PRIVILEGE – common law principles governing privilege – solicitor/client relationship – whether real prospect of litigation – where preliminary consideration of possible class action by solicitors to secure funding by litigation funder – onus of establishing dominant purpose of giving or obtaining legal advice or for use in actual or reasonably anticipated legal proceedings
PRIVILEGE – claim of privilege by applicants bringing class action – whether legal professional privilege attaches to confidential communications between lawyers and proposed class action group members – communication prior to agreement with a litigation funder – communication prior to the institution of proceedings – whether advice is unsolicited – whether privilege is waived – claim of privilege by trustee in bankruptcy – communications relating to bankruptcy proceedings – whether it is available to the trustee to explore the availability of a claim by investors – where the trustee is not a party to the proceedings
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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AGLC
Perazzoli v BankSA (No 2) [2016] FCA 260
Case
[2016] FCA 260
Decision Date
CaseChat Overview and Summary
In Perazzoli v BankSA (No 2), the applicants, who had lost significant funds due to a Ponzi scheme, sought to establish a class action against BankSA. The dispute involved complex questions regarding legal professional privilege, particularly concerning communications between lawyers and potential class members and the trustee in bankruptcy. The applicants argued that their communications with their former solicitors, GMG, and their current solicitors, JWS, were privileged. BankSA contested these claims, arguing that the communications were not privileged as they did not meet the necessary criteria for legal professional privilege.
The court had to determine whether the applicants' communications with their solicitors were protected by legal professional privilege, specifically whether they were for the dominant purpose of giving or obtaining legal advice or for use in actual or reasonably anticipated legal proceedings. The court also had to consider whether the trustee in bankruptcy could claim privilege over communications relating to potential claims by investors. The key issue was whether these communications were part of an actual or reasonably anticipated legal proceeding, or if they were unsolicited advice.
The court ruled that the claims to privilege by the applicants were only partially successful. The communications between the applicants and their former solicitors, GMG, were not privileged as they did not meet the criteria for legal professional privilege. However, the communications between the applicants and their current solicitors, JWS, were privileged. The trustee in bankruptcy's claims to privilege were essentially successful, as the trustee had not waived his privilege and the communications were for the purpose of exploring potential claims by investors.
The court ordered that BankSA prepare a minute of the orders based on these findings. The applicants and the trustee were given the opportunity to propose their own minutes of order if they disagreed with BankSA's proposal. The parties were also invited to confer on the costs of the hearing.
Orders
Orders of the court
1. The first respondent submit its proposed minutes of order to give effect to these reasons for decision, and to the extent that the applicant or the Trustee of the bankrupt estate of the second respondent do not agree with those minutes of order they submit their respective proposed minutes of order, each within a period to be fixed by the Court.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
It should also be noted at this point that there is an overlap between the documents in each Schedule, simply because some of them fall within the attack under one or more of the eight issues. The final orders should therefore reflect the extent to which BankSA is successful in response to the applicants’ claims. That is not, of course, to lose sight of the onus of proof discussed above.THE FACTS As the judgment of White J records, the applicants allege that they (and Group Members) lost significant funds as a result of the conduct by Mr Samra operating a “Ponzi” scheme through the fourth respondent ALC Group Pty Ltd (ALC) and the third respondent, the Michael Christopher Samra Family Trust, trading as Adelaide Lending Centre (ALC Trust). ALC was wound up on 6 August 2009. The liquidator of ALC conducted a meeting of the creditors of ALC in about September 2009. Mr Griffin was present at that meeting. It is not clear how he came to attend that meeting. The liquidator told the meeting he was not in a position to pursue any claim against BankSA. On 1 October 2009, a meeting of some investors in the Ponzi scheme through ALC took place with Mr Griffin and others from GMG present. It appears that that meeting was arranged by Mr Griffin as a result of some discussions he had with a few of the creditors of ALC after the ALC meeting. Mr Samra had declared himself bankrupt on 3 March 2010, and was later on 6 August 2010 declared bankrupt on a creditor’s petition after the first order was annulled. The Trustee was then appointed as trustee in bankruptcy. GMG was acting for the petitioning creditor and then acted for the Trustee in the bankruptcy. Mr Griffin was the principal lawyer acting for the Trustee thereafter until 30 July 2013 (I note that in fact initially the solicitors were Griffin Hilditch, a predecessor firm of GMG, but nothing turns on that). In December 2011, an examination of Mr Samra under s 81 of the Bankruptcy Act 1966 (Cth) took place. On 22 March 2012, the Trustee obtained orders for the examination of an officer of BankSA, and for the production of certain of its records. After some communications between lawyers for the Trustee and BankSA, the request for records was refined and those records were duly produced to the (then) Federal Magistrates Court on 7 May 2012 and on 11 July 2012. The BankSA officer was examined on 10 May 2012. On 14 August 2012, the Trustee obtained an order for the examination of another officer of BankSA. An order for further production was also made, but was not pursued. That officer was examined on 6 November 2012. Throughout the period up to 30 July 2013, GMG remained as the legal advisors to the Trustee, and provided or arranged the legal representation for the Trustee at the three examinations. Mr Griffin says in [17] of his first affidavit that, up to that date, GMG had “not been retained by the Applicants or by any of the Group Members (as this expression is defined at para 4 of the Statement of Claim) in respect of this representative proceeding”. He says he did act in limited respects on occasions in the period October 2009 to July 2013 for individual investors in ALC. It will be necessary to refer to that aspect further.
Evidence
Evidence Before The Court
I shall for convenience describe each of those issues as Issues 1-8 respectively.THE EVIDENCE Obviously, to a significant extent, the resolution of those issues required findings of fact, but also to a degree some qualitative judgments. As a starting point, for example, Issue 1 requires a finding about whether there was a relevant solicitor/client relationship between GMG and the applicant and/or other Group Members from 1 October 2009 (as the applicants contend) or only from about June 2013 (as BankSA contends). The evidence adduced on the issues for the applicants was as follows:(a)affidavit of Ms Vozzo, sworn 21 April 2015;(b)affidavit of Gregory Griffin, sworn 25 February 2015;(c)affidavit of Gregory Griffin, sworn 21 April 2015;(d)affidavit of Moreno Ferluga, sworn 30 April 2015;(e)affidavit of Wendy Jones, sworn 24 December 2014; and(f)affidavit of Matthew Elson, sworn 6 May 2015.Mr Griffin is a solicitor from GMG, formerly acting for the applicants. Mr Ferluga is an applicant. Ms Jones and Mr Elson are solicitors from the legal firm representing BankSA. The evidence adduced by the Trustee was in three affidavits of Mr Burke, sworn on 31 March 2015, 21 April 2015 and 1 May 2015. Mr Burke is a solicitor from the legal firm now representing the Trustee. The additional evidence adduced by BankSA, which also sought to rely on the affidavits relied on by the applicants and the Trustee, was the further affidavit of Ms Jones of 23 April 2015. There was no application to cross-examine any of the deponents, so I proceed on the basis of the reliability of the primary facts asserted by each of them.THE RELEVANT PRINCIPLES As might be expected, there was no real issue about the key applicable principles or the main authorities establishing them. The disputes centred on their application to the particular facts, or on whether the primary facts were sufficient to preserve the claim for privilege. It is not, therefore, necessary (at least at this point), to refer to other than the relevant principles. Again, these are taken largely from the submissions. Common law principles govern the claims of privilege by the applicants and the Trustee, rather than ss 118 and 119 of the Evidence Act 1995 (Cth) (Evidence Act), as the issue before the Court is the inspection of documents produced in answer to subpoenas, not the admissibility of evidence: Esso Australia Resources v Federal Commissioner of Taxation (1999) 201 CLR 49 at [17] per Gleeson CJ, Gaudron and Gummow JJ and at [64] per McHugh J. Legal professional privilege protects communications, not documents, although the exception to this proposition is that a document prepared with the dominant purpose of its being used as a communication with a legal adviser to obtain legal advice may be privileged even though it has not in fact been, and may never be, so used: Pratt Holdings Pty Ltd v Federal Commissioner of Taxation (2004) 136 FCR 357 at [19] per Finn J (Pratt Holdings). A communication will be protected by legal professional privilege where it was brought into existence for the “dominant purpose” of:(a)giving or obtaining legal advice (sometimes described as “legal advice privilege”); or(b)use in actual or reasonably anticipated legal proceedings (sometimes described as “litigation privilege”): Grant v Downs (1976) 135 CLR 674 at 677 per Barwick CJ (Grant v Downs); Australian Competition and Consumer Commission v Cadbury Schweppes Pty Ltd (2009) 174 FCR 547 at [34]-[38] (Cadbury Schweppes).
Decision
Reasons for decision
Again, BankSA has pointed out that it is not readily apparent how their production meets category 3 of the subpoenaed documents, particularly having regard to their date and the period specified in the subpoena. I do not think that is a reason not to accept that they are privileged from inspection by BankSA.CONCLUSIONS For the reasons given, the claims to privilege by the applicant have only partly been successful. I have not revisited the entirety of Annexure 1, to determine the extent to which, if at all, the rulings I have made may recognise legal professional privilege in the “advice privilege” documents there listed, having regard to my rulings on the status of the documents in Annexures 3 to 5. The claims to legal professional privilege in respect of the documents in Annexure 2, based on litigation privilege, have not been successful. The claims to privilege by the Trustee in respect of the documents he presented in response to the subpoena have, in essence, been successful. I have not accepted his claims to privilege over documents presented by GMG in response to the subpoena to it. I consider the appropriate course is to require BankSA to prepare a minute of the orders which will follow from these rulings, where necessary by reference to particular documents. If GMG and the Trustee accept that they give effect to these reasons, I will sign them. If there is a dispute, GMG and/or the Trustee can provide the terms of the minutes of order which they consider are appropriate. In that event, each party may provide a short written submission in support of the order proposed. I will hear the parties as to an appropriate timetable. In the event that BankSA now wishes to obtain specific rulings with respect to particular documents listed in Annexure 1, it is to be given a fixed time to submit a list of those documents (or a list of the document numbers) and (if so advised) a brief annotation explaining why the document is not privileged, and the applicants will be given a further time to respond with (if so advised) a brief responsive annotation. I will then provide a further ruling on the papers submitted. The parties are also invited to confer as to the costs of this hearing, including (as I am presently disposed) to refer the costs to be determined by the primary judge. If there is some other proposal, the parties are to put in their respective contentions, again in a time frame to be specified.
Ratio Decidendi
Legal Principle Established
GMG acted for the applicants in this proceeding until shortly after the BankSA interlocutory application, when it became apparent that, by reason of the allegations made by BankSA, it was appropriate for other solicitors to represent the applicants. The present solicitors for the applicants are JWS.CONSIDERATION As the applicants point out, the present issues may give rise to questions about whether legal professional privilege attaches to confidential communications between lawyers and proposed class action group members prior to any formal retainer, and prior to any agreement with a litigation funder, and prior to the institution of proceedings. BankSA says that the present issues present no questions of general importance, but require the application of well accepted principles to the particular circumstances. The factual basis for the Trustee’s claims to privilege is quite straightforward. As he says, he is a non-party who has cooperated and complied with the Court’s order. The Trustee does not now have, and has at no time had, any direct interest in the outcome of this proceeding. The Trustee is not in a position to make any submission about the relevance to the resolution of this proceeding of the documents produced in response to the subpoenas. He says he is doing no more than maintaining his right to claim legal professional privilege where that privilege arises. The Trustee contends that he has not expressly waived legal professional privilege and he does not waive his privilege now. He also contends that there has been no implied waiver of legal professional privilege. The affidavit of Mr Burke of 31 March 2015 explains why he claims privilege in respect of 15 documents produced by him and individually addressed in [7]-[22] of that affidavit, and to a document marked “NDC.2”, that is an email of 15 July 2015. I have dealt with the last-mentioned document at [35] above. The 15 documents fall into two categories. The first is email communications between the Trustee and JWS between 16 April 2014 and 2 May 2014 and on 27 January 2015 (documents 2 to 9 and 15). The second is notes of meetings or email communications between the Trustee and JWS and a representative of LCM on 9 April 2014, in June 2014, and on 2 September 2014 (documents 1 and 10-14). They are not addressed in Schedules 6, 7 or 8. There is another group of documents addressed in Mr Burke’s affidavit of 21 April 2015. They are 57 of the documents produced by GMG. Mr Burke has inspected each document. Where the document appears to reflect communications between the Trustee and GMG, or to reflect discussions with a purpose of providing legal advice to the Trustee generally or in relation to potential proceedings, privilege is claimed. The schedule to that affidavit lists the documents and why, in more detail, privilege is claimed in respect of some of them. I note that privilege is no longer claimed over the email exchange between 24 May and 17 June 2013, referred to in that schedule. That is document 53 in Annexure 6 to the Notice.