Scott v Stevens [No 2]

[2022] WASC 379

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CIVIL

CITATION:   SCOTT -v- STEVENS [No 2] [2022] WASC 379

CORAM:   KENNETH MARTIN J

HEARD:   2 SEPTEMBER 2022

DELIVERED          :   2 SEPTEMBER 2022

PUBLISHED           :   10 NOVEMBER 2022

FILE NO/S:   CIV 1962 of 2021

BETWEEN:   GRAEME SCOTT

Plaintiff

AND

ALISTAIR DAVID JOHN STEVENS

First Defendant

JULIUS LUKE MATTHYS

Second Defendant

NORMAN MEL ASHTON

Third Defendant

RICHARD CHARLES HENFREY

Fourth Defendant

QUINTIS (AUSTRALIA) PTY LTD

Fifth Defendant

SANDALWOOD PROPERTIES LTD

Sixth Defendant

QUINTIS HOLDCO PTY LTD

Seventh Defendant

Catchwords:

Discovery - Orders sought to restrict inspection of document - Legal professional privilege no longer pressed

Legislation:

Defamation Act 2005 (WA)
Rules of the Supreme Court 1971 (WA)

Result:

The defendants give the plaintiff inspection of the Allens Linklaters advice.

Category:    B

Representation:

Counsel:

Plaintiff	:	Mr R J Anderson KC (via videolink) & Ms J Di Lena
First Defendant	:	Ms C Galati
Second Defendant	:	Ms C Galati
Third Defendant	:	Ms C Galati
Fourth Defendant	:	Ms C Galati
Fifth Defendant	:	Ms C Galati
Sixth Defendant	:	Ms C Galati
Seventh Defendant	:	Ms C Galati

Solicitors:

Plaintiff	:	Law One (WA) Pty Ltd
First Defendant	:	Carmel Galati
Second Defendant	:	Carmel Galati
Third Defendant	:	Carmel Galati
Fourth Defendant	:	Carmel Galati
Fifth Defendant	:	Carmel Galati
Sixth Defendant	:	Carmel Galati
Seventh Defendant	:	Carmel Galati

Case referred to in decision:

Harman v Home Department State Secretary [1983] 1 AC 280

Hearne v Street [2008] HCA 36; (2008) 235 CLR 125

KENNETH MARTIN J:

(These further reasons were delivered extemporaneously on 2 September 2022 and have been edited from the transcript.)

Introduction

1. I am dealing with a dispute between the parties regarding a document that has been discovered in the proceedings.

2. The overarching litigation itself is a defamation claim regarding communications that the plaintiff, Mr Scott, alleges the defendants made to the regulator, Australian Securities and Investigations Commission (ASIC).  The communications concerned the plaintiff being issued an Australian Financial Services Licence, or AFSL, in the context of the entity Agri Management (WA) Pty Ltd.  In order to obtain a licence of this nature, it must be granted by ASIC.

3. The communication is said to be an objection, by one or more of the defendants, to Mr Scott obtaining a licence - as with the proposed licence, Mr Scott would have a role as a responsible manager or responsible person in the context of that licence. 

4. There have been a number of interlocutory issues flare up - one of which I resolved some time ago prior to the filing of the defence. 

5. The defence in this matter was filed on 11 February 2022 (folio 21).  It referred to various documents, including a 2018 advice from Allens Linklaters to the receivers and managers of the 'Quintis Group' ('Allens Linklaters advice').

6. For example, par 40 of the defence says:

   In late 2018, the then receivers and managers of the Quintis Group received an advice from Allens Linklaters, which identified a number of potential 'claims for contravention of the Corporations Act's insider trading and market manipulation provisions against Frank Wilson'.

7. Likewise, par 53(w) again refers to the Allens Linklaters Advice:

   53.The matters complained of stated the following facts which the Defendants believed were true:

   ...

   (w)in late 2018, the then Receivers and Managers of the Quintis Group received an advice from Allens Linklaters which identified a number of potential 'claims for contravention of the Corporations Act's insider trading and market manipulation provisions against Frank Wilson'.

8. On 2 May 2022, the plaintiff made a request to the defendants under O 26 r 8(2) of the Rules of the Supreme Court 1971 (WA) ('RSC') for inspection of the Allens Linklaters advice.

9. In response to this request, on 16 May 2022, the defendants' asserted legal professional privilege over the Allens Linklaters advice.  Therefore, the defendants did not allow the plaintiff to inspect it.

10. In the affidavit of Emily Bruce filed 1 September 2022 (folio 43), it states, at par 11, that the defendants indicated that they no longer press a claim for privilege over the Allens Linklaters advice. 

11. Instead, the defendants now wish to restrict inspection of the document - as they say they are concerned it may be used for purposes other than these proceedings.

The parties' positions

1. The parties have both filed minutes of proposed orders outlining what orders they are seeking regarding the inspection of the Allens Linklaters advice.

2. Insofar as it refers to the Allens Linklaters advice, the defendants seek, by reference to their minute filed 1 September 2022 (folio 40), that:

   3.By 2 September 2022 the Defendants give inspection of the 'Allens Linklater' advice (the Advice) to the plaintiff's counsel, Mr Robert Anderson QC and his solicitor, Ms Jonelle Di Lena subject to the following:

   3.1Ms J. Di Lena, be permitted to disclose the contents of the Advice in general terms to the Plaintiff to the extent necessary to obtain instructions;

   3.2The Plaintiff be permitted to use any information disclosed to him with respect to the Advice only for the purposes of this action and instructing his Counsel, Mr R. Anderson QC, and solicitor, Ms Di Lena.

   4.The Court notes that the Defendants have relieved the plaintiff's counsel, Mr Robert Anderson QC and his solicitor, Ms Jonelle Di Lena of their undertaking to them in respect of the Advice.

   5.The costs of and incidental to conferral in relation to the privilege issue of the Advice and the costs of and incidental to this minute be costs in the cause.

3. By contrast, the plaintiff seeks, by his memorandum of proposed orders also filed 1 September 2022 (folio 42), orders that:

   1.By 5 September 2022 the defendants give inspection of the 'Allens Linklaters advice'.

   ...

   3.The Court notes that the defendants have relieved the plaintiff's counsel, Mr Rob Anderson QC and his solicitor, Ms Jonelle Di Lena of their undertaking to them in respect of the 'Allens Linklaters advice'.

   4.The costs of and incidental to conferral in relation to the privilege issue of the 'Allens Linklaters advice' and the costs of today be paid by the defendants fixed in the amount of $ [amount] and payable forthwith.

4. Put shortly, the defendants seek orders that the plaintiff's solicitors of record and counsel be permitted to inspect the Allens Linklaters advice - provided they only use the advice for the purpose of the proceedings and that they only disclose the contents of it generally to the extent the plaintiff needs to provide instructions.  This differs to the plaintiff, who seeks for there to be no restrictions as to the inspection of the Allens Linklaters advice.

5. The parties also differ in terms of the costs associated with the Allens Linklaters advice, with the defendants seeking for the associated costs to be costs in the causes - whereas the plaintiff seeks for the defendants to pay the costs in an amount to be fixed.

The Allens Linklaters advice

1. At the previous interlocutory argument, which I determined between these parties some time ago, the defendants were kind enough to provide me with a copy of that advice of 17 October 2018 - which was provided by Allens Linklaters to the receivers of McGrath Nicol, Messrs Fraser and Preston at the time.  I have read it before - and for the purposes of today, I have read it again.

2. On its face, as one might expect, it sees Allens Linklaters provide candid advice to their client about matters relevant to their work as administrators in terms of the assets of the Quintis Group.  The Quintis Group is not a party to the present proceedings.

3. Nonetheless, it would appear that, in the context of the defendants' defence to the plaintiff's defamation arguments, which focus upon their communications to ASIC, that this advice, which they obviously had access to from Allens Linklaters, bears upon matters relevant to their seeking to establish a qualified privilege defence at common law - and also a defence by s 30 of the Defamation Act2005 (WA) to the effect, namely, that it was reasonable in all the circumstances for the communication claimed of as defamatory to be made.

4. I note that, in the plaintiff's reply filed on 1 April 2022, malice is contended against the defendants under par 3.5 of the pleading.  

5. The question is whether, in circumstances in which the advice is now to be provided, and the claim of privilege no longer asserted, the Court ought go any further than the position that applies by common law - in terms of what obligations apply to parties, and indeed to third parties, who are in receipt of discovered documentary materials that are compulsorily obtained under the interlocutory processes of the Court before trial.

The legal principles

1. The orthodox common law position is explained by the High Court most recently in Hearne v Street [2008] HCA 36; (2008) 235 CLR 125. I refer to the unanimous reasons of the court - but in particular to Gleeson CJ at [3] who observed that the so-called:

   ... 'implied undertaking' is now better understood as a substantive legal obligation.

2. Gleeson CJ also went further to say:

   I also agree that a servant or agent of a party, in the position described in the formulation of the first issue, is directly bound by such an obligation, and is not merely potentially liable as an accessory to a breach by the party.

3. See further his Honour's observations at [5] and [6].

4. At [59], Kirby J agreed with some expressed reservations concerning the position in terms of upholding the contempt ruling made by the New South Wales Court of Appeal, by a majority in that case, which was the subject of the appeal.  

5. The plurality reasons by Hayne, Heyden and Crennan JJ deal with the so-called implied undertaking, explaining, which is really the significant point of that case, that it is not in the nature of a volunteered undertaking.  Rather, it is an obligation of law that applies to documents provided under compulsion - such as the documents identified in the plurality reasons at [96], making reference there to documents inspected after discovery, answers to interrogatories, documents provided on subpoena, documents produced for the purposes of taxations of costs, documents produced under the direction of an arbitrator, documents seized under an Anton Piller order, witness statements served by judicial direction, and affidavits.

Determining this matter

1. Here there appears to be no doubt, albeit discovery has not yet been given, that this compulsorily obtained document, by reason of it being called for in effect under the rules requiring documents mentioned by the pleadings to be produced for inspection (see RSC O 26 r 8(2)), will be subject to the same obligations. By reference to a comparison of the rival minutes, criticism has been directed at the defendants, who no longer assert privilege, objecting to them seeking constraints that would extend above and beyond what I will refer to as the Hearne v Street legal obligation undoubtedly applicable to this document when produced.

2. So, for instance, a reference to the solicitor of record only being permitted to disclose the contents of the advice in general terms is said essentially to be (a) conceptually wrong, but also (b) as a matter of forensic practicality, unworkable and vague.  

3. In terms of the obligation being qualified by a suggested condition making reference to it by general terms only, I agree with that pragmatic criticism.  And, indeed, counsel for the defendant today indicated she would not, in effect, press for such a constraint.

4. The further condition sought, under 3.2 of the defendant's minute, is that the plaintiff be permitted to use any information disclosed to him with respect to this written advice, only for the purposes of this action and for the instructing of his counsel and solicitor.  However, by reference to my earlier observations, all condition 3.2 does would be to replicate an existing legal obligation that is imposed by reference to this document once it is in the hands of the plaintiff's legal advisers.

5. In the course of my dialogue with counsel today, I did canvass a potential to effectively limit the copying of the document - so that the plaintiff would only be permitted in effect to have in his possession a copy of this advice from Allens Linklaters when he was, in effect, in the physical precincts of his legal representatives.  Reflecting on that, however, and after hearing the submission of senior counsel put in reply, I am of the view that there is an insufficient basis shown in the evidence to warrant event that further restraint as suggested.

6. The obligation carried by the Hearne v Street undertaking is a serious and significant obligation - as indeed the facts of that case display.  It extends not only to the lawyers involved - that is, by comparison to Ms Harman in the case of Harman v Home Department State Secretary [1983] 1 AC 280 - but also to directors and the other persons that are identified as recipients. That will include court staff, barristers and the like, vis-à-vis this document extending beyond a use for the purposes of the action at hand.

7. Participation in any endeavour to publish the document or its content on a wider basis, or to assist in publication on a wider basis than the defence of, or the prosecution of the action at hand, would clearly be a violation of that obligation applicable to a document so obtained.  One further observation I make is that it seems likely, if this matter proceeds to a trial, that the advice will be relied upon by the defendants.  It is already referred to in their pleadings.

8. In that context, this Court's position in terms of documents referred to at a trial, towards what may later be obtained by third party participants, is now subject of elaborate regulation under O 67B r 6 of this Court's rules.  In particular, see the third table within this rule which sees a third party enjoy an entitlement without restriction to obtain a copy of a list of exhibits, but not the exhibits themselves, notwithstanding that the content of the exhibit is actually read out later in court, or is referred to in open court.

9. For those latter events, it is possible under O 67B r 8 and r 9, and particularly r 9(3), for an application to be made subsequently by a third party to obtain access to an exhibit.  And, under O 67B r 9(3), the Court must give permission to that end on application, if the criteria thereunder are satisfied.  One of those key criteria is that the application relates to information or a record or other thing that was considered by the court in the proceeding in which the application relates:  see O 67B r 9(3)(a)(i).

10. In short, longer term there is, notwithstanding a direct reference made to it in the trial, no automatic third party entitlement to obtain a copy of this advice document - unless leave were first granted by this Court on an application of a third party under O 67B r 9(3).  That is not a uniform position in other courts around the country.  The position varies from State to State, and indeed also, in the federal jurisdictions, where access to documents referred to as exhibits is differently regulated, with perhaps a greater level of prima facie accessibility for third parties.

11. Nevertheless, the local position is as I have stated.  In these circumstances then, I have not been satisfied by the evidence put before me that it is necessary to go to an extent as is sought under the defendant's memorandum of proposed orders.  Consequently, orders should be made in terms of the counter memorandum of proposed orders - as proposed by the plaintiff.

Costs

1. Counsel for the defendants put to me today that, although the matter was listed today for a special appointment, the nature of the hearing was as a directions hearing.  Therefore, it is put that costs of the hearing should be in the cause.

2. In the circumstances however, and although it was a relatively short point, there was a strong contest to be resolved over the issue of obtaining access to the Allens Linklaters advice on a conditional basis.  That issue needed to be argued and resolved.

3. It is no criticism of the parties that they brought this argument to the Court for it to be resolved.  It is an important point that needed to be cleared up.  But in such circumstances, there was always going to be a winner and a loser, and that is just the binary nature of most civil litigation contests.  In the circumstances, I will follow the orthodoxy of costs following the event outcome on the disputed issue.

4. As Mr Anderson KC mentioned, there is for contested proceedings in chambers a fixed amount.  That is $2,227 under item 2.8 of the scale.  Consequently, I will insert that amount in proposed order 4 of the minute of orders of the plaintiff, in terms of a costs outcome entitlement as the successful party on this application. Otherwise, I will make orders in terms of pars 1 to 4 of the plaintiff's minute.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

DM

Associate to the Honourable Justice Martin

10 NOVEMBER 2022