Traderight (NSW) Pty Ltd (ACN 108 880 968) v Bank of Queensland Limited (ACN 009 656 740) (No 16) and 13 related matters

[2013] NSWSC 418

Supreme Court

New South Wales

Medium Neutral Citation:	Traderight (NSW) Pty Ltd (ACN 108 880 968) v Bank of Queensland Limited (ACN 009 656 740) (No 16) and 13 related matters [2013] NSWSC 418
Hearing dates:	11 April 2013
Decision date:	26 April 2013
Before:	Ball J
Decision:	Notice of motion filed on 11 April 2013 be dismissed
Catchwords:	EVIDENCE - privilege - client legal privilege - whether an adequate description of documents, over which privilege is claimed, has been provided - Uniform Civil Procedure Rules 2005 (NSW) rr 21.3 and 21.4 - whether privilege properly claimed - inspection of privileged material - DISCOVERY - relevance - Uniform Civil Procedure Rules 2005 (NSW) r 21.1(2).
Legislation Cited:	Civil Procedure Act 2005 (NSW) Evidence Act 1995 (NSW) Practice Note SC Eq 11 Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited:	Dye v Commonwealth Securities Ltd (No 5) [2010] FCA 950 Grant v Downs [1976] HCA 63; (1976) 135 CLR 674 Kennedy v Wallace [2004] FCAFC 337; (2004) 142 FCR 185 Kirby v Centro Properties Limited (No 2) [2012] FCA 70; (2012) 87 ACSR 229 Lake Cumbeline Pty Limited v Effem Foods Pty Limited [1994] FCA 1479 Marshall v Prescott [2012] NSWSC 992 National Crime Authority v S (1991) 29 FCR 203 Palavi v Radio 2UE Sydney Pty Ltd [2011] NSWCA 264 Priest v State of New South Wales [2006] NSWSC 1281 Re Southland Coal Pty Limited (receivers and managers appointed (in liq)) [2006] NSWSC 899; (2006) 203 FLR 1 Rich v Harrington [2007] FCA 1987; (2007) 245 ALR 106 Walker Corporation Pty Limited v Sydney Harbour Foreshore Authority [2008] NSWLEC 247; (2008) 161 LGERA 86
Category:	Procedural and other rulings
Parties:	Traderight (NSW) Pty Ltd (ACN 108 880 968) (First Plaintiff in 06/258216 and First Defendant in 06/258225) Bronwyn Smith (Second Plaintiff in 06/258216 and Second Defendant in 08/258225) Geoffrey Versace (Third Plaintiff in 06/258216 and Third Defendant in 08/258225) Smith Partners Development Pty Ltd (Fourth Plaintiff in 06/258216; Fourth Defendant in 08/258225) Verich Holdings Pty Ltd (Fifth Plaintiff in 06/258216; Fifth Defendant in 08/258225) Bank of Queensland Limited (ACN 009 656 740) (Defendant in 06/258216; Plaintiff in 08/258225; First Defendant/Cross Claimant in 08/282126; First Defendant in 09/287816; First Defendant/Cross Claimant in 08/282304; First Defendant in 09/287824; Defendant/Cross Claimant in 10/367117; Defendant/Cross-Claimant in 08/281332; Plaintiff/First Cross Claimant in 08/279848; First Defendant in 09/287814; Defendant/Cross Claimant in 10/367086; Defendant/Cross Claimant in 10/305568; Defendant/Cross Claimant in 10/306022; Defendant/Cross Claimant in 10/304306) Rossmick No 1 Pty Limited (First Plaintiff/First Cross Defendant in 08/282126; First Plaintiff in 09/287816) Rossmick No 2 Pty Limited (Second Plaintiff/Second Cross Defendant in 08/282126; Second Plaintiff in 09/287816) Michael Bradley (Third Plaintiff/Third Cross Defendant in 08/282126; Third Plaintiff in 09/287816) Ross Chapman (Fourth Plaintiff/Fourth Cross Defendant in 08/282126; Fourth Plaintiff in 09/287816) Luke Nolan (Fifth Plaintiff/Fifth Cross Defendant in 08/282126; Fifth Plaintiff in 09/287816) Tomala No 1 Pty Ltd (ACN 110 321 698) (Sixth Plaintiff/Sixth Cross Defendant in 08/282126; Sixth Plaintiff in 09/287816) Casmick Pty Ltd (ACN 110 292 012) (Seventh Plaintiff/Seventh Cross Defendant in 08/282126; Seventh Plaintiff in 09/287816) Nolan No 1 Pty Ltd (ACN 110 019 426) (Eighth Plaintiff/Eighth Cross Defendant in 08/282126; Eighth Plaintiff in 09/287816) Nadine Nolan (Ninth Plaintiff/Ninth Cross Defendant in 08/282126; Ninth Plaintiff in 09/287816) David Liddy (Second Defendant in 08/282126; Second Defendant in 09/287816; Second Defendant in 09/287824; Second Cross Defendant in 08/279848; Second Defendant in 09/287814) Jude Financial Services Pty Ltd (ACN 115 763 481) (First Plaintiff/First Cross Defendant in 08/282304; First Plaintiff in 09/287824) Russell Jude Edward Gardner (Second Plaintiff/Second Cross Defendant in 08/282304; Second Plaintiff in 09/287824) Penelope Ann Gardner (Third Plaintiff/Third Cross Defendant in 08/282304; Third Plaintiff in 09/287824) Donna Quinn (Third Defendant in 08/282126; Third Defendant in 09/287816; Fourth Defendant in 09/287824) Garry Allsop (Fourth Defendant in 09/287816; Fourth Defendant in 08/282126; Fourth Defendant in 09/287816; Third Defendant in 09/287824; Third Cross Defendant in 08/279848) Shamarbre Pty Ltd (First Plaintiff/First Cross Defendant in 10/367117) Ronald George Johnson (Second Plaintiff/Second Cross Defendant in 10/367117) Geraghty & Palmer (NSW) Pty Ltd (First Plaintiff/First Cross Defendant in 08/281332) Shauna Margaret Geraghty (Second Plaintiff/Second Cross Defendant in 08/281332) Barry Palmer (Third Plaintiff/Third Cross Defendant in 08/281332) SME Business Assist Pty Limited (ACN 108 524 232) (First Defendant/First Cross Claimant in 08/279848; First Plaintiff in 09/287814) Scott Rolfe McCoy (Second Defendant/Second Cross Claimant in 08/279848; Second Plaintiff in 09/287814) Leokate Pty Ltd (ACN 111 162 068) (First Plaintiff/First Cross Defendant in 10/367086) Stephen Sargent (Second Plaintiff/Second Cross Defendant in 10/367086) Lauren Sargent (Third Plaintiff/Third Cross Defendant in 10/367086) Best Deal Pty Limited (ACN 119 366 433) (First Plaintiff/First Cross Defendant in 10/305568) Jeffrey Bruce Jones (Second Plaintiff/Second Cross Defendant in 10/305568) LJH Group Pty Limited (ACN 123 507 497) (First Plaintiff/First Cross Defendant in 10/306022) Leslie Xu (Second Plaintiff/Second Cross Defendant in 10/306022) Jin Yu Yang (Third Plaintiff/Third Cross Defendant in 10/306022) Southpole Financial Services Pty Ltd (First Plaintiff/First Cross Defendant in 10/304306) Harunur Rashid Chowdhury (Second Plaintiff/Second Cross Defendant in 10/304306) Iftekhar Tarek Hassan (Third Plaintiff/Third Cross Defendant in 10/304306) Ikthedar Hassan Murad (Fourth Plaintiff/Fourth Cross Defendant in 10/304306)
Representation:	NA Cotman SC with RD Glasson (OMB Parties) S Couper QC with JV Gooley, GAF Connolly and RM Higgins (Bank Parties) McCabes (OMB Parties) HWL Ebsworths (Bank Parties)
File Number(s):
Publication restriction:	N/A

Judgment

1. By a notice of motion, filed on 11 April 2013, the OMB Parties seek access to unredacted versions of documents in respect of which the Bank claims privilege. Alternatively, they seek an order that the Bank provide a more detailed description of the documents in respect of which the Bank claims privilege so that the OMB Parties are able to make an assessment of whether the claims for privilege are properly made.

Background

1. There were orders for general discovery in these proceedings. Discovery has taken place electronically in accordance with a protocol agreed between the parties. The Bank's solicitors, HWL Ebsworth (HWLE), were provided by the Bank with approximately 59,000 documents to be reviewed for the purpose of discovery. Those documents were barcoded and scanned into an electronic database known as Ringtail. Various information about each document was recorded, including the description of the document and its date. The documents were then reviewed in order to determine whether a claim for privilege should be made in respect of each document or part of it. If a claim for privilege was made in respect of part of a document the relevant part was redacted. Originally, some documents were redacted on the ground that they were confidential, although subsequently those redactions were removed. Mr Hocking, the Bank's solicitor on the record, reviewed the documents in respect of which a claim for privilege had been made for the purposes of verifying the claims and providing verified lists of privileged documents. Mr Hocking reviewed each document to satisfy himself that the claim for privilege was properly made. Where Mr Hocking considered it appropriate, he removed the redactions that had been made. In some cases, different copies of the same document were redacted differently. In those cases, Mr Hocking says that he attempted to make the redactions uniform by making all copies conform to the least redacted document, even if he thought a wider claim for privilege could have been maintained. He accepts, however, that he may not have identified all documents with different levels of redaction. In some cases, where a claim for privilege was made in respect of the whole document, privilege was not claimed in respect of the document itself. Instead, the document was produced, but wholly redacted. Generally, Mr Hocking did not alter the descriptions recorded in the Ringtail database in respect of the documents he reviewed.

1. Owing to an administrative error, unredacted versions of a number of documents in respect of which a partial claim for privilege was made were produced to the OMB Parties. The OMB Parties do not now dispute that the production of those documents was accidental. Consequently, they do not now claim that privilege in respect of those documents has been waived. They do, however, refer to unredacted versions of a number of those documents in support of an argument that the Bank has, at least in those instances, made an unjustified claim for privilege.

1. The lists of documents filed by the Bank drew a distinction between those documents in respect of which a claim for privilege was made over the whole document and those documents in respect of which a claim for privilege was only made in relation to part of the document. Documents falling within the first class were enumerated in a schedule known as Schedule 1. Documents falling within the second class were enumerated in a schedule known as Schedule 2. In connection with disputes concerning the Bank's claim for privilege, the Bank also prepared a document setting out the documents that had been discovered in respect of which a claim for privilege was made, but where the basis for the claim was not apparent from the description of the document. That schedule then divided the documents into six categories and each document was assigned to one of those categories. The six categories are:

Category 1 - documents sent to or by the OMB Parties/McCabes or other solicitors.

Category 2 - basis for privilege claim not identified at all.

Category 3 - internal emails.

Category 4 - claim for privilege not evident from document description.

Category 5 - invoices from HWLE/other solicitors.

Category 6 - emails to which inhouse counsel/solicitors are a party, legal file notes and memorandums.

A total of 1061 documents fall within the six categories. It is those documents that are the subject of the OMB Parties' motion. Thirty-five documents fall within categories 1 and 2.

1. On 1 February 2013, the OMB Parties filed a motion substantially in the form of the current motion. I heard that motion on 4 February 2013 and indicated that the OMB Parties should identify a sample not exceeding 30 documents and that, in respect of that sample and the documents falling within categories 1 and 2, the Bank should serve a document indicating the basis of the claim for privilege. I then indicated I would deal with the motion after that had been done.

1. In adopting that approach, I was conscious of two matters. First, it would be an expensive and time consuming exercise to require the Bank to review each of the 1061 documents and provide details in respect of each document setting out the basis on which the claim for privilege was made. On the other hand, the OMB Parties were entitled to know and the court needed to be satisfied that the Bank had not misunderstood or misapplied the test of privilege in making the claims that it did.

1. The Bank complied with my request by serving an affidavit of Mr Hocking sworn on 25 March 2013. That affidavit, among other things, explains the process followed by the Bank in giving discovery and sets out the basis on which the claim for privilege is made in relation to the 35 documents falling within categories 1 and 2 and the 30 documents selected by the OMB Parties from the other categories. Set out below are some extracts from the tables prepared by Mr Hocking which are illustrative of what he has done. The document number is the number given to the document in the schedule listing all 1061 documents. The material that has been underscored is the material that has been added to the original description contained in that schedule:

No.	Doc ID	Full/part privileged	Description
1	BOQ.019.003.0237	Full	Draft letter from Quinn D to OMB Company Directors - for the dominant purpose of legal advice
4	BOQ.008.003.0056	Part	Letter form Quinn D to OMB Company Directors - privilege claimed over redaction, being hand-written post-it note by lawyers in the litigation
12	BOQ.046.001.0046	Part	Email from Xu L to [email protected] - privilege claimed over redaction, being separate email from E Clegg (Legal) to G Allsopp dated 23 January 2007 for the dominant purpose of legal advice (email has been scanned and coded as part of the email described above but is in fact a separate email).
20	BOQ.021.002.0092	Part	Email from Geraghty S to Edwards 5, Quinn D - privilege claimed over redaction which actually covers an earlier redaction, being an email from D Quinn to the Bank's lawyers for the dominant purpose of legal advice
26	BOQ.019.003.0017	Part	Email from [email protected] to [email protected] - privilege claimed over redaction, being hand-written notes to the Bank's lawyers for dominant purpose of legal advice and by the Bank's lawyers
35	BOQ.019.003.0023	Full	Email from Edwards S to Quinn D - legal professional privilege claimed over the email, being an [sic] communication that repeats legal advice from the Bank's lawyers and was in contemplation of litigation
36	BOQ.034.001.0202	Full	Email from P Teitzel to D Brown - privilege is claimed over the full document which is an email chain between Jacqui Bayles as corporate solicitor, Brad Edwards as General Counsel and various officers of the Bank for the dominant purpose of legal advice culminating in the advice being forwarded and repeated by P Teitzel to D Brown for the dominant purpose of legal advice
41	BOQ.030.004.0105	Full	Email from McEvoy A to Barker A, Marsault A, McKinlay - privilege is claimed over the full document, which is an email chain for the dominant purpose of legal advice.
46	BOQ.034.009.0007	Full	Email from D Brown to A Barker - the description of this document is incorrect. The document is actually an email from P Teitzel to S Cannon, A Barker dated 25 June 2004 - privilege is claimed over the full document, which is an email repeating and attaching legal advice for the dominant purpose of legal advice
47	BOQ.030.004.0006	Full	Email from Turner P to Barker A - privilege is claimed over the full document, which is an email chain emanating from K Bird, paralegal employed by the Bank, responding to and repeating legal advice and for the dominant purpose of legal advice
53	BOQ.034.047.0219	Full	Email from P Teitzel to D Quinn, B Schmidt - privilege is claimed over the full document, which is an email chain seeking legal advice from J Bayles as corporate solicitor, the provision of legal advice and repetition of legal advice for the dominant purpose of legal advice
58	BOQ.034.001.0186	Part	Email from D Brown to R Norton, D Liddy, R Hines, L Steike, P Teitzel - privilege is claimed over a redacted email, which is an email from P Teitzel to J Bayles as corporate solicitor forwarding the described email for the dominant purpose of legal advice.
64	BOQ.034.034.0117	Part	Email from N Young to A McEvoy - privilege is claimed over a redacted email, which is the entirety of the email, being an email chain emanating from J Bayles as corporate solicitor giving advice and seeking instructions for the dominant purpose of advice and subsequent emails responding for the dominant purpose of legal advice
99	BOQ.047.004.0046	Part	Email from Evans R to Rodriguez E - privilege is claimed over redacted emails, which are emails from and to the Head of Asset Management who is responsible for recovery of debts, in contemplation of litigation
193	BOQ.046.002.0271	Part	Email from Cornish R to Dowsett G - privilege is claimed over a redacted email, being an email repeating legal advice in response to an unredacted email to R Cornish and Stacey Hester, Manager of Legal, for an update on legal advice concerning taking action against the Hurstville OMB parties. Email was for the dominant purpose of legal advice and in contemplation of litigation.
361	BOQ.045.006.0360	Part - now released	Notes Untitled - privilege was claimed over redacted portions, which were the contents of the file note other than parties and date and the note referred to as point 3. Privilege was claimed on the basis that the notes identified as points 1 and 2 appeared to be for the dominant purpose of legal advice by their content (which refer to issues known to be the subject of legal advice at this time) and by the apparent party ("Stacey" Hester). Any claim has been released as I cannot be certain that the name I first took to be Stacey is not "Stuey" or some other name.
362	BOQ.019.004.0542	Part	Financial Report Entitled "Maroubra Junction and Hurstville Compensation Reconciliation" - privilege claimed over redacted portion, being an handwritten note by the Bank's lawyers in the litigation
522	BOQ.019.004.0083	Full	Invoice from Home Wilkinson Lowry - the document is incorrectly described in that it is a document produced by the bank's lawyers in preparation of invoicing the Bank for professional fees and disbursements for the provision of legal advice. The document discloses legal advice and contains handwritten notes of the lawyers in the litigation.
690	BOQ.034.008.0341	Full	Email from J Bayles to P Teitzel, L McCarthy, G Allsopp, A McEvoy, B Kameus, A Barker - privilege is claimed over the entire document, being an email from J Bayles as corporate solicitor for the dominant purpose of legal advice

Legal principles

1. Rule 21.2(4) of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) provides:

An order for discovery may not be made in respect of a document unless the document is relevant to a fact in issue.

UCPR r 21.1(2) provides:

For the purposes of this Division, a document or matter is to be taken to be relevant to a fact in issue if it could, or contains material that could, rationally affect the assessment of the probability of the existence of that fact (otherwise than by relating solely to the credibility of a witness), regardless of whether the document or matter would be admissible in evidence.

1. Rule 21.3 relevantly provides:

(1) Party B must comply with an order for discovery by serving on party A a list of documents that deals with all of the documents (other than excluded documents) referred to in the order.

(2) The list of documents:

(a) must be divided into two parts:

(i) Part 1 relating to documents in the possession of party B, and

(ii) Part 2 relating to documents that are not, but that within the last 6 months prior to the commencement of the proceedings have been, in the possession of party B, and

(b) must include a brief description (by reference to nature and date or period) of each document or group of documents and, in the case of a group, the number of documents in that group, and

(c) must specify, against the description of each document or group in Part 2 of the list of documents, the person (if any) who party B believes to be in possession of the document or group of documents, and

(d) must identify any document that is claimed to be a privileged document, and specify the circumstances under which the privilege is claimed to arise.

...

1. UCPR r 21.4 relevantly provides:

(1) The list of documents must be accompanied by:

(a) a supporting affidavit, and

(b) if party B has a solicitor, by a solicitor's certificate of advice.

...

(2) The affidavit referred to in subrule (1) (a) must state that the deponent:

...

and must state, in respect of any document that is claimed to be a privileged document, the facts relied on as establishing the existence of the privilege.

1. Mr Cotman SC, who appeared for the OMB Parties, submitted that the party making the claim for privilege must establish the facts giving rise to the privilege. The use of verbal formulae and bare conclusory assertions of purpose are not sufficient. In support of that submission, Mr Cotman referred to the following statement by Austin J in Re Southland Coal Pty Limited (receivers and managers appointed (in liq)) [2006] NSWSC 899; (2006) 203 FLR 1 at [14](c):

The party claiming privilege bears the onus of establishing the basis of the claim, and the party seeking production does not bear the onus of excluding privilege (Mitsubishi Electric Australia Pty Limited v Victorian WorkCover Authority (2002) 4 VR 33 at 337; ASIC v Rich [2004] NSWSC 1089 at [2]; in the matter of Bauhaus Pyrmont Pty Limited (in liq) [2006] NSWSC 543 at [24]). The party claiming the privilege must establish the facts from which the court can determine that the privilege is capable of being asserted (National Crime Authority v S (1991) 100 ALR 151 at 159).

1. Mr Cotman also referred to a number of other authorities in support of the proposition he advanced. They included Marshall v Prescott (No 4) [2012] NSWSC 992 at [41]; Priest v State of New South Wales [2006] NSWSC 1281 at [21]; Walker Corporation Pty Limited v Sydney Harbour Foreshore Authority [2008] NSWLEC 247; (2008) 161 LGERA 86 at [12] and Kirby v Centro Properties Limited (No 2) [2012] FCA 70; (2012) 87 ACSR 229 at [11], where the principles stated by Austin J have been repeated with approval, as well as Dye v Commonwealth Securities Ltd (No 5) [2010] FCA 950; National Crime Authority v S (1991) 29 FCR 203 at 211, Rich v Harrington [2007] FCA 1987; (2007) 245 ALR 106 at [7] and Kennedy v Wallace [2004] FCAFC 337; (2004) 142 FCR 185.

1. In my opinion, to express the principle as broadly as Mr Cotman does is to overstate it. In Grant v Downs [1976] HCA 63; (1976) 135 CLR 674 at 689, Stephen, Mason and Murphy JJ said:

It is for the party claiming privilege to show that the documents for which the claim is made are privileged. He may succeed in achieving this objective by pointing to the nature of the documents or by evidence describing the circumstances in which they were brought into existence. But it should not be thought that the privilege is necessarily or conclusively established by resort to any verbal formula or ritual. The court has power to examine the documents for itself, a power which has perhaps been exercised too sparingly in the past, springing possibly from a misplaced reluctance to go behind the formal claim of privilege. It should not be forgotten that in many instances the character of the documents the subject of the claim will illuminate the purpose for which they were brought into existence.

The point made in this passage is that privilege could not necessarily or conclusively be established by resort to verbal formula or ritual. Their Honours were not saying that it was never appropriate to rely on general descriptions. As they point out, the privilege may be apparent from the nature of the documents themselves.

1. It is also important to bear in mind the context in which the plurality in Grant v Downs made the statement they did. Grant v Downs involved a wrongful death claim in respect of the death of a patient who was held at the North Ryde Psychiatric Centre. At issue were a number of reports concerning the death. In his list of documents, the respondent claimed privilege in respect of the reports on the ground that they belonged "to a class of reports that are required to be prepared about injuries suffered by patients in mental hospitals" and have "as one of the material purposes for their preparation submission to the legal advisors of the said Health Commission ...". The documents in question went to the heart of the case and it was clear on the face of the affidavit of documents that only one of the purposes for which the documents were prepared was to obtain legal advice.

1. Similarly, to take another example referred to by Mr Cotman, in Kennedy v Wallace [2004] FCAFC 337; (2004) 142 FCR 185 the Australian Federal Police, in executing a search warrant, seized handwritten notes prepared by the appellant. The appellant claimed that the notes were the subject of legal professional privilege because they recorded advice the appellant had received from a Swiss lawyer. One issue in the case was whether the advice given by the lawyer recorded advice that could properly be regarded as legal. Chief Justice Black and Emmett J at [23] held that the appellant bore the onus on that question and had not discharged that onus. A bare assertion that the communications recorded in the notes were for the purpose of obtaining legal advice were, in the circumstances of the case, not sufficient. That was because there was evidence that the services that were provided by the lawyer went well beyond the provision of legal advice. Indeed the lawyer appeared to manage the Swiss company established by the appellant that was a focus of the police investigation.

1. UCPR r 21.4 also needs to be read in the light of ss 56 and 58 of the Civil Procedure Act 2005 (NSW). Section 56 relevantly provides:

(1) The overriding purpose of this Act and of rules of court, in their application to civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings.

(2) The court must seek to give effect to the overriding purpose when it exercises any power given to it by this Act or by rules of court and when it interprets any provision of this Act or of any such rule.

...

1. Section 58 relevantly provides:

(1) In deciding:

(a) whether to make any order or direction for the management of proceedings, including:

...

(b) the terms in which any such order or direction is to be made,

the court must seek to act in accordance with the dictates of justice.

(2) For the purpose of determining what are the dictates of justice in a particular case, the court:

(a) must have regard to the provisions of sections 56 ..., and

(b) may have regard to the following matters to the extent to which it considers them relevant:

(i) ...

...

(vi) the degree of injustice that would be suffered by the respective parties as a consequence of any order or direction,

(vii) such other matters as the court considers relevant in the circumstances of the case.

1. It is also relevant to observe that one of the most expensive parts of litigation is the costs of discovery, particularly in large cases such as this one. Concern over those costs has prompted amendments to the rules of court and the adoption of practice notes, such as Practice Note SC Eq 11 Disclosure in the Equity Division, to limit a party's discovery obligations. As Allsop P said in Palavi v Radio 2UE Sydney Pty Ltd [2011] NSWCA 264 at [101]:

Parties should understand that the restriction on discovery now contained in Pt 21 is the current framework for discovery. Discovery (and its uncontrolled use) always contains (and contain) the risk of abuse and oppression. Discovery can be a highly expensive exercise. Courts in defamation, as in all other matters, including commercial matters, should be astute to ensure that it is not used as a weapon of oppression by wealthy litigants to oppress less well-funded parties. Even when all parties are well resourced, over-enthusiastic and unnecessary use of discovery impedes the due administration of justice and undermines confidence in the court system's ability to resolve disputes justly, quickly and cheaply. Parties should understand that there is no entitlement to "chain of inquiry" discovery. If discovery is being used abusively, the courts can and should control it.

1. Of course, the issue in the present case is not the scope of discovery but whether the Bank has given an adequate description of the documents in respect of which a claim for privilege has been made and whether, if it has not, it should be ordered to redo its list of privileged documents. However, similar considerations arise. It is necessary to balance the costs of the Bank complying with the orders sought by the OMB Parties against the benefits that are likely to be obtained.

Should the orders sought be made?

1. Mr Cotman submitted that the orders sought in the notice of motion should be made essentially for two reasons. First, he submitted that it is apparent from several of the documents that were produced in an unredacted form (as a consequence of the error referred to earlier) that privilege had not been properly claimed in relation to those documents or the redacted parts. Documents 64, 193 and 361 fall within that category. Mr Cotman also referred in written submissions to other unredacted versions of documents. However, those documents were not within one of the classes in respect of which I directed the Bank to provide additional information. Mr Cotman saw those documents as a result of what is now accepted to be an error. In those circumstances, I have not considered the submissions in relation to those documents. Second, Mr Cotman submitted that the additional information given in Mr Hocking's affidavit was still inadequate to justify a claim for privilege.

1. It is convenient to deal first with the documents that Mr Cotman submits that, on inspection, are not privileged.

1. Document 64 consists of a series of emails concerned with the drafting of a section of a standard form letter to be given to potential franchisees of the Bank. The relevant section concerns IT services to be provided by the Bank. In the first email in the chain, Ms Bayles, a corporate solicitor with the Bank who also served on the committee of the Bank responsible for overseeing the Bank's expansion interstate, sets out the proposed text of the section and asks various employees of the Bank whether they have any comments. She also draws attention to some text that Mr Young, the Head of Technology, wanted to include in the letter and observes that the text is "contrary to our discussions in the OMB Expansion Team Meeting". Ms Bayles also asks in her email "Who has the final say? IT or us..." In the last email in the chain, Mr Young gives instructions on what he wants done. Mr Cotman submits that the email chain is a commercial discussion between members of the interstate expansion team on what should be included in the letter and for that reason is not privileged. I do not accept that submission. In my opinion, the dominant purpose of the chain was to obtain or to give instructions on what should be included in the letter so that Ms Bayles could finalise its drafting. In drafting the letter, Ms Bayles was acting as a lawyer.

1. Document 193 is a series of emails. In the first of the series, Mr Davies asks Mr Cornish whether "we can move forward with all parties on Hurstville". The last contains a response to that question from Mr Cornish in which Mr Cornish reports on a conversation he had with a solicitor from HWLE. Privilege is only claimed over that email. Mr Cotman submits that that email is not privileged because it does not itself reveal legal advice obtained from HWLE. He submitted that the case was analogous to those that have held that memoranda of fees are not privileged: see, for example, Lake Cumbeline Pty Limited v Effem Foods Pty Limited [1994] FCA 1479. In that case Tamberlin J said at [58]:

In the present case, I have perused the memoranda of costs which have been provided by the applicants and I do not consider that they disclose the nature or content of privileged material. I do not therefore consider that it can be said that disclosure of and reliance upon these memoranda amounts to a use of, or partial disclosure of, legally privileged material ...

However, I do not accept the analogy. Section 118 of the Evidence Act 1995 (NSW) provides:

Evidence is not to be adduced if, on objection by a client, the court finds that adducing the evidence would result in disclosure of:

(a) a confidential communication made between the client and a lawyer; or

(b) a confidential communication made between 2 or more lawyers acting for the client; or

(c) the contents of a confidential document (whether delivered or not) prepared by the client, lawyer or another person;

for the dominant purpose of the lawyer, or one or more of the lawyers, providing legal advice to the client.

The communication between the Bank and HWLE concerning progress that HWLE had made in carrying out instructions that had been given to them was clearly a confidential communication between a client and lawyer. It had no other purpose than HWLE providing legal advice to the Bank. The fact that the advice itself was not given in the communication does not mean that the communication did not occur for the purpose of HWLE providing legal advice.

1. The position in Lake Cumbeline was different. The question in that case was whether the memoranda of fees were brought into existence for the sole purpose of giving legal advice (as the test for privilege then was). Tamberlin J held that they were not because they were brought into existence for the purpose of recording and raising charges. Moreover, they did not disclose the nature or content of other communications and consequently were not privileged for that reason. Here, however, the internal communications within the Bank do disclose the nature and content of the communication with HWLE and, for the reason I have given, that communication was privileged. Consequently, the internal communication itself is privileged.

1. Document 361 is a handwritten note recording a telephone conference with Mr Gill and someone referred to as "Stuey" or possibly "Stacey" or some other name. The note records three points. The first relates to Hamilton; the second to Tuggeranong; and the third to Toronto, each franchises of the Bank at the time. Only the first two notes were redacted. Mr Hocking gave evidence that he originally thought that the note recorded a conversation with Stacey Hester, who was a lawyer with the Bank, and he inferred that they recorded legal advice because he knew that there were issues with those two branches at the time. He now concedes that he cannot be certain that the note records a conversation with Ms Hester, and for that reason the claim for privilege is no longer maintained.

1. It is worth observing, however, that privilege was never claimed in respect of the item concerning Toronto, which is one of the franchises in issue in this case, and that the notes recorded in relation to Hamilton and Tuggeranong are irrelevant to any issue in the case.

1. The balance of the documents fall into a number of categories.

1. First, there are documents that were originally described as letters between parties neither of whom were lawyers. Those letters were in fact drafts which Mr Hocking says in his affidavit were prepared for the dominant purpose of legal advice. Documents 1 to 3, 5, 8, 9, 11, 15 to 19 and 33 fall into that category.

1. Second, there are documents which contain handwritten notes "by" or "of" or "to" "lawyers in the litigation" and privilege is claimed over those notes. Documents 4, 6, 7, 10, 13, 14, 21, 22, 23, 27, 29, 34, 308, 350, 362 and 522 fall into that category.

1. Third, in some cases two emails have been scanned together and have been described as a single email. In others, the document consists of an email chain. The chain is referred to as a single document and that document is described by reference to only one of the emails in the chain. Privilege is not claimed in relation to all emails in the chain. Document 12 is an example. It consists of two emails. One is an email from Mr Xu to the Bank. The other is an internal email from Ms Clegg to Mr Allsopp which is said by Mr Hocking to be for the dominant purpose of legal advice. Document 30 is another example, that document is described as an email from Mr Heckenberg to Ms McMahon, a corporate solicitor. Some emails passing between Mr Heckenberg and Ms McMahon are said to be privileged because they are communications for the dominant purpose of legal advice. A third example is document 58. That document is an email chain which includes an email from Mr Teitzel to Ms Bayles as corporate solicitor which Mr Hocking says forwards the described email for the dominant purpose of obtaining legal advice. Documents that raise similar issues are documents 20, 24, 25, 31 and 102.

1. Fourth, privilege is claimed over the handwritten notes on some documents on the ground that they are notes of "the Bank's Lawyers for the dominant purpose of legal advice". Documents 26 and 28 fall into this category.

1. Fifth, privilege is claimed over some communications because they repeat legal advice from the Bank's external lawyers or the Bank's internal lawyers. Documents 35, 36, 38, 39, 40, 53 and 280 fall, in whole or in part, into this category.

1. Sixth, there are a number of communications to or from B Edwards, General Counsel, Ms Bayles or Ms Hester, Manager Legal, that are said to be for the purpose of giving legal advice or documents prepared by them for the purpose of giving legal advice. Documents falling into this category are documents 53, 280, 348, 365, 559, 563, 564, 584, 690, 693 and 701.

1. Seventh, there are a number of miscellaneous documents. Document 41 is one. That is simply described as an email chain for the dominant purpose of legal advice. Document 99 is similar. It is an email chain. Privilege is claimed over emails in the chain from Mr Rodriguez, the Head of Asset Management, on the ground that they are communications in contemplation of litigation. Documents 46, 106 and 522 were incorrectly described in the list. Document 46 is said to be privileged because it repeats legal advice, although it does not identify who gave the advice. Document 106 is actually an email from Ms Bayles to Mr Allsopp which is said to be for the dominant purpose of legal advice. Document 522 is not actually a bill but is said to be a document prepared for the purposes of invoicing the Bank that discloses legal advice and contains handwritten notes of the lawyers in the litigation. Document 47 is an email chain emanating from K Bird, a paralegal employed by the Bank, which is said to repeat legal advice and to be for the dominant purpose of legal advice. Document 77 is said to be an email from a paralegal employed by the Bank for the dominant purpose of legal advice and in contemplation of litigation.

1. Mr Cotman makes two main submissions in relation to these documents. First, he submits that the descriptions of the documents are inadequate to understand properly the claim for privilege that has been made. Second, in relation to the documents said to be communications to or from in-house lawyers for the purposes of obtaining legal advice, he submits that the relevant lawyers performed both legal and commercial functions with the Bank and it is not possible from the description of the documents to determine in what capacity the lawyers were acting when sending, preparing or receiving the relevant documents.

1. There is considerable force in what Mr Cotman says in relation to at least some of the documents. For example, the descriptions in relation to a number of documents do not identify who prepared the document or gave the advice in respect of which privilege is claimed. The documents referred to in paragraphs 28 and 32 above contain examples. In those circumstances, I asked to inspect 31 of the 65 documents in question. Mr Couper QC, who appeared for the Bank, informed me that two of those documents were the same. In addition, he informed me that he had inspected document 690 himself, that he was satisfied that there was a proper basis for the claim for privilege and that I may be embarrassed if I inspected the document and concluded that it was privileged. The only question in relation to that document is whether Ms Bayles in sending it was acting as a lawyer. Having regard to Mr Hocking's affidavit and what Mr Couper said, I chose not to look at that document. I am satisfied on the basis of what I have been told that Ms Bayles was acting as a lawyer when sending that email. Finally, the Bank was unable to produce unredacted versions of documents 20, 24 and 25. Parts of those documents were redacted for privilege in other proceedings. The originals cannot be found and only the redacted versions are still available. Each of the three documents is an email to the Bank's lawyers and privilege is claimed on the basis that the communication was for the dominant purpose of obtaining legal advice. On the face of it, claim for privilege appears to be a proper one.

1. The result is that I inspected 26 documents. I did not inspect documents referred to in paragraphs 28, 29 and 31 above. Although some of those documents are inadequately described, in my opinion it is not necessary to inspect the documents to be satisfied of the claims for privilege. The documents referred to in paragraph 28 are described as drafts. Mr Hocking says that they were prepared for the dominant purpose of providing legal advice. There is no reason to doubt what he says. The same can be said of the documents referred to in paragraph 31 above.

1. The documents referred to in paragraph 29 above are notes of lawyers or notes to lawyers in the litigation. Mr Hocking does not say for what purpose the notes were prepared. However, it can be inferred that they were prepared for the dominant purpose of the Bank being provided with professional legal services in connection with these proceedings. On that basis, they are privileged under s 119 of the Evidence Act, which provides:

Evidence is not to be adduced if, on objection by a client, the court finds that adducing the evidence would result in disclosure of:

(a) a confidential communication between the client and another person, or between a lawyer acting for the client and another person, that was made; or

(b) the contents of a confidential document (whether delivered or not) that was prepared;

for the dominant purpose of the client being provided with professional legal services relating to an Australian or overseas proceeding (including the proceeding before the court), or an anticipated or pending Australian or overseas proceeding, in which the client is or may be, or was or might have been, a party.

1. With four possible exceptions, I am satisfied that the remaining documents are properly the subject of a claim for privilege. In particular, where a claim for privilege is made in relation to a communication to or from a corporate lawyer, I am satisfied that the lawyer was acting as a lawyer for the purpose of sending or receiving the communication.

1. The first exception is document 35. That is an email from Mr Edwards to Ms Quinn among others which is said to repeat legal advice. The email relevantly says:

Just thinking more about the Ross debacle - I think we should definitely stand strong on our previous advise [sic] and action as we stated on the 4pm deadline of yesterday. Sole reason is we do not want him to be controlling the situation. If we don't, and delay further, it will be placing the control back with him.

The reply to be along the lines that he has not meet [sic] our requests and we will action as previously advised.

In my opinion, this email does not repeat legal advice that the Bank should "stand strong". The reference to "advise" is a reference to the Bank's previous stated position to Mr Chapman. Mr Edwards is expressing a commercial opinion on how best to deal with Mr Chapman in the circumstances.

1. The second exception is document 99. That is an email chain to and from Mr Rodriguez, the person responsible for the recovery of debts, which is said to be in contemplation of litigation. As Mr Couper points out, the communications do not have to be to or from a lawyer in order to attract the privilege conferred by s 119 of the Evidence Act. However, the communications must be for the dominant purpose of the client being provided with professional legal services in relation to anticipated or actual proceedings. It is clear, however, that the communications in question are concerned with what provision must be made in the Bank's accounts following termination of the Bankstown franchise. That is made clear by Mr Rodriguez's email dated 25 August 2008 in which he says:

To enable us to determine if a provision is required or not, can you please advise if this OMB was terminated with Compensation or not and what the value of the branch is estimated to be.

1. The third possible exception is document 522. That is a draft account which contains a description of the work covered by the account. The work relates to reading and replying to correspondence from the OMB Parties' lawyers. In my opinion, the claim for privilege in relation to this document is marginal. Although the bill contains a description of the work that was done, the information that it reveals is that HWLE did work in responding to a letter from McCabe Terrill. The response itself, however, reveals that that work was done. But even if the document is not privileged, in my opinion it is clearly not discoverable. I do not see how it could be relevant to a fact in issue in these proceedings in the sense required by UCPR r 21.1(2).

1. The fourth possible exception is document 584. That is an email from Ms Barker, who is apparently a paralegal employed by the Bank, by which Ms Barker sends to various people at Ms Bayles' request a document the subject of which is described as "NSW Labour Council - NSW Government MOU". It is not possible from inspecting the document to know whether it was sent at Ms Bayles' request for the purpose of Ms Bayles giving legal advice. Once again, however, it is difficult to understand how the email could be relevant to a fact in issue in these proceedings.

1. It is clear from what I have said that the list of 1061 privileged documents did not comply with UCPR r 21.4 because it did not adequately set out the facts relied on in support of the claim for privilege. Mr Hocking's affidavit does not completely cure the defects in relation to the 65 documents it deals with. In some cases, the documents are not adequately described, and where privilege is claimed on the basis that the communication is for the dominant purpose of providing legal advice, it is not clear who it is said provided the advice. In addition, it would have been preferable if the basis for the claims corresponded more precisely to the grounds of privilege set out in ss 118 and 119 of the Evidence Act. However, in my opinion, the evidence given by Mr Hocking demonstrates that the Bank has gone about the task of giving discovery diligently. Moreover, there is nothing to suggest that Mr Hocking has misunderstood the appropriate tests for privilege. As I have said, privilege was claimed over five documents where the claim could not be maintained (and in one case was abandoned), or might be regarded as marginal or, in the case of one document, where it is not possible to determine the claim from inspection of the document. However, as I have also said, some of those documents were clearly not discoverable and there is a question, having regard to their subject matter and what they say, whether any of them were.

1. It would take a substantial amount of time to redo the list. That conclusion is borne out by the time it has taken me to consider the 26 documents I have inspected. The sample I have considered has not revealed any serious errors in the approach that the Bank has taken. Indeed, if the sample is representative, as is likely, it reveals that a substantial number of the documents were not discoverable in the first place. Certainly, none of the documents I have inspected take the case any further. The only reason for ordering that the list be redone is on the off-chance that a claim for privilege has been made in respect of a significant document which cannot be maintained. That chance does not justify either of the orders the OMB Parties seek.

Orders

1. The Notice of Motion filed on 11 April 2013 is dismissed.

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Decision last updated: 26 April 2013