Perdaman Chemicals & Fertilisers Pty Ltd v The Griffin Coal Mining Company Pty Ltd [No 8]

[2012] WASC 494

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   PERDAMAN CHEMICALS & FERTILISERS PTY LTD -v- THE GRIFFIN COAL MINING COMPANY PTY LTD [No 8] [2012] WASC 494

CORAM:   MARTIN CJ

HEARD:   5 DECEMBER 2012

DELIVERED          :   14 DECEMBER 2012

FILE NO/S:   CIV 1925 of 2011

CIV 2422 of 2011
CIV 2423 of 2011
CIV 3201 of 2011
Consolidated by orders dated 18 August 2011 & 14 November 2011

BETWEEN:   PERDAMAN CHEMICALS & FERTILISERS PTY LTD

Plaintiff

AND

THE GRIFFIN COAL MINING COMPANY PTY LTD
First Defendant

LANCO INFRATECH LTD
Second Defendant

LANCO RESOURCES AUSTRALIA PTY LTD
Third Defendant

RUSSELL CONLEY
Fourth Defendant

MANOJ AGARWAL
Fifth Defendant

LAGADAPATI MADHUSUDHAN RAO
Sixth Defendant

KANDIMALLA K V NAGA PRASAD
Seventh Defendant

LANCO RESOURCES INTERNATIONAL PTE LTD
Eighth Defendant

S AMARENDRAN
Ninth Defendant

(BY ORIGINAL ACTION)

THE GRIFFIN COAL MINING COMPANY PTY LTD
Plaintiff

AND

PERDAMAN CHEMICALS AND FERTILISERS PTY LTD
First Defendant

VIKAS RAMBAL
Second Defendant

ANDREAS WALEWSKI
Third Defendant

(BY COUNTERCLAIM)
 

Catchwords:

Civil procedure - Legal professional privilege - Application by defendants to inspect certain confidential documents - Plaintiff claimed legal professional privilege - Whether plaintiff has waived legal professional privilege by their conduct - Turns on own facts

Legislation:

Nil

Result:

All documents in confidential annexure 'AW-72' to the affidavit of Andreas Walewski sworn 5 November 2012 be provided to the defendants for inspection other than the document entitled 'Witness Statement of Gary Woods'

Category:    B

Representation:

Original Action

Counsel:

Plaintiff:     Mr M L Bennett

First Defendant             :     Mr C G Colvin & Mr N J Landis

Second Defendant         :     Mr C G Colvin & Mr N J Landis

Third Defendant           :     Mr C G Colvin & Mr N J Landis

Fourth Defendant          :     Mr C G Colvin & Mr N J Landis

Fifth Defendant            :     Mr C G Colvin & Mr N J Landis

Sixth Defendant            :     Mr C G Colvin & Mr N J Landis

Seventh Defendant        :     Mr C G Colvin & Mr N J Landis

Eighth Defendant          :     No appearance

Ninth Defendant           :     Mr C G Colvin & Mr N J Landis

Solicitors:

Plaintiff:     Bennett & Co

First Defendant             :     Clifford Chance

Second Defendant         :     Clifford Chance

Third Defendant           :     Clifford Chance

Fourth Defendant          :     Clifford Chance

Fifth Defendant            :     Clifford Chance

Sixth Defendant            :     Clifford Chance

Seventh Defendant        :     Clifford Chance

Eighth Defendant          :     Tottle Partners

Ninth Defendant           :     Clifford Chance

Counterclaim

Counsel:

Plaintiff:     Mr C G Colvin & Mr N J Landis

First Defendant             :     Mr M L Bennett

Second Defendant         :     No appearance

Third Defendant           :     No appearance

Solicitors:

Plaintiff:     Clifford Chance

First Defendant             :     Bennett & Co

Second Defendant         :     Herbert Smith Freehills

Third Defendant           :     Herbert Smith Freehills

Case(s) referred to in judgment(s):

DSE (Holdings) Pty Ltd v Intertan Inc [2003] FCA 384; (2003) 127 FCR 499

MARTIN CJ: 

Summary

1. These reasons are concerned with an application by the defendants (excluding the eighth defendant) for inspection of documents which have been discovered by the plaintiff subject to a claim for privilege from inspection by reason of legal professional privilege. For the reasons which follow, I have concluded that the plaintiff has waived privilege in respect of most of the documents the subject of the defendants' application, and orders for inspection should be made in respect of those documents.

Background

1. The plaintiff, Perdaman Chemicals and Fertilisers Pty Ltd (Perdaman), claims damages from the Griffin Coal Mining Co Pty Ltd (Griffin) and various other defendants as a result of alleged breaches of a coal supply agreement between Perdaman and Griffin, unconscionable conduct by Griffin and various other defendants, and tortious interference in Griffin's performance of the coal supply agreement by various other defendants.  Griffin is a subsidiary and associate of the other corporate defendants who can be loosely described as the Lanco group.

2. The pleadings are voluminous and defy succinct summary.  For present purposes, it is sufficient to note that the coal supply agreement to which I have referred was entered into by Perdaman so as to secure a source of supply of coal to be used by it in the operation of a plant for the production of urea which it proposes to establish in the vicinity of Griffin's coal mines near Collie in Western Australia.  A central component of Perdaman's claim is the assertion that, during May 2011, Griffin took various steps which had the consequence that prospective financiers of Perdaman withdrew from advanced negotiations with respect to the provision of finance to enable the establishment of the urea plant, with the result that Perdaman was unable to achieve one of the conditions precedent under the coal supply agreement, being the requirement of achieving 'financial close' by a specified date - namely, 28 August 2011.  Perdaman allege that at the time of Griffin's actions during May 2011, it was 'on the cusp of achieving financial close' (Statement of Claim [17]) and that but for Griffin's actions, Perdaman would have achieved financial close by the requisite date.

3. In that context, Perdaman specifically pleads that on 25 May 2011, it provided written advice to Griffin pursuant to cl 24.4 of the coal supply agreement (which requires the provision of milestone reports from time to time) that the likely impact of Griffin's actions during an inspection of Griffin's mine on 10 May 2011, and in sending a letter dated 24 May 2011 indicating its refusal to execute security documents relating to the coal supply agreement was 'that the financiers were likely to withdraw from financing the Perdaman Project' (Statement of Claim [119.12]).  In the context of the plea, it is to be implied that Perdaman asserts that the statements in the Buyer Milestone Report, dated 25 May 2011, were true.  Further, Perdaman pleads that Societe Generale (who were the lead prospective financier to the project) wrote to Perdaman by letter dated 26 May 2011 in the following terms (which are expressly said to be true in the Statement of Claim):

   The conduct of Lanco/Griffin on 10 May 2011 at the mine site visit and subsequently, however has directly affected the confidence of the lenders.  It appears from Lanco's conduct that it is not committed to comply with the terms of the Coal Supply Agreement dated 21 December 2010, and instead is intent on causing Griffin in some way to withdraw from that agreement.

   The attitude of Lanco will prevent Financial Close being achieved by Perdaman as scheduled.  There is therefore now a high likelihood that the lender group will simply withdraw over time from the project financing, thereby creating major delays for the implementation of the project itself  [119.13].

4. Griffin and the other defendants deny that Perdaman was on the cusp of achieving financial close and further deny that the conduct of any of the defendants had any effect on the attitude of Perdaman's prospective financiers (Defence and Counterclaim [17]).  Griffin and the other defendants assert that Perdaman would never have achieved financial close by the date required under the coal supply agreement, irrespective of any conduct on their part.  Although Griffin and the other defendants admit that the Buyer Milestone Report and the letter of 26 May from Societe Generale were sent, they deny the facts asserted in those communications.

5. It can thus be seen that the attitude of the prospective financiers of the project, and their response to the actions which Perdaman asserts Griffin took during May 2011 is a central feature of the case.  The two documents to which I have referred, being the Buyer Milestone Report and the letter from Societe Generale to Perdaman of 26 May 2011 have been specifically pleaded by Perdaman to be aspects of that central issue.

The document said to be privileged

1. Perdaman has discovered an email dated 25 May 2011 sent by its legal advisers to two of Perdaman's directors, with four attachments which are described, in the list of discovered documents (attached to the defendants' submissions of 26 November 2012) as 'Buyer Milestone Report 25052011', 'Letter Societe Generale (email) 25052011'; 'Letter to Mr Manoj Agarwal Griffin Coal 25052011' and 'Witness Statement of Gary Woods'.

2. Perdaman claims privilege from inspection of the email and its attachments on the basis of legal professional privilege.

3. Griffin and the other defendants assert that Perdaman has waived any privilege which might otherwise attach to both the email and its attachments, because the maintenance of the claim for privilege is inconsistent with Perdaman's conduct by putting in issue the truth of the matters asserted in the Buyer Milestone Report and the letter from Societe Generale to Perdaman of 26 May 2011, and thereby putting in issue the circumstances in which those documents came to be written.

The legal principle to be applied

1. The legal principle to be applied in the resolution of this issue is not contentious.  It can be succinctly enunciated by adopting the observations of Allsop J in DSE (Holdings) Pty Ltd v Intertan Inc [2003] FCA 384; (2003) 127 FCR 499 [58], to the effect that waiver occurs when

   the party entitled to the privilege makes an assertion (express or implied), or brings a case, which is either about the contents of the confidential communication or which necessarily lays open the confidential communication to scrutiny and, by such conduct, an inconsistency arises between the act and the maintenance of the confidence, informed partly by the forensic unfairness of allowing the claim to proceed without disclosure of the communication [58].

My inspection of the documents

1. The parties were agreed that this is one of those cases in which I should inspect the documents prior to making a determination with respect to the issue of privilege.  In essence, that is because the relationship between the documents over which privilege has been claimed, and the issues pleaded by Perdaman, and particularly the pleading of the Buyer Milestone Report, and the letter from Societe Generale of 26 May 2011, is not apparent merely from the description given to the documents in the list of discovered documents.  I was provided with the documents as a confidential annexure to an affidavit of Mr Andreas Walewski, a director of Perdaman.  Unfortunately, neither the text of the affidavit nor the confidential annexure clearly identify which of the documents provided to me correspond with the discovered documents.  To the contrary, it seems clear that I have been provided with documents which go beyond those enunciated in the list to which I have referred.  For example, included in the confidential annexure is an email from Mr Vikas Rambal, a director of Perdaman, to Perdaman's lawyer, Mr Martin Bennett, of 26 May 2011 which forwards an email from Societe Generale to Mr Rambal to which the letter from Societe Generale of 26 May 2011 is attached.  To take another example, I have also been provided with an email from Mr Rambal to Mr Bennett dated 24 May 2011, which forwards an email from Mr Stephen Krust, of Societe Generale, to Mr Rambal dated 24 May 2011, the subject of which is a draft letter from Societe Generale to Mr Rambal, which deals with the same subject as the letter dated 26 May 2011, but which is in rather different terms, and which concludes:

   IF OKAY, WE WILL HAVE IT PUT ON LETTERHEAD.  THIS IS A ROUGH DRAFT BUT YOU SEE THE DIRECTION.

2. It is not clear from the affidavit or the submissions I have received whether these additional documents have been discovered, and if so, whether they are subject to a claim of privilege.

3. In these circumstances, it appears to me that all that I can usefully do is to rule on the documents that I have been given, and leave it to the parties to renew or amend their various applications in the light of these reasons.  For the avoidance of doubt, I will refer to the documents by reference to the page number that they have been given in the confidential annexure 'AW‑72' to Mr Walewski's affidavit ('Confidential Annexure'), although I acknowledge that this will be of no assistance to the defendants, who, of course, have not yet seen the confidential annexure.

Email from Mr Krust to Mr Rambal cc Mr Walewski dated 24 May 2011 (Confidential Annexure, 19)

1. This document is a copy of an email dated 24 May 2011 from Mr Krust of Societe Generale to Mr Rambal, copied to Mr Walewski, on the subject of the site visit to the Griffin mine.  It deals with events which occurred during that visit, and which are plainly relevant to the proceedings.  There is no apparent basis upon which it could be privileged, and it should be provided for inspection.

Email from Mr Rambal to Mr Bennett dated 24 May 2011 (Confidential Annexure, 18)

1. This document is a copy of an email from Mr Rambal to Mr Bennett of 24 May 2011, forwarding the email from Mr Krust to Mr Rambal bearing the same date and to which I have just referred.  The only notation added by Mr Rambal at the time of forwarding the email are the letters 'fyi' which I take to mean 'for your information'.  I would not infer from that notation that Mr Rambal was requesting legal advice from Mr Bennett with respect to the email, but even if he was, Perdaman has waived any privilege which would attach to the email for the reasons which follow.

Email from Mr Rambal to Mr Bennett of 24 May 2011 (Confidential Annexure, 16‑17)

1. This is the email to which I have already referred.  By the email, Mr Rambal forwards to Mr Bennett an email from Mr Krust to Mr Rambal, copied to Mr Walewski and Ms Stephenie Clement‑de‑Givry, entitled 'Draft Letter' and which sets out what is described as a 'rough first draft' of a letter which is plainly the first draft of the letter which was ultimately sent by Societe Generale to Perdaman on 26 May 2011.  The terms of the first draft are significantly different to the letter of 26 May 2011.  It is a fair inference from the conclusion of the email from Mr Krust to Mr Rambal, which I have set out above at [11], that Societe Generale were seeking Perdaman's input into the terms of the letter which was to be sent to Perdaman, and which became the letter of 26 May 2011.  It is a fair inference from the fact that Mr Rambal forwarded this email to Mr Bennett, that he was seeking legal advice with respect to the terms in which Societe Generale should write to Perdaman.  Given the significant variation between the terms of the first draft, and the terms of the letter of 26 May 2011, there is a real prospect that Perdaman and/or its legal advisers may have communicated to Societe Generale with respect to the appropriate terms of the letter to be sent.  Given those inferences, in my view it would be inconsistent for Perdaman to rely upon the terms of the letter from Societe Generale to it of 26 May 2011 as stating the true position of the prospective project financiers while at the same time claiming privilege over communications which deal with the extent to which Perdaman and its legal advisers contributed to the formulation of that letter.  Although fairness is no longer regarded as the touchstone of waiver of legal professional privilege, as Allsop J has noted in DSE (Holdings) cited above, it informs decisions with respect to waiver.  In this instance it would be quite unfair to allow Perdaman to assert that the terms of the letter from Societe Generale to Perdaman of 26 May 2011 reflected the true statement of the position of the prospective project financiers while at the same time maintaining a claim for privilege over communications which may well reveal the extent of its contribution to the formulation of that letter.

Draft Witness Statement of Gary Woods (Confidential Annexure, 14-15)

1. This document is a copy of a draft witness statement of a Mr Gary Woods.  I would infer that the document was prepared for the purpose of these proceedings.  It does not appear to have any relationship to the issues which underpin the defendants' assertion of waiver of privilege or the correspondence of 25 and 26 May 2011.  Accordingly, I conclude that the document is privileged from inspection.

Draft Buyer Milestone Report (Confidential Annexure, 13)

1. This document appears to be a copy of an attachment to the email from Bennett & Co to Mr Rambal and Mr Walewski of 25 May 2011.  It is similar in terms, but not identical to the Buyer Milestone Report which was ultimately provided to Griffin by Perdaman.  It is a fair inference from the fact that the document was attached to the email from Bennett & Co that it was prepared by Bennett & Co.  Given that Perdaman expressly plead the provision of the document to Griffin in terms which infer that it is asserted to be a true statement of the position, it is inconsistent (and unfair) for Perdaman to maintain a claim for privilege which would conceal the likely provenance of that document.  I therefore conclude that any privilege attaching to the document has been waived.

Draft letter from Societe Generale to Mr Rambal dated 25 May 2011 (Confidential Annexure, 11‑12)

1. This document is a copy of what also appears to have been an attachment to the email from Bennett & Co to Mr Rambal of 25 May 2011.  Accordingly, there is an inference open to the effect that the document was prepared by Bennett & Co.  Its form is more similar to the letter ultimately sent by Societe Generale to Mr Rambal on 26 May 2011 than the document described as 'the rough first draft', but its terms are nevertheless different from the letter ultimately sent in a number of significant respects.  Given that Perdaman asserts that the letter from Societe Generale of 26 May 2011 was a true statement of the position of the prospective financiers, it would be inconsistent and unfair for Perdaman to maintain a claim for privilege which would conceal communications which are capable of sustaining an inference to the effect that Perdaman and its legal advisers made a significant contribution to the formulation of the letter.

Email from Bennett & Co to Mr Rambal and Mr Walewski of 25 May 2011 (Confidential Annexure, 10)

1. This is a copy of the email dated 25 May 2011 attaching a number of the documents to which I have already referred.  It follows from the conclusions I have reached with respect to the attachments, that privilege has also been waived in respect of the email itself, as the email provides evidence of the possible input of Perdaman and its legal advisers to the formulation of the documents which Perdaman has pleaded.

Letter from Perdaman to Mr Manoj K Agarwal of Griffin dated 25 May 2011 (Confidential Annexure, 9)

1. This document is a copy of the Buyer Milestone Report dated 25 May 2011, in the form in which it was ultimately provided to Griffin.  It has been discovered in this form and no claim for privilege from inspection has been made in relation to it.  I cannot see any basis upon which privilege could be claimed in respect of this version of the document.

Email and attachment from Mr Krust to Mr Rambal and Mr Walewski dated 25 May 2011 (Confidential Annexure, 7‑8)

1. This document is a copy of an email from Mr Krust to Mr Rambal and Mr Walewski dated 25 May 2011 attaching a draft letter on the subject of financial close.  Its terms are:

   Attached is current draft.  I do, as a prudent banker, need approval from management before finalizing it.  Will seek this asap.  In between time, let me know if you have any questions.

2. Attached to the email is another draft of a letter from Societe Generale to Mr Rambal dated 25 May 2011.  It appears to be in identical terms to the letter ultimately sent on 26 May 2011.  As the communication is between Societe Generale and officers of Perdaman, I cannot see any basis upon which privilege could be claimed in relation to the email or its attachment, and in any event, the communication would fall within the scope of the waiver which I have already identified.

Email from Mr Rambal to Mr Bennett cc Mr Casey Bohan dated 26 May 2011 (Confidential Annexure, 4‑6)

1. This is a copy of an email that merely forwards to Mr Bennett an email received by Mr Rambal from Societe Generale, copied to Mr Krust, Ms Sophea Seng and Mr Walewski, attaching the letter actually sent by Societe Generale dated 26 May 2011 and which has been discovered.  The email from Mr Rambal to Mr Bennett does not seek any legal advice in relation to the letter and accordingly I can see no basis upon which a claim for privilege could be made in respect of the communication.  In any event, as the email is the culmination of the sequence of communications which I have set out, and in respect of which I have concluded that Perdaman has waived privilege, it would also fall within the scope of that waiver if otherwise privileged.

Conclusion

1. For these reasons, in my view, all of the documents provided to me for inspection other than the document entitled 'Witness Statement of Gary Woods' should be provided by the plaintiff to the defendants for inspection either because they do not fall within the scope of legal professional privilege, or if they do, because privilege in respect of the documents has been waived by Perdaman.