Wenkart T.R. v The Commissioner, Australian Federal Police

[1995] FCA 788

CATCHWORDS

PRACTICE AND PROCEDURE - subpoena - application to set aside - irrelevance of documents sought to any issue - objection by liquidator to disclosure of other documents on ground of prejudice to the course of winding up - order made for production at this stage of copies with parts blacked out - no question of principle.

THOMAS RICHARD WENKART & ANOR v THE COMMISSIONER, AUSTRALIAN FEDERAL POLICE & ORS

NG 106 of 1995

Lindgren J
Sydney
19 September 1995

MINUTE OF ORDERS

THE COURT:

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

IN THE FEDERAL COURT OF AUSTRALIA )
NEW SOUTH WALES DISTRICT REGISTRY )        No NG 106 of 1995
GENERAL DIVISION                 )

BETWEEN:

THOMAS RICHARD WENKART & GEOFFREY ALBERT HOLDEN
  Applicants

AND:

THE COMMISSIONER, AUSTRALIAN FEDERAL POLICE
                   First Respondent

MICHAEL WAYNE LUTZE
                  Second Respondent

NIKA MANAGEMENT SERVICES PTY LTD (IN LIQUIDATION) (ACN 002 770 505) (FORMERLY KNOWN AS MACQUARIE PROFESSIONAL SERVICES PTY LTD)
                   Third Respondent

CORAM:Lindgren J

PLACE:Sydney

DATE:19 September 1995

REASONS FOR JUDGMENT

These Reasons for Judgment are my reasons for orders which I made two days ago at the conclusion of the hearing on 19 September 1995.

The applicants, who are former directors of the third respondent ("Nika"), by para 1 of an amended application filed on 23 March 1995, seek a declaration that certain documents seized by the second respondent in execution of a search warrant, obtained by the first respondent, on the offices of Greenwood and Freehills, are subject to legal professional
privilege.  The documents were specified in a list which is schedule A to the amended application.  There are 16 documents listed in schedule A.  Thus, the issue posed, at least by para 1 of the amended application, is one of legal professional privilege in relation to the 16 documents which have been seized.

By a notice of motion filed on 22 May 1995 the applicants have moved the Court for an order that certain matters be determined as preliminary issues in the proceedings.  One of these is whether a purported waiver of legal professional privilege referred to in a letter dated 10 May 1995, which is annexure A to the affidavit of Kenneth Raphael sworn 22 May 1995 filed in the proceedings, is a proper exercise of the powers of the liquidator of Nika.

The liquidator of Nika is Mr Lord.  It is common ground that Mr Lord did purport to waive legal professional privilege by the letter dated 10 May 1995.  The way in which the matter comes before the Court at present is as follows.  On 5 September 1995 a subpoena was issued on behalf of the applicants addressed to the liquidator of Nika, requiring that the liquidator produce four categories of documents of which the second reads as follows:

"All original or copy reports to the Australian Securities Commission ('ASC'), or draft reports to the ASC with respect to Nika Management Services Pty Limited."

By a notice of motion filed on 18 September 1995, Mr Lord, in his capacity as the liquidator of Nika moves the Court for an order, inter alia, that para 2 of the subpoena be set aside.  In support of that motion he relies upon an affidavit by himself which is headed "SECOND AFFIDAVIT" and is dated 13 September 1995.  It is so headed because there is another affidavit on the Court file by Mr Lord of the same date to which I will refer later.  By his second affidavit dated 13 September 1995, Mr Lord says that with respect to para 2 of the subpoena he has in his possession the following documents:

"(a)copy letter dated 29th March 1994 from myself to the Australian Securities Commission ('ASC');

(b)copy letter dated 29th June 1994 from myself to the ASC; and

(c)copy letter dated 24th August 1995 from myself to the ASC."

Mr Lord continues by saying that the first of those documents was made by him pursuant to s 476 of the Corporations Law and the second and third documents pursuant to s 533 of the Corporations Law and that each of those documents deals with the matters referred to in those sections. I do not need to refer for present purposes to the sections, beyond saying that they provide for reports by a liquidator to the ASC and could, depending upon the circumstances, lead to action by the ASC against company officers such as the present applicants.

Importantly, in para 4 of his second affidavit dated 13
September 1995, Mr Lord deposes that none of the three documents refers to:

"(a)these proceedings;

(b)the claim for legal professional privilege made in respect of the sixteen documents that are at the heart of these proceedings; or

(c)my decision to waive any claim of the Third Respondent to legal professional privilege in respect of these documents."

Mr Wigney of counsel says, quite correctly on behalf of the applicants and in opposition to Mr Lord's motion, that it is possible that the documents contain material relevant to the issue of waiver raised by the applicants' motion. But the fact is that the only evidence before me is that of Mr Lord to which I have referred.  He has not been cross-examined on that affidavit.  I see no reason why I should not, in these circumstances, accept what he says in para 4.  I have to say, however, that it is always a cause of some concern when an affidavit supporting a claim such as the present contains a brief statement asserting what is the ultimate issue or is close to it and there is in opposition neither opposing affidavit evidence nor cross-examination of the deponent.

But as I said, on the evidence before me, and that is the only material on which I can base my decision, I accept what Mr Lord says in para 4.  His affidavit would have been more cogent if there had been more detail in para 4 than is there but I do not think that I should not accept it merely because
it could have been more comprehensive and detailed.  Accordingly, I think that the case is made out by Mr Lord for the orders sought in para 3 of his notice of motion filed on 18 September 1995.

At the hearing before me on 19 September 1995 there was a further matter debated and this related to certain documents which were produced in response to the subpoena and to which Mr Lord referred in his other affidavit sworn 13 September 1995 (filed in Court on 18 September 1995).  These are eight documents which were referred to in schedule 2 to that affidavit.  Mr Lord deposed that he was of the view that disclosure of the material referred to in those documents had the potential to affect prejudicially the further conduct of the winding up of Nika and he drew attention to the fact that the applicants were directors of Nika.

He said in his affidavit that although he had no objection to producing to the Court the eight documents listed in schedule 2, he objected to their being inspected.  In the alternative, he requested that the Court make an order the effect of which would be that he could make available to the parties copies which had the potentially prejudicial material blacked out.  I made an order that the documents (meaning, of course, copies) should be produced with the material blacked out at this stage, but reserved liberty to the applicants if they so saw fit, to apply for an order that upon an undertaking being given to the Court in a form to which I refer below, the material blacked out should be made available.  I made the order in the form in which I made it so that the documents, or rather copies of them with the blacked out material, could be produced for inspection without further delay and so that the matter might be progressed.

I note that at this stage there has been no application on behalf of the applicants but I reserve liberty to them so to apply on two days' notice.  If such an application were to be entertained there would have to be an undertaking, as I indicated on 19 September, to the effect that the contents of the material blacked out and/or the effect of that material would not be revealed to anyone other than the legal advisers of the applicants and there would have to be an undertaking by them to the effect of the implied undertaking which always obtains that the material in question would not be used for any purpose other than the legitimate purposes of these proceedings.

COSTS

On 19 September 1995, I reserved the question of the costs of the motion.  In relation to costs, it does seem to me that although Mr Lord has had success on his motion in relation to para 3 of it, there has been an element of success for the applicants in relation to the other issue although that issue has not been resolved finally.  Moreover, although I do not say that this is conclusive, in the nature of things it is Mr Lord and not the applicants who can know what is the content of the three documents which I have held need not be produced.  In these circumstances I think that the appropriate order on the motion is that the cost of the motion be the parties' costs of the proceedings [following submissions, this was altered to an order that the parties to the motion bear their own respective costs of it].  As on the last occasion I note that the first respondent was represented by counsel on the hearing.

In the result, for the record I set out as orders 1, 3, 4 and 5 below, orders which I made on 19 September, and as order 2, below, the new order for costs which I made on the occasion of the giving of reasons on 21 September 1995.

(1)On the motion brought by notice of motion filed on 18 September 1995 by Mr J F Lord an order in terms of para 3 of that notice of motion.

(2)Order that each party to the motion bear its own costs of the motion.

(3)Order that there be returned to the liquidator the documents referred to in para 2 of the second affidavit of Mr Lord sworn 13 September 1995.

(4)Order that in relation to the documents  referred to in schedule 2 to Mr Lord's first affidavit dated 13 September 1995, production may take place by production of copies with the parts referred to blacked out.

(5)Reserve liberty to the applicants to apply on two days' notice for a variation in relation to order (4) on the footing that production of the parts blacked out be only to legal advisers subject to the appropriate undertaking to the Court.

I certify that this and the preceding 7 pages are a true copy of the Reasons for Judgment of the Honourable Justice Lindgren.

Associate:

Dated:3 October 1995

Heard:       19 September 1995

Place:       Sydney

Decision:     19 September 1995

Appearances:  Mr M Wigney of counsel, instructed by Rosenblum & Partners, solicitors, appeared for the applicants (respondents to the motion).

Mr P Fury, solicitor of Kemp Strang & Chippindall, solicitors, appeared for the subpoenaed third party, John Frederick Lord (applicant on the motion).

Mr J Lonergan of the Australian Government Solicitor appeared for the first and second respondents.