Perazzoli v BankSA, a division of Westpac Banking Corporation Limited

[2017] FCAFC 204

FEDERAL COURT OF AUSTRALIA

Perazzoli v BankSA, a division of Westpac Banking Corporation Limited [2017] FCAFC 204

Appeal from:

Perazzoli v BankSA (No 2) [2016] FCA 260

File number:

SAD 194 of 2016

Judges:

PERRAM, FOSTER AND MURPHY JJ

Date of judgment:

8 December 2017

Catchwords:

PRACTICE AND PROCEDURE – Legal professional privilege – litigation privilege – the discretion to examine documents in a privilege dispute – error in the exercise of discretion by failing to examine documents to decide a privilege dispute – misapplication of the test for litigation privilege –advice privilege – misapplication of the test for advice privilege – no written retainer of lawyer  – whether relationship of trust and confidence existed sufficient to imply a lawyer/client relationship – whether a colourable case of abuse of process through misuse of the examination power in s 81 of the Bankruptcy Act– whether case advanced in cross-appeal was advanced before the court below – refusal to permit a new case to be advanced on appeal – whether a colourable case of breach of the implied undertaking – failure to make a definite charge of abuse of process

Legislation:

Australian Securities and Investments Commission Act 2001 (Cth)

Bankruptcy Act 1966 (Cth)

Corporations Act 2001 (Cth)

Trade Practices Act 1974 (Cth)

Cases cited:

Apple Computer Australia Pty Ltd v Wily [2002] NSWSC 855

Archer Capital 4A v Sage (2013) 306 ALR 414; [2013] FCA 1160

Attorney-General (NT) v Kearney (1985) 158 CLR 500

Australian Competition and Consumer Commission v Yazaki Corporation [2014] FCA 1316

AWB Ltd v Cole (2006) 152 FCR 382; [2006] FCA 571

AWB Ltd v Cole (No 5) (2006) 155 FCR 30; [2006] FCA 1234

Bailey v Department of Land and Water Conservation [2009] NSWCA 100

Barewa Oil and Mining NL (in liq) v Isim Mineral Development Pty Ltd (1981) 38 ALR 288

Barnes v Federal Commissioner of Taxation (2007) 242 ALR 601

Bond & Caboche v England (1997) 25 ACSR 394

Brookfield Multiplex Ltd v International Litigation Funding Partners Pte Ltd (No 2) (2009) 180 FCR 1

Carey v Korda (2012) 91 ACSR 572; (2012) WASCA 228

Cataldi v Commissioner for Government Transport [1970] 1 NSWLR 65

Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501

Commissioner of Taxation (1999) 201 CLR 49; [1999] HCA 67

Cormack v Heathcote (1820) 2 Brod & B 4

Coventry v Charter Pacific Corp Ltd (2005) 227 CLR 234

Cranssen v R (1936) 55 CLR 509

Descôteaux v Mierzwinski [1982] 1 SCR 860

Douglas-Brown v Furzer (1994) 11 WAR 400

Ensham Resources Pty Ltd v AIOI Insurance Company Ltd (2012) 209 FCR 1

Evans v Wainter (2005) 145 FCR 176

Federal Commissioner of Taxation  v Pratt Holdings Pty Ltd (2005) 225 ALR 266

Flanders v Beatty (1995) 16 ACSR 324

Forty Two International Pty Ltd v Barnes [2010] FCA 397

Grant v Downs (1976) 135 CLR 674

Griffin v Pantzer (2004) 137 FCR 209

Grocon Ltd v Alucraft Pty Ltd (In Liq) (1992) 10 ACLC 1

Harman v Secretary of State for Home Department [1983] 1 AC 280

Hearne v Street (2008) 235 CLR 125

Hird v Chief Executive Officer of the Australian Sports Anti-Doping Authority (2015) 227 FCR 95; [2015] FCAFC 7

House v R (1936) 55 CLR 499

In the matter of Owston Nominees No 2 Pty Ltd (in liq) (receivers and managers appointed) [2013] NSWSC 538

Kadlunga Proprietors v Electricity Trust of South Australia (1985) 39 SASR 410

Karounos v Official Trustee (1988) 19 FCR 330

Liberty Funding Pty Ltd v Phoenix Capital Ltd (2005) 218 ALR 283

Minter v Priest [1930] AC 558

Mitsubishi Electric Australia Pty Ltd v Victorian WorkCover Authority (2002) 4 VR 332; [2002] VSCA 59

MWJ v The Queen (2005) 22 ALR 436; [2005] HCA 74

Nickmar v Preservatrice Skandia Insurance (1985) 3 NSWLR 44

Players Pty Ltd v (in liq) v Clone Pty Ltd (2013) 115 SASR 547

Re BPTC Ltd (1992) 7 ACSR 291

Re Excel Finance Corporation Ltd;Worthley v England (1994) 52 FCR 69

Re Laurie Cottier Productions (1992) 9 ACSR 513

Re Moage; Sheahan v Pitterino (1998) 82 FCR 10

Re Normans Wines Ltd (2004) 88 SASR 541

Re Southern Equities Corporation Ltd (1997) 25 ACSR 394

Riddick v Thames Board Mills Ltd [1977] QB 881

Seymour v Australian Broadcasting Commission (1997) 19 NSWLR 219

Spedley Securities Ltd (in liq) v Bank of New Zealand (1991) 26 NSWLR 711

Sutherland v Pascoe (2013) 297 ALR 44; [2013] FCAFC 15

Tarea Management (North Shore) Pty Ltd v Glass (1991) 28 FCR 93

Varawa v Howard Smith & Co (1910) 10 CLR 382

Westminster Airways Limited v Kuwait Oil Co Limited (1951) 1 KB 134

Date of hearing:

22 November 2016

Registry:

South Australia

Division:

General Division

National Practice Area:

Commercial and Corporations

Sub-area:

General and Personal Insolvency

Category:

Catchwords

Number of paragraphs:

290

Counsel for the Appellants/Cross-Respondents:

Mr A Sullivan QC and Mr S Evans

Solicitor for the Appellants/Cross-Respondents:

Johnson Winter & Slattery

Counsel for the Respondents/Cross-Appellants:

Mr B Roberts SC and Mr T Besanko

Solicitor for the Respondents/Cross-Appellants:

Fisher Jeffries

ORDERS

SAD 194 of 2016

BETWEEN:

GALLIANO PERAZZOLI

First Appellant

MORENO FERLUGA

Second Appellant

WILLIAM JOHNSON

Third Appellant

AND:

BANKSA, A DIVISION OF WESTPAC BANKING CORPORATION LIMITED (ABN 33 007 457 141)

First Respondent

MICHAEL CHRISTOPHER SAMRA

Second Respondent

MICHAEL CHRISTOPHER SAMRA AS TRUSTEE OF THE MICHAEL CHRISTOPHER SAMRA FAMILY TRUST TRADING AS ADELAIDE LENDING CENTRE (ABN 69 787 153 821) (and another named in the Schedule)

Third Respondent

AND BETWEEN:

BANKSA, A DIVISION OF WESTPAC BANKING CORPORATION LIMITED (ABN 33 007 457 141)

Cross-Appellant

AND:

GALLIANO PERAZZOLI (and others named in the Schedule)

First Cross-Respondent

JUDGES:	PERRAM, FOSTER AND MURPHY JJ
DATE OF ORDER:	8 DECEMBER 2017

THE COURT ORDERS THAT:

1.The limited leave to appeal allowed by Order 2 made on 23 June 2016 be extended such that leave is granted in respect of each ground of appeal alleged in the Amended Notice of Appeal dated 28 October 2016.

2.The appeal is allowed and the cross-appeal dismissed.

3.Orders 1 and 5 of the Orders made on 7 June 2016 be set aside.

4.The First Respondent’s application to inspect the documents produced pursuant to subpoenas issued to Nicholas David Cooper, LCM Litigation Fund Pty Ltd and GMG Legal Services Pty Ltd:

(a)be allowed only in respect of the documents (or parts of documents) in respect of which the Appellants and group members made no objection to inspection, as identified by the notation “No objection” in the column headed “Basis for claim for privilege or objection to inspection” in annexure “AV-1” to the affidavit of Antonietta Vozzo sworn on 21 April 2015; and

(b)otherwise be dismissed.

Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

THE COURT:

A.        INTRODUCTION

1. This proceeding is an appeal by the appellants/cross-respondents, Galliano Perazzoli, Moreno Ferluga and William Johnson (the appellants) against the first respondent/cross-appellant, BankSA, a division of Westpac Banking Corporation Ltd (BankSA), from an interlocutory judgment of a single judge of this Court which partly refused the appellants’ claims of legal professional privilege: see Perazzoli v BankSA (No 2) [2016] FCA 260. BankSA cross-appeals in relation to a limited subset of documents in respect of which the appellants’ claims of privilege were allowed.

2. The underlying proceeding is a class action brought by the appellants under Part IVA of the Federal Court of Australia Act 1976 (Cth) (the Act) on their own behalf and on behalf of all persons who advanced monies during the claim period (whether described as a loan, a deposit or an investment) to the private lending business known as “Adelaide Lending Centre”.  For convenience we describe the persons who advanced monies to that business as “investors” although that description may not always be apposite.

3. The proceeding alleges that the private lending business was a Ponzi scheme operated by the second respondent, Michael Samra, the third respondent, Mr Samra as trustee of the Michael Christopher Samra Family Trust trading as Adelaide Lending Centre (Mr Samra’s family trust), and the fourth respondent, Adelaide Lending Centre Group Pty Ltd (ALC), a company controlled by Mr Samra and his wife (collectively, the Samra entities).  It alleges that the scheme was implemented with the knowing assistance of BankSA which is alleged to have contravened various provisions in the Trade Practices Act 1974 (Cth), the Corporations Act 2001 (Cth) and the Australian Securities and Investments Commission Act 2001 (Cth), to have breached contracts with consumers and to have been negligent.

4. The privilege dispute arises out of an interlocutory application by BankSA to summarily dismiss or permanently stay the class action. It issued subpoenas to GMG Legal Services Pty Ltd trading as Griffins Lawyers (Griffins), then the lawyers for the appellants and class members, LCM Litigation Fund Pty Ltd (LCM), the litigation funder of the class action, and Nicholas Cooper, Mr Samra’s trustee in bankruptcy (Trustee). Those parties claimed legal professional privilege over numerous documents in nine boxes of documents which were produced in response to the subpoenas.  For some of the relevant period Mr Griffin was a principal in the law firm, Griffin Hilditch, rather than of its successor, Griffins Lawyers, but for convenience we usually describe both firms as “Griffins”.

5. The primary judge refused the claims of privilege in relation to documents which came into existence and record, or are, communications before 30 June 2013 but allowed the claims in relation to communications after that date.  The central question in the appeal is whether the primary judge erred in concluding that documents created by Griffins in the preparatory stages of the class action and maintained on the firm’s file, before any of the investors had entered into a formal retainer agreement with the firm or signed a litigation funding agreement, did not attract legal professional privilege under either the “legal advice” or “litigation” heads of privilege.

6. The cross-appeal concerns whether the primary judge erred in rejecting BankSA’s contention that documents which came into existence and record, or are, communications between 1 November 2011 and 30 June 2013 do not attract privilege, because there is a “colourable case” that they came into existence in furtherance of an abuse of process for two separate but interrelated reasons:

   (a)that examinations conducted under s 81 of the Bankruptcy Act 1966 (Cth) (Bankruptcy Act) in relation to Mr Samra’s bankruptcy (bankruptcy examinations) were conducted in the name of the Trustee but were in fact used by the Trustee’s then solicitors, Griffins, for the purpose of Griffins (itself) investigating and procuring evidence for a potential claim against BankSA on behalf of the appellants and other investors, with the consequence that the power was abused; and/or

   (b)Griffins’ collateral use in the class action of documents produced by BankSA in the bankruptcy examinations, to investigate claims in its own right or potentially for investor clients, constituted a breach of the implied undertaking.

7. For the reasons we explain we have made orders to allow the appeal and dismiss the cross-appeal.

   B.         THE EVIDENCE

8. In the hearing below, the parties relied on the following affidavits together with their annexures, and the same material is before us in the appeal:

   (a)for the appellants:

   (i)an affidavit of Antoinetta Vozzo, a partner of Johnson Winter & Slattery, the solicitors for the appellants, sworn 21 April 2015, together with Annexure “AV-1”;

   (ii)two affidavits of Mr Griffin, sworn 25 February 2015, together with Annexure “GMG-1” (First Griffin Affidavit) and 21 April 2015 (Second Griffin Affidavit);

   (iii)an affidavit of Moreno Ferluga sworn 30 April 2015;

   (iv)an affidavit of Wendy Jones, a partner of Fisher Jeffries, BankSA’s solicitors, affirmed 24 December 2014, together with annexures (First Jones Affidavit); and

   (v)an affidavit of Matthew Elson, a solicitor with Fisher Jeffries, sworn 6 May 2015.

   (b)for the Trustee, three affidavits of Thomas Burke, a solicitor with Norman Waterhouse Lawyers, the Trustee’s solicitors, sworn 31 March 2015, 21 April 2015 and 1 May 2015; and

   (c)for BankSA, the affidavits relied on by the appellants and the Trustee, as well as a further affidavit of Ms Jones affirmed 23 April 2015.

9. Ms Vozzo stated that she, together with another solicitor with Johnson Winter & Slattery and Scott Evans of counsel, reviewed the documents produced in answer to the subpoenas for the purpose of articulating and particularising the claims for legal professional privilege and that those claims are set out in a schedule which is Annexure “AV-1” to her affidavit.  That schedule was then re-engrossed with consecutive document numbers by BankSA’s solicitors and annexed as Annexure “WAJ17” to the First Jones Affidavit (the Privilege Schedule).

10. The Privilege Schedule lists and identifies approximately 2,149 documents which are the subject of the appellants’ claims of privilege and states whether BankSA objects to the claim.  It provides a brief description of the nature of each document, its date, provenance and the basis of the privilege claim (the document description) sufficient to permit a meaningful testing of the claims to privilege: see Kadlunga Proprietors v Electricity Trust of South Australia (1985) 39 SASR 410 at 415-416 (White J with whom King CJ and Millhouse J agreed).

11. For the hearing at first instance, BankSA’s solicitors filed a Notice of Grounds of Opposition (Notice of Opposition).  It set out five grounds of objection to the privilege claims made by the appellants and three grounds of objection to the privilege claims made by the Trustee, with eight annexures (being schedules extracted from the Privilege Schedule) listing and identifying the documents relevant to each of the eight grounds of objection.  The primary judge dealt with the issues in the case by reference to the Notice of Opposition and the numbered annexures.

12. Before the primary judge, the appellants handed up a schedule, extracted from the Privilege Schedule, which lists 58 documents recording communications between Griffins and investors in October and November 2009 (the Example Documents Schedule) and copies of those documents in a paginated volume (the Example Documents).

13. The appellants informed the primary judge that, while the Example Documents Schedule was more readily “digestible” than the Privilege Schedule, they were “more than happy” for the primary judge to examine all the disputed documents, and they did not contend that the primary judge should confine his examination to just the Example Documents. All documents in respect of which disputed claims of privilege were made (the disputed documents) were before the primary judge and available for inspection.  

    The further material in the appeal

14. In the appeal the appellants filed a further affidavit of Ms Vozzo sworn 19 May 2016 which annexes three reorganised schedules of documents extracted from the Privilege Schedule.  The three reorganised schedules are:

    (a)the Counsel Documents Schedule - which lists approximately 96 documents relating to work undertaken by Griffins for the purpose of seeking advice from counsel;

    (b)the Client Documents Schedule - which lists numerous documents recording communications between Griffins and investors, broken down on an investor by investor basis; and

    (c)the Client Lists Schedule - which lists documents recording lists of investors made by Griffins.

15. The appellants invited us to consider these reorganised schedules, and also to inspect four of the documents listed in the Counsel Documents Schedule (documents 189, 1068, 2041 and 2080). 

16. After hearing the appeal we directed the parties to prepare two further schedules extracted from the Privilege Schedule which list and identify each document in respect of which the primary judge:

    (a)refused the claim of privilege and which is relevant in the appeal.  (This list also highlights the documents relevant in the cross-appeal); and

    (b)upheld the claim of privilege and which is relevant in the cross-appeal;

    together with copies of those documents.  To assist in determining the issues in the appeal and cross-appeal we have inspected most of these documents, which comprise seven lever arch binders.  

    BankSA’s opposition to “further” material being received

    The Client Documents Schedule, the Client Lists Schedule and the Counsel Documents Schedule

17. The three reorganised schedules are just extracts from the Privilege Schedule and list some subsets of the disputed documents, which themselves were before the primary judge.  They are not further evidence and they are easier to use than the full Privilege Schedule.  It is appropriate that we have regard to them.

    The Example Documents

18. BankSA submitted that we should not inspect the Example Documents.  It argued that the primary judge had a discretion whether to inspect those documents and did not err in not doing so.  It said that there were sound reasons for the primary judge not to inspect those documents when BankSA had been denied access to them, even in order  to make submissions in regard to them, and they were only a small subset of the disputed documents.  It contended that the appellants did not establish an error in the exercise of discretion of the type described in House v R (1936) 55 CLR 499 (House v King) at 504-505 (Dixon, Evatt and McTiernan JJ).

19. BankSA further argued that, even if the primary judge erred in not inspecting the Example Documents, it would not have changed the outcome of the dispute.  It argued that the primary judge took into account that Griffins had meetings with investors from October 2009 and received information from them in October and November 2009, and that his Honour characterised the firm’s activities in that period merely as the assembly of material to enable development of a litigation funding proposal rather than for reasonably anticipated litigation.

20. BankSA contended that the purpose of such an inspection is to resolve the veracity of the claims of privilege over the documents which are the subject of inspection: Grant v Downs (1976) 135 CLR 674 (Grant v Downs) at 677 per Barwick CJ and at 688-9 per Stephen, Mason and Murphy JJ; AWB Ltd v Cole (No 5) (2006) 155 FCR 30; [2006] FCA 1234 at [44](12) (AWB v Cole No 5) (Young J).  It argued that it is impermissible for the Court to exercise the power to inspect some documents so as to make factual findings about other documents as though that is a substitute for evidence.  It also said that there is no sound basis to draw inferences about the relationship between Griffins and the investors in the period from 2010 to 30 June 2013 by reference to a small subset of documents confined to a period in late 2009, which were likely to have been carefully selected by the appellants for forensic reasons.  It submitted that if the Court was minded to examine the Example Documents we should inspect all the disputed documents rather than draw inferences from just a small subset.

21. The appellants handed up the Example Documents Schedule to the primary judge on the basis that it was “more digestible” than the full Privilege Schedule and said that the documents in the schedule went to two key issues: (a) the meeting of investors at Griffins’ offices on 1 October 2009; and (b) the taking of instructions from investors by Griffins in the months of October and November 2009.  The thrust of the appellants’ submission was that the documents demonstrated one of the appellants’ key contentions – that, from the very start of the relationship between Griffins and the investors, the firm was advising investors about prospective litigation.

1. The appellants handed up the Example Documents and specifically invited the primary judge to examine them.  It is unquestionable that the primary judge had a discretion do so: Grant v Downs at 677, 688-9; Esso Australian Resources Ltd v Commissioner of Taxation (1999) 201 CLR 49; [1999] HCA 67 (Esso) at [52] per Gleeson CJ, Gaudron and Gummow JJ. It is clear that the primary judge preferred not to inspect the documents. His Honour said:

   …to save me coming back and asking for it if I choose to, and I will be able to give it back to you, hopefully, in a sealed state when I give a ruling on this application… hopefully, it goes back to you unopened. That would be my first ambition if it’s possible.

2. In circumstances where the primary judge hoped not to inspect the Example Documents, did not say that he inspected any of the disputed documents (or even just the Example Documents), and made no specific or even general reference to the contents of any of the disputed documents, we infer that his Honour did not examine any of them.  BankSA did not submit to the contrary.

3. It is appropriate for the Court to examine the Example Documents when:

   (a)they are relevant to the determination of issues in the appeal and we should be in the same position as the primary judge.  We should not be hesitant to exercise the power to examine documents to resolve a privilege dispute: Esso at [52];

   (b)BankSA made no objection to them being handed up to the primary judge nor any objection to counsel’s invitation to the primary judge to inspect them.  They are just a subset of the disputed documents available for inspection by the primary judge and by us; and

   (c)there is no merit in BankSA’s contention that the decision of the primary judge not to inspect the Example Documents made no difference to his Honour’s findings.  We are satisfied that, had his Honour inspected the documents, it is quite unlikely that he would have made the findings that his Honour did (at [87] and [89]).

4. We do not accept that it is impermissible or necessarily unsound to inspect the Example Documents and to draw inferences from that subset of documents about the relationship between investors and Griffins in the period from 2010 to mid-2013.  The nature of the relationship between investors and Griffins at the commencement of their dealings is likely to be material in deciding the nature of their relationship at later stages.  The knowledge obtained by inspecting some documents may inform a contextual understanding of other documents and the surrounding circumstances.  Before us, the appellants provided copies of the Example Documents to counsel for BankSA and it was therefore in a position to make submissions as to what inferences should be drawn.

5. Even so, because we have not restricted our examination to just the Example Documents, little turns on this issue.  While the Example Documents are of assistance, we have not drawn inferences based only on them.

   The Counsel Documents

6. BankSA also submitted that we should not inspect four documents from the Counsel Documents Schedule.  It argued that those documents were not relied upon by the primary judge and there is no application to adduce fresh evidence, and it reiterated the submissions it made in relation to the Example Documents.

7. It is appropriate for the Court to inspect the four Counsel Documents.  They are plainly relevant to the determination of the issues in the appeal being described in the Privilege Schedule as follows:

   (a)a document dated 13 November 2009 – described as “Griffins file note re class action and of meeting with Patrick Coope [a representative of LCM], counsel” and as “Counsel advice” and “Privileged information provided to a proposed funder to enable it to decide whether to fund a Claim”;

   (b)a document dated 13 November 2009 – described as “Griffins file note dictated by Lucy Travers [a solicitor with Griffins] re attendance on Counsel” and as “Communications between Counsel and Griffins relating to Counsel advice”;

   (c)a document dated 13 November 2009 – described as “Griffins File Note re conference with Counsel, Patrick Coope, Greg Griffin, Adam Coombe and Lucy Travers” and as “Counsel advice”, “Communications between Counsel and Griffins relating to Counsel advice” and “Privileged information provided to a proposed funder to enable it to decide whether to fund a Claim”; and

   (d)a document dated 4 November 2009 – described as “Greg Griffin letter to Counsel re: “Possible Class Action” seeking advice” and as “Communications between Counsel and Griffins relating to Counsel advice” and “Privileged information provided to a proposed funder to enable it to decide whether to fund a Claim”.

8. It is inapposite to describe these documents as fresh evidence when they are just a subset of the documents which were available for inspection by the primary judge.  We do not accept that we should not examine them because the primary judge did not do so, particularly when (as we explain) we consider the primary judge erred in declining to examine them.  Nor do we accept that it is impermissible or necessarily unsound to examine these documents and to draw inferences from them.   The appellants provided the documents to counsel for BankSA and it was in a position to make submissions as to the inferences to be drawn.  Again, not much turns on this because we have examined the disputed documents and did not restrict our examination to these four documents.  We have not drawn inferences based just on them.

   C.        THE FACTS AND PROCEDURAL HISTORY

9. We have drawn our account of the facts from the affidavits relied on by the parties, and to a limited extent from our inspection of the disputed documents.  None of the deponents were cross-examined and the primary judge proceeded on the basis of the reliability of the primary facts asserted.  We take the same approach.

   The ALC private lending business

10. For some years prior to August 2009, the Samra entities conducted a “private lending” business known as “Adelaide Lending Centre”.  The business operated by seeking monies (whether described as loans, deposits or investments) from private individuals, and then using those funds to make short-term loans to third parties engaged in construction projects or property development projects, usually in and around Adelaide.  The Samra entities banked with and had overdraft facilities with BankSA.

    August 2009 - the collapse of the Samra entities

11. On 20 August 2009, the Supreme Court of South Australia ordered that ALC, one of the entities through which the lending business operated, be wound up and that Stephen Duncan and Christopher Powell of the insolvency firm KordaMentha be appointed as liquidators.  On 28 August 2009, Mr Duncan and Mr Powell were also appointed receivers and managers of Mr Samra’s family trust trading as Adelaide Lending Centre.

    October 2009 - Griffins commences to investigate a class action against BankSA and the Samra entities

12. Many individuals who had advanced monies to the private lending business (who we describe as investors) lost substantial monies as a result of the collapse of the Adelaide Lending Centre lending business.  The materials indicate that their combined losses exceed $70 million.

13. In about August 2009, Griffins was retained by one of the investors, Mr Rozkalis, for the purposes of bringing an action against Mr Samra and others, and obtained a default judgment in his favour.

14. In about September 2009, Mr Duncan conducted a meeting of creditors of ALC which Mr Griffin attended.  Mr Duncan informed the meeting that he was not in a position to pursue any claim against BankSA as he had a commercial relationship with the bank and was therefore in a position of conflict.

15. At the conclusion of that meeting, a group of investors who knew that he was a solicitor approached Mr Griffin and sought that he assist them to recover the monies they had lost.  As a result of that approach, Mr Griffin convened a meeting of investors at the offices of Griffins on 1 October 2009 to discuss legal avenues for the recovery of their losses.  As we later explain in more detail, the evidence shows that from 1 October 2009 Griffins commenced to investigate a possible class action by investors against BankSA and the Samra entities.

    March 2010 - Mr Samra’s bankruptcy

16. Mr Samra declared himself bankrupt on 3 March 2010.  Griffins then acted for one of the investors, Mr Rozkalis, in seeking annulment of the bankruptcy order and filing a creditor’s petition for bankruptcy.

17. On 6 August 2010 the earlier bankruptcy order was annulled.  Mr Samra was declared bankrupt on Mr Rozkalis’ petition and Mr Cooper was appointed as Trustee.  Upon his appointment Griffins commenced to act for the Trustee.

    December 2011 - the bankruptcy examinations commence

18. On a date in 2011 which is not clear, the Trustee sought and was granted leave in the Federal Magistrates Court (FMC) to issue a summons for examination (examination summons) and production of documents to Mr Samra pursuant to s 81 of the Bankruptcy Act. Griffins acted for the Trustee in seeking the examinations summons and in the subsequent examinations. In December 2011, Mr Samra was examined and he produced documents.

19. On 21 March 2012, the Trustee sought leave of the FMC to issue examination summonses to Simon Finch, the relationship manager for Mr Samra at BankSA, and to BankSA to produce documents relating to its dealings with ALC, Adelaide Lending Centre and the bankrupt.  The Trustee swore an affidavit in support of the application dated 21 March 2012 in which he stated his purpose in seeking the examination summons.  We set out his evidence in that regard when dealing with the cross-appeal.  The FMC granted leave to issue the examination summons on 22 March 2012.  On 14 August 2012, the Trustee sought and obtained leave to issue an examination summons to Mr Finch’s superior at BankSA, Robert Sporton.

20. In correspondence between lawyers for the parties, the breadth of the summons for production of BankSA documents was refined.  On 7 May 2012, BankSA duly produced documents to the FMC and again on 11 July 2012.  Mr Finch was examined on 10 May 2012 and Mr Sporton was examined on 6 November 2012.   

    November 2014  - commencement of the class action

21. On 14 November 2014, Griffins filed the originating application and statement of claim in the class action, both signed by Mr Griffin.  The proceeding was served on BankSA on 12 December 2014.

    December 2014  - the application to dismiss or stay the proceeding

22. On 24 December 2014, BankSA filed an interlocutory application seeking orders for summary dismissal, in the alternative the permanent stay of the proceeding, and in the further alternative a permanent restraint on Griffins acting in the class action.  The application alleged that:

    (a)documents were sought and produced by BankSA in answer to an examination summons in the bankruptcy examinations, issued on the application of the Trustee for whom Mr Griffin acted, but which improperly sought documents as an aid to litigation that was in contemplation by the appellants and other investors for whom Mr Griffin also acted; and/or

    (b)Griffins misused those documents in contravention of the Harman undertaking because the firm – which was at relevant times acting both as solicitors to the Trustee and for the appellants and other investors – deployed the documents produced by BankSA in furtherance of the litigation by the appellants and other investors for their separate ends.

    To a significant extent the application is based in the assertion that Griffins acted for the appellants and other investors at the same time as the firm was acting for the Trustee in the bankruptcy examinations.

23. Without making any admission of wrongdoing, Griffins voluntarily ceased to act for the appellants a short time after BankSA filed the application.  Johnson Winter & Slattery commenced to do so.

    February 2015 - the First Griffin Affidavit

24. In the First Griffin Affidavit (made on 25 February 2015), Mr Griffin said that Griffins was retained upon the Trustee’s appointment on 6 August 2010.  He said that he acted for the Trustee in what he called the “Samra Bankruptcy Proceeding” which he said was conducted over the period from August 2011 until July 2013.  

25. Mr Griffin said that during the Samra Bankruptcy Proceeding (i.e. between August 2011 and July 2013) Griffins was not “retained to act” by investors in regards to the present class action.  He said:

    17.1Whilst I first met with some of Mr Samra’s creditors and investors in 2009 soon after the collapse of the “Adelaide Lending Centre” business on about 6 August 2009, I was not then retained to act in regards a representative proceeding or in any proceedings against BankSA.

    17.2My firm did act in limited respects for individual investors in regards their dealings with Mr Samra. For example in or around August 2009 my firm advised an investor in the “Adelaide Lending Centre” business who was considering noting a caveat against the property of the Samra entities, and at about the same time for another investor who commenced Supreme Court proceedings against Mr Samra.

    17.3From time to time after August 2009 my firm:

    17.3.1spoke to investors, both individually and sometimes together, with a view to considering possible claims they may have; and

    17.3.2acted in discrete matters for individual investors in relation to the wider Samra matter.

    March 2015 – the issue of subpoenas to produce documents

26. On 4 March 2015, BankSA issued subpoenas seeking production of documents by Griffins, the Trustee and LCM.  Griffins, the Trustee and LCM applied to set aside the subpoenas.

27. On 8 April 2015, White J refused to set aside the subpoenas: see Perazzoli v BankSA [2015] FCA 373.

    April 2015–the Second Griffin Affidavit

28. It was in this context that Mr Griffin swore the Second Griffin Affidavit (on 21 April 2015).  The relevant thrust of his evidence was that from 1 October 2009 until about 30 June 2013, although Griffins was not formally retained by any of the investors, Griffins and the investors had the requisite relationship of trust and confidence such that it was appropriate to imply that they were solicitor and ‘client’. He said:

    Communications with Investors

    7.In August 2009 I attended a meeting of creditors of the Fourth Respondent in this proceeding, ALC Group Pty Ltd (ALC).  I know ALC to be the corporate entity through which Mr Samra operated his “Adelaide Lending Centre” business.  Mr Stephen Duncan as one of ALC’s liquidators, chaired the meeting.  At the meeting, Mr Duncan said words to the effect that he would not be able to cause ALC to bring proceedings against the First Respondent (BankSA) as he had a commercial relationship with BankSA and was in a position of conflict.

    8.At the conclusion of this meeting, I was approached by a number of investors who knew that I was a solicitor.  They asked me to assist them to recover the moneys which they had lost with Mr Samra and his business.  I believe that this was as a result of Mr Duncan’s stated inability to pursue BankSA.

    9.As a result of that approach, I convened a meeting of investors at my firm’s offices a few weeks later.  That meeting was convened because I was a solicitor and I wanted to discuss with investors potential legal avenues of recovery of their losses.  The meeting was convened by me in my professional capacity as a solicitor.

    10.To my knowledge, each of the investors who attended at my offices knew I was a solicitor and that my firm was a legal practice.  I handed out my Griffins Lawyers business card to investors at the meeting.  I assumed that those investors attending were doing so on the basis that they wished to discuss their legal options, to receive legal advice, and to consider retaining my firm as lawyers should any legal action prove possible in the future.  No investor said anything to me to the contrary at that meeting or at any other time.  I considered at the time, and consider now, that I was dealing with the investors in my professional capacity as a solicitor.

    11The meeting was conducted on a confidential basis, in that it was not open to the public or any person who had not lost moneys in Mr Samra’s business (with the exception of spouses, and directors of companies who had lost moneys).  I asked the attendees to keep the matters discussed at the meeting confidential.  Other than this, I am not able to disclose the content of the matters discussed at that meeting due to legal professional privilege.

    12.After that meeting, and as I depose in paragraphs 17.2 and 17.3 of my first affidavit, my firm acted in discrete matters for individual investors in regards their dealings with Mr Samra, and my firm continued to speak with investors, both individually and sometimes together, with a view to considering possible claims they may have.

    13.In the matters, meetings and communications with those investors to which I refer in the preceding paragraph, I was at all times acting in my professional capacity as a solicitor, as were my staff members who assisted me.  Those matters, meetings and communications were confidential and, I respectfully assert, subject to legal professional privilege.  Despite not having a formal retainer with the investors, other than those for whom I acted in discrete matters, all investors were dealing with me as a solicitor and had the manifest intention of seeking legal advice or legal services in relation to their losses.

    14.From time to time, my staff and I created documents and made copies of other documents to assist in our consideration of the possible legal claims of investors and so that we might provide legal advice to investors.  We also asked investors to make copies of relevant documents to give to my firm.  The purpose of creating those documents and making those copies was the possible legal proceedings to be brought by investors and recover lost moneys and for the provision of legal advice in respect of such claims.  Those documents and copy documents were held by my firm on a confidential basis.

29. Mr Griffin was not challenged on his evidence. His evidence is not entirely satisfactory because he put somewhat different positions in his two affidavits.  Relevantly, the thrust of his first affidavit was that prior to 30 June 2013 he was not retained to act for the investors in the proposed class action, and in the second affidavit that he nevertheless had the requisite relationship of trust and confidence with the investors for a solicitor and ‘client’ relationship to be inferred.  The difference probably arose because Mr Griffin was sensitive to BankSA’s broad suggestion of impropriety in his having acted for both the Trustee and for the investors.  In our view, Mr Griffin tried to dance on the head of a pin as to whether he acted for the investors and as a result his evidence was unnecessarily opaque.  

30. As we later explain, it is plain on the evidence (including our examination of the disputed documents) that from 1 October 2009 until 30 June 2013 (and continuing), although none of the investors who consulted with Griffins signed a retainer agreement with the firm, Griffins stood in a relationship of trust and confidence with them such that it is appropriate to infer a lawyer and ‘client’ relationship.  We consider the Second Griffin Affidavit correctly sets out the position.

    Mr Ferluga’s evidence

31. Mr Ferluga, the second appellant, swore an affidavit on behalf of himself, his wife, his father and two companies of which he was a director (the Ferluga entities).  He said that:

    (a)he was interested in becoming involved in an action against BankSA and the Samra entities as the Ferluga entities had advanced approximately $1 million to the Samra entities;

    (b)in about August or September 2009, along with other investors who had advanced monies to the Samra entities, he attended the offices of the legal firm Duncan Basheer Hannon and met with a partner of the firm, Peter Humphries, to discuss possible legal action against BankSA and the Samra entities.  Mr Humphries advised that Duncan Basheer Hannon was not willing to act in a class action against BankSA but may be able to assist investors in pursuing individual claims.  Mr Ferluga was not willing to pursue an individual claim because of the legal costs involved;

    (c)shortly after that meeting he was informed (he believes by another investor) that Mr Griffin was potentially interested in pursuing an action against BankSA and the Samra entities for the benefit of investors;

    (d)he knew that Mr Griffin was a solicitor and he contacted and spoke to Mr Griffin in Mr Griffin’s professional capacity;

    (e)on 1 October 2009, along with other investors who had advanced monies to the Samra entities, he attended the Griffins’ offices and met with Mr Griffin.  He intended and believed that his communications at the meeting with Mr Griffin and other investors were confidential and subject to legal professional privilege;

    (f)on 6 October 2009, he received a telephone call from Mr Adam Coombe, a solicitor employed with Griffins.  His purpose in that and subsequent communications with Griffins was to discuss legal options for the recovery of losses arising from his dealings with the Samra entities, to receive legal advice, and to consider retaining Griffins should any legal action prove possible.  During the telephone call, Mr Ferluga discussed matters relating to his potential claims with Mr Coombe and made arrangements to meet the following day so he could provide further instructions and receive Griffins’ advice about his legal options.  In particular, he sought Griffins’ advice about the possibility of the Ferluga entities participating in any action pursued on behalf of the investors in the Samra entities.  He claimed that those communications are subject to privilege;

    (g)on 7 October 2009, Mr Ferluga again attended the Griffins office and met with Mr Coombe.  He provided confidential instructions to Griffins and agreed to provide copies of relevant documents for the firm to consider so he could be provided with legal advice.  He claimed that those communications are subject to privilege;

    (h)between October 2009 and February 2015 (when Griffins ceased to act for the appellants), Mr Ferluga provided the firm with instructions and documents relating to the Ferluga entities’ dealings with the Samra entities for the purposes of advancing the preparation of litigation against BankSA and the Samra entities, and seeking legal advice from Griffins about their claims against those parties;

    (i)he regarded the Ferluga entities as clients of Griffins notwithstanding that they did not enter into a written retainer agreement with the firm;

    (j)he understood that any litigation would involve a two-stage process.  The first stage involved Griffins investigating the potential action, seeking litigation funding or having investors pool their own funds to fund an action.  Assuming litigation funding was secured, the second stage involved entering into litigation funding agreements and pursuing the claims; and

    (k)he signed a litigation funding agreement with LCM in about June 2013 and the other Ferluga entities followed in June 2014 and November 2014.  The litigation funding agreements appointed Griffins as the solicitors for the Ferluga entities in the litigation.

    Mr Ferluga was not challenged on this evidence.

    Communications with a litigation funder

1. In his first affidavit, Mr Griffin said that in late 2009 he spoke informally with LCM about the possibility of it funding proceedings proposed to be brought by investors.  He said that “[a]part from sporadic and general discussions, no agreements or funding commitments were made with the Funder.  No funding agreement was entered into.”  

2. In his second affidavit, Mr Griffin said that he also had discussions with another litigation funder, IMF Litigation Funding (IMF).  He said that Griffins’ communications with both LCM and IMF were:

   …for the purposes of the funding of potential legal proceedings, and ultimately this representative proceeding (no funding was sought for the bankruptcy examinations). The documents brought into existence in relation to my communications with litigation funders were created for the sole purpose of this proceeding and the funding thereof. All of those communications with litigation funders were confidential. I believe that LCM and IMF have maintained the confidential nature of our communications.

3. Our inspection of the documents shows that Mr Griffin sought the involvement of LCM in a proposed class action against BankSA from an early date.  He invited Mr Coope, a representative of LCM, to attend the meeting of investors on 1 October 2009 and Mr Coope outlined the likely funding terms to the investors present.  Although there were numerous interactions between Griffins and LCM thereafter, LCM did not finally commit to provide litigation funding for the class action until mid-2013.

4. Mr Griffin said that, in 2014, LCM requested that junior counsel be retained to draw class action pleadings and that senior counsel be retained to advise on prospects. He said that advice was not provided until September 2014.  However, the Counsel Documents show that senior counsel provided advice on prospects in November 2009, and further advice at later points.

   D.        THE APPEAL

5. The Amended Notice of Appeal sets out two broad grounds of appeal, under the headings “advice privilege” and “litigation privilege” and we deal with the appeal by reference to those broad grounds.

6. We reiterate that the primary judge dealt with the privilege claims by reference to a numbered item in the Notice of Opposition and a numbered Annexure listing and identifying the documents subject to that objection.

   (a)Item 1 set out an objection to the claims of privilege in respect of all documents in Annexure 1 to the Notice of Opposition, on the basis that there was no solicitor/client relationship between the appellants or other investors and Griffins prior to 30 June 2013;

   (b)Item 2 set out an objection to the claims of privilege in respect of all documents in Annexure 2 to the Notice of Opposition, on the basis that there was no real prospect of litigation prior to 30 June 2013;

   (c)Item 3 set out an objection to the claims of privilege in respect of documents in Annexure 3 to the Notice of Opposition, in the alternative to Items 1 and 2, on the basis that, in respect of documents recording communications in the period from 1 November 2011 until 30 June 2013, there was a colourable case that the communications were made in furtherance of an abuse of process, and privilege therefore did not attach;

   (d)Item 4 set out an objection to the claims of privilege in respect of documents in Annexure 4, in further alternative to Items 1, 2 and 3, on the basis that the appellants did not meet their onus to discharge the dominant purpose test; and

   (e)Item 5 set out an objection to the claims of privilege in respect of documents in Annexure 5 on the basis that they were not confidential.  BankSA no longer maintains this ground.

7. The same document may be listed under multiple items. For example, a document may be subject to a claim of litigation privilege under Item 2 and also subject to a claim of advice privilege under Item 1.  If privilege is allowed under either item then the document may be subject to the objection that it was made in furtherance of an abuse of process under Item 3 or the objection that the appellants failed to satisfy their onus to discharge the dominant purpose test under Item 4.

   E.         LITIGATION PRIVILEGE

8. The appellants state that if the claims under this head of privilege are accepted, privilege attaches to all but approximately 30 of the disputed documents.

9. Under Item 2 of the Notice of Opposition, BankSA described their opposition to the claims of litigation privilege as follows:

   Further and in the alternative, insofar as the claim for privilege is based upon litigation privilege, the applicants and Group Members have failed to discharge their onus of establishing that there was a real prospect of litigation at any time prior to 1 July 2013. If this is accepted then each of the claims identified in Annexure 2 hereto will be disposed of.

   The primary judge’s reasons

10. The primary judge found (at [86]) that the documents which recorded communications prior to 30 June 2013 did not attract litigation privilege because “on the evidence, such documents are not shown to have been created for the dominant purpose of existing or anticipated litigation”.  His Honour said (at [87]) that he took the approach taken in Ensham Resources Pty Ltd v AIOI Insurance Company Ltd (2012) 209 FCR 1; [2012] FCAFC 191 (Ensham Resources) at [53]-[57] (Lander and Jagot JJ) and applied the test propounded in Mitsubishi Electric Australia Pty Ltd v Victorian WorkCover Authority (2002) 4 VR 332; [2002] VSCA 59 (Mitsubishi) at [19] per Batt JA (with whom Charles and Callaway JJA relevantly agreed), and concluded that for communications before 30 June 2013 “the evidence does not demonstrate a real prospect of litigation, as distinct from a mere possibility”.

11. The primary judge’s reasons at [87] and [89] are central in relation to the appeal on litigation privilege.  The primary judge said (at [87]) that it was only on about 30 June 2013 that “the spasmodic communication between the applicants and other group members and [Griffins] became sufficiently focused as to demonstrate a real prospect of litigation.”  His Honour said that before 30 June 2013:

    There is no evidence to demonstrate a coherent and cogent assembly of relevant documentary material, the taking and recording of statements of potential witnesses, the drawing of any briefs for the getting of advice about the prospects of a claim such as the present being pursued, the provisional engagement of any appropriate expert witnesses, or indeed any material plan for the collation of, or the assessment of, information and possible witness statements before about that time. The funding agreement in June 2013 did not apparently authorise the proceeding, but the coherent assembly of material, the preparation of draft pleadings and the advice of counsel, upon which LCM was then to determine whether it would fund the proposed claim. The funding agreement is not in evidence, so I have inferred that from the course of events.

    (Emphasis added)

12. His Honour said (at [89]):

    The prospect of litigation was until at least 30 June 2013 merely an idea of a possibility, without any real decision to pursue the coherent investigation of such a claim having been made. It was no more than a vague prospect depending on funding availability for proper investigation and the procuring of advice about the prospects of success of such a claim.

    (Emphasis added)

13. The primary judge accepted (at [88]) that from an early date Mr Ferluga, at least, wanted to explore the prospects of bringing a claim against BankSA and others but did not accept that the evidence of the communications by Griffins with him (or other investors) until about mid-2013 indicated that there was a real prospect of litigation such as the present case.

14. Consequently, the primary judge concluded that the documents recording communications made before 30 June 2013 which rely only on litigation privilege in Annexure 1 and as listed in Annexure 2 did not attract legal professional privilege.  His Honour said that the documents listed in Annexure 2 were not protected from inspection by BankSA.

    The grounds of appeal

15. The Amended Notice of Appeal alleged:

    Litigation Privilege

    2.The learned Judge erred in law by failing to correctly apply the test to determine whether documents brought into existence in the period 1 October 2009 to 30 June 2013 were the subject of litigation privilege:

    2.1On the findings before the Court (Reasons [19], [40]-[41], [47]-[48], [56]-[65], [69]-[71], [75], [81], [87]-[89], [93], [97], [106], [129]-[150], [156], [174] and [179]) the learned Judge should have concluded that there was a real prospect of litigation from 1 October 2009, together with an assembly of relevant documentary material, the taking and recording of statements of potential witnesses, and the drawing of briefs for the getting of advice about the prospects of a claim from counsel from October 2009.

    3The learned Judge erred in concluding that the evidence and materials before him did not demonstrate a real prospect of litigation, as distinct from a mere possibility, from 1 October 2009.

    4The learned Judge erred in finding that there was no evidence or materials before him to demonstrate a coherent and cogent assembly of relevant documentary material, the taking and recording of statements of potential witnesses, and the drawing of briefs for the getting of advice about the prospects of a claim from counsel from October 2009.

    5The learned Judge erred in not exercising his undoubted discretion to examine any of the documents the subject of the privilege claim (particularly the documents placed in a sealed envelope by his Honour as referred to at line 30 on page 11 to line 39 on page 12 of the transcript of the hearing on 22 May 2015 - copy attached) as part of the process of determining whether the documents in question were privileged.

16. The essence of the appeal is the allegation that the primary judge erred in finding that there was no real prospect of litigation from 1 October 2009 until 30 June 2013, and therefore that documents which came into existence and record, or are, communications before 30 June 2013 do not attract litigation privilege.

    Relevant principles

17. It is common ground between the parties that the primary judge correctly stated the principles in relation to litigation privilege.

18. The primary judge said (at [28]) that for a communication to be protected by litigation privilege it must be made for the dominant purpose of actual, “reasonably apprehended” or “reasonably anticipated” litigation.  In order for litigation to be “reasonably apprehended” or “reasonably anticipated”, there must be a “real prospect” of that litigation, as distinct from a mere possibility, but it does not have to be more likely than not: see Mitsubishi at [19]; Ensham Resources at [53]-[57]; Australian Competition and Consumer Commission v Yazaki Corporation [2014] FCA 1316 (Yazaki) at [30]-[33] per Besanko J. Whether litigation is “reasonably anticipated” is “fact-sensitive”: Yazaki at [38].

19. The party claiming legal professional privilege bears the onus of satisfying the Court that a communication is subject to privilege. The primary judge explained (at [29]) that the existence of legal professional privilege is not established simply by using a verbal formula, by mere assertion that privilege attaches to a particular communication, or that communications are undertaken for the dominant purpose of use in actual or reasonably anticipated legal proceedings.  There will be cases in which a claim of privilege will not be sustainable in the absence of evidence identifying the circumstances in which the relevant communication took place and the topic to which the communications were directed: AWB v Cole No 5 at [44](3).  Some authorities refer to a requirement for “focused and specific” evidence as to the purpose of the communication: Barnes v Federal Commissioner of Taxation (2007) 242 ALR 601; [2007] FCAFC 88 (Barnes) at [18] (Tamberlin, Stone and Siopis JJ).

20. A ‘dominant purpose’ is one that predominates over other purposes; it is the prevailing or paramount purpose: Federal Commissioner of Taxation v Pratt Holdings Pty Ltd (2005) 225 ALR 266; [2005] FCA 1247 at [30] (Kenny J); The test is objective and requires consideration of all the facts and circumstances: Grant v Downs at 682 and 685 per Stephen, Mason and Murphy JJ; Ensham Resources at [52]; Yazaki at [34].

    BankSA’s contentions

21. BankSA submitted that the appeal invites the Court to undertake a wholesale reconsideration of the evidence including by reference to: (a) the evidence of Mr Ferluga and Mr Griffin; (b) the objective surrounding circumstances; (c) the document descriptions in the Privilege Schedule; and (d) the Example Documents.

22. It relied upon asserted intermediate findings of fact by the primary judge that:

    4.1from about late 2009, at the instigation of Mr Griffin (a principal at GMG), and not on behalf of investors, GMG had “sporadic and general discussions” with litigation funders, including LCM Litigation Fund Pty Ltd (LCM), about funding a potential claim against the Bank, but no funding commitment was made until mid-2013;

    4.2the “unequivocal” evidence of Mr Griffin should be accepted that he had not been retained to institute or conduct proceedings against the Bank by the Appellants or any group member until 31 July 2013, and that his role from late 2009 until July 2013 was to act in limited respects for individual investors in relation to Samra-related matters;

    4.3prior to mid-2013 when litigation funding was procured, the Appellants had not established that GMG’s communications with investors and litigation funders were pursuant to any retainer or for any client with whom GMG had a solicitor/client relationship, but instead were consistent with GMG itself exploring the prospect of a funding arrangement for an action such as the present proceeding of its own initiative;

    4.4investors attending spasmodic meetings, or spasmodically communicating with GMG, were hopeful of participating in a class action, but it was left to GMG (acting of its own initiative) to explore an action and the funding thereof with a view to putting a proposal to the Appellants and group members, and (viewed objectively) it was not the intention of the relevant investors to have a solicitor/client relationship until June 2013 when funding was ultimately procured;

    4.5it was only when the funding agreement was procured so as to fund the coherent assembly of material (but not the proceeding itself), that litigation was a real prospect rather than a mere possibility;

    4.6until that time, litigation was no more than a vague prospect depending upon the availability of funding for proper investigation and the procuring of advice about the prospects of success of such a claim;

    4.7it was after funding was procured that: (1) the spasmodic communication between GMG and the Appellants and group members became directed to the pursuit of a claim; (2) a decision was made to pursue the coherent investigation of such a claim; and (3) GMG and the Appellants (and group members) entered a retainer for GMG to investigate, and if appropriate to institute and then prosecute, proceedings; and

    4.8only later, in 2014, in accordance with the requirements of the litigation funder LCM, draft pleadings were prepared and advice was taken from senior counsel.

23. In elaboration of those findings, BankSA submitted that the following matters bear upon whether there was a real prospect of litigation:  

    81.On 1 October 2009, Mr Griffin arranged a meeting with a group of investors with a view to discussing a potential claim against the Bank, and the possible engagement of GMG for any future legal action.  GMG then had intermittent meetings with investors, both individually and together, with a view to considering possible legal claims that they might have, during which there was the provision of information to GMG.

    8.2The dealings with investors in late 2009 were premised upon the existence of an arrangement with a litigation funder for the funding of any action.  Mr Griffin had “sporadic and general” discussions with a litigation funder preceding the first meeting with investors, which were at his own instigation rather than on behalf of investors.  Mr Ferluga was only prepared to conduct the proceeding if it was funded.

    8.3By February 2010, LCM communicated its refusal to fund the litigation at that stage.  Prior to June 2013, LCM was not provided with any detailed briefing to consider either the funding of the investigation of the claim, or the funding of the claim itself.

    8.4Thereafter, from February 2010 until funding was obtained in June 2013, the communications with investors are sparse, and inconsistent with a solicitor/client relationship relating to the institution of proceedings against the Bank.  During that period, only a limited number of investors received any communications.  The communications with a limited number of investors, in November 2011 in particular, appear connected with the funding of the bankruptcy examinations.

    8.5In June 2013, after funding was obtained, the spasmodic communication between GMG and the Appellants and group members became directed to the pursuit of a claim, and steps were taken to pursue the investigation of the claim in a meaningful way.

    8.6When this period of nearly 4 years is viewed holistically, there is a clear inference, which the primary judge drew, that the present proceeding was a mere possibility, and would not have been brought, until funding from a litigation funder was secured so as to enable the proper investigation of the potential proceedings, because: (1) GMG spasmodically negotiated with funders over the 4 year period; (2) there was no retainer between GMG and any of the Appellants or group members until they started to enter into funding agreements with LCM in mid-2013; (3) instructions by the Appellants to formulate the claim and to obtain counsel’s advice were only forthcoming after funding was secured; (4) the majority of the communications with investors pre-date the formation of a retainer by 4 years; and (5) there is no other explanation proffered for such a significant delay in the commencement of proceedings.

24. BankSA argued that the evidence of Mr Ferluga and Mr Griffin did not assist the appellants because it did not show that litigation was more than a mere possibility until June 2013. It said Mr Ferluga’s evidence was that:

    (a)his willingness to participate in a claim against BankSA was dependent upon securing litigation funding;

    (b)he attended a meeting with Mr Griffin on 1 October 2009 because he was “interested” in being involved in an action against the Samra entities and/or BankSA; and

    (c)his communications with Griffins in October 2009 were to discuss the “possibility” of the Ferluga entities participating in “any action pursued on behalf of investors who had lost money dealing with the Samra entities”, “should any legal action prove possible in the future.”

25. It said Mr Griffin’s evidence was that:

    (a)he was not retained to act for investors in respect of the present claim against BankSA in 2009;

    (b)he convened the meeting of investors at his office on 1 October 2009 because he “was a solicitor” and he “wanted to discuss with investors potential legal avenues of recovery of their losses”;

    (c)he assumed that investors that attended the meeting wanted “to discuss their legal options, to receive legal advice and to consider retaining [his] firm as lawyers should any legal action prove possible in the future”;

    (d)from time to time after August 2009 he spoke to investors, both individually and sometimes together, with a view to “considering possible claims they may have”;

    (e)no litigation funding was secured until about June 2013, at which point the appellants and class members commenced to enter into funding agreements with LCM;

    (f)between late 2009 and June 2013, Mr Griffin’s discussions with LCM were only “sporadic and general” in nature; and

    (g)it was only at the behest of LCM that, in 2014, after funding agreements had been entered into, junior counsel was retained to draw the pleadings in the present action and senior counsel was retained to advise on the prospects of success.

1. BankSA submitted that the Example Documents are selective and relate only to a confined period in late 2009.  In any event, it argued that:

   (a)they go no further than to show (as the primary judge recognised at [59] and [75]) that from time to time after August 2009 Mr Griffin spoke with investors, both individually and in groups “with a view to considering possible legal claims they may have”, and that after the 1 October 2009 meeting, from time to time Griffins “generated documents for the purpose of providing legal advice to ‘investors’ regarding possible claims to recover their losses”, including against BankSA; and

   (b)thereafter, until litigation funding was secured in about June 2013, there were only sparse communications with the investors and those communications were only “sufficiently focused” to demonstrate a real prospect of litigation from about June 2013.

2. BankSA denied that the objective surrounding circumstances on which the appellants relied show that there was a real prospect of litigation from 1 October 2009.  It submitted that:

   (a)it is far from self-evident that a mainstream lender such as BankSA would have knowledge of any Ponzi scheme operated by Mr Samra sufficient to sustain a claim against it, for example, the state of mind that would permit an action to be brought under the first limb of Barnes v Addy.  It argued that the fact that investors might consider such a claim does not mean that there was a real prospect of litigation at that point.  It said that it might be inferred that investors would want to investigate whether a party with capacity to pay, such as BankSA, might be exposed to liability, but consideration of such a claim does not mean there was a real prospect of litigation at that point in time;

   (b)viewed objectively, the communications between Griffins and investors in late 2009 were just part of an investigative process and not for the dominant purpose of prospective or reasonably anticipated legal proceedings.  Those investigations were logically anterior to, and a precursor to the point at which it could be said that proceedings are reasonably anticipated;

   (c)the absence of draft pleadings or advice from senior counsel until 2014 tended to show that what occurred between 2009 and mid-2013 was just investigation;

   (d)the contention that litigation was a real prospect in October 2009 is irreconcilable with the absence of substantial communications between Griffins and investors between 2010 and 2012, the unexplained delay of about four years in obtaining funding and having investors enter into funding and retainer agreements, about four to five years before instructions were given to draw pleadings, about five years before advice was sought or obtained from senior counsel and about five and a half years before proceedings were initiated; and

   (e)there was in fact no lawyer/client relationship between the appellants and Griffins until mid-2013.

3. BankSA also contended that the appellants failed to adduce focused and specific evidence that the dominant purpose of the communications between 1 October 2009 and 30 June 2013 was for the anticipated litigation, so as to discharge their onus in that regard: see Grant v Downs at 689 per Stephen, Mason and Murphy JJ; Barnes at [18].  It submitted that such a purpose is far from self-evident when there was no lawyer/client relationship between Griffins and the appellants and other investors until mid-2013 and where the primary judge found that Griffins was engaged in a process of investigation at its own instigation.

   Consideration re litigation privilege

   Appeal Ground 5 – the failure to examine the disputed documents

4. We deal first with appeal ground five which alleges that the primary judge erred in the exercise of discretion by failing to examine any of the disputed documents, particularly the Example Documents.

5. BankSA’s submissions gave little attention to this ground of appeal.  It argued that the primary judge did not err in failing to inspect the disputed documents when, having regard to the nature of the evidence they adduced, the appellants had failed to make good their own privilege claims.  It is not entirely clear, however, whether BankSA’s submission that the appellants failed to establish a House v King error was directed to the primary judge’s decision not to examine any of the disputed documents or was restricted just to his decision not to inspect the Example Documents.  We proceed on the assumption that BankSA contended that the primary judge did not err in declining to examine any of the disputed documents, including the Example Documents.

6. As we explain, we consider the primary judge erred in deciding not to examine the disputed documents.

7. The primary judge’s conclusion that there was no real prospect of litigation until 30 June 2013 is based in his findings (at [87] and [89]) that, until that date, communications between investors and Griffins were not “sufficiently focused” and that litigation was no more than “a vague prospect” which depended on the availability of litigation funding for a “proper investigation and the procuring of advice about the prospects of success of such a claim”.  The primary judge said that before 30 June 2013 there was no evidence to demonstrate:

   (a)a coherent and cogent assembly of relevant documentary material;

   (b)the taking of witness statements;

   (c)the drawing of any briefs to counsel to advise as to prospects of success in a claim such as the present case;

   (d)the provisional engagement of any appropriate expert witnesses; or

   (e)any material plan for the collation or assessment of information and witness statements.

   His Honour inferred that the coherent assembly of materials, the preparation of draft pleadings and the advice of counsel upon which LCM was then to determine whether it would fund the proposed claim, did not commence until June 2013.

   The Privilege Schedule

8. The primary judge’s consideration of the privilege claims should have started with consideration of the document descriptions in the Privilege Schedule.  BankSA did not contend that the document descriptions were insufficient to allow a meaningful testing of the privilege claims, and the accuracy of the description of documents in such a list, compiled by a solicitor on oath, is usually to be relied upon by the Court.  As Jenkins LJ said in Westminster Airways Limited v Kuwait Oil Co Limited [1951] 1 KB 134 (Westminster Airways v Kuwait Oil) at 146:

   …if, looking at the affidavit, the court finds that the claim to privilege is formally correct, and that the documents in respect of which it is made are sufficiently identified and are such that, prima facie, the claim to privilege would appear to be properly made in respect of them, then, in my judgment, the court should, generally speaking, accept the affidavit as sufficiently justifying the claim without going further and inspecting the documents.

9. We have some sympathy for the primary judge’s position in regard to the Privilege Schedule, faced as his Honour was with the onerous task of picking through a 70 page Excel spreadsheet listing more than 2,000 documents so as to identify by reference to the document descriptions which of them appeared prima facie to be privileged. In the appeal and cross-appeal our task is made somewhat easier by the appellants’ preparation of four reorganised schedules and by our direction to the parties to prepare two further schedules which list and identify all documents relevant in the appeal and the cross-appeal.

10. We were also assisted in the appeal and cross-appeal by our direction to the parties to prepare folders of the disputed documents corresponding to the two further schedules. Our examination of the disputed documents did not require us to rummage through nine boxes to look for relevant documents, as the primary judge would have been required to do had he decided to examine the documents.  At first instance, the appellants should have done more to make the Court’s task easier.

11. The Privilege Schedule describes numerous documents which strongly point away from the findings that the primary judge made.  This can readily be seen in the four reorganised schedules being:

    (a)the Example Documents Schedule, which lists documents which came into existence and record, or are, communications between investors and Griffins in October and November 2009;

    (b)the Client Documents Schedule which lists documents which came into existence and record, or are, communications between investors and Griffins on an investor by investor basis throughout the period from October 2009 to 30 June 2013;

    (c)the Counsel Documents Schedule which lists documents which came into existence and record, or are, communications between Griffins and counsel in regard to investors’ claims against BankSA throughout the period from October 2009 to 30 June 2013;

    (d)the Client Lists Schedule which identifies lists of the investors who consulted Griffins and information about their losses, created by Griffins throughout the period from October 2009 to 30 June 2013.

    Communications between investors and Griffins

12. The Client Documents Schedule (extracted from the Privilege Schedule) identifies numerous documents which record communications between investors and Griffins in the period from 1 October 2009 to 30 June 2013.  The schedule is 100 pages in length and lists (on average) approximately 18 documents per page.  It lists documents which record, or are, communications between 74 groups of investors (counting family groups as one investor) and Griffins on an investor by investor basis.  The document descriptions are usually “Griffins’ file notes” or “memos” described as “Seeking or receiving instructions from client”, “Seeking advice regarding a claim”, “Providing advice regarding a claim” and “Providing a report on the claim”, and sometimes also record that the investor provided documents to Griffins.

13. The extent of the communications varied from investor to investor and in relation to many investors it continued through the relevant period. For example, the Privilege Schedule shows communications between Griffins and:

    (a)Mr Ferluga (on behalf of himself, Susan Ferluga and Renato Ferluga) on 6, 8 and 12 October 2009, 28 April 2010, 10 November 2011, 14 November 2011, 23 November 2011, 25 November 2011, 14 December 2011, 29 February 2012, 25 May 2012, 2 August 2012, 10, 16 and 18 October 2012, 17 January 2013 and 11 April 2013 and that he provided documents on 19 February 2010; and

    (b)Galliano and Antoinetta Perazzoli on 20, 21 and 23 October 2009, 1 December 2009, 5, 7, 8 and 15 January 2010, 16 March 2010, 22 April 2010, 17, 18 and 19 May 2010, 7 June 2010, 15 August 2010, 15 October 2010, 24 November 2010, 14 February 2011, 8 March 2011, 11 May 2011, 16 and 26 September 2011, 10 and 25 November 2011, 7 and 14 December 2011, 6 and 8 February 2012, that they provided documents on 14 February 2012, 21 and 28 February 2012, 26 March 2012, 12 April 2012, 1 June 2012, 13 August 2012, 7 September 2012, 5, 10 and 16 October 2012, 4 and 18 February 2013, and 21 May 2013 and that they provided documents on 27 January 2010.

    There were substantially fewer communications with some other investors.

14. The Example Documents Schedule lists a subset of those communications, commencing with the meeting between Griffins and investors on 1 October 2009 and covering the months of October and November 2009 (with one outlier document dated 6 January 2010).  Those communications, at the commencement of the dealings between investors and Griffins, are material to understanding their relationship and to give context to their later dealings.  It identifies the following documents:

    (a)a file note of Griffins dated 1 October 2009, described as “Griffins file note – conference with Greg Griffin, Adam Coombe, Lucy Travers, Henry Winter, Patrick Coope and 13 potential participants in the class action” and as “Providing advice regarding a Claim” and “Privileged information provided to a proposed funder to enable it to decide whether to fund a Claim” (emphasis added);

    (b)five email chains between investors and Griffins, variously described as “re: Class action – ALC Group Pty Ltd” “re: Samra and Bank of South Australia – Class Action”, “re: Class Action Meeting” and “re: Class action – documents received [from an investor]” and as “Seeking or receiving instructions from Client” and “Seeking advice regarding a Claim” (emphasis added); and

    (c)46 Griffins’ file notes or memos of attendances or conferences between investors and Griffins in which the communications are described as “Seeking or receiving instructions from Client”, “Providing advice regarding a Claim” and “Seeking advice regarding a Claim”.

15. In our view the document descriptions in the Client Documents Schedule and the extent of the communications between the investors and Griffins point away from the primary judge's conclusion that before 30 June 2013 there was no evidence of a coherent assembly of relevant documentary material, the taking of witness statements, or of a material plan for the collation and assessment of relevant information and witness statements.

    Communications between Griffins and counsel

16. The Counsel Documents Schedule (extracted from the Privilege Schedule) lists numerous documents which came into existence and record, or are, communications between 1 October 2009 and 30 June 2013 between Griffins and counsel in regard to a potential class action against BankSA.  It lists 99 documents with document descriptions including:

    (a)“Greg Griffin letter to Counsel re: Possible Class Action seeking advice” and as “Communications between Counsel and Griffins relating to Counsel advice” and “Privileged information provided to a proposed funder to enable it to decide whether to fund a Claim” dated 4 November 2009 (emphasis added);

    (b)“Griffins file note re class action and of meeting with Patrick Coope, [and] counsel” and as “Counsel advice” and “Privileged information provided to a proposed funder to enable it to decide whether to fund a Claim” dated 13 November 2009;

    (c)“Griffins File Note re conference with Counsel, Patrick Coope, Greg Griffin, Adam Coombe and Lucy Travers” and as “Counsel advice”, “Communications between Counsel and Griffins relating to Counsel advice” and “Privileged information provided to a proposed funder to enable it to decide whether to fund a Claim” dated 13 November 2009;

    (d)“Draft letters to various investors regarding potential litigation regarding Michael Samra (with handwritten amendments) and draft letter to Counsel seeking advice, internal Griffins emails” and as “Providing advice regarding a Claim” and “Providing a report on a claim” dated 22 November 2011;

    (e)“Draft letters to counsel (with handwritten amendments) seeking advice” and as “Communications between Counsel and Griffins relating to Counsel advice” dated 23 November 2011;

    (f)“Email chain between Adam Coombe, Bernie Walrut and Greg Griffin re: meeting with Counsel” and as "Work product” dated 12 December 2011;

    (g)“Draft internal Griffins memorandum regarding conference with Counsel” describing the basis of the privilege claim as being that the memorandum was prepared for the dominant purpose of the Trustee obtaining legal advice and/or professional legal services relating to anticipated legal proceedings dated 16 December 2011;

    (h)“Tax invoice to Griffins from Counsel” and as “Communications between Counsel and Griffins relating to Counsel advice”  and “Providing advice regarding a Claim” dated 31 January 2012;

    (i)“Griffins File Note – Bernie Walrut conference with Counsel” and as “Counsel advice” and “Communications between Counsel and Griffins relating to Counsel advice” dated 7 May 2012;

    (j)“Email from Adam Coombe to Greg Griffin re draft opinion” and as “Communications between Counsel and Griffins relating to Counsel advice” dated 20 September 2012;

    (k)“Letter from Adam Coombe to Counsel” and as “Counsel advice” and “Communications between Counsel and Griffins relating to Counsel advice” dated 21 September 2012;

    (l)“Letter from Adam Coombe to Counsel” and as “Communications between Counsel and Griffins relating to Counsel advice” dated 28 September 2012;

    (m)“Email from Adam Coombe to Counsel re Samra: possible claims against Bank SA, attaching letter from Adam Coombe to Counsel seeking advice” and as “Communications between Counsel and Griffins relating to Counsel advice" dated 28 September 2012 (emphasis added);

    (n)“Griffins File Note – Adam Coombe conference with Greg Griffin re draft opinion of Counsel” and as “Seeking advice regarding a Claim” dated 4 October 2012;

    (o)“Griffins File Note – Adam Coombe conference with Greg Griffin and Counsel” and as “Seeking advice regarding a Claim” and “Providing a report on a Claim” dated 11 October 2012;

    (p)“Draft Memorandum to Counsel from Adam Coombe pursuing a class action against Bank SA (including drafts and handwritten notes) ” and as “Communications between Counsel and Griffins relating to Counsel advice” dated 11 December 2012 (emphasis added);

    (q)“Griffins Memorandum from Adam Coombe to re Pursuing a class action claim against BankSA” and as "Communications between Counsel and Griffins relating to Counsel advice” and “Privileged information provided to a proposed funder to enable it to decide whether to fund a Claim” dated 11 December 2012;

    (r)“Griffins File Note – Adam Coombe notes of conference with Counsel” and as  “Counsel advice” dated 20 December 2012;

    (s)“Griffins internal Memorandum to Greg Griffin from Adam Coombe re conference with Counsel and drafts thereof” and as “Counsel advice” dated 8 January 2013;

    (t)“Griffins File Note - Adam Coombe telephone call from Moreno Ferluga” and as “Providing a report on a Claim” and “Counsel advice” dated 17 January 2013;

    (u)“Griffins Memorandum from Adam Coombe to file re representative proceedings (including drafts and handwritten amendments)” and as “Counsel advice” dated 18 January 2013 (emphasis added);

    (v)“Email correspondence between Adam Coombe, Greg Griffin and Patrick Coope attaching memorandum from Adam Coombe to Greg Griffin re attendance on Counsel” and as “Counsel advice” and “Privileged information provided to a proposed funder to enable it to decide whether to fund a Claim” dated 24 January 2013;

    (w)“Email from Adam Coombe to counsel chambers and Greg Griffin re Michael Samra/potential claim(s) against BankSA attaching Griffins letter to Counsel seeking advice with attachment” and as "Communications between Counsel and Griffins relating to Counsel advice” dated 27 February 2013 (emphasis added);

    (x)“Letter from Greg Griffin to Counsel re potential class action claim against Bank SA seeking advice” and as “Communications between Counsel and Griffins relating to Counsel advice” dated 27 February 2013;

    (y)“Griffins file note – Adam Coombe notes of conference with Counsel and Monika Peretko”, and as “Communications between Counsel and Griffins relating to Counsel advice” and “Counsel advice” dated 19 March 2013;

    (z)“Griffins Memorandum from Adam Coombe to Counsel re Moreno Ferluga and BankSA and as “Communication between Counsel and Griffins relating to Counsel advice” and “Privileged information provided to a proposed funder to enable it to decide whether to fund a Claim” dated 21 March 2013 (emphasis added);

    (aa)“Memorandum from Griffins to Counsel” dated 25 March 2013;

    (bb)“Memorandum of Advice of Counsel” and “Memorandum from counsel to Griffins” and as “Counsel advice” dated 28 March 2013; and

    (cc)“Email from Greg Griffin to Patrick Coope and Kara Hancock re documents provided to Counsel (including chain emails between [various Griffins solicitors and Patrick Coope]” and as “Disclosure of privileged information to a litigation funder concerning a Claim” dated 24 June 2013.

1. Second, our examination of the disputed documents shows that the brief to Mr Whitington QC to appear at the bankruptcy examinations was expressly stated to be pursuant to the Trustee’s instructions.  Our inspection of the documents indicates that the Trustee was aware that Griffins was investigating a class action against BankSA.

2. Third, during the bankruptcy examinations, the following exchange took place between Mr Whitington QC for the Trustee and Mr Roberts for BankSA.  Prior to this exchange Mr Whitington had been examining Mr Sporton in relation to BankSA’s lending practices and relationship with Mr Samra and the Adelaide Lending Centre business:

   MR ROBERTS: Registrar I object to this. The line of questioning has been going for a long time along the same line. My learned friend hasn’t been required as yet through the want of objection to justify the relevance of this to the examinable affairs, and my respectful submission, it doesn’t meet that threshold. It might be a question best addressed in the absence of Mr Sporton. I’m in my learned friend’s as to that, but in my respectful submission it ought to be justified.

   THE REGISTRAR:  You’re suggesting that this doesn’t relate to the examinable affairs?

   MR ROBERTS:  That’s my submission, Madam Registrar, yes. And if need be I will expand upon why that’s so. But in my submission, this is not addressing a chose in action which is legitimately open to the trustee in bankruptcy, and beyond it being relevant to a chose in action being available to the trustee in bankruptcy, it’s not a relevant line of inquiry.

   THE REGISTRAR:  Do you want to address that now?

   MR WHITINGTON:  ….that’s a fundamentally misconceived proposition which I can address through the authorities. To suggest that somehow or other we can only inquire about a chose of action available to the trustee in bankruptcy is fundamentally wrong.

   THE REGISTRAR:  Yes.

   MR WHITINGTON:  Any inquiry which benefits the creditors of the bankrupt estate is, at the very least, a relevant endeavour. If creditors - recovery can be made for creditors in a way which will reduce their claims on the bankrupt estate, that is a perfectly permissible endeavour for the trustee to explore. And here, the fact is that very many of the depositors with Mr Samra’s organisation had his personal guarantee, so any recovery which would inure to them or their benefit will go to reduce the claims on his bankrupt estate. Likewise, if there’s any other cause of action available, not able to adumbrate in detail now, but any cause of action available to a lender of ALC Group against a third party, which goes in discharge of the liability of ALC Group, can also go in discharge of a commensurate liability of Mr Samra, and therefore also augment his bankrupt estate….

   THE REGISTRAR:  Yes, I’m surprised it is come after we’ve been here almost an entire day, and yet it would apply to, really, the entire course of the questioning.

   MR WHITINGTON:  It would.

   THE REGISTRAR:  Directed to Mr Sporton.

   MR ROBERTS:  Registrar, that point, with respect, is well made. The trustee has a wide liberty, and it’s a wide power, and we don’t resile from that.

   THE REGISTRAR:  I must say, the points made by Mr Whitington are exactly the basis on which I have assumed we’re here today.

   (Emphasis added)

   Mr Roberts then made submissions directed to showing that was a wrong proposition, but noted:

   My learned friend, with respect, has been quite frank in saying that what is here being investigated are causes of action that are direct rights of action available to the creditors of the bankrupt estate not prosecuted by the trustee.

   BankSA was aware that the Trustee was using the examinations for the purpose of investigating claims by the investors against the bank.

3. Fourth, BankSA did not submit at first instance that the Trustee should be disbelieved on his evidence as to his purpose in seeking the examination summonses and it did not seek leave to cross-examine him.  It did not suggest that anyone other than the Trustee was directing the examinations and accepted that the examinations were “the Trustee’s decision and accountability”.

4. Fifth, as BankSA belatedly accepted, it is legitimate for compulsory examinations to be conducted for the purpose of investigating the availability of an action by a creditor against a third party because, to the extent such an action may be successful, the insolvent company or bankrupt estate will be relieved of the burden of the debt: Evans v Wainter at [142]-[144] and [246]-[247]; Re Excel Finance Corporation at 93; Flanders v Beatty at 333-334; Re Normans Wines Ltd (2004) 88 SASR 541; [2004] SASC 171 per Mullighan J at [86], per Gray J at [140]-[141]; Re Laurie Cottier Productions (in liq) (1992) 9 ACSR 513 at 518 (Waddell CJ in Eq); Re BPTC Ltd (1992) 7 ACSR 291 at 295 (McLelland J); Douglas-Brown v Furzer (1994) 11 WAR 400 at 408 (Malcolm CJ, with whom Ipp and Anderson JJ agreed). Such a purpose is consistent with the Trustee’s statement as to his purpose for the examinations.

5. Sixth, Mr Griffin swore that he was retained by the Trustee and that he had the conduct of the “Samra Bankruptcy Proceedings” on behalf of the Trustee.  BankSA did not cross-examine him to suggest he was the real instigator of the bankruptcy examinations or that he conducted them at his own instigation for his own separate ends rather than on instructions from the Trustee.  As we said (at [246]), whether BankSA’s case was to be that Mr Griffin tricked the Trustee, manipulated him such that the Trustee was his puppet or colluded with him, Mr Griffin was not provided the opportunity to deal with any such allegations.  It is appropriate to disregard such allegations which were not tested by BankSA putting them to Mr Griffin: Cross on Evidence at pp 614-615.

6. The fact that BankSA did not cross-examine Mr Griffin provides a sound basis for accepting his evidence.  It is usually unfair to reject evidence on which there has been no cross-examination, where the rule in Browne v Dunn has not been complied with, and where the witness has not otherwise been given the opportunity to deal with a suggestion only made in address: Cross on Evidence at pp 612-613 and the cases there cited.

7. Seventh, we take a different view of the evidence to the primary judge and we do not draw the inferences for which BankSA contended.  The temporal connection between the bankruptcy examinations and Griffins’ communications with investors and litigation funders provides little support for an inference that Griffins conducted the bankruptcy examinations at its own instigation for its own separate ends.  The Trustee and the investors had a common interest in investigating the availability of claims by investors against BankSA through such examinations.  The primary judge was correct in stating (at [179]) that the Trustee’s examinations were proceeding in parallel with the investigation being conducted by Griffins.  It is clear from our inspection of the disputed documents that the Trustee was aware of Griffins’ relationship with and legal work for the investors.

8. Eighth, it was appropriate for the Trustee to proceed on the basis that the investor’s claims, or at least some of them, were provable in Mr Samra’s bankruptcy.  BankSA cited authorities which it argued show that the investors’ claims are not provable in the bankruptcy (see Coventry v Charter Pacific Corp Ltd (2005) 227 CLR 234; [2005] HCA 67 at [6]), and the appellants cited authorities which they argued show that they are: see Tarea Management (North Shore) Pty Ltd (in liq) v Glass (1991) 28 FCR 93 at 95 (Hill J, with whom Lockhart and Einfeld JJ agreed); Barewa Oil and Mining NL (in liq) v Isim Mineral Development Pty Ltd (1981) 38 ALR 288 at 292 (Brinsden J). It is unnecessary for us to resolve any conflict in the authorities because, assuming that there is a conflict, it was reasonable for the Trustee to take a cautious view and to investigate the investors’ entitlement to bring such claims. Further, as the Trustee noted, some investors had personal guarantees from Mr Samra. BankSA accepted that such claims are provable in the bankruptcy. It is unnecessary to decide, but we would be surprised if a significant number of the investors did not have claims of breach of trust, liquidated claims for lost loans or other liquidated claims which are provable in the bankruptcy.

9. It is unnecessary to deal with the appellants’ other arguments in relation to the cross-appeal. We can see no error in the primary judge’s conclusion (at [124]) that BankSA failed to establish a “colourable case” or “reasonable grounds” for believing that the documents listed in Annexure 3 came into existence in furtherance of an abuse of process through abuse of the examinations power in s 81.

   The alleged breach of the implied undertaking

10. Under the second limb of the cross-appeal, BankSA alleged that there is a colourable case of abuse of process in that documents produced by BankSA in response to the examination summons were improperly used by Griffins to investigate a case against BankSA, either in its own right or potentially for the investors, in breach of the implied undertaking.

    The primary judge’s reasons

11. The primary judge summarised this limb of BankSA’s claim of a colourable case of abuse of process (at [120]) as being a claim that the documents produced by BankSA in the bankruptcy examinations were deployed by Griffins beyond their proper use by the Trustee, and therefore in breach of the implied undertaking that they would not be used for any purpose other than that for which they were produced.

12. As the primary judge said (at [121]), there was no evidence that the Trustee breached the implied undertaking.  His Honour said (at [122]) that BankSA contended that the implied undertaking was breached by Griffins using BankSA’s documents for the purposes of the class action, including for the purposes of advising the appellants and other investors and for drafting the statement of claim.

13. The primary judge noted (at [123]) that Mr Griffin directly denied that Griffins used BankSA’s documents to assist in pleading the material facts in the statement of claim.  His Honour said that his evidence was not challenged in cross-examination and it was appropriate to accept it.  The primary judge concluded that there was:

    …too much room for doubt, depending on the extent to which material was publicly received, transcript was reviewed, information was provided to creditors by the Trustee, and the like.

14. His Honour held that there was not a clear case of breach of implied undertaking and that it was not clear that Griffins used BankSA’s documents to institute or prosecute the present proceeding in a way which was improper.  At [124], his Honour said that he did not accept “that the documents listed in Annexure 3 are not the subject of legal professional privilege because they came into existence as part of a process which amounted to, or may have amounted to, an abuse of process or because they have been used improperly for the purposes of the current proceeding.”  

    Relevant principles

15. In Hearne v Street (2008) 235 CLR 125; [2008] HCA 36 (Hearne v Street) at [96] Hayne, Heydon and Crennan JJ described the “implied undertaking” found in Harman v Secretary of State for Home Department [1983] 1 AC 280 at 304, 309, 319, 320 and 321 in the following terms:

    Where one party to litigation is compelled, either by reason of a rule of court, or by reason of a specific order of the court, or otherwise to disclose documents or information, the party obtaining the disclosure cannot, without leave of the court, use it for any purpose other than that for which it is given unless it is received into evidence.

    (Emphasis added)

16. The implied undertaking extends to documents produced pursuant to an examination summons: see Re Southern Equities at 433-7. Generally speaking, a breach of the implied undertaking may constitute an abuse of process: Riddick v Thames Board Mills Ltd [1977] QB 881; Liberty Funding Pty Ltd v Phoenix Capital Ltd (2005) 218 ALR 283 at [20]; Forty Two International Pty Ltd v Barnes [2010] FCA 397 at [94] per Yates J.

17. The general law protection of the implied undertaking is affected by the rules of court. Relevantly to any breach of the implied undertaking arising in the bankruptcy examinations, r 14.11(1) of the Federal Circuit Court Rules provides:

    An order or undertaking, whether express or implied, not to use a document for any purpose other than for the proceeding in which it is disclosed does not apply to the document after it has been read to or by the Court or referred to in open Court in such terms as to disclose its contents.

    BankSA’s contentions

18. BankSA argued that, if it is accepted that an investigation of a claim against BankSA through the bankruptcy examinations was undertaken by Griffins for itself and not as solicitors for the Trustee, there has been a colourable case of a breach of the implied undertaking.  It submitted that, while Griffins was permitted to access and use BankSA’s documents as solicitor for the Trustee, it was not permitted to use such documents for its own separate ends.

19. It contended that, masked by Griffins’ dual role, BanksSA’s documents were accessed and used by: (a) Griffins acting qua solicitors for the Trustee and; (b) Griffins acting at its own instigation to investigate a claim that might form the basis of a class action against BankSA and to pursue litigation funding for such a claim.  It said that it is self-evident that it would be a breach of the implied undertaking for separate lawyers acting for the investors to have been given access to BankSA’s documents to allow that firm to investigate a case against BankSA, and Griffins had no greater right merely because they were, at the same time, the solicitors for the Trustee.

20. BankSA relied on the fact that Mr Griffin only said that Griffins did not use BankSA’s documents to draft the statement of claim.  He did not say that they were not used to formulate or otherwise consider a claim against BankSA or to source funding from a litigation funder and BankSA argued that the qualified nature of his evidence is telling.  It contended that, in light of the primary judge’s finding that Griffins investigated the class action at its own instigation, and in the absence of any evidence to the contrary, the inference should be drawn that Griffins used BankSA’s documents for Griffins’ investigation of a possible class action against BankSA during the period in which Griffins carried out that investigation.

21. BankSA also argued that, if the appellants are successful in establishing that there was a solicitor/client relationship between Griffins and the appellants or other investors in the period prior to 30 June 2013 in respect of a potential class action against BankSA, it would follow that Griffins had duties to deploy the information derived from BankSA’s documents in favour of its clients, which supports the inference which it sought.

    Consideration re breach of the implied undertaking

22. We commence by noting that, in her first affidavit, Ms Jones made two allegations.  First, that there was a high level of correlation between various matters about which Mr Finch and Mr Sporton were examined in the bankruptcy examinations and the allegations made against BankSA in the statement of claim in the class action.  She said that the correlation extended to allegations about:

    (a)why BankSA continued to lend to the Samra entities and what investigations they undertook;

    (b)the referral business BankSA received from Mr Samra;

    (c)excesses on the accounts operated by Mr Samra;

    (d)the accounts operated by the Samra entities and BankSA’s knowledge of those accounts;

    (e)BankSA’s knowledge of Mr Samra’s private lending business;

    (f)BankSA’s knowledge of and/or acquiescence in Mr Samra paying excesses with the funds of new depositors and creating excesses to pay existing depositors;

    (g)what a reasonable or prudent banker would be concerned about or should have done in relation to Mr Samra, and what could reasonably be expected of Mr Finch in his role as relationship manager with responsibility for the accounts operated by Mr Samra;

    (h)BankSA’s knowledge of Mr Samra using funds of new depositors to repay existing depositors; and

    (i)BankSA’s knowledge of Mr Samra’s loan book and whether enquiries should have been made about the loan book.

23. Mr Griffin responded to the allegation by stating that the similarities were unsurprising when the bankruptcy examinations and the class action were concerned with the same matters. Before us, BankSA no longer sought to rely on the correlation.

24. Second, Ms Jones said that pleadings in the class action referred to six email exchanges between Mr Finch and Mr Samra (the BankSA emails) which she said were produced by BankSA in answer to the examination summons.

25. Mr Griffin expressly denied that.  He said that the BankSA emails were obtained from two investors in about November 2009 and were part of exhibit “MS3” tendered into evidence on 27 February 2012 during the examination of Mr Samra, which predated BankSA’s production of documents.  He also noted that three of the BankSA emails were identified during Mr Finch’s examination as coming from “MS3”.  His evidence was not challenged.

26. More broadly, Mr Griffin swore that:

    …none of the documents produced by Westpac in the Samra Bankruptcy Proceedings to which the Harman implied undertaking applied or continued to apply were used in drafting of the statement of claim.

    He was not challenged on that evidence.

27. Mr Griffin accepted that Griffins may have made one minor and unintentional possible breach of the implied undertaking in relation to some ALC bank statements produced by BankSA (most of which had previously been provided by an investor).  We agree with the primary judge that that possible breach was immaterial.

28. Importantly, the evidence indicates that Griffins had in its possession more BankSA documents than just those produced in the bankruptcy examinations.  It tends to show that Griffins also had:

    (a)from investors, copies of numerous BankSA emails to Mr Samra and from Mr Samra to BankSA and information derived therefrom;

    (b)from the liquidators of ALC, BankSA documents and information derived therefrom; and

    (c)from the examination of Mr Samra, copies of BankSA communications and documents and information derived therefrom.

29. The evidence also indicates that:

    (a)some of the documents BankSA produced in the bankruptcy examinations were tendered into evidence and the implied undertaking therefore no longer applied to them; and

    (b)the contents of some BankSA documents or communications were disclosed in the examinations of Mr Finch and Mr Sporton and pursuant to r 14.11 the implied undertaking therefore no longer applied.

    The examinations were held in public and the transcripts of the examinations were open for inspection by investors (as creditors) without fee and by any other person on payment of the relevant fee pursuant to s 81(17) of the Bankruptcy Act.

30. BankSA advanced its contention of a colourable case of breach of the implied undertaking at a level of generality which assumed that all of the numerous documents listed in Annexure 3 were subject to the implied undertaking when clearly they were not.  It made no attempt to identify:

    (a)which of the documents it produced in the examinations were tendered in evidence and therefore not subject to the implied undertaking;

    (b)which of the documents it produced in the examinations were referred to in the examinations in such terms as to disclose their contents, and therefore not subject to the implied undertaking;

    (c)which of the documents it produced in the examinations continued to be protected by the implied undertaking;

    (d)what information derived from those documents was used in the investigations or when that communication occurred; or

    (e)any alleged matter which it said had been derived from such (unidentified) BankSA documents.

1. The appellants submitted that BankSA sought to make a serious allegation of abuse of process against Mr Griffin without ever making the definite charge which is required.  We accept that submission.  In our view, BankSA should not be permitted to make the serious allegations it does without making a definite charge.  In Varawa v Howard Smith & Co (1910) 10 CLR 382 at 386, O’Connor J relevantly said “the privilege will not be lost unless in the course of the proceeding in which the evidence is tendered it is definitely charged that the communication was in itself a step in the commission of a crime or preparatory to or in aid of the commission of a crime."

2. Permitting BankSA to do so would be quite unfair to Mr Griffin.  Ms Jones made specific allegations against him of misusing documents BankSA produced in the bankruptcy examinations.  He addressed those allegations and in response, BankSA effectively dropped them and made different, non-specific allegations.  To make out a colourable case of abuse of process by Mr Griffin, BankSA should have made a definite charge and put specific allegations to him.  Instead, BankSA elected not to make such a charge nor to put the relevant allegations to Mr Griffin and by not doing so he has been denied the opportunity to answer them.

3. It would also deny the appellants the opportunity to answer definite allegations with evidence, as they had in relation to the BankSA emails upon which Ms Jones initially relied. It would be unfair to the appellants and investors who are the beneficiaries of the claimed privilege as they risk losing the benefit of privilege over their communications in major litigation without their solicitor being given a proper opportunity to refute the suggestion of improper behaviour.

4. The difficulties inherent in BankSA’s approach can also be seen in the position in which the Court is placed.  If, from our examination of the disputed documents (which are from Griffins’ file), it appeared to us that some BankSA documents (or information derived from them) were deployed in aid of the appellants and class members in the present proceeding, there is no evidence that would permit us to determine whether those documents were:

   (a)produced by BankSA in the bankruptcy examinations;

   (b)produced by Mr Samra in the bankruptcy examinations;

   (c)obtained from investors; or

   (d)obtained from the liquidators of ALC.

   If any such documents were identifiable as having been produced by BankSA in the bankruptcy examinations, there is little that would permit us to determine whether such documents had been tendered into evidence or whether their contents had been sufficiently disclosed in the examinations such that the implied undertaking no longer applied.

5. It is also worth noting that whether we allow BankSA to advance the relevant submissions or not makes little difference.  The primary judge rejected BankSA’s submission that there was a colourable case that Griffins had breached the implied undertaking in documents produced by BankSA in the bankruptcy examinations.  His Honour said (at [123]) that:

   There is too much room for doubt, depending on the extent to which material was publicly received, transcript was reviewed, information was provided to creditors by the Trustee, and the like.

   In circumstances where BankSA made no attempt to identify the documents it produced in the bankruptcy examinations, nor which of those documents were tendered in evidence or their contents disclosed in the examinations such that the implied undertaking no longer applied, and we therefore do not know which of the (unidentified) documents produced are protected by the implied undertaking, and where Griffins also had BankSA documents from other sources, we respectfully agree with the primary judge’s conclusion.  There is too much room for doubt for us to find a prima facie case or a colourable case of a breach of the implied undertaking.

6. We dismiss this limb of the cross-appeal.

   H.        COSTS

7. We see no reason why costs should not follow the event and we presently propose to order that BankSA pay the appellants’ party-party costs of and incidental to the appeal and cross-appeal and of the hearing at first instance.  We have not, however, made orders in that regard and will provide the parties with an opportunity to make submissions should they wish to do so.  If a party seeks a different costs order to that proposed it must file short submissions (no more than three pages) within seven days, and the opposing party or parties shall file short submissions in response within seven days thereafter.  If neither side seeks an alternative costs order within seven days we will make the orders proposed without further reference to the parties.

I certify that the preceding two hundred and ninety (290) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Perram, Foster and Murphy.

Associate: 

Dated:       8 December 2017

SCHEDULE OF PARTIES

SAD 194 of 2016
Respondents
Fourth Respondent:	ADELAIDE LENDING CENTRE GROUP PTY LTD (IN LIQUIDATION) (ACN 088 613 156)
Cross-Respondents
Second Cross-Respondent:	MORENO FERLUGA
Third Cross-Respondent:	WILLIAM JOHNSON