Re Doran Constructions Pty Ltd (in liq) - [2002] NSWSC 215

No judgment structure available for this case.

Reported Decision:
(2002) 20 ACLC 909

New South Wales

Supreme Court

CITATION: Doran Constructions Pty Limited (in Liquidation) [2002] NSWSC 215

CURRENT JURISDICTION: Equity

FILE NUMBER(S): SC 5112/98

HEARING DATE(S): 12 December 2001

JUDGMENT DATE: 27 March 2002

PARTIES :

Alan Edwards Lewis (Applicant)
Christopher Freeman (Respondent)

JUDGMENT OF: Campbell J

COUNSEL : S Donaldson SC (Applicant)
A S Martin SC with A Gelbart (Respondent)

SOLICITORS: Walker Insolvency Lawyers (Applicant)
Christopher C Freeman & Co (Respondent)

CATCHWORDS: CORPORATIONS - winding up - liquidator's examination - circumstances in which liquidator entitled to ask questions relating to legal advice given to company in liquidation - EVIDENCE - liquidator's examinations - whether evidence given at is governed by Evidence Act 1995 (NSW) - EVIDENCE - legal professional privilege - circumstances in which joint retainer of solicitor exists - EVIDENCE - procedure to adopt when deciding whether legal professional privilege does not exist - EVIDENCE - waiver of client legal privilege - disclosure of substance of advice - disclosure made knowingly and voluntarily - disclosure by agent or employee authorised to make it - disclosure made under compulsion of law

LEGISLATION CITED: The Evidence Act 1995 (NSW)
Service and Execution of Process Act 1901 (Cth)
Corporations Act 2001 (Cth)
Companies Act 1899 (NSW)
Supreme Court Act 1970
Evidence Act 1995 (Cth)

CASES CITED: Rochefoucould v Boustead (1896) 65 LJCh 794
Farrow Mortgage Services Pty Ltd (in Liq) v Webb (1996) 39 NSWLR 601
Stockbridge v Lupton, McLelland J, 23 September 1988, unreported
Hellenic Mutual War Risks Association (Bermuda) Ltd & General Contractors Importing and Services Enterprises v Harrison [1997] 1 Lloyds Report 160
Sullman v Sullman [2002] NSWSC 169
Makita (Aust) Pty Ltd v Sprowles [2001] NSWCA 305
Jones v Dunkell (1959) 101 CLR 298
Minter v Priest [1930] AC 558
Alfred Crompton Amusement Machines Ltd v Customs and Excise Commissioners (No. 2) [1972] 2 QB 102
Perry v Smith (1842) 9 M & W 681
Mann v Carnell (1999) 201 CLR 1
Northern Territory v GPAO (1999) 196 CLR 553
Cheney v Spooner (1929) 41 CLR 532
Gould v Brown (1998) 193 CLR 346
Proust v Blake (1989) 17 NSWLR 267
Blake v Norris (1990) 20 NSWLR 300
Fiorentino v Irons (1997) 79 FCR 327
Re Interchase Corporation Limited (1996) 68 FCR 481
Re Griffin (1887) 8 LR (NSW) 132
Yelds v Nurses Tribunal (2000) 49 NSWLR 491
Re Transequity Ltd (in Liq) (1991) Tas R 308
Re BPTC Ltd (in Liq) (1992) 7 ACSR 539
Re Compass Airlines Pty Ltd (1992) 35 FCR 447
Re Darlington Commodities Pty Ltd (1987) 10 NSWLR 424
Re BPTC Ltd (in Liq) (1993) 29 NSWLR 708
Re John Pringle & Co Limited (1934) 34 SR (NSW) 508

DECISION: See orders following para 128

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
equity LIST

CAMPBELL J

27 March 2002

5112/98 DORAN CONSTRUCTIONS PTY LIMITED (In Liq) RE: ALAN EDWARD LEWIS

JUDGMENT

HIS HONOUR:

Nature of Application

1 The applicant is the liquidator of Doran Constructions Pty Ltd (in Liq) (“Doran Constructions”). He became liquidator on 24 December 1997. He has been conducting some examinations seeking to investigate a transaction to which Doran Constructions was party, which was entered on 1 November 1994. The transaction has been described as a “debt substitution” transaction, as a result of which Doran Constructions ceased to be owed a debt by Doran Holdings Pty Ltd (“Doran Holdings”), and came to be owed a debt by Doran Constructions (Australia) Pty Ltd (“Doran Constructions (Australia)”). The debt of $4.1 million, which had been owed by Doran Holdings to Doran Constructions was, the liquidator contends, the principal asset of Doran Constructions. Doran Holdings is, he contends, a company of substance, while Doran Constructions (Australia) is not. The liquidator has begun a civil action against the directors of Doran Constructions, alleging that the conduct of the directors in entering this transaction was in breach of their duties to the company.

2 To gather information for that litigation, the liquidator has conducted various examinations under Part 5.9 of the Corporations Law.

3 Amongst the people examined are: Mr Martin Linz, an accountant, who had acted as the auditor of Doran Constructions, and Mr Christopher Freeman, a solicitor, who acted for certain people and companies (precisely which companies is a matter of dispute) connected with Doran Constructions.

4 In the course of an examination of Mr Freeman before a Deputy Registrar, on 22 May 2001, Mr Freeman made a number of claims to refuse to answer certain questions on the grounds of legal professional privilege. The Deputy Registrar made a ruling about the availability of legal professional privilege to the line of questioning that was being pursued. That ruling (which I will consider in more detail later in these reasons for judgment) restricted the questions which the liquidator could ask. In this application, the liquidator seeks a review, under Part 61 Rule 3 of the Supreme Court Rules, of that ruling by the Deputy Registrar.

5 As part of his investigation of the same transaction, the liquidator also served Mr Freeman with a summons to produce certain documents. Mr Freeman objected to the production of four of those documents, on the grounds of legal professional privilege. On 4 October 2001 the Deputy Registrar upheld each of those claims for legal professional privilege. The present application also seeks a review of that ruling by the Deputy Registrar.

The 1 November 1994 Meeting – The Liquidator’s Contentions

6 The liquidator contends that Mr Freeman is not able to claim legal professional privilege concerning any aspect of what transpired at the meeting of 1 November 1994. There are three alternative and independent bases on which the liquidator makes this claim.

7 The first is that there was a joint retainer of Mr Freeman by (amongst others) Doran Constructions, to give advice at that meeting. The common law provides that if there is a joint retainer of a solicitor, all of those who are entitled to that privilege must join in any waiver of it (Rochefoucould v Boustead (1896) 65 LJCh 794, Farrow Mortgage Services Pty Ltd (in liq) v Webb (1996) 39 NSWLR 601 at 608 per Sheller JA (with whom Waddell A-JA agreed)). However, those who jointly retain the solicitor do not have privilege, one from the other, in the advice given (Stockbridge v Lupton, McLelland J 23 September 1988, unreported; Farrow Mortgage Services Pty Ltd (in liq) v Webb (1996) 39 NSWLR 601 at 608 per Sheller JA (with whom Waddell A-JA agreed), 603 per Meagher JA (dissenting)). The principle was stated succinctly by Rix J in Hellenic Mutual War Risks Association (Bermuda) Ltd & General Contractors Importing and Services Enterprises v Harrison [1997] 1 Lloyds Report 160 at 165:

“Parties who grant a joint retainer to solicitors retain no confidence as against one another: If they subsequently fall out and sue one another, they cannot claim privilege.”

8 The liquidator says that, by virtue of his appointment as liquidator, he is entitled to exercise all of the rights of Doran Constructions, including the right of Doran Constructions to be informed of all advice given by Mr Freeman pursuant to the joint retainer.

9 The Evidence Act 1995 (NSW) has reformulated the law concerning what it calls client legal privilege. It includes the following provisions:

118. Legal advice

Evidence is not to be adduced if, on objection by a client, the court finds that adducing the evidence would result in disclosure of:

(a) a confidential communication made between the client and a lawyer, or

(b) a confidential communication made between 2 or more lawyers acting for the client, or

(c) the contents of a confidential document (whether delivered or not) prepared by the client or a lawyer,

for the dominant purpose of the lawyer, or one or more of the lawyers, providing legal advice to the client.

124. Loss of client legal privilege: joint clients

(1)

(2)

(a) a communication made by any one of them to the lawyer, or

(b) the contents of a confidential document prepared by or at the direction or request of any one of them,

in connection with that matter.”

10 The Dictionary to the Evidence Act 1995 says, “Civil proceeding means a proceeding other than a criminal proceeding.”

11 It was not submitted to me that there was any difference of substance between the common law consequences of joint retainer of a solicitor, and the consequences under the Evidence Act 1995 of joint retainer, so far as the liquidator’s ability to find out communications for the purpose of legal advice is concerned.

12 The second basis on which the liquidator alleged no privilege exists is that, as between Doran Constructions and any entity which was present at the meeting, there was no confidentiality. The basis for this submission was the statement of McLelland J in Stockbridge v Lupton (supra) at page 5 that: “There will be no privilege where the presence of a third party indicates that the communications were not confidential.” (See also Cross on Evidence, Australian Edition, current electronic version, para [25255], Re: Griffin (1887) 8 LR (NSW) 132) Here, it was said, there was no confidentiality which could be asserted against Doran Constructions, because the directors of Doran Constructions, its eyes and ears, were present at the meeting, taking in what was said.

13 The third basis on which the liquidator alleges that no legal professional privilege claim can now be made is that, if it ever existed, it has been waived.

14 Counsel for both parties accepted that there was no difficulty, as a matter of principle, about legal professional privilege being available in the course of such an examination, in appropriate circumstances (Re: Transequity Ltd (in Liq) (1991) TasR 308; Re: BPTC Ltd (in Liq) (1992) 7 ACSR 539; Re: Compass Airlines Pty Ltd (1992) 35 FCR 447).

The Liquidator’s First Basis for Contesting that Privilege Existed – Was There a Joint Retainer?

15 There is no dispute between the parties about the relevant legal principle. Whether the liquidator’s first ground succeeds depends on a decision of fact about whether there was, or was not, a joint retainer. This is a decision which I am called on to make on the basis of fairly incomplete evidence.

Mr Linz’s Evidence at the Examination

16 One item of evidence is a transcript of an examination of Mr Linz on 24 March 1999. He gave evidence that he had been present at a meeting held in the boardroom at “Doran’s”. Also present were the four Doran brothers (who, it is common ground, were the directors of Doran Constructions, Doran Holdings, and Doran Constructions (Australia)), Mr Brad Joyce, and Mr Chris Freeman.

“And what was the purpose of the meeting? --- It was to discuss the loan accounts between Doran Holdings and Doran Constructions and Doran Constructions (Australia).” (T153).

17 Mr Linz said the meeting probably lasted an hour or more, and that he made no notes of the meeting. He says he was asked to come to the meeting by Brad Joyce.

“Now why did you take no note of the meeting Mr Linz? --- Because I was only asked to give advice on one specific matter.

Yes, when were you asked to give that advice? --- Well obviously before the meeting, I can’t remember how long before the meeting I was asked.

Who asked you to give that advice? --- Brad Joyce.

And was the request to give the advice in writing? --- No.

And what was the specific matter you were asked to give advice on? --- Transaction in general but in particular under what circumstances would it be considered inappropriate.

Would what be considered inappropriate? --- The – a transaction between a forgiveness or a round robin of these loan accounts between the companies, repayment of loans.

What did Mr Joyce say to you as best you can recall that you were asked to then give advice about? --- Um, he was continuing with the rationalisation of the group which had been going on for a number of years. He wanted to tidy up loan accounts. Continued to tidy up loan accounts between the entities. He was – the company was about to take action against the University and he wanted to make sure that everything was tidy within the companies and he wanted to know under what circumstances – or just to ensure that those transactions, that the repayment of loans – in what circumstances they would be seen to be voidable. He didn’t actually ask that but that’s what he meant.

What did he ask? --- Um, I can’t remember. It would be something in the vernacular to that effect.” (T154-155)

“Yes, and no doubt you would have been concerned to ensure that the advice you gave was correct advice? --- Well the advice I – well what I gave Brad was a copy of certain copies of the Corporations Law in terms of voidable transactions and gave him a brief explanation of that, but also noting that I am not a lawyer, nor was I an insolvency expert, so really I could – my advice went no further than that.” (T155)

… “Did you after the meeting record anywhere what advice you had given at the meeting? --- Um, I did not.

Nowhere at all? --- Well frankly it was unnecessary because Chris Freeman in fact gave – attended the same meeting and explained better than what I could the law in that regard.

I see, so you went to a meeting down in the boardroom and do you recall whether there was anything else discussed at this meeting while you were there other than this issue of a round robin of payments? --- I can remember Chris explaining that the directors would have to think in terms of each company and the reasonableness of the transaction for each of those companies.

Do you recall any other topics being discussed? --- Well, that was discussed and – and issues of, um, the rational continue – part of the continuing rationalisation of the Doran Group would have been discussed. Just the simplification of the Group was discussed.” (T156)

18 Mr Linz later gave evidence that the meeting in question took place on 1 November 1994, and that he had signed the audit report for the year ended 30 June 1994 on 28 October. (From the context, it is clear enough that this audit report is on one or more of the Doran companies, but it is not clear which one or ones.)

19 Mr Linz gave evidence that he had seen a minute of 1 November 1994. His evidence continued:

“You didn’t attend any such meeting on 1 November 1994, did you, where there was a resolution in the form that appears in that minute? --- No. It’s – it’s difficult to say and let me explain why. I attended a meeting of the brothers and Chris Freeman at around about that time, I can remember that. Whether that was – whether I – whether that was the directors’ meeting and I only attended part of it or I attended the whole of it, I cannot remember.

Well, let me put it to you very clearly, Mr Linz. Have you ever attended a meeting where Paul, Peter, John and Michael Leo Doran were present, where it was resolved that on behalf of Doran Constructions repayment of $4.1 million from Doran Holdings would be demanded forthwith? --- I – I can remember those transactions being discussed and decisions made at that meeting. Whether that’s the same meeting as – as the directors’ meeting or whether they had one immediately after I left, I don’t know.” (T160 )

20 The “minute” which was referred to in that evidence was later identified as being minutes of a meeting of directors of Doran Constructions held on 1 November 1994. (T161)

21 Mr Linz gave evidence of his recollection of the meeting:

“I can remember Brad Joyce describing the transaction. I can remember – oh, the situation and the transaction. I can remember Chris Freeman explaining about each company having to make its individual – the Directors of each company having to make up – make the decision for that individual company and there – and discussion in relation to that. And I can remember discussion as to the transactions which were proposed in that minute.

So what can you recall Mr Joyce outlining? --- Um, the figures that are in – in that minute.

As best you can recall, tell us what he said? --- Ah, I can remember 4.1 million but I can’t remember the amount in respect of Doran Property Services. Um, I can remember um an analysis – an analysis of the loans between the companies and, um, what would need to happen for um, ah, to enable DCA to be able to repay its loan and for Doran Holdings to repay its loan.” (T162)

22 Mr Linz said that Mr Joyce was the first person he could recall addressing the meeting in relation to the proposal. His recollection of what Mr Joyce said was:

“Um, I can remember um, discussion that this was a continuation of the rationalisation which Ernst & Young had commenced. That there needed to be a tidying – a continued tidying up of the Group in terms of inter-group loan accounts. Um, I think Ernst & Young and the banks had – had both commented upon that issue.”

23 Mr Linz could not remember any comments from, or questions from, the Doran brothers at the meeting, though he said that he was sure that they would have asked questions. When asked about what Mr Freeman said, his evidence was:

“Um, I can remember, as I’ve already repeated I think three times, that he explained that it was the responsibilities of the Directors to make decisions in respect of each individual Company. I can remember him explaining that the transaction would have to be of a commercial nature. I’d be guessing to go further than that.”

Mr Freeman’s Evidence at the Examination, and the Deputy Registrar’s Ruling

24 Another item of evidence, is evidence which was given by Mr Freeman in his examination on 22 May 2001. He gave evidence that he had commenced a professional association with the Doran family about 1975, 1976 or 1977. He had, over the years, acted for each of the four Doran brothers and for various companies in the Doran group of companies. He had acted for Doran Constructions, but was not its only solicitor. Doran Constructions had used two other firms of solicitors (one after the other) for building construction litigation. Mr Freeman had done some legal work concerning building construction for Doran Constructions, and had also done some work of a type which a commercial solicitor might perform. He said:

25 Mr Freeman gave evidence that he had retained files relating to Doran Constructions from about 1985. His general practice for rendering fees to the Doran Group and the Doran individuals was, when he rendered a fee note, to make a copy of the fee note and put it in the appropriate file.

26 Mr Freeman gave evidence that he was aware of a series of transactions in November 1994 by which Doran Constructions was repaid a debt by Doran Holdings and lent money on to Doran Constructions (Australia). (T15) He said he recalled being present at a meeting prior to the transactions, in which the transactions were discussed, and the subject of the discussion was the reason for the transaction. When asked, “And part of the discussion related to whether or not the transaction would be vulnerable to being set aside at the suit of a future liquidator?” he claimed legal professional privilege.

Q Why do you say it’s privileged?”

27 Mr Gelbart, counsel appearing for the examinee, volunteered to answer that question, and was permitted by the Deputy Registrar to do so. While Mr Gelbart’s explanation is imperfectly transcribed in the transcript which was tendered before me, the gist of it seems to be that during various parts of the meeting Mr Freeman acted for different entities, that sometimes he was giving advice to directors in relation to their own position, in which case those directors could claim privilege, while at other times he was giving advice to companies other than Doran Constructions, in which case those companies other than Doran Constructions could claim privilege in relation to that particular item of advice.

28 The Deputy Registrar, well aware of where the questioning of Mr Freeman had been leading, said “Yes, of course, but the series of questions that have just been put to the examinee has been for the purpose of trying to –” Mr Gelbart, also alive to the direction the questioning had been heading in to such an extent that he did not even need to have the Deputy Registrar finish her sentence, said: “Yes, but perhaps that’s the explanation which Mr Freeman has…”.

29 Counsel for the liquidator sought to resume the questions. There followed the segment of transcript which gave rise to the ruling of the Registrar which is challenged in the present hearing.

30 Mr Braham, counsel for the liquidator, thereupon asked for a ruling on that question. He asserted that there was a joint retainer of Mr Freeman, by companies including Doran Constructions, and that the liquidator, as the successor in title of that joint privilege, was entitled to know what was said. Mr Gelbart asserted that, “On Mr Freeman’s evidence the meeting was segmented. Various parts of the meeting dealt with various issues and with various companies”. In consequence, he said a question which sought to probe the entirety of the advice given at the meeting was not permissible, though there could be no objection to advice which was tendered at the meeting to Doran Constructions. Mr Braham responded saying:

“Mr Freeman has not said that the meeting was segmented. He said at different times he was giving advice, in relation to different matters, but the meeting wasn’t segmented in – there were six people there, they were there for the whole meeting, all six of them. The subject of discussion was one transaction, and there were three parties to that transaction, and that’s why he was there to advise. It’s artificial to say some of what he said was privileged to Doran Holdings when he was there to advise four directors, each of whom was a director of each of the three companies in relation to a transaction in respect of which three companies were participating. It’s a classic case of joint privilege.”

31 Mr Freeman then, and apparently from the witness box, joined in the argument. He said:

“When you look at the meeting the meeting does actually segment, because as my friend rightly pointed out at the time you have the transaction that flows from one company to another company and up through a third company, so there must be the segmentation through that transaction. And while my friend says that it is artificial to say – because we’re all in the same room and because we’re all directors of one company that that entitles him to information concerning Doran Holdings, for example, or Doran Constructions Australia, and the advice that was given there, I think would be completely and utterly wrong.”

32 This statement, expressed in the language of conclusion and submission, rather than of giving evidence of primary fact, was responded to by the Deputy Registrar saying:

“Right, so your evidence is that there is a distinction, and if you were called to give evidence that in your mind there is a clear distinction between certain advice that you gave that went to the three separate entities and that there are some matters upon which you provided advice that do not touch upon Doran Constructions.”

33 To this Mr Freeman replied:

“Yes, and there is also a further matter which is weighing very heavily upon me, and that is the actual four Doran brothers. I have sought instructions to be released from the privilege and I have been told in no uncertain terms that I must continue to claim the privilege, and that I must continue to claim the privilege even in relation to what was said in relation to Doran Constructions because the nature of that could well be what my friend is endeavouring to establish now – although I’m not saying that it is, but it could well be – what action should the directors of Doran Constructions have taken.”

34 The Deputy Registrar then gave the ruling which is challenged in this hearing.

“What I’m going to do is require you to answer any question that is put to you about the advice given at that meeting or what was said that touches on Doran Constructions in any way if it – whether or not it also concerns another entity. So that only in those clear cases where the advice that you gave did not touch upon Doran Constructions in any way, would you be entitled to claim that privilege. Otherwise there is a joint privilege, the liquidator is entitled to the information, the world at large is not entitled to the information, but the liquidator is a joint privilege holder.”

35 Mr Braham then asked some questions which went to the question of waiver of privilege. He established from Mr Freeman that Mr Freeman had been in court when Mr Linz was examined about the meeting, and that both Mr Freeman and counsel appearing in that examination also acted for the Doran brothers.

“Q There was no objection taken to the questions asked about what occurred at the meeting when the evidence was given by Mr Lindzt, was there?

A No I don’t think that would have been proper to do so, or I was led to believe by counsel that it wasn’t proper to do so.”

36 There was evidence about Mr Freeman’s involvement, in November and December 1997, in giving advice about what should occur in relation to the external administration of Doran Constructions. The evidence was that the advice was given mainly to Paul Doran, not in writing, “usually over the telephone. I’d get a call from Paul and he’d ask me questions.”. Mr Freeman issued a fee note on 16 December 1997, to Doran Constructions Pty Ltd, which related to those conversations that he had with Paul Doran as to what steps should be taken.

37 It seems to me that the informality with which advice was given on that occasion, and the way in which, notwithstanding that, the fee note was rendered to Doran Constructions, may provide some assistance on the present problem.

38 Later, (T32) the Deputy Registrar explained her earlier ruling as being that:

“…the examinee is to provide an answer to any question which touches on the advice given to Doran Constructions, whether or not it also could be regarded as advice to Doran Holdings and Doran Constructions Australia. Only those matters which go to advice given to Doran Holdings or Doran Constructions Australia exclusively need not be answered.”

39 And again at T33.

“Gelbart: It is only the advice which was given to Doran Constructions?

Deputy Registrar: No, its anything that touches on Doran Constructions – it’s anything of common interest. It is only advice exclusively given to other entities, exclusively, that must not be canvassed.”

40 She confirmed (T33) that advice given to directors in their personal capacity would still be privileged.

41 Counsel for the liquidator then sought to proceed with the examination, consistently with the ruling which had been given.

Q What did they tell you was the purpose of the transaction?”

42 Before that question was answered, there was debate between counsel as to whether the answer would be privileged. The Deputy Registrar then said (T35):

“I’ll advise the examinee on this issue, that if the advice was given solely to one of the entities that was represented at that conference, then you needn’t provide an answer to the court. If it touched on matters concerning Doran Constructions and constitutes in part, at least, advice to Doran Constructions, you are required to answer that question.”

43 Mr Freeman requested further assistance from the Registrar, and said:

“The first part I would say related solely to Doran Holdings and I just wonder if my friend could leave me alone just to speak to you for a moment on this particular issue. Is this convenient?”

44 The Deputy Registrar was, understandably, unwilling to take up this novel suggestion.

“Because even this part of it could get, you know, sort of fairly tricky.”

“Please explain it to me as best you can with all parties present.”

“Yes, well certainly -- .”

45 Mr Freeman never got to give his explanation. Mr Gelbart interjected:

“Perhaps Registrar the difficulty may well be because of the generality of the question. That there is at least the serious possibility that a discourse or discussion which occurred pertaining to parties other than Doran Constructions – .”

46 At that stage, Mr Braham obtained confirmation that the Deputy Registrar would not direct Mr Freeman to give a complete disclosure of what occurred in the meeting, and foreshadowed the making of an application to review the Deputy Registrar’s ruling. Mr Freeman’s examination was then stood over generally.

Mr Freeman’s Affidavit

47 For the purpose of the present hearing Mr Freeman has, on 12 December 2001, sworn an affidavit. In paragraph 3 of that affidavit he states:

“As at or about 1 November 1994 Doran Holdings was not a shareholder in Doran Constructions, Doran Constructions (Australia) nor Doran Property Services. Doran Constructions (Australia) held all the issued capital of Doran Constructions and of Doran Property Services.”

48 This affidavit does not state (nor does any other evidence placed before me state) how Doran Holdings fitted into the Doran Group of companies in terms of shareholding.

49 The 12 December 2001 affidavit confirms that Mr Freeman attended a meeting on 1 November 1994. It says that the meeting was, “held in the boardroom of Doran Holdings in Newcastle.”. However, the affidavit makes clear that following that meeting, Mr Freeman drafted minutes of directors for Doran Holdings, Doran Constructions, Doran Constructions (Australia) and Doran Property Services. Thus, while the meeting was held, “in the boardroom of Doran Holdings”, in the sense that it was the boardroom where Doran Holdings held a board meeting, it was also held, in that same sense, in the boardroom of each of the other three companies.

50 The 12 December affidavit says that present at the meeting were Mr Linz, Mr Brad Joyce, and the Doran brothers. It says, “Mr Brad Joyce was the financial controller of Doran Holdings and Mr Martin Linz was its auditor.” It is apparent from the transcript of Mr Linz’s evidence, however, that Mr Linz is not only the auditor of Doran Holdings, but also the auditor of Doran Constructions (Australia), and of Doran Constructions. When that is the situation concerning Mr Linz, I would not be justified in inferring that Mr Brad Joyce had no role in any of the other Doran companies. Indeed, both Mr Linz, and Mr Freeman, gave evidence in their examinations as though he was financial controller of all the Doran Companies.

51 Mr Freeman’s affidavit continues:

…

6. “At this meeting Mr Joyce said words to the effect:

“Holdings has been asked by its financiers to clean up its intercompany loan accounts.”

7. Mr Joyce then drew a diagram on a whiteboard depicting intercompany loans involving Doran Holdings. The diagram showed that Doran Holdings was indebted to Doran Constructions in the sum of about $4.1 million and to Doran Property Services in about $500,000. Doran Constructions (Australia) was indebted to Doran Holdings in the sum of about $4.8 million.

8. Mr Joyce then said words to the effect:

“Holdings wants to do a series of transactions to take the loans out of Holdings and place them in the Constructions group. Chris, what are your thoughts on how we should go about it?”

9. I then gave legal advice to Doran Holdings about the proposed transactions. When I finished, one of the Doran brothers (I do not recall whom), said words to the effect.

“Chris, what will be the personal position of the directors?

I then gave legal advice to the Doran brothers as to any possible personal liability they may have as directors.

10. At the end of the meeting Mr Paul Doran said words to the effect:

“Chris, would you please draft the minutes for the companies to reflect the transactions.”

11. I then drafted the Minutes of Meeting of the directors for Doran Holdings, Doran Constructions, Doran Constructions (Australia) and Doran Property Services.

12. During this meeting I was not asked nor did I provide legal advice to Doran Constructions.”

52 The first sentence of paragraph 9, and paragraph 12 of this affidavit were objected to. I allowed the first sentence of paragraph 9 on the basis that it was opinion evidence. The same ruling was made concerning the last sentence in paragraph 9 and that part of paragraph 12 where Mr Freeman deposed to not providing legal advice to Doran Constructions.

53 Counsel for the examinee submitted to me that I should accept – indeed that I must accept – this evidence of Mr Freeman as establishing that there was a retainer which was not a joint one. He pointed to the fact that Mr Freeman had not been cross-examined on the affidavit.

54 In my view, in the circumstances of the present case, the failure to cross-examine is not of critical importance, and little weight can be given to the opinions which Mr Freeman expressed. There are four reasons for this view.

55 First, Mr Freeman’s evidence was not directed to the essential question of by whom Mr Freeman was retained. Rather, it was directed to who was the recipient of legal advice at various stages during the meeting. Indeed, in May 2001 Mr Freeman had given evidence that he had “definitely not” formed a view as to by whom he was retained (see paragraph 26 above) though it would “normally be the situation” that he was retained to act for all relevant entities in the Doran Group who were interested in the transaction.

56 Secondly, it had been made clear from the way the case was run before me, that every effort would be made to maintain the privilege and that objection would be taken to any attempt in cross-examining Mr Freeman, to prise from him any details about the meeting which led to the conclusions expressed in the first and last sentences of paragraph 9 and in paragraph 12. When cross-examination of Mr Freeman would take place in relation to material that was prima facie privileged, and at a time when I had not decided whether there was a joint retainer, it was highly likely that any attempt to cross-examine Mr Freeman on the basis of his opinions, would have been objected to, and would not have been permitted. In not cross-examining, counsel for the liquidator was simply recognising that forensic reality.

57 The third reason is that there is no rule of law requiring that evidence not challenged in cross-examination, be accepted – Sullman v Sullman [2002] NSWSC 169 at [304] – [306].

58 The final reason is that, on reflection, I have decided I was wrong to admit the first and last sentence of paragraph 9, and that part of paragraph 12 where Mr Freeman deposed to not providing legal advice to Doran Constructions.

59 In Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305, Heydon JA made an extensive survey of judicial opinions concerning the circumstances in which expert evidence was admissible, and how the evidence of an expert could be fitted into a process of judicial reasoning. A common theme is that the court should know the matters of fact on the basis of which the opinion is expressed. In the course of his judgment in Makita Heydon JA quoted with approval the following statements:

ipse dixit

Davie v The Lord Provost, Magistrates and Councillors of the City of Edinburgh

R v Jenkins

Phipson on Evidence

R v Turner

Trade Practices Commission v Arnotts Ltd (No.5)

Pownall v Conlon Management Pty Ltd

60 Heydon JA expressed his own conclusion as follows:

“The basal principle is that what an expert gives is an opinion based on facts. Because of that, the expert must either prove by admissible means the facts on which the opinion is based, or state explicitly the assumptions as to fact on which the opinion is based.”

“…the opinion of an expert requires demonstration or examination of the scientific or other intellectual basis of the conclusions reached: that is, the expert’s evidence must explain how the field of “specialised knowledge” in which the witness is expert by reason of “training, study or experience”, and on which the opinion is “wholly or substantially based”, applies to the facts assumed or observed so as to produce the opinion propounded. If all these matters are not made explicit, it is not possible to be sure whether the opinion is based wholly or substantially on the expert’s specialised knowledge. If the court cannot be sure of that, the evidence is strictly speaking not admissible, and, so far as it is admissible, of diminished weight.

61 When I was not told, in evidence, on what basis Mr Freeman had formed the opinions he expressed in the first and last sentences of paragraph 9, and that part of paragraph 12 where he deposed to not providing legal advice to Doran Constructions, I should not have admitted them. Having admitted them, I am in a situation where I cannot know what weight to put upon them, as I do not know on what basis those opinions were formed. I do not propose to allow those portions of his evidence to perform a task which they cannot legitimately perform.

62 I should also say that Mr Freeman’s evidence, that during the meeting he was not asked to provide legal advice to Doran Constructions, is of little assistance. It is perfectly possible for there to be a conclusion that there was a retainer by, amongst others, Doran Constructions, even if no one in the course of the meeting said words to the effect of, “Will you please now advise Doran Constructions”.

63 I was not informed about to whom Mr Freeman sent his memo of fees concerning this meeting, nor about who actually paid that memo of fees. If there were evidence from which I could infer that there was a joint retainer, this is a factor which could be taken into account, in accordance with Jones v Dunkell (1959) 101 CLR 298 to draw that inference more confidently. While there is a limitation on the rule in Jones v Dunkell, which prevents the court from drawing an inference from failure to call evidence where that evidence itself would be legally privileged, no legal privilege would attach to the topic of who was sent a solicitor’s memo of fees, or who paid it.

Was there a Joint Retainer? – Decision

64 Phipson on Evidence, 13th ed, para 15-11 states the relevant common law rule as follows:

exclusive

65 It is to be observed that, according to this statement of the rule, the mere fact of employment of the same solicitor by two people is not enough to give rise to a “joint retainer” for the purpose of this rule concerning privilege. As well, the capacity in which a communication was made needs to be considered.

66 That one needs to consider not just whether there was a joint retainer, but also the capacity in which the communication was made is consistent with the basis on which legal professional privilege exists at all at common law. In Minter v Priest [1930] AC 558, at 568 Lord Buckmaster said:

“The relationship of solicitor and client being once established, it is not a necessary conclusion that whatever conversation ensued was protected from disclosure. The conversation to secure this privilege must be such as, within a very wide and generous ambit of interpretation, must be fairly referable to the relationship, but outside that boundary the mere fact that a person speaking is a solicitor, and the person to whom he speaks is his client affords no protection.”

67 In other words, the communication which is protected by the privilege must be one which is made or received by a lawyer in the capacity of lawyer (Alfred Crompton Amusement Machines Ltd v Customs and Excise Commissioners (No. 2) [1972] 2 QB 102, at 129, 136, 138.)

68 The need to consider both whether there has been a joint retainer, and whether a particular communication has been made to a lawyer in his capacity as jointly retained lawyer, emerges with greater clarity from one of the cases relied on as authority in the paragraph of Phipson which I quoted above at paragraph 64 above.

69 In Perry v Smith (1842) 9 M & W 681; 152 ER 288, the vendor of real estate sued the purchaser for not taking title at the correct time. The purchaser pleaded that the vendor was not ready to settle at the correct time. They had employed a common solicitor. That solicitor gave evidence that the purchaser had told him he could not have the purchase money ready on time, and asked for an extension of time, in consequence of which the vendor was not ready to settle on the contracted-for day. The defendant objected that this communication was privileged. That contention was rejected. Parke B said

“If the party employs an attorney who is also employed on the other side, the privilege is confined to such communications as are clearly made to him in the character of his own attorney. It is plain this was not, but in his adverse character of attorney for the vendors. The attorney, therefore, stood in the character of an ordinary witness, and the evidence was properly received.”

70 Alderson B said:

“It is clear that the communication made to this witness was made to him in his character of attorney for the vendors, on whose part he was applying for payment.”

71 While there is this distinction between the employment of the solicitor, and the character in which a communication is made, I do not accept that it requires each individual sentence spoken in the course of a single meeting to be individually analysed. Further, in my view, the Deputy Registrar was mistaken in deciding the question of whether there was joint privilege by requiring Mr Freeman to decide whether any particular question asked, about what transpired in the meeting, touched on advice given to Doran Constructions.

72 Rather, whether there is a communication made to, or from, a solicitor in his or her joint capacity is decided by objective evidence about whether the occasion for the communication was one where the solicitor was being asked to advance the purpose for which he or she was jointly consulted. It is appropriate to apply here the same test as Lord Buckmaster applied in Minter v Priest for the purpose of deciding whether a privilege arose at all, namely that the communication which is one made to the solicitor in his or her capacity as a jointly retained lawyer,“…must be such as, within a very wide and generous ambit of interpretation, must be fairly referable to the relationship”.

73 That it is at this level of generality that one decides whether a joint privilege exists, is demonstrated by the language in which Cross on Evidence (Australian Edition, current electronic version) para [25265] explains joint privilege.

“A “joint privilege” arises where two or more persons communicate with a legal advisor for the purpose of retaining that legal advisor’s services or obtaining that legal advisor’s advice, eg two persons for their mutual benefit stating a case for the opinion of counsel, or communications between a solicitor and a wife acting collusively with her husband in divorce proceedings. A joint privilege also arises where one of a group of persons in a formal legal relationship communicates with a legal advisor on a matter relating to that relationship, eg partner and partner, trustee and beneficiary (unless the existence of the trust is the very matter in dispute in the litigation), company director and shareholder, and joint venturers. A joint privilege also exists as between claimants under a testator’s will and the executors as against the rest of the world. Where the communications relate to matters outside the joint relationship, they are privileged in favour of the person who communicated with the lawyer against the other party to the relationship, even if the latter funded the expense of the communication, eg communications between a local authority and its solicitors against a rate payer in matters not connected with the rates, or communications between a lawyer and a company in litigation with a shareholder.” (citations omitted)

74 Further, in deciding whether there are circumstances which prevent legal professional privilege from existing, the court should judge the objective evidence for itself. In many enquiries about whether legal professional privilege exists, the starting point is evidence from the lawyer concerned. Thus, Cross on Evidence (Australian Edition, current electronic version) para [25270] says:

“If a lawyer swears that a question cannot be answered without disclosing communications made professionally by the client, that oath is conclusive unless it appears from the nature of the question that the privilege cannot be applicable.”

75 I would add that another way in which the lawyer’s oath is rendered not conclusive is if it appears from evidence about the circumstances in which the communication was made, that the privilege cannot be applicable. As with any question of fact concerning admissibility of evidence, the way in which these matters “appear” is that they appear to be so to the court, on the basis of the evidence which is before the court.

76 In my view, there was a joint retainer in the present case. While the impetus for the transaction was, I accept, that Doran Holdings had been asked by its financiers to clean up its intercompany loan accounts, that “cleaning up” process required co-operative action on the part of all four companies involved. There is no basis for believing that any of the companies whose co-operation was involved, were excluded from the advice which was given. Certainly none of them sought advice from anyone other than Mr Freeman. That Doran Holdings was the impetus for the transaction, but all the companies needed to co-operate, is well captured by Mr Joyce’s statement at the meeting, “Holdings wants to do a series of transactions to take the loans out of Holdings and place them in the Constructions group. Chris what are your thoughts on how we should go about it?” Further, Mr Linz gave evidence that the purpose of the meeting was to discuss the loan account between Doran Holdings, Doran Constructions and Doran Constructions (Australia). Mr Linz also gave evidence that the matter he was asked to give advice on was, “transaction in general but in particular under what circumstances would it be considered inappropriate.” This supports an inference that when Mr Freeman was at the same meeting, he also had been asked to give advice on the same matter.

77 Mr Freeman explained that:

“I was asked there to give certain advice, which I gave, but everything that went into that meeting was used by me to work out whether in fact I should give that advice, and what that advice should be”. (See paragraph 26 above).

78 This shows, it seems to me, that the entire meeting was one where the communications which passed, were ones to advance the purpose for which the solicitor was jointly consulted.

79 Counsel for the examinee submitted that I should not conclude that there was a joint retainer because the interests of Doran Holdings and Doran Constructions were opposite, in relation to the debt transaction. If this is so, it does not appear to have been realised at the time.

80 In my view, the liquidator is entitled to ask questions about everything that transpired at the meeting on 1 November 1994.

81 If one applies section 124 of the Evidence Act 1995, it seems to me that Doran Constructions, the Doran brothers and other companies in the Doran Group, had “jointly retained a lawyer in relation to the same matter” at the time of the meeting on 1 November 1994. For reasons I give below at paragraphs 87 to 112, it seems to me that the question of whether there is privilege in the present case, should be decided by reference to the Evidence Act 1995, rather than by reference to the common law. However, as I have earlier said, no one suggested to me that there is any relevant difference between the common law and the Evidence Act 1995 so far as this topic is concerned.

82 Having found that there was a joint retainer, there is no occasion to consider the second argument on which the liquidator relied.

Was there a Waiver of Privilege?

83 The third argument of the liquidator concerns waiver. In light of the conclusion I have come to concerning the existence of a joint retainer, this question does not need to be decided, but as it has been fully argued, and in case this decision goes elsewhere, I will express my conclusions. The alleged waiver arises from the fact that, when Mr Linz was examined about the meeting on 1 November 1994 and gave the evidence I have set out above which tells at least part of the story about what happened at that meeting, counsel for the Directors was present at the examination, and took no objection to Mr Linz being asked those questions he was asked. This is said to amount to a waiver of any privilege which might have attached to that evidence.

84 The common law concerning waiver of legal professional privilege has been authoritatively laid down in Mann v Carnell (1999) 201 CLR 1. Gleeson CJ, Gaudron, Gummow and Callinan JJ said, at 13:

“At common law, a person who would otherwise be entitled to the benefit of legal professional privilege may waive the privilege. It has been observed that “waiver” is a vague term, used in many senses, and that it often requires further definition according to the context. Legal professional privilege exists to protect the confidentiality between lawyer and client. It is the client who is entitled to the benefit of such confidentiality, and who may relinquish that entitlement. It is inconsistency between the conduct of the client and maintenance of the confidentiality which effects a waiver of the privilege. Examples include disclosure by a client of the client’s version of a communication with a lawyer, which entitles the lawyer to give his or her account of the communication, or the institution of proceedings for professional negligence against a lawyer, in which the lawyer’s evidence as to advice given to the client will be received.

Waiver may be express or implied. Disputes as to implied waiver usually arise from the need to decide whether particular conduct is inconsistent with the maintenance of confidentiality which the privilege is intended to protect…what brings about the waiver is the inconsistency, which the courts, where necessary informed by consideration of fairness, perceive, between the conduct of the client and maintenance of the confidentiality; not some overriding principle of fairness operating at large.”

85 Likewise, McHugh J rejected “fairness” as a test of whether there had been a waiver, and stated the test as being [at 42]:

voluntary

86 Section 122 Evidence Act 1995 has adopted a different test to that of the common law for when waiver occurs (Mann v Carnell, at [23]). Section 122 of that Act provides:

122. Loss of client legal privilege: consent and related matters

(1)

(2)

(a) in the course of making a confidential communication or preparing a confidential document, or

(b) as a result of duress or deception, or

(c) under compulsion of law, or

(d) if the client or party is a body established by, or a person holding an office under, an Australian law---to the Minister, or the Minister of the Commonwealth, the State or Territory, administering the law, or the part of the law, under which the body is established or the office is held.

(3)

(4)

(a) a lawyer acting for the client or party, or

(b) if the client or party is a body established by, or a person holding an office under, an Australian law---the Minister, or the Minister of the Commonwealth, the State or Territory, administering the law, or the part of the law, under which the body is established or the office is held.

(5)

(a) a disclosure by a client to another person if the disclosure concerns a matter in relation to which the same lawyer is providing, or is to provide, professional legal services to both the client and the other person, or

(b) a disclosure to a person with whom the client or party had, at the time of the disclosure, a common interest relating to a proceeding or an anticipated or pending proceeding in an Australian court or a foreign court.

(6)

Is Whether There Was a Waiver Decided Under the Common Law, or the Evidence Act?

87 A preliminary question arises about whether it is by reference to the common law, or by reference to the Evidence Act, that the question of waiver of privilege needs to be decided in the present case. The purpose for which the Deputy Registrar’s rulings are being tested in this case is so that the liquidator can know what questions might be asked at a resumed examination of Mr Freeman. Thus, the question of whether section 122 of the Evidence Act 1995 governs the situation will depend upon whether Mr Freeman giving evidence at a resumed examination will amount to, “the adducing of evidence” within the meaning of section 122 Evidence Act 1995.

88 Section 4 of the Evidence Act 1995 says:

“4(1) This Act applies in relation to all proceedings in a NSW court, including proceedings that:

(a) relate to bail, or

(b) are interlocutory proceedings or proceedings of a similar kind, or

(c) are heard in chambers, or

(d) subject to subsection (2), relate to sentencing.”

Submissions for the Liquidator

89 The liquidator submits that, for the purpose construing both the words, “evidence is not to be adduced…” in section 118 Evidence Act 1995, and, “the adducing of evidence” in section 122 Evidence Act 1995, the role of those sections in the Act as a whole needs to be taken into account. The liquidator submits that, when the Act is looked at as a whole, it is apparent that section 118 and section 122 are intended to apply in proceedings in which interlocutory or final relief is sought. The liquidator submits that they do not purport to deal with, or restrict in any way, access to information or documents in the course of investigative processes.

90 The liquidator points out that in Northern Territory v GPAO (1999) 196 CLR 553, at page 571 para [16] Gleeson CJ and Gummow J said, and that McHugh and Callinan JJ at page 629 para [199] agreed:

“…the Evidence Act is concerned with the adducing of evidence (Ch2), the admissibility of evidence (Ch3), proof (Ch4) and certain ancillary matters (Ch5). It does not deal with the obligations of a party to whom an order in the nature of a subpoena is addressed to produce documents to the court in question. Nor does the Evidence Act deal with the grant of leave by the court to inspect or otherwise make use of documents which have been produced in answer to a subpoena.”,

Evidence Act 1995

91 The liquidator points to some aspects of the structure of the Evidence Act 1995. Chapter 2 of the Evidence Act 1995 is headed, “Adducing Evidence”. That chapter is concerned with matters relating to the competence and compellability of witnesses, oaths and affirmations, general rules about giving evidence, the process of examination-in-chief, cross-examination and re-examination, the tender of documents, and the conduct of views. Those topics, he says, are ones which contemplate the familiar processes of adducing evidence in the context of a trial. Those processes are quite different from the investigative ones adopted at an examination, pursuant to section 597 of the Corporations Law.

92 Further, the liquidator says that section 118 and section 122 are to be found in Part 3.10 of the Evidence Act 1995. That Part falls within Chapter 3, which bears the title, “Admissibility of Evidence”. That Chapter is comprised of a series of inclusionary and exclusionary rules relating to the admissibility of evidence. Client legal privilege, under Part 3.10, is one such exclusionary rule. The introductory note includes a diagram which shows how the Chapter applies to particular evidence. That diagram shows the question, “Does a privilege apply? (see Part 3.10)” as simply one of a list of exclusionary rules, which must be applied to reach the ultimate conclusion of whether the evidence is admissible, or not admissible.

93 The liquidator also says that Chapter 3 commences with a general inclusionary rule to the effect that relevant evidence is admissible. There is no “relevant evidence” in a liquidator’s examination, there being no issues to be determined by reference to which questions of relevance can be decided. An examinee is simply required to answer such questions as the court directs (section 597(7) Corporations Law), and the court may put, or allow to be put, such questions about the corporation and its examinable affairs as the court thinks appropriate (section 597(5B) Corporations Law). The liquidator submits that Part 3.2 (hearsay), Part 3.3 (opinion evidence), Part 3.4 (admissions as exceptions to the hearsay rule and the opinion rule), Part 3.5 (exclusion of evidence of judgments and convictions), Part 3.6 (evidence of tendency or coincidence), Part 3.7 (evidence relevant only to credibility), Part 3.8 (character evidence as an exception to the hearsay rule, opinion rule, tendency rule and credibility rule) and Part 3.9 (identification evidence) are all quite clearly of no application in a liquidator’s examination.

94 In the circumstances, he submits that Part 3.10 should likewise be interpreted as applying in the context of a trial, not in the context of an investigative procedure like a liquidator’s examination.

95 The liquidator recognises that for the purpose of interpreting other legislation, examinees at liquidator’s examinations have been regarded as “attending to give evidence”. Thus, in Cheney v Spooner (1929) 41 CLR 532 the High Court held that a summons requiring someone to attend a liquidator’s examination was a, “summons…requiring any person to appear and give evidence…in any civil…proceeding…” within the meaning of section 16(1) of the Service and Execution of Process Act 1901 (Cth). In Re: Darlington Commodities Pty Ltd (1987) 10 NSWLR 424 McLelland J held such a summons was one, “for the purpose of obtaining evidence in any proceeding before the court”, within the meaning of section 16A of the Service and Execution of Process Act 1901 (Cth). Such a summons is also one for, “the attendance of any person for the purpose of being examined” within the meaning of Part 36 Rule 12 of the Supreme Court Rules (Re: BPTC Ltd (in Liq) (1993) 29 NSWLR 708). However, the liquidator says that all those decisions are distinguishable, because the statutory context in which section 122 occurs in the Evidence Act 1995 is different.

Submissions for the Examinee

96 The examinee submits that the person being examined pursuant to section 596B of the Corporations Law is, “adducing evidence” within the meaning of that term in section 118 of the Evidence Act 1995.

97 The examinee says that the natural and ordinary meaning of the word “adduce” is, “to lead to, to bring forward or allege”: The Oxford English Dictionary, and that notion applies to what is done when a witness is questioned in a liquidator’s examination.

98 The examinee points out that courts have described a person who is examined pursuant to an order under section 596B of the Corporations Act 2001 (Cth) as a “witness”: Gould v Brown (1998) 193 CLR 346 at para [32] per Brennan CJ and Toohey J. In Re: John Pringle & Co Limited (1934) 34 SR (NSW) 508 Street J also referred to a person examined pursuant to the legislative predecessor of section 596B (section 123 of the Companies Act 1899 (NSW)) as a “witness” and his answers as “evidence”. Street J said, at 512:

witness

the evidence

99 The examinee also relies on the text of the Corporations Law. Section 597(16) makes it plain that the person examined under section 596(B) is giving evidence, by providing that a person ordered to be examined may retain a solicitor or a counsel and may put to the person such questions to enable the person to explain or qualify “any answers or evidence given by the person”.

100 The examinee says that “proceedings”, while not defined in the Evidence Act 1995, nor in the Supreme Court Act 1970, or in the Supreme Court Rules, is a word applicable to a liquidator’s examination. In Proust v Blake (1989) 17 NSWLR 267 Samuels JA (with whom Mathews J agreed) said that, though the word “proceedings” is not defined in the Supreme Court Act 1970,

“…it is used very generally in the latter Act to cover the whole variety of forensic exercises which may occur in the Court…it may well be that the word “proceedings” is a protean one which will take its meaning from its context.”

101 He points out that in Cheney v Spooner (1929) 41 CLR 532 at 537 Isaacs J and Gavan Duffy J held that a liquidator’s examination took place in a “proceeding”, namely the winding up. Starke J approached the matter differently, saying at 538-539:

Blake v Norris

Fiorentino v Irons

102 Most relevantly, the examinee says, in In Re: Interchase Corporation Limited (1996) 68 FCR 481 at 487, Kifel J held that an examination under section 596B of the Corporations Law was a “proceeding” in a Federal Court, within the meaning of section 4(1) of the Evidence Act 1995 (Cth).

Decision on Whether Common Law or Evidence Act Applies

103 In my view the matters which the examinee relies on all lead to the conclusion that the question of waiver of privilege should be decided by reference to the Evidence Act 1995, not by reference to the common law. The factors arising from the structure of the Evidence Act 1995 to which the liquidator points, do not lead to a conclusion that when evidence is given in a liquidator’s examination that does not count as ”the adducing of evidence” within the meaning of section 118 and section 122 Evidence Act 1995. It would, in my view, require a very powerful argument based on the structure of the Act to be able to overcome the express words of section 4(1): “This Act applies in relation to all proceedings in a New South Wales court…”.

104 While Chapter 2 is concerned with the general topic of “adducing evidence” I do not find in it any indication that the only circumstance in which one can “adduce evidence” within the meaning of Chapter 2 is in the context of a conventional trial. The first of the, “general rules about giving evidence” contained in Division 3 of Chapter 2 is:

26. Court’s control over questioning of witnesses

The court may make such orders as it considers just in relation to:

(a) the way in which witnesses are to be questioned, and

(b) the production and use of documents and things in connection with the questioning of witnesses, and

(c) the order in which parties may question a witness, and

(d) the presence and behaviour of any person in connection with the questioning of witnesses.”

105 That section empowers the court to depart from the common law rules about examination-in-chief, cross-examination and re-examination, even in a trial, if the court thinks it just to do so. The rules that are contained in Chapter 2 as to the manner in which examination-in-chief, cross-examination and re-examination are to occur, are all subject to section 26. Further, those rules are rules which apply on those occasions when there is examination-in-chief, cross-examination, or re-examination. That those rules occur in Chapter 2 does not mean that all occasions when “evidence is adduced” are occasions when there is examination-in-chief, cross-examination and re-examination.

106 Nor do I find anything in the structure of Chapter 3 which compels the conclusion for which the liquidator submits.

107 Many provisions in Chapter 3 are ones which say that evidence is admissible, or is not admissible, or say that a rule which is itself cast in terms of admissibility does, or does not apply, in certain circumstances. Such provisions include:

· Section 56 (relevant evidence is admissible, evidence that is not relevant is not admissible)

· Section 59 (hearsay not admissible)

· Section 60, 63, 64, 65, 66, 69, 70, 71, 72, 73, 74, 75 (situations in which the hearsay rule does not apply)

· Section 76(1) (evidence of an opinion not admissible)

· Section 77, 78, 79 (exceptions to the opinion rule)

· Section 81, 83 (exceptions to both hearsay and opinion rule)

· Section 82, 84, 85, 86, 87, 88, 89, 90 (conditions for admissibility of admissions)

· Section 91, 92, 93 (when facts found in previous proceedings are, or are not, admissible by proof of court order or decision)

· Section 95-101 (circumstances of admissibility, or non-admissibility, of evidence of tendency, or coincidence)

· Section 102 (evidence relevant only to credibility not admissible)

· Section 103, 104, 106, 108 (circumstances when credibility rule does not apply)

108 By contrast, Part 3.10 does not use the language of evidence being “admissible” or of creating exceptions to rules which are themselves cast in the language of admissibility. Instead, it talks about the circumstances in which evidence can, or cannot, be “adduced”. This is so in relation to not only the provisions concerning client legal privilege, but also the professional confidential relationship privilege (section 126A-126F), the sexual assault communications privilege (section 126G-126I), public interest privilege (section 130) and settlement negotiation privilege (section 131).

109 (Some other provisions of Part 3.10 use different language again – thus the religious confession privilege (section 127) is cast in terms permitting the person to whom the confession is made “to refuse to divulge” that the confession was made, or its contents. The self-incrimination privilege (section 128) is cast in different language again, concerning whether the court is to require the witness to give evidence).

110 Section 134, the final section in Part 3.10 says, “Evidence that, because of this Part, must not be adduced or given in a proceeding is not admissible in the proceeding.”

111 That Part 3.10 has been cast in different language to most of the rest of the Act, suggests that the draftsman was allowing for the possibility that there would be circumstances for “adducing of evidence”, where questions of admissibility, or non-admissibility, did not arise. Section 134 has the effect that, in those circumstances where evidence is not to be adduced and questions of admissibility arise, the evidence is not admissible. Section 134 also leaves open the possibility that there can be adducing of evidence in circumstances where questions of admissibility do not arise.

112 For these reasons, I do not find that the structure of the Act leads to a conclusion that section 118 and section 122 are not to apply to a liquidator’s examination. Thus, any question of whether there has been a waiver of privilege in the present case, will be decided by reference to section 122, not by reference to the common law.

Was there a Waiver here?

113 There are some additional factual matters to be taken into account in deciding whether there has been a waiver in the present case. Mr Freeman has sworn that at no stage was Mr Linz authorised by the Doran brothers, or Doran Holdings, to waive client legal privilege in respect of the meeting. Nor was counsel appearing, nor Mr Freeman, “instructed or authorised by those for whom we appeared at the examination to waive client legal privilege in respect of the meeting”.

114 The first question to decide is whether, “the substance of the evidence” has been disclosed. Ampolex Ltd v Perpetual Trustee Co (1996) 40 NSWLR 12 concerned a case where the shareholders of a listed company had been told what the company’s views were concerning prospects of success in some litigation affecting the company. (The litigation concerned what ratio should be applied in converting into ordinary shares, some convertible notes which the company had issued.) The company also told the shareholders, “the company has received legal advice and believes that the litigation will be resolved in its favour.”, “on the basis of legal advice received, Ampolex believes that it will be successful in the convertible note litigation.” And “there is a dispute about the conversion ratio. Ampolex maintains that the correct ratio is 1:1 and has legal advice supporting this position.” Application was made to the court to produce legal advice so referred to, on the ground that the statements I have quoted amounted to a disclosure of the substance of the advice, and hence that there had been a waiver. Rolfe J held that, when, in the first two statements I have just quoted, Ampolex stated its view about the outcome of the litigation, and that it had received legal advice, this did not amount to disclosure of the substance of the advice. However, the last of the statements which I have quoted, did amount to disclosure of the substance. His Honour said, at 18:

“I do not regard the statement of Ampolex’s view as constituting a disclosure of the legal advice. It may be that in forming its opinion Ampolex has misconstrued or misunderstood the advice. However that may be, the statement does not rise above a statement of Ampolex’s view that it does not purport to state the advice or its substance and effect and, therefore, it does not amount to a disclosure of the advice. In my opinion what appears at page 58 can be contrasted by what appears on page ii. Those words I have held amount to a waiver of the privilege in that they disclose the substance of the legal advice, viz, that the correct ratio is 1:1.”

“result”

“consequence”

115 It is of some importance in that case that the evidence in question, concerning which his Honour held there had been a waiver, was the advice passing from the lawyer to Ampolex. Section 122 requires one to consider, in relation to each item of evidence that is sought to be adduced, whether the substance of that evidence has been disclosed. In the present case, while some aspects of the advice which was given at the meeting on 1 November have been disclosed (for instance, that the directors needed to consider separately the appropriateness of the transaction for each of the companies), I am not satisfied that the substance of all communications from Mr Freeman to those present at the meeting, has been disclosed. As well, I expect that the liquidator would be most interested to explore what communications were made in the other direction, from the Doran brothers to Mr Freeman. I am not satisfied that the substance of the evidence on that topic has been disclosed. For those reasons, there has not been the sort of waiver which would entitle the liquidator to explore all aspects of what was said at the meeting.

Disclosure Made Knowingly and Voluntarily?

116 In Ampolex Ltd v Perpetual Trustee Co(Canberra) Ltd (1996) 40 NSWLR 12 at 22, Rolfe J said:

“voluntarily”

“under compulsion of law”

“knowingly”

117 I am not satisfied that the failure of counsel to object to the evidence when given, was done deliberately, rather than through a mistake. The evidence which Mr Freeman gave, that he was “led by counsel to believe that it wasn’t proper” to object to the questions asked of Mr Linz (see paragraph 35 above) does not make clear whether it was prior to the examination that he was “led to believe” in this way. It is the person who asserts that there has been a waiver, who bears the onus of satisfying the court about each of the elements in section 122(2). This provides a reason why I would not be satisfied that there had been a waiver, under section 122(2) of client legal privilege in relation to any part of the contents of the meeting.

Disclosure by an Agent or Employee Authorised to make it?

118 Even though there was no express authorisation given to counsel appearing at the trial to waive any legal professional privilege, it is, it seems to me, part of the implied authority of counsel appearing in court proceedings for a client, to make decisions about whether to waive, or not to waive, privilege. I would not uphold this basis for saying there had been no waiver.

Disclosure made Under Compulsion of Law?

119 While it is true that the attendance of Mr Freeman and Mr Linz at their respective examinations was under compulsion of law, there was no compulsion on the Doran brothers to give up any legal professional privilege, or client legal privilege, to which they might otherwise have been entitled. If it had been the case that the Doran brothers had knowingly and voluntarily disclosed to the examinee some matters about which they were entitled to claim legal professional privilege, I would not doubt that there was an effective waiver of client legal privilege concerning that matter, notwithstanding that the disclosure occurred in the general context of them attending an examination under compulsion of law. The same analysis applies to the situation where Mr Doran’s counsel, knowingly and voluntarily, permits a disclosure to be made of material which would otherwise be privileged. This basis for alleging there has been no waiver also fails.

Privilege Concerning the Documents

120 Mr Freeman has been served with an order for production which the Court made on 19 January 2001 requiring him to produce:

“All documents in the possession, custody or power of the Examinee relating to advice given by the Examinee (or by a member of the firm of which the Examinee is or has been a member) to Doran Constructions Pty Ltd (whether on its own or as a member of a group of recipients of such advice) including, but not limited to, advice relating in any way to the series of transactions which occurred on or about 1 November 1994 between Doran Constructions Pty Ltd, Doran Holdings Pty Ltd and Doran Constructions (Australia) Pty Ltd.”

121 Pursuant to that order, he has produced four documents. He has sworn an affidavit which states as follows:

“…

4. The first document identified by the words “Doran Holdings” in the first line is my handwritten note of a telephone conversation which recorded the legal advice I was providing to my client, Doran Holdings Pty Limited.

(5) The second document is a typewritten note which recorded the legal advice I had provided or was to provide to:

(a) (first paragraph) my client Doran Holdings Pty Limited at a meeting of the Board of that company

(b) (second and third paragraphs) my client Doran Holdings Pty Limited and separately, my clients, to Paul Adrian Doran, Peter Joseph Doran, Michael Leo Doran and John Cerriti Doran as directors.

(c) (fourth paragraph) my client Doran Holdings Pty Limited

6. The third document is my handwritten note of a telephone conversation with Mr Linz which recorded the legal advice I was providing to my clients, Paul Adrian Doran, Peter Joseph Doran, Michael Leo Doran and John Cerriti Doran as directors.

7. The fourth document identified by the monogram “DPS” in the first line is my handwritten note which recorded the legal advice I was providing to my client Doran Property Services Pty Ltd (first part of the three parts of the record) and to my client Doran Holdings Pty Limited (the second and the third part of the record).

8. The abovementioned documents do not contain any record of any legal advice provided or to be provided to Doran Constructions Pty Limited.”

122 That affidavit was read without objection. The Deputy Registrar refused an application to cross-examine Mr Freeman, and accepted his evidence as the basis for holding the privilege claim was upheld.

123 Before me the same evidence was read again – again without objection. This time there was no application to cross-examine Mr Freeman.

124 It was submitted, for the liquidator, that the affidavit is inadequate to show that the advice was not given to more than one company in the group, and that the onus is on the examinee to prove the grounds of the legal professional privilege.

125 In my view, the claim for privilege is adequately made out. The drafting of the schedule to the order for production is not as tight as it might be. It is cast in the form requiring production of “all As including Bs”. Practice in the law makes one well enough familiar with that sort of inclusive description, and familiar enough with the fact that such a description catches Bs, even if a B could not properly be described as an A. Thus the documents, which were produced pursuant to the order of production, were not necessarily ones relating to advice given by Mr Freeman (or his firm) to Doran Constructions (whether on its own or as a member of a group of recipients of such advice).

126 Further, the date of the documents is not established. While I have concluded that there was a joint retainer of Mr Freeman by the Doran brothers and various Doran companies, including Doran Constructions, for the meeting on 1 November 1994, I cannot conclude that everything which fits into the second part of the schedule to the order for production (advice relating in any way to the series of transactions which occurred on or about 1 November 1994 between Doran Constructions Pty Ltd, Doran Holdings Pty Ltd and Doran Constructions (Australia) Pty Ltd) is similarly given pursuant to a joint retainer.

127 The latter part of the schedule to the order for production requires production of, “advice relating in any way to the series of transactions which occurred on or about 1 November 1994…”. The expression “relating to” is one which is fairly indefinite, but is potentially an extremely general or far reaching one; its meaning needs to be determined by its context (Yelds v Nurses Tribunal (2000) 49 NSWLR 491 at 501). In the present case, the schedule to the order for production comes devoid of context. In my view, if Mr Freeman had sought written advice about his clients’ prospects of success in upholding the ruling which the Deputy Registrar made about privilege concerning the meeting of 1 November 1994, that written advice would fall within the schedule to the order for production. When the ambit of the order for production is so wide, I cannot conclude that the fact that the meeting of 1 November 1994 itself was held pursuant to a joint retainer of Mr Freeman, provides even the basis for an inference that everything which falls within the schedule to the order for production was similarly pursuant to a joint retainer. The documents which are called for, being described as “advice”, and the order for production being directed to a solicitor, are, prima facie, privileged unless there is ground for concluding that those documents were produced pursuant to a joint retainer. There is no such ground. Accordingly, those four documents need not be produced.

128 I should make clear the scope of the decision I am making concerning these documents. It is that Mr Freeman has sworn that the documents concern professional communications between himself and a client other than Doran Constructions. Thus, the documents are prima facie privileged. There is nothing which appears in the evidence before me to show that the privilege is not applicable. This decision is, however, an interlocutory decision. If, on another occasion, another judicial officer were to have evidence which led to a conclusion that in fact no privilege attached, a different conclusion might be arrived at. Hence, the decision I make is not a final decision that the documents are privileged. Rather, it is a decision that the documents need not be produced pursuant to the order for production made on 19 January 2001.

1 Declare that the applicant is entitled, at any resumed examination under Part 5.9 of the Corporations Law of Christopher Freeman concerning the affairs of Doran Constructions (Australia) Pty Ltd, to enquire into all matters which transpired at a meeting on 1 November 1994 attended by Mr Freeman, Mr Martin Linz, Mr Paul Doran, Mr Peter Doran, Mr John Doran, Mr Michael Doran and Mr Brad Joyce.

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Last Modified: 03/28/2002

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Citations

Re Doran Constructions Pty Ltd (In Liq) [2002] NSWSC 215

Most Recent Citation

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Cited Sections

CITATION:	Doran Constructions Pty Limited (in Liquidation) [2002] NSWSC 215
CURRENT JURISDICTION:	Equity
FILE NUMBER(S):	SC 5112/98
HEARING DATE(S):	12 December 2001
JUDGMENT DATE:	27 March 2002
PARTIES :	Alan Edwards Lewis (Applicant) Christopher Freeman (Respondent)
JUDGMENT OF:	Campbell J

COUNSEL :	S Donaldson SC (Applicant) A S Martin SC with A Gelbart (Respondent)
SOLICITORS:	Walker Insolvency Lawyers (Applicant) Christopher C Freeman & Co (Respondent)
CATCHWORDS:	CORPORATIONS - winding up - liquidator's examination - circumstances in which liquidator entitled to ask questions relating to legal advice given to company in liquidation - EVIDENCE - liquidator's examinations - whether evidence given at is governed by Evidence Act 1995 (NSW) - EVIDENCE - legal professional privilege - circumstances in which joint retainer of solicitor exists - EVIDENCE - procedure to adopt when deciding whether legal professional privilege does not exist - EVIDENCE - waiver of client legal privilege - disclosure of substance of advice - disclosure made knowingly and voluntarily - disclosure by agent or employee authorised to make it - disclosure made under compulsion of law
LEGISLATION CITED:	The Evidence Act 1995 (NSW) Service and Execution of Process Act 1901 (Cth) Corporations Act 2001 (Cth) Companies Act 1899 (NSW) Supreme Court Act 1970 Evidence Act 1995 (Cth)
CASES CITED:	Rochefoucould v Boustead (1896) 65 LJCh 794 Farrow Mortgage Services Pty Ltd (in Liq) v Webb (1996) 39 NSWLR 601 Stockbridge v Lupton, McLelland J, 23 September 1988, unreported Hellenic Mutual War Risks Association (Bermuda) Ltd & General Contractors Importing and Services Enterprises v Harrison [1997] 1 Lloyds Report 160 Sullman v Sullman [2002] NSWSC 169 Makita (Aust) Pty Ltd v Sprowles [2001] NSWCA 305 Jones v Dunkell (1959) 101 CLR 298 Minter v Priest [1930] AC 558 Alfred Crompton Amusement Machines Ltd v Customs and Excise Commissioners (No. 2) [1972] 2 QB 102 Perry v Smith (1842) 9 M & W 681 Mann v Carnell (1999) 201 CLR 1 Northern Territory v GPAO (1999) 196 CLR 553 Cheney v Spooner (1929) 41 CLR 532 Gould v Brown (1998) 193 CLR 346 Proust v Blake (1989) 17 NSWLR 267 Blake v Norris (1990) 20 NSWLR 300 Fiorentino v Irons (1997) 79 FCR 327 Re Interchase Corporation Limited (1996) 68 FCR 481 Re Griffin (1887) 8 LR (NSW) 132 Yelds v Nurses Tribunal (2000) 49 NSWLR 491 Re Transequity Ltd (in Liq) (1991) Tas R 308 Re BPTC Ltd (in Liq) (1992) 7 ACSR 539 Re Compass Airlines Pty Ltd (1992) 35 FCR 447 Re Darlington Commodities Pty Ltd (1987) 10 NSWLR 424 Re BPTC Ltd (in Liq) (1993) 29 NSWLR 708 Re John Pringle & Co Limited (1934) 34 SR (NSW) 508
DECISION:	See orders following para 128