FEDERAL COURT OF AUSTRALIA
Whittenbury v Vocation Limited (No 2) [2020] FCA 653
File number: VID 434 of 2015 Judge: MIDDLETON J Date of judgment: 15 May 2020 Catchwords: CORPORATIONS – discovery – claim of privilege by liquidators – powers of liquidators to assert and waive legal professional privilege
PRACTICE AND PROCEDURE – discovery – legal professional privilege – standing to claim privilege – whether liquidator has power to assert or waive privilege on behalf of company – costs follow the event – mixed outcome
Legislation: Corporations Act 2001 (Cth)
Federal Court Rules 2011 (Cth)
Cases cited: Re Dallhold Investments Pty Limited (1994) 53 FCR 339
Lenning v Alexander Proudfoot Company World Headquarters [1991] NSWCA 172
Date of hearing: Determined on the papers Registry: Victoria Division: General Division National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Category: Catchwords Number of paragraphs: 36 Counsel for Cheryl Whittenbury: Ms K Burke Solicitor for Cheryl Whittenbury: Slater and Gordon Counsel for Vocation Limited: Ms S Gory Solicitor for Vocation Limited: Gilbert + Tobin Counsel for PricewaterhouseCoopers (A Firm): Mr M C Garner Solicitor for PricewaterhouseCoopers (A Firm): Herbert Smith Freehills Counsel for John S Dawkins: Mr M Pesman SC Solicitor for John S Dawkins: Baker McKenzie Counsel for Stephen J Tucker, Michelle K Trenenick and Douglas J Halley: Mr Blazer Solicitor for Stephen J Tucker, Michelle K Tredenick and Douglas J Halley: Allen & Overy ORDERS
VID 434 of 2015 BETWEEN: CHERYL WHITTENBURY
Applicant
AND: VOCATION LIMITED (ACN 166 631 330)
First Respondent
PRICEWATERHOUSECOOPERS
Second Respondent
MARK EDWARD HUTCHINSON (and others named in the Schedule)
Third Respondent
AND BETWEEN: VOCATION LIMITED (ACN 166 631 330)
Cross-Claimant
AND: THE PARTNERS OF JOHNSON WINTER & SLATTERY
Cross-Respondent
JUDGE:
MIDDLETON J
DATE OF ORDER:
15 MAY 2020
THE COURT ORDERS THAT:
1.On or before 4:00pm on 22 May 2020, the parties confer, and provide an agreed minute of order reflecting the reasons in this judgment, or if there is no agreement, brief written submissions as to the appropriate orders to make.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
MIDDLETON J:
INTRODUCTION
By interlocutory application dated 20 December 2019, the Second Respondent (‘PwC’) sought orders pursuant to r 20.32 of the Federal Court Rules 2011 (Cth) (the ‘Rules’) that unredacted copies of certain documents over which claims of privilege have been made by the First Respondent (‘Vocation’) be produced for inspection (‘PwC’s Application’). PwC’s Application was supported by the affidavit of Gregg Nicholas Rowan affirmed on 20 December 2019 (the ‘December Rowan Affidavit’).
On 26 February 2020, PwC filed written submissions in support of PwC’s Application (‘PwC’s February Submissions’).
On the return of PwC’s Application on 28 February 2020, the Court made orders, including orders substantially in the terms sought…
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- Case
- [2020] FCA 653
- Decision Date
CaseChat Overview and Summary
The court considered the statutory powers and duties of liquidators under the Corporations Act 2001 (Cth) and the implications of any decision to assert or waive privilege. Sackville J noted that liquidators must act in good faith and consider all available options, including the potential impact on the liquidation process. The court also examined the Hurwood Affidavit, which was intended to support a claim of privilege, and noted that no such claim had been formally made by the liquidators. Consequently, the court refused leave for Vocation Limited or the non-executive directors to rely on the Hurwood Affidavit.
Turning to the issue of costs, the court noted that while PwC had been substantially successful in its application for discovery, the outcome was mixed. Vocation Limited had already conceded on approximately 25% of the documents in dispute, and PwC had abandoned its challenge over two-thirds of the remaining documents. The court found that the appropriate order was for each party to bear its own costs, given the mixed outcome of the proceedings. The court also highlighted the importance of the time and resources expended by both parties in reaching the current position.
The court's final orders required the parties to confer and provide an agreed minute of order reflecting the reasons in the judgment, or if no agreement was reached, brief written submissions as to the appropriate orders to make. This directive aimed to ensure that the parties could finalise the procedural aspects of the case in a manner that aligned with the court's reasoning and the principles of fairness and proportionality.
Orders
Orders of the court
1. On or before 4:00pm on 22 May 2020, the parties confer, and provide an agreed minute of order reflecting the reasons in this judgment, or if there is no agreement, brief written submissions as to the appropriate orders to make.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Full text does not contain this section.
Ratio Decidendi
Legal Principle Established
Whilst Sackville J did not express a concluded view, the observations he made are sound and in my view, correct. In the context of any liquidation, the liquidator has certain powers and duties, but these can only be exercised after a bona fide consideration of the options available. It may well be that a liquidator (for instance) may not make a claim of legal professional privilege to avoid needlessly protracting a liquidation – see s 480 of the Corporations Act 2001 (Cth) (the ‘Corporations Act’). If a relatively aggrieved person is dissatisfied with a decision of a liquidator, there is an avenue to appeal such a decision: see s 1321 of the Corporations Act. I should say, if a claim for legal professional privilege had been made by the liquidators of Vocation, I would have allowed evidence to be adduced by third parties to support the claim. However, as no claim has been made, I refuse leave for Vocation or the NEDs to rely on the Hurwood Affidavit and any submissions relating to the privilege issue.COSTS I now turn to the issue of costs. PwC submits that the Court should order that Vocation pay the costs of and incidental to PwC’s Application, because it has had substantial success on that application, and costs should follow the event. Vocation submits that the appropriate order is that each party bear their own costs. PwC was not, Vocation contends, ‘substantially successful’ in PwC’s Application. It was submitted that PwC had abandoned its claim for inspection of most of the documents (2,089 out of 3,378) that were in dispute. In respect of the documents that were subject to challenge in PwC’s Application, prior to the filing of PwC’s Application, Vocation had already confirmed in respect of approximately 25% of those documents that it did not oppose an order for production because it was not funded to do so. As to the balance of the documents that were the subject of a challenge in PwC’s Application, PwC has abandoned its challenge over two-thirds of those documents. I accept the relevant facts as set out in the submissions of Vocation dated 30 March 2020 in paragraphs 6 to 22, which seem to me not to be in contention and need no rehearsal in these reasons. The usual rule is that costs follow the event. As to where there is a mixed outcome, in Dodds Family Investments Pty Ltd (formerly Solar Tint Pty Ltd) v Lane Industries Pty Ltd (1993) 26 IPR 261 at 272, Gummow, French and Hill JJ explained: Where there is a mixed outcome in proceedings, the question of apportionment is very much a matter of discretion for the trial judge. Mathematical precision is illusory and the exercise of the discretion will often depend upon matters of impression and evaluation. The factors that may be taken into account include the time referable to the issues, the claims made by the moving party and the effect of the ultimate orders that are made: see Lenning v Alexander Proudfoot Company World Headquarters [1991] NSWCA 172. From 8 August 2019, PwC’s position (as advised to Vocation) has consistently been that any legal professional privilege in the ‘Prospectus Advice’ and the ‘Disclosure and Announcement Advice’ has been waived by Vocation. That position was resisted by Vocation in correspondence from its solicitors, Gilbert + Tobin, from August 2019 until the evening before PwC filed its application on 20 December 2019. At the time, Gilbert + Tobin advised that Vocation was unable to fund opposition to an order for production of ‘Continuous Disclosure Advice’. In support of its application, PwC relied upon an affidavit prepared in the period before 20 December 2019 (and ultimately affirmed on 20 December 2019) by Mr Rowan. That affidavit was substantially in final form before Gilbert + Tobin advising on the evening of 19 December 2019 that Vocation had changed its earlier position, and would now neither consent to nor oppose the making of an order requiring production of the documents in Attachment F of Gilbert + Tobin’s 19 December 2019 letter (being the Disclosure and Announcement Advice). Vocation continued to resist production of documents relating to the Prospectus Advice until 7 February 2020, when Gilbert + Tobin advised that Vocation would no longer press privilege claims in respect the ‘Replacement Prospectus Advice’ documents.