FEDERAL COURT OF AUSTRALIA

Sheahan and Lock (Liquidators); In the Matter of Binqld Finances Pty Ltd (In Liq) [2015] FCA 718

IN THE MATTER OF BINQLD FINANCES PTY LTD (IN LIQUIDATION)

THE COURT ORDERS THAT:

1.    The parties confer and submit to the Associate to Foster J as soon as practicable draft orders giving effect to Reasons for Judgment given this day (13 July 2015).

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE MATTER OF E.G.L. DEVELOPMENT (CANBERRA) PTY LTD (IN LIQUIDATION)

THE COURT ORDERS THAT:

1.    The parties confer and submit to the Associate to Foster J as soon as practicable draft orders giving effect to Reasons for Judgment given this day (13 July 2015).

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE MATTER OF LIGON 268 PTY LTD (IN LIQUIDATION)

THE COURT ORDERS THAT:

1.    The parties confer and submit to the Associate to Foster J as soon as practicable draft orders giving effect to Reasons for Judgment given this day (13 July 2015).

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE MATTER OF BINQLD FINANCES PTY LTD (IN LIQUIDATION)

IN THE MATTER OF E.G.L. DEVELOPMENT (CANBERRA) PTY LTD (IN LIQUIDATION)

IN THE MATTER OF LIGON 268 PTY LTD (IN LIQUIDATION)

REASONS FOR JUDGMENT

(REVISED FROM TRANSCRIPT)

1    On 2 March 2015, the Supreme Court of New South Wales ordered that:

(a)    Binqld Finance Pty Ltd (ACN 119 243 220) (Binqld) be wound up in insolvency;

(b)    Ligon 268 Pty Ltd (ACN 051 824 081) (Ligon 268) be wound up in insolvency;

(c)    E.G.L. Development (Canberra) Pty Limited (ACN 008 517 646) (EGL) be wound up in insolvency; and

(d)    John Sheahan and Ian Russell Lock of Sheahan Lock Partners be appointed liquidators of each of those corporations.

2    On 16 April 2015, Messrs Sheahan and Lock in their capacity as liquidators of the above corporations commenced three sets of proceedings in the South Australia Registry of this Court: SAD 82 of 2015, SAD 83 of 2015 and SAD 84 of 2015. Those proceedings relate to Binqld, EGL and Ligon 268 respectively. In each of those proceedings, the liquidators sought orders and directions pursuant to s 479(3) of the Corporations Act 2001 (Cth) (the Act), an order that a summons for examination be issued to Andrew John Binetter pursuant to s 596A of the Act and an order for production of documents by Messrs John Vouris and Bradley Tonks pursuant to s 597(9) of the Act.

3    Messrs Vouris and Tonks are the liquidators of an incorporated legal practice, Signet Lawyers Pty Limited (In Liquidation), which had in the past acted for Binqld, EGL, Ligon 268, Andrew Binetter and other corporations and individuals associated with Andrew Binetter.

4    On 4 May 2015, a Registrar made orders for the examination of Andrew Binetter and for the production of documents sought by the liquidators. An order was made in each proceeding substantially in the same terms. Order 3 made by the Registrar in SAD 82 of 2015 was in the following terms:

Messrs John Vouris and Bradley Tonks, of PKF Lawler Pty Ltd, produce to the Court, at level 17, Law Courts Building, Queen’s Square, Sydney, New South Wales at 10.15am on 13 May 2015, all files held by them, in their capacity as the joint and several liquidators of Signet Lawyers Pty Ltd (in liquidation), in respect of Binqld Finances Pty Ltd (in liquidation), including, but not limited to, all electronic files held on the computer server (or on any copies of the computer server) of Signet Lawyers Pty Limited (in Liquidation) in respect of Binqld Finances Pty Limited (in liquidation).

5    In the period from 13 May 2015 to 8 July 2015, Messrs Vouris and Tonks took steps to produce to the Court the documents called for by Order 3 in each proceeding. They produced compact discs to the Court in tranches on 26 June 2015, 2 July 2015, 6 July 2015 and 8 July 2015. As at 8 July 2015, the legal representatives of Messrs Vouris and Tonks had prepared and made available to the liquidators a composite production list which contains a description of all of the materials which had by that date been produced to the Court.

6    The materials are described in that list as “Electronic documents” and are listed by reference to 66 compact discs. In the list, the documents stored on each disc are described by reference to certain specified categories of documents. In addition, in respect of each disc, the lawyers for Messrs Vouris and Tonks have identified and listed the names of other persons or entities who, in their opinion, might have an interest in the documents stored on the disc. Those lawyers also took steps to notify the named interested parties of the fact that the discs had been produced to the Court and that access to the documents stored thereon may be granted to the liquidators and other interested persons and entities.

7    The liquidators now seek access to all of the discs produced by Messrs Vouris and Tonks to which they have not yet had access. Andrew Binetter and Gary Binetter have made claims that access to certain documents should not be granted to the liquidators or, as I understand it, to other persons and entities. The Messrs Binetter contend that those documents are protected from production and from access by legal professional privilege, in each case the privilege being that of either Andrew Binetter or Gary Binetter.

8    The liquidators argue that, at most, the documents which have been produced by Messrs Vouris and Tonks are the subject of joint privilege shared by the three corporations of which they are liquidators (Binqld, EGL and Ligon 268) as well as other persons and corporations loosely described as “the Binetter group”, which group includes Andrew Binetter and Gary Binetter personally and another corporation of which Messrs Sheahan and Lock are liquidators, BCI Finances Pty Limited (In Liquidation), and that no one holder of such joint privilege can rely upon it as against any one or more of the other holders of such joint privilege.

9    The relevant principles were summarised by Sheller JA in Farrow Mortgage Services Pty Ltd (In Liq) v Webb (1996) 39 NSWLR 601 at 608. There his Honour said:

Shared or similar interest in subject of communication:

Two or more persons may join in communicating with a legal adviser for the purpose of retaining his or her services or obtaining his or her advice. The privilege which protects these communications from disclosure belongs to all the persons who joined in seeking the service or obtaining the advice. The privilege is a joint privilege. So is it also if one of a group of persons in a formal legal relationship communicates with a legal adviser about a matter in which the members of the group share an interest. Communications by one partner about the affairs of the partnership or a trustee about the affairs of the trust are examples. Implicit in the relationship is the duty or obligation to disclose to other parties thereto the content of the communication. Accordingly no privilege attaches to such communications as against others who, with the client, share an interest in the subject matter of communication. But the parties together are entitled to maintain the privilege “against the rest of the world”: Phipson, par 20-28 and par 20-29. Logically the joint nature of the privilege means that all to whom it belongs must concur in waiving it. Theirs is one inseverable right. In pars 20-29 the learned editors of Phipson say that in the case of joint interest, it is sufficient, as against third persons, if only one of the interested parties claims the privilege, though all must concur in waiving it. In Rochefoucauld v Boustead [1897] 1 Ch 196, two parties were engaged in a joint venture. The first invited the second to consult his solicitor but, in proceedings against both parties, waived any privilege in respect of what took place. The second party was held to remain entitled to insist upon the maintenance of the privilege.

10    To similar effect are the observations of Campbell J in Re Doran Constructions Pty Ltd (In Liq) (2002) 168 FLR 116 at 132–133 [72]–[73] where his Honour said:

72    Rather, whether there is a communication made to, or from, a solicitor in his or her joint capacity is decided by objective evidence about whether the occasion for the communication was one where the solicitor was being asked to advance the purpose for which he or she was jointly consulted. It is appropriate to apply here the same test as Lord Buckmaster applied in Minter v Priest for the purpose of deciding whether a privilege arose at all, namely that the communication which is one made to the solicitor in his or her capacity as a jointly retained lawyer, “... must be such as, within a very wide and generous ambit of interpretation, must be fairly referable to the relationship”.

73    That it is at this level of generality that one decides whether a joint privilege exists, is demonstrated by the language in which Cross on Evidence (Aust ed, current electronic version) par [25265] explains joint privilege.

“A ‘joint privilege’ arises where two or more persons communicate with a legal advisor for the purpose of retaining that legal advisor’s services or obtaining that legal advisor’s advice, for example, two persons for their mutual benefit stating a case for the opinion of counsel, or communications between a solicitor and a wife acting collusively with her husband in divorce proceedings. A joint privilege also arises where one of a group of persons in a formal legal relationship communicates with a legal advisor on a matter relating to that relationship, for example, partner and partner, trustee and beneficiary (unless the existence of the trust is the very matter in dispute in the litigation), company director and shareholder, and joint venturers. A joint privilege also exists as between claimants under a testator’s will and the executors as against the rest of the world. Where the communications relate to matters outside the joint relationship, they are privileged in favour of the person who communicated with the lawyer against the other party to the relationship, even if the latter funded the expense of the communication, for example, communications between a local authority and its solicitors against a ratepayer in matters not connected with the rates, or communications between a lawyer and a company in litigation with a shareholder.”

See also Heydon JD, Cross on Evidence (10th Australian Edition, LexisNexis, 2015) at 905–906 [25265] and the cases therein referred to.

The Claims Made by Andrew Binetter

11    The privilege claims made by Andrew Binetter are supported by an affidavit sworn by Dajana Malnersic on 9 July 2015 and an affidavit sworn by Mark Douglass on 13 July 2015. In her affidavit, Ms Malnersic refers to copies of two retainers of firms with which Mr Douglass was associated from time to time. The first such retainer is dated 9 September 2009 and is with Argyle Lawyers. The second is dated 8 November 2011 and is with Signet Lawyers. A copy of each of these retainers is exhibited to Ms Malnersic’s affidavit as part of Exhibit DM-2. The retainers appear to be on behalf of the Binetter group.

12    In his affidavit sworn today, Mr Douglass refers to a conversation he had with Andrew, Gary and Michael Binetter in around 2006, the substance of which was that the firm for whom he then worked was to be retained generally to work for the Binetter group upon the basis that the work to be undertaken would be billed in one bill addressed to a particular corporation which would be nominated by the Binetters. The Binetters told Mr Douglass that the costs rendered in each bill would then be split as between them and their corporate associates in such manner as they should determine. The written retainers which are in evidence suggest that the retainers effected by those documents were with Ligon 158 Pty Limited and Milgerd Nominees Pty Limited, in respect of the 2009 retainer, and Ligon 158 Pty Limited and Ligon 159 Pty Limited, in respect of the 2011 retainer. The first written retainer is headed “Tax Litigation Retainer & Cost Agreement” and the second is headed “Taxation Advice Retainer and Cost Agreement”.

13    When one looks at the terms of the written retainers, it is fairly clear that the intention of the parties to each retainer was that the lawyers would act generally for all of the members of the Binetter group in relation to tax litigation which was both in existence and in prospect as at the date of each retainer. Clearly, on the authorities, there was a joint retainer of those lawyers in respect of that subject matter.

14    However, that is not the end of the matter. It is, of course, possible for one or more parties to a joint retainer to seek individual advice from time to time from the very same lawyers who have been jointly retained upon the basis or understanding on the part of all parties that that individual advice is to be privileged in favour of the party seeking the advice not only against external parties but also against all of the other parties to the joint retainer.

15    The claims to privilege made by Andrew Binetter relate to five documents.

16    The first is an email from his current solicitor, Ms Malnersic, dated 8 July 2015 to Ms Sutton, who was formerly in partnership with or worked for Mr Douglass from time to time, seeking information about the terms of the various retainers entered into by members of the Binetter group and, in particular, Andrew Binetter with Argyle Lawyers, Signet Lawyers and other firms associated with Mr Douglass. That document is clearly privileged and would, in any event, be of no benefit to the liquidators or anybody else in the substantive litigation currently on foot in this Court, as between the liquidators and members of the Binetter group (SAD 5 of 2015), being the litigation for the purposes of which documents have been sought from Messrs Vouris and Tonks. There are documents attached to that email which comprise copies of the material which Ms Malnersic disclosed in Exhibit DM-2 to her affidavit and in respect of which no claims for privilege or confidentiality have been made.

17    The second document over which Andrew Binetter claims privilege is Mr Douglass’ reply to Ms Malnersic’s inquiry. It is an email dated 8 July 2015 and is also clearly privileged. The privilege is Andrew Binetter’s.

18    The third document which Andrew Binetter says is privileged is a letter from Signet Lawyers dated 6 March 2014 to Mr Timothy Game of Senior Counsel. It seems to me that this document relates to the private affairs of Mr Andrew Binetter and to no-one else. Notwithstanding that, there is reference in the body of the letter to affidavits filed in the Administrative Appeals Tribunal relating to litigation involving the group generally. I think that the claim to privilege has been made out in respect of the letter and I decline to grant access to it. But I should add, as I mentioned to Counsel for the liquidators during the hearing, the document would be of very little assistance, in any event, to the liquidators in proceeding SAD 5 of 2015. Apparently, there is also a letter bearing the same date which is in substantially the same terms addressed to Mr Game’s Junior Counsel, Mr Johnson. Access to that letter should also be declined for the same reasons.

19    The fifth document in respect of which Andrew Binetter claims privilege is a letter from Signet Lawyers to him dated 27 March 2014. It is a letter of advice. It is clearly privileged. It relates solely to the affairs of Andrew Binetter. I uphold his claim of privilege in respect of that letter and decline access to it. Again, I should add that the document would provide very little, if any, assistance to the liquidators in proceeding SAD 5 of 2015, in any event.

The Claims made by Gary Binetter

20    Gary Binetter wishes to keep confidential certain parts of a file note, the entirety of which has been provided to the liquidators and possibly to other parties already. This is Confidential Annexure HSK-4 to the affidavit of Mr Koops. It is a file note of a conference among Gary Binetter and lawyers retained by members of the Binetter group held at 5.00 pm on 18 February 2013.

21    Mr Binetter wants the Court, in effect, to withdraw the access already granted to parts of that file note and to prohibit the use by the liquidators of certain parts of that file note. The application to prevent the liquidators from using this material is based upon the proposition that certain parts of the note record matters which are properly the subject of the individual privilege of Gary Binetter. In order to establish that proposition, Gary Binetter would need to establish that there was an individual retainer by him of one or more of the persons referred to in the file note and that the parts of the document in respect of which privilege is claimed fall within that retainer.

22    Mr Binetter’s claim to privilege is supported by an affidavit from his solicitor, Mr Koops, affirmed on 8 July 2015. Paragraphs 9 to 12 contain the precise basis upon which this privilege is asserted. They are in the following terms:

Gary Binetter’s privilege claim

9.    I am informed by Mr Gary Binetter, and believe to be true, that he retained Signet Lawyers to provide him with advice in his personal capacity on or around 18 February 2013, being the date the File Note was purportedly taken. I am informed and believe that Mr Gary Binetter sought advice on his personal liability.

10.    I am also informed by Mr Gary Binetter, and believe to be true, that Signet Lawyers retained Neil Williams SC and Rashelle Seiden of Counsel to act in relation to all matters involving Emil Binetter and Erwin Binetter, their children and related entities, which included the advice provided to Mr Gary Binetter in his personal capacity in the File Note.

11.    I am instructed by Mr Gary Binetter that he claims legal professional privilege over Parts of the File Note. I am instructed that he does not waive his legal professional privilege over Parts of the File Note.

12.    The Parts of the File Note records:

(a)    confidential communications passing between Mr Gary Binetter and his solicitors Mark Douglass and Melissa Care of Signet Lawyers, and Neil Williams SC and Rashelle Seiden of Counsel, for the dominant purpose of obtaining legal advice in his personal capacity or preparing for a pending or anticipated litigation in which Mr Gary Binetter may be a party personally; and

(b)    confidential communications passing between solicitors and Counsel acting for Mr Gary Binetter for the dominant purpose of providing Mr Gary Binetter with legal advice in his personal capacity or preparing for a pending or anticipated litigation in which Mr Gary Binetter may be a party personally.

23    Gary Binetter has not sworn an affidavit to support his claim for privilege. He relies only upon an affidavit from his solicitor. Mr Koops was not present at the conference which is the subject of the file note in question so that his evidence does no more than record instructions conveyed to him by Gary Binetter. The evidence of Mr Koops should be accorded little weight in the circumstances of this case, particularly where there is no direct evidence of any relevant individual retainer and no probative evidence which explains the circumstances in which and the purposes for which the conference referred to in the file note was convened. Further, no reason has been advanced as to why Gary Binetter did not give evidence before me in order to support his privilege claims. In particular, there is no probative evidence of a retainer entered into between Gary Binetter and Mr Douglass pursuant to which Gary Binetter sought and received advice as to potential personal liability in circumstances where that advice was to be kept confidential from any of the members of the Binetter group.

24    In addition, a close examination of the subject matter of the file note reveals that the conference, of which the note is a record, was held to discuss the course of action that was to be undertaken by various corporate entities within the Binetter group in connection with the tax litigation then on foot. It is a file note headed “B Group” and, as I have already said, appears to relate to a conference held on 18 February 2013 at 5.00 pm. The persons in attendance in person at the conference were Mr Neil Williams of Senior Counsel, Ms Rashelle Seiden of Counsel, Mr Douglass and Ms Melissa Care who apparently was a solicitor employed by Mr Douglass at the time.

25    There is no direct evidence before me as to who made the file note. Having regard to its form and content, I infer that it was not made by Mr Williams or Ms Seiden. Furthermore, it seems to me that Mr Douglass probably did not make the note either. He was the senior solicitor present and likely left the taking of notes to his junior. The most likely notetaker, in my view, was Ms Care. For present purposes, it does not matter very much who took the note, although I think I should proceed upon the basis that Ms Care made the note. None of the persons who attended the conference has given evidence before me. No-one has come forward to explain the purpose for which the conference was held or the context in which it took place.

26    The note records that, about 20 minutes after the conference started, Gary Binetter joined the conference by telephone. The note then records discussion about a number of matters. The most frequent speakers appear to have been Mr Williams, Ms Seiden and Gary Binetter.

27    Gary Binetter does not seek to claim privilege for the entire note but rather seeks to excise from the note various remarks made from time to time which refer to personal liability which he might potentially have in certain circumstances. For example, after an initial discussion where Ms Seiden outlined some problems concerning the tax litigation involving the group, Gary Binetter made a remark about the quality and reliability of certain evidence filed in the relevant proceeding on behalf of the Binetter interests. That comment clearly related to evidence already filed and intended to be adduced by the group in the tax litigation. There was a concern expressed at the conference that, should that evidence be proven to be false in due course, there may be serious personal consequences for Gary Binetter. It seems to me that it is beyond argument that that remark was made in the context of the tax litigation involving the entire group, or at least the parties to that litigation, and is subject to the joint privilege of the whole group. Such joint privilege cannot be raised as between the members of the group as a reason for withholding access to the document or parts of it.

28    It is not necessary to set out each and every part of the file note which Gary Binetter seeks to have excised. It is fair to say that, although the subject matter of the note is the group’s tax litigation, from time to time comments and observations are made concerning the potential for personal liability on the part of one or other of the individuals concerned (viz Andrew Binetter and Gary Binetter). It is, generally speaking, those comments which Gary Binetter seeks to have excised from the note.

29    I do not think that any of these remarks are privileged as being advice tendered or legal services provided to Gary Binetter alone in his personal capacity. All of the remarks in question are intimately connected with the tax litigation involving the companies in the group and, potentially, the individuals, and I do not consider that the claim for individual privilege has been made out in respect of any of them. It would be wrong to suggest, as Gary Binetter must, that the portions of the file note sought to be excised contain material which was always intended to be kept confidential not only from strangers but from those members of the Binetter group involved in the tax litigation. Such a suggestion would have been ridiculed had it been made at the conference on 18 February 2013. In coming to this view, I have assumed in favour of Gary Binetter’s contentions that there were, from time to time, individual retainers of Mr Douglass by Gary Binetter although there was no probative evidence led before me which proved the existence of such a retainer as at February 2013. Nonetheless, I have concluded that the relevant file note does not record any advice or information the subject of such a personal retainer.

30    It seems to me that the true position was that the retainers in place from time to time were general retainers by the group but that, in addition to the group retainer, against the background of the existence of those general retainers, some individual advice was given or sought which attracted privilege in the hands of the individual concerned. However, in the case of the particular file note over which Gary Binetter claims privilege, I do not consider that Gary Binetter has made good the proposition that the portions of that file note which he seeks to excise or mask fall within that principle.

Conclusions

31    For all of the above reasons, I propose to uphold all of the claims of privilege made by Andrew Binetter and to reject Gary Binetter’s claim of privilege in respect of certain parts of the file note to which I have referred.

32    Gary Binetter also claimed that, when finalising the orders made by him on 8 July 2015, Registrar Morgan omitted an order that had been agreed among the relevant parties concerning confidentiality of certain examination transcripts. As this matter was not controversial, on 10 July 2015, I made the order requested by Gary Binetter. This was the only order sought by him in his Amended Interlocutory Application which I was prepared to make. All of his other claims for relief in that process should therefore be dismissed.

33    I will direct the parties to bring in Short Minutes of Order to give effect to these Reasons for Judgment.

Associate:

Dated:    17 July 2015