Southern Cross Airlines Holdings Ltd v Arthur Andersen & Co
[1999] FCA 786
•7 JUNE 1999
FEDERAL COURT OF AUSTRALIA
Southern Cross Airlines Holdings Ltd v Arthur Andersen & Co [1999] FCA 786
SOUTHERN CROSS AIRLINES HOLDINGS LIMITED (IN LIQUIDATION) ACN 006 892 387 v ARTHUR ANDERSEN & CO (A FIRM), SIR LEO HIELSCHER, BRIAN HARVEY BADEN POWELL, LEONARD THOMAS GEORGE HEARD, DAME MARGARET GEORGINA CONSTANCE GUILFOYLE, LEIGH MASEL, DAVID SAMUEL COATS, JAMES GRAHAM AMBROSE TUCKER, GEOFFREY ARTHUR COHEN; AND WESTPAC BANKING CORPORATION (ARBN 0078 457 113), GLEDHILL BURRIDGE & CATHRO (A FIRM)
QG 170 OF 1996DOWSETT J
7 JUNE 1999
BRISBANE
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
QG 170 OF 1996
BETWEEN:
ARTHUR ANDERSEN & CO (A FIRM)
Applicant/First RespondentAND:
WESTPAC BANKING CORPORATION (ARBN 007 457 113)
Respondent/Eight Cross-RespondentJUDGE:
DOWSETT J
DATE OF ORDER:
7 JUNE 1999
WHERE MADE:
BRISBANE
THE COURT ORDERS THAT:
1.Orders in terms of paragraph 1A of the notice of motion filed 11 May 1999 excluding documents generated solely by Mr Borden or any other employee of Mallesons Stephen Jaques.
2.This order be stayed until Friday 11 June 199 at 4.00 pm.
3.Costs in the cause.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
QG 170 OF 1996
BETWEEN:
ARTHUR ANDERSEN & CO (A FIRM)
Applicant/First RespondentAND:
WESTPAC BANKING CORPORATION (ARBN 007 457 113)
Respondent/Eight Cross-Respondent
JUDGE:
DOWSETT J
DATE:
7 JUNE 1999
PLACE:
BRISBANE
REASONS FOR JUDGMENT
This has been an extended application for further discovery relating to documents in the possession of Westpac which were generated as a result of inquiries conducted by an employed solicitor, Ms Filipowski, following the discovery of irregularities in the treatment of the Southern Cross account by the bank. As I have said, Ms Filipowski was a legal practitioner employed by the bank in its dispute resolution section. She was assisted in her undertaking by representatives of an external firm of solicitors. In the course of the investigation, she communicated some of the information she had derived to the Reserve Bank in response to an inquiry, and it has been accepted by the parties that there was an obligation upon Westpac to make an appropriate report to the Reserve Bank concerning its exposure.
Westpac's position has been that Ms Filipowski conducted the inquiry solely to enable her to give legal advice to the bank as to its exposure and that any communication to the Reserve Bank was based upon such advice. It is, I think, common ground that some documents were generated in the course of her inquiry but that those documents did not amount in themselves to the communication of legal advice to Westpac, although they may have been prepared to assist her in giving such advice.
Mr McMurdo QC, for Arthur Andersen and Co, the applicant for further discovery, concedes that, to the extent that any document actually gives legal advice, it would not be discoverable. He asserts, however, that documents produced in the course of the investigation, and presumably summarising in one way or another, the factual outcome of the investigation, were not documents produced solely for the purpose of giving legal advice and that another purpose underlay her employment in this task.
This would normally be a difficult matter for the party asserting same to prove; however, there are aspects of this case which make it rather easier. It is obvious that a major irregularity of the sort with which the inquiry was concerned was a matter which would have serious consequences in various aspects of the bank's activities. It was, for example, necessary to consider the question of the continued employment of a particular employee, Mr Tingiri. It would also have been necessary to consider the adequacy or otherwise of internal bank procedures. Clearly, the Reserve Bank had an interest in the matter. One would infer that the Stock Exchange would have been likely to require information, or might have required information, and the bank or its directors would also have had to consider their commercial exposure. Some of these matters would involve the consideration of appropriate legal advice, but they would also involve a consideration of factual matters for reasons unrelated to legal advice.
The mere fact that a person is a solicitor does not preclude his or her usefulness as an investigator, and it seems at least theoretically possible, that in causing a solicitor to undertake a substantial inquiry into this matter, which lasted over some months, the bank was expecting not just legal advice, but also the ascertainment of various facts which, although necessary for the purposes of that advice, would also be useful for the other assorted purposes to which I have referred. It was obviously necessary that such facts be established for those purposes, as well as for the purpose of obtaining legal advice. For this reason, I inquired of Ms Filipowski whether or not, to her knowledge, the bank was, at the time, seeking to ascertain the various factual matters surrounding the irregular transactions, by any inquiry apart from hers. She said that she was not aware of any such inquiry. It seems to me to be more probable than not that if there were another inquiry into these circumstances, she would have been aware of it. Presumably, each investigator would have required access to the same documents, and they would have crossed paths at some point.
In the circumstances, although the matter is one of some considerable difficulty, I am inclined to the view, on the balance of probabilities, that the bank anticipated that Ms Filipowski would generate a record of the relevant facts surrounding the suspect transactions, which would be of use to the bank for a number of purposes, including obtaining advice from Ms Filipowski and perhaps from external solicitors. I infer that Ms Filipowski’s establishment of those factual matters was not intended by the bank to be solely for the purpose of obtaining legal advice. It is the bank’s intention which is finally relevant for present purposes. In those circumstances, the claim to privilege should not be allowed with respect to documents which record facts established by Ms Filipowski in the course of her inquiry. However documents which go beyond the recording of facts and involve the discussion of legal issues are privileged. In the course of argument, we ventilated the possibility of a document-by-document approach to the question, but counsel for Westpac indicated that there was nothing in the documents, as far as he was aware, suggesting that such an approach would be of any assistance.
I certify that the preceding six (6) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Dowsett.
Associate:
Dated: 7 June 1999
Counsel for the Applicant/First Respondent:
Mr P McMurdo QC
Mr T D O J North & Ms S Brown
Solicitor for the Applicant/First Respondent:
Minter Ellison
Counsel for the Respondent/Eighth Cross-Respondent:
Mr J C Sheahan SC
Mr R M Derrington
Solicitor for the Respondent/Eighth Cross-Respondent:
Mallesons Stephen Jaques
Date of Hearing:
7 June 1999
Date of Judgment:
7 June 1999
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