Smoothy Cattle Co Pty Ltd v CCS Mining and Civil (WA) Pty Ltd - [2019] WADC 134

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION:   PERTH
CITATION:   SMOOTHY CATTLE CO PTY LTD -v- CCS MINING AND CIVIL (WA) PTY LTD [2019] WADC 134
CORAM:   GETHING DCJ
HEARD:   21 AUGUST 2019
DELIVERED          :   17 SEPTEMBER 2019
FILE NO/S:   CIV 3256 of 2018
BETWEEN:   SMOOTHY CATTLE CO PTY LTD
Plaintiff
AND
CCS MINING AND CIVIL (WA) PTY LTD
First Defendant
KIERAN JOHN DUGGAN
Second Defendant
STEPHEN CHRISTOPHER O'SULLIVAN
Third Defendant
DONNCHA LOWNEY
Fourth Defendant
DANIEL HOGHTON
Fifth Defendant

Catchwords:

Practice and procedure - Impact of the deregistration of party on a claim for legal professional privilege - Relevance of a prior inconsistent statement

Legislation:

Evidence Act 1903 (WA), s 21, s 22

Result:

Registrar's decision upheld

Representation:

Counsel:

Plaintiff	:	Mr J C Yeldon
First Defendant	:	Not applicable
Second Defendant	:	No appearance
Third Defendant	:	Ms C A Boothman
Fourth Defendant	:	Ms C A Boothman
Fifth Defendant	:	Ms C A Boothman

Solicitors:

Plaintiff	:	Pacer Legal
First Defendant	:	Not applicable
Second Defendant	:	Rowe Bristol Lawyers
Third Defendant	:	HWL Ebsworth Lawyers
Fourth Defendant	:	HWL Ebsworth Lawyers
Fifth Defendant	:	HWL Ebsworth Lawyers

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

Amcus Pty Ltd v Hurst Rentals Pty Ltd (No 2) [2010] NSWSC 239
Australia Machinery Engineering (AME) Pty Ltd v Moore Group Holding Pty Ltd [2017] WADC 124
Australian Competition and Consumer Commission (ACCC) v TPG Internet Pty Ltd (2013) 250 CLR 640; [2013] HCA 54
Baker v Evans (1987) 77 ALR 565
Beecham Group Ltd v Bristol Myers Co [1979] VR 273
Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9) [2008] WASC 239; (2008) 39 WAR 1
Briggs v Glentham Pty Ltd (1992) 8 WAR 339
Browne v Dunn (1894) 6 R 67 (HL)
Burke v Corruption and Crime Commission [2012] WASCA 49
Charara v Grewal [2013] NSWSC 1015
Driscoll v The Queen [1977] HCA 43; (1977) 137 CLR 517
Fairfax Media Publications Pty Ltd v Western Australian Rugby Union Inc [2008] WASCA 123
Fraser v Fraser [2019] WASC 135
George Ballantine & Son Ltd v FER Dixon & Son Ltd [1974] 1 WLR 1125
Global Funds Management (NSW) Ltd v Rooney (1994) 36 NSWLR 122
Grant v Downs [1976] HCA 63; (1976) 135 CLR 674
Hadley Hall Estate Holdings Ltd v HHE Management Ltd [2005] WASC 44
HAR v The State of Western Australia [No 2] [2015] WASCA 249
Hazart Pty Ltd v Rademaker (1993) 11 WAR 26
Hunt v Knabe (No 2) (1992) 8 WAR 96
Job v The State of Western Australia [2006] WASCA 186
Kellert v Foate [2015] NSWSC 954
Kezic v St John of God Health Care Inc [2015] WASCA 220
Lake Cumbeline Pty Ltd v Effem Foods Pty Ltd t/as Uncle Ben's of Australia (1994) 126 ALR 58
Liebherr-Australia Pty Ltd v Bloomfield [2006] WASCA 128
MJH v The State of Western Australia [2006] WASCA 167; (2006) 33 WAR 9
Moore v Devanjul Pty Ltyd (No 3) [2012] QSC 355
O'Meara v The State of Western Australia [2013] WASCA 228
R v Davies (1921) 21 SR (NSW) 311
Santos v The State of Western Australia (No 2) [2013] WASCA 39
Seaton v Enever [2014] WADC 58
Swaab v Commissioner of the NSW Police Service [2005] NSWSC 901
Thorne v The State of Western Australia [2006] WASCA 218
Vassilou (an infant) v Roberman [2007] WADC 145

GETHING DCJ:

On 6 May 2017 a Cone Crusher which Smoothy Cattle Co Pty Ltd (SCC), the plaintiff, was entitled to hire was delivered to the Telfer Gold Mine. There it remained until 6 December 2019 when it was collected and returned to SCC. It is not in dispute that the Cone Crusher ended up at the Telfer Gold Mine as a result of communications between Brent Ronald Smoothy, the sole director of SCC, and Kieran John Duggan, the second defendant. Mr Duggan was at the time a director of CCS Mining and Civil (WA) Pty Ltd (CCS Mining), the first defendant. The third, fourth and fifth defendants were also directors of CCS Mining (whom I will refer to as the 'Other Directors').
What is now in dispute is which entity hired the Cone Crusher from SCC and on what terms. SCC says that it hired the Cone Crusher to CCS Mining.
On or about 23 April 2018 SCC served on CCS Mining a statutory demand in relation to the hire fees for the Cone Crusher. On 14 May 2018 CCS Mining filed an application in the Supreme Court to set aside the statutory demand. The application by CCS Mining was accompanied by an affidavit from Mr Duggan (Duggan SC Affidavit). On or about 9 July 2018 the parties (SCC and CCS Mining) agreed to orders setting aside the statutory demand with no orders as to costs.
The present action was commenced on 29 August 2018 by writ endorsed with a statement of claim. In addition to a claim against CCS Mining for the hire fees for the Cone Crusher, SCC also asserts that Mr Duggan and the Other Directors engaged in misleading and deceptive conduct contrary to Australian Consumer Law (ACL) s 18 arising out of the communications between Mr Smoothy and Mr Duggan.
CCS Mining and the Other Directors filed a joint defence on 5 October 2018. Mr Duggan filed his on 26 November 2018, and then an amended defence on 7 January 2019. The defendants all plead that the Cone Crusher was hired by CCS Equipment Pty Ltd (CCS Equipment), of which Mr Duggan was also a director. They say that the communications made by Mr Duggan to Mr Smoothy were in his capacity as director of CCS Equipment and not CCS Mining. There is a further dispute as to the terms on which the Cone Crusher was provided.
On or about 19 June 2018 CCS Equipment was placed in external administration.
The position in the defences is different to that asserted by Mr Duggan in the Duggan SC Affidavit. At no point in that affidavit did Mr Duggan assert that the contracting party was not CCS Mining, but CCS Equipment. Rather, the essence of the genuine dispute asserted was a dispute as to whether the amount was correct or agreed between the parties. CCS Mining now says that the statements in the Duggan SC Affidavit were made in error, and that 'CCS Equipment Pty Ltd is the operating company that Smoothy has always dealt with, and that CCS Mining and Civil is a non-trading entity'.[1]
[1] Email dated 14 November 2018 from HWL Ebsworth to Pacer Legal, being Annexure BRS-9 of the Affidavit of Brent Ronald Smoothy sworn 21 January 2019.
In view of the inconsistency between the position put forward in the defences and that in the Duggan SC Affidavit, SCC's solicitors corresponded with the solicitors for CCS Mining and the Other Directors seeking immediate discovery of the relevant parts of the file of the solicitors acting for CCS Mining in the Supreme Court proceedings. Various correspondence then ensued between the solicitors for the parties without the dispute being able to the resolved.
Consequently, by chamber summons filed on 21 January 2019, SCC sought the following orders (Plaintiff's Application):
1. The plaintiff be released from the implied undertaking in respect of the affidavit of Mr Kieran John Duggan, sworn 14 May 2018, in Supreme Court proceedings matter number COR 79 of 2018 ('Mr Duggan Affidavit') between the plaintiff and the first defendant for the purposes of illustrating the first defendant's inconsistencies which give rise to an implied waiver of legal professional privilege.
2. Within 14 days of the hearing, the first defendant make available to the plaintiff and to his solicitors a list of the following documents:
(a) copies of the file notes or instructions given to DLA Piper by Mr Kieran John Duggan that lead to the preparation of the Mr Duggan Affidavit; and
(b) any other documents related to the preparation of the Mr Duggan Affidavit including, but not limited to, advice of DLA Piper relevant to the evidence given by Mr Duggan in the Mr Duggan Affidavit.
3. The plaintiff and his solicitors be at liberty to copy and inspect the documents referred to in the list referred to in the previous paragraph herein.
4. The defendants pay the plaintiff's costs incidental to this application and the action, to be assessed if not agreed.
SCC filed an affidavit sworn by Mr Smoothy on 21 January 2019 in support of the Plaintiff's Application (First Smoothy Affidavit).
The Plaintiff's Application was listed in chambers on 1 February 2019 and orders were made programming it through to a special appointment before a registrar. The parties each filed written submissions. In addition, the defendants filed an affidavit sworn by Daniel Hoghton, the fifth defendant (Hoghton Affidavit). In it, Mr Hoghton asserts on behalf of CCS Mining legal professional privilege over all:
(a)communications between DLA Piper and CCS Mining;
(b)communications between DLA Piper and Mr Duggan as a director of CCS Mining;
(c)documents relating to the preparation of the Duggan SC Affidavit; and
(d)advice by DLA Piper relevant to the preparation of the Duggan SC Affidavit.
The Plaintiff's Application was heard by a registrar on 10 April 2019. The registrar made orders in terms of par 1 of the Plaintiff's Application, but not pars 2 and 3, and ordered that costs be in the cause (Registrar's Decision).
On 18 April 2018 SCC lodged an appeal notice from Registrar's Decision (Appeal Notice). The Appeal Notice was filed within the time period required by District Court Rules 2005 (WA) r 15(2).
The grounds of appeal are:
In dismissing the Plaintiff's application, the learned Registrar erred in law and fact as follows:
1.Erred in failing to find the conduct of the first defendant amounted to an implied waiver of privilege due to the inconsistency between: a) the substance of the Duggan affidavit; and b) the alternative factual reality contained in the first defendant's defence dated 5 October 2018.
2.Further erred in failing to find the first defendant waived privilege in circumstances where the error remains uncorrected.
The final orders sought by SCC in the appeal are:
1.The first defendant make available to the plaintiff the documents sought by way of the chamber summons dated 21 January 2019.
2.The defendant's pay the plaintiff's costs of the application and of the appeal.
No defendant has sought to challenge the order releasing SCC from the implied undertaking in relation to the Duggan SC Affidavit.
The appeal is by way of a new hearing of the Plaintiff's Application.[2] It involves a complete de novo review.[3] In essence I am to treat the Plaintiff's Application as if it were before the court for the first time, save that SCC as party appealing has the right as well as the obligation to open the appeal.[4] There is no requirement on SCC, as the party who lodged the appeal, to show that the registrar made an error in the Registrar's Decision.
[2] District Court Rules r 15(6).
[3] Briggs v Glentham Pty Ltd(1992) 8 WAR 339, 349 ‑ 350 (Malcolm CJ, with whom Pidgeon & Rowland JJ agreed); Hunt v Knabe (No 2) (1992) 8 WAR 96, 109 ‑ 110 (judgment of the court); Hazart Pty Ltd v Rademaker (1993) 11 WAR 26, 28; Liebherr-Australia Pty Ltd v Bloomfield [2006] WASCA 128[8]; Kezic v St John of God Health Care Inc [2015] WASCA 220 [42] (reasons of the court).
[4] Hazart Pty Ltd v Rademaker (28).
CCS Mining and the Other Directors subsequently brought an application seeking summary judgment against SCC. Mr Duggan also brought an application for summary judgment against SCC. Those applications are not before me in the appeal. However, the plaintiff relies on material in two of the affidavits from those applications in the determination of the appeal:
(a)Mr Smoothy, sworn 24 June 2019 (Second Smoothy Affidavit); and
(b)Mr Duggan, sworn 17 June 2019 (Duggan DC Affidavit).
As the appeal is by way of a new hearing of the matter that came before the registrar, the parties are not confined to the evidence presented to the registrar, and the court should ordinarily allow the parties to rely on additional evidence, subject to a discretion to exclude.[5] As the evidence in these affidavits is relevant and there is no reason which would make it unjust to admit it, I allow the parties to rely on it.[6]
[5] Hazart (28 – 30), (37) (Anderson J); Australia Machinery Engineering (AME) Pty Ltd v Moore Group Holding Pty Ltd [2017] WADC 124 [7] (Parry DCJ); Seaton v Enever [2014] WADC 58 [4] (Davis DCJ); Vassilou (an infant) v Roberman [2007] WADC 145 [12] ‑ [15] (Keen DCJ).
[6] Hazart (29 ‑ 30).
Mr Duggan was not represented at the hearing of the appeal. By letter dated 29 August 2019, his lawyer advised the court that this was because of error on their part, and that he generally supports the position of the Other Directors that the documents in question should remain privileged.
The position is complicated by the fact that on or about 14 July 2019 CCS Mining was deregistered by ASIC.[7] Upon being deregistered, it ceased to exist.[8] As it is not possible for a non-existent entity to be party to court proceedings, the action as against CCS Mining cannot be continued, and is now at an end.[9] CCS Mining should be removed as a party to the action.[10]
[7] Third, Fourth and Fifth Defendants' Outline of Submissions, filed 19 July 2019, par 2.
[8] Corporations Act 2001 (Cth) (CA) s 601AD(1).
[9] Moore v Devanjul Pty Ltyd (No 3) [2012] QSC 355 [62] (Meekin J); Amcus Pty Ltd v Hurst Rentals Pty Ltd (No 2) [2010] NSWSC 239 [15], [22] (Slatttery J).
[10] Moore v Devanjul Pty Ltd [63].
The Other Directors assert that the deregistration of CCS Mining presents a 'practical obstacle' to the orders sought by SCC in the Application, being by way of specific discovery against a party to proceedings. They say that the Plaintiff's Application should be dismissed on that basis alone.[11] However, on deregistration, while all of the property of CCS Mining vests in ASIC,[12] the directors of the company immediately prior to deregistration are required to keep the company's 'books' for a period of three years after deregistration.[13] The definition of 'books' in CA s 9 is wide enough to include any of the DLA Piper Materials in the possession of CCS Mining at the point in time it was deregistered. This has the consequence that the DLA Piper Materials are in 'possession, custody or power'[14] of the Mr Duggan and the Other Directors for the purposes of an order for discovery.[15] In any event, subject to the issues of relevance and legal professional privilege raised in the Appeal, SCC could issue a subpoena to produce directly to DLA Piper.[16] So it is appropriate that I determine the substantive issues raised in the Appeal.
[11] Third to Fifth Defendants' Outline of Submissions, filed 26 August 2019, pars 3 – 4.
[12] CA s 601AD(2).
[13] CA s 601AD(5).
[14] District Court Rules 2005 (WA) r 46(2).
[15] Charara v Grewal [2013] NSWSC 1015 [18] (Campbell J).
[16] Plaintiff's Outline of Submissions, filed 4 September 2019, par 6.
Mr Duggan and the Other Directors continue to resist the production of the DLA Piper Materials on the basis of legal professional privilege. The privilege is that of CCS Mining.[17] It was asserted by CCS Mining by a director (the fifth defendant Mr Hoghton) before it was deregistered.[18] The deregistration of CCS Mining does not have the effect of dissolving or extinguishing a claim for legal professional privilege which could have been asserted by the company before it was deregistered.[19] As the property of CCS Mining vests in ASIC,[20] ASIC is competent to both assert and waive the privilege.[21] However, its general policy is to do neither,[22] and there is no evidence to the contrary in the present case. DLA Piper is not able to waive the privilege.[23] The resulting position is that the privilege subsists until it is expressly or impliedly waived by a person or entity competent to and able to do so.[24]
[17] Third to Fifth Defendants' Submissions, filed 26 August 2019, pars 3 – 4.
[18] Hoghton Affidavit, par 7 (filed 22 February 2019).
[19] Baker v Evans (1987) 77 ALR 565, 567 (Pincus J); Lake Cumbeline Pty Ltd v Effem Foods Pty Ltd t/as Uncle Ben's of Australia (1994) 126 ALR 58, 65 (Tamberlin J); Swaab v Commissioner of the NSW Police Service[2005] NSWSC 901 [16] (Hidden J); Kellert v Foate [2015] NSWSC 954 [73] (Harrison AsJ).
[20] CA s 601AD(2), (3).
[21] Lake Cumbeline (65).
[22] See generally: Australian Securities and Investment Commission, Deregistered company books and records (16 June 2017) Australian Securities and Investment Commission. See for example: Lake Cumbeline (65); Kellert [59] – [61].
[23] Grant v Downs[1976] HCA 63; (1976) 135 CLR 674, 686 (Stephen, Mason and Murphy JJA); Lake Cumbeline (65); Swaab v Commissioner of NSW Police Service [17]; Kellert [67].
[24] Lake Cumbeline (65); Kellert [72].
The main issue in the appeal is whether Mr Duggan impliedly waived legal professional privilege in relation to:
(a)copies of the file notes or instructions given to DLA Piper by Mr Duggan that led to the preparation of the Duggan SC Affidavit; and
(b) any other documents related to the preparation of the Duggan SC Affidavit including, but not limited to, advice of DLA Piper relevant to the evidence given by Mr Duggan in that affidavit.
I will refer to these documents as the 'DLA Piper Material'.
SCC asserts that the privilege was waived in two ways. The first was by CCS Mining in filing a defence inconsistent with the position set out in the Duggan SC Affidavit. This occurred before it was deregistered. The second is by Mr Duggan partially disclosing the contents of his communications with Mr Wallace of DLA Piper in the Duggan DC Affidavit. This was filed on 17 June 2019, also before CCS Mining was deregistered. So both acts of waiver occurred before CCS Mining was deregistered, and while the directors could, on its behalf, do acts which amount to a waiver of the privilege.
In order to determine the main issue, I need to address two sub‑issues:
•To what issue is the DLA Piper Material Relevant?
•Has the privilege been waived?

To what issue is the DLA Piper Material relevant?

SCC asserts in the statement of claim that the contract for the Cone Crusher was with CCS Mining:[25]
[25] Statement of claim, pars 6 ‑ 11.
6.On about 10 April 2017, Mr Smoothy and Mr Duggan had a telephone conversation which:
(a)Mr Duggan inquired of Mr Smoothy by words to the effect:
i.whether the Cone Crusher was available for sale or hire by CCS for use at the Telfer Gold Mine;
ii.if so, what price did Smoothy Cattle want for the sale or hire of the Cone Crusher by CCS.
(b)Mr Smoothy replied to Mr Duggan words to the effect:
i.It's available; the hire rate is $45,000 per month; but it's less per month if you want to buy it.
ii.Directors will have to guarantee payment because I want to be paid.
iii.I'll send you the details.
7.On 12 April 2017 Mr Smoothy sent Mr Duggan an SMS Text Message which followed up on the telephone conversation pleaded in paragraph 6 herein and which comprised inter alia:
(a)an option to purchase the Cone Crusher within 6 months at the election of CCS using part of the hire monies paid by then as part of the purchase price of $300,000;
(b)a hire rate of $45,000 per month if the option to purchase was not finalised within 6 months;
(c)the directors of CCS guaranteed payment of the hire rate to Smoothy Cattle and this would need to be written up by CCS' lawyer and signed by each director and provided to Smoothy Cattle Co.
Particulars
A copy of the SMS Text Message is available from the plaintiff's solicitors.
8.On 5 May 2017 Mr Duggan sent Mr Smoothy a reply SMS Text Message to the SMS Text Message of Mr Smoothy referred to in the immediately preceding paragraph which comprised acceptance of the hire rate of $45,000 per month for 6 months by Mr Duggan, for and on behalf of himself, Mr O'Sullivan, Mr Lowney and Mr Hoghton and CCS.
Particulars
A copy of the SMS Text Message is available from the plaintiff's solicitors. The SMS Text Message said 'We agree to this. When can we collect machine for mobilisation' – the 'we' being a reference to the directors of CCS.
9.On or about 14 May 2017:
(a)CCS' agent Frontier Transport collected the Cone Crusher from Smoothy Cattle and delivered it to the Telfer Cold Mine for CCS' use on 16 May 2017.
(b)There the Cone Crusher stayed until CCS returned the Cone Crusher to Smoothy Cattle on 6 December 2017.
10.In or about early December 2017, Mr Duggan informed Mr Smoothy that CCS did not want to purchase the Cone Crusher and informed Mr Smoothy he was freighting the Cone Crusher back to Smoothy Cattle.
11.Smoothy Cattle claims that by the matters pleaded in the pargraph 6, 7, 8, 9 and 10 herein, it entered into a contract with CCS ('the Contract') under which:
(a)CCS agreed to pay Smoothy Cattle its hire rate for CCs use of the Crusher when invoiced;
(b)The said hire rate was AUD $45,000 per month;
(c)The said hire period was 6 months.
Particulars
The Contract was partly oral, partly in writing and partly by a course of conduct. In so far as it was oral, it was comprised of the telephone conversation pleaded in paragraph 6 herein. In so far as it was in writing, it was comprised of the SMS Text Messages pleaded in paragraphs 7 and 8 herein, and insofar as it was by a course of conduct it was comprised of the matters pleaded in paragraphs 6, 7, 8, 9 and 10 herein.

Part of the factual basis pleaded is the telephone conversation between Mr Smoothy and Mr Duggan on or about 10 April 2017. In the Second Smoothy Affidavit (sworn in opposition to the summary judgment applications) Mr Smoothy deposes:
5.In or about April 2017, I received a phone from Mr Kieran Duggan, second defendant in these proceedings, on my mobile phone.
6.I knew Mr Duggan as I had previously had dealings with him for the hire of equipment.
7.I do not recall the exact words he used but in substance Mr Duggan said words to the effect that:
(a)he was a director of the company CCS Mining and Civil (WA) Pty Ltd ('CCS');
(b)CCS needed the services of a cone crusher at the Telfer Gold Mine; and
(c)what price would I want for the sale or hire of the cone crusher by CCS.
5.I said to Mr Duggan Smoothy Cattle Co Pty Ltd ('Smoothy Cattle') had a cone crusher sitting there and CCS could either purchase it or hire it.
6.Mr Duggan then said words to the effect that he was trying to organise finance and wanted to know the best price he could get.
7.I said to Mr Duggan words to the effect:
(a)the hire rate is $45,000 per month, same as OPS would charge but it'll be a better deal if you want to buy it;
(b)I need the CCS company directors to provide guarantees because I want to get paid; and
(c)I'll send you a text message with the details.
Mr Smoothy then goes on to give evidence about the exchange of SMS text messages between himself and Mr Duggan which led to him releasing the Cone Crusher to be collected on 12 May 2017 and delivered to the Telfer Gold Mine.[26]
[26] Second Smoothy Affidavit, pars 12 ‑ 17.
The Other Directors in their defence relevantly plead that, if any representations made were by Mr Duggan to Mr Smoothy (which is not admitted), they were made in Mr Duggan's capacity as a director of CCS Equipment and not in his capacity as a director of CCS Mining, and they were not made on behalf of or with the authority or approval of any of CCS Mining or the Other Directors.[27]
[27] First, Third, Fourth and Fifth Defendants' Defence (filed 5 October 2018), par 6.
Mr Duggan relevantly pleads:[28]
[28] Second Defendant's Amended Defence (filed 7 January 2019), par 6.
6.The Second Defendant denies paragraph 6 of the Statement of Claim, save that the Second Defendant admits that he had a telephone conversation with Mr Smoothy on or about 10 April 2017 during which:
a.The Second Defendant stated words to the following effect:
i.'is the Cone Crusher available for hire';
ii.'we are interested in hiring the Cone Crusher for 3 months';
iii.'we intend to use the Cone Crusher at the Telfer Mine site'; and
iv.'if the Cone Crusher is available for hire, how much will you charge for us to use it'; and
b.Mr Smoothy respondent by stating to the effect that:
i.'the Cone Crusher is available';
ii.'why don't you just buy the Cone Crusher instead of hiring it'; and
iii.'I will charge you market rate – whatever OPS would charge'.
Particulars
The Plaintiff's reference to 'OPS' was a reference to 'OPS Screening and Crushing Equipment', which is a company that supplies and hires out (among other things) crushing equipment.
c.The Second Defendant responded by stating words to the effect that, 'we have enough machinery on finance already and we wouldn't be interested in buying the Cone Crusher'; and
d.Mr Smoothy responded to the effect that, 'I will get back to you'.
Mr Duggan then goes on to plead that in engaging in negotiations and discussions with Mr Smoothy in relation to the proposed hire of the Cone Crusher, he was doing so for, and on behalf of, CCS Equipment. He then goes into detail as to Mr Smoothy's knowledge of this, and the sets out his assertion of what was agreed.
In the Duggan DC Affidavit, Mr Duggan deposes as to his recollection of the conversation with Mr Smoothy on or about 10 April 2017:
14.On 10 April 2017, I contacted Mr Smoothy by telephone to enquire about the hire of the Crusher. During the telephone conversation, I said words to the effect that:
a.'we are interested in hiring your Crusher for 3 months';
b.'we intend to use the Crusher at the Telfer Gold mine site within a couple of weeks'; and
c.'if the Crusher is available for hire, how much will you charge for us to hire it'.
15.During the telephone conversation on 10 April 2018 [sic 2017] Mr Smoothy said words in response to the effect that:
a.'the Crusher is available'; and
b.'why don't you just buy the Crusher instead of hiring it'; and
c.'I will charge you market value or whatever OPS is charging' [referring to 'OPS Screening and Crushing Equipment', which is a company that supplies and hire out (among other things) crushing equipment].
16.I responded to Mr Smoothy to the effect that 'we have enough machinery on finance already and we wouldn't be interested in buying the Crusher.'
17.Mr Smoothy did not advise me of the hire rate for the Crusher during this telephone conversation but said 'I will get back to you about the hire price' before we ended the conversation.
18.I did not expressly refer to either CCS Mining or CCS Equipment during this conversation, but on the basis of my previous dealings with Mr Smoothy, as set out above in paragraph 13 I assumed that Mr Smoothy would understand that I was acting on behalf of CCS Equipment.
He also sets out the prior context in which this conversation occurred, as well as his understanding of what was agreed and with whom.[29]
[29] Duggan DC Affidavit, pars 20 ‑ 22.
It is readily apparent that there is a factual dispute as to the terms of the communications between Mr Smoothy and Mr Duggan.
The issue of whether there was a contract between SCC and CCS Mining falls away because of the deregistration of CCS Mining. However, the communications between Mr Smoothy and Mr Duggan are central to the misleading and deceptive conduct claim asserted by SCC. In the misleading conduct claim, SCC asserts that in his communications with Mr Smoothy, Mr Duggan was acting on behalf of CCS Mining and its directors.[30] Mr Duggan in his amended defence asserts that SCC and Mr Smoothy were, or ought to have been, aware of the fact that, in these communications, he represented CCS Equipment.[31] The defence of the Other Directors contains a bare denial of the misleading conduct claim.[32]
[30] Statement of Claim, par 16.
[31] Second Defendant's Amended Defence, par 16.
[32] First, Third, Fourth and Fifth Defendants' Defence, par 16.
In the context of the dispute so defined, if, in the 10 April 2017 telephone conversation, Mr Duggan said to Mr Smoothy that he was a director of CCS Mining, this would be a relevant fact, but by no means determinative. On the other hand, Mr Duggan's uncommunicated subject intention or belief as to whom he was contracting on behalf of is not relevant to the determination of what he in fact represented to Mr Smoothy. Moreover, it is not necessary for SCC to prove an intention to mislead or deceive for there to be a contravention of ACL s 18.[33]
[33] Australian Competition and Consumer Commission (ACCC) v TPG Internet Pty Ltd (2013) 250 CLR 640; [2013] HCA 54 [56] (French CJ, Crennan, Bell & Keane JJ).
It is in this context that the issue of the relevance of the DLA Piper Materials falls to be determined.
In the Duggan SC Affidavit, Mr Duggan relevantly deposes:[34]
[34] Duggan SC Affidavit, pars 1 ‑ 12, par 18 and pars 31 ‑ 35.
1.I am a Director of CCS Mining and Civil (WA) Pty Ltd trading as CCS Equipment (CCS) and as such I am authorised to make this affidavit on behalf of CCS.
2.I make this affidavit in support of the plaintiff's application to set aside the statutory demand dated 23 April 2018 issued by the defendant pursuant to section 459E of the Corporations Act 2001 (Act) relating to the defednant's invoices INV-0058 and INV-0059 for the total sum of $231,000.00 (Statutory Demand).
3.The matters set out in this affidavit are based on my own knowledge unless otherwise stated in which case I refer to the source of my information.
4.The matters deposed to in this affidavit are true to the best of my knowledge and belief.
BACKGROUND
5.In or about December 2016, CCS entered into Contract with McMahons Contracting to provide crushing and screening service at Newcrest's Telfer mine (Telfer).
6.In carrying out the services, CCS required the use of a cone crusher.
7.In or about 10 April 2017, I spoke with the defendant concerning the potential hire a 1540 Cone Crusher (Machine), I discussed with the Defendant the availability of the Machine, purchase price and the hire rates, I agreed to hire rates of $30,000 per month based upon a maximum 300 hours usage per month.
8.The basis of negotiations for the charge for the Machine was not on time in possession but rather upon time utilisation of the equipment. This was based on the plaintiff's previous agreement with the defendant whereby the plaintiff said on per hour of use basis.
9.CCS had previously hired the Machine from the Defendant in or about January 2016 for a three (3) month period to carry out crushing and screening services under a contract with Newcastle at the Telfer. The terms of that hire agreement was based upon per hour usage.
10.By text message dated 12 April 2017 the defendant through Brent Smoothy (Smoothy) wrote to me outlining proposed terms for the purchase of the Machine. Now shown to me marked 'KD-01' and attached is a copy of that text message.
11.In or about early May 2017, by text message, I agreed to the hire of the Machine based upon the telephone discussion on or about 10 April 2016, I also agreed to collect the Machine from the defendant's storage yard. Now shown to me marked 'KD-02' and attached is a copy of that text message.
12.No written agreement executed between the parties either for the purchase of the Machine or hire agreement of the Machine between the parties.
…
18.The plaintiff disputes that the defendant is entitled to the amount claimed by virtue of the fact that:
i.Rates had not been agreed for the use of the Machine;
ii.The Machine was not in a state of repair necessary to undertake the works for which it was required; and
iii.As the Machine was not ready it caused the works programme for which it was required to be delayed.
…
STATUTORY DEMAND
31.The Statutory Demand relates to invoices INV-0058 and INV‑0059. True copies of the statutory demand and affidavit in support are attached and collectively marked 'KD-07'.
DISPUTE AS TO CONTRACT AND DEBT OWED
32.The plaintiff disputes there is contract with the defendant in the terms contained in the text message at Annexure KD-01.
33.No written agreement executed between the parties, personal guarantees or PPSR registration were entered into or arranged.
34.The plaintiff disputed that the Statutory Demand debt amount is correct or agreed between the parties.
35.The plaintiff says there is a genuine dispute concerning the issues raised by the statutory demand.
It is readily apparent that there is an inconsistency between the position in the Duggan SC Affidavit and the position of all defendants in the present action.
In the Duggan DC Affidavit, Mr Duggan in essence asserts that the positon in the Duggan SC Affidavit came about because of confusion by his then lawyer:[35]
45.The Affidavit of 14 May 2018 was drafted by Mr Brett Wallace of DLA Piper who was the First Defendant's lawyer at that time. I do not know why the Affidavit of 14 May 2018 deposed that the First Defendant carried on a business under the name 'CCS Equipment' as that statement is incorrect. I do not waive any privilege in respect of any parts of my communications with Mr Wallace and/or DLA Piper.
46.As deposed to above, I note that CCS Equipment trades as 'CCS Mining and Civil' and I consider it possible that Mr Wallace may have gotten confused by this. I also note that Mr Wallace did not contact me about swearing an affidavit in support of the application to set aside statutory demand until approximately 12.30pm on 14 May 2019 and that the Affidavit of 14 May 2018 was subsequently prepared extremely swiftly that afternoon as I understand that it needed to be filed by no later than 4.00pm that day. As a result of the haste in completing the Affidavit, I did not have much time to review the Affidavit of 14 May 2018 prior to it being executed and for that reason I did not note at the time that the Affidavit of 14 May 2018 incorrectly referred to the First Defendant as having entered into an agreement with the Plaintiff to hire the Crusher. I do not waive any privilege in respect of any parts of my communications with Mr Wallace and/or DLA Piper.
47.As stated above, the First Defendant has never carried on any business. Annexed hereto and marked 'KD-8' is a true copy of a search of the ASIC Business Name Register for the business name 'CCS Equipment', which records that no such business has ever been registered (whether in the name of the First Defendant or any other person). The only entity I am aware of with the name 'CCS Equipment' is CCS Equipment.
[35] Duggan DC Affidavit, pars 45 ‑ 47.
The question then arises as to how the inconsistency may be used in the trial of the current matter.
In the materials currently before the court, SCC does not assert that the failure by CCS Mining to assert that the contract was with CCS Equipment in the Supreme Court proceedings has any formal legal consequence. So, for example, SCC does not assert that CCS Mining, Mr Duggan or the Other Directors are somehow estopped from denying that CCS Mining was the counterparty to the contract for the hire of the Cone Crusher.
Rather, the use which SCC seeks to make of the Duggan SC Affidavit is evidentiary.
The out of court statements by Mr Duggan in the Duggan SC Affidavit are hearsay for the purposes of the present action. A statement by Mr Duggan which was against his interests could be admissible against him in the present action.[36] However, the recitation of the conversation with Mr Smoothy on or about 10 April 2017 set out in par 7 of the Duggan SC Affidavit is in very general terms, and is not to the effect that Mr Duggan told Mr Smoothy that he was inquiring about the Cone Crusher in his capacity as a director of CCS Mining. So it is too vague to constitute an admission against interest.
[36] Santos v The State of Western Australia (No 2) [2013] WASCA 39 [54] (McLure P, with whom Buss & Mazza JJA agreed); O'Meara v The State of Western Australia [2013] WASCA 228 [150] (Hall J, with whom Mazza J agreed); Job v The State of Western Australia [2006] WASCA 186 [176] (McLure JA, Buss JA agreeing).
The only possible use which the Duggan SC Affidavit may have is as a prior inconsistent statement by Mr Duggan. But for the provisions of Evidence Act 1903 (WA) (EA) s 21, evidence of a prior inconsistent statement would be liable to be excluded on the basis of the collateral evidence rule.^[37] Section 21 of the EA provides an express statutory exception to that rule.[38] In cross-examination, counsel for the plaintiff would be required to put to Mr Duggan Mr Smoothy's evidence (assuming he gave evidence in the terms of the Second Smoothy Affidavit) that in the 10 April 2017 conversation Mr Duggan told Mr Smoothy that he was a director of CCS Mining and that it was CCS Mining who need the Cone Crusher.[39] If Mr Duggan denied this, pursuant to EA s 21 and s 22 he may be asked whether he has made a statement on a prior occasion inconsistent with that denial. The material in the Duggan SC Affidavit would be 'relative to the subject-matter of the proceedings' for the purposes of EA s 21.[40] The circumstances in which he made the prior inconsistent statement would need to be identified. If Mr Duggan does not distinctly admit that he made such statement, proof may be given that he did in fact make it. The situation is somewhat blurred by the fact that the essence of the cross-examination is not that on the prior occasion (being the Duggan (SC) Affidavit) Mr Duggan said that he told Mr Smoothy that he was inquiring about the Cone Crusher in his capacity as a director of CCS Mining. It is that in the affidavit Mr Duggan did not at any point assert that the contract was not with CCS Mining, but with CCS Equipment. However, for present purposes, I will treat the contents of the Duggan SC Affidavit as being inconsistent. As Buss JA observed in MJH v Western Australia:[41]
A prior statement of a witness will be 'inconsistent' with his or her evidence if there are discrepancies or divergences between the statement and the evidence. For example, where a witness has made a prior statement in which he or she gives an account of an event or transaction that is in issue in the proceedings, and the witness gives evidence of the event or transaction which omits material facts contained in the previous account, the prior statement will be 'inconsistent' with his or her evidence.
[37] O'Meara v The State of Western Australia [147].
[38] O'Meara [147]; MJH v The State of Western Australia [2006] WASCA 167; (2006) 33 WAR 9[43] ‑ [45] (Roberts‑Smith JA), [144] (Buss JA); HAR v The State of Western Australia [No 2] [2015] WASCA 249 [57] (Buss JA, with whom Hall J agreed).
[39] Browne v Dunn (1894) 6 R 67 (HL), 76 (Lord Halsbury); Burke v Corruption and Crime Commission [2012] WASCA 49 [180] (Buss JA, with whom Martin & Mazza JJA agreed); Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9)[2008] WASC 239; (2008) 39 WAR 1[1023] ‑ [1041] (Owen J).
[40] MJH v The State of Western Australia [127] (McLure JA); [155], [157] (per Buss JA).
[41] MJH [158], also [132] (McLure JA).
The prior inconsistent statement does not become evidence in the trial of the present action. Rather, it is only able to be used by the trial judge in the assessment of the credibility and reliability of the evidence of Mr Duggan at the trial of the action, and is not evidence of the truth of what was said on the prior occasion.[42]
[42] Driscoll v The Queen [1977] HCA 43; (1977) 137 CLR 517, 536 (Gibbs J); O'Meara [70]; Job v The State of Western Australia [176]; Thorne v The State of Western Australia [2006] WASCA 218 [13] (McLure JA, Wheeler & Buss JJA agreeing).
Counsel for SCC could seek to go into the reason for the inconsistency in cross-examination. Likewise, counsel for Mr Duggan may seek in re-examination to undo any damage to his credibility and reliability by giving him an opportunity to explain the inconsistency between his evidence at trial and what he said in the Duggan SC Affidavit. I assume for present purposes, he will answer in terms of the material set out at [40]. It is only at this point the issue of the DLA Piper Materials becomes relevant.
On this analysis, the only use which can be made of the DLA Piper Material is to test the validity of explanation of the Mr Duggan as to the inconsistency which I have identified. That is, it only goes to the credibility and reliability of Mr Duggan's testimony in the trial of the action. The issue then becomes whether being relevant in this way only the DLA Piper Materials:
(a)are discoverable if in the possession of Mr Duggan or the Other Directors; and/or
(b)could be the subject of a subpoena to DLA Piper.
At the hearing of the appeal, counsel for the Other Directors drew my attention to long established authority that discovery will not be ordered of documents which go only to credit.[43] Counsel for SCC drew my attention to the recent decision of Strk AJ in Fraser v Fraser seemingly to the contrary.[44] In that case, after finding that the defendants had impliedly waived legal professional privilege, her Honour held that the documents were relevant to the facts in issue, in particular the issue of whether the defendants had changed their position. The defendants could be cross-examined on this issue using the documents. In this sense her Honour concluded that the 'documents go to the question of credit'.[45] There is no inconsistency. The general position is more accurately put by Commissioner Siopis SC in Hadley Hall Estate Holdings Ltd v HHE Management Ltd that discovery will not be allowed of 'documents going to a collateral and unrelated issue going exclusively to credibility'.[46] Or as the Court of Appeal observed in Fairfax Media Publications Pty Ltd v Western Australian Rugby Union Inc: 'A document going exclusively to the credit of a party does not relate to a matter in question'.[47] This is consistent with the collateral evidence rule, which is to the effect that, ordinarily, an answer given by a witness to a question on a matter relating solely to his or her credit is a collateral matter, and the answer is final and cannot be rebutted.[48] As I have already observed, evidence of prior inconsistent statements is an exception to the collateral evidence rule.[49] In Fraser the documents were relevant to the facts in issue and could not be described as being collateral and unrelated, as going exclusively to credibility. [50]
[43] George Ballantine & Son Ltd v FER Dixon & Son Ltd [1974] 1 WLR 1125, 1132 (Walton J); Beecham Group Ltd v Bristol Myers Co [1979] VR 273, 278 (Menhennitt J); Fairfax Media Publications Pty Ltd v Western Australian Rugby Union Inc [2008] WASCA 123 [30] (Newnes AJA, with whom Buss JA agreed).
[44] Fraser v Fraser [2019] WASC 135.
[45] Fraser [51] – [58].
[46] Hadley Hall Estate Holdings Ltd v HHE Management Ltd [2005] WASC 44 [35] (Commissioner Siopis SC).
[47] Fairfax Media [30].
[48] HAR v The State of Western Australia [No 2].
[49] MJH [43] ‑ [45], [144]; HAR [57].
[50] Fraser [47] ‑ [58].

Beyond its use as a means of testing the credibility and reliability of Mr Duggan's evidence, I am not satisfied that the DLA Piper Materials are relevant to the facts in issue. To the extent that DLA Piper was provided with primary materials, that is, materials such as contemporaneous emails which were not brought into existence for the dominant purpose of obtaining legal advice or being used in the Supreme Court proceedings, those materials may be the subject of a subpoena to DLA Piper and are discoverable by the Mr Duggan and the Other Directors in any event. As best, the DLA Piper materials may reveal communications setting out the subjective belief of Mr Duggan or the Other Directors as to the entity which they thought they were using to contract for the use of the Cone Crusher. Beyond matters going to credit, this is not evidence which the court is able to take into account in assessing what in fact Mr Duggan represented to Mr Smoothy.

Appropriate final orders

Having come to the conclusion that the DLA Piper Materials go exclusively to credit and do not relate to a matter in question, I do not need to go on the consider whether the privilege asserted over these materials has been waived.
Any residual unfairness towards SCC is limited by the fact that Mr Duggan and the Other Directors have no further capacity to disclose the DLA Piper Materials for their own benefit. The privilege may be waived by the client,[51] but only the client. And they are not the client.[52]
[51] R v Davies (1921) 21 SR (NSW) 311, 312-314 (Cullen CJ, with whom Pring &Wade JJ agreed).
[52] Baker v Evans (567 ‑ 568); Global Funds Management (NSW) Ltd v Rooney (1994) 36 NSWLR 122, 130 (Young J).
The appropriate final orders are in terms of the Registrar's Decision, though I will hear from the parties as to costs.

I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
JM
Associate
18 SEPTEMBER 2019