Tabcorp Holdings Ltd v State of Victoria
[2013] VSC 302
•13 June 2013
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
COMMERCIAL COURT
No. S CI 2012 4846
BETWEEN
| TABCORP HOLDINGS LIMITED (ACN 063 780 709) | Plaintiff |
| v | |
| STATE OF VICTORIA | Defendant |
---
JUDGE: | SIFRIS J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 30 May 2013 | |
DATE OF JUDGMENT: | 13 June 2013 | |
CASE MAY BE CITED AS: | Tabcorp Holdings Ltd v State of Victoria | |
MEDIUM NEUTRAL CITATION: | [2013] VSC 302 | |
---
EVIDENCE – Privilege – Legal professional privilege – Adequacy of evidence in support of claim.
EVIDENCE – Privilege – Legal professional privilege – documents and communications with third parties – Evidence Act 2008 (Vic) s 118.
EVIDENCE – Privilege – Joint privilege – Evidence Act 2008 (Vic) s 124.
EVIDENCE – Privilege – Waiver of privilege.
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | J.C. Sheahan SC with R. Strong and R.C.A. Higgins | Herbert Smith Freehills |
| For the Defendant | S.B. McNicol SC with G. Mukherji A. Bailey N. Hassan | Johnson Winter and Slattery |
HIS HONOUR:
A. Introduction
By summons dated 15 May 2013 the plaintiff, Tabcorp Holdings Ltd (“Tabcorp”) seeks the production for inspection of documents listed in Schedule 1, Part 2 of the State’s List of Documents (“the Privilege List”) over which the defendant, the State of Victoria (the “State”), claims client legal privilege. Tabcorp’s summons identifies 107 documents the subject of the application (“the Challenged Documents”).
The State opposes the production for inspection of the Challenged Documents. A schedule of the Challenged Documents is exhibited to the affidavit of Chris Connor sworn 24 May 2013 (“the Connor affidavit”). The State’s opposition to Tabcorp’s application is supported by the Connor affidavit and also by the affidavit of Geoffrey Tabe sworn 23 May 2013 (“the Tabe affidavit”).
The application is supported by an affidavit of Bradley Kevin Holmes sworn 16 May 2013 (“the Holmes affidavit”).
The State claims legal advice privilege over the Challenged Documents (except document numbers 171, 204 and part of document number 298) pursuant to s 118 of the Evidence Act 2008 (Vic), as supplemented by the relevant common law principles. These Challenged Documents form part of a list of some 305 privileged documents over which the State has claimed privilege in these proceedings.
Tabcorp contends that the claim for privilege is not made out. It further contends that if the evidential foundation for the claim is made out, the privilege is a joint privilege with Totalisator Agency Board (“TAB”) and Tabcorp and, finally, that in any event privilege has been waived.
B. The Substantive Proceeding
In the proceeding Tabcorp claims an entitlement to payment of approximately $687 million from the State. The alleged payment entitlement arises from the expiry of Tabcorp’s gambling licences on 15 August 2012, and the grant of new gambling licences by the State — which commenced operation on 16 August 2012. The statement of claim filed on 24 August 2012 pleads three bases for the claim:
(a)the operation of s 4.3.12 of the Gambling Regulation Act 2003 (Vic) (“the statutory claim”); further, or in the alternative,
(b)a contractual undertaking by the State to deal with Tabcorp reasonably and in good faith (“the good faith and reasonable dealing agreement”); further, or in the alternative,
(c)an indemnity given by the State for any loss suffered by Tabcorp by reason of any change in legislation (“the MoU indemnity”).
The documents discovered by the parties in this proceeding relate principally to the public offering of shares in Tabcorp in 1994 (“the Float”) and the arrangements put in place to enable the Float to be implemented.
The documents the subject of this application for inspection relate to the Float and were all created in the period 1993 to 1995. Many of these documents are letters to or from the law firm Arthur Robinson & Hedderwicks (“ARH”).
C. The Issues
The first issue is whether the factual basis for the claim of privilege in relation to the Challenged Documents has been made out. In other words, have the documents in respect of which privilege is claimed been sufficiently described, or is it apparent from the context that these documents were created or used for the dominant purpose of obtaining legal advice.
The second issue is whether the privilege includes documents that are not between lawyer (ARH) and client (the State) but include various other parties, mainly advisors and other third parties. In addition to raising the first issue, in relation to those documents that include the third parties, Tabcorp submits that as a matter of law the privilege does not include these documents as they fall outside the ambit of s 118 of the Evidence Act which exclusively governs the issue.
The third issue relates to joint privilege. Tabcorp contends that if privilege is established by the State, then Tabcorp is a joint privilege holder pursuant to s 124 of the Evidence Act because, although not having specifically retained ARH, it was embraced by the State’s retainer, and any legal advice provided by ARH was specifically related to Tabcorp and for its benefit.
The fourth issue is waiver. Tabcorp contends that in any event the Challenged Documents have been disclosed to Tabcorp and accordingly there has been a waiver of the privilege by the State.
The question was raised as to whether Tabcorp as successor to the TAB is entitled to its privilege. I will not deal with this as a separate issue. It will be dealt with as part of the third issue.
Given the nature of the application and the issues involved it is necessary to have an appreciation of the factual setting and the dramatis personae. The facts which are largely uncontroversial are taken directly from the Holmes affidavit.
D. Relevant Factual Background
The TAB was a statutory corporation established in 1960 pursuant to s 116A of the Racing Act 1958 (Vic). As at December 1993, the TAB conducted a substantial gaming and wagering operation.
On 21 December 1993, the government of the State of Victoria announced its decision to privatise the TAB and publicly float the business of the TAB on the Australian Stock Exchange (“ASX”) by 30 June 1994.
On 23 December 1993, Michael Roux, director of the Office of State Owned Enterprises (“OSOE”), wrote to A Guy, Managing Partner, ARH, inviting ARH to submit an “expression of interest in assisting the Government with the provision of relevant services required for the successful implementation of the public float”. ARH was subsequently appointed as legal advisor to the issue of shares the subject of the prospectus. The individuals from ARH involved in the Float were Peter Stewart, Ian Renard, John Harry, Grant Anderson, Craig Henderson and Wendy Rae.
In addition to ARH, the other key players involved in the Float were as follows:
(a)Centaurus Corporate Finance (“Centaurus”) — which was engaged as the principal financial advisor to the State in relation to the Float. The key individuals involved from Centaurus were Mr Tilley, Tim Antonie and Mark Shearman.
(b)within the Government, the then Treasurer, Alan Stockdale, had primary responsibility for the Float, along with individuals, particularly Michael Roux from the OSOE, which was a division of the Department of Treasury. For example, Mr Stockdale signed a Memorandum of Understanding entered into between the State and various Victorian racing clubs and boards on 15 March 1994 (“the MoU”) for and on behalf of the government of the State of Victoria; signed an Allocation Statement on 12 August 1994 (“the Allocation Statement”); and authored and signed a letter to the chairman of Tabcorp dated 29 June 1994 (“the Treasurer’s Letter”). In addition, he co-signed the letter at the beginning of the Prospectus (along with the former Premier, Mr Kennett).
(c)the main individuals from the TAB involved in the Float were:
(i)Michael Gullquist, secretary and legal counsel of the TAB. Mr Gullquist became the secretary and legal counsel of Tabcorp on 27 June 1994;
(ii) Tony Hodgson, Acting Chairman of the TAB from December 1993, and Chairman from May 1994; and
(iii) Clive Hooke, Interim Chief General Manager.
(d)the Victorian Racing Industry — which was represented in negotiations with the State by Macquarie Bank and Clayton Utz. The Racing Industry included all the various racing clubs in Victoria who were represented by Victorian Racing Club, the Victorian Amateur Turf Club, the Moonee Valley Racing Club Inc, the Victorian Country Racing Council Inc, the Harness Racing Board (for and on behalf of the Harness Racing Clubs of Victoria) and the Greyhound Racing Control Board (for and on behalf of the Greyhound Racing Clubs of Victoria) as well as VicRacing Pty Ltd (“Vic Racing”).
(e)Price Waterhouse — which was appointed by the State as the investigating accountants for the Float.
(f)McIntosh Corporate Limited — which was appointed to advise on market related issues as Lead Manager to the issue.
ARH were the only lawyers that performed work and gave advice in relation to the Float.
In January 1994, negotiations commenced between the Government and the Racing Industry in relation to the necessary arrangements for the privatisation and the Float. In early January 1994, the TAB was requested by the Government to nominate a representative for the Steering Committee for the Float. On 7 January 1994, Michael Roux (director, OSOE) wrote a letter to Tony Hodgson (Acting Chairman of the TAB) “to advise of progress in relation to the reforms announced by the Government for the Totalisator Agency Board (TAB)”. The letter states that the Steering Committee is to be chaired by Mr Tilley, and that it will operate principally as a working group with responsibility for (amongst other things):
(i)Advice on structuring and marketing the public offer.
(ii)Provision of general financial advice to the Government.
(iii)Advice on capital structure for the business.
(iv)Leading and overseeing the due diligence review.
(v)Overseeing the preparation of a prospectus.
(vi)Ensuring proper contract arrangements between the Government, the TAB and Racing.
(vii)Overseeing legislation to bring about the float.
The letter states that “it is proposed that the group comprise representatives from the TAB, as well as the OSOE and the Centaurus project team. Your early advice as to a suitable nominee from the TAB for the working group would be appreciated”.
The due diligence process in relation to the Float commenced in February 1994 and is dealt with in detail below.
The negotiations between the government and the Racing Industry in relation to the necessary arrangements for the Float culminated in the signing of the MoU on 15 March 1994 between the government and the Racing Industry. The MoU summarised the understanding between the government and the Racing Industry in relation to the restructuring of the TAB and the conduct by TABCO (which was the term used to describe Tabcorp before it was incorporated), and its subsidiaries, of wagering and gaming operations in Victoria, and that the parties would establish a joint venture between the Racing Industry and TABCO for the purpose of carrying on wagering and gaming in Victoria. The MoU also stated that the parties intended that the relevant licences would be held by TABCO.
The terms of the MoU were the subject of negotiation between ARH and Clayton Utz (solicitors to the Racing Industry). Centaurus and Macquarie were copied into that correspondence. The MoU refers to an agreement between the State, TABCO and Race Co, a company owned by the Racing Industry (“the State Agreement”). Tabcorp has discovered what appears to be a draft of that agreement, which has a document footer bearing the date 10 March 1994.
Following the entry of the MoU, negotiations continued between Mr Tilley and Mr Yates from Macquarie in relation to the key agreements which would govern the relationship between the floated company, and its subsidiaries, and the Racing Industry.
In terms of Tabcorp and its subsidiaries who were the parties to these key agreements, Tabcorp was incorporated on 13 April 1994, and on 20 April 1994, Tabcorp Participant Pty Limited (“Tabcorp Participant”), Tabcorp Assets Pty Limited (“Tabcorp Assets”), and Tabcorp Manager Pty Limited (“Tabcorp Manager”) were all incorporated as wholly-owned subsidiaries of Tabcorp.
The key agreements were all dated 25 May and were as follows:
(a)an agreement between Tabcorp, Tabcorp Assets, Tabcorp Manager, Tabcorp Participant and Vic Racing for the formation and operation of an unincorporated joint venture (“the JVA”). The JVA provided for the establishment of an unincorporated joint venture between Tabcorp Participant and Vic Racing (which was a company owned and controlled by the Racing Industry) to conduct wagering, gaming, approved betting competitions and Club Keno, with the unincorporated joint venture's operations to be managed by Tabcorp Manager, subject to the control of a management committee consisting of three representatives of each of Tabcorp Participant and Vic Racing;
(b)an agreement between Tabcorp, Tabcorp Manager, Tabcorp Participant, Vic Racing and Racing Products Victoria Pty Limited (“Racing Products Victoria”) entitled the “Product Supply Agreement”; and
(c)an agreement between Tabcorp, Tabcorp Manager, Tabcorp Participant, Vic Racing and Racing Products Victoria entitled the “Racing Program Agreement”.
The State was not a party to any these agreements. ARH negotiated the terms of these agreements with Clayton Utz (for the Racing Industry). The State has discovered letters from Clayton Utz to ARH in early April 1994 which demonstrate that ARH provided drafts of these agreements to the Racing Industry, and the Racing Industry commented upon those drafts. This correspondence is copied to Mr Tilley and Mr Yates.
Throughout this period, drafts of the necessary legislation to enable the privatisation and the Float were being prepared. This process commenced in January 1994 when Michael Pryles of Minter Ellison Morris Fletcher was engaged by the Government to prepare the initial drafting instructions for the legislation for consideration by Mr Stockdale prior to 25 January 1994. Tim Antonie from Centaurus was also involved in preparing the draft legislation, as was Mr Tilley. The TAB was involved in reviewing and commenting upon drafts of the legislation sent to it by Centaurus.
ARH prepared and lodged numerous forms with the Australian Securities Commission (“ASC”) in respect of the incorporation of Tabcorp, the appointment of Tabcorp’s directors, the Memorandum of Association of Tabcorp, and meetings of the company.
On 3 March 1994, ARH lodged an “Application for Reservation of a Name” form with the ASC. The form sought reservation of the name “TAB Corp Limited”. The form requests the “lodging party or agent name”, which has been filled in with ARH’s details. The form is signed at the bottom by Ian Renard of ARH.
On 12 April 1994, ARH lodged an “Application for Registration as a Company” form with the ASC. The form sought the registration of “TAB Corp Limited” as a public company to acquire and operate the business of the TAB. The registered office of TAB Corp Limited was listed as being “at the office of Arthur Robinson & Hedderwicks”.
On 13 April 1994 “TAB Corp Limited” was incorporated and registered as a public company. The ASC Certificate of Registration form 204 is addressed to ARH. The Certificates of Registration forms for Tabcorp Manager, Tabcorp Assets and Tabcorp Participant, each of which was incorporated and registered on 20 April 1994, are also addressed to ARH.
Also on 13 April 1994, the Memorandum of Association and Articles of Association of “TAB Corp Limited” were lodged with the ASC. They were prepared by ARH.
Also on 13 April 1994, ARH lodged with the ASC a “Notification of Consenting Directors” listing “all persons who have been named as a proposed director in the Memorandum or Articles of the proposed company and who have consented to be directors”. The directors listed were Michael Roux, Geoff Tabe, Geoff Frankish, Harry De Jong and Joanne Favilla. They were all employees of the OSOE, which was a division of the Department of Treasury and Finance.
On 20 April 1994, ARH lodged with the ASC a “Notification of Initial Appointment of Officeholders” in relation to the appointments of the initial directors of Tabcorp. The appointment date of each of the directors is stated to be 13 April 1994.
Also on 20 April 1994, ARH lodged with the ASC a “Notification of Change of Office Hours or Address” changing the address of TAB Corp Limited from ARH to the OSOE effective 15 April 1994.
On 27 April 1994, the name of “TAB Corp Limited” was changed to “Tabcorp Holdings Limited”. The ASC Certificate of Registration on Change of Name form 245 is addressed to ARH.
The name change was brought about by ARH filing an “Application for Reservation of Name” form with the ASC on 26 April 1994 in respect of the name “Tabcorp Holdings Limited” (address of 1 Treasury Place, Melbourne) and then, on 27 April 1994, filing a Notification of Resolution form with the ASC, recording that it was resolved at a general meeting on 27 April 1994 that the name of the company be changed to “Tabcorp Holdings Limited”.
Between 19 May 1994 and 14 June 1994, the ASC sent a series to letters to ARH re “Tabcorp Corporations Law — paragraph 1026(2)(d) Consent”. These letters were by way of reply to letters from ARH, and they provided the consent of the ASC to Tabcorp and/or the TAB publishing certain material in relation to the float.
On 27 May 1994, Mark Shearman and Tim Antonie of Centaurus wrote to Clive Hooke of the TAB enclosing a fourth draft of the Tabcorp Prospectus and stating that this draft was “for distribution to your team”. The Prospectus was the subject of a detailed due diligence process overseen by ARH, and conducted through the TAB Due Diligence Committee (“DDC”) which is described below.
On 27 June 1994, a Tabcorp Notice of General Meeting was lodged with the ASC under cover of a letter from ARH with the subject line “TABCORP Holdings Limited”, which stated that it enclosed a Notice of General meeting of TABCORP Holdings Limited. The Notice was prepared by ARH.
On 28 June 1994, Tabcorp was granted a Wagering Licence and a Gaming Licence, each for a period of 18 years. On the grant of these licences, Tabcorp became liable to pay to the State the sum of $579.2 million as consideration for the licences. It paid this sum to the Government on 29 August 1994.
On 29 June 1994, ARH lodged with the ASC a “Notification of Change of Office Hours or Address” changing the address of Tabcorp from 1 Treasury Place, Melbourne to the Racing Industry Centre, 1 Queens Road, Melbourne.
On or around 29 June 1994, ARH lodged with the ASC a “Notification of Change to Officeholders” recording that that the State-appointed directors ceased holding office on 27 June 1994, and that the Tabcorp independent directors (namely, Ross Wilson, Michael Robinson, Tony Hodgson, Peter Ritchie and Peter Wade) were appointed on 27 June 1994.
On 29 June 1994, the Treasurer wrote to the Chairman of Tabcorp, and to the Chairman of Vic Racing, about the State’s privatisation of the TAB (“the Treasurer’s Letter”). The Treasurer’s Letter stated that it was written to confirm the principles on which the State was privatising the TAB.
On 30 June 1994, the Prospectus was finalised and signed by, or on behalf of, each of the directors of Tabcorp. On 1 July 1994, the Prospectus was lodged by ARH with the ASC.
In or around late June or early July 1994, ARH lodged with the ASC a “Notification of Change to Officeholders”, recording that Michael Gullquist was appointed secretary of Tabcorp effective from 27 June 1994. Mr Gullquist had, until this point, been the Company Secretary and General Counsel of the TAB.
In early July 1994, Tabcorp applied to be listed on the ASX. ARH prepared the necessary Application for Listing and sent it to McIntosh Corporate with a request that the form be signed by Ross Wilson (managing director and CEO of Tabcorp) and returned to ARH.
On 7 July 1994, ARH certified that copies of certain documents referred to in the Prospectus and made available for public inspection were true and complete copies. Those certificates state that the solicitor providing the certification is “authorised by Tabcorp Holdings Limited” to do so.
On 12 August 1994, the Treasurer signed the Allocation Statement. The Allocation Statement provides that any rights of the TAB not otherwise allocated under the Allocation Statement are allocated to Tabcorp Assets (a wholly owned subsidiary of Tabcorp). Sections 152 and 153 of the Gaming and Betting Act 1994 (Vic) (“GBA”) gave statutory force to the Allocation Statement by providing that all rights of the TAB that are allocated under an allocation statement to Tabcorp or a wholly owned subsidiary of Tabcorp vest in Tabcorp or the wholly owned subsidiary (as the case may be).
On 15 August 1994, McIntosh Corporate wrote to the ASX. This letter was copied to Peter Stewart of ARH. Among other things the letter refers to ARH as “TABCORP’s lawyers”.
The Float was successfully completed on 15 August 1994.
On 18 August 1994, Peter Stewart of ARH wrote to “Mr M Gullquist, Secretary, TABCORP Holdings Limited” enclosing “an updated copy of the checklist of matters to be dealt with in connection with the float”. The letter indicates that ARH had been providing legal services to Tabcorp in connection with the Float, and that ARH intended to continue providing these services. The letter also states that “[m]atters up to and including 15 August were discussed when Wendy and I [Peter Stewart] met with Craig Launder and you at your offices”. The reference to “Wendy” is a reference to Wendy Rae, a partner of ARH.
ARH acted for Tabcorp in August 1994 in relation to the Betting Rules which Tabcorp was required to prepare pursuant to the GBA. In particular, Tabcorp was required to have the Betting Rules approved by the Victorian Casino and Gaming Authority (“VCGA”). On 11 August 1994, ARH wrote to the VCGA stating that “we are instructed by TABCORP Holdings Limited to request that the Authority exercises its discretion under regulation 13”. On 15 August 1994, Michael Gullquist, Company Secretary of Tabcorp, wrote to ARH on Tabcorp letterhead enclosing executed certificates for the betting Rules and instructed ARH to forward them to the VCGA for approval.
It is necessary to refer to the due diligence process in more detail.
On or about 5 April 1994, representatives of ARH, Price Waterhouse, the TAB, the Department of Treasury, Centaurus and McIntosh signed a document entitled “Due Diligence Planning Memorandum for the Public Offering of Shares in TAB Limited” (“Due Diligence Planning Memorandum”). The Due Diligence Planning Memorandum described the due diligence process that was to be undertaken in relation to the Prospectus to be issued by Tabcorp.
As contemplated by the Due Diligence Planning Memorandum, the following reports were issued on 30 June 1994:
(a)the Price Waterhouse due diligence report, which was addressed to the Treasurer, the directors of Tabcorp, Centaurus, ARH and McIntosh;
(b)the McIntosh due diligence report, which was addressed to the Treasurer, Tabcorp and its directors, Centaurus, ARH and Price Waterhouse;
(c)the ARH legal due diligence report, which was addressed to “the Board of the Company, the State and members of the Due Diligence Committee” (“the Legal Due Diligence Report”). Tabcorp does not have a copy of the final version of the Legal Due Diligence Report, however it does have a copy of a draft of the report. A letter dated 30 June 1994 from ARH to, among others, Tabcorp refers to the Legal Due Diligence Report as being “from our firm to the Board of the Company, the State and the members of the Due Diligence Committee, dated today”.
On 1 July 1994 ARH sent a letter to Centaurus, the OSOE, McIntosh, Price Waterhouse and the TAB. The letter states that it encloses “an original dated 30 June 1994 of our Due Diligence Report (2 volumes)”, a copy of “the executed Report of the Prospectus Due Diligence Committee dated 30 June 1994” and “an original opinion letter dated 30 June 1994 signed by ARH”.
The draft Legal Due Diligence Report, of which Tabcorp has a copy, is dated 14 June 1994 and relevantly:
(a)states that the report: “has been written in connection with the preparation of the Prospectus” of Tabcorp (Part A, 1.1);
(b)states that: “The purpose of this Report and the due diligence investigation undertaken by AR&H is: ... to assist those involved in the preparation and issuing of the Prospectus to take advantage of certain defences provided by the Corporations Law...” (Part A, 1.2);
(c)states that: “This Report has been prepared solely for the use of the Directors of TABCORP, the State and the members of the DDC” (Part A, 2);
(d)also refers to the expectation that the Tabcorp Board will pass a resolution approving the Prospectus, and this will be largely in accordance with a minute drafted by ARH for the Board (Part A, 5.5 and Part B, 2.2);
(e)also refers to ARH undertaking all the tasks to incorporate Tabcorp and its subsidiaries (Part B, 1.1 and 1.6); and
(f)generally concerns the information provided by or about Tabcorp and the TAB, these being the key sources of information/verification of the Prospectus. Copies of previous drafts of the Legal Due Diligence Report had been provided to Tabcorp and all members of DDC.
As contemplated by the Due Diligence Planning Memorandum, a Report of the Prospectus Due Diligence Committee was prepared and signed by each member of the DDC, being Centaurus, the OSOE, ARH, Price Waterhouse, the TAB and McIntosh. A list of these members of the DDC is also set out at paragraph 1.2 of the report. The report is dated 30 June 1994, and is addressed to the Treasurer and to the directors of Tabcorp.
Further, on 28 September 1994, ARH sent a letter to Michael Gullquist, of Tabcorp Holdings, headed “Data Room Documents”. The letter stated that “[eJnclosed are two disks which contain a copy of our TABCORP Due Diligence Database. Apparently, the disks are best viewed with ‘courier’ lettering and a margin of 0.3 on the left hand and right hand sides”. The disks have not been located nor has any document that records precisely what information was contained on them.
In addition, on 13 August 1994, Price Waterhouse sent a letter to, amongst others, Tabcorp with the subject line “Tabcorp Holdings Limited — Comfort Letter”. The letter stated on the top of page 6 that “we have participated in the preparation and verification of certain statements and financial information in the Australian Prospectus. Attached hereto is a copy of the Annotated Australian Prospectus containing the verification notes”.
Tabcorp has discovered, in this proceeding, minutes of a meeting of the DDC for the period February 1994 to August 1994. There were 13 meetings during this period. The State has also discovered a copy of these minutes, but it has claimed privilege in relation to parts of some of the minutes, and it has produced for inspection versions of the minutes which it has redacted for reasons of privilege. Holmes has exhibited to his affidavit a version of the minute from Tabcorp’s discovery with the State’s redaction highlighted in yellow for ease of reference.
Lawyers from ARH attended each meeting of Tabcorp’s board of directors between 15 April 1994 and 28 July 1994, as well as attending meetings of the directors of Tabcorp’s wholly-owned subsidiaries Tabcorp Assets, Tabcorp Participant and Tabcorp Manager. The minutes of each meeting were prepared by ARH.
Next it is necessary to refer to the Tabcorp Board Meetings in relation to the Float.
In addition, on 21 July 1994, ARH wrote a letter to Michael Gullquist, entitled “TABCORP Holdings Limited”. The letter attached drafts of various documents by ARH. This included a draft directors’ report under s 305 of the Corporations Law. The copy of this letter in Tabcorp’s possession attaches the draft Directors’ Report. The draft Directors’ Report was prepared by ARH. Section 10(c) on page 4 of the document deals with “Directors’ Interests in Contracts” and states that “Mr MB Robinson is a partner of the firm Arthur Robinson & Hedderwicks. Arthur Robinson & Hedderwicks provides legal services to the Company, for which professional services will be received.”
Further, on 15 August 1994, ARH wrote a letter to Michael Gullquist in respect of “TABCORP Holdings Limited” which states that “Enclosed are original executed Minutes of Directors’ Meetings of TABCORP Holdings Limited, TABCORP Employee Share Administration Ply Ltd and TABCORP Manager Pty Ltd for inclusion in the Minute Books of those companies”. This letter was addressed to “Mr M Gullquist, Totalizator Agency Board”.
Tabcorp has discovered a copy of five minutes of meetings of Tabcorp directors during the period between 15 April 1994 and 28 July 1994. The State has also discovered a copy of these minutes, but it has claimed privilege in relation to parts of some of the minutes, and it has produced for inspection versions of the minutes which it has redacted for reasons of privilege. In addition, the State has discovered minutes of meetings of Tabcorp Assets, Tabcorp Participant and Tabcorp Manager, which it has also redacted for reasons of privilege, some of which were not in Tabcorp’s possession and so were not discovered by Tabcorp. A version of the minutes from Tabcorp’s discovery with the State’s redaction highlighted in yellow has been provided to the Court for ease of reference.
E. Critical Findings
This relatively detailed examination of the facts clearly establishes a number of relevant matters.
Throughout the entire period of their retainer, ARH were the only solicitors providing advice to the State and this included extensive advice in relation to and directly to and for the benefit of both TAB and Tabcorp before, during and after the Float. Neither TAB nor Tabcorp retained separate solicitors. Of course, this is the issue. The State contends that such advice could not be given to TAB because it was not a separate entity and therefore any advice was solely to the State even though it was essentially about TAB and its privatisation. The State further contends that Tabcorp, although a separate entity, is not a successor to any privilege that TAB may have. Tabcorp contends that both it and TAB are separate entities, that they were embraced by the retainer and directly received the benefit of any advice.
Whether or not TAB was part of and indistinguishable from the State, TAB (and Tabcorp) did have separate personnel who actively participated at all relevant stages in the discussions and legal advice which related to TAB and Tabcorp — whatever its separate existence —was clearly for their benefit. Again, it is contended by the State that because TAB did not have a separate existence it was not embraced by the retainer and the advice could not be for its benefit but rather it was for the sole benefit of the State.
Tabcorp is and was at all relevant times a separate entity. From the date of its incorporation, 13 April 1994, and extending to the Float and beyond, it had an identity separate from the State. It relevantly did not have solicitors during the period and received ongoing advice directly from ARH in relation to numerous matters. It was clearly embraced by the retainer.
So far as TAB is concerned, it also in my view had a separate identity. It was a statutory corporation capable of suing and being sued in its own right. Regardless of whether it was a separate entity in relation to Crown immunity, for the purpose of the argument on privilege it was relevantly an entity apart from the State. This is so notwithstanding its being controlled by the State, a fact which may be relevant for other purposes.[1]
[1]State of New South Wales v Public Transport Ticketing Corporation [2011] NSWCA 60, [30]–[31] (Allsop J).
F. Adequacy of claim for privilege — the first issue
The State, as the party claiming the privilege, bears the onus of establishing the basis of the claim, and must establish the facts from which the court can determine that the privilege is capable of being asserted.[2]
The State’s claim to privilege
[2]Powercor Australia Ltd v Perry [2011] VSCA 239, [42] (Warren CJ, Nettle and Tate JJA); Priest v New South Wales [2006] NSWSC 1281, [21] (Johnson J). See also, Grant v Downs (1976) 135 CLR 674, 689 (Stephen, Mason and Murphy JJ); National Crime Authority v S (1991) 29 FCR 203, 211 (Lockhart J).
Section 118 of the Evidence Act provides:
Evidence is not to be adduced if, on objection by a client, the court finds that adducing the evidence would result in disclosure of:
(a)a confidential communication made between the client and a lawyer; or
(b)a confidential communication made between 2 or more lawyers acting for the client; or
(c)the contents of a confidential document (whether delivered or not) prepared by the client, lawyer or another person;
for the dominant purpose of the lawyer, or one or more of the lawyers, providing legal advice to the client.
The State claims client legal privilege over the Challenged Documents under s 118(a), (b) and (c) of the Evidence Act.[3] The State contends that the legal services and advice provided by ARH and Minter Ellison to the State were comprised in and facilitated by communications to and from Centaurus, the Treasurer, officers of the Treasurer and the OSOE; and that all such communications to and from ARH and Minter Ellison were for the purposes of their respective retainers by the State, and were confidential, according to the terms of those retainers.
[3]The State’s original submissions referred to a claim of privilege under s118(a) and (b) only, however this was extended to include s118 (c) applying privilege to the contents of confidential documents prepared by third parties.
In a letter dated 5 April 2013, Tabcorp requested a description of documents over which privilege was claimed pursuant to the Supreme Court Rules 2005 (Vic), Rule 29.04(b). Tabcorp listed five areas in which it contended that discovery had been insufficient. These referred to: (a) the State Agreement, (b) the Treasurer’s Letter, (c) the Prospectus, (d) the JVA and (e) the MoU. In response, on 23 April 2013, the State provided the Privilege List, a list of 305 documents. An accompanying letter from the State’s solicitors noted those documents in the Privilege List which were within the five categories identified by Tabcorp. The information provided in the Privilege List included the type of document, the document title, and the authors and recipients of communications.
In a letter dated 30 April 2013, Tabcorp requested that the State substantiate its claim to privilege regarding 110 of the documents in the Privilege List relating to the Treasurer’s letter, the Prospectus, the State Agreement, and MoU and other (miscellaneous) documents. Additional correspondence followed the 30 April 2013 letter in relation to whether or not the State was required to provide further substantiation to the privilege claims. While the State maintained that the Privilege List provided sufficient substantiating information, Tabcorp considered that the details provided fell short of justifying the claims to privilege.
The descriptions of the Challenged Documents
The current application involves 107[4] Challenged Documents of the 305 documents provided in the Privilege List. For the purposes of the application, the solicitors for the State prepared a Schedule of the Challenged Documents (exhibited to the Connor Affidavit) with descriptions of the 107 documents. The documents are divided into six categories: (a) documents relating to the State Agreement, (b) documents relating to the Treasurer’s Letter, (c) documents relating to the Prospectus, (d) documents relating to the DDC — Correspondence and Reports, (e) documents relating to Price Waterhouse and (f) “Other Documents”.
[4]The State is no longer claiming privilege over three of the documents identified in the Tabcorp letter of 30 April 2013.
By way of illustration, the following are examples of the descriptions provided in the Schedule:
Document 75–77 (Category A)
Fax Cover Sheet from ARH to T Antonie of Centaurus attaching:
· A fax dated 9 March 1994 from J Harry and G Anderson of ARH to M Tilley of Centaurus regarding Totalizator Agency Board enclosing:
· A draft of the State Agreement prepared by ARH on or around 9 March 1994 with explanatory notes.
Documents 246–247 (Category B)
Fax from G Anderson per J Harry to M Pryles of Minter Ellison attaching:
· a copy of the draft letter from the Treasurer dated 17 June 1994
Document 210 (Category C)
File note of G Anderson of ARH re meeting at which Prospectus was checked on 30 June 1994 at Centaurus Corporate Finance Pty Ltd at 4:30-11:30pm
Document 220 (Category C)
Fax received by ARH being a marked up extract of the Prospectus.
Document 1 (Category D)
Signed Due Diligence Report — Volume 1 — Public Offering of Shares in Tabcorp Holding Limited signed by 1 Renard of ARH
The question to be determined is whether the descriptions in the Schedule provide an adequate basis for a claim of privilege.
Requirements in establishing a claim to privilege
A party claiming privilege is required to identify and prove that the “dominant purpose” which led to the making of a confidential communication was for the provision of a legal advice by a lawyer to a client.[5] “Dominant purpose” refers to the “ruling, prevailing, or most influential purpose”.[6] If there is more than one purpose, and they are of equal weight, no privilege inheres in the communication.[7] The dominant purpose is determined objectively, having regard to the evidence, the nature of the document and the parties’ submissions.[8]
[5] Carnell v Mann (1998) 89 FCR 247, 253 (Higgins, Lehane and Weinberg JJ).
[6]Federal Commissioner of Taxation v Spotless Services Ltd (1996) 186 CLR 404, 416 (Brennan CJ, Dawson, Toohey, Gaudron, Gummow and Kirby JJ).
[7] Sparnon v Apand Pty Ltd (1996) 68 FCR 322, 328 (Branson J); Esso Australia Resources Ltd v FCT (1999) 210 CLR 49, [76].
[8] Grant v Downs (1976) 135 CLR 674, 677 (Barwick CJ), 682 and 689 (Stephen, Mason and Murphy JJ); Commissioner of Taxation (Cth) v Pratt Holdings Pty Ltd [2005] FCA 1247 at [30(3)] (Kenny J).
In Barnes v Commissioner of Taxation the Full Federal Court held that support for a claim of privilege must be “focused and specific”.[9] Verbal formulae and bare conclusory assertions of purpose would not be sufficient to make out a claim for privilege.[10]
[9][2007] FCAFC 88.
[10] Barnes v Commissioner of Taxation (Cth) [2007] FCAFC 88, [18]–[19] (Tamberlin, Stone and Siopis JJ); Buzzle Operations Pty Ltd (in liquidation) and Another v Apple Computer Australia Pty Ltd (2009) 74 NSWLR 469, [9], [21] and [22] (White J); Blackrock Asset Management Australia Services Ltd v Waked (No 2) [2011] FCA 479, [18] (Perram J); Krok v Szaintop Homes Pty Ltd (No 1) [2011] VSC 16, [15] (Judd J); Kennedy v Wallace (2004) 142 FCR 185, [145], [167]–[173] (Allsop J).
In Bailey v Director-General, Department of Land and Water Conservation,[11]the New South Wales Court of Appeal held that particularly where the State, or agencies of the State are involved, every effort should be made to ensure that evidence in support of a claim for privilege is in all respects “adequate and compelling”. The Court said:
Furthermore, and particularly where agencies of the state are litigants, every effort should be made not only to ensure that the rules are complied with, but also to ensure that evidence in support of a claim for privilege is in all respects adequate and compelling. It would be both inappropriate and risky for the inadequacies to which I have referred to be ignored simply upon the basis that the judge can inspect the documents and decide the issues for him or herself. Such a course involves expenditure of considerable time on the part of the judge which, although it cannot be totally avoided, may well be able to be reduced where, as was said in Barnes, “focussed and specific evidence” has been filed in support of a claim for client legal privilege.[12]
[11] (2009) 74 NSWLR 333.
[12]Ibid [45] (Tobias JA, with Allsop P and Hodgson JA agreeing) (emphasis added).
In the recent decision of Krok v Szaintop Homes Pty Ltd (No 1),[13] Judd J dealt with the nature of the evidence required to establish a claim of privilege as follows:
Ordinarily, a party amenable to a discovery obligation, from whom disclosure is sought, must establish a claim to client legal privilege if that party is to be relieved from a disclosure obligation on that basis. Evidence is required. Mere assertions and conclusions are not sufficient. The evidentiary foundation may, of course, be augmented by inspection, although inspection alone can rarely, if ever, establish a claim.
…
The evidence advanced in support of a claim for client legal privilege attaching to a document must at least establish the purpose for which the document was made, identify the maker and the party for whom the document was prepared, and establish the elements of confidentiality. In my opinion, the evidence advanced on behalf of the trustee was inadequate to support its claims. In her affidavit sworn 17 December 2010, Ms Kavadas verified the matters set out in a schedule which described each of the documents and the ‘Basis of Claim of Privilege or Confidentiality’. Verification of the basis for the claim of privilege or confidentiality is not evidence of confidentiality.[14]
Do the descriptions provide an adequate basis for a claim of privilege?
[13][2011] VSC 16.
[14]Ibid [15], [17].
Tabcorp submitted that the descriptions provided in the Schedule of Challenged Documents are insufficient to establish a basis of the privilege claim in accordance with established principle.
Tabcorp pointed to several deficiencies in the State’s supporting evidence. It submitted that the relevant purpose of a communication is that of the maker of the communication over which privilege is sought,[15] and cannot be proved by “mere assertion by a third party”.[16] Tabcorp contended on the basis of this principle, that the State’s reliance on the affidavit of Mr Tabe, a third party, fails to provide probative evidence as to the intention of the makers of the Challenged Documents.
[15]Singapore Airlines v Sydney Airports Corporation [2004] NSWSC 380, [30] (McDougall J); Seven Network Ltd v News Ltd [2005] FCA 142, [3] (Tamberlin J).
[16] Re Southland Coal Pty Ltd (recs & mgrs apptd) (in liq) [2006] NSWSC 899, [14(g)] (Austin J).
Senior counsel for Tabcorp emphasised that the critical issue made plain by the authorities is that evidence is required as to the purpose of the maker of the document over which the privilege is claimed, sufficient to satisfy the court that the dominant purpose was the provision of legal advice to the State. Tabcorp contended that the State’s evidence, as set out in the Connor and Tabe affidavits, consists of assertions and generalised comments, and does not meet the standards described in the authorities.
In relation to many of the Challenged Documents it was submitted that the claim of privilege is based on transactional advice provided in the context of the Float, which would have involved commercial matters. The purpose of the communications may not have been only, or even mostly, to provide legal advice to the State. This is especially so regarding the role of a party such as Centaurus, in providing financial advice to the State. In order to establish privilege in such a case, further substantiation is required, directed at proving that each communication from ARH to the party was for the dominant purpose of ARH providing legal advice to the State.
The State submitted that the current case is one in which inferences as to whether the communication comprised legal advice, and whether this was its dominant purpose, may be drawn from the descriptions provided in the Schedule of Challenged Documents.
The State noted Austin J’s view in Re Southland Coal Pty Ltd, that evidence of a lawyer regarding his/her client’s motivation in creating a communication is not in itself sufficient to establish the dominant purpose of the communication.[17] However, the State argued that it is not always necessary to adduce evidence of purpose of a communication from its maker. In support of this, the State pointed to Austin J’s further statement that a lawyer may be in the position to give admissible evidence regarding the circumstances surrounding the communication. Consideration of the context, together with inferences from the documents themselves, may establish privilege.
[17](2006) 59 ACSR 87; [2006] NSWSC 899, [28] (Austin J).
Further, the State submitted that the purpose of a communication can in some circumstances be inferred from the purpose of the lawyer’s retainer. In accordance with Austin J’s reasons in Re Southland Coal Pty Ltd, no negative inference should be drawn from the absence of direct evidence as to purpose from the authors. Privilege can be inferred from the context, and it is unnecessary to adduce evidence of the author of each document. [18]
[18]Ibid [30].
As alternative support for its claim, the State relied upon the principle that privilege extends to documents which are part of a “continuum” of legal advice.[19] Such a ‘continuum’ existed between the State and ARH and Minter Ellison, and communications prepared by or that passed between third parties, that were prepared or communicated for the dominant purpose of the State being provided legal advice by ARH in relation to the TAB float.[20] Alternatively, the State submitted that the confidential communications in the Challenged Documents are inextricably linked to the nature of the professional legal services being provided to the State, and are therefore privileged.[21]
[19] Balabel v Air India [1988] 2 All ER 246, 254 (Taylor LJ); BHP Billiton Olympic Dam Corporation Pty Ltd v Bluestone Apartments Pty Ltd [2013] SASC 64, [62]-[63] (Anderson J).
[20]Pratt Holdings Pty Ltd v Commissioner of Taxation 136 FCR 357, [85], [87] (Stone J); Re Southland Coal Pty Ltd (recs & mgrs apptd) (in liq) (2006) [2006] NSWSC 899, [14(f)] (Austin J); Spotless Group Ltd v Premier Building & Consulting Group Pty Ltd (2006) 16 VR 1, [52] (Neave JA).
[21]Spotless Group Ltd v Premier Building & Consulting Group Pty Ltd [73] (Neave JA), citing Rickard Constructions Pty Ltd v Rickard Hails Moretti Pty Ltd [2006] NSWSC 234, [59].
In my view, the State has failed to make out a sufficient evidential foundation for its claim of privilege. The evidence is not sufficiently “focused and specific”, and directed to the requirements of legal advice and the dominant purpose of such advice. The descriptions provided do not satisfy this standard. They are inadequate in establishing that the Challenged Documents were for the dominant purpose of ARH’s provision of legal advice to the State, and therefore do not satisfy the requirements of client legal privilege under s 118 (a), (b) or (c). Some of the communications included in the Challenged Documents relate to agreements to which the State was not party, and cannot be understood to be directed at providing legal advice to the State. Even on Mr Tabe’s evidence, the Challenged Documents include communications which he did not believe to be legal advice. The position is not improved by the general evidence contained in the affidavits in support.
The Court’s discretion to inspect documents over which privilege is claimed
Both parties noted the discretion conferred on the Court under s 133 of the Evidence Act to inspect documents for the purpose of determining the question of privilege.[22]
[22]See also Rule 29.13 of the Supreme Court (General Civil Procedure) Rules 2005 (Vic).
Section 133 provides:
If a question arises under this Part relating to a document, the court may order that the document be produced to it and may inspect the document for the purpose of determining the question.
With regard to the exercise of this discretion, however, a party claiming privilege cannot delegate to the Court the task of establishing that the privilege exists.[23] Adequate materials must be put before the Court to allow the claim to be entertained. As Tobias JA said in Bailey v Director-General, Department of Land and Water Conservation:
…the power under s 133 to inspect documents cannot be used as a substitute for admissible evidence to support the various elements necessary to establish privilege so that if evidence in respect of any one of those elements is missing, the gap cannot be filled by an inspection of the documents. [24]
[23]Bailey v Director-General, Department of Land and Water Conservation (2009) 74 NSWLR 333, [2] (Allsop P), [57] (Tobias J).
[24](2009) 74 NSWLR 333, [57].
In the absence of adequate substantiating evidence, the utility of inspecting the documents is also questionable, as examination of the terms of the documents alone may not answer the question of whether of not they were brought into existence for the dominant purpose of providing or receiving legal advice.[25]
[25]See Telstra Corporation Ltd v Minister for Communications, Information Technology and the Arts (No 2) [2007] FCA 1445, [40] – [41] (Graham J).
G. Extent of privilege — the second issue
Tabcorp contends that any privilege, if established, does not extend to third parties who are not agents of the State such as Centaurus and Price Waterhouse (“the Consultants”). Third parties who are agents are specifically included in the definition of client (s 117(1)(b) of the Evidence Act).
Tabcorp submitted that the Consultants could not be agents because their terms of engagement specifically stated that they were not agents and unless the documents were a sham, they should be given full effect.
The State contended that the Consultants were relevantly agents of the State.
The Consultants had the State’s express authority to communicate with its lawyers. Indeed, the scope of their retainers required them to do so. In the case of Centaurus, attachment 1 to the letter of engagement dated 4 January 1994 included the following required services, all of which necessarily involve communication with legal advisors and all of which were necessary to allow the State to obtain legal advice:
•Co-ordinate the activities of other specialist advisers.
•Assist in negotiation and preparation of an Underwriting Agreement. This must also have involved legal advisers.
•Lead and oversee the due diligence review.
•Oversee the preparation of a prospectus.
•Ensure proper contract arrangements between the Government, the TAB and Racing.
•Oversee as requested legislation to bring about the float.
In the case of Price Waterhouse, the letter of engagement dated 24 February 1994 included the following required services, all of which necessarily involve communication with legal advisors and all of which were necessary to allow the State to obtain legal advice:
•Advice on capital structure for the business, in conjunction with the financial advisor.
•Full accounting due diligence review.
•Relevant input into the preparation of a prospectus, including preparation of an Investigating Accountant’s Report on actual and forecast financial information contained therein.
Clause 8 of Centaurus’ letter of engagement provided that:
Centaurus is engaged as an independent adviser and consultant and nothing in this letter of engagement shall be deemed to constitute Centaurus as an agent or employee of the State and Centaurus shall not have any authority to incur and shall not incur any obligation or make any representation on behalf of the State of Victoria except with the express written instructions of the State’s Representative.
Clause 9 of Price Waterhouse’s letter was in the same terms.
These clauses do not of themselves establish that the Consultants were not agents of the State for the purposes of obtaining legal advice. As stated by Finn J: ”…parties cannot by the mere device of labelling, no matter how genuinely intentioned, either confer a particular legal character on a relationship that it does not possess or deny it a character that it does possess.”[26] If the actual incidents and content of the relationship to which the parties have consented is one upon which the law imposes the consequences which result from agency, their denial of an agency relationship may be disregarded.[27]
[26]South Sydney District Rugby League Football Club Ltd v News Ltd [2000] FCA 1541, [134].
[27]Ibid [135]. See also G E Dal Pont, Law of Agency (2nd Edition, 2008) [1.5].
The fact that the retainers required tasks that necessarily involved communication with the State’s legal advisors, and tasks that were required to enable the State to receive legal advice, indicates that the State gave the Consultants authority to communicate with the legal advisors on its behalf. The right to receive communications from the State’s legal advisors, and to provide them with information confidential to the State, is not an independent right that the consultants already possessed. It was an authority specifically conferred by the State. It is this authority that relevantly constituted the Consultants as agents for the specific purpose identified.
These clauses, read in the context of the entire agreement, are clearly intended to establish that the Consultants do not have authority to bind the State vis-à-vis third parties. In circumstances where the retainer requires the Consultants to communicate with legal advisors, these clauses cannot be taken to mean that the Consultants did not have authority to communicate with legal advisors on behalf of the State. The fact that the scope of the agency did not extend to entering into binding agreements with third parties says nothing about whether it extended to communicating with legal advisors on the State’s behalf.
Finally, the key question is not whether the Consultants were the State’s agents generally, which clearly they were not, but whether they were agents for the purposes of obtaining legal advice. This is revealed by the reasoning of Cotton LJ in Wheeler v Le Marchant:
It is said that as communications between a client and his legal advisers for the purpose of obtaining legal advice are privileged, therefore any communication between the representatives of the client and the solicitor must be also privileged. That is a fallacious use of the word, “representatives”. If the representative is a person employed as an agent on the part of the client to obtain the legal advice of the solicitor, of course he stands in exactly the same position as the client as regards protection, and his communications with the solicitor stand in the same position as the communications of his principal with the solicitor. But these people were not representatives in that sense. They were representatives in this sense, that they were employed on behalf of the clients ... to do certain work, but that work was not the communicating with the solicitor to obtain legal advice. So their communications cannot be protected on the ground that they are communications between the client by his representatives and the solicitor.[28]
[28](1881) 17 Ch D 675, 684 (emphasis added).
As pointed out by the State, the corollary of this is that where the work the representative is employed to do does include communicating with the solicitor to obtain legal advice, then the representative is relevantly an agent who is protected by the privilege. The agency can extend both to giving and receiving legal advice.[29]
[29]DSE (Holdings) Pty Ltd v InterTan Inc (2003) 135 FCR 151, [94].
In my view the Consultants were agents in the relevant sense. However, a finding that for the purpose of privilege the Consultants were agents of the State says nothing about whether the dominant purpose of the documents was legal advice or indeed whether the documents are relevant.
If I am wrong and the Consultants were not agents of the State notwithstanding the clear limited agency referred to above, s 118(c) would still have limited application in the circumstances referred to in that section — namely the preparation of confidential documents. If they are not agents, documents that go beyond these documents will not be privileged unless the decision in Pratt Holdings Pty Ltd v Commissioner of Taxation[30] is applicable and remains good law. In Pratt Holdings there was a specific finding that the third party was not an agent but was still covered by the privilege.
[30](2004) 136 FCR 357 (“Pratt Holdings”).
In Pratt Holdings Finn J said:[31]
To deny that a third party is an agent in such circumstances does not, though, provide a sufficient or principal reason for denying privilege to the documentary communication (or contents) it has authored. The important consideration in my view is not the nature of the third party’s legal relationship with the party that engaged it but, rather, the nature of the function it performed for that party. If that function was to enable the principal to make the communication necessary to obtain legal advice it required, I can see nor reason for withholding the privilege from the documentary communication authored by the third party. That party has been so implicated in the communication made by the client to its legal adviser as to bring its work product within the rationale of legal advice privilege.
[31]Ibid [42].
Stone J (with whom Merkel J agreed) said that:[32]
The coherent rationale for legal professional privilege developed by the High Court does not lend itself to artificial distinction between situations where that expert assistance is provided by an agent or alter ego of the client and where it is provided by a third party. Nor, in my view, should the availability of privilege depend on whether the expert opinion is delivered to the lawyer directly by the expert or by the client. Provided that the dominant purpose requirement is met I see no reason why privilege should not extend to the communication by the expert to the client.
[32]Ibid [106].
Pratt Holdings was not a case concerning s 118 and the specific reference to agent in s 117(1)(b). As a consequence of Pratt Holdings, the Evidence Act was amended and s 118(c) was introduced to protect confidential documents prepared by third parties, whether agents or not.
To the extent that s 118(c) is restricted to confidential documents prepared by third parties, whether agents or not, the question remains whether post Pratt Holdings ‘client’ as used in s 118(a) and (b) and specifically defined to include an agent can include a party who is not called an agent (or who is specifically recorded as not being an agent) but who relevantly has an agency function so far as any communication or document (for the dominant purpose of legal advice) is concerned.
Tabcorp submitted that Pratt Holdings has no application because s 118(c) was specifically introduced to give effect to the vice perceived in Pratt Holdings. The State argues that the case still has residual application.
In view of the decision I have come to it is not necessary to resolve this issue and I do not propose to do so. However, I am inclined to the view that Pratt Holdings does not apply.
H. Joint Privilege — the third issue
Relevant legal principles
Legal professional privilege may exist as a joint privilege. Such a joint privilege arises most clearly where two or more parties explicitly jointly retain a lawyer in relation to the same matter. A joint privilege can also arise where there is a formal legal relationship between two or more parties and one of those parties communicates with a lawyer for the dominant purpose of obtaining legal advice, and the other parties share an interest in the subject matter of the advice obtained.[33] For example, a trustee/beneficiary relationship may give rise to joint privilege where the trustee receives legal advice for the benefit of the trust.[34]
[33]Schreuder v Murray (No 2) (2009) 41 WAR 169, [9] (Pullin JA), citing Farrow Mortgage Services Pty Ltd (In liq) v Webb (1996) 39 NSWLR 601, 608 (Sheller JA); [64] (Buss JA).
[34]See, eg, Clarke v Great Southern Finance Pty Ltd (receivers and managers appointed) (in liq) [2012] VSC 260.
The holders of a joint privilege have no confidence against each other, but are able to maintain their privilege against others.[35] Further, as ss 118 and 119 of the Evidence Act require the existence of a “confidential communication” or “confidential document”, where issues of joint interest arise, the party claiming the privilege must establish that the communications or documents were to be kept confidential from the other parties.[36]
[35]Farrow Mortgage Services Pty Ltd (in liq) v Webb (1996) 39 NSWLR 601, 608; Mercantile Mutual Insurance (NSW Workers Compensation) Ltd v Murray [2004] NSWCA 151, [41] (Mason P).
[36]Krok v Szaintop Homes Pty Ltd (No 1) [2011] VSC 16, [21], [24], [25] (Judd J).
Section 124 of the Evidence Act applies where one party of a joint retainer is involved in proceedings against one or more of the other parties to the joint retainer and the joint retainer relates to a matter connected to the proceedings. The section excludes the operation of ss 118 and 119 of the Evidence Act, which would otherwise prevent the adducing of privileged material at trial. Section 124 is as follows:
124 Loss of client legal privilege – joint clients
(1)This section only applies to a civil proceeding in connection with which 2 or more parties have, before the commencement of the proceeding, jointly retained a lawyer in relation to the same matter.
(2)This Division does not prevent one of those parties from adducing evidence of
(a)a communication made by any one of them to the lawyer; or
(b)the contents of a confidential document prepared by or at the direction or request of any one of them –
in connection with that matter.
‘Joint retainer’ under s 124 has been given an expansive definition.[37] There is no need for specific contractual documents between each of the parties and the lawyer. Nor are all of the parties required to have communicated with, instructed or received advice directly from the lawyer.[38] Rather what is contemplated is that the advice was sought ‘for the benefit’ of the other joint privilege holders.[39] Whether a lawyer has been jointly retained can be determined by looking at the relationship between the parties, the relationship between the parties and the lawyer and the factual context of the retainer/advice.
[37]See Re Doran Construction Pty Ltd (in liq) [2002] NSWSC 215, [76], [81] (Campbell J).
[38]Clarke v Great Southern Finance Pty Ltd (receivers and managers appointed) (in liq) [2012] VSC 260, [43], [46] (Sifris J).
[39]Great Southern Managers Australia Ltd (receivers and managers appointed) (in liq) v Clarke [2012] VSCA 207, [21], [23].
For example, in Re Doran Constructions Pty Ltd (in liq), Campbell J had regard to the fact that the parties were not excluded from the advice given and that they had not sought advice from other lawyers:
In my view, there was a joint retainer in the present case. While the impetus for the transaction was, I accept, that Doran Holdings had been asked by its financiers to clean up its intercompany loan accounts, that ‘cleaning up’ process required cooperative action on the part of all four companies involved. There is no basis for believing that any of the companies whose cooperation was involved, were excluded from the advice which was given. Certainly none of them sought advice from anyone other than Mr Freeman.[40]
[40](2002) 194 ALR 101, [56].
In Farrow Mortgage Services Pty Ltd (in liq) v Webb, Sheller JA looked to the formal legal relationship between the parties finding that:
Communications by one partner about the affairs of the partnership or a trustee about the affairs of the trust are examples. Implicit in the relationship is the duty or obligation to disclose to other parties thereto the content of the communication. Accordingly no privilege attaches to such communications as against others who, with the client, share an interest in the subject matter of communication. [41]
[41](1996) 39 NSWLR 601, 608.
In Pioneer Concrete (NSW) Pty Ltd v Webb, Simos J looked to the objectively determined knowledge of the parties and the true substance of the retainer to make a finding of joint retainer as, among other things:
…the defendant did have the view that the communications from the barristers were communications to him as a client, and did believe on reasonable grounds that the lawyers giving advice were his lawyers so as to entitle the defendant to privilege ... the true substance of the arrangements between the lawyers and the company was to the effect that the lawyers would advise as clients both the company and the former directors in their personal capacities although all legal fees were to be paid by the company.[42]
[42](1995) 18 ACSR 418, 422-423 (Simos J).
Further, in Clarke v Great Southern Finance Pty Ltd(receivers and managers appointed) (in liq), I had regard to the interest of the relevant party, a beneficiary, in the advice received by the trustee for the benefit of the trust:
It is precisely because of this very relationship that the plaintiffs shared a very real direct interest in the advice and as a consequence are entitled (as all parties agree) to joint privilege over the relevant document. [43]
[43]Clarke v Great Southern Finance Pty Ltd (receivers and managers appointed) (in liq) [2012] VSC 260, [51].
The Court of Appeal agreed with this finding, stating that:
The section does not require all of the joint privilege holders to expressly retain the lawyer: it encompasses cases where one joint privilege holder retains the lawyer for its benefit and for the benefit of the other joint privilege holders.[44]
[44]Great Southern Managers Australia Ltd (receivers and managers appointed) (in liq) v Clarke [2012] VSCA 207, [21].
In addition to the joint retainer, to attract the application of s 124, there must also be a connection between the proceeding in which the evidence is being adduced and the matter regarding which the parties retained a lawyer.[45] The documents have been discovered and no party suggested there was no relevant connection.
The parties’ submissions
[45]Clarke v Great Southern Finance Pty Ltd (receivers and managers appointed) (in liq) [2012] VSC 260, [53]-[62].
Tabcorp relied on s 124, submitting that the Challenged Documents are subject to joint privilege arising from a joint retainer and thus Tabcorp was able to adduce them notwithstanding ss 118 and 119 of the Evidence Act.
The State’s submission had essentially two elements. First, the State argued that TAB and Tabcorp were mere emanations of the State and thus there was only one party insofar as s 124 is concerned and no joint retainer could arise. Secondly, even if TAB and Tabcorp were sufficiently distinct from the State, they did not receive any benefit from, nor did they have a sufficient interest in, the advice to support a finding of joint retainer.
The State relied on the high degree of control it had exercised over TAB, for example in appointing TAB board members and approving TAB’s internal rules and expenses. Relying on cases that dealt with Crown immunity, the State said this degree of control suggested that TAB enjoyed the status, rights and liabilities of the State and thus was not a separate entity for the purpose of s 124 but a mere emanation or alter-ego of the State.[46] The State submitted that insofar as TAB or Tabcorp directors or representatives were provided with documents or dealt with ARH, they did so as part of the State and not for TAB or Tabcorp. In relation to the benefit of the advice, the State argued, among other things, that ARH was engaged by the State for the State’s own benefit and was paid from the State’s own funds; that the State was not required to deal with the TAB in any particular way; and that the benefit of the Float went to the State and not to TAB. These factors were all said to suggest that the State did not engage ARH to provide any legal advice for the benefit of TAB or Tabcorp.
[46]Superannuation Fund Investment Trust v Commissioner of Stamps (SA) (1979) 145 CLR 330, 342 and 348 (Stephen J); Roads Corporation v Pearse [2012] VSC 527, [8], [13] (Bell J).
Tabcorp contended that TAB and Tabcorp were separate legal entities with their own interests and responsibilities separate to those of the State. Further, TAB and Tabcorp actively participated in the discussions and legal advice leading up to the Float and separately received the benefit of the advice apart from benefits received by the State. Tabcorp submitted that both TAB and Tabcorp needed legal advice to navigate the complexities of the Float transaction. As neither of them engaged other lawyers, according to Tabcorp it was clear that ARH was responsible for advising them in addition to the advice ARH gave to the State.
The relevant facts
To determine whether a joint retainer arose in this case it is necessary to look at the relationship between the State and TAB and Tabcorp, and between ARH and TAB and Tabcorp.
TAB, as a statutory corporation, had an independent legal existence to the State. It was capable of incurring legal obligations and liabilities and of suing and being sued. Tabcorp, as a company governed by the Corporations Law, was also not merely a division or operation of the State.
TAB and Tabcorp were also treated and acted as entities distinct from the State. For example, TAB had its own representative on the Steering Committee and on the DDC in addition to that of the State. TAB was actively and inextricably involved in the Float and was not just a ‘factual’ component of the legal advice being received. Rather, TAB made its own contributions and suggestions to the transaction and incurred its own significant legal obligations and risks through the float process. For example, TAB reviewed and commented on the proposed legislation to enable the privatisation and float.[47] Tabcorp and its subsidiaries were parties to a number of key agreements — particularly those dated 25 May described above — which the State was not a party to.[48] The terms of these agreements were all negotiated by ARH with Clayton Utz acting for the Racing Industry (the relevant counter party).
[47]See above [28].
[48]See above [26].
While the State did exercise some control over both TAB and Tabcorp, that control does not preclude the existence of both entities as distinct from the State.
ARH also took many active steps for both TAB and Tabcorp, providing them with legal services directly and not intermediated by the State. ARH prepared and lodged numerous forms and documents with the ASC in respect of Tabcorp (including the final Prospectus);[49] it distributed draft documents such as the Prospectus to TAB for its review;[50] and it certified that documents referred to in the Prospectus were true and correct with certificates stating that ARH was “authorised by Tabcorp Holdings Limited” to do so. Indeed, when writing to the ASX, ARH refers to itself as “TABCORP’s lawyers”,[51] and in correspondence to TAB, ARH refers to itself as providing “legal services to” Tabcorp.[52] Further, ARH attended Tabcorp board meetings between April and July 1994 and the meetings of Tabcorp’s wholly-owned subsidiaries. Minutes from those meetings were prepared by ARH.[53]
[49]See above [29]–[39]
[50]See above [40].
[51]See above, [51].
[52]See above [66].
[53]See above [65].
The due diligence procedure is also informative of the relationships between the parties. The entire due diligence process and the work of the DDC was for the use of Tabcorp in the preparation of the Prospectus. Throughout the due diligence process TAB and Tabcorp received reports and letters from ARH and the DDC including draft Due Diligence Reports and advices from ARH regarding the DDC. The DDC’s final report was issued on 30 June 1994 and sent to all members of the committee, including Tabcorp and TAB.
Finally, throughout all of the above ARH were the only solicitors advising the State and its entities. TAB and Tabcorp did not engage any lawyers themselves nor were they advised by other lawyers apart from ARH pursuant to the State’s retainer.
Conclusion regarding s 124
In light of the above facts, in my view it is clear that, for the purposes of s 124, TAB and Tabcorp were separate entities from the State and they were capable of being, and indeed were, embraced by a joint retainer with the State of ARH. Further, it is clear that TAB and Tabcorp both had interests in the advice provided by ARH, which advice was sought for their benefit by the State.[54]
[54]Great Southern Managers Australia Ltd (receivers and managers appointed) (in liq) v Clarke [2012] VSCA 207, [21], [23].
TAB and Tabcorp had their own distinct interests, obligations and considerations separate to those of the State. They were not mere emanations of the Crown or the State’s ‘alter-ego’. The Float involved TAB and Tabcorp in complex legal negotiations, incurring serious legal obligations and taking on legal risks. For this purpose both TAB and Tabcorp required legal advice and that advice was given by ARH pursuant to the State’s retainer and through no other lawyers. None of the relevant advices were withheld from TAB or Tabcorp. Indeed, ARH took active steps for both TAB and Tabcorp, distributed advices and material to TAB and Tabcorp and conducted itself as if TAB and Tabcorp were ARH’s clients.
While there was no formal retainer document between TAB and Tabcorp and ARH, none is necessary.[55] Indeed, despite the lack of such a document it appears that TAB and Tabcorp were actively engaged with ARH in both instructing and receiving advice and legal services from ARH. Though I have not found that TAB and Tabcorp were in a trust-like relationship with the State, it is clear that the State engaged ARH to advise TAB and Tabcorp and the facts show that the retainer was for their benefit. This is sufficient for a finding of joint retainer under s 124.
[55]Clarke v Great Southern Finance Pty Ltd (receivers and managers appointed) (in liq) [2012] VSC 260, [43], [46].
Finally, in my opinion, the joint privilege held by TAB can properly be claimed by Tabcorp. Tabcorp, in its own right, is entitled to joint privilege at least from the date of its incorporation (13 April 1994) which was many months before the Float. In relation to the earlier period, TAB had a joint privilege. I am satisfied that Tabcorp as successor in title to TAB is entitled to the benefit of the joint privilege between the State and TAB.[56]
[56]Tabcorp was properly a successor to Tab. Under ss 150–153 of the GBA all property and rights of TAB vested in Tabcorp and its subsidiaries. Successor is to be given a broad meaning: see Retravision (NSW) Ltd v Copeland (Unreported, Supreme Court of New South Wales, Young J, 8 October 1997).
I. Waiver — the fourth issue
It is not strictly necessary to deal with this issue and I do not propose to do so. Clearly the documents specifically provided to TAB or Tabcorp[57] may well provide the basis for a claim of waiver of privilege. However, it is not possible to tell at this stage how the documents will be used in a manner that is inconsistent with the maintenance of a claim for privilege.
[57]It is unclear precisely what documents were provided. In a letter dated 28 September 1994 two discs were sent by ARH to Tabcorp. They were said to contain a copy of the due diligence database.
J. Disposition
For the reasons given the claim for sole privilege in relation to the Challenged Documents fails and Tabcorp is entitled to inspect all of the Challenged Documents.
25
32
0