Times Properties Pty Ltd v Challenge Bank Ltd

[1995] FCA 1036

CATCHWORDS

EVIDENCE - client's legal privilege - documents and communications passing between receiver and solicitors for appointor - whether appointor able to claim privilege - whether receiver able to claim privilege - whether appointor's solicitors were separately instructed by receiver.

Evidence Act 1995, ss117-119
Trade Practices Act, s52

TIMES PROPERTIES PTY LTD v CHALLENGE BANK LIMITED
NO. WAG 70 OF 1995

JUSTICE R D NICHOLSON
PERTH
21 DECEMBER 1995

IN THE FEDERAL COURT OF AUSTRALIA     )    LIMITED DISTRIBUTION

WESTERN AUSTRALIA DISTRICT REGISTRY   )

GENERAL DIVISION  )     NO. WAG 70 OF 1995

B E T W E E N:  TIMES PROPERTIES PTY LTD

Applicant

and

CHALLENGE BANK LIMITED

Respondent

MINUTE OF ORDER

JUDGE MAKING ORDER:     JUSTICE R D NICHOLSON

DATE OF ORDER:          21 DECEMBER 1995

WHERE MADE:            PERTH

THE COURT ORDERS THAT:

1. Within 7 days the respondents produce to the applicant for inspection the following documents (as described in the "Schedule of Documents" produced by Farrix Pty Ltd in response to a subpoena for production of documents dated 29 September 1995):

(a)Letter to Andrew Barclay, Mallesons Stephen Jaques dated 10 August 1994.

(b)Letter from Mallesons Stephen Jaques to Price Waterhouse dated 30 May 1994.

(c)File note dated 15 April 1994.

(d)Letter from Mallesons Stephen Jaques dated 25 August 1994.

(e)File note, paragraph 2 dated 11 May 1994.

(f)Letter to Mallesons Stephen Jaques dated 10 August 1994.

1. The respondent pay the applicant's costs in relation to the claim for client's legal privilege.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA     )    LIMITED DISTRIBUTION

WESTERN AUSTRALIA DISTRICT REGISTRY   )

GENERAL DIVISION  )     NO. WAG 70 OF 1995

B E T W E E N  TIMES PROPERTIES PTY LTD

Applicant

and

CHALLENGE BANK LIMITED

Respondent

CORAM:JUSTICE R D NICHOLSON

DATE:21 DECEMBER 1995

PLACE:PERTH

REASONS FOR JUDGMENT

R D NICHOLSON J:

On 29 September 1995 the applicant issued subpoenas for production of documents to Farrix Pty Ltd ("Farrix") and to Price Waterhouse.  On 11 October 1995 Farrix by its solicitors produced two sets of documents to the Court.  No documents were produced by Price Waterhouse in response to the subpoena.  Both the respondent and Farrix initially claimed client legal privilege over ten documents comprising correspondence and file notes of conversations between Price Waterhouse and the respondent's solicitors.  Of the ten documents originally subject to the claims, documents 2 and 4 have been discovered by the respondent but not yet inspected, and document 5 has been discovered and inspected.  The result is that the claims are now pursued in relation to documents numbered 1, 3, 6, 7, 9 and 10 inclusive.  The claims in the written submissions are made by the respondent and the Receiver (as later defined), who is a partner in Price Waterhouse.

Farrix was the registered proprietor of BNZ House ("the Property") which was sold to the applicant.  The applicant alleges in its statement of claim that, in connection with that sale, the respondent by its agent published an Investment Report and a Final Information Package and made oral representations by its representatives and agents, including its solicitors concerning the tenancies of the Property.  The claim is that such conduct and representations were misleading and deceptive and likely to mislead and deceive, contrary to s52 of the Trade Practices Act.

As part of the claim by the applicant it is said that the respondent was at all material times the mortgagee in possession of the Property, although that allegation is not admitted on its behalf.  It is not disputed that the solicitors on the record for the respondent in this proceeding were its solicitors and representatives for the sale of the Property. 

Affidavit evidence before the Court on this interlocutory application establishes that Farrix granted a mortgage ("the Mortgage") over the property to the respondent on 24 April 1989.  On 20 March 1990, the respondent made the appointment of the partner of Price Waterhouse as Receiver and Manager of the Property ("the Receiver").  Condition 14 of the Mortgage authorised the respondent to make such appointment.  Condition 14(4) provided that a Receiver appointed by the respondent "shall be the agent of the Mortgagor and the Mortgagor shall be solely responsible for anything done or not done by the Receiver..."  Consequently, the appointment of the Receiver had the effect of appointing that person as the agent of Farrix. 

It is common ground that the claims by the respondent and Farrix are to be resolved by reference to ss117, 118 and 119 of the Evidence Act 1995. It is not necessary that these be set out here and reference will be made to relevant provisions in the course of these reasons.

For a claim to be made pursuant to s118 or s119 of the Evidence Act 1995, the objection must be made by "a client". Section 117(1) defines "client" to include "(a) an employer (not being a lawyer) of a lawyer". In my view, by the use of the word "employer" the paragraph does not intend to exclude the professional engagement by a client of a lawyer. In the present proceeding the respondent employed its solicitors. The respondent is therefore a client for the purposes of making the objection under s118 or s119.

However, the documents over which privilege is claimed were created in the period May 1994 until August 1994.  The proceeding was not commenced until 30 June 1995.  There is no evidence before the Court from which it can be inferred that the proceedings were "anticipated" in May-August 1994.  There is therefore no evidence that the documents were prepared for "the dominant purpose" of providing the respondent with legal advice (s118) or professional legal services (s119).  The respondent's claim cannot therefore succeed under either of those sections.

The claim by the respondent is put in another way. Section 117(1)(b) provides that the word "client" includes "an employee or agent of a client". It is contended that, to the extent the Receiver (or those assisting him) assisted in the process of sale of the Property (or sought advice in relation to the same), he was acting as the agent of the Respondent so that he comes within the definition of "client" in s117(1)(b) of the Evidence Act, with the consequence that the respondent is entitled to make objection pursuant to s118 and s119 of that Act.

There is support in the documents for the existence of such an agency relationship.  Documents 6 and 9 are relied upon in particular to support this submission because they contain advice given by the respondent's solicitors to an employee of the Receiver.  This is reinforced by a reference in document 1 where the Receiver signs as "Agent for the (Respondent)".  Further, in document 1 the Receiver states that he is acting on instructions from the Respondent (as he also does in documents 5 and 8).  The documents are therefore capable of supporting an inference on behalf of the respondent that the Receiver was acting as agent for the respondent. 

However, that inference is rebutted by reference to condition 14(4) in the Mortgage which establishes that the Receiver upon appointment by the respondent was the agent of Farrix: cf Ford and Austin, Principles of Corporation Law, 7th ed, (Butterworths), at 971, par25.090. Consequently, the claimed agency in the documents can provide no sound foundation for a conclusion of the existence of the necessary agency relationship to bring the Receiver within the definition of "client" in s117(1) of the Evidence Act. The result is that the respondent has no entitlement to a claim under ss118 or 119 on that basis.

For the Receiver it is contended that, if the solicitors of the respondent were engaged by the Receiver in his own right, the Receiver is a client entitled to claim the privilege and any employee of the Receiver is also a client: see s117(1)(b). This contention is unsupported by reference to any evidence which would justify an inference that the respondent's solicitors were independently instructed by the Receiver. It must therefore fail.

For these reasons I consider that neither the respondent nor the Receiver have a claim for legal professional privilege in respect of the documents and orders should be made for production and inspection. 

I certify that this and the preceding 3 pages are a true copy of the Reasons for Judgment of his Honour Justice R D Nicholson.

Associate:

Date:

APPEARANCES BY WRITTEN SUBMISSIONS

Counsel for the Applicant:        Ms J Hill

Solicitors for the Applicant:     Bennett & Co

Counsel for the Respondent:       Mr P Doherty

Solicitors for the Respondent:     Minter Ellison Northmore Hale

Date of Judgment:                21 December 1995