ROBERT MICHAEL KIRMAN and WILLIAM JAMES HARRIS as joint and several liquidators of GH1 PTY LTD (Receivers and Managers Appointed) (in liq) - [2019] WASC 103

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   ROBERT MICHAEL KIRMAN and WILLIAM JAMES HARRIS as joint and several liquidators of GH1 PTY LTD (Receivers and Managers Appointed) (in liq) [2019] WASC 103
CORAM:   MASTER SANDERSON
HEARD:   31 JANUARY 2019
DELIVERED          :   2 APRIL 2019
FILE NO/S:   COR 238 of 2017
MATTER:   GH1 PTY LTD (Receivers and Managers Appointed) (In liq)
AND
MNWA PTY LTD (In liq)
EX PARTE

ROBERT MICHAEL KIRMAN and WILLIAM JAMES HARRIS as joint and several liquidators of GH1 PTY LTD (Receivers and Managers Appointed) (in liq)
First Plaintiffs

ROBERT MICHAEL KIRMAN and WILLIAM JAMES HARRIS as joint and several liquidators of MNWA PTY LTD (in liq)
Second Plaintiffs

Catchwords:

Corporations Act - Solicitor answering examination summons - Issue of privilege - Turns on own facts

Legislation:

Corporations Act 2001 (Cth)

Result:

Application dismissed

Category: B

Representation:

Counsel:

First Plaintiffs	:	Mr J E Scovell
Second Plaintiffs	:	Mr J E Scovell
Examinee	:	Mr P Bruckner

Solicitors:

First Plaintiffs	:	H W L Ebsworth Lawyers
Second Plaintiffs	:	H W L Ebsworth Lawyers
Examinee	:	Torrens Legal

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

Nil

MASTER SANDERSON:

By summons for examination filed 5 October 2017 the plaintiffs obtained orders against Darryl Kipping that he be examined in relation to the affairs of the corporations of which they were liquidators and that he produce certain books and records. Mr Kipping is a solicitor and he had acted for the companies now in liquidation and various officers of those companies. Mr Kipping has produced certain records and has been examined. It is the plaintiffs' position Mr Kipping has not produced all of the documents he was obliged to produce under the original orders as varied from time to time. On 12 October 2018 the plaintiffs filed an interlocutory process seeking production of further documents. I will come to the terms of the orders sought by the plaintiffs in their interlocutory process in due course. But first it is necessary to provide some facts to put the application in context. What follows is taken largely from the submissions filed on behalf of Mr Kipping.
The orders made on 5 October 2017 required production under s 596D and s 597(9) of the Corporations Act 2001 (Cth) (the Act) books described as follows:
(a)any client documents (as that term is defined in the Legal Profession Conduct Rules 2010 (WA)) of GH1 in your possession, custody or power which you have not, as at the date of this summons, provided to the plaintiffs, including books and records relating to any trust of which GH1 has at any time been trustee in respect of the period in which GH1 was the trustee; and
(b)any client documents (as that term is defined in the Legal Profession Conduct Rules 2010 (WA)) of MNWA in your possession, custody or power which you have not, as at the date of this summons, provided to the plaintiffs, including books and records relating to any trust of which MNWA has at any time been trustee in respect of the period in which MNWA was the trustee.
On 19 January 2018 Mr Kipping wrote to the plaintiffs' solicitors. He raised a number of points which can be summarised as follows:
(1)He invited the liquidators to reduce the scope of production of documents taking into account he was required to review approximately 6.5GB of unarchived emails together with 13GB of archived emails at an estimated cost of $100,000;
(2)He proposed an extension of time for production and the examination be delayed so that the liquidators had time to review production before examination;
(3)He raised that the examinations regarding the respective companies should proceed separately;
(4)He proposed the examination occur in private and there be confidentiality orders taking into account an Australian Federal Police (AFP) investigation of the directors and the issues of joint privilege;
(5)He proposed that produced documents be kept confidential; and
(6)He proposed that copies of emails be produced on storage devices to facilitate timely production and to reduce costs.
The plaintiffs' solicitors replied on 25 January 2018. The liquidators agreed that the examinations proceed consecutively and agreed the examination take place in private and be covered by confidentiality orders. They did not take up the offer of time to review the documents before the examination but instead expressed a preference to proceed with the examination on 30 January. Otherwise, Mr Kipping's points were not addressed.
The examination proceeded on 30 January 2018. At the commencement of the hearing agreed orders were handed to the registrar to the effect that a confidentiality regime was put in place and the examinations would proceed consecutively. Orders were also made modifying the order for production – this modification effectively limiting the scope of production. The agreed orders were as follows:
(a)Any client documents (as that term is defined in the Legal Profession Conduct Rules 2010 (WA)) of GH1 in its own capacity or in its capacity as trustee of any trust of which GH1 has at any time been the trustee in respect of the period in which GH1 was the trustee, in your possession, custody or power which you have not, as at the date of this summons, provided to the plaintiffs; and
(b)Any client documents (as that term is defined in the Legal Profession Conduct Rules 2010 (WA)) of MNWA in its own capacity or in its capacity as trustee of any trust of which MNWA has at any time been the trustee in respect of the period in which MNWA was the trustee, in your possession, custody or power which you have not, as at the date of this summons, provided to the plaintiffs.
It is these orders which are the subject of this interlocutory application. Pursuant to those orders on 30 January 2018 a box of documents was produced. It was at this point the question of joint privilege arose. In the course of finalising the confidentiality orders Mr Kipping's counsel indicated that Mr Kipping's firm had retainers with Allen Caratti and Tina Bazzo, directors of a number of corporations. From time to time he would also be retained to act for those corporations. As a consequence there were a number of documents produced which the liquidators were entitled to inspect and receive as they were the subject of joint privilege between the company and the directors.
In the course of the examination on 30 January 2018 Mr Kipping's counsel noted that a solicitor has competing obligations to comply with the summons but an equal and opposite obligation not to produce to the extent the summons does not require production. Some mechanism had to be engaged for the resolution of doubt. Counsel anticipated agreement in order to resolve any disputes. He suggested that differing views as to what might comprise a 'client document' could be resolved by conferral and a consent order. Between 5 February 2018 and 26 February 2018 Mr Kipping and the plaintiffs' solicitors conferred as to how any disputes could be resolved. That resulted in the following sub‑paragraphs being inserted in the orders:
2 (c)All documents, including communications sent by Torrens Legal to GH1 (and their representatives), timesheets, invoices, statutory trust account activity documents and file notes, prepared by Torrens Legal for GH1 or predominantly for the purpose of GH1 or GH1's matter; and
2 (d)All documents, including communications sent by Torrens Legal to MNWA (and their representatives), timesheets, invoices, statutory trust account activity documents and file notes, prepared by Torrens Legal for MNWA or predominantly for the purpose of MNWA or MNWA's matter.
Between 19 March 2018 and 26 March 2018 the plaintiffs' solicitors and Mr Kipping corresponded about documents to be produced. It is not necessary to detail that correspondence. But two things do emerge. First, the plaintiffs' solicitors were concerned about documents going to the scope of Mr Kipping's retainer. Second, Mr Kipping was alive to the plaintiffs' solicitors' concerns but was also mindful of his obligations not to disclose documents which were covered by legal professional privilege and which were not within the scope of the examination orders.
On 9 April 2018 Mr Kipping was examined for a second day. In dealing with the document review process he had this to say (ts 79):
I reviewed my various files from a document point of view as well as email communication and also with regards to accounting side that was requested. In that regard, I then reviewed those documents and communications with regard to determining what matters were – advice was being provided on and to whom that advice was being provided. From there, I then determined what documents fell within the advice being provided to GH1, the company as to what matters being provided to – advice to other parties and what was unrelated matters.[1]
[1] Transcript of proceedings before Registrar S Boyle 9 April 2018.
During the course of the examination Mr Kipping agreed he would provide a list of matters where Torrens Legal was acting for GH1 solely and then a separate list of any matters where Torrens Legal was acting where GH1 was one of its clients. That written advice was provided on 9 April 2018.
Mr Kipping was then further examined on 10 April 2018 and 12 April 2018. On 25 April 2018 Mr Kipping provided a written response to certain questions.
It is against that background that the plaintiffs sought the following interlocutory orders:
1.The First Plaintiffs and Second Plaintiffs have leave to adduce in evidence and rely upon the transcript of the examination of Darryl Kipping in this application.
Non produced documents
2.Within 4 weeks of the date of these orders, Darryl Kipping is provide to the first plaintiffs and second plaintiffs any client documents (as that term is defined in the Legal Profession Conduct Rules 2010 (WA)) of GH1 PTY LTD (Receivers and Managers Appointed) (In Liquidation) ACN 099 191 714 (GH1) and MNWA PTY LTD (In Liquidation) ACN 101 717 177 (MNWA) in his possession, custody or power which he has not, provided to the first plaintiffs and second plaintiffs to date, in particular:
(a)all emails to and from, correspondence with and documents relating to facilities loaned to GH1 or for which GH1 has given security by:
(i)the Bank of Queensland; and
(ii)Australia and New Zealand Banking Group Limited; and
(b)all emails to and from, correspondence with and documents received from or provided to GH1 and MNWA's former lawyers (including copies of court documents) including:
(i)Alan Rumsley;
(ii)Solomon Brothers;
(iii)Sonia Edwards;
(iv)Metaxas & Hager;
(v)Zafra Legal (formerly Wilson + Atkinson);
(vi)Robson & Hayes; and
(vii)Roe Legal.
Claim for Privilege
1.Within 4 weeks of the date of these orders, Darryl Kipping is provide to the first plaintiffs and second plaintiffs a list of all documents in his possession which he was required to produce pursuant to the Orders dated 30 January 2018 but which have not be produced due to claims of privilege and such list is to specify the nature of the privilege claimed and the identity of the party or parties on whose behalf the privilege is claimed, in relation to each document without disclosing the content of the document.
4.Mr Kipping pay the costs of and incidental to this application.
There are two ways in which a person who is being examined can be compelled to produce books and records of a company. Under s 596D(2) of the Act the summons which is issued to a person may require production at the examination of 'specified books that are in the person's possession and relate to the corporation or to any of its examinable affairs'. Then under s 597(9) a court may direct a person to produce at an examination books in the examinee's possession which are 'relevant to matters to which the examination relates'. That latter order seems to anticipate an order separate from an order actually made in the summons. Contextually there is nothing to suggest the two orders are mutually exclusive. In other words, there would seem to be no reason why, if an order is made in the summons, a court could not subsequently make an order which is more specific or attempts to more clearly define documents so as to make it plain precisely what has to be provided.
Counsel for Mr Kipping submitted the two sections did not allow for the making of what he described as 'fresh orders' as to production. As I understand his submission it was to the effect once orders were made that was the end of the matter – there was no scope for making an order which would be the equivalent of say an order for further and better discovery. That submission should not be accepted. As I have indicated, it is not required by either the text or the context of the sections and would provide a limitation on the capacity of a court to order production of documents which might be relevant to an examination.
But the question still remains as to whether or not the orders sought in the interlocutory process ought be made. It was Mr Kipping's contention he had given careful consideration to what documents should be produced and he was satisfied all documents within the scope of the order had been produced. That position emerges from a number of exchanges with counsel during his evidence – in particular on pages 79, 120 and 122 of the transcript.[2] The tenor of the examination generally is Mr Kipping has carefully considered all of the documents in his possession and as and where necessary has taken advice of counsel. During the examination there was an exchange with counsel at page 179 of the transcript where Mr Kipping makes it plain he was very much alive to privilege attached to advice he had given to Ms Bazzo and Ms Bazzo alone.[3] It is difficult to see he has confused joint privilege with legal advice privilege when he was acting solely for Ms Bazzo.
[2] Transcript of proceedings before Registrar S Boyle 9 April 2018.
[3] Transcript of proceedings before Registrar S Boyle 12 April 2018.
In support of their application the plaintiffs relied on an affidavit of Cassandra Michelle Guy sworn 12 October 2018. Ms Guy details documents and correspondence which she says are in Mr Kipping's possession and which should be produced pursuant to either the summons or the various orders. With respect that affidavit is argumentative. What does not emerge from the affidavit is anything discrete and distinct which would show unequivocally Mr Kipping has failed to meet his obligations. Rather, the correspondence which is attached to the affidavit (and to which I have referred in part in these reasons) suggests Mr Kipping has produced all documents which he is required to produce pursuant to the summons.
On balance I am not satisfied the orders sought by the plaintiffs ought be made. I am satisfied the evidence discloses Mr Kipping has carefully examined what documents he is required to produce and he has produced those documents. The documents which have not been produced he has satisfied himself are subject to legal professional privilege. That being the case, any orders which I might make would potentially force Mr Kipping to disclose documents which are covered by privilege. To make such orders would be beyond the scope of the examination process.
Accordingly, I would dismiss the plaintiffs' interlocutory process. I will hear the parties as to the form of orders and as to costs.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
DG
Associate to Master Sanderson
2 APRIL 2019