The Oswal matters – pre trial discovery and privilege applications

[2016] VSC 386

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE
COMMERCIAL COURT

BETWEEN

S CI  2011 04653

RADHIKA PANKAJ OSWAL	Plaintiff
- and -
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED (ACN 005 357 522) & OTHERS (according to the attached schedule)	Defendants

AND BETWEEN

S CI 2012 01995
PANKAJ OSWAL	Plaintiff
- and -
IAN MENZIES CARSON & OTHERS (according to the attached schedule)	Defendants

AND BETWEEN

S CI 2015 00804
YARA PILBARA FERTILISERS PTY LTD (ACN 095 441 151)	Plaintiff
- and -
PANKAJ OSWAL & OTHERS (according to the attached schedule)	Defendant

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RULING NO 1

EVIDENCE – Privilege – Legal professional privilege – Whether communications made for the dominant purpose of providing legal advice to client – Multiple purposes – Evidence Act 2008 (Vic) s 118 – Whether documents should be inspected under s 133 of the Evidence Act 2008 (Vic) – Tabcorp Holdings Ltd v Victoria [2013] VSC 302 distinguished.

EVIDENCE – Privilege – Loss of client legal privilege – Waiver of privilege – Whether waiver by reason of disclosure of privileged communications to other parties - Character of communications – Consideration of context in which communications took place – Whether recipients of documents under an obligation of confidence – DSE (Holdings) Pty Ltd v InterTan (2003) 135 FCR 151 considered.

EVIDENCE – Evidence Act 2008 (Vic) s 122 (3) and s 122(5)(a), (b) and (c) – Whether a party in its pleadings has put in issue its state of mind such that it is inconsistent with the maintenance of confidentiality in documents relevant to the formation of that state of mind – Vic Hotel Pty Ltd v DC Payments Australasia Pty Ltd (2015) 321 ALR 191 applied.

EVIDENCE – Privilege – Loss of client legal privilege – Whether communications in furtherance of an abuse of power – Insufficient evidence – Evidence Act 2008 (Vic) s 125.

EVIDENCE – Privilege – Whether a party with an interest in the outcome of a legal proceeding has a right of access to privileged documents relating to another party’s prospect of success in that legal proceeding – Common interest found – Yunghanns v Elfic Pty Ltd (No 2) (2000) 1 VR 92 applied.

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RULING NO 2

EVIDENCE – Privilege – Legal professional privilege – Confidential communication made between two lawyers acting for the client – Nature of transaction – Context – No “knowing and voluntary” disclosure – Not disclosed with express or implied consent of client – Evidence Act 2008 (Vic) s 118(b), s 122(3)(a) and (3)(b) – QUBE Logistics (Vic) Pty Ltd v Wimmera Container Hire Pty Ltd [2013] VSC 695 followed.

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RULING NO 3

PRACTICE AND PROCEDURE – Discovery – Civil Procedure Act 2010 (Vic) s 55 (2)(b) – Claim that party should be relieved from its discovery obligations on the basis that claim against it untenable in fact and law – Not a proper basis for resisting discovery.

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RULING NO 4

PRACTICE AND PROCEDURE – Discovery – No issue of principle.

EVIDENCE – Privilege – Legal professional privilege – No issue of principle.

EVIDENCE – Privilege – Legal professional privilege – Without prejudice privilege – Whether any exception under s 131(2) of the Evidence Act 2008 (Vic) applies.

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PRE-TRIAL RULINGS (DISCOVERY AND PRIVILEGE)

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JUDGE:	Daly AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	4, 5 & 6 November 2015, further written submissions received on 24 November 2015
DATE OF RULING:	25 November 2015
DATE OF HEARING:	6 November 2015
DATE OF RULING (No 2):	1 December 2015
DATE OF HEARING:	18 December 2015
DATE OF RULING (No 3):	22 December 2015
DATE OF HEARING:	19 February 2016
DATE OF RULING (No 4):	3 March 2016
CASE MAY BE CITED AS:	The Oswal matters – pre trial discovery and privilege applications
MEDIUM NEUTRAL CITATION:	[2016] VSC 386  Revised 2 August 2016

Ruling No 1

APPEARANCES:	Counsel	Solicitors
S CI 2011 04653
For the Plaintiff	Mr P Durack SC with Mr A T Strahan	Jones Day until 9 November 2015 Watson Mangioni from 9 November 2015
For the First to Fourth Defendants	Mr P H Solomon QC with Ms K E Foley	Herbert Smith Freehills
S CI 2012 01995
For the Plaintiff	Mr P J Jopling AM QC with Ms J Collins	Watson Mangioni
For the First to Fourth Defendants	Mr P H Solomon QC with Miss P Neskovcin	Herbert Smith Freehills
For the Tenth and Eleventh Defendants	Mr T Walker QC with Mr D Fahey	Maddocks
S CI 2015 00804
For the Plaintiff, Second Plaintiff by Second Counterclaim, First to Fifth Defendants by Counterclaim	Mr P H Solomon QC with Miss P Neskovcin	Herbert Smith Freehills
For the First Defendant	Mr P J Jopling AM QC with Ms J Collins	Watson Mangioni

Ruling No 2

APPEARANCES:	Counsel	Solicitors
S CI 2011 04653
For the Plaintiff	Mr P J Jopling AM QC with Ms J Collins	Watson Mangioni Lawyers Pty Ltd
For the First to Fourth Defendants	Mr P H Solomon QC with Miss P Neskovcin and Ms K E Foley	Herbert Smith Freehills

Ruling No 3

APPEARANCES:	Counsel	Solicitors
S CI 2011 04653
For the Plaintiff	Mr A Strahan	Watson Mangioni
For the First to Fourth Defendants	Miss P Neskovcin	Herbert Smith Freehills
For the Seventh Defendant	Mr J Redwood	Clayton Utz
For the Ninth to Eleventh Defendants	Mr L Duggan, solicitor	Clyde & Co
S CI 2012 01995
For the Plaintiff	Mr A Strahan	Watson Mangioni
For the First to Fourth Defendants	Miss P Neskovcin	Herbert Smith Freehills
For the Ninth Defendant	Mr J Redwood	Clayton Utz
For the Tenth and Eleventh Defendant	Mr T J Walker QC with Mr D J Fahey	Maddocks
S CI 2015 00804
For the Plaintiff	Mr P H Wallis with Mr J Ross	Watson Mangioni
For the Plaintiff and First and Second Defendants to the First Cross-Claim	Miss P Neskovcin	Herbert Smith Freehills

Ruling No 4

APPEARANCES:	Counsel	Solicitors
S CI 2011 04653
For the Plaintiff	Mr P H Wallis	Watson Mangioni
For the First and Second Defendants	Miss P Neskovcin	Herbert Smith Freehills
For the Ninth to Eleventh Defendants	Mr S M Anderson QC with Mr S Freire	Clyde & Co
S CI 2012 01995
For the Plaintiff	Mr P H Wallis	Watson Mangioni
For the Eleventh Defendant	Mr T J Walker QC with Mr D J Fahey	Maddocks

HER HONOUR:

INTRODUCTION

1. The issues in the proceeding, and the relevant background to these rulings is conveniently provided in the judgments of the Honourable Justice Sifris,[1] and the judgment of the Honourable Justice McKerracher.[2] The rulings presume a familiarity with these matters, although the identity and role of the parties is summarised in paragraph 13 of Ruling No 1.

1. Please note that these rulings have been revised to correct any clerical errors.

Ruling No 1

[1]Oswal v Carson & Ors (No 2) [2014] VSC 209 and Oswal v Carson & Ors [2013] VSC 615.

[2]Yara Pilbara Fertilisers Pty Ltd [formerly known as Burrup Fertilisers Pty Ltd] v Oswal (No 8) [2015] FCA 49.

1. On 4, 5, and 6 November 2015 I heard argument in four separate applications in three proceedings, being:

(a)        S CI 2011 04653, Radhika Oswal v ANZ Banking Group Ltd and Ors (‘RO proceeding’);

(b)        S CI 2012 01995, Pankaj Oswal v Carson and Ors (‘PO proceeding’); and

(c)        S CI 2015 00804, YPF Pty Ltd v Pankaj Oswal and ors (‘804 proceeding’);

(collectively ‘Oswal proceedings’).

1. Given the desirability of expedition, I will not recount here the issues in the Oswal proceedings, which are numerous, except where necessary for the purposes of determining the applications. 

1. There are four interested parties for the purposes of the applications, being Mrs Radhika Oswal, Mr Pankaj Oswal, the ANZ Banking Group Ltd (‘ANZ’) and the Receivers (‘ANZ parties’) and Yara Pilbara Fertilisers Pty Ltd (formerly Burrup Fertilisers Pty Ltd) (‘Fertilisers’). 

1. In her summons filed 21 August 2015 in the RO proceeding, Mrs Oswal challenges the claims to privilege made by the ANZ parties in redacting parts of specific documents and to certain documents in their entirety.  Ultimately, the application was concerned with twenty six documents, although I acknowledge that my findings may apply to other documents in the possession of the ANZ parties which have not yet been discovered in the proceeding, given that there are outstanding discovery applications on foot. 

1. In the PO proceeding, Mr Oswal sought inspection of documents in seven classes of documents, being:

(a)        communications not sent to a lawyer advising the ANZ parties - ANZ and the Receivers’ internal communications and/or communications between ANZ and the Receivers;

(b)        communications not sent to a lawyer advising ANZ or the Receivers – communications between ANZ and/or Receivers and Flagstaff;

(c)        communications not sent to an external legal counsel – Flagstaff or PPB and Energy Advice;

(d)       communications between ANZ/Flagstaff/Receivers and ANZ’s in-house lawyer Bob Santamaria not sent to an external legal adviser;

(e)        communications between ANZ/Flagstaff/Receivers/Energy Advice and Blake Dawson;

(f)         third party communications, being communications between ANZ, Receivers, Flagstaff and/or Freehills sent to or from Peter Rowland, Allen & Overy or Barclays Capital; and

(g)        communications with Yara Australia Pty Ltd or their lawyers Clayton Utz.

1. Between the issue of the summons filed on 8 September 2015, and the commencement of the hearing on 4 November 2015, a number of privilege claims made by the ANZ parties were withdrawn, either in whole or in part, and a number of challenges were withdrawn.  However, a number of documents which were the subject of privilege claims by the ANZ parties, which were subsequently withdrawn, became the subject of privilege claims by Fertilisers.  There were also some overlapping claims by the ANZ parties and Fertilisers. 

1. The application in the PO proceeding was heard together with the application by Mr Oswal in the 804 proceeding that the ANZ parties produce for inspection:

(a)        communications and documents recording the work of PPB before the appointment of the Receivers;

(b)        communications or documents said to record legal advice from Fertiliser’s lawyers Blake Dawson communicated to the Receivers;

(c)        a communication said to record legal advice provided by Allens Arthur Robinson to ANZ; and

(d)       communications or documents said to record legal advice provided by Freehills in relation to various matters. 

1. Again, between the filing of the summons in the applications and the commencement of the hearing on 4 November 2015, a number of privilege claims were withdrawn and/or modified in relation to the documents which were the subject matter of both applications (together, the ‘PO/804 application’). 

1. The fourth application (‘ANZ parties’ application’) is for the inspection of certain documents produced by DLA Piper Australia (‘DLA’) and Murcia Pestell Hillard Pty Ltd (‘MPH’) upon subpoena in the RO proceeding, over which Mr Oswal claims privilege.  Some of these documents have been discovered by Mrs Oswal in the RO proceeding.  Owing to the pressure of time, and the relatively minimal impact of this application upon case management issues in the Oswal proceedings, I will publish my ruling on this application separately. 

1. Some issues arose during the preparation of the parties for the application as to whether all of the documents identified by the ANZ parties in the PO/804 application as documents over which they claimed privilege ought to be produced for submission by the parties and for possible inspection by the Court, or that a sample be selected.  In the end, it was determined that a sample of documents be produced by the ANZ parties, with that sample to be selected by Mr Oswal’s solicitors.  This course was undertaken on the understanding that the solicitors for the ANZ parties would apply the findings with respect to the sample documents to the documents not in the sample.  This process of itself served to reduce the number of documents over which the ANZ parties claimed privilege, especially in the 804 application. 

1. Another issue arose in relation to the application in the RO proceeding, where it was contended that the ANZ parties should produce all documents over which the ANZ parties maintained privilege that was susceptible to challenge by Mrs Oswal, regardless of whether they had been discovered by the ANZ parties.  However, it was successfully contended on the part of the ANZ parties that the production of any further documents of that character by the ANZ parties ought await the hearing and determination of Mrs Oswal’s outstanding discovery application, which the managing judge, Sifris J, had determined ought to be considered after the hearing and determination of these applications. 

1. Finally, as noted above, the ANZ parties withdrew their claims for privilege over a number of documents, following which Fertilisers stepped in and made a claim for legal professional privilege over many of these documents.  Indeed, Fertilisers has made a claim for privilege over the bulk of the documents outside the sample.  However, to date it has been exempted from making any discovery in the PO and RO proceedings. 

1. In order to properly understand the parties’ submissions, the roles and relationships of different parties, and certain key disputes and transactions are of some significance.  Some further detail is provided below. 

GSA proceeding

This proceeding was brought by the suppliers of gas to the Burrup ammonia plant, the main undertaking of Fertilisers, under a Gas Supply Agreement made in 2001 (‘GSA’).  The proceeding concerned the construction of the terms of the GSA, which provided for the supply of natural gas to Fertilisers on extremely favourable commercial terms.  The outcome of the GSA proceeding would have a substantial impact upon the value of Fertilisers, and thus the value of the Oswals’ shares in Holdings. 

Pankaj Oswal

Plaintiff in the PO proceeding, and the defendant in the Fertilisers’ proceeding.  Former shareholder of Burrup Holdings Pty Ltd (‘Holdings’), Fertilisers’ holding company, former managing director of Fertilisers, and former customer of ANZ.  Husband of Radhika Oswal.

Radhika Oswal

Plaintiff in the RO proceeding.  Former shareholder of Holdings.  Wife of Pankaj Oswal.

ANZ

Defendant in the RO and PO proceedings.  Former lender to Mr Oswal.  Lender to Fertilisers.  In December 2010, ANZ appointed the Receivers to the assets and undertaking of Fertilisers and PO’s shares in Holdings under various credit facilities between it and Mr Oswal and Fertilisers.

Receivers

Ian Carson, David McEvoy and Simon Theobald.  Principals of PPB.  Defendants in the RO and PO proceedings.

PPB

Engaged by Freehills in December 2009 to provide advice to enable Freehills to provide advice to ANZ regarding its position vis-a-vis the Oswal Group and Fertilisers. 

Freehills (now Herbert Smith Freehills)

Retained by ANZ, and after the appointment of the Receivers in December 2010, by ANZ and the Receivers in relation to matters concerning the Oswal Group of companies and the Oswal proceedings.

Fertilisers

Fully owned by Holdings, operator of the Burrup ammonia plant.  Controlled by Receivers between December 2010 and February 2012.  Defendant in GSA proceeding in WA brought by suppliers of gas under the GSA. 

Blake Dawson (now Ashurst Australia)

Retained by Fertilisers (and then the Receivers) in the GSA proceeding. 

Murcia Pestell Hillard (‘MPH’)

Solicitors retained by Mr and Mrs Oswal in relation to their affairs, including their dealings with ANZ. 

DLA Piper

Solicitors retained by Mr Oswal in December 2009 after ANZ insisted on Mrs Oswal having separate legal representation for the purposes of negotiations between her and ANZ which culminated in Mrs Oswal granting a mortgage over her previously unencumbered shares in Holdings.  MPH continued to advise Mrs Oswal during this period.

Flagstaff and Energy Advice

Consultants retained by the Receivers to advise upon the realisation of ANZ’s securities, including the process of selling the shares held by the Oswals in Holdings.

Yara Australia Pty Ltd (‘Yara’)

The minority shareholder in Holdings prior to the sale of the Oswals’ shares in Holdings. 

Clayton Utz

Solicitors for Yara.

Apache Fertilisers Ltd

A party to the GSA, a plaintiff in the GSA proceeding, and the purchaser of the Oswal’s shares in Holdings. 

Allens Arthur Robinson and two London based barristers

Provided advice to ANZ on various matters prior to December 2009.

Issues in the applications

1. The issues in the RO application are whether the ANZ parties have established that the dominant purpose of the communications in the documents for which the privilege is claimed is for the allowable purposes under s 118 of the Evidence Act 2008 (Vic) (‘Act’), in circumstances where the documents may well have been brought into existence for multiple purposes. Further, Mrs Oswal asserts that if the ANZ parties are entitled to claim privilege in these documents, privilege in some of these documents may well have been waived by reason of ANZ having put in issue its belief regarding certain matters by making positive assertions regarding its state of mind in its defence, rather than simply joining issue with the allegations made by Mrs Oswal in her statement of claim.

1. A number of issues arise with respect to the combined PO/804 applications, including:

(a)        the ANZ parties’ and Fertilisers’ failure to establish the factual basis of their privilege claims;

(b)        ‘dominant purpose’ issues, in particular, whether the communications could have had a number of purposes, for example, commercial purposes, such that there was an onus upon the ANZ parties to advance clear and cogent evidence to establish that the dominant purpose of the communication was the provision and/or receipt of legal advice;

(c)        claims by the ANZ parties and Fertilisers in respect of communications with lawyers who did not act for them;

(d)       whether I should inspect the disputed documents to evaluate the privilege claims;

(e) whether privilege has been lost by reason of s 125 of the Act, that is, by reason of communications being in furtherance of an abuse of power;

(f)         whether any privilege has been lost by reason of Fertilisers’ disclosure to ANZ and the Receivers (when not acting in their capacity as receivers of Fertilisers), the ANZ parties’ disclosure to Fertilisers, and disclosures to Yara, Apache, Orica and other third parties;

(g) whether Fertilisers and ANZ are entitled to rely upon s 122(5)(a)(i) of the Act as an answer to any ‘disclosure waiver’; and

(h)        in relation to Fertilisers’ documents, whether Mr Oswal was entitled to have access to these documents as a shareholder of Holdings, either by reason of the terms of an agreement, or at law. 

1. In the ANZ parties’ application, the issue is whether Mr Oswal is entitled to claim privilege over documents recording communications between MPH and DLA during the period of his retainer of DLA, on the basis that he had appointed MPH to be his agent for the purpose of communicating with DLA regarding the subject matter of its retainer, or that they were communications between two lawyers retained to act for him. 

PO/804 Application

1. Senior counsel for Mr Oswal launched a concerted attack upon the adequacy of the evidence relied upon by both the ANZ parties and Fertilisers in support of their claims for legal professional privilege.  He submitted that it was inadequate for a litigation solicitor who was not actively involved in advising the ANZ parties during the course of the transactions which the documents concern to give evidence about the purpose for which the communications came into existence.  The necessary elements should have been the subject of direct evidence by either the persons who caused the documents to come into existence, or at the very least, by a person familiar with the transactions and/or communications.  As for the claims made by Fertilisers, the solicitor who swore the affidavits on behalf of Fertilisers did not even take the trouble to verify the claim for privilege over the schedule annexed to his affidavit.

1. Further, it was submitted that the descriptions of the claims for legal professional privilege in both Ms Overington’s affidavit and the ANZ parties’ written submissions do not go beyond a bare and formulaic assertion of a claim to legal professional privilege.  On that basis, I should not exercise my discretion to inspect the documents, because it is not appropriate for the inspection process to be used to fill gaps in the evidence.[3]

   [3]During the course of my review of the transcript of the first part of the hearing of the application, I realised that a remark I made to the effect that I ‘had read everything’ might have been misinterpreted as stating that I had read the disputed documents prior to the hearing.  I had not done so.

1. Mr Oswal relied heavily on the decision of Sifris J in Tabcorp Holdings Ltd v Victoria (‘Tabcorp’),[4] where his Honour declined to inspect the documents and rejected the State’s privilege claims.

   [4][2013] VSC 302.

1. In Tabcorp, Sifris J stated:

The first issue is whether the factual basis for the claim of privilege is 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 legal advice. 

1. Section 133 of the Act provides the Court with a discretion to inspect documents in order to determine any question in part 3.10 of the Act. I agree with the statement of Sifris J that a party claiming privilege cannot delegate to the Court the task of establishing that the privilege exists, and that 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 or not they were brought into existence for the dominant purpose of providing or receiving legal advice. [5]

[5]Ibid [97].

1. There are of course many claims for legal professional privilege where a mere description of a document is sufficient to establish the claim for privilege.  A description along the lines of ‘Brief to Counsel to Advise’ is one that immediately springs to mind.  Other descriptions might call for further explanation, such as correspondence with anodyne titles, circulation of draft transactional documents to not only the client, but also to other professional advisers of the client, or internal communications within a client. Balanced against this is the practical difficulties in amassing evidence where there are claims over large numbers of documents, particularly given the distaste expressed in the authorities regarding the expenditure of excessive legal costs in interlocutory skirmishes.[6] In my view, in disputes such as the current case, there needs to be sufficient detail in the description of the documents, along with a sufficient explanation of the roles of the parties to the transactions and the context in which the communications took place in order to establish, in the face of a legitimate and cogent challenge by the other party, that there is a prima facie claim for legal professional privilege. As to whether it is appropriate to inspect the documents, I note that legal professional privilege is a substantive right not to be lightly lost or discarded,[7] and the very nature of that right is that evidence led in support of claims must necessarily be somewhat opaque in order to avoid destroying the confidentiality of the communication over which it is claimed. On the other hand, a court must be alert to preventing abuses of this right by parties attempting to protect disclosure of otherwise non‑privileged communications by devices such as routing them through lawyers, or having their lawyers retain third party experts to advise on purely commercial or technical matters rather than retaining them directly. Inspection of the documents is often a means by which such abuses can be detected. The practical value of inspection is no doubt why a facilitative provision such as s 133 is included in the Act. Finally, I accept the submissions of counsel for the ANZ parties that I should not approach the question of the exercise of my discretion under s 133 of the Act with any particular bias.

   [6]see Yara Australia Pty Ltd v Oswal (2013) 41 VR 302.

   [7]Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543.

1. In my view, there is sufficient evidence before me, including the evidence advanced on behalf of each of the parties regarding the roles of the parties and the events and circumstances which culminated in these proceedings, to draw an inference that the ANZ parties and Fertilisers would require, seek, and receive legal advice at each step of the way, and that other expert advice would both precipitate the seeking of legal advice and inform the legal advice provided.  The question of whether there had been disclosures of legal advice which amounted to a waiver is a separate question.  To summarise the context (much of which is the subject of the pleadings as well as the evidence), it is apparent that:

(a)        at some time in late 2008, ANZ became sufficiently concerned about its exposure to Mr Oswal and/or Fertilisers, which was in the context of the size of its business substantial, to seek advice from Freehills;

(b)        an agreement was reached between Mr Oswal and ANZ in December 2009 for a managed sale of his shares in Holdings and between Mrs Oswal and the ANZ for Mrs Oswal to provide a mortgage of her shares in Holdings;

(c)        Freehills engaged PPB to enable Freehills to provide legal advice to ANZ regarding its exposure to Mr Oswal and his related entities;

(d)       ANZ, relying upon its rights under its various securities, appointed certain principals of PPB as receivers of the assets and undertakings of Fertilisers, along with Mr Oswal’s shares in Holdings in December 2010;

(e)        at that time, Fertilisers was engaged in hard fought litigation with the suppliers of the main raw material of its main undertaking, the Burrup ammonia plant, the outcome of which would substantially affect the value of both Fertilisers’ business and the Oswals’ shares in Holdings;

(f)         in May 2011, the Receivers commenced a process of offering to the market the Oswals’ shares in Holdings;

(g)        the Receivers owed duties to Mr Oswal, Fertilisers, and ANZ (noting there was another minority shareholder, Yara, to contend with as well); and

(h)        the Oswals’ shares in Holdings were ultimately sold to one of the antagonists in the Fertilisers’ litigation, Apache, on terms which involved settling the GSA proceeding and renegotiating the GSA. 

1. It is inconceivable that in such circumstances there would not be lawyers involved at every step of the way.  Further, it is likely that there will be some degree of informality in the communications between the lawyers, the client or clients, and third parties engaged by the lawyers and the clients, such that communications which record legal advice or instructions for legal advice would not be capable of being described in such a way as to make their contents self-evident.  In that regard, the remarks of Allsop J (as he then was) in DSE (Holdings) Pty Ltd v InterTan[8] (‘DSE Holdings’) are apposite:

It is necessary to put this direct evidence in a little context.  The respondents retained a large and well-known international investment banking house (the terms of the arrangement and common sense do not require strict adherence to corporate form here) and a well-known and highly experienced firm of solicitors to assist them in the negotiation, documentation and effectuation of a large commercial transaction – the sale of shares in the respondents’ then Australian subsidiary, for over $100 million.  The subsidiary owned and ran a chain of businesses.  I can, and do, readily infer that the sale of such property involved a large and complex negotiation and transaction, requiring the skilled and careful advice of lawyers and experienced commercial people within the investment house.  I can also readily infer that implicit (even if, as appears to be the case, no express words of retainer of AAR were uttered or written) in AAR’s retainer (‘to assist in relation to the Sale’: para 4(3) of Mr Reid’s affidavit) was a request to provide all relevant legal advice on matters, whether great or small, as they arose in discussion either with the clients or SSB, in connection with the undertaking of the sale, including, but by no means limited to, drafting documents, both to reflect the clients’ instructions and from their experience to best protect and advance their clients’ interests.  As Taylor LJ (as his Lordship then was) said in Balabel v Air India [1988] Ch 317 at 330:

… legal advice is not confined to telling the client the law; it must include advice as to what prudently and sensibly should be done in the relevant legal context.

I will return to Balabel in due course.  For present purposes its importance lies in the recognition that the nature of provision of legal advice by a firm such as AAR in a context of the kind here was no doubt multi-faceted, complex and not amenable to sharp division between what was advisory and what was merely administrative.

[8](2003) 135 FCR 151, 160. See also AWB v Cole (2006) 152 FCR 382, and the authorities referred to at [85]-[100].

1. In my view, the observations of Allsop J in DSE Holdings, along with the survey of the authorities by Young J in AWB v Cole[9] regarding the need to evaluate the character of communications in their commercial context does not conflict with the need for caution urged by Beach J in the case relied upon by Mr Oswal in his submissions, Asahi Holdings (Australia) Pty Ltd v Pacific Equity Partners Pty Ltd (No 4),[10] in circumstances where third party advisers work alongside lawyers in a non‑litigious setting.  Rather, taken together, the authorities highlight the need for careful scrutiny, both to protect legitimate claims for privilege, and to reject claims over communications made for other purposes.  It is this complexity which highlights the utility, on appropriate occasions, of the Court inspecting the documents for which legal professional privilege is claimed. 

   [9](2006) 152 FLR 382, and the authorities referred to at [85]-[100].

   [10][2014] FCA 796 [28].

1. The observations of Allsop J above are relevant to the question of whether disclosures between the advisers to a client amount to waiver for the purposes of s 122 of the Act. However, it is also relevant to my ability to draw an inference that in such a transaction, conducted in an environment where there was significant and material litigation going on in the background, that there would be a continuous course of transactions and issues upon which the main commercial players would seek and receive legal advice. The complexity of the transactions and the tasks involved are illustrated by the matters set out in the letter by which the Receivers engaged Flagstaff, as summarised at paragraph 47 in Ms Overington’s affidavit of 20 October 2015.

1. I accept many of the criticisms made on behalf of Mr Oswal regarding the quality of the evidence supporting Fertilisers’ claims for legal professional privilege. However, once again, the context is important. Fertilisers was engaged in substantial litigation. It had engaged Blake Dawson to act on its behalf. There is no evidence to indicate that Blake Dawson acted for Fertilisers (or the Receivers) for any other purpose. A substantial proportion of the claims made by Fertilisers are made under s 119 of the Act, as one might expect. One might readily infer that a claim for privilege is likely to be sustainable in these circumstances. The retainer letter between the Receivers and Blake Dawson is in evidence. This is not a situation where a party in the position of say, ANZ, is conducting a multifaceted complex transaction involving legal and non‑legal issues and personnel. Accordingly, insofar as the claims are made by Fertilisers, there is sufficient material before me to at least make out a prima facie claim for privilege.

1. Accordingly, the necessary context to establish a prima facie case that ANZ and Fertilisers’ claims for privilege are maintainable is established on the pleadings and the evidence.  On the other hand, the appointment of advisers such as PPB and other advisers by Freehills rather than by ANZ directly, at least prior to the appointment of the Receivers, does raise concerns that such retainers were used as a device to cloak what were communications about commercial or technical matters with an undeserved confidence. 

1. In my view, the current case is distinguishable from Tabcorp, in that there is sufficient contextual evidence, and sufficient detail in the descriptions of the documents to establish, at least on a prima facie basis, that the claims for legal professional privilege would prove, upon inspection, to be maintainable, such as to justify me exercising my discretion to inspect the documents.  The fact that the descriptions of the documents and the claims are brief does not of itself mean that they are formulaic (although, somewhat mystifyingly, given the scrutiny which must have been undertaken of the documents in the sample by the ANZ parties’ legal team, some proved to be incorrect).  Again, there is a degree of tension between providing sufficient detail to establish a prima face claim for privilege and disclosing details which might destroy the privilege which is sought to be protected. 

1. Further, as I noted during the course of the hearing, I would not be prepared to make a finding that a document was prepared in furtherance of a fraud within the meaning of s 125 of the Act without inspecting the document regarding which such an allegation is made.

1. Accordingly, I reviewed the sample of discovered documents, which caused me to draw the following conclusions:

(a)        the ANZ parties’ claims for legal professional privilege, with some exceptions, were valid;

(b)        if the purpose of having Freehills, rather than ANZ or the Receivers engage third party experts was to impermissibly cloak communications of a commercial or technical character with the protection of legal professional privilege, that purpose does not appear to have been effected.  Subject to any issues about waiver by disclosure, the communications involving those third parties for which privilege is claimed do involve the seeking, giving, or recording of legal advice.  Further, it is apparent from the redactions to some of the documents in the sample that a substantial degree of selectivity has been adopted by the ANZ parties’ legal team in identifying communications which are the subject of a valid claim for privilege, while disclosing documents and communications which are clearly of a commercial character.  The selectivity of the claims for privilege in that regard appear to reflect an acknowledgement on the part of the ANZ parties’ legal team (albeit a possibly belated acknowledgement) that, while the parties were engaged in many tasks, communications regarding these tasks could only be protected if they were for the dominant purpose of obtaining or receiving legal advice to assist with the performance of those tasks;

(c)        a sufficient number of the documents for which Fertilisers have also claimed privilege evidence communications for which no such claim is maintainable on the part of Fertilisers, or where further evidence would be required to maintain the claim, leading me to form the view that greater scrutiny needs to be applied to Fertilisers’ claims over the documents not the subject of a claim by the ANZ parties, and thus not forming part of the sample of documents provided to the Court; and

(d)       the question of whether privilege has been waived by any party by reason of disclosure to others is a question of some complexity.

1. The question in paragraph (d) above, along with the question of whether Mr Oswal is entitled to have access to Fertilisers’ documents by reason of his rights under the Shareholder Agreement between Mr Oswal, Fertilisers, Holdings and Yara, and whether certain documents have lost their privilege by reason of them coming into existence in furtherance of an abuse of power will be considered in the following sections. 

Waiver by disclosure

1. Mr Oswal submits that there are a number of communications where any privilege has been lost by reason of:

(a)        disclosure by Fertilisers to ANZ;

(b)        disclosure by ANZ to Fertilisers; and

(c)        disclosure to Yara, Apache, Orica and other third parties.

1. Further, Mr Oswal submits that the ANZ parties’ claims for privilege over communications with Fertilisers’ lawyers who did not act for them, and claims by Fertilisers over communications with ANZ and the Receivers’ lawyers who did not act for them are untenable. 

1. Mr Oswal does not contend that communications between the ANZ parties or either of them and Flagstaff and/or Energy Advice amount to waiver of legal professional privilege by reason of disclosure to a third party.  Given the evidence regarding the nature of their retainers and the confidentiality obligations included in their retainers, that challenge would be difficult to maintain.   Rather, the challenge is to the purpose for which the communication came into existence.  That challenge has been addressed by the inspection of the documents. 

1. Further, Mr Oswal does not appear to contend that communications between Blake Dawson and Minter Ellison amounted to a disclosure for the purposes of s 122 of the Act, understandably, given both firms were retained to act for the Receivers. However, he does contend that, to the extent that there were communications between Blake Dawson and Freehills for the purposes of Freehills providing legal advice to the ANZ, and communications which included Blake Dawson, Freehills, ANZ, and, on some occasions Minter Ellison, any privilege claimed by either of the ANZ parties or Freehills was lost by reason of s 122(3) of the Act.

1. Surprisingly, this matter was the subject of only limited argument during the course of the hearing, although the issue was the subject of further written submissions by Fertilisers and Mr Oswal after the conclusion of the hearing. However, it is clear that both the ANZ parties and Fertilisers rely upon s 122(5)(a) of the Act to avoid the consequences of the deemed disclosure under s 122(3) of the Act, and in my view, may also, in some instances, be able to rely upon ss 122(5)(b) and (c) of the Act. Section 122(5) of the Act provides, relevantly, that:

A client or party is not taken to have acted in a manner inconsistent with the client or the party objecting to the adducing of the evidence merely because –

(a)       the substance of the evidence has been disclosed –

(i)in the course of making a confidential communication or preparing a confidential document; or

…

(b)of a disclosure by a client to another person if the disclosure concerns a matter in relation to which the same lawyer is providing, or is to provide, professional legal services to both the client and the other person; or

(c)of a disclosure to a person with whom the client or the person had, at the time of the disclosure, a common interest relating to the proceeding or an anticipated or pending proceeding in an Australian court or a foreign court.

1. Accordingly, when it comes to maintaining legal professional privilege in communications within what might be described as the broader ‘team’, the ANZ parties and/or Fertilisers must establish that not only were the communications made for the dominant purpose of one or more of the parties being provided with legal advice, but that the communications were made in circumstances where there was an express or implied obligation of confidence upon each of them with respect to communications with each other.  In its written submissions, Fertilisers relied upon the decision of the New South Wales Court of Appeal in State of New South Wales v Jackson[11] where it was held to extend to ‘an unspoken obligation, and to an ethical, moral or social obligation’. 

   [11][2007] NSWCA 279 [41].

1. There was no direct evidence before me to the effect that the communications within the broader team were subject to an express obligation of confidence, save for the references to ‘confidential communications’ within the evidence, and the boilerplate footers to emails in the disputed documents.  However, I can infer from the issues facing ANZ and the Receivers in the realisation of ANZ’s securities, and the inextricable link between the value of those securities and the progress and outcome of the GSA proceeding, that the parties to the communications recognised an obligation of confidentiality to the other parties.  Senior counsel for the ANZ parties criticised the reference to a ‘circle of confidence’ in Mr Oswal’s submissions during the course of the ANZ parties’ application as being a concept not known to the law.  It may well not be, but it does provide a useful shorthand description of a group of parties who, in relation to a particular transaction or transactions, must, by reason of their roles in the transaction, owe each other obligations of confidence.  In this respect I have once again had regard to the remarks of Allsop J in DSE Holdings,[12] where he stated:

In a transaction of this kind, the clients would expect aspects of what was done and not done that might possibly be of significance to be considered by, and discussed between and among, the experienced lawyers and the experienced investment bankers.  In reaching these conclusions, I have drawn on the evidence referred to above, and an application of what I hope is common sense in recognising the likely human reality of what was in fact done as set out in Mr Reid’s affidavit.  Given the nature of the subject matter, the experience of the advisers involved and the lack of adversion to any formal terms as to how the parties (clients, lawyers and investment bankers) would inter-react and communicate, I have no difficulty in inferring that there was a clear obligation of confidence owed to the respondents upon SSB and AAR, that AAR was authorised (and indeed expected) to communicate material to SSB (including privileged material) if AAR thought that SSB should know of it or asked for it, that SSB was authorised (and indeed expected) by the respondents to receive and pass on any information or document concerning the transaction which either agent thought appropriate so to do and that each of AAR and SSB was the agent of the respondents to request, give and receive views and information to and from each other for the purposes of best effectuating the respondents’ position in the transaction. 

The close cooperation of the parties is deposed to by Mr Reid; the lack of specific terms of retainer of AAR I infer from the evidence; the overlapping and complementary roles of SSB and AAR I infer from the nature of the transaction and the nature of their relevant expertise (SSB’s expertise being reflected in the terms of their retainer).  It would, in my view, be unrealistic to think that the instructions to each, implicit in the consent to cooperative communication which apparently occurred, did not contain an authorisation to request, give and receive information and views to and from the other in the way I have described. 

[12](2003) 135 FCR 151, 161.

1. In its written submission, Fertilisers submitted that I ought conclude that ANZ was under an implied obligation to keep the communications between it, the Receivers, and Fertilisers’ lawyers confidential by reason of the following circumstances:

(a)        the very subject matter of the communications, being the GSA proceeding, the possible outcomes, and how the GSA proceeding might be involved;

(b)        ANZ’s interests were aligned with Fertilisers in the GSA proceeding; and

(c)        ANZ was copied into communications passing between Fertilisers and its lawyers.

1. In my view, each of ANZ, the Receivers, and Fertilisers owed each other duties of confidentiality with respect to communications regarding the GSA proceeding and the conduct of the sale process, to the extent that this was affected by the GSA proceeding and to the extent that the sale process raised issues which might be of concern to Fertilisers, such as their obligations under the GSA.  Rather than a ‘circle of confidentiality’, what is perhaps a more accurate description of the relationships between the parties is that they formed part of a ‘web of confidentiality’, with the Receivers at the centre of the web.  As well as the matters referred to in Fertilisers’ written submissions, another relevant circumstance which would cause me to infer an obligation of confidence included the high financial stakes both the ANZ and Fertilisers had in the GSA proceeding.

1. As stated by senior counsel in his submissions:

the choices were difficult and the legal questions that arose in that context were constant and were also difficult.  It seems highly artificial to suppose that somehow the lawyers, indeed, all of the advisers who are acting in that situation, are going to be able to operate in some kind of compartmentalised vacuum, so that each of them only did certain things and was privy to only certain communications. 

1. I do not consider that the protection afforded to ANZ in clause 7.1 of its charge over the assets of Fertilisers to detract from its obligations towards Fertilisers with respect to confidential communications concerning the GSA proceeding. 

1. Clause 7.1 of the Fixed and Floating Charge between Fertilisers and ANZ dated 18 December 2002 (‘Deed of Charge’) provides as follows:

7.1      Confidential information

(a)Subject to clause 7.1(b), the Security Trustee may, for the purpose of exercising any Power, disclose to any person (Proposed Party) any documents or records of, or information about, the Issuer, the Charged Property or the Issuer’s business or affairs, whether or not confidential and whether or not the disclosure would be in breach of any law or of any duty owed to the Issuer.

(b)The Proposed Party must, prior to such disclosure, undertake, where such information is confidential, in a form reasonably acceptable to the Issuer, to treat such information as confidential.  This clause 7.1(b) will not apply whilst an Event of Default is continuing.

1. Clause 6.6 of the Deed of Charge provides that ANZ may exercise any power of a controller appointed pursuant to the Deed of Charge (i.e. the Receivers).  The ‘Powers of the Security Trustee’ are not defined in the Deed of Charge, but presumably include the power to appoint a controller under clause 6.1 of the Deed. 

1. Clause 7.1 of the Deed of Charge is relied upon to support Mr Oswal’s contention that ANZ did not owe any obligation of confidence to Fertilisers.  I do not consider those contentions to be made out.  The power of ANZ to appoint the Receivers had been exercised.  The powers under 6.3 of the Deed of Charge were being exercised by the Receivers, not ANZ.  It is difficult to see how ANZ, in receiving privileged documents of Fertilisers, was exercising any ‘power’ that excused it from any obligation of confidence that was otherwise owed by it in all of the circumstances. 

1. I note the submissions advanced on behalf of Mr Oswal that there cannot be obligations of confidence between ANZ and Fertilisers because the Receivers interacted with each of them in different capacities and with different obligations and duties towards them. I cannot see how this is a matter which would influence my findings as to whether the parties were under an implied obligation of confidence. Parties in the positions of the Receivers by necessity act in different capacities at different times, or even in multiple capacities at the same time. However, the language of the Act refers to ‘clients’ or ‘parties’. I do not see how the language of the Act can be strained to distinguish between a party acting in one capacity and that same party acting in a different capacity. Either a party owes or is owed a duty of confidentiality to or by another or not. To employ the rather vernacular analogy introduced during the course of the hearing, it is not a matter of what a party does in the tent, but whether a party is actually in the tent in the first place. Of course, the question of the capacity in which a party is acting might affect whether the dominant purpose of the communication was for the provision of legal advice.

1. In any event, to the extent that the communications between Fertilisers and the ANZ concern the GSA proceeding, I consider that the ANZ parties and Fertilisers shared a common interest in the GSA proceeding within the meaning of s 122(5)(c) of the Act. The extent that this extends to the documents outside the sample in which Fertilisers claims privilege, and beyond the sample to documents which are in the exclusive possession of Fertilisers (for example, documents shared with Minter Ellison) is a matter for further consideration.

1. The reason why the ANZ parties and Fertilisers held a common interest in the outcome of the GSA proceeding is because of the substantial financial impact of the outcome of the GSA proceeding on the value of Fertilisers, and thus ANZ’s ability to realise its security interests, including Mr Oswal’s shares in Holdings. It is therefore axiomatic that the common interest extended to Mr Oswal, as the owner of the shares, as he would be entitled to any surplus after any liability to ANZ was discharged, therefore making this a convenient point to turn to Mr Oswal’s submissions regarding his independent entitlement to Fertilisers’ advices regarding the GSA proceeding. 

Mr Oswal’s right of access to Fertilisers’ Advice regarding the GSA proceeding

1. Mr Oswal claims that Fertilisers is unable to maintain legal professional privilege in legal advice provided to Fertilisers regarding the GSA proceeding (‘advices’) as against him as opposed to the wider world, because at the time they were created, he was entitled to access the advices on two distinct bases:

(a)        by virtue of his status as a shareholder of Holdings, as a guarantor of Fertilisers’ debt to ANZ, and the relationship between Fertilisers, Holdings and the shareholders of Holdings as being a quasi-joint venture relationship; and

(b)        by the express terms of clause 6.1 of the Shareholders’ Deed between Mr Oswal, Yara, Holdings and Fertilisers executed on or about 24 March 2008 (‘Deed’), which provides that:

6.1      Right of access

After giving at least 10 Business Days’ notice to Holdings, each Shareholder (itself or through its accountant or employee and at its own cost) will be entitled to reasonable access during Holdings’ normal business hours to:

(a)visit and inspect any premises occupied by any company in the Company Group, the Registered Office and any property of any company in the Company Group;

(b)inspect and take copies of documents relating to the Business and the Company Group’s affairs including its books, accounts and records; and

(c)discuss the Company Group’s affairs, finances and accounts with the Company Group’s officers, employees and auditors.

for the purpose of auditing and valuing of the Company Group or for any reasonable purpose.

1. Mr Oswal submits that this right of access was recognised prior to the appointment of the Receivers, given that he has in his possession advices provided in relation to the GSA proceeding prior to that time, and a similar right on the part of Yara was recognised by Barker J in granting an interlocutory injunction in favour of Yara on 18 November 2010.  One of the purposes for seeking inspection of the documents was asserted by Yara as being to enable it to assess the value of its shares in Holdings, while in later correspondence between Yara and Apache, Apache appeared to accept that a proper purpose for seeking inspection of Fertilisers’ documents was to assist Yara in defending defamation proceedings brought by Mr Oswal in Norway.  Finally, Mr Oswal submitted that if a common interest exists at the time at which the document comes into existence, it is not lost simply because the parties subsequently fall out.[13]  

   [13]see Commercial Union Assurance Co PLC v Mander [1996] 2 Lloyd’s Rep 640.

1. There is no doubt, in my view, that prior to Mr Oswal ceasing to be a shareholder in Holdings on 28 November 2011, he would have had, subject to him complying with the notice obligations in clause 6.1 of the Deed, a right to access the advices provided to Fertilisers.  The clause is plain in its terms, and I was not directed to any term of the Deed or any other instrument which would have caused Mr Oswal to lose his rights under the Deed by reason of the appointment of the Receivers.  I reject the submissions advanced on behalf of Fertilisers that Mr Oswal’s rights to access the Fertilisers’ documents somehow became property subject to the control of the Receivers, or that all of his rights as a shareholder were surrendered upon the appointment of the Receivers.  That much is apparent from the authorities relied upon by Mr Oswal, especially Re Geneva Finance Ltd.[14]

   [14](1992) 7 ACSR 415.

1. However, there is no evidence that during the period between the appointment of the Receivers and 28 November 2011 Mr Oswal sought to exercise his rights under clause 6.1 of the Deed.  Further, clause 16.2(c) of the Deed provides that:

(for outgoing Shareholder):  This Deed will also be terminated for any one Shareholder when it ceases to hold, directly or indirectly, any Shares.  In that case, the provisions of clause 16.2(b) still apply.

Clause 16.2(b) of the Deed provides that:

(Consequences)  If this deed is terminated under clause 16.2(a) then, in addition to other rights, powers or remedies provided by law:

(i)each party is released from its obligations to perform this deed further, except those imposing obligations of confidentiality; and

(ii)each Shareholder retains the right it has against such other Shareholder in respect of any past breach.

1. Accordingly, Mr Oswal’s (unexercised) rights under clause 6.1 of the Deed did not survive the termination of the Deed on 28 November 2011.   The question is, whether any common law right he had as a shareholder of Holdings to access the documents of Fertilisers during the time he remained a shareholder means that Fertilisers is unable to maintain a claim for privilege in the advices. 

1. I accept that during the course of the receivership that Mr Oswal maintained a common interest in the GSA proceeding, given that he would be entitled to any residual value of his shares after the realisation of ANZ’s security interest, and that the appointment of the Receivers did not extinguish Mr Oswal’s common law rights insofar as the exercise of those rights would not interfere with the Receivers’ performances of their duties. 

1. Of course, Mr Oswal was a shareholder of Holdings, not Fertilisers, and as such prima facie not entitled to the documents of Fertilisers as such.  However, given the findings of Kenneth Martin J in Oswal v Yara Australia Pty Ltd (No 3),[15] that the relationship between the shareholders of Holdings was a ‘quasi-incorporated co-venture’ or a ‘quasi-joint venture’, with Fertilisers and Holdings being the joint venture vehicles, that overcomes the ‘separate legal entity’ argument advanced on behalf of Fertilisers, as one would expect joint venture partners would have a common interest in litigation to which the joint venture vehicle was a party.  That much is evident from the decision of Warren J (as her Honour then was) in Yunghanns v Elfic Pty Ltd (No 2),[16] to the effect that parties to a joint venture would generally have such a common interest.

   [15](2011) 86 ACSR 1 [16], [49] and [434].

   [16](2000) 1 VR 92.

1. In my view, in these circumstances, Fertilisers cannot maintain any privilege in the GSA advices against Mr Oswal while he remained a shareholder in Holdings.  Mr Oswal has established that, as at the time the advices were brought into existence, there was a sufficiently common interest between Fertilisers and Mr Oswal in the GSA proceeding to prevent Fertilisers from claiming privilege against Mr Oswal.  It is accepted that a major, if not the major, influence on the value of Mr Oswal’s shares in Holdings, was the terms under which the other parties to the GSA proceeding could sell gas to Fertilisers, and in particular, whether Fertilisers could compel the other parties to continue to supply gas at a favourable price.  Mr Oswal was entitled to any surplus from the sale of the shares over and above what was payable to ANZ to realise its securities.  The fact that Fertilisers was under the control of the Receivers, who also had an interest and duty to maximise the value of Fertilisers, did not alter that commonality of interest between Mr Oswal and Fertilisers in the conduct and outcome of the GSA proceeding. 

1. Of course, the decision in Yunghanns v Elfic Ltd (No 2)[17] and the authorities referred to by Warren J (as her Honour then was) in that decision is only authority for the principle that Fertilisers is unable to maintain a claim for legal professional privilege in the advices against Mr Oswal.  The principle does not, as far as I can see, extend to conferring a positive right of access to those documents.  The issue of whether Fertilisers ought to be compelled to produce the advices is a question of discovery, which is complicated by the fact that some or all of the advices may have been discovered by the ANZ parties, but not produced for inspection, including documents not within the sample. 

   [17]Ibid.

Loss of privilege by reason of a ‘fraud on the power’

1. Senior counsel submitted that no privilege is capable of attaching to communications by which the Receivers sought guidance to pursue a ‘deliberate abuse of power’. Section 125 of the Act provides as follows:

(1)       This Division does not prevent the adducing of evidence of –

(a)a communication made or the contents of a document prepared by a client or lawyer (or both), or a party who is not represented in the proceeding by a lawyer, in furtherance of the commission of a fraud or an offence or the commission of an act that renders a person liable to a civil penalty; or

(b)a communication or the contents of a document that the client or lawyer (or both), or the party, knew or ought reasonably to have known was made or prepared in furtherance of a deliberate abuse of a power.

(2)For the purposes of this section, if the commission of the fraud, offence or act, or the abuse of power, is a fact in issue and there are reasonable grounds for finding that –

(a)the fraud, offence or act, or the abuse of power, was committed; and

(b)a communication was made or document prepared in furtherance of the commission of the fraud, offence or act or the abuse of power –

the court may find that the communication was so made or the document so prepared.

(3)In this section ‘power’ means a power conferred by or under an Australian law.

1. In his Third Further Amended Statement of Claim,[18] Mr Oswal alleged that the Receivers owed certain duties to Fertilisers under the Corporations Act 2001 (Cth) in negotiating any compromise of the GSA proceeding, but had breached their duties by entering into the new GSA and compromising the GSA proceeding for the improper purpose of effecting the sale of the Oswals’ shares in Holdings. Further, the terms of the new GSA and the settlement of the GSA proceeding did not reflect the merits of Fertilisers’ position in the GSA proceeding. Mr Oswal submitted that no privilege can attach to communications with the intent of guiding them to enter into a transaction in breach of their duties in the relevant sections of the Corporations Act. 

   [18]at paragraphs 20Q to 20U.

1. A useful summary of the relevant principles applicable to this aspect of the application, which is referrable to a substantial proportion of documents in the sample, is to be found at paragraphs 73 and 74 of the decision of Derham AsJ in HRF Nominees Pty Ltd (in Liq) v Man Civil Constructions Pty Ltd (No 2),[19] as follows:

   [19][2014] VSC 613.

(a)The range of instances of fraud are not limited to legal fraud in the narrow sense, but applies to all forms of fraud and dishonesty as fraudulent breach of trust, fraudulent conspiracy, trickery and sham contrivances: Kang v Kwan; ([2001] NSWSC 698 [37])

(b)In ATH Transport v Jas (International), ([2002] NSWSC 956, [12]) Barrett J found that the s 125 exception or negation activated by ‘fraud’ is a statutory emanation of the principle that there is no privilege in iniquity;

(c)An element of actual dishonesty is not required: Amcor v Barnes; ([2011] VSC 341 [47])

(d)Privilege does not attach to a lawyer and client communication made for some illegal or improper purpose contrary to public interest: Hodgson v Amcor; Amcor v Barnes (No 2) ([2011] VSC 204 [70])

(e)Proof of the fraud to the civil standard, taking into account the Briginshaw (Briginshaw v Briginshaw (1938) 60 CLR 336) test is not required. Various descriptions of the standard have been used namely:

(iii)there must be something to give colour to the charge;

(iv)it is enough that circumstances are made to appear which sufficiently point to the bona fides and credibility of the allegation;

(v)some prima facie evidence that has some foundation in fact: Hodgson v Amcor; Amcor v Barnes (No 2). ([2011] VSC 204 [82])

1. I agree with the submissions on behalf of Mr Oswal that ‘fraud’ is not confined to actual dishonesty, and that contraventions of the statutory duties relied upon by Mr Oswal are caught within the meaning of s 125 of the Act. Further, the fact that the question of whether the Receivers have breached their duties is a central issue in the PO proceeding does not preclude the operation of s 125 of the Act.

1. Mr Oswal relied upon, among other things, the matters set out at paragraph 44 of the affidavit of John Cameron Biggs sworn on 23 October 2015, which referred to the following matters:

(a)        the negotiations between Apache and the ANZ parties regarding the proposed sale of the Oswals’ shares in Holdings to the Receivers from August 2011;

(b)        evidence that the Receivers themselves considered that they had a conflict of interest;

(c)        reference to the Receivers’ need to obtain an opinion from Fertilisers’ senior counsel regarding its prospects in the GSA proceeding;

(d)       the terms of a letter from Clayton Utz to ANZ and Freehills regarding Yara’s view of Fertilisers’ prospects of success in the GSA proceeding and, in particular, the following statement:

As your clients know, all powers which any receiver and manager of BFPL possesses, including any power to settle the GSA proceeding, may be exercised only for the purpose for which they were granted and cannot be exercised for any collateral purpose.

(e)        the terms of an opinion from Energy Advice to the Receivers to the following effect:

On 24 November 2011, EnergyAdvice wrote to the Receivers providing an opinion in relation to the terms of the New GSA (PPB.006.001.0259) (tab 49).  Amongst other things, the letter noted that “[t]he price outcomes under the New GSA are significantly higher than under the Old GSA” (page 5).  The letter concluded: “It is our conclusion and advice that whilst the proposed terms and conditions of the New GSA are not ideal, they do represent a reasonable outcome having regards to the advised significant legal uncertainties surrounding the enforceability of the current GSA”;

(f)         the assessment by Flagstaff of the value of Fertilisers under the new GSA at US$894 million, compared with US$1,565 million under the existing GSA; and

(g)        the execution by ANZ and the Receivers of various documents to effect the settlement of the GSA proceeding and Fertilisers’ entry into the new GSA. 

1. The above matters are said to ‘give colour to the charge’ that the Receivers breached their duties to Fertilisers.  However, while I accept that it is not necessary for Mr Oswal to make good the allegations as if at trial, the question of whether the Receivers breached their duties is not only whether the Receivers’ subjective intention was to further the interests of others ahead of Fertilisers, but whether in fact, as a consequence of the settlement of the GSA proceeding and the entry into the new GSA, Fertilisers was worse off by reason of the actions of the Receivers.  In that regard, there is a gap in the evidence, at least in the evidence before me, in that there was a material risk (the magnitude of that risk will no doubt be the subject of extensive evidence and submission at trial) that Fertilisers would not be successful in the GSA proceeding, and as a result, faced the prospect of losing the supply of its primary raw material.  There is enough in the non-privileged material to indicate that such an outcome would have a very adverse effect upon the value of Fertilisers.  To simply point to evidence that the value of Fertilisers under the new GSA was less than its value under the existing GSA includes an unstated, and possibly unwarranted assumption that the existing GSA was enforceable in the manner contended for by Fertilisers in the GSA proceeding. 

1. Accordingly, the question of whether the Receivers breached their duty to Fertilisers is a question of considerable complexity, requiring a balancing of the various risks and rewards to Fertilisers of how it dealt with the GSA proceeding and the parties to the GSA.  The existence of a potential conflict of duty, and an observation by a solicitor not actively engaged in the GSA proceeding to the effect that it appeared that Fertilisers had good prospects of success, does not provide a sufficient foundation to reach a conclusion that the conduct of the Receivers might reasonably be considered to have been in furtherance of a ‘fraud on the power’. 

Radhika Oswal application

1. There are two issues which arise in this application: first, whether the ANZ parties have established that the documents record communications which were made for the purpose of the ANZ parties obtaining and/or receiving legal advice, rather than some other purpose, and whether the ANZ parties, by pleading certain matters in their defence, have put their states of mind in issue, such that privilege in any legal advice which is likely to heave informed that state of mind has been waived. 

1. In relation to the first issue, I determined, over the somewhat muted protests of senior counsel for Mrs Oswal, that there was sufficient material before me to determine that there was at least a real likelihood that the documents concerned were privileged, which could be finally determined by inspection.  The results of that inspection are summarised in Schedule C to these reasons.  To the extent that the claims have not been upheld, it is owing to my conclusion that the communications concerned advice, notwithstanding the fact that they were between ANZ and their solicitors, which was not legal advice, but was rather in the nature of strategic and/or communications advice (taking by way of example, communications regarding what ought to be disclosed to Victoria Police and how that information ought to be disclosed).  Further, there is insufficient evidence before me to determine the ANZ parties’ claim for privilege in the forensic handwriting expert’s report, and inspection takes the matter no further.  Indeed, the reference to the purpose of the report in the introduction to the report, and the fact that it was also commissioned by another firm of lawyers with no obvious connection to ANZ (I can infer from references in other documents in evidence that one of the parties to the purported European guarantees was involved in commissioning the report, but no more), suggests that it was prepared for multiple purposes.

1. In relation to the second issue, the question of whether the ANZ parties, by pleading certain matters in their defence and counterclaim, have, in the words of Allsop J in DSE (Holdings) Pty Ltd v Intertan Inc (’Intertan’):[20]

…makes an assertion (express or implied) or brings a case, which is either about the contents of a confidential communication or which necessarily lays open the confidential communication to scrutiny and, by such conduct, an inconsistency arises between the act and the maintenance of the confidence, informed partly by the forensic unfairness of allowing the claim to proceed without disclosure of the communication.

[20](2003) 127 FCR 499 [58].

1. At paragraphs 5.18, 5.19 and 5.20 of the Further Re-Amended Statement of Claim (‘FRASC’) Mrs Oswal alleged as follows (omitting particulars):

5.18     In the course of the negotiations referred to in paragraph 5.14 above:

(a)the Bank repeated its demands for the Plaintiff and Pankaj to execute guarantees and mortgages as referred to in paragraphs 5.7 and 5.8 above;

(b)the Bank asserted:

(i)that the European Guarantees had been forged and were not valid documents;

(ii)that Pankaj had admitted (during a meeting with representatives of the Bank held at the Bank’s offices at 100 Queen Street Melbourne on 9 December 2009) that he had forged the European Guarantees or caused them to be forged;

(iii)that the alleged forgeries constituted ‘Events of Default’ within the meaning of the ANZ Facilities, including an ‘Event of Default’ by YPF under the SBSA;

(iv)that, as a result of the alleged ‘Events of Default’, the Bank was entitled to demand immediate repayment of a total amount of US$928 million and to exercise certain rights and powers (including, without limitation, the right or power to appoint controllers or receivers to the assets and undertaking of YPF and/or YPH’s shares in YPF);

(v)that if the guarantees and mortgages referred to in (a) above were not executed, the Bank would issue notices of default under the ANZ Facilities and proceed to appoint controllers or receivers to the assets and undertaking of YPF and/or YPH’s shares in YPF and/or sell the assets and undertaking of YPF;

(vi)that Pankaj could go to prison as a result of his alleged role in the alleged forgeries if the alleged forgeries were reported to the relevant authorities or became public knowledge as a result of steps taken by the Bank;

(vii)that if the Bank proceeded to issue notices of default under the ANZ Facilities, it would report the alleged forgeries to the relevant authorities or the alleged forgeries would become known to such authorities;

(viii)that it was wanting to ‘help’ Pankaj and the Plaintiff, and the Bank also didn’t want the alleged forgeries to become public, but they had to execute the documents required by the Bank;

(ix)the Bank had reason to believe the Plaintiff knew everything about the alleged forgeries and that even she could go to prison;

(x)that so far as the Bank was concerned the defaults resulting from the alleged forgeries would become irrelevant once it was repaid the money owing to it under the ANZ Facilities from the proceeds of the sale to occur under the Sale Process Agreement which it was prepared to enter into if the guarantees and mortgages referred to in paragraphs 5.7(sa) and 5.8 were provided;

(c)Mr Pestell repeated to the Plaintiff the substance of the Bank’s assertions as pleaded and particularised in sub-paragraphs (b)(v) to (vii) and (x) above;

(d)the Plaintiff believed that, if the alleged forgeries were reported or became known to the relevant authorities, Pankaj could go to prison as a result of his alleged role in the alleged forgeries;

(e)the Bank was aware that the Plaintiff held the belief referred to in paragraph (d) above;

(f)the Plaintiff believed that if the Bank issued notices of default, the Bank would report the alleged forgeries to the authorities or otherwise take steps which would lead to the alleged forgeries becoming known to the relevant authorities;

(g)the Bank was aware that the Plaintiff had the belief referred to in (f) and deliberately said nothing to change her belief;

(h)the Plaintiff believed that, if she and Pankaj did not sign the guarantees and share mortgages required by the Bank, then the Bank would appoint controllers or receivers to the assets and undertaking of YPF and/or YPH’s shares in YPF;

(i)the Bank was aware that the Plaintiff had the belief referred to in (h) and deliberately said nothing to change her belief.

5.19If it be the fact that during the December 2009 negotiations the Bank was not prepared to enter into any agreement concerning the reporting of the alleged forgeries to the authorities or the taking of steps likely to result in the forgeries becoming public knowledge (such an agreement being denied by the Bank in its Defence dated 20 October 2011), then the Plaintiff alleges that:

(a)the Bank failed to make that position known to the Plaintiff; and

(b)the Bank deliberately failed to do so.

5.20At the time that the Bank made the assertions set out in paragraphs 5.18(b((i), (ii), (iii) and (iv), the Bank, by at least Mr Page, Mr Santamaria and Mr Gaudion, believed (but did not inform the Plaintiff or her solicitors) that:

(a)it was not clear, and the Bank was not sure, that the European Guarantees had been forged;

(b)if they had been forged, it was not clear, and the Bank was not sure, that Pankaj was involved;

(c)it did not know whether Pankaj admitted to having forged any documents, as he had spoken in ambiguities, been hazy and had contradicted himself and, in any event, it was not clear whether there had been any forgery or whether he had been involved in any forgery;

(d)as it was not possible to reach complete conclusions on key facts, it was not clear, and the Bank was not sure, whether any Event of Default within the meaning of the ANZ Facilities existed by reason of a possible forgery; and

(e)accordingly it was not clear, and the Bank was not sure, that it was entitled to demand immediate repayment of a total of US$928 million or any amount or exercise the rights and powers it asserted (including to appoint receivers).

1. In their defence to the FRASC and Counterclaim dated 25 July 2014, the ANZ parties stated as follows:

5.18     To paragraph 5.18:

(a)They admit that during the negotiations and communications referred to in paragraphs 5.7 and 5.14 above ANZ requested that each of the plaintiff and Pankaj Oswal execute guarantees and share mortgages.  Otherwise they do not admit the allegations in sub-paragraph 5.18(a) and say further that they refer to and repeat paragraphs 5.7 to 5.14 above.

(b)They admit that at a meeting on 20 December 2009 at which the plaintiff’s lawyers and Pankaj Oswal’s lawyers were present, a statement was made on behalf of ANZ.

(c)They otherwise deny the allegations in sub-paragraph 5.18(b) and (ba) and say further that the statement made on behalf of ANZ was made by reading aloud a written statement, a copy of which was provided to the plaintiff’s lawyers and Pankaj Oswal’s lawyers on about 20 December 2009 (‘the 20 December Statement’), the full terms and effect of which will be referred to at trial, including without limitation ANZ’s statement that it reserved all of its rights.

(d)They do not admit the allegations in sub-paragraph 5.18(c) to (i) and say further that sub-paragraphs 5.18(d), (f) and (g) are embarrassing.

5.19To paragraph 5.19:

(a)They admit that ANZ was not prepared to enter into any agreement of the kind alleged.

(b)Save that they deny that ANZ acted deliberately in the manner alleged in paragraph 5.19, they otherwise do not admit the allegations therein, and say further and in any event that Pankaj Oswal and the plaintiff  knew that ANZ would not enter into an agreement of the kind alleged.

5.20Save that they refer to and repeat paragraph 5.18 above, they otherwise deny the allegations in paragraph 5.20 and say further that:

(a)Paragraph 5.20 is embarrassing.

(b)That at the time alleged by the plaintiff:

(i)Pankaj Oswal had informed ANZ at the meeting on 9 December 2009 referred to in paragraph 5.1 above, that he had forged or procured the forgery of the European Guarantees.

(ii)By letter dated 15 December 2009, BGL BNP Paribas (BGL) informed ANZ that in respect of certain named deeds of indemnity referred to in that letter expressed to be as between Banque Générale du Luxembourg and ANZ (dated 22 July 2005), and Fortis Banque Luxembourg and ANZ (dated 16 December 2005 and 5 September 2006), the signatures on those documents were formally contested by the named persons, and BGL considered that the deeds of indemnity had not been issued by them. 

Particulars

The letter was sent by Olivier Marlot and Marc Olinger of BGL to Christopher Page of ANZ.  A copy of the letter is in the possession of the first to fourth defendants’ solicitors and may be inspected by appointment. 

(iii)By letter dated 23 December 2009, Intertrust International Management Limited (formerly BGL Reads International Management Limited) informed AZ that in respect of certain named deeds of undertaking referred to in that letter, its representatives did not sign the said deeds and the seal on the documents was ‘counterfeit’. 

Particulars

The letter was sent by M T Cahill and R Le Hegarat of Intertrust International Management Limited to Christopher Page of ANZ.  A copy of the letter is in the possession of the first to fourth defendants’ solicitors and may be inspected by appointment.

(iv)Pankaj Oswal had not provided ANZ with, and therefore ANZ could not know, all of the details regarding the circumstances concerning the forgery of the European Guarantees;

(v)Insofar as it is alleged that at the times referred to ANZ did not believe that the European Guarantees were forged, that Pankaj Oswal was involved in the forgery, that Events of Default had occurred under the ANZ Facilities or that ANZ was entitled to demand immediate repayment under the facilities and then exercise its rights to enforce existing securities:

(A)They deny the allegations.

(B)They say further that Events of Default had occurred under the ANZ Facilities such that ANZ could exercise its rights as necessary including by demanding immediate repayment under the facilities and/or appointing receivers and/or agents for the mortgagee in possession to the assets and undertaking of YPG, the shares in YPF held by YPH, and 15% of the shares in YPH.

Particulars

The Events of Default included: defaults arising by reason of the circumstances referred to in this paragraph above, being defaults under clauses 21.1(d)(iii), 21.1(b) and 21.1(f)(i)(B) of each of the Burrup Trust Facilities; clauses 23.1(d)(iii), 23.1(b) and 23.1(f)(i)(B) of the Maruti Facility; clause 7.1 of the Pankaj Oswal share mortgage dated 2 May 2007; clause 5.1 of the YPH Share Mortgage; clause 11.1 of the SBSA; clause 5.1 of the YPF fixed and floating charge dated 18 December 2002; and any and all other Events of Default whether or not known to ANZ or ANZ Fiduciary Services Pty Ltd which had occurred on or before 20 December 2009, and in respect of which all rights and powers were reserved by the 20 December Statement. 

1. Mrs Oswal contends that by its pleadings, ANZ has laid open to scrutiny all documents it holds regarding its state of belief as at December 2009 with respect to:

(a)        the results of its investigation into the authenticity of the European guarantees; and

(b)        its instructions to and advice from Freehills regarding its obligations to report the alleged forgeries of the European guarantees to Victoria Police and its intentions in that regard.

1. The decision of the Court of Appeal in Vic Hotel Pty Ltd v DC Payments Australasia Pty Ltd (‘Vic Hotel’)[21] makes it clear that there need not be any express or implied reference by a privilege holder to the content of any privileged communication to give rise to the need to consider whether the privilege holder had acted inconsistently with the maintenance of confidentiality.  Dixon AJA (with whom Mandie and Beach JJA agreed), put the position as follows:

ANZ Application

1. In the ANZ application, the ANZ parties seek to produce for inspection a number of documents which are heavily redacted.  These documents were produced as a result of my rulings on 25 November 2015 and 22 December 2015, where I held (in the 25 November ruling) that:

ANZ cannot, consistently, assert in its pleadings a positive belief as to its entitlement to enforce rights arising on default and simultaneously protect from disclosure documents that evidence the state of its belief at the relevant time.

1. The consequence of this finding was that the ANZ parties were found to have waived legal professional privilege in (at that time) an unspecified class of documents concerning its belief as to certain facts which gave rise to events of default on the part of Mr Oswal which entitled ANZ to realise its securities.  After further argument concerning what specific classes of documents were caught by this part of my ruling, on 22 December 2015, I determined that the ANZ parties discover and provide inspection of:

any additional documents evidencing or relating to:

(a)any suggestion or allegation that the European Guarantees had not been signed by the parties who purportedly signed those documents;

(b)the correctness or otherwise of any suggestion or allegation that the European Guarantees had not been signed by the parties who purportedly signed those documents;

including, for the avoidance of doubt, documents evidencing the investigation referred to in paragraphs 3 and 5 of ARO.023.001.0003, insofar as those investigations of any suggestions relate to the investigation or allegation that the European Guarantees had not been signed by the parties who purportedly signed those documents.

1. This category was framed with considerable care, on the basis that legal professional privilege is an important substantive right, not to be too readily found to have been waived, and consistently with my observations in the 25 November ruling that there needs to be a strict limitation upon which communications are said to have been waived, noting that the analysis needs to be undertaken at a reasonably granular level. 

1. In his affidavit of 5 February 2016, Mr Kenneth Adams, a partner of Herbert Smith Freehills who has carriage and conduct of this proceeding on behalf of the ANZ parties, deposed as to the following matters:

(a)       on 29 January 2016, ANZ made discovery of 72 documents in response to paragraph 11 of the orders made on 22 December 2015, of which four documents were redacted for legal professional privilege;

(b)      he exhibited copies of the four documents in redacted form;

(c)       in November 2008, Freehills was engaged by ANZ to provide legal advice and representation to ANZ in relation to a non‑specific whistle blower communication received by the Australian Prudential Regulation Authority in respect of certain loan facilities provided by ANZ;

(d)      in the course of this engagement, he conducted interviews of ANZ employees and provided advice and reports to ANZ from time to time;

(e)       he described in general terms the nature and purpose of the four redacted documents; and

(f)       he deposed as follows:

The redacted parts of the Redacted Documents do not contain any suggestion or allegation that the European Guarantees had not been signed by the parties who purportedly signed those document(s) or the correctness or otherwise of such a suggestion or allegation;

and

I am instructed by ANZ to make available unredacted versions of the Redacted Documents to the Court for inspection should this application … be opposed, or should the Court otherwise wish to inspect the Redacted Documents.

1. In my view, it is not necessary to inspect the unredacted versions of the documents in order to resolve this application.  The evidence of Mr Adams as to the privileged status of the documents is unambiguous, and is as extensive as one could expect in the circumstances.  The evidence is that the subject matter of the redacted parts of the documents is not responsive to paragraph 11 of the 22 December orders (referred to in paragraph 3 above).  It may well be that the redacted parts refer to matters or communications which are relevant to the subject matter of the proceeding, but are otherwise protected by legal professional privilege, and, most importantly, do not relate to communications or matters where ANZ has, by its pleadings, waived any right to confidentiality by reason of its pleading in paragraphs 5.20 of its defence to the further re‑amended statement of claim. 

1. Counsel for Mrs Oswal submitted that by disclosing parts of the redacted documents, ANZ has acted inconsistently with the maintenance of the privilege in the remainder of the document (see s 122(3) of the Act). However, the redacted documents were produced under compulsion of law. Accordingly, the ANZ parties are entitled to rely upon s 122(5)(a)(iii) of the Act as an answer to this contention.

1. Finally, counsel for Mrs Oswal submitted that the large scale redactions make it impossible to understand the redacted parts of the documents.  I disagree.  The unredacted passages are capable of standing alone, and are comprehensible in their current form. 

1. Accordingly, I will grant the ANZ parties the relief sought by them in their summons filed 5 February 2016. 

Apache Application

1. This application had been adjourned from 18 December 2015 for the reasons set out in the 22 December 2015 ruling.  I was required, by reason of the approach to case management by the managing judge in the context of the looming trial date, to determine the application for discovery on the basis of the pleadings as they stand, and not on the basis of the Apache parties’ original submissions that Mrs Oswal’s pleadings were untenable, and that as such, the Apache parties should be relieved from the burden of making discovery.  However, in determining the Apache application, I have had regard to the Apache parties’ submissions regarding the need for the Court to maintain a tight rein over discovery, especially having regard to the fact that the claims against the Apache parties are relatively tangential to the main issues in the proceeding. 

1. That said, I do consider that the documents the relevant Apache parties relied upon in forming the opinion referred to by them in the relevant sections of their defences are relevant to the issues as raised by the pleadings, in particular, paragraphs 61.1(b)(i) and 61.2(a)(i) of the Apache parties’ defence.  However, the categories of documents sought by Mrs Oswal in schedule 2 to the submissions dated 9 December 2015 are too broad, insofar as they seek documents ‘relating to’ the opinions, including all documents ‘relevant to the basis for that opinion’, and communications between the Apache parties and its joint venture partners.  It may well be that communications between the joint venture partners are caught by the more limited category of discovery I will order, but I cannot see how communications between the joint venture partners about what actions they might or might not take are otherwise relevant to the question of what action the Apache parties thought they were entitled to take.  Given what is pleaded by the Apache parties regarding the opinion they held, it is sufficient that the Apache parties discover the documents which they actually relied upon to form that opinion.

1. As for the ‘thirteen dedicated contracts’, the submission of the Apache parties that the post contractual conduct of the Apache parties is irrelevant to the construction of the GSA is correct, and seems to be accepted by Mrs Oswal. 

1. Mrs Oswal contends, in summary, that the thirteen dedicated contracts are relevant to two matters: first, the entry into these contracts in 2005 was inconsistent with the Apache parties’ contention in 2006 (to be implied by the issue of the Force Majeure notice dated 23 November 2006 (‘Force Majeure Notice’)) that the GSA was a field depletion contract, not a supply agreement, as one could infer that, as at 2005, the Apache parties would not have entered into the thirteen dedicated contracts if they held the view that the GSA was a field depletion contract.  The time difference between the entry into the thirteen dedicated contracts and the issue of the Force Majeure notice is of limited moment.  Further, if the GSA was, contrary to Mr Oswal’s and Fertilisers’ contentions in the GSA proceeding, a field depletion contract, the entry into the thirteen dedicated contracts was contrary to the Apache parties’ contention in the Force Majeure Notice that the prospective inability of the Apache parties to supply gas under the GSA was owing to events beyond the control of the Apache parties. 

1. I agree with the submissions made on behalf of the Apache parties that the second submission goes nowhere: nowhere in the further re‑amended statement of claim is any reference made to the Apache parties’ having engaged in misleading and deceptive conduct by making representations of this kind by issuing the Force Majeure Notice.  However, I agree that, given that the Apache parties have put their opinion as to their rights to serve the Force Majeure Notice in issue by reason of their defences to Mrs Oswal’s claims, any conduct by them within a reasonable period of time before and after the formation of that opinion may be directly relevant to the reasonableness and/or bona fides of that opinion. 

1. For completeness, notwithstanding the criticisms of the evidence relied upon by Mrs Oswal in her application, there can be little doubt that, by reason of the commercial significance of the GSA and the issue of the Force Majeure Notice, there are likely to be documents in existence which meet the description of the documents sought by Mrs Oswal.  Similarly, there can be no reason not to infer that the thirteen dedicated contracts are evidenced in writing. 

1. Finally, it may well be that a substantial proportion of the documents to be discovered by the Apache parties will be subject to a claim for legal professional privilege.  The proposed orders set in place a regime to deal with any disputes arising out of any claim for legal professional privilege. 

Fertilisers’ Application

1. In its summons filed 15 December 2015, Fertilisers sought the following orders:

Pursuant to paragraph 7 of the orders made by the Honourable Associate Justice Daly on 10 December 2015 (the Orders), and subject to the production of the documents by the first to fourth defendants (ANZ Parties) by 22 January 2016 pursuant to paragraph 6 and ‘other matter’ C of the Orders, Fertilisers maintains a claim for client legal privilege and/or without prejudice privilege in all those documents listed in the schedule titled ‘PO Schedule – privilege claims still in dispute (5 November 2015)’ (Schedule) shaded yellow or pink, except those documents which have been inspected by the Court and in respect of which the Court determined that Fertilisers could not maintain a claim for privilege (as referred to in Schedule A to the reasons for decision dated 25 November 2015).

1. In effect, Fertilisers is seeking a declaration that it is entitled to maintain a claim for legal professional privilege over certain documents discovered by the ANZ parties over which the ANZ parties did not press a claim for legal professional privilege. 

1. Following a review of its original privilege claims and correspondence between the parties, Fertilisers maintained a claim over 42 documents. Mr Oswal withdrew his challenges to the claims made with respect to all but sixteen documents, five of which were documents over which Fertiliser maintained were immune from disclosure under s 131(1) of the Act (‘without prejudice privilege’), on the basis that the documents evidenced communications between various parties regarding the settlement of the GSA proceeding.

1. Fertilisers relied upon an affidavit of Ian Michael Johns, a partner of Maddocks, the solicitors representing Fertilisers in this proceeding, who deposed as to Fertilisers’ privilege claims over the 42 documents.  He deposed that the documents fell into the following categories:

(a)   documents containing communications involving Fertilisers (or its agents) and one of Fertilisers’ legal advisers for the dominant purpose of Fertilisers’ receiving legal advice or assistance regarding its participation in the sale process which is the subject of the proceeding;

(b)   documents containing communications between Fertilisers and one of its legal advisers for the dominant purpose of receiving legal advice or assistance in relation to negotiations for the possible settlement of the GSA litigation and the terms of such a settlement; or

(c)    documents being a communication and/or document prepared in connection with and/or contains an attempt to negotiate a settlement of the GSA litigation.

1. The terms of the orders made by me on 10 December 2015 did not contemplate Fertilisers making a claim for without prejudice privilege, but I do not consider that Fertilisers should be shut out from doing so, given the manner in which Fertilisers was drawn into the various discovery and privilege disputes in this proceeding. 

1. Counsel for Mr Oswal made the following submissions with respect to the remaining sixteen documents:

(a)   the description of the documents in Mr Johns’ affidavit does not, in some cases, accord with the description of the documents, which are derived from the ANZ parties’ August 2013 privilege list, in that some of the descriptions raise suspicions that they may be documents which fall within the terms of paragraph 57 of the 25 November ruling and paragraph 6 of the orders made on 10 December 2015, being ‘documents which constitute or record advice to Fertilisers regarding the GSA proceeding’ (‘GSA Advices’);

(b)   in any event, just as Mr Oswal had a common interest in the GSA proceeding with Fertilisers sufficient to justify his access to the GSA Advices (regarding Fertilisers’ prospects of success in the GSA proceeding), he ought to be held to have a common interest in documents concerning the settlement of the GSA proceeding; and

(c) a number of exceptions to the immunity conferred by s 131(1) of the Act apply in the current case.

1. I agree that the description of the documents does appear to be inconsistent with the evidence of Mr Johns, although I note that the descriptions were applied to the documents (a subset of a large set of documents) some two and a half years ago by the solicitors for the ANZ parties, and there might be some errors in coding, and the contents of email communications do not always necessarily accord with their titles.

1. Given the limited number of documents concerned, I determined to inspect the documents over which a claim for legal professional privilege was maintained by Fertilisers.  Subject to two exceptions, I am satisfied that first, the claims for legal professional privilege are valid, and secondly, that they do not fall within the class of documents the ANZ parties were ordered to produce to Mr Oswal, namely, the GSA Advices. 

1. The first exception is the last three pages of document 9: without further explanation, it is not clear how the communications recorded on those pages (which are very brief, most of the pages being taken up with address blocks and the usual disclaimers) are subject to any claim by Fertilisers for legal professional privilege.  Indeed, from  my review, it is not clear whether document 9 records a complete and intact email chain, and it also appears that any claim maintainable over the questioned portion may well be claimable by the ANZ parties rather than by Fertilisers.  No doubt this anomaly can be explained in correspondence. 

1. As for the second exception, as the communications in document 12 include representatives of the Apache parties, I cannot see how a claim for legal professional privilege can be maintained.  However, I accept that Fertilisers is entitled to maintain a claim for without prejudice privilege in document 12.

1. Further, I do not accept that I should extend the scope of Mr Oswal’s right to access beyond the GSA Advices.  The issue of the existence and scope of Mr Oswal’s common interest with Fertilisers was the subject of extensive argument at the hearing of the applications commencing on 4 November 2015.  Mr Oswal was held to have a relevant interest in advices regarding Fertilisers’ prospects of success in the GSA proceeding, because Fertilisers’ prospects of success in the GSA proceeding were intimately connected with the value of Mr Oswal’s shares in Holdings.  However, documents concerning the proposed or actual settlement of the GSA proceeding, or the mechanics of the settlement process, insofar as they did not contain any advice regarding Fertilisers’ prospects of success in the GSA proceeding, could not, of themselves, go to the valuation of Mr Oswal’s shares in Holdings.

1. There was no real dispute between the parties that Fertilisers’ claim for without prejudice privilege is maintainable, and, from my brief review of the documents concerned, those claims are in fact maintainable. Mr Oswal’s complaints about Fertilisers’ maintenance of the privilege fall into two categories: first, he submits that Fertilisers is adopting an approach which is inconsistent with the approach taken by all of the other parties to the dispute with respect to the disclosure of documents concerning the negotiation of the settlement of the GSA proceeding and the entry into the new GSA. The circumstances in which the ANZ parties negotiated a settlement of the GSA proceeding is a central issue in this proceeding, and the parties have discovered numerous documents constituting or recording the settlement negotiations. Secondly, it was submitted on behalf of Mr Oswal that a number of the exceptions in s 131(2) of the Act apply to these documents: in particular, ss 131(2)(c), (e), (f), and/or (i).

1. The first point can be disposed of quickly: Fertilisers cannot be bound by the manner in which other parties choose to conduct themselves in this proceeding. As for the second submission, the relevant provisions of s 131(1) of the Act are as follows:

(1)       Evidence is not to be adduced of –

(a)a communication that is made between persons in dispute, or between one or more persons in dispute and a third party, in connection with an attempt to negotiate a settlement of the dispute; or

(b)a document (whether delivered or not) that has been prepared in connection with an attempt to negotiate a settlement of a dispute.

(2)       Subsection (1) does not apply if –

…

(c)the substance of the evidence has been partly disclosed with the express or implied consent of the persons in dispute, and full disclosure of the evidence is reasonably necessary to enable a proper understanding of the other evidence that has already been adduced; or

…

(e)the evidence tends to contradict or to qualify evidence that has already been admitted about the course of an attempt to settle the dispute; or

(f)the proceeding in which it is sought to adduce the evidence is a proceeding to enforce an agreement between the persons in dispute to settle the dispute, or a proceeding in which the making of such an agreement is in issue; or

…

(i)making the communication, or preparing the document, affects a right of a person; or

…

1. As noted in Fertilisers’ written outline of submission in reply:

The onus rests upon Mr Oswal to identify which exception applies to each document that is challenged, and to demonstrate by evidence the applicable circumstances relating to each document that is alleged to fall within the relevant exception.

1. The task facing a party seeking to establish that an exception under s 131(2) of the Act applies might not be quite as stringent as contended for by Fertilisers, as it might be possible to make submissions with respect to classes or categories of documents, and one must recognise the difficulties a party such as Mr Oswal is labouring under in such circumstances. However, I agree that, at this stage, there is insufficient evidence before me to conclude that any of the exceptions apply. For example, there is no evidence that the ANZ parties or the Apache parties’ discovery contain unredacted versions of the documents being the subject of Fertilisers’ application, and no evidence about documents which have been disclosed might be qualified or illuminated by these documents. It is impossible for me to determine whether an exception ought to apply by me inspecting the documents concerned: such an inspection would take place completely out of context.

1. I also agree that this proceeding is not a proceeding to enforce an agreement, and there is no issue about whether the relevant agreement was, as a matter of fact, actually made: it is a proceeding to set aside the agreement.  Finally, I also agree that Mr Oswal has not established that making the without prejudice communications has affected a ‘right’ of his. 

1. However, given the vast volume of discovery in this proceeding, and the uncertainty about how the evidence might unfold at trial, I would not shut out Mr Oswal from making a fresh application to inspect these documents if considered warranted.  Realistically, such an application would probably have to be made to the trial judge, who will be in a better position to assess whether any exception applies once the court book has been filed and evidence is underway. 

1. I will circulate a set of draft orders among the parties to give effect to this ruling, and propose that the question of costs be once again dealt with by way of written submissions. 

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SCHEDULES OF PARTIES

PROCEEDING SCI 2011 04653

RADHIKA PANKAJ OSWAL	Plaintiff
- and -
AUSTRALIA & NEW ZEALAND BANKING GROUP LIMITED (ACN 005 357 522)	First Defendant
IAN MENZIES CARSON	Second Defendant
DAVID LAURENCE McEVOY	Third Defendant
SIMON GUY THEOBALD	Fourth Defendant
JP MORGAN CHASE BANK NA (ABN 43 074 112 011)	Fifth Defendant
CHEMICAL HOLDINGS PTY LTD (ACN 153 344 248)	Sixth Defendant
YARA AUSTRALIA PTY LTD (ACN 076 301 221)	Seventh Defendant
YARA PILBARA HOLDINGS PTY LTD (ACN 097 138 353)	Eighth Defendant
APACHE CORPORATION	Ninth Defendant
QUADRANT NORTHWEST PTY LTD (ACN 009 140 854)	Tenth Defendant
QUADRANT ENERGY AUSTRALIA LIMITED (ACN 009 301 964)	Eleventh Defendant
YARA PILBARA FERTILISERS PTY LTD (ACN 095 441 151)	Twelfth Defendant

PROCEEDING SCI 2012 01995

PANKAJ OSWAL	Plaintiff
- and -
IAN MENZIES CARSON	First Defendant
DAVID LAURENCE McEVOY	Second Defendant
SIMON GUY THEOBALD	Third Defendant
AUSTRALIA AND NEW ZEALAND BANKING GROUP LTD (ACN 005 357 522)	Fourth Defendant
APACHE CORPORATION	Fifth Defendant
APACHE NORTHWEST PTY LTD (ACN 009 140 854)	Sixth Defendant
APACHE ENERGY LIMITED (ACN 009 301 964)	Seventh Defendant
CHEMICAL HOLDINGS PTY LTD (ACN 153 344 248)	Eighth Defendant
YARA AUSTRALIA PTY LTD (ACN 076 301 221)	Ninth Defendant
YARA PILBARA HOLDINGS PTY LTD (ACN 097 138 353)	Tenth Defendant
YARA PILBARA FERTILISERS PTY LTD (ACN 095 441 151)	Eleventh Defendant

PROCEEDING SCI 2015 00804

YARA PILBARA FERTILISERS PTY LTD (ACN 095 441 151)	Plaintiff
- and -
PANKAJ OSWAL	First Defendant
RADHIKA OSWAL	Second Defendant
COMICAL ALI MILITANT VEGETARIAN PTY LTD (ACN 129 299 172)	Third Defendant
OSWAL INDUSTRIAL PTY LTD (ACN 121 121 659)	Fourth Defendant

First Cross-Claim

RADHIKA OSWAL	Plaintiff by First Cross-Claim
- and -
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED (ACN 004 357 522)	First Defendant to First Cross-Claim
ANZ FIDUCIARY SERVICES PTY LTD (ACN 100 709 493)	Second Defendant to First Cross-Claim
IAN MENZIES CARSON	Third Defendant to First Cross-Claim
DAVID LAURENCE McEVOY	Fourth Defendant to First Cross-Claim
SIMON GUY THEOBALD	Fifth Defendant to First Cross-Claim
YARA PILBARA HOLDINGS LTD (ACN 097 138 353)	Sixth Defendant to First Cross-Claim
YARA PILBARA FERTILISERS PTY LTD  (ACN 095 4441 151)	Seventh Defendant to First Cross-Claim

Second Cross-Claim

PANKAJ OSWAL	Plaintiff by Second Cross-Claim
YARA PILBARA FERTILISERS PTY LTD (ACN 095 441 151)	Defendant to Second Cross-Claim

Third Cross-Claim

YARA PILBARA FERTILISERS PTY LTD (ACN 095 441 151)	Plaintiff by Third Cross-Claim
PANKAJ OSWAL	Defendant to Third Cross-Claim

Fourth Cross-Claim

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED (ACN 005 357 522)	Plaintiff by Fourth Cross-Claim
- and -
PANKAJ OSWAL	Defendant to Fourth Cross-Claim