Rouse v IOOF Australia Trustees No. Scgrg-98-257 Judgment No. S127

[1999] SASC 127

ROUSE V IOOF AUSTRALIA TRUSTEES

CIVIL

The Proceedings

LANDER J. On 25 February 1998, the plaintiffs, except for the 16th and 17th plaintiffs, commenced proceedings against the defendant seeking the following orders:
“1..... That Alan Henry Herald of C/o Ernst & Young, 91 King William Street, Adelaide in the State of South Australia be appointed as inspector pursuant to Section 84C of the Trustee Act in respect of the following trusts:-
1.1... A trust established pursuant to an indenture executed on 2 February 1934 by George Glen Leggoe, Arthur Ernest Herbert Evans, SEAS Sapfor Forests Pty Ltd (formerly South Australian Perpetual Forests Ltd) as amended by an indenture dated 19 June 1969 between SEAS Sapfor Forests Pty Ltd, Kenneth William Neill and Johannes Karl Schmidt;
1.2 A trust established by an indenture executed on 6 March 1964 by the defendant and SEAS Sapfor Forests Pty Ltd;
2...... That the said inspector investigate the administration of the said trusts by the defendant and prepare a written report to be made to this court and to the Attorney-General of the State of South Australia upon the results of the investigation such other time permitted by order of this court.”
On 8 May 1998 the last two mentioned plaintiffs were joined as plaintiffs in this action.
On 13 August 1998, for reasons to which I will later refer, the plaintiffs sought alternative relief in the following orders:
“1..... The defendant’s proper officer produce within seven (7) days for inspection by the plaintiffs all documents in the defendant’s custody, power or control (including, without derogation, the documents refused to be produced by the defendant recorded in a letter from Phillips Fox to Johnson Winter & Slattery dated 12 March 1998 as itemised in the schedule exhibited to the affidavit sworn by Gregory Noel Grainger on 31 July 1998) in relation to the following trusts:-
1.1A trust established pursuant to an indenture executed on 2 February 1934 by George Glen Legoe, Arthur Ernest Herbert Evans, SEAS Sapfor Forests Pty Ltd (formerly Southern Australian Perpetual Forests Ltd) as amended by an indenture dated 19 June 1969 between SEAS Sapfor Forests Pty Ltd, Kenneth William Neill and Johannes Karl Schmidt;
1.2A trust established by an indenture executed on 6 March 1964 by the defendant and SEAS Sapfor Forests Pty Ltd;
2...... That the defendant preserve such documents until judgment in this action or until further order.
3.That the defendant provide to the plaintiffs’ solicitors upon request photocopies or duplicate copies as the case may be of such documents.”

The Facts Giving Rise To The Disputes

In or about 1928, a scheme was commenced and implemented whereby investors contributed to the cost of purchasing land and the planting and growing of radiata pine trees for timber and pulp in the South East of South Australia. The scheme is a long term investment. There are about 20,000 investors or, as they are called, covenant holders.
The scheme operates whereby the defendant acts as the trustee of two trusts under which the covenant holders are the beneficiaries and the 13th, 14th and 15th plaintiffs provide management and other services. The scheme manager is Sapfor Forests Pty Ltd. All of the plaintiffs in this action are covenant holders. In short, the defendant is the trustee and the plaintiffs are some of the beneficiaries of the two trusts.
The plaintiffs seek an order from this Court appointing Mr Herald as inspector of the defendant in relation to its activities as trustee of the two trusts. In the alternative, as I have pointed out, the plaintiffs seek access to the documents referred to in the schedule to the application.
The defendant in this action, IOOF and the 13th, 14th and 15th plaintiffs are involved in proceedings other than these proceedings. IOOF commenced proceedings against the 15th plaintiff seeking reimbursement of deductions made by the Forest Company pursuant to Cl 24 of the Trust Deed. Those proceedings also give rise to a question as to whether an agreement made between IOOF and the 13th, 14th or 15th plaintiffs settled the subject matter of the action. Next, and more importantly, IOOF has sued the 13th, 14th and 15th plaintiffs claiming that those parties have wrongly withheld payments due to IOOF pursuant to the Trust Deed. The actions have been considerate and the consolidated and the consolidated action has been termed the ‘management action’. There is also a dispute between the parties which has been submitted to arbitration.
These proceedings are last in point of time.
The various actions and applications within the actions have taken up the time of a number of judges of this Court. The management action is presently proceeding before Williams J and is in about its sixth month of hearing.
This matter has also been the subject of consideration by Doyle CJ and by Williams J. Williams J decided an issue within the proceedings adverse to the plaintiffs, who have appealed. The Full Court has reserved its decision in relation to that matter.
This application, which I am called upon to consider, is a discrete matter within this action. The application was made orally by Mr Gray QC, Senior Counsel for the plaintiff. The application was:
“That the defendant deliver up the copies of exhibit LJH10 to the affidavit of Lindon John Huxtable sworn on 16 July 1998 in the possession of the defendant or the defendant’s legal advisers.”
The documents which the plaintiffs seek are copies of documents which were the subject of an application before the Chief Justice on 20 and 23 July 1998. On 23 July 1998, the Chief Justice ordered:
“The court orders by consent:-
1...... That the defendant by close of business on Wednesday 29 July 1998 deliver to my associate - chambers all copies of the document LJH10 to the affidavit of Mr Huxtable sworn on 16 July 1998.
2.That the defendant’s solicitors, Johnson Winter & Slattery be permitted to retain one copy of that document and counsel, Mr Abbott QC, be permitted to retain a further copy of the documents but that the content of the document is not to be communicated by the solicitors or by counsel to any other person except to the extent that it is necessary to do so for the purpose of obtaining instructions from their client in connection with the application for the return of the remaining documents.”
I believe that the Chief Justice’s order has been complied with. The plaintiffs, therefore, seek the two copies of LJH 10 in the possession of the defendant’s solicitors and senior counsel, Mr Abbott QC.
The plaintiffs, although they have not expressly said so, would also seek an order for the uplifting of Exhibit LJH 10 and its return to the plaintiffs.

Exhibit LJH 10

Exhibit LJH 10 consists of five documents. They were described by Mr Huxtable in a later affidavit in the following terms:
“9.1.. a bundle consisting of copies of Regulations 194/96, 218/82 and 201/80 made under the Trustee Act 1936.
9.2a 14 page document headed “Summary of 1964 Trust Deed”.
9.3... a 4 page document headed “Checklist Indicators of Inadequate Trustee Performance”;
9.4a 22 page document headed “Conference Head (sic) at Auspine Offices at Tarpeena on 26/6/97 at 10.30 a.m.”; and
9.5... a 21 page document headed “Auspine Ltd re IOOF Australia Ltd Conference at Phillips Fox on 10 and 11 November 1997”.
That is an adequate enough description.
The first category of documents was, of course, compiled by the Government Printer. Those regulations can be purchased from the Government Printer. That category of documents is unimportant.
The other four categories were prepared by the plaintiffs’ legal advisers in the course of preparation for the institution of these proceedings and after the institution of these proceedings.
They are documents of a kind which ordinarily would never come into the possession of the defendant. They are documents which would usually be described as confidential and to which legal professional privilege would attach. However, the original of these documents and copies did come into the possession of the defendant.

The Circumstances In Which The Defendant Obtained The Documents

On 11 May 1998, Mr Huxtable, who is Corporate Trusts Manager employed by the defendant, whilst laying out his files for the purpose of allowing the plaintiffs’ solicitors to copy the documents contained within the files noticed some documents which were not the property of his employer, the defendant. They were the originals of the documents the subject of this application. He read those documents and concluded that the documents were probably the property of the plaintiffs’ solicitors or, alternatively, their clients.
He telephoned Ms Stein, who is a partner in Messrs Fisher Jeffries, defendant’s solicitors in the management action, and asked her to come to his office for the purpose of examining the documents.
He believed that the documents supported or confirmed his view that this action had been brought for a collateral purpose.
Ms Stein read some of the documents and advised him that he should take advice from Dr Baxter, who is a partner in Messrs Johnson Winter & Slattery, the defendant’s solicitors IOOF in this action.
Mr Huxtable contacted Dr Baxter who attended at his office on the same day. Dr Baxter advised Mr Huxtable that he was entitled to copy the documents and Mr Huxtable did so.
I find that on 11 May 1998, Mr Huxtable made four copies of the documents which he had discovered that day. One copy went to Ms Stein of Fisher Jeffries, the defendant’s solicitors in the management dispute. One copy was sent to Marion Rodwell, legal counsel of the defendant’s controlling entity, IOOF Friendly Society. One copy was provided to Dr Baxter of Johnson Winter & Slattery and Mr Huxtable kept one copy for himself.
Mr Huxtable was not able to say whether Dr Baxter advised him that he could send a copy of the documents to Ms Stein but I am satisfied, on Mr Huxtable’s evidence, that he would not have done so without first obtaining Dr Baxter’s advice. I infer from the fact that the documents were sent to Ms Stein that Dr Baxter advised him that it was permissible to do so. I find that the documents were sent by Mr Huxtable to Ms Stein on or about 11 May 1998. I find that Mr Baxter was aware on or about 11 May 1998 that Mr Huxtable either intended to forward the documents or had sent the documents on that day.
I think the copy made for Johnson Winter & Slattery was not provided to them until 14 May 1998 because on that day Mr Huxtable wrote to Dr Baxter seeking his advice in relation to the documents. The letter read:
“We enclose copies of the documents discovered on Monday 11 May 1998 amongst our records.
On inspection we have ascertained that the documents are not those of IOOF Australian Trustees Limited and therefore we request advice on what we should do with the documents.”
I am satisfied, from Mr Huxtable’s evidence, that that letter was written in those terms on the suggestion of Dr Baxter.
Notwithstanding that it must have been clear to both Mr Huxtable and Dr Baxter that these documents were the property of either the plaintiff’s solicitors or their client, no urgency was demonstrated in responding to the request for advice. I infer that there was no urgency because advice had been given by Dr Baxter on 11 May 1998.
In any event, Dr Baxter gave written advice in relation to these documents on 3 June 1998.
His advice may be summarised thus:
The documents are not the property of IOOF.
The documents belong to the plaintiffs’ solicitors or the plaintiffs.
The documents would have to be returned upon a request for their return.
The documents would have been subject to legal professional privilege when created.
Any privilege in the documents had been lost because the documents had been read by Mr Huxtable and Dr Baxter. Moreover, the “production in furtherance of a collateral purpose would mean that legal professional privilege is in any event lost”.
IOOF can use the information in the documents as it thinks fit.
The fact that there is a trustee/beneficiary relationship between the plaintiffs and the defendant is irrelevant.
“The documents suggest (although they are not unequivocal) that the principal purpose of Auspine in seeking the inspection of documents and in proceeding under section 84C of the Trustee Act for the appointment of an inspector, was to further Auspine’s interest in the action brought against it by IOOF”.
IOOF was entitled to copy the documents and use them as it liked.

In or about June 1998, although it may be as early as May 1998, Mr Whitington QC was approached by the defendant’s solicitors and tendered some advice in relation to these documents. His advice to the defendant’s solicitors was that they should return the originals and all copies of the documents. Apparently when Mr Whitington offered this advice he was under the misapprehension that the documents were discovered by staff of Johnson Winter & Slattery at Johnson Winter & Slattery’s premises. I do not think, however, that that misapprehension could have been material to his advice.
There is no record on the defendant’s solicitor’s file of that oral advice. I find that very surprising. Mr Hunwick, the junior solicitor working on this matter was advised of the fact that advice had been given but not the content. I find that surprising.
There is no evidence from Mr Huxtable that that advice was ever conveyed to him. I infer, in the absence of any evidence from IOOF’s solicitors, that Mr Whitington’s advice was never passed on to the client. I am not sure why it was not. Perhaps the solicitors did not agree with the advice.
I interpose to mention one other matter not directly connected with these proceedings but nevertheless important.
On receipt of the documents on 11 May 1998, Ms Stein became under an obligation to discover those documents in the management action if they were relevant or could lead to a train of inquiry within the test prescribed in the Peruvian Guano case: Compagnie Financière et Commerciale du Pacifique v Peruvian Guano Co (1882) 11 QBD 55.
I infer that she has failed to discover the documents. If they have not been discovered because they are not relevant in these proceedings then that is entirely appropriate. If they have not been discovered for any other reason then that might be inappropriate. Of course, if the documents had been discovered, the plaintiffs and their advisers would have become aware of two matters. First that a copy of the documents was in the possession of Messrs Fisher Jeffries and secondly that the original documents were in the possession of Messrs Johnson Winter & Slattery. The non discovery of these documents in the management action prevented the plaintiffs or their advisers becoming aware of the whereabouts of the documents.
Notwithstanding that the defendant and its advisers recognised that these documents belonged to the plaintiffs or their advisers no notice was given that the defendant had the documents and more importantly that they were in the hands of its legal advisers in both actions. No explanation has been given for failing to advise the plaintiffs or their legal advisers that the documents were in the hands of the defendant. I have no doubt that a deliberate decision was made not to advise the plaintiffs or their solicitors that the defendant and its solicitors had these documents. The defendant hoped to use these documents in the proceedings against the plaintiffs.

The Use Of The Documents

The defendant’s tactics after this time were driven by its possession of the documents.
On 17 June 1998, Mr Huxtable swore an affidavit in which he alleged that Auspine and its fellow plaintiffs had brought this action for a collateral purpose. He said:
“10... In the circumstances, the defendant entertains the suspicion that these proceedings have been brought, not for their ostensible purpose of seeking the inspection of documents and the appointment of an inspector to report on the defendant’s administration but to distract and to bring pressure to bear upon the defendant in its capacity as plaintiff in the litigation referred to in paragraph 6 hereof.”
He did not disclose that IOOF had the plaintiffs’ documents to support that assertion. He remained silent about those documents.
The allegation was made, in my opinion, to draw a response from the plaintiffs. The defendant hoped to use the plaintiffs’ documents against the plaintiffs in respect of their responses.
Between 10 and 15 July the plaintiffs responded to those allegations by filing affidavits denying that they had been guilty of an abuse of process.
At no time prior to 15 July did IOOF or its solicitors ever advise the plaintiffs’ solicitors that the documents were in their possession.
On 16 July 1998 a conference was held with Mr Whitington. Mr Johnson, the senior partner in Johnson Winter & Slattery and Mr Hunwick, a junior solicitor employed by that firm, attended that conference. At that conference, advice was given by Mr Whitington that the plaintiffs’ solicitors should be advised that the documents were in the possession of IOOF.
The defendant tendered, as part of its case, an affidavit of James Hunwick sworn on 16 March 1998. It did so for the purpose of explaining the advice given by Mr Whitington in or about June of 1998. Mr Hunwick, in that affidavit, also referred to the conference on 16 July 1998. The purpose of his evidence was to establish that Mr Whitington was unaware of any proposal for an application on the part of the defendant to stay these proceedings as an abuse of process.
In any event, Mr Gray QC, senior counsel for the appellants, sought and obtained leave to cross examine Mr Hunwick in relation to the matters contained in his affidavit.
Mr Hunwick was subjected to a vigorous but fair cross examination. That must have been a stressful experience for a person who has only been admitted as a practitioner of this court for twelve months.
I was impressed by Mr Hunwick as a witness. I believe he was careful in his answers but more importantly I believe he was entirely truthful. I am also satisfied from his evidence that he is a careful and conscientious solicitor, notwithstanding that Mr Huxtable’s affidavit, which Mr Hunwick drew, contained some errors in dates.
In any event, I am prepared to act on Mr Hunwick’s evidence.
Mr Hunwick said that Mr Whitington advised, at the conference of 16 July 1998, that the original documents and all copies of the documents should be returned to the plaintiffs’ solicitors. After Mr Hunwick’s evidence was completed, Mr Whitington sought an adjournment of this application so that he might call Mr Johnson. Mr Johnson is presently in England. I refused that application because I was not sure when I might be able to return to hearing this matter. Because of my commitments the matter might have had to go off some months. Mr Whitington then sought an adjournment for a short time so that he might put in place a video conferencing link to take Mr Johnson’s evidence in England. I acceded to that request.
When the matter resumed, Mr Whitington advised that he did not wish to pursue his application to call Mr Johnson.
The purpose of calling Mr Johnson, so I was advised, was to correct Mr Hunwick’s evidence in one respect. Mr Johnson, I was told, would say that Mr Whitington did not advise that all copies of LJH 10 should be returned.
However, as I say, Mr Johnson did not give that evidence nor did Mr Whitington who was of course available to be called, although it must be appreciated, if he was called, that that would have impacted on his ability to continue as defendant’s counsel on this application.
In the end I am left with the evidence of Mr Hunwick, which I accept. I find that Mr Whitington did advise on 16 July 1998 that the defendant’s solicitors ought to return the originals and all copies of these documents.

I am prepared to accept that Mr Whitington was not advised on 16 July 1998 that the defendant contemplated bringing an application for a stay of these proceedings upon the ground that the plaintiffs were actuated by a collateral purpose which amounted to an abuse of process. I do not believe that the defendant decided upon such an application until after the conference with Mr Whitington.
The matter was due to resume before the Chief Justice on 23 July 1998. After the conference, Mr Johnson made contact with Mr Abbott QC, who was then overseas. He faxed Mr Abbott a copy of LJH 10.
At some time on 16 July, I believe that Mr Abbott advised the defendant that an application should be made for a stay of these proceedings upon the ground that the proceedings amounted to an abuse of process.
I infer that he advised that the application should be supported by an affidavit sworn by Mr Huxtable exhibiting these documents.
At some time on 16 July 1998, the plaintiffs’ solicitors were advised that the original documents were in the hands of the defendant. A representative of the plaintiffs’ solicitors attended at IOOF to collect the documents.
The plaintiffs’ solicitors were not advised that copies of the documents had been taken. In particular they were not advised that copies of the documents had been provided to IOOF’s solicitors in the management action.
On 16 July 1998, Mr Huxtable swore an affidavit exhibiting these documents as exhibit LJH 10. I am not sure what time of the day it was that he swore the affidavit but the documents were not collected by the plaintiffs’ solicitors until 4:45 pm. Mr Huxtable said that the affidavit was sworn after the documents were collected. I think, having regard to paragraph 3 of the affidavit, that is probably so.
In any event the affidavit was sworn for a purpose. The purpose was to exhibit the documents to support an application for abuse of process. An application was made on 17 July 1998 for a stay of these proceedings upon the basis that the plaintiffs’ proceedings amounted to an abuse of process. The application also sought orders for cross examination of the plaintiffs’ solicitors and some but not all of the plaintiffs. These documents were exhibited to support that application.
On 17 July 1998, the plaintiffs’ solicitors wrote to the defendant’s solicitors in the following terms:
“Dear Mr Johnson
Rouse & Others v IOOF Australia Trustees Limited - Supreme Court Action No. 257 of 1998
I refer to your letter dated 16 July 1998 and to the affidavit sworn by Mr Huxtable on same date.
The documents exhibited to Mr Huxtable’s affidavit comprise documents recording information and legal advice of a confidential nature for the purpose of the current proceedings. They are subject to legal professional privilege.
The documents were mistakenly left at your client’s premises in the course of inspection of trust documents by members of my office. Our conduct should in no way be construed as a waiver of privilege.
The original documents have been returned and I now request that any copies retained by your client, any members of your office or any other party to be returned.
I seek the undertaking of:-
1...... Your client, your firm and any other party to whom the documents have been produced not to disclose the same or its contents to any other party; and
2.Your client that Mr Huxtable’s affidavit and the subject documents not in any way be relied upon by your client for the purposes of the current proceedings or any other proceedings.
You have advised that you have filed the affidavit at court but no member of your office has disclosed the documents to your client’s solicitors in other litigation, Fisher Jeffries, or to any other party. You are unaware as to any disclosure by members of your client’s office. You seek the opportunity to take instructions and also confer with counsel, who returns from leave on 20 July 1998.
You will appreciate that my clients would view this as a very serious matter and accordingly propose to take urgent action.
On that basis, I request the above undertakings in writing by 4.00 pm today.
I advise that I have contacted the Associate to the Chief Justice and advised that:-
Mr Huxtable’s affidavit exhibits documents that are subject to legal professional privilege;
There is a possibility that action will be taken to seek injunctive relief to restrain the use of the affidavit and the exhibited documents;
In the circumstances it is recommended that the Chief Justice not read the affidavit in the meantime.”
No doubt it was Mr Huxtable’s affidavit which made the plaintiff’s solicitors aware that copies had been taken of these documents. Neither IOOF nor the defendant’s solicitors had disclosed the existence of copies to that point of time.
That letter sought the return of any other copies and the undertakings referred to in the letter. As well the plaintiffs’ solicitors were keen to ascertain whether the documents had been communicated to Fisher Jeffries. The letter refers to a telephone conversation in which the plaintiffs’ solicitors had been advised that the defendant’s solicitors had not disclosed the documents to Fisher Jeffries.
Johnson Winter & Slattery responded to that letter on 17 July 1998.
“Dear Sirs
IOOF Australia Trustees Ltd and Auspine Ltd
We refer to your letter of 17 July 1998.
We have now discussed the matter with counsel. The recital of the telephone conversation with Mr Johnson which starts on the last two lines of the first page is not correct. We confirm that we have not given the documents nor disclosed their content to Fisher Jeffries. We decline to indicate whether or not we have given them to any other party but we confirm that we have obtained advice from counsel as to the contents of the documents. Mr Johnson did not state that he was “unaware as to any disclosure by a member of [his] client’s office”. He said that he did not know what the exact situation was in respect to any disclosure that might have been made by his client.
To enable the status quo to be preserved over the weekend and to enable further consideration to be given and without in any way making any admission, we are instructed by our client that it will not disclose the contents of the documents or distribute the documents to any other party until midnight on Monday, 20 July 1998. This firm gives the same undertaking.
We will no doubt communicate further about the matter on Monday.
Yours faithfully”
It has to be said that the reply is evasive.
It must have been clear to Johnson Winter & Slattery that it was most important to the plaintiffs to ascertain whether these documents had gone to IOOF’s solicitors in the management action.
In my opinion, there is no doubt that Johnson Winter & Slattery were well aware that Fisher Jeffries had seen these documents. In my opinion, Dr Baxter was aware, as early as 11 May that Ms Stein had seen the documents prior to his visit to IOOF. I believe that when Dr Baxter advised IOOF on the 11 May that the documents could be copied, he understood that the documents would be copied for the purpose of submission to Ms Stein. In those circumstances Johnson Winter & Slattery’s reply is disingenuous and misleading. I believe the letter was written in those terms to avoid admitting that Fisher Jeffries had seen and received a copy of the documents.
A further conference took place on 19 July 1998. This time it was at Mr Abbott QC’s chambers. Mr Abbott was, of course, present and so also were Mr Johnson, Mr Hunwick and Ms Stein.
Ms Stein said that she had seen the documents and had received a copy. She also said that she had destroyed the copy which she had received. In an affidavit sworn by Mr Huxtable in support of this application Mr Huxtable said that he was advised by Ms Stein that she copied the copy which she received and provided it to Mr Blue, junior counsel in the management action. Mr Huxtable has also sworn that Ms Stein told him that Mr Blue returned his copy to Ms Stein and that she had destroyed both copies.
I accept that Ms Stein copied the copy she received and provided a copy to Mr Blue. I also accept that Mr Blue returned his copy and that Ms Stein destroyed both copies. I am unable to conclude when or why it was that she destroyed the two copies.
The matter came on for hearing before the Chief Justice on 20 July 1998. Senior Counsel for the plaintiff, Mr Gray QC, complained of the defendant’s conduct in relation to these documents. The matter was further agitated on 23 July 1998 when the Chief Justice made an order requiring the defendant to give up all copies of the documents except for one copy in the possession of Mr Abbott QC, one of the Senior Counsel retained by the defendant.
In neither of those hearings were the Court or the plaintiff’s advised that Messrs Fisher Jeffries had received a copy of these documents.
In this application the defendant relied inter alia upon affidavits of Lindon John Huxtable, who was the Corporate Trust Manager of the defendant and James Jenner Hunwick, a solicitor employed by the defendant’s solicitors. Mr Gray not only cross examined Mr Hunwick but also was given leave to cross examine Mr Huxtable.
Mr Huxtable was a most unsatisfactory witness. In particular he was evasive and, in my opinion, deliberately so. I believe that he knew more than he was prepared to say.
He swore his first affidavit, in respect of this application, on 5 March 1999.
In that affidavit he deposed to finding the documents and then taking the documents to Mr Grainger, Corporate Solicitor for the defendant. He then said that he telephoned Dr Baxter and advised him that he had found the documents and that Dr Baxter then came to IOOF’s premises and inspected the documents. In that affidavit of 5 March 1999, he did not disclose that he first spoke to Ms Stein and asked her to inspect the documents and that she did so and that she advised him to speak to Dr Baxter. The omission is important. It is clear that the plaintiffs’ main fear in this case has been the possibility of Fisher Jeffries obtaining these documents. I believe that Mr Huxtable deliberately omitted any reference to Ms Stein’s involvement on 11 May from his affidavit sworn on 5 March 1999.
He said that Dr Baxter advised him that he could make copies of the document. He made a copy for himself and a copy for each of Laura Stein of Fisher Jeffries, Marion Rodwell, Counsel for IOOF Friendly Society and a copy for Johnson Winter & Slattery.
In that affidavit he then disclosed information he had received from Johnson Winter & Slattery as to how they had dealt with the copy which they had received.
Apparently Johnson Winter & Slattery made a further copy for themselves and provided both senior counsel, retained by the defendant, with a copy. Mr Whitington received his copy on the morning of 16 July 1998 and Mr Abbott was sent a copy on that same day.
Mr Huxtable’s affidavit confirms that Phillips Fox were not contacted and advised of the existence of the documents before 16 July.
The plaintiffs’ solicitors complained of the paucity of the information contained in that affidavit, as a result of which, on 12 March 1999, Mr Huxtable swore a further affidavit.
In that further affidavit he deposed:
“4..... In paragraph 12.1 of my earlier Affidavit I stated that I sent a copy of the Documents to Laura Stein of Fisher Jeffries. I did this on or about 11 May 1999 (sic), after receiving some oral advice from Dr Baxter.
5.Before I sent the copy of the Documents to Ms Stein, I had already shown her the originals. I did this on or about 4 May 1999 (sic) because I thought that the Documents may have been relevant to the management dispute. Ms Stein briefly reviewed the first 10 or so pages and advised me to request advice from Johnson Winter & Slattery. I did not recall this at the time I swore my earlier Affidavit.
6...... In paragraph 12.1 of my earlier Affidavit I stated that I distributed one copy of the Documents to Ms Stein. I did this (having received Dr Baxter’s advice that I could copy the Documents) because Ms Stein is the partner at Fisher Jeffries action for IOOF in the management dispute, and I suspected that the Documents implied that the within action may have been brought to disrupt the management dispute.”
There are some errors in the dates. In his evidence he corrected the dates in paragraphs 4 and 5. He said the date in paragraph 4 was incorrect and that the year was 1998. In respect of paragraph 5 he said that the year was again incorrect but so also was the day. The date should read 11 May 1998.
Both he and Mr Hunwick were cross examined about the date in paragraph 5 of his first affidavit. In respect of this matter I accept his evidence that it was on 11 May 1998 that he first spoke to Ms Stein. I accept his evidence that he spoke to Ms Stein immediately after he discovered the documents. He could not have spoken to her on 4 May 1998 because he had not discovered the documents before that date.
I do not believe his evidence contained in paragraph 6 of his affidavit that he sent the documents to Ms Stein because they may have been relevant to the management dispute. I am not sure if they are relevant to the management dispute. If they were they should have been discovered. However I think they were sent to Ms Stein for another reason so that they might be used to embarrass the defendants in that action. I believe that the documents were provided to Ms Stein so that IOOF could obtain a forensic advantage.
Paragraph 5 of the affidavit of 12 March 1999 discloses for the first time that Ms Stein inspected these documents before Dr Baxter. I have found that Mr Huxtable deliberately omitted that fact from his affidavit of 5 March so as to minimise Fisher Jeffries’ involvement. That affidavit also discloses, for the first time, that Fisher Jeffries obtained these documents on the same day as Mr Huxtable discovered them. Again I find that that fact was deliberately omitted from the affidavit of 5 March 1999.
In his cross examination, Mr Huxtable said that he had a number of conversations with Ms Stein about his affidavit. He was unable to be precise as to when the conversations took place. I do not believe his evidence in relation to that. I believe he was well aware of the conversations and when he had them with Ms Stein. The purpose of his conversations with Ms Stein was to ascertain that she had received the documents and how she had dealt with them.
In his affidavit he deposes:
“I am informed by Ms Stein and verily believe that:
7.1... she read the copy of the Documents I sent her and, within a few days of receiving her copy of the Documents, made one copy of the Documents which she provided to Malcolm Blue (junior counsel for IOOF in the management dispute);
7.2Mr Blue read his copy of the Documents and returned it to Ms Stein within a few days of receiving it;
7.3... at some time contemporaneous with the events described in subparagraphs 7.1 and 7.2 Ms Stein allowed a junior solicitor at Fisher Jeffries assisting her in the management dispute (Lisa Smiley) to read Ms Stein’s copy of the Documents;
7.4at some time prior to 23 July 1999, (sic) after Mr Blue returned his copy, Ms Stein caused both her and Mr Blue’s copy of the Documents to be shredded; and
7.5... Ms Stein did not provide copies of the Documents to anyone except Mr Blue and Ms Smiley, and Ms Stein no longer has any copy of the Documents in her possession.”
Mr Huxtable must have been in a position to ascertain when Mr Blue returned his copy of the documents to Ms Stein and when those documents were shredded.
The documents discovered by Mr Huxtable, were removed by him from the documents which were to be photocopied by Phillips Fox on 11 May 1998. I believe that Mr Huxtable removed those documents to prevent Phillips Fox becoming aware that they had left documents behind. If the documents had remained where he had discovered them they would have been copied by Phillips Fox and presumably those solicitors would have immediately become aware that the defendant was in possession of some of their documents.
I believe that the defendant’s solicitors deliberately avoided informing the plaintiffs or their solicitors of the discovery of the documents. I believe they did so in order to lay a trap for the plaintiffs in relation to the abuse of process argument. I believe they deliberately avoided telling the plaintiffs of the existence of the documents until 16 July 1998 when the plaintiffs had completed the filing of their affidavits in relation to the abuse of process argument. I believe that the assertion made by Mr Huxtable in his affidavit of 17 June 1998 was made deliberately so as to provoke the plaintiffs into swearing affidavits upon which they might be cross examined with the use of these documents.
I believe that the plaintiffs’ solicitors were advised of the existence of the documents on 16 July so that the documents could be exhibited to Mr Huxtable’s affidavit of the same date and used for supporting the application for a stay of these proceedings as an abuse of process.
It was put by counsel for the defendant, on this application, that the defendant’s conduct was not inappropriate because the documents contain evidence that these proceedings had been brought for an improper purpose and thus amounts to an abuse of process. I do not accept that submission.

The Claim Of Abuse

When the defendant first made its application for a stay the plaintiffs sought particulars of the alleged abuse. On 21 September 1998, the Chief Justice made an order in the following terms:
“1..... By close of business on 30 September 1998 the defendant provide full particulars in writing of the matters relied upon by it in support of its application for a stay of the within proceedings.“1. By close of business on 30 September 1998 the defendant provide full particulars in writing of the matters relied upon by it in support of its application for a stay of the within proceedings.
2.By close of business on 30 September 1998 the defendant provide particulars of any evidence produced by it in support of an application for a stay of these proceedings.”
The defendant has given particulars in accordance with para 1 of the Chief Justice’s order. The particulars are:
“ PARTICULARS OF ABUSE
In these particulars, the 13th, 14th and 15th defendants are referred to as “Auspine”.
1...... Auspine are defendants in proceedings in the Supreme Court of South Australia numbered 480/93 and 1299/96 (collectively referred to as “the management dispute”) in which the defendant herein (“IOOF”) is the plaintiff.
2Auspine has instituted these proceedings for the purposes of:
2.1deflecting IOOF from devoting an appropriate level of effort and resources to the management dispute;
2.2obtaining information to be used in the management dispute which information would not otherwise be available to them by procedures which can be invoked in the management dispute.”
The particulars claim that only the 13th, 14th and 15th defendants are guilty of an abuse of process. There is no claim that any of the other plaintiffs have been improperly motivated to bring these proceedings.
The improper purposes are referred to in paragraph 2 of the particulars. There are two alleged improper purposes. The first is in deflecting the defendant from the prosecution of its claims in the management action. Secondly it is claimed that these proceedings had been brought for the purpose of obtaining information which would not otherwise have been available to the plaintiffs for the purpose of using that information in the management action.
A claim that a party has been guilty of an abuse of process is a serious claim and cannot be made lightly. It can only be made in circumstances where there is evidence to support the claim.
It would be appropriate to confine the defendant strictly to its particulars in determining whether these documents support the alleged improper purposes.

Whilst the defendant has complied with paragraph 1 of the Chief Justice’s order of 21 September 1998 I am informed that the defendant has still not complied with paragraph 2. The defendant offered no reason for its failure to comply with paragraph 2 of the order.

Abuse Of Process And Legal Professional Privilege

I am prepared to assume, without deciding, that both of the purposes identified in the particulars of abuse are improper purposes and if either purpose was made out in due course the court would conclude that the proceedings generally are an abuse of the process of the Court.
I am also prepared to assume, for the purpose of this application, that if these documents do disclose information which would support either of the purposes referred to in the particulars then the documents would not attract legal professional privilege nor would they be confidential to the plaintiffs and their advisers.
In other words I am prepared to assume that the defendant’s argument is correct and that documents which evidence an abuse of process do not attract legal professional privilege and are not confidential to the creator and any party to whom the creator might publish the documents.
I think there is support in the authorities for those propositions.
The rationale underlying legal professional privilege is that it assists and enhances the administration of justice: Grant v Downs (1976) 135 CLR 674 at 685.
A communication to facilitate a crime or fraud does not attract the protection of legal professional privilege.
In R v Cox and Railton [1884] 14 QBD 153 at 165 Stephen J said:
The question, therefore is, whether, if a client applies to a legal adviser for advice intended to facilitate or to guide the client in the commission of a crime or fraud, the legal adviser being ignorant of the purpose for which his advice is wanted, the communication between the two is privileged? We expressed our opinion at the end of the argument that no such privilege existed.”
In Southern Equities Corporation Limited (in liq) v Arthur Anderson & Co (1997) 70 SASR 166 Doyle CJ said at 174:
“... fraud in this context embraces a range of legal wrongs that have deception, deliberate abuse of or misuse of legal powers, or deliberate breach of a legal duty at their heart.”
Documents brought into existence to pervert the course of justice are not protected by legal professional privilege: Carpar v Commissioner of Police (1994) 34 NSWLR 715. Communications designed to frustrate a court order are not privileged: Re Bell; ex parte Lees (1980) 30 ALR 489.
Whether an abuse of process is fraud as explained by Doyle CJ in Southern Equities Corporation (in liq) v Arthur Anderson & Co or whether it is in a category of its own, in my opinion, a communication designed to ensue its result does not attract legal professional privilege. That is because an abuse of the court’s process is the antithesis of assisting or enhancing the administration of justice.
If these communications or documents contain evidence of an abuse of process then, in my opinion, they would not be protected.
It is not enough that a party simply asserts that the privilege does not attach to a communication because of fraud: Attorney-General (NT) v Kearney (1985) 158 CLR 500 at 516. The party must be able to point to evidence or material which prima facie establishes the fraud, although there is no obligation on the party to prove the existence of the fraud. There must be some evidence or material which gives colour to the charge: Commissioner of Australian Federal Police v Propend Finance Pty Ltd and Others (1997) 188 CLR 501.

The Documents

I approach then, a consideration of these documents, on the basis that the defendant asserts that three of the plaintiffs have been motivated to bring these proceedings for improper purposes and that the documents themselves will prima facie establish that charge. The documents will give colour to the charge of abuse.
That requires me to examine the documents. The plaintiffs conceded that it would be appropriate for me to examine these documents for the purpose of determining the application.
I have carefully read all of the documents on a number of occasions. In my opinion the documents do not disclose any evidence of an improper purpose.
In my opinion, the documents do not disclose any evidence that the 13th, 14th and 15th plaintiffs or indeed any of the plaintiffs have brought these proceedings for either of the improper purposes identified in the Particulars.
Indeed I agree with the submission made by Mr Gray that in a number of respects the documents confirm that the proceedings were brought for a proper purpose.
It is difficult in these reasons to identify the passages which indicate a proper purpose. It is also difficult to address the submissions made by Mr Whitington and the particular passages which he said support the defendant’s argument that the documents evidence an improper purpose.
The difficulty is that by addressing the submissions I will publish the information contained in the documents and thereby further infringe upon the privilege which, in my opinion, attaches to the documents and thereby destroy the confidential nature of the documents.
The parties will simply have to be content with my saying that in my opinion the documents do not contain evidence of an improper purpose or an abuse of process.
It was not argued on behalf of the defendant that the inadvertent leaving of the documents at the premises of IOOF amounted to a waiver of legal professional privilege. The defendant relied solely upon a claim of an abuse of process for justifying its action after 11 May 1998 and for its claim to be entitled to retain the copies. As I have found against the defendant in relation to that it seems to me that it must follow that the plaintiffs are entitled to the order sought because the documents are documents which attract legal professional privilege and are confidential to the plaintiffs and their legal advisers.

Order

I therefore order the defendant to deliver up all copies of Exhibit LJH 10 not otherwise delivered up in accordance with the Chief Justice’s order of 23 July 1998.

[1999] SASC 127

30 March 1999