SERRY v Rawnsley - [2002] FMCA 212

FEDERAL MAGISTRATES COURT OF AUSTRALIA

SERRY v RAWNSLEY & ORS

[2002] FMCA 212

TRADE PRACTICES – Whether cause of action disclosed against companies as holders of units in a trust – whether claim should be dismissed summarily.

PRACTICE AND PROCEDURE – Discovery – legal privilege – waiver – reference in affidavit material to privileged documents – costs.

Reynolds v Southport Wines Pty Ltd (2002) FCA 712 (6 June 2002)
Esso Australia Resources Ltd v Commissioner of Taxation (Cth) (1999) 201 CLR 49
Mann v Carnell (1999) 168 ALR 86

Trade Practices Act 1974, ss.51AC, 52, 75B, 82

Federal Magistrates Act 1999, ss.42, 45

Applicant:

TANYA SERRY

Respondents:

MARC HAROLD RAWNSLEY, RICHARD GORDON CHANDLER,
RSC PTY LTD (ACN 007 386 138), DAVIDS STAFFING SOLUTIONS PTY LTD (ACN 079 168 451), DAVIDS PERSONNEL SERVICES PTY LTD
(ACN 091 298 234), MARC RAWNSLEY MANAGEMENT SERVICES PTY LTD (ACN 058 665 517) and CHANDLER GROUP HOLDINGS PTY LTD
(ACN 005 702 036)

File No:

MZ 970 of 2001

Delivered on:

11 October 2002

Delivered at:

Melbourne

Hearing Date:

27 July 2002

Judgment of:

McInnis FM

REPRESENTATION

Counsel for the Applicant:

Mr M Clarke

Solicitors for the Applicant:

Mulcahy Mendelson & Round

Counsel for the Respondents:

Mr Corbett

Solicitors for the Respondents:

Madgwicks

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
MELBOURNE

MZ970 of 2001

TANYA SERRY

Applicant

And

MARC HAROLD RAWNSLEY

First Respondent

And

RICHARD GORDON CHANDLER

Second Respondent

And

RSC PTY LTD (ACN 007 386 138)

Third Respondent

And

DAVIDS STAFFING SOLUTIONS PTY LTD (ACN 079 168 451)

Fourth Respondent

And

DAVIDS PERSONNEL SERVICES PTY LTD (ACN 091 298 234)

Fifth Respondent

And

MARC RAWNSLEY MANAGEMENT SERVICES PTY LTD
(ACN 058 665 517)

Sixth Respondent

And

CHANDLER GROUP HOLDINGS PTY LTD
(ACN 005 702 036)

Seventh Respondent

REASONS FOR JUDGMENT

There are three issues which require a ruling of the Court. The first is an application by the Sixth and Seventh Respondents that the application against them be summarily dismissed (the first issue).
The second issue is one of discovery of documents by the Respondents of certain documents where legal privilege has been claimed (the second issue).
The third issue relates to the question of whether the Applicant should pay the Respondents’ costs thrown away as a result of an order that the final hearing date be vacated.
In this application the Applicant has commenced proceedings against seven Respondents and made a claim for a declaration in damages pursuant to the Trade Practices Act 1974 (the TPA). In brief terms the claim arises from a recruitment services business venture.
It is appropriate to refer to the Applicant’s Statement of Claim filed

21 June 2002 in order to understand in brief terms for the purpose of this ruling the background to this claim and the identity of each of the Respondents.
It is alleged that Marc Harold Rawnsley (Rawnsley) the First Respondent and Richard Gordon Chandler (Chandler) the Second Respondent were both directors at all material times of “RSC Pty Ltd” (RSC) the Third Respondent. They are also claimed to be co-directors of Davids Staffing Solutions Pty Ltd (Davids Staffing) the Fourth Respondent and Davids Personnel Services Pty Ltd (Davids Personnel) the Fifth Respondent.
RSC was formerly known as “Chandler Recruitment Services Pty Ltd and is trustee of the “Chandler Recruitment Services Unit Trust” (the trust).
Marc Rawnsley Management Services Pty Ltd (Rawnsley Management) is the Sixth Respondent and a holder of units in the trust. Likewise Chandler Group Holdings Pty Ltd (the Chandler Group) the Seventh Respondent is also claimed to be a holder of units in the trust. Rawnsley at all material times is said to have been a director and controller of Rawnsley Management and Chandler at all material times was a director and controller of the Chandler Group.
Hence it is evident that through the corporate structure which has been briefly described both Rawnsley and Chandler have directorships of companies which in turn are either unit holders or trustees of the trust.
The claim by the Applicant in brief terms relates to a personnel agency business which it is alleged was the subject of an agreement in May 1999 between the Applicant, Rawnsley, Chandler and RSC (the agreement). It is not necessary to provide details in this ruling of all the alleged particulars of the agreement save to say that it is claimed that a new company was to be incorporated to conduct a new personnel agency business with the Applicant owning 40% of the shares in the new company (the business). According to the claim the Applicant, Rawnsley and Chandler were to become directors of the new company with 60% of the shares in the new company being owned by RSC.

A key benefit which the Applicant claims to have brought to the new business is a significant customer namely ‘Australia Post’. The Applicant, Rawnsley and Chandler also were to become directors of Davids Staffing.
In the Statement of Claim filed 21 June 2002 the Applicant claims that representations were made in January 2000 by Rawnsley for and on behalf of RSC. They key representations alleged were that the business was to re-structured and managed with that of RSC to save on administration costs etc and would be merged with the business of RSC. A new company Davids Personnel was to be established to pay all salaries of staff including the Applicant. The Applicant was to receive 30% share of the equity and net income of the merged business with the remaining 70% share of the equity and income to be retained by interests associated with Rawnsley and Chandler. The Applicant claims that it was represented that she would be financially better off under the new merged business.
It is further pleaded that in April 2002 Rawnsley and Chandler for and on behalf of RSC, Rawnsley Management and The Chandler Group made further representations. The representations are alleged to include a reference to the purpose of re-structuring the business with RSC to save payroll tax, workcover charges and administration costs. It is claimed that the representations included reference that the Applicant again would be receiving a 30% share of the net income and equity of the merged business. Significantly it is claimed that representations were made that Rawnsley Management and The Chandler Group would receive a 30% share each of the net equity and net income of the merged business. The representations alleged to have been made in April 2002 referred to as “the second representations” included again, according to the Applicant, a suggestion that she would be better off under the new re-structured business.
It is claimed that based upon a belief that she was to become entitled to a 30% share in the equity and income of the merged business the Applicant signed minutes of a meeting on 22 June 2000 whereby it was agreed, according to the Applicant, that she would receive one unit in the trust to be issued by RSC and that Rawnsley Management and The Chandler Group would consent to the issue of the unit and otherwise waive their rights under a particular clause of the Trust Deed. According to the minute the annual distribution of the net income of the Trust would be 30% to the Applicant and the balance to Rawnsley Management and The Chandler Group.
In a nutshell the complaint by the Applicant is that instead of receiving 30% of the equity and net proceeds her one unit of the trust represented only one of 20,001 units. It is claimed by the Applicant that the agreement reached to merge the businesses meant that a new corporate structure would involve relinquishing 10% of her 40% interest in Davids Staffing and in turn she would receive 30% of the new merged business. Her complaint is that the purpose of the re-structure or merger was in reality to ensure that she no longer had any equity in the business and otherwise deny her a 40% in either the equity or net income of the business or the trust.
It is claimed that RSC was established as a trustee of the unit trust and that Rawnsley and Chandler through companies owned and controlled by them held units in the trust and shares in RSC. It is alleged that Rawnsley used MRM and the Chandler Group to hold the unit trusts.
The complaint of the Applicant is that the purpose of the restructure or merger was to ensure that she no longer had any equity in the business and to otherwise deny her a 30% share in either the equity or net income of the business or the trust.

The first issue – Application to dismiss the claim against Rawnsley Management and the Chandler Group

Respondents’ submissions

The Respondents submitted that the Statement of Claim does not reveal any case and/or claim for relief against Rawnsley Management or the Chandler Group. Reference was made to paragraph 12 of the Statement of Claim which sets out alleged representations and it was submitted that the representations were made by Rawnsley and Chandler for and on behalf of RSC, Rawnsley Management and the Chandler Group. Yet it was submitted on the material already filed in relation to the matter there is no suggestion in any of the evidence that representations were being made in any capacity by Rawnsley and Chandler for and on behalf of Rawnsley Management or the Chandler Group. The representations do not refer to the Family Trust companies in the exchanges.
Further reference was made to the relief sought against Rawnsley Management or the Chandler Group and it was submitted that the relief sought is a declaration that they had engaged in misleading and deceptive conduct and damages. The damages sought however were said to be referred to in the affidavit of the Applicant sworn

22 February 2002 and that a proper reading of that affidavit reveals damages sought from either Rawnsley or Chandler or the trustee of the unit trust being RSC. It is submitted that if no damages are being sought against Rawnsley Management or the Chandler Group then it is not sufficient to maintain a claim in the present circumstances to simply seek a declaration against those parties.
During the course of submissions Counsel for the Respondents referred the Court to the decision of the Federal Court in Reynolds v Southport Wines Pty Ltd (2002) FCA 712 (6 June 2002) where Hely J states at paragraphs 29 and 30 the following:
“29.The Applicant seeks a number of declarations and damages, including punitive damages for the manner in which the Respondent terminated the Applicant’s position ‘in contravention of the clear terms of the employment agreement’ and aggravated damages for mental distress. The entitlement to relief is said to arise by reason of the Respondents breach of contract, or by reason of breaches of the Respondent of s 52 of the Trade Practices Act 1974 (Cth) (the TPA) arising by reason of misrepresentations said to have been made to the Applicant in the course of his employment. The Respondent submits that there is no breach of the kind alleged, or alternatively no loss flows from any such breach. An element of the Respondent’s defence in relation to the TPA claims is that if there were any misrepresentations, they were not made in trade or commerce.
30.The claims for a declaration can be put to one side. If the subject matter of a proposed declaration founds an entitlement to damages then there is no utility in making a declaration as well as awarding damages. If the subject matter of a proposed declaration does not found an entitlement to damages then, at least in the circumstances of the present case, there is no utility in making a declaration, albeit for different reasons. A declaration cannot be made if it ‘will produce no forseeable consequences for the parties’. (Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd (1999) 200 CLR 591, 613 per Gaudron J).”
It is submitted by the Respondents that in the present case the declaration should not be granted if it will produce no forseeable consequence against the parties. In reality the damages sought against the Respondents are sought against the First to Fifth Respondents and principally the First, Second and Third Respondents. It is claimed that the only relief sought against the Rawnsley Management and the Chandler Group is a declaration which would produce no forseeable consequence to the parties. It is submitted that there is no utility therefore having the Rawnsley Management and the Chandler Group as parties to these proceedings. It was further submitted that there is no assurances, guarantees or warranties that have been given or alleged to have been given by Rawnsley Management or the Chandler Group which would provide a basis for any particular relief against them. The pleading against Rawnsley Management and the Chandler Group is otherwise embarrassing and should be struck out. There is no suggestion in the present case of any Cross-claim being raised by Rawnsley Management or the Chandler Group.
On the pleadings it is submitted that there is nothing specific alleged against Rawnsley Management and the Chandler Group in terms of the representations and nor is it said that the affidavit material explains those representations by Rawnsley or Chandler may be said to have been made for on or behalf of Rawnsley Management and the Chandler Group.
As I understood the submissions of the Respondents, it was claimed that merely being a director of another company does not mean that representations by that director in each instance can be said to be representations made for and on behalf of each company of which the person happens to be a director.
The Court was invited to compare the affidavit evidence of the Applicant in her affidavit sworn 18 December 2001 and in particular paragraph 22 thereof where reference is made to the meeting held on 23 April 2000 which has been the subject of pleadings. It is said that in the affidavit there is no reference made to representations being given on behalf Rawnsley Management or the Chandler Group. This should be contrasted with paragraph 12 of the Statement of Claim which asserts that the representations were made by Rawnsley and Chandler for and on behalf of “the Sixth and Seventh Respondents”.
The Court was further referred to an affidavit of the Applicant sworn 31 May 2002 and in particular paragraph 4 thereof which refers to paragraph 22 of the earlier affidavit and corrects a date and otherwise contains the following passage:
“The issue of my share in the business, whatever structure that took, had been resolved at the meeting at drinks at the Greek restaurant. When referring to the trust distribution, Chandler said words to the effect that the distribution was 30/30/30/10, that is 30% to Chandler; 30% to Rawnsley; 30% to me; and 10% to Webster. Chandler said the whole purpose of the restructure was that it was for administration purposes and would save on Workcover costs.”
It is submitted that the passage to which I have just referred makes no reference to the representation being made for and on behalf of Rawnsley Management and the Chandler Group and that there is no reference in the nature of the representations relied upon to the basis upon which it could be pleaded that the representations were for and on behalf of Rawnsley Management and the Chandler Group.
It was further submitted that an implication that Rawnsley Management and the Chandler Group would be bound by representations due to their involvement in the implementation of at least some of the representations was not sufficient to provide a basis upon which a cause of action for misleading or deceptive conduct against Rawnsley Management and the Chandler Group could be pursued. As the pleading against both Rawnsley and Chandler does not suggest that the representations were made in their capacity as directors of the unit holders then it was submitted that there is no cause of action established. It is further submitted that there needs to be reliance and loss and damage flowing from reliance. In the present case the Applicant it was submitted continued to receive income from the trust and hence there could not be any loss or damage arising from any reliance upon representations, if any, on behalf of Rawnsley Management and the Chandler Group.

Applicant’s submissions

It was submitted on behalf of the Applicant that the application set out relief sought against Rawnsley Management and the Chandler Group and in particular reference was made to paragraph (D) which claims “Damages under s.82 of the TPA for breach of s.52 and/or s.51AC and/or 75B of the TPA” and paragraph A which seeks a declaration that Rawnsley Management and the Chandler Group have engaged in misleading and deceptive conduct in contravention of s.52 of the TPA.
It was submitted that the elements of s.52 are set out in the Statement of Claim and the application and these include the representations, reliance and damages suffered. It was submitted that whether the Applicant succeeds is a matter that can be debated but is at least arguable. Otherwise it was submitted that the Applicant has pleaded that Rawnsley at all times was a director of Rawnsley Management and that Chandler a director of the Chandler Group.
Reference was made to the Statement of Claim where it is pleaded that Rawnsley Management and the Chandler Group are both duly registered companies and holders of units in the trust. It was further submitted that I should take account of the third paragraph of the Statement of Claim which pleads that RSC at all material times was the trustee of the trust. It is submitted that in the circumstances there are pleadings against the trustee and the two unit holders which at the time representations were made constituted 100% of the units. That then relates back to the claim that Rawnsley and Chandler were directors of RSC the trustee. It is then argued that Rawnsley and Chandler when speaking of taking an interest or representing that the Applicant was getting an interest in the trust were doing so as directors of the trustee company and/or the unit holders.
It was further submitted that by pleading the directorship and the relationship of those directors to the trustee company of the trust is sufficient basis for a claim against Rawnsley Management and the Chandler Group. In the circumstances it was submitted the Applicant could not expect enforcement of the matters raised in the signed Minutes of Meeting on 22 June in the absence of any agreement between RSC, Rawnsley Management and the Chandler Group. The 30% interest to be obtained by the Applicant may be achieved by a number of means within the power of the other parties. Therefore the implementation of the representation provides a basis where it could be said that it is implicit that representations were made by Rawnsley and Chandler for and on behalf of Rawnsley Management and the Chandler Group respectively. There were no other directors of RSC the trustee and Rawnsley controls Rawnsley Management whilst Chandler controls the Chandler Group and together that achieves control of RSC which makes up all the units in the trust. These matters it is asserted are clear from the affidavit material. It is said that the Minute of the meeting of 22 June was signed by Chandler and Rawnsley purportedly on behalf of Rawnsley Management and the Chandler Group respectively.
Further reference was made to the Affidavit of the Applicant sworn

31 May 2002 where at paragraph 19 she refers to an email of

16 February 2001 from Rawnsley which states, “As a result of the unit holders meeting held as above … the unit holders agreed to distribute $130,000 on the basis of unit holdings …” That unit holders meeting it was submitted could only take place with Rawnsley Management and the Chandler Group.
It was submitted that loss and damage flows from what happened in the period when the Applicant left even though she continued to receive a benefit for some period after the concerns about her unit holding became known.

In general terms it was submitted that the Federal Magistrates Court should not be concerned with “too much legalese” and that in any event there is at least a triable issue which has been established against Rawnsley Management and the Chandler Group.

Reasoning

In my view it is important to remember that the Federal Magistrates Court is under a statutory obligation to proceed without undue formality. It also should endeavour to ensure that the proceedings are not protracted (See s.42 Federal Magistrates Act 1999).
Hence the statutory obligation in the present case may be said to benefit both the Applicant and the Respondents in the sense that any technical defect in the pleadings identified by the Respondents may be regarded as raising an unduly formal complaint whilst on the other hand the desire to make application for summary dismissal against Rawnsley Management and the Chandler Group would no doubt of course assist in achieving the other objective of ensuring that proceedings are not protracted.
In the present case I am satisfied that the combination of the Statement of Claim, the Application and the Affidavit material at least sufficiently raises a triable issue both against Rawnsley Management and the Chandler Group. I am satisfied on the basis that in the pleadings the representations are at least claimed to have been made for and on behalf of both Respondents and that the factual circumstances giving rise to the representations as alleged and indeed the Minute that has been signed and referred to as being a Minute of the meeting of

22 June 2000 clearly implicates both Rawnsley Management and the Chandler Group by the conduct of Rawnsley and Chandler who respectively are directors of RSC the trustee of the unit trust of units then at least held by both Rawnsley Management and the Chandler Group.
In my view it is somewhat artificial to exclude at this stage the claim by the Applicant against Rawnsley Management and the Chandler Group though no doubt the Applicant would be aware of the consequences of bringing a claim which could not be established based on representations made as described. Whilst the Statement of Claim may be more specific as to the basis upon which it could be said representations were made for and on behalf of Rawnsley Management and the Chandler Group there is sufficient material in the pleadings, the application and the affidavit material which in my view at this stage would not justify summary dismissal of the claims against the two Respondents.
I am further satisfied that in the circumstances of this case declaratory relief may be sufficient in terms of the claim against both Rawnsley Management and the Chandler Group though I suspect that in reality the more significant issue will be that of damages and it will be for the Applicant to establish that at a later stage based upon evidence and according to legal principles that there is a basis upon which damages now claimed can be established against each of the Respondents.
At present however as indicated I am satisfied that the application to dismiss the claim against Rawnsley Management and the Chandler Group should not be allowed.

The second issue – Whether the Respondents can claim privilege to certain discovered documents

In this matter an order was made by the Court on 8 February 2002 that it was in the interests of the administration of justice to allow discovery pursuant to s.45 of the Federal Magistrates Act 1999. Categories of documents were then the subject of an order that the parties file and serve a List of Discoverable Documents. An issue has arisen as to privilege claimed by the Respondents in relation to certain documents set out in a document entitled, “Respondents Schedule of Privileged Documents” which is Exhibit RGC 26 to the affidavit of Richard Gordon Chandler sworn 23 July 2002.
In the schedule whilst originally a number of documents were referred to as being the subject of privilege, it was conceded that there is no dispute that those documents post dating the commencement of proceedings are not now the subject of any claimed privilege. This includes documents numbers 1 to 23 inclusive.
From that List of Documents there were other documents where inspection was not requested by the Applicant namely documents 39 and 40 which appear to be emails from Respondents’ solicitors to Counsel.
Two additional documents numbered 24 and 25 in the schedule do not appear to be in issue between the parties.
The documents which are the subject of claimed privilege are those documents numbered 26 to 38 and 41 to 43. Those documents are described in the schedule as follows:

PRIVILEGED DOCUMENTS
PETER HILDERBRANDT FILE

26.	Copy Memorandum to Counsel and backsheet to Rodney Garratt	Undated
27.	Email from Rodney Garratt to Peter Hilderbrandt attaching draft letter from P Hilderbrandt to Andrew White (4 pages)	9 October 2001
28.	Email from Rodney Garratt to Peter Hilderbrandt	9 October 2001
29.	Email from Peter Hilderbrandt to Rodney Garratt and Richard Chandler	10 October 2001
30.	Email from Peter Hilderbrandt to Rodney Garratt, Richard Chandler and March Rawnsley	15 October 2001
31.	Email from Peter Hilderbrandt to Rodney Garratt, together with replies (3 pages)	31 October 2001
32.	Email from Peter Hilderbrandt to Rodney Garratt, together with replies (4 pages)	27 November 2001
33.	Email from Peter Hilderbrandt to Rodney Garratt, together with replies (3 pages)	28 November 2001
34.	Email from Peter Hilderbrandt to Andrew O’Bryan and Michael Parker	30 November 2001
35.	Copy letter from Peter Hilderbrandt to Rodney Garratt	9 December 2001
36.	Email from Peter Hilderbrandt to Rodney Garratt	10 December 2001
37.	Email from Peter Hilderbrandt to Rodney Garratt	11 December 2001
38.	Email from Peter Hilderbrandt to Rodney Garratt	17 December 2001
39.	Email from Peter Hilderbrandt to Rodney Garratt	20 December 2001
40.	Email from Peter Hilderbrandt to Rodney Garratt, together with reply (2 pages)	22 December 2001
HALL & WILCOX FILE
41.	Handwritten file note (2 pages)	14 June 2001
42.	Email from Peter Hilderbrandt to Andrew O’Bryan and Michael Parker	30 November 2001
43.	Handwritten file notes (3 pages)	4 December 2001

Respondents’ submissions

It is submitted by the Respondents in relation to each and every document that they are documents passing between solicitor and client and the dominant purpose of those documents was to obtain legal advice. It was intended that they be confidential communications and accordingly the documents remain privileged.
During the course of submissions I was referred to Affidavit material. In particular reference was made to the Statement of Mr Chandler where he refers to obtaining advice from Counsel in November and December of 2001 that the trust deed did not allow payments to be made to the Applicant. It was only after receiving that advice from Counsel that Mr Chandler realised that there was no power to make the payments to the Applicant. Those payments in fact are relied upon by the Applicant as evidence of performance of, in part, the agreement alleged by the Applicant.
In any event it is clear that most of the documents where privilege is claimed may fairly be categorised as communications between the solicitor and Counsel for and on behalf of the Respondents. It is in that context that Counsel for the Respondents submits that the documents are privileged and that there has not been any waiver. It was however asserted that the trust deed reflects the advice given by Counsel and to that extent it is not necessary for the Respondents to rely upon Counsel’s advice “per se”. It was submitted however that the Respondents do rely upon the fact that they were advised at that time of a particular fact, namely that the trust deed did not authorise the payments to the Applicant and that that fact is the basis upon which the Respondents seek to recover monies paid by mistake. It is asserted however that the dominant purpose for the creation of the documents was the obtaining of the advice and therefore it is privileged.
A discreet argument was advanced in relation to documents from the Hall & Wilcox file. It was submitted those documents related to tax advice referred to in one of the Rawnsley documents where a proposal was put to the Applicant and tax advice obtained that certain payments could be made to the Applicant in an advantageous way. It was suggested that the documents have questionable relevance but if relevant they would be subject to a claim for privilege and privilege was maintained. Whilst reference has been made to advice for and on behalf of the Respondents, it was submitted that the correspondence and discussions regarding various settlement offers arising out of the Hall & Wilcox file still remain privileged. It was submitted that reference or reliance upon advice in any context did not itself constitute waiver of privilege.
The basis for the claim of repayment due to mistake was incorrect advice received from previous solicitors which was then corrected and is justified on a proper reading of the trust deed confirmed by advice from Counsel. The claim for money paid by mistake does not therefore rely on Counsel’s advice but rather on the terms of the trust deed and as indicated earlier it was submitted that does not constitute a waiver of the privilege.

Applicant’s submissions

It was submitted on behalf of the Applicant that the issue of advice and in particular the Hall & Wilcox file had been referred to in affidavits filed on behalf of the Respondents. The filing of those affidavits renders the information relevant. Reference was made to the affidavit sworn by Marc Harold Rawnsley on 31 January 2002 where the deponent states:
“The intent of the proposal was to allow the applicant to receive disproportionate distributions of profit from the income of the unit trust. Richard had not yet sought or obtained advice and he agreed to do so urgently because the end of financial year was approaching. Advice was then obtained from McPherson & Kelly Solicitors as to whether this could be done. Now produced and annexed and marked MHR 2 is a copy of the letter of advice from McPherson & Kelly dated 21 June 2000.
I was also referred to paragraph 39 of the deponent’s affidavit where he states the following:
“Peter Hilderbrandt was then retained to act and obtain advice as to the applicant’s entitlement to further distributions from the unit trust. Mr Hilderbrandt briefed Mr Garratt QC to provide advice and as a result of that advice it became apparent that there was no entitlement to make distributions and loans to the applicant from the unit trust as had previously occurred.”
It was submitted that the passage to which I have referred does not indicate that the advice was sought for the predominant purpose of litigation.
Reference was also made to exhibit MHR 9 of the same affidavit which purports to be discussion papers prepared by Mr Rawnsley for a meeting on 19 December 2001. I was referred to the passage under the heading “Re-characterisation of payments” where the following passage appears:
“The trustee (RSC Pty Ltd) has now been advised by counsel (Mr Rodney Garratt – QC) that the trust deed and the deed of variation do not provide scope for the distributions as made. Counsel advises that the advice provided by McPherson & Kelly was incorrect and that the trustee was mistaken in relying on this advise (sic) when making the payment.
We have also sought advice from taxation experts at Hall Wilcox (Mr Andrew O’Bryan and Mr Keith James) who agreed with the interpretation of the trust deeds”.
It was therefore submitted that as the issues had been relied upon in affidavit material then that constitutes either a waiver or that it could be said to be unconscionable not to permit inspection of the documents which are the subject of the claim for privilege.

Reasoning

The parties agree that in the event that I decided it was appropriate to do so I should exercise my power to examine the documents in question. It is clear on the authorities that where there is a disputed claim the Court should not hesitate to exercise that power and indeed in appropriate cases there is power to allow cross-examination of a deponent of an affidavit claiming privilege (See Esso Australia Resources Ltd v Commissioner of Taxation (Cth) (1999) 201 CLR 49). It is also clear in the Esso case that the claim for legal professional privilege can be claimed in respect of a document produced or brought into existence with the “dominant purpose” of its author or the person under whose directions, whether particular or general it was produced or brought into existence. Either using it or its contents in order to obtain legal advice or to conduct or aid in the conduct of litigation which was at that time in reasonable prospect (see Esso per Gleeson CJ, Gaudron and Gummow JJ at 68-9).
In general terms the waiver of legal professional privilege is usually a waiver by the client because it is the client’s privilege to be waived. The Court is entitled to look at the objective facts rather than a reference to the intention of the client (see Mann v Carnell (1999) 168 ALR 86 at 94).
In my view in the present case it is clear that a proper reading of the documents which I have undertaken would indicate that in normal circumstances the dominant purpose would appear to be in order to obtain legal advice in circumstances where the conduct of litigation was at least at the time a reasonable prospect.
I am satisfied however by reference to the advice in affidavit material which in turn supports in part a cross-claim for mistaken payment that the client in this case has effectively waived privilege. In the alternative I am further satisfied that it would be unfair in the circumstances to permit reference to the documents which are the subject of the claimed privilege on the one hand and yet on the other hand not permit inspection of those documents. It is not necessary for me to consider whether a concept of unconscionability arises in circumstances of this kind as in my view there has been sufficient conduct on the part of the client asserting legal privilege to conclude that there has indeed been a waiver of that privilege. Hence the documents which are said to be the subject of privilege should in my view be made available to the Applicant.

The third issue – Whether the Applicant should pay the Respondent’s costs thrown away as a result of an order that the final hearing date be vacated

Respondents’ submissions

Reference was made to affidavit material of the solicitors acting for and on behalf of the respondents relating to the lead up to the vacation of the trial date. A detailed reference was made to the chronology of events set out in the affidavit of Murray Burton Round sworn 31 May 2002.
In brief terms it is clear that the court set a detailed timetable upon which certain steps were to be taken by the parties. Detailed orders were made by the Court on 8 February 2002 as amended on 25 February 2002. Apart from a dispute about service of the Respondents Facts and Contentions, it is asserted that the Respondent has otherwise complied with the orders or at the very least there has been substantial compliance. The original hearing date was 6 June 2002 but that date was vacated. It is said that the difficulties in the readiness for trial which led to the vacation of the date were substantially caused by the failure of the Applicant to comply with the orders of the Court in relation to certain steps to be taken including preparation of an affidavit of documents and objection to delivery of some documents. It is not necessary to recite the precise details of the orders and non compliance alleged save to say that I am satisfied that there has been a degree of non compliance on the part of the Applicant which has at least substantially led to the date of the hearing being vacated.

Applicant’s submissions

The Applicant in turn submitted there was a short delay in the filing of the Respondents Facts and Contentions but that the real reason for the delay in any event was a re-assessment of the duration of the hearing which could not be accommodated as scheduled. A variety of applications were dealt with on 3 June 2002 and it was clear the matter was not ready to proceed on 6 June 2002. In the circumstances it was submitted that costs should be “costs in the cause”. It was submitted that time has been used by the parties to better organise their respective cases and in particular the Respondents have filed further affidavit material to be relied upon at the trial.

Reasoning

In my view there is significant merit in the complaint by the Respondents that the Applicant has not substantially complied with the orders. On the other hand I am satisfied that there has been to a far lesser degree some delay on the part of the Applicant but in all the circumstances it is not a sufficient delay which would have required the hearing date to be vacated.
However, I am also satisfied that with the review of the estimated hearing time based in part on additional material and a re-assessment of the case that in all probability the matter would not have been able to proceed uninterrupted as scheduled on 6 June 2002.
In dealing with the three issues before me it is clear that I have not found in the Respondents’ favour in relation to the first issue and the second issue.
In all the circumstances it is my view that balancing the issue of costs which normally would follow the decisions relating to the first two issues with the issues arising out of the third issue the most appropriate to make is that the costs be costs in the cause. I shall hear counsel in relation to any further orders which may be required in this matter.

I certify that the preceding sixty-five (65) paragraphs are a true copy of the reasons for judgment of McInnis FM

Associate:

Date: 11 October 2002.