FEDERAL COURT OF AUSTRALIA

Temwell Pty Ltd (ACN 082 656 157) v DKGR Holdings Pty Ltd [2003] FCA 930

TEMWELL PTY LTD (ACN 082 656 157)  -v-  DKGR HOLDINGS PTY LTD (formerly known as DYNAMIC DATA SYSTEMS PTY LTD) (In Liquidation) (ACN 062 778 616),  mCOM SOLUTIONS INC, DRAGON VENTURES. COM INC, mCOM SOLUTIONS AUSTRALIA PTY LTD (In Liquidation) (ACN 091 375 950), DAVID HAINS, ROBERT VAN ZANTEN, DRAGONVENTURES.COM LTD, RICHARD HAINS  and  IAN MORRIS KIEFEL

AND

mCOM SOLUTIONS INC. and mCOM SOLUTIONS AUSTRALIA PTY LTD (ACN 091 375 950)  v  TEMWELL PTY LTD (ACN 082 656 157), SLADEMERE PTY LTD (ACN 082 656 139), SHEPRIDGE PTY LTD (ACN 082 696 077), GEOFFREY MICHAEL TAUBER, MORRY FRAID, ROGER ENRIQUEZ

V 663 of 2000

RYAN J

2 SEPTEMBER 2003

MELBOURNE

REASONS FOR RULING ON PRIVILEGE

OF EMAIL COMMUNICATIONS TO AND FROM ZEEV GOLDSTEIN

1                     Two affidavits affirmed by Zeev Goldstein have been filed in these proceedings on behalf of the applicant, Temwell.  The first was affirmed on 6 June 2003 and the second, prepared in August 2003, has not been affirmed but has been adopted by Mr Goldstein at the outset of his oral evidence which commenced on 1 September this year.

2                     Mr Goldstein is a resident of Israel with extensive experience as a computer software engineer.  He was introduced to the MTD project in late 1999 by one Achi Racov, who was then an employee of the Natwest Bank in the United Kingdom.  Through Mr Racov, Mr Goldstein was retained on behalf of the mCom respondents to carry out due diligence investigations with a view to acquiring the MTD business of the first respondent, DDS.  In the course of those investigations Mr Goldstein visited Melbourne from 4 to 7 February and from 13 to 17 March 2000 and carried out certain inquiries in conjunction with a Mr Yaron Ivry.  He also had discussions with the fifth, eighth and ninth individual respondents, David Hains, Richard Hains and Ian Kiefel, and observed a demonstration of the MTD technology which Mr Racov made to the Bank Leumi in Israel.

3                     With the assistance of notes and comments made by Mr Goldstein, Mr Ivry prepared a due diligence report dated 6 February 2000, which, it appears to be common ground, was the date when compilation of the report commenced, rather than when it was finished. 

4                     It has emerged in the course of cross-examination of Mr Goldstein that each of his affidavits evolved in its final form after a succession of some 110 email communications to and from him in Israel.  Most of those from Australia emanated from Mr Pringle, a member of the firm Meerkin & Apel, who are Temwell's solicitors.  Others were from other solicitors within Meerkin & Apel and two were from Senior Counsel for Temwell.

5                     A question has arisen whether Counsel and solicitors for the respondents should have access to certain of the emails before cross-examination of Mr Goldstein is resumed.  No claim of privilege has been asserted in respect of about 87 of the 110 emails to and from Mr Goldstein and they have been made available to the respondents' legal advisers.  However, legal professional privilege has been asserted in respect of the whole or part of each of the remaining emails.

6                     Counsel for the respondents base their claim for access to the disputed emails on the guidelines published by this Court to regulate the conduct of expert witnesses.  Those guidelines are contained in a practice direction dated 15 September 1998 and the relevant parts stipulate, under the heading “General Duty to the Court”:

·          ‘An expert witness has an overriding duty to assist the Court on matters relevant to the expert's area of expertise. 

·          An expert witness is not an advocate for a party. 

·          An expert witness's paramount duty is to the Court and not to the person retaining the expert.’

7                     Then under the heading “The Form of the Expert Evidence” occur, amongst others, these stipulations:

·          ‘All assumptions made by the expert should be clearly and fully stated. 

… …

·          The expert should give reasons for each opinion. 

At the end of the report the expert should declare that “[the expert] has made all the inquiries which [the expert] believes are desirable and appropriate and that no matters of significance which [the expert] regards as relevant have, to [the expert’s] knowledge, been withheld from the Court.”

There should be attached to the report or summarised in it the following: 

(i)  all instructions (original and supplementary and whether in writing or oral) given to the expert which define the scope of the report;  (ii)  the facts, matters and assumptions upon which the report proceeds; and (iii)  the documents and other materials which the expert has been instructed to consider.’

8                     Mr Goldstein has given expert evidence of the time and cost which would be involved in rewriting the Application Software without reference to the programs previously developed for the MTD2000 and the MTD3000 by DDS.  He has also expressed an opinion about the commercial longevity, as it has been called, of the MTD3000 software.  As well, he has indicated, on the basis of what he observed during his visits to Melbourne in February and March 2000, respects in which the MTD3000 Application Software source code was an enhancement or a modification of that for the MTD2000, and has made observations about the source code for the PIMPOS operating system for each of the two devices.

9                     Finally, in his capacity as an expert witness, Mr Goldstein has ventured explanations or definitions of expressions said to be used in a special or technical sense in the computer software industry.  Those expressions include “application software”, “application programs”, “related programs”, “enhancement” and “modification”.

10                  No formal report has been provided by Mr Goldstein covering the matters which I have just identified as those on which he has given expert evidence.  Nor has he set out in his affidavit or elsewhere, except by inference, his instructions or the facts, matters and assumptions upon which his opinions have been based or the documents or other materials which he has been asked to consider.  In those circumstances, Counsel for the respondents would normally be entitled to access to all notes, memoranda and successive drafts of Mr Goldstein's affidavit in order to explore what instructions he was given and the extent to which his opinions have been formulated independently of Temwell and its advisers.  See Interchase Corporation Ltd v Grosvenor Hill (Queensland) Pty Ltd (No 1) [1999] 1 QR 141.

11                  However, it is clear from the necessarily brief summary of his evidence which I have given, that Mr Goldstein has also deposed to matters as to which he is a witness of fact, not an expert.  Those matters appear to concern chiefly the extent to which David Hains, Richard Hains and Ian Kiefel were directly or personally involved in the acquisition of the MTD business from DDS.  If it is possible to segregate from the disputed emails communications directed solely to evidence to be given in that capacity, that should be done so as to preserve the legal professional privilege which Temwell asserts.

12                  I am not persuaded that, merely by requiring Mr Goldstein to give both opinion evidence and evidence of facts based on observation, Temwell has waived that privilege in the sense discussed in Attorney General (NT) v Maurice (1986) 161 CLR 475, to which I was referred by Mr Delany for the respondents.  As explained by Mason and Brennan JJ in that case, at 488;

‘ …the implied waiver inquiry is at bottom focused on the fairness of imputing such a waiver.’

13                  To similar effect Dawson J observed, at 497:

‘It would not be fair to allow privilege to be waived with respect to a portion of a document or a conversation without requiring disclosure of the rest of it, at least if the document or conversation dealt with the one subject-matter.’ (emphasis added)

14                  Here, as I understand it, the disputed emails are said to deal with at least two subject matters;  the evidence to be given by Mr Goldstein by way of expressing an expert opinion, and the evidence which it was proposed he should give of primary facts based on his observations in February and March 2000.  If those two subject matters can be disentangled from a single email, I consider that fairness requires that to be done so as to preserve the privilege asserted by Temwell in respect of communications directed to the second of those subject matters.

15                  It seems that I may be required to consider particular emails for myself.  As I do not consider it practicable or expedient to do as Mr Golvan, the Senior Counsel for Temwell, suggested and to have that issue canvassed by another judicial officer or a registrar, if I am required to take that course, I would be disposed to preserve the privilege only where that can be done by redaction or otherwise without violence to an understanding of those parts necessary to permit a full exploration by the respondents of Mr Goldstein's evidence and his conduct in the capacity of an expert witness.  Accordingly, I propose, as I said, to the extent necessary, to examine the disputed emails and indicate which can be segregated or dismembered in the way I have just indicated.

Associate:

Dated:              2 September 2003