lies. As I understood the defendant's oral submissions, it argued for inspection of the 'draft deed' by reference to whether privilege has been waived, not whether the document was privileged.
In my opinion, that is the correct approach. There is a difference between a transaction document and a draft. Disclosure of a draft document, including a draft of a transaction document, may reveal or tend to reveal the content of the privileged communications which led to the preparation of that draft.[30] The privilege attaches to those communications, and includes the draft document because it may reveal those communications.
[30] Dalleagles Pty Ltd v Australian Securities Commission (1991) 6 ACSR 498, 506.
The plaintiffs have discovered an email of 9 November 2017, in which Mr Dey forwarded the 'draft deed' to Mr Tucker together with a proposed email to send to Mr Milbourne. The proposed email included the statement:
Please see attached a draft deed that we propose each of the parties to the ASA enters into to acknowledge that the ASA was signed and exchanged on 1 November 2017 as was the clear intention of the parties at the time.
An earlier draft of the proposed email (also discovered) stated:
Please see the attached (binding agreement) we propose to enter into with MSI in light of the delay in MMB executing the ASA, in which the parties irrevocably acknowledge the ASA was signed and exchanged on 1 November 2017 and which extends the deadline for receipt of the deposit to [Wednesday 15 November 2017].
The defendant submitted that the email (and the earlier draft) reveals the content of the 'draft deed': 'viz, when executed, the deed would have constituted an agreement that the date of exchange under cl 2.5(a) of the MSI Sale Agreement was 1 November 2017'.[31]
[31] Defendant's written submissions [18].
The plaintiffs submitted that the email does not reproduce the content of the 'draft deed', but only discloses its existence. They also submitted, however, that the deed 'became necessary because, on 9 November 2017, MSI departed from the Effectiveness Assumption, which arose from an earlier course of conduct …'[32]
[32] Plaintiffs' written submissions [54].
Were the plaintiffs to rely on the email exchange for the purpose of the submission in the above paragraph ‑ to argue that the 'draft deed' 'became necessary' because of the defendant's conduct ‑ such use would be plainly inconsistent with maintaining confidentiality in the draft deed. Even without reliance for that purpose, the email sufficiently discloses the substance of the 'draft deed' in a manner that is inconsistent with maintaining the confidentiality which privilege would otherwise protect.
The plaintiffs have, in my judgment, waived privilege in the draft deed and it should be provided for inspection.
The defendant's chamber summons also seeks inspection of 'any email or other communication under cover of which the draft deed was sent by Clayton Utz to KordaMentha'. The waiver by disclosure would extend to those communications to the extent that they relate to the content of the draft. Waiver would not extend to advice, or the disclosure of instructions, more generally.
To the extent it is necessary to resolve whether waiver extends to any email or other communication, as claimed by the defendant, the court should inspect the relevant documents.
Conclusion
I would, accordingly, allow the defendant's application with regard to par (b) of the chamber summons, at least as regards the draft deed and subject to inspection of further documents.
The application will otherwise be dismissed.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
CG
Associate to the Honourable Justice Allanson
4 SEPTEMBER 2020
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: MIRABELA NICKEL LTD (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED) -v- MINING STANDARDS INTERNATIONAL PTY LTD [No 2] [2020] WASC 314 (S)
CORAM: ALLANSON J
HEARD: ON THE PAPERS
DELIVERED : 11 SEPTEMBER 2020
FILE NO/S: CIV 1806 of 2019
BETWEEN: MIRABELA NICKEL LTD (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED)
First Plaintiff
MIRABELA INVESTMENTS PTY LTD (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED)
Second Plaintiff
MARTIN MADDEN, SCOTT DAVID HARRY LANGDON AND RICHARD SCOTT TUCKER as joint and several receivers and managers of MIRABELA NICKEL LTD (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED)
Third Plaintiff
MARTIN MADDEN, SCOTT DAVID HARRY LANGDON AND RICHARD SCOTT TUCKER as joint and several receivers and managers of MIRABELA INVESTMENTS PTY LTD (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED)
Fourth Plaintiff
AND
MINING STANDARDS INTERNATIONAL PTY LTD
Defendant
Catchwords:
Evidence - Legal professional privilege - Inspection of document for which privilege claimed
Legislation:
Nil
Result:
No further orders
Category: B
Representation:
Counsel:
| First Plaintiff | : | No appearance |
| Second Plaintiff | : | No appearance |
| Third Plaintiff | : | No appearance |
| Fourth Plaintiff | : | No appearance |
| Defendant | : | No appearance |
Solicitors:
| First Plaintiff | : | Clayton Utz |
| Second Plaintiff | : | Clayton Utz |
| Third Plaintiff | : | Clayton Utz |
| Fourth Plaintiff | : | Clayton Utz |
| Defendant | : | Russells |
Case(s) referred to in decision(s):
Nil
ALLANSON J:
In reasons published 4 September 2020, I ordered the plaintiffs to produce for the defendant's inspection and provide to it a copy of the 'draft deed CU provided' referred to in the email from Mr Avijit Dey to Mr Richard Tucker dated 9 November 2017 at 7.41 pm (MBN.001.001.5353_0001).
I further ordered the plaintiffs to produce to the court for inspection any email or other communication under cover of which the draft deed was sent by Clayton Utz to KordaMentha. The purpose of the inspection was to determine whether any covering communication was privileged and, if so, whether that privilege had been waived by the conduct of the plaintiffs.
I have now been provided with a copy of the draft deed and an email from the plaintiffs' solicitors, dated 9 November 2017 ‑ the covering communication. The email has previously been discovered and privilege claimed.
Having inspected the document I find that the plaintiffs have not waived privilege by reason of any inconsistency between their conduct and the maintenance of the confidentiality.
There will be no further order.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
CG
Associate to the Honourable Justice Allanson
11 SEPTEMBER 2020
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