Orix Australia Corporation Limited v Crouch - [2006] FCA 1610

FEDERAL COURT OF AUSTRALIA
Orix Australia Corporation Limited v Crouch [2006] FCA 1610
PRIVILEGE – legal professional privilege – dominant purpose of the relevant document or communication – whether an unfiled affidavit and subsequent drafts are covered by the privilege – whether documents enclosed with a privileged letter are covered by the privilege.
Evidence Act 1995 (Cth) ss 119, 133
Baker v Campbell (1983) 153 CLR 52, referred to
ORIX AUSTRALIA CORPORATION LIMITED v NICHOLAS JAMES DAVID CROUCH AND GWENETH AILEEN MCCORMICK
NSD 1863 OF 2005
TAMBERLIN J
24 NOVEMBER 2006
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NSD 1863 OF 2005

BETWEEN:

ORIX AUSTRALIA CORPORATION LIMITED
Applicant

AND:

NICHOLAS JAMES DAVID CROUCH
First Respondent

GWENETH AILEEN MCCORMICK
Second Respondent

JUDGE:

TAMBERLIN J

DATE OF ORDER:

24 NOVEMBER 2006

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:
1.With the exception of Document 16, the documents be privileged from production.
2.Costs of this application in respect of privilege are to be costs in the cause.

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

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NSD 1863 OF 2005

BETWEEN:

ORIX AUSTRALIA CORPORATION LIMITED
Applicant

AND:

NICHOLAS JAMES DAVID CROUCH
First Respondent

GWENETH AILEEN MCCORMICK
Second Respondent

JUDGE:

TAMBERLIN J

DATE:

24 NOVEMBER 2006

PLACE:

SYDNEY

REASONS FOR JUDGMENT

The question for decision before me is whether certain documents on a Notice to Produce addressed to the first respondent are privileged from production. There are ten documents in respect of which the claim is made. These are described an Affidavit in Support of the privilege claim of Mr Crouch as follows:

Description of Document

Nature of Privilege Claimed

9 Affidavit of Raymond Alexander McCormick sworn 1 December 2005 prepared by Douros Lawyers regarding anticipated proceedings in which Crouch is a party against ORIX concerning a preference payment.
Section 119 Evidence Act Adducing the document would result in disclosure of the contents of a confidential document that was prepared for the dominant purpose of the client being provided with professional legal services relating to an anticipated proceedings in which the client is a party.

10 Draft affidavit of Raymond Alexander McCormick prepared by Douros Lawyers regarding anticipated proceedings in which Crouch is a party against ORIX concerning a preference payment.
Section 119 Evidence Act Adducing the evidence would result in a disclosure of the contents of a confidential document that was prepared for the dominant purpose of the client being provided with professional legal services relating to an anticipated proceedings in which the client is a party.

11 Draft affidavit of Raymond Alexander McCormick prepared by Douros Layers regarding anticipated proceedings in which Crouch is a party against ORIX concerning a preference payment.
Section 119 Evidence Act Adducing the evidence would result in a disclosure of the contents of a confidential document that was prepared for the dominant purpose of the client being provided with professional legal services relating to an anticipated proceedings in which the client is a party.

12
Draft affidavit of Raymond Alexander McCormick prepared by Douros Layers regarding anticipated proceedings in which Crouch is a party against ORIX concerning a preference payment.

Section 119 Evidence Act Adducing the evidence would result in a disclosure of the contents of a confidential document that was prepared for the dominant purpose of the client being provided with professional legal services relating to an anticipated proceedings in which the client is a party.

13 Draft affidavit of Gweneth Aileen McCormick prepared by Douros Layers regarding anticipated proceedings in which Crouch is a party against ORIX concerning a preference payment.
Section 119 Evidence Act Adducing the evidence would result in a disclosure of the contents of a confidential document that was prepared for the dominant purpose of the client being provided with professional legal services relating to an anticipated proceedings in which the client is a party.

14 Draft affidavit of Gweneth Aileen McCormick prepared by Douros Layers regarding anticipated proceedings in which Crouch is a party against ORIX concerning a preference payment.
Section 119 Evidence Act Adducing the evidence would result in a disclosure of the contents of a confidential document that was prepared for the dominant purpose of the client being provided with professional legal services relating to an anticipated proceedings in which the client is a party.

15 Draft affidavit of Darren McCormick prepared by Douros Layers regarding anticipated proceedings in which Crouch is a party against ORIX concerning a preference payment.
Section 119 Evidence Act Adducing the evidence would result in a disclosure of the contents of a confidential document that was prepared for the dominant purpose of the client being provided with professional legal services relating to an anticipate proceedings in which the client is a party.

16
Email from David Rossi of Crouch Insolvency to Crouch dated 16 February 2006 concerning anticipated proceedings against ORIX.

Section 119 Evidence Act Adducing the evidence would result in a disclosure of a confidential communication that was prepared for the dominant purpose of the client being provided with professional legal services relating to an anticipated proceedings in which the client is a party.

17 Letter from David Vorbach of Ebsworth & Ebsworth (solicitors for MKP) to Crouch dated 19 July 2005 concerning anticipated proceedings against ORIX regarding a preference payment.
Section 119 Evidence Act Adducing the evidence would result in a disclosure of a confidential communication that was prepared for the dominant purpose of the client being provided with professional legal services relating to an anticipated proceedings in which the client is a party.

19. Letter from Doug Vorbach of Ebsworth & Ebsworth (solicitors for MKP) to Crouch dated 9 May 2005 concerning anticipated proceedings against ORIX regarding a preference payment
Section 119 Evidence Act Adducing the evidence would result in a disclosure of a confidential communication that was made for the dominant purpose of the client being provided with professional legal services relating to an anticipated proceedings in which the client is a party.

I have been requested to examine the documents in accordance with s 133 of the Evidence Act 1995 (Cth) and have done so for the purpose of determining the question of privilege.
It is evident from the table that the claims are based on s 119 of the Act, which deals with disclosure of confidential documents and communications which are prepared for the dominant purpose of providing a client with professional legal services relating to legal proceedings. In determining the question of privilege, the Court is required to evaluate the dominant purpose of each relevant document or communication.
The facts and circumstances relevant to the claim for privilege under s 119 are outlined as follows in the affidavit of Mr Crouch sworn on 21 August 2006:
i.Gweneth and Raymond McCormick had an interest in a property located at Unit 79, 100 Old Burleigh Road, Broadbeach, Queensland (“the Property”). The Property was sold for an amount of $800,000 and settled on 3 December 2004.
ii.On 12 November 2004, ORIX Australia Corporation Limited (“ORIX”) placed a caveat over the Property. The caveat was purportedly lodged pursuant to a clause in ORIX’s standard terms and conditions for Commercial Hire Purchase Agreements.
iii.ORIX entered into six Commercial Hire Purchase Agreements with Queensland Construction Equipment Pty Limited (“QCE”). Raymond McCormick, as a previous director of QCE, entered into personal guarantees and indemnities with ORIX (“the Agreements”).
iv.The Agreements were introduced to ORIX by Moody Kiddell (“MPK”). MPK prepared each application and submitted them to ORIX. Upon acceptance by ORIX, MPK prepared the Agreements for execution by QCE, Gweneth McCormick and Raymond McCormick.
v.On 3 December 2004, ORIX was paid $411,624.00 on settlement of the Property.
vi.The First Respondent as Trustee has conducted investigations including the issuing of section 77A and 77C notices and compiled evidence with respect to commencing proceedings against ORIX to recover the payment received by ORIX.
vii.The First Respondent as Trustee has sought legal advice from Douros Lawyers and counsel with respect to commencing proceedings against ORIX to recover the payment received by ORIX.
viii.Following these investigations and the receipt of legal advice, the First Respondent has formed the view that the $411,624.00 recovered by ORIX is a voidable preference in the bankrupt estates as there was no caveatable interest, and therefore ORIX received money by way of an unfair preference.
The evidence in support of the privilege claim by Mr Crouch, who is the Trustee of the bankrupt estate of Gweneth McCormick, is that he conducted investigations, sought legal advice and now claims privilege on the bases set out in the above table. No other information is given as to the provenance or nature of the documents. As can be seen, the table simply gives a description of each document and a description of the nature of the privilege as claimed in a generic sense. This evidence is not very satisfactory and I have relied on my inspection of the documents as the main basis for ruling on privilege.
In relation to Document 9, which is the Affidavit of Raymond Alexander McCormick of 1 December 2005, the description given is that it was prepared by lawyers regarding anticipated proceedings concerning a preference payment in which Mr Crouch is a party.
The objection raised to this claim is that Mr McCormick has filed a number of documents in the various proceedings and this affidavit, so far as the applicant is aware, has not in fact been filed and may be no more than an affidavit deposing as to the circumstances in which he became bankrupt or the state of his assets and liabilities. Therefore, it is submitted, the affidavit is not privileged.
On its face, the document is an affidavit which appears to have been prepared for the dominant purpose of legal proceedings in order to provide an evidentiary foundation for the provision of professional legal representation and submissions.
It is not necessary, in order to enliven the entitlement to privilege, that the document is filed in court. Having regard to its date and contents, I am satisfied that to require production would result in the disclosure of a confidential communication or document prepared for the dominant purpose of providing professional services in an anticipated proceeding. This document is privileged.
Documents 10-12 are draft affidavits of Raymond Alexander McCormick and Documents 13-14 are draft affidavits of the other bankrupt, Gweneth Aileen McCormick. In my view, the reasoning in relation to Document 9 similarly applies to these draft affidavits and therefore they are privileged from production.
Legal professional privilege is confined to professional communications made on a confidential basis for legal advice and services. The concept of legal privilege is founded on the special significance that the Court attaches to the informed resolution of disputes in the court system and the application of the law to those disputes. In consequence, the communications which arise from that professional relationship are given special significance: see, for instance, Baker v Campbell (1983) 153 CLR 52 at 128 for a discussion of the rationale underlying the privilege. In essence, the purpose of legal privilege is to facilitate the giving of advice in the conduct of adversarial litigation to ensure that there is open communication between clients and legal advisers.
I consider that Documents 10-14 inclusive are privileged for the above reasons.
Document 15 is an affidavit by a son of the bankrupt whose only involvement in the bankruptcy of his parents was that he filed an initial debtor’s petition in the estate of his father, which was subsequently set aside. I consider the same principles apply to this document as to the preceding documents.
Document 16 is a print-out of an email with a number of handwritten notes on it. There is no description as to its origin or purpose, although there is a reference in the email to an anticipated Statement of Claim. However, I do not consider there is sufficient connection between this letter and the giving of legal advice or the conduct of legal proceedings such as to warrant a conclusion that the dominant purpose of this communication was to obtain professional legal services. Therefore, I do not think this document is privileged.
Document 17 is a letter from Ebsworth & Ebsworth to Mr Crouch dated 19 July 2005. The letter concerns anticipated proceedings against Orix regarding a preference payment. In my view, it comes within the protection of s 119 of the Act. It refers to legal advice and discusses evidence in prospective proceedings. Therefore, it is privileged.
Document 18 is a letter from Crouch Insolvency to Douros Lawyers enclosing a response to a s 77A notice which notes particular points of interest in respect of that response. It is agreed between the parties that this document is privileged on the basis that it is a communication between solicitor and client.
Document 19 is a letter from Ebsworth & Ebsworth to Mr Crouch dated 9 May 2005 providing files which relate to legal proceedings. The letter also comments on the significance of these documents. I do not consider that the documents which are enclosed with that letter are subject to privilege. However, in my view, the covering letter itself is covered by the privilege. The fact that a document is privileged does not mean that all annexures or enclosures with that document are within the privilege merely by reason of being associated with privileged correspondence. The position is different, of course, if those documents themselves are the subject of legal advice, if they embody legal advice, or if they can be categorised as being for the purpose of the provision of legal services. This is not the case here.
For the above reasons, I am satisfied that, with the exception of Document 16 as discussed earlier, the documents in the table are privileged and need not be made available. In addition, it is apparent from my inspection that Documents 1-8 are also privileged from production.
I do not consider it is appropriate to make any order for costs in relation to this application on the privilege question, other than that the costs of the application are to be costs in the cause.
I therefore order that Document 16 be made available and that the costs of this application abide the outcome of the proceedings.

I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin.
Associate:
Dated: 24 November 2006

Counsel for the Applicant:

Mr J K Chippindall

Solicitor for the Applicant:

M.D. Nikolaidis & Co Solicitors

Counsel for the Respondents:

Ms E. Glover

Solicitor for the Respondents:

Douros Lawyers

Date of Hearing:

22 August 2006

Date of Final Written Submissions

28 August 2006

Date of Judgment:

24 November 2006

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 1863 OF 2005

JUDGE:	TAMBERLIN J
DATE OF ORDER:	24 NOVEMBER 2006
WHERE MADE:	SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 1863 OF 2005

JUDGE:	TAMBERLIN J
DATE:	24 NOVEMBER 2006
PLACE:	SYDNEY

Description of Document	Nature of Privilege Claimed
9	Affidavit of Raymond Alexander McCormick sworn 1 December 2005 prepared by Douros Lawyers regarding anticipated proceedings in which Crouch is a party against ORIX concerning a preference payment.	Section 119 Evidence Act Adducing the document would result in disclosure of the contents of a confidential document that was prepared for the dominant purpose of the client being provided with professional legal services relating to an anticipated proceedings in which the client is a party.
10	Draft affidavit of Raymond Alexander McCormick prepared by Douros Lawyers regarding anticipated proceedings in which Crouch is a party against ORIX concerning a preference payment.	Section 119 Evidence Act Adducing the evidence would result in a disclosure of the contents of a confidential document that was prepared for the dominant purpose of the client being provided with professional legal services relating to an anticipated proceedings in which the client is a party.
11	Draft affidavit of Raymond Alexander McCormick prepared by Douros Layers regarding anticipated proceedings in which Crouch is a party against ORIX concerning a preference payment.	Section 119 Evidence Act Adducing the evidence would result in a disclosure of the contents of a confidential document that was prepared for the dominant purpose of the client being provided with professional legal services relating to an anticipated proceedings in which the client is a party.
12	Draft affidavit of Raymond Alexander McCormick prepared by Douros Layers regarding anticipated proceedings in which Crouch is a party against ORIX concerning a preference payment.	Section 119 Evidence Act Adducing the evidence would result in a disclosure of the contents of a confidential document that was prepared for the dominant purpose of the client being provided with professional legal services relating to an anticipated proceedings in which the client is a party.
13	Draft affidavit of Gweneth Aileen McCormick prepared by Douros Layers regarding anticipated proceedings in which Crouch is a party against ORIX concerning a preference payment.	Section 119 Evidence Act Adducing the evidence would result in a disclosure of the contents of a confidential document that was prepared for the dominant purpose of the client being provided with professional legal services relating to an anticipated proceedings in which the client is a party.
14	Draft affidavit of Gweneth Aileen McCormick prepared by Douros Layers regarding anticipated proceedings in which Crouch is a party against ORIX concerning a preference payment.	Section 119 Evidence Act Adducing the evidence would result in a disclosure of the contents of a confidential document that was prepared for the dominant purpose of the client being provided with professional legal services relating to an anticipated proceedings in which the client is a party.
15	Draft affidavit of Darren McCormick prepared by Douros Layers regarding anticipated proceedings in which Crouch is a party against ORIX concerning a preference payment.	Section 119 Evidence Act Adducing the evidence would result in a disclosure of the contents of a confidential document that was prepared for the dominant purpose of the client being provided with professional legal services relating to an anticipate proceedings in which the client is a party.
16	Email from David Rossi of Crouch Insolvency to Crouch dated 16 February 2006 concerning anticipated proceedings against ORIX.	Section 119 Evidence Act Adducing the evidence would result in a disclosure of a confidential communication that was prepared for the dominant purpose of the client being provided with professional legal services relating to an anticipated proceedings in which the client is a party.
17	Letter from David Vorbach of Ebsworth & Ebsworth (solicitors for MKP) to Crouch dated 19 July 2005 concerning anticipated proceedings against ORIX regarding a preference payment.	Section 119 Evidence Act Adducing the evidence would result in a disclosure of a confidential communication that was prepared for the dominant purpose of the client being provided with professional legal services relating to an anticipated proceedings in which the client is a party.
19.	Letter from Doug Vorbach of Ebsworth & Ebsworth (solicitors for MKP) to Crouch dated 9 May 2005 concerning anticipated proceedings against ORIX regarding a preference payment	Section 119 Evidence Act Adducing the evidence would result in a disclosure of a confidential communication that was made for the dominant purpose of the client being provided with professional legal services relating to an anticipated proceedings in which the client is a party.

Counsel for the Applicant:	Mr J K Chippindall
Solicitor for the Applicant:	M.D. Nikolaidis & Co Solicitors
Counsel for the Respondents:	Ms E. Glover
Solicitor for the Respondents:	Douros Lawyers
Date of Hearing:	22 August 2006
Date of Final Written Submissions	28 August 2006
Date of Judgment:	24 November 2006