Tanami Gold Nl v Metals X Ltd

[2016] WASC 215

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   TANAMI GOLD NL -v- METALS X LTD [2016] WASC 215

CORAM:   KENNETH MARTIN J

HEARD:   ON THE PAPERS, SUBMISSIONS OF 27 MAY, 13 JUNE 2016

DELIVERED          :   19 JULY 2016

FILE NO/S:   CIV 1537 of 2015

BETWEEN:   TANAMI GOLD NL

First Plaintiff

TANAMI (NT) PTY LTD
Second Plaintiff

AND

METALS X LTD
Defendant

Catchwords:

Legal professional privilege - Objections to inspection by defendant - Redactions to email by defendant objected to by inspecting party

Legislation:

Nil

Result:

Rulings on assertions of legal professional privilege over three redactions to produced email

Category:    B

Representation:

Counsel:

First Plaintiff                :     No appearance

Second Plaintiff            :     No appearance

Defendant:     No appearance

Solicitors:

First Plaintiff                :     Allen & Overy

Second Plaintiff            :     Allen & Overy

Defendant:     Tottle Partners

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

Brambles Holdings Ltd v Trade Practices Commission (No 3) (1981) 58 FLR 452

Coal Hub Pty Ltd v NSL Consolidated Ltd [2016] WASC 203

Komacha v Orange City Council (Unreported, NSWSC, 30 August 1979)

Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd (No 4) [2010] FCA 863

1. KENNETH MARTIN J:  I am dealing with the plaintiffs' application of 9 May 2016 seeking orders for production and inspection of an unredacted copy of the defendant's discovered document 162.  The document is identified under attachment A to the verifying affidavit of the defendant's director, Peter Gerard Cook, towards the defendant's supplementary list of discoverable documents ‑ Mr Cook's affidavit being sworn on 13 November 2015.

2. The case manager has referred the plaintiffs' contested inspection application to me, given the underlying legal professional privilege issues associated with the challenged aspects of document 162.  Hence, there is a dispute in relation to a revelation of asserted legal advice received by the defendant.  There arises as well here a correlative need for the presiding judicial officer resolving the objection to inspection to inspect the relevant document in order to properly evaluate the challenged assertion of legal professional privilege by the defendant.

3. For the purposes of the exercise, I issued some consensual directions on 18 May 2016.  They provided for an agreed exchange of written submissions and any further affidavit evidence from the parties.  I subsequently received a further affidavit on behalf of the plaintiffs by a legal practitioner acting on their behalf.  This is the affidavit of David Ashley Jenaway, sworn 6 May 2016.

4. It is unnecessary to recount the content of the Jenaway affidavit in detail, other than to note it contains a significant amount of passing correspondence between the respective solicitors acting for the parties over time.

The arguments

1. The plaintiffs invoke in support of their application to be allowed inspection of a wholly unredacted copy of document 162, a principle which they say establishes there is a clear distinction between on the one hand, the confidential circulation of legal advice within a corporate client (which subject to waiver considerations may retain its privileged status), in contrast to the comments or recommendations made by officers of a corporation having regard to that legal advice (which will not be privileged on the basis that they are a 'activity of the corporation - whether or not the advice is followed).  See Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd (No 4) [2010] FCA 863 [22] ‑ [23] (Logan J), that decision referring in turn to reference by Franki J in Brambles Holdings Ltd v Trade Practices Commission (No 3) (1981) 58 FLR 452, 458 ‑ 459 to a passage from the judgment of Rath J in Komacha v Orange City Council (Unreported, NSWSC, 30 August 1979).

2. For its part the defendant resists the demands of the plaintiffs for an inspection of the three redacted aspects of this document.  It does so having earlier made concessions in respect of previously greater levels of redactions to this document.  But the defendant has maintained its assertion of legal professional privilege for confidential legal advice it says it received in respect of three redacted portions of sentences or parts of sentences found within pars 6, 14 and 16 of the document.

Document 162:  contextual considerations

1. Document 162 is a communication by email of 16 April 2015 at 5.56 pm ‑ circulating between the board of directors of the defendant corporation.  Mr Cook as the author of the email dispatched it primarily to Mr Andrew Ferguson.  But he sent it as well to his fellow Metals X directors Messrs Newton, Heggen, Cmriec and Hallam.

2. Mr Cook's email appears to have been sent in response to Mr Ferguson's communication to him earlier the same day, at 4.09 pm (again, this document was copied by Mr Ferguson to the other Metals X directors).  Under this communication, Mr Ferguson had said to Mr Cook, inter alia:

   … it would be useful to me if I could have a full explanation of precisely what is going on, what is being alleged and what is being claimed by Tanami.

   I need to understand the current unfolding legal situation … To understand what we are trying to achieve please send me, as a member of the [defendant] board, complete copies of all legal advice and correspondence received or sent, including councils [sic] opinion with regard to [the defendant's] claim against Tanami for breach of contract, including any further advice that [the defendant] may have received subsequent to Monday's Tanami shareholder vote.

   In addition, and as previously mentioned, I require an explanation about what Tanami is claiming from [the defendant], ie potential consequences and outcomes, the amount of damages, and a sensible estimate of the total cost to [the defendant] that may arise from these proceedings …

3. On the face of it, the scenario of a response from Mr Cook to Mr Ferguson as a fellow Metals X director, responding to Mr Ferguson's request to see the legal advice which had been obtained by the defendant in respect of a dispute with another corporation (Tanami), displays a clear capacity to attract the protections of legal professional privilege.  A corporation through its governing board of directors may need to candidly discuss legal advice received by the corporation in respect of a dispute concerning the business affairs of the corporation.

4. That was the context in which Mr Cook sent back his longish reply email of Thursday 16 April 2015 at 5.56 pm, which is document 162.  As indicated, the entirety of the email has not been made the subject of a claim of privilege by the defendant against inspection.  Rather, it is now only the three components (or part components) of sentences which have been the subject of redaction that are maintained as privileged and which remain subject to challenge.

Document 162:  content

1. Defending the maintenance of confidentiality and legal professional privilege over the three residually redacted portions of document 162, the defendant provided an affidavit of Jesse Ann Earl ‑ a solicitor having the day‑to‑day conduct of the matter on behalf of the defendant, sworn 10 June 2016.

2. Ms Earl provides the court confidentially with an unredacted copy of this email of Mr Cook, being document 162 ‑ which I have now reviewed in conducting my evaluation of the defendant's maintained privilege claim as regards the three redacted sentences or part sentences.

3. The defendant through its solicitors has also provided me with a written outline of submissions of 10 June 2016 to support the position taken.  The parties have denoted the redacted sentences or part sentences by reference to the sequentially numbered paragraphs of Mr Cook's email.  The plaintiffs (applicants) obviously have not seen the redacted portions of Mr Cook's email, which I have now seen and considered.

4. This is one of those situations in which it is both necessary and helpful for the court in reaching a decision about the redacted material to view the material at issue, and evaluate it in overall context.

5. There has been no arguments put suggesting any clash as between the parties over the underlying principles of law governing an application of this kind.  I note also the recent decision of Le Miere J in Coal Hub Pty Ltd v NSL Consolidated Ltd [2016] WASC 203, particularly at [17] and [27] - [29].

6. The challenge as it is articulated under the plaintiffs' written submissions effectively is put on a two‑fold basis.  First, the plaintiffs would contend against the availability in the circumstances of a proper claim for legal professional privilege.  Second, if that is not accepted, then they further contend, based upon the surrounding content of document 162, particularly the following sentences to each relevantly redacted portion of the email ‑ that there has been a waiver of privilege by the defendant, in all the circumstances.  To that end the Federal Court decision to which I earlier referred, Sunland Waterfront v Prudential Investments (No 4) is put at the forefront of the plaintiffs' written submissions of 27 May 2016 ‑ which are signed and settled by senior and junior counsel.

Decision on privilege objections

1. Having now reviewed the redacted components of document 162, I will indicate my decisions separately in respect of each of the three redacted sentences.  I will do that by reference to each of the three (as numbered) paragraphs of the email which are at issue.

Paragraph 6:  part sentence

1. Mr Cook wrote in his par 6 to Mr Ferguson, as follows:

   Metals X has had to object to this treatment in the only option that was afforded to it, and this was to challenge its validity.  Legal counsel was sought and factual information was collated and presented. [redacted component part sentence] but to advise the parties that we believed we had a claim and to fully disclose what it was.  We discussed the requirement to do this in Hong Kong …

2. Having viewed the redacted part sentence component within par 6 of document 162, I am of the view that what is there stated by Mr Cook only describes his own conduct.  He does that by reference to the legal advice that had then been received by the defendant, but not the actual legal advice itself.  There may be arguments about what might be inferred about the legal advice received by the defendant, assessed against Mr Cook's described subsequent personal conduct.

3. But on my assessment this part of the sentence will not attract legal professional privilege on a basis of being a confidential board discussion of the legal advice received by the defendant corporation.  The situation is in fact quite to the contrary.  This redacted component of the sentence only describes Mr Cook's actions in the aftermath of the defendant receiving legal advice.  As such what he has said at this point does not attract legal professional privilege, on my assessment.

4. On that basis there is no need to consider the plaintiffs' further waiver arguments.  Consequently, the redacted component of the sentence in par 6, ought now be disclosed.  In reaching that conclusion, however, I expressly say that I do not accept that there has been any correlative waiver of the defendant's legal advice itself, simply by reference to what is the now open position as regards Mr Cook's conduct, subsequent to viewing that advice once received by the defendant.

Paragraph 14:  sentence

1. This claim to privilege is made in respect of what is the second sentence appearing in par 14 of Mr Cook's email.

2. Paragraph 14 commences in these terms:

   I am comfortable that the path we are heading down has been forced upon us and that it is not vexatious but is simply doing what is right and what is expected of us to uphold the rights and interests of our shareholders. [redacted sentence]

   After completion of the redacted sentence, par 14 of the email then resumes in terms:

   In that regard, I would expect that the same applies [sic] the TAM board and other stakeholders.

3. Having reviewed the redacted sentence, I am of the view that here, this sentence does attract legal professional privilege.  That is on the basis that what is said, although not setting out the content of the legal advice received in detail, can be read as suggesting the nature of the legal advice which was received.  Absent the objection to inspection to this sentence, there could then follow a basis for an argument against inspection that once subsisted, that the privilege was then otherwise waived by the defendant, given that the balance of the content of document 162 has been disclosed.  Hence the redaction is necessary to deny that argument, as it does.

4. In the circumstances I will uphold the claim to privilege against inspection, which is conveyed by the redaction made of the complete sentence.

5. Nor, having myself evaluated the redacted sentence, am I attracted by the plaintiffs' further argument that what surrounds or follows the redacted sentence can somehow support a claim of there being an inferential act of waiver.  In fact, as I have indicated, the defendant's assertion of the privilege in respect of this sentence is the affirmative step taken towards negating what might otherwise be contended for, as regards waiver arguments.  This challenge must fail.

Redacted part sentence at par 16 of Mr Cook's email

1. In par 16, the unredacted components of this communication of Mr Cook to Mr Ferguson read:

   I full [sic] appreciate your concerns about the impacts upon Metals X, its relationships and the consuming nature of these activities.  However, settlement can only come with due respect for each participant's position and fair compensation for all.  In that regard, it is my view that we look to settle such matter and move on if a fair tri‑partied [sic] agreement can be reached and this should be on a confidential basis.  The determination of fair needs to be balanced against potential gains [balance of the sentence redacted to end of paragraph].

2. Having viewed the redacted component of this sentence, although the position here is somewhat less clear than the sentence redacted at par 14, I am of the view that despite a limited degree of ambiguity in the sentence, that on balance the remarks by Mr Cook should be similarly assessed.  In other words, Mr Cook's reference to the defendant's legal advice at this point does not describe the legal advice itself ‑ although the thrust of the legal advice received in the end is capable of being inferred from the part sentence.

3. The claim of privilege made under the redaction is proper and legitimate here in my view ‑ on a basis that were it to be otherwise, the disclosure of the balance of the residual content of this document 162 email could provide a platform for arguments that the defendant's privilege in the underlying advice itself had been waived.  A claim to privilege against inspection via the redaction negates any inferential or implied waiver argument being prosecuted.

4. Consequently, I would also uphold the claim to privilege in respect of the part sentence that has been redacted at par 16.

Overall conclusion

1. In the end, I uphold the defendant's claims to legal professional privilege against inspection in respect of par 14 and par 16, but not in respect of the part sentence redacted under par 6.

2. In all the circumstances, given the mixed outcome, the costs of the exercise should be ordered as being costs in the cause of this action.