The State of South Australia and State Bank of South Australia v Lewis Barrett

[1995] SASC 4956

COURT IN THE SUPREME COURT OF SOUTH AUSTRALIA PERRY J

CWDS
Evidence - legal professional privilege - claim by plaintiff bank that legal professional privilege applied so as to prevent access by the defendants, being former directors of the bank, to certain discovered documents - held that as the documents came into being while the defendants were directors of the bank, when they would have had a legal right of access to them, and as the directors were then part of the corporate personality of the bank in the sense that they were its "eyes and ears", they should not be regarded separately from the "client" for the purposes of the rules relating to legal professional privilege - as such, they were entitled to access, notwithstanding that they had since resigned.

HRNG ADELAIDE #DATE 7:2:1995 #ADD 13:3:1995

Counsel for plaintiffs:             Mr B R Martin QC with him
  Mr T Stanley

Solicitors for plaintiffs:            Crown Solicitor (SA)

Counsel for defendants Barrett, Simmons, Bakewell, Byrne, Nankivell, Searcy and Summers:   Mr J Sulan QC with him
  Mr M Selley

Solicitors for defendants Barrett, Simmons, Bakewell, Byrne, Nankivell, Searcy and Summers:   Piper Alderman

Counsel for defendant Clark:         Mr J Goldberg

Solicitors for defendant Clark:     Goldberg and Co

Counsel for defendant FAI:            Mr G Muecke

Solicitors for defendant FAI:         Morcombe Townsend

ORDER
There is no claim for legal professional privilege which prevents those documents as have been discovered being made available for inspection in the usual way.

JUDGE1 PERRY J I have been asked to rule on a claim by the plaintiffs, or at least the second-named plaintiff, being at the time in question the State Bank of South Australia, ("the bank") that access by the defendants to a group of discovered documents should be denied on the ground of legal professional privilege.

2. The plaintiffs' discovery is contained in a number of filed lists and supplementary lists of documents. The parts of the lists the subject of the claim for privilege have been grouped together by Mr Martin QC in a separate consolidated list tendered during the course of his argument.

3. With the benefit of consideration of the matter overnight and the further assistance of Mr Martin QC this morning, I feel able to give my ruling now.

4. Mr Sulan QC's argument is that the relevant documents came into existence whilst the first to seventh defendants, or some of them, were directors of the bank, and that circumstance precludes any claim for privilege of the kind now advanced. He develops the argument in various ways.

5. He first contended that as the directors had a right of access to those documents while they were in office as directors, whether or not they exercised that right, this fact alone removes the cloak of legal professional privilege which would otherwise attach to them.

6. The second argument is that the directors were the eyes and ears of the bank, and could not be distinguished from its corporate personality in the relevant sense. As a consequence, they should be equated with the clients, and the privilege could not therefore attach to them.

7. Given that a corporation can only act through directors and other agents and servants, the law often characterises the acts of such persons as the acts of the corporation itself.

8. Both arguments were predicated on the footing that if legal professional privilege attaches to any document, it does so at the time of its creation, having regard to the circumstances applying at that time.

9. I am not sure that that criterion holds good with respect to all documents. There may be documents with respect to which privilege would not apply at the time of their creation, which may, for example, be given to a solicitor who may then use them for the purpose of giving advice. In those circumstances, the documents may not have been privileged at the time when they came into being, but they might become privileged in the hands of the solicitor. Whether or not such a process might subsequently confer an immunity not attaching to a document at the time of its creation is a question admitting of no little difficulty.

10. However, it does not seem to me that the documents now in question fall into that category. They are, rather, in the nature of advices to or requests for advice from the bank with respect to aspects of the transactions in question in the proceedings.

11. Counsel were not able to point to any authority directly in point.

12. Mr Martin QC argued that whatever the significance of the fact that the directors were, in a sense, part of the corporate personality of the bank, that ceased when they resigned. But it seems to me that once it is accepted that the directors were in all relevant senses fully identified with the bank at the time these documents came into existence, the necessary consequence is that no legal professional privilege can be said to have existed qua the directors at that time. It is not to the point that legal professional privilege settled on these documents qua the world at large from the time at which they were brought into being. Legal professional privilege never prevents access by the client or the giver of the advice or the professional adviser responsible for the creation of the document in question; it only ever applies to other persons. So that it seems that, from the outset, these documents qua the directors were not subject to legal professional privilege or, perhaps more accurately, the ambit of the cloak of legal professional privilege which settled on them did not extend to the directors.

13. The only question left, and it is, so far as I know, a novel one, is whether or not, upon the directors ceasing to hold office as such, in some way there was a change in the legal position and they then became subject to the privilege attaching to the documents, even though the bank has since sued the directors.

14. In my opinion, that question should be resolved in favour of the directors. It seems to me to be inconsistent with the undoubted fact that at the time they held office they could have had access to these documents, that in some way that situation should be regarded as having changed when they ceased to hold office. True it is that, both while holding office and after they ceased to hold office, the directors have a duty of confidentiality with respect to strangers and to the world at large. But there is no suggestion that any such duty of confidentiality would be breached if they were given access to documents in the course of these proceedings.

15. It is an elementary principle of the law relating to discovery that a document discovered out of the hands of the parties to the proceedings can only be used by the other parties for the purpose of those proceedings, and no other purpose.

16. Mr Sulan QC did not argue that documents coming into existence after June 1991, which was the date upon which the defendant Bakewell ceased to be a director, he being the last to resign, should be made available, so that it is necessary only to rule with respect to the documents which came into existence before 30 June 1991.

17. I rule that as to such of those documents as have been discovered, there is no claim for legal professional privilege which prevents them being made available for inspection in the usual way.

18. Whether or not any claim for statutory or other privilege or confidentiality or public interest immunity settles on any of them is another matter. I will hear counsel as to that in due course.