Re Global Medical Imaging Management Ltd (in liq)

[2001] NSWSC 476

CITATION:	Re Global Medical Imaging Management Limited (in liq) [2001] NSWSC 476 revised - 8/06/2001
CURRENT JURISDICTION:	Equity
FILE NUMBER(S):	SC 1289/01
HEARING DATE(S):	04/06/01, 05/06/01
JUDGMENT DATE:	5 June 2001
PARTIES :	In the matter of Global Medical Imaging Management Limited (in liquidation) (formerly called Minotaur Funds Limited) (ACN 067 182 110) Andrew Hugh Jenner Wily as liquidator of Global Medical Imaging Management Limited Australian Mezzanine Investments Pty Limited (Joseph Skrzynski, Su-Ming Wong, William Duncan Ferris, Paul Kenneth Riley) ("First Applicants") James Joughin, Peter Kempen (Partners Ernst & Young) ("Second Applicants") Dr Ronald Meikle, Dr Robert Dempster & Mr Chris Ericksen ("Third Applicants")
JUDGMENT OF:	Santow J

COUNSEL :	S D Rares, SC/T D Castle (Liquidator) J V Nicholas ("First Applicants") C Moore (Solicitor) ("Second Applicants") P Crutchfield (Solicitor) ("Third Applicants")
SOLICITORS:	Morgan Lewis Alter (Liquidator) Baker & McKenzie ("First Applicants") Clayton Utz ("Second Applicants") Landerer & Company (as Agents for Arnold Bloch Leibler) ("Third Applicants")
CATCHWORDS:	PROCEDURE — Evidence — Legal professional privilege — Applicability to liquidator’s funding agreement — Sections 118 and 119 of Evidence Act.
LEGISLATION CITED:	Evidence Act 1995 (NSW) s118; s119
CASES CITED:	Cook v Pasminco Limited (No. 2) (2001) ATPR 41/800 Esso Australia Resources Ltd v Commissioner of Taxation of the Cth of Australia (1999) 74 ALJR 339 National Crime Authority v S (1991) 100 ALR 151
DECISION:	Funding agreement protected by legal privilege.

REVISED — 8 June, 2001
IN THE SUPREME COURT
OF NEW SOUTH WALES
IN EQUITY

SANTOW J

No. 1289/01
In the matter of Global Medical Imaging Management Limited (in liquidation) (formerly called Minotaur Funds Limited) (ACN 067 182 110)
Andrew Hugh Jenner Wily as liquidator of Global Medical Imaging Management Limited
Australian Mezzanine Investments Pty Limited (Joseph Skrzynski, Su-Ming Wong, William Duncan Ferris, Paul Kenneth Riley)
(“First Applicants”)

James Joughin, Peter Kempen (Partners Ernst & Young)
(“Second Applicants”)

Dr Ronald Meikle, Dr Robert Dempster & Mr Chris Ericksen
(“Third Applicants”)

JUDGMENT — ex tempore

INTRODUCTION

1 The matter before me is not, as far as I am aware, the subject of any authority directly on point. It concerns whether a funding agreement between a liquidator and certain third parties satisfies the requirements for client legal privilege in s119 of the Evidence Act 1995 (NSW).

2    The decision of Lindgren J in Cook v Pasminco Limited (No. 2) (2001) ATPR 41/800 concerned the general law principles, not those of ss118 or 119 of the Evidence Act; see paragraph 41 of his judgment. He concluded that under the general law, no legal professional privilege attached to a costs agreement. It is not entirely clear from the facts whether the costs agreement in that case would have revealed, at least inferentially, the legal strategy that was likely to be (or have been) followed, though not revealing the content of any advice or any associated confidential communication. Be that as it may, I consider that case does not preordain the result in the present circumstances.

RESOLUTION OF QUESTION

3 Section 119 is in the following terms:

“119. 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 between the client and another person, or between a lawyer acting for the client and another person, that was made; or
(b) the contents of a confidential document (whether delivered or not) that was prepared;
for the dominant purpose of the client being provided with professional legal services relating to an Australian or overseas proceeding (including the proceeding before the court), or an anticipated or pending Australian or overseas proceeding, in which the client is or may be, or was or might have been, a party.”

4 There can be no doubt that, firstly, the following elements of s119 have been fulfilled:

(i) evidence is sought to be adduced during the hearing of proceedings;

(ii) the relevant client, being the liquidator, has through counsel objected;

(iii) adducing the evidence would result in disclosure of the content of a document confirmed as confidential by clause 10.1 of the funding agreement; and

(iv) there are currently proceedings to which the funding document relates in Australia, in which the client is a party.

5    The remaining element and the question to be answered is whether the funding agreement, being a confidential document relating to an Australian proceeding “was prepared” “for the dominant purpose of the client being provided with professional legal services" in relation to such proceeding.

6 At first blush, one might be inclined to treat a funding agreement as falling outside s119, being provided not for the dominant purpose of the provision of professional legal services but, rather, for a purpose anterior to their provision, namely, the funding thereof. Such a view would comport with the trend of a hardening judicial attitude to narrow the scope of the legal professional privilege; see the discussion of the cases cited in "Legal Professional Privilege in Australia" by Dr R J Desiatnik (Prospect, 1999) at 53 as reflected for example that it is not enough for a person merely to assert a claim for privilege (National Crime Authority v S (1991) 100 ALR 151 at 159 per Lockhart J) That trend of the general law as so interpreted is however not consistently reflected in its statutory counterpart. The Evidence Act 1995 to some extent widens its scope, notably by substituting the dominant purpose test for the sole purpose test, though the general law has now caught up; Esso Australia Resources Ltd v Commissioner of Taxation of the Cth of Australia (1999) 74 ALJR 339.

7    But that first blush view is not the view that I would, on consideration adopt. To deny legal privilege to a funding agreement of this sort would fail to give proper weight to its inextricable connection with the very subject matter of the legal advice that might be given and the nature of the professional legal services to be rendered. It has the potential to reveal the litigant’s likely legal strategy. The funding agreement in a literal and substantive sense, fulfils the purpose of providing legal services in terms not only of the overall capacity to have them at all, but also their availability at critical junctures in the case. While it may not reveal the content of legal advice, it reveals the confidential circumstances of its availability and throws oblique light on the confidential circumstances to which the advice is directed.

8    One could, for example, infer from a funding agreement the likelihood of tactical advice being given of a particular kind at different stages of the litigation or, for that matter, of the likelihood of an appeal being advised or not advised. I consider this funding agreement could do so.

9    Accordingly I would conclude that the dominant purpose element is made out.

10 I would add that in some cases, a funding agreement might even allow such a reliable inference of the likely legal advice, that it would fall within the protection of s118. It protects both the legal advice and any related confidential communications. However, I do not need to determine that question here.

CONCLUSION

11    In all the circumstances, I consider that the Evidence Act does protect this funding agreement from disclosure, being within the scope of legal professional privilege conferred by s119.

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Last Modified: 06/12/2001