FEDERAL COURT OF AUSTRALIA

Mitic v OZ Minerals Limited [2015] FCA 1152

THE COURT ORDERS THAT:

1.    By 10 November 2015, OZ Minerals and Zinifex are to serve on all other parties a list of any further Challenged Documents in respect of which they no longer press their claims for legal professional privilege, as a result of their abandoning their privilege claims in respect of various Representative Documents.

2.    All Challenging Parties have liberty to apply, on two business days’ notice, for the matter to be relisted for the determination of any remaining claims of legal professional privilege as contemplated by the Court’s Order 10 of 28 September 2015.

3.    Costs reserved with respect to Allens’ challenge to the Zinifex claims for privilege.

4.    There be no order as to the costs of Mr Mitic’s challenges to OZ Minerals’ claims for privilege.

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

REASONS FOR JUDGMENT

Introduction

1    These proceedings are being case managed by Middleton J. Issues concerning legal professional privilege arose and were referred to me for consideration. OZ Minerals and Zinifex claimed legal professional privilege over approximately 1,500 documents discovered by OZ Minerals. OZ Minerals claimed legal professional privilege over approximately 550 documents discovered by Clayton Utz. And Zinifex claimed legal professional privilege over approximately 2,240 documents discovered by Allens. Many challenges were made to the claims for privilege. Largely by the proposals, consent and co-operation of the parties, I made orders giving effect to a regime permitting each party to nominate up to 20 sample documents that represented the documents challenged by that party.

2    During the exchange of written submissions and evidence in relation to those representative documents, many of the numerous claims to privilege were conceded or challenges were not pressed by one or other of the parties. By Monday there remained only seven representative documents over which a claim for privilege was contested.

3    These are my reasons in relation to those seven representative documents. For the reasons below, I uphold the claims to legal professional privilege over all the redacted parts of those documents, save for a passage in two documents over which OZ Minerals did not seek to maintain its claim for privilege.

Background to the proceedings

4    The primary proceeding is a representative proceeding brought by Mr Mitic. He represents the former shareholders of Zinifex. On 1 July 2008, by a scheme of arrangement, Zinifex merged with Oxiana Ltd. The merged entity is OZ Minerals. Under the scheme of arrangement, the former shareholders of Zinifex received shares in Oxiana in exchange for their Zinifex shares. Mr Mitic, on behalf of the shareholders of Zinifex, claims against OZ Minerals for alleged loss and damage arising from alleged breaches of duty by OZ Minerals. Mr Mitic says that the breaches of duty arise from alleged failures by OZ Minerals to disclose material information relevant to the merger. The breaches of duty are based on continuous disclosure obligations and proscriptions against engaging in misleading or deceptive conduct.

5    Mr Mitic’s allegations concerning the non-disclosed material broadly relate to the matters including:

(1)    an 8 August 2008 refinancing deadline (which was later extended to 30 November 2008);

(2)    Oxiana’s current liability position;

(3)    a cross-default risk that arose for Oxiana if a failure to refinance occurred, ie the failure would trigger an event of default, making the debt payable, in the Loan Note Subscription Agreement of US $520 million (LNSA) and the Mezzanine Facility of US $140 million;

(4)    a refinancing risk that Oxiana would not be able to refinance its US Debt Facilities;

(5)    a development delay risk concerning the effect on cash flows of delays or cancellation of mining development or exploration projects to which Oxiana was committed; and

(6)    other risks including an insolvency risk, and an asset sale risk.

6    These risks are pleaded as relevant to the merger as involving “Merger Refinancing Risk” and “Merger Development Delay Risk”.

7    Mr Mitic says that if the market had been informed about matters concerning Oxiana’s indebtedness, its business prospects, and the risks of the merger then the result would have been either that (i) the merger would not have proceeded, or (ii) the merger would have proceeded but Zinifex shareholders would have received better consideration under the scheme of arrangement.

8    OZ Minerals denies liability. In the alternative, and in ancillary proceedings, OZ Minerals seeks apportionment of its liability. One of the ancillary proceedings is brought by OZ Minerals against Oxiana’s former solicitors, Clayton Utz. OZ Minerals pleads in its defence that Clayton Utz was a member of the Oxiana Due Diligence Committee and was engaged to provide due diligence legal services. OZ Minerals relies on matters including alleged representations by Clayton Utz to Oxiana which it says were misleading or deceptive. The first representation is pleaded as being:

That there were no matters in relation to the Financing Documents or their terms which were material and which ought to be disclosed to the ASX in accordance with Oxiana’s continuous disclosure obligations under the Corporations Act and the ASX Listing Rules, and which had not previously been disclosed by Oxiana to the ASX.

9    In affidavit evidence from a solicitor acting for OZ Minerals, and in oral submissions, the following key dates in the sequence of events were identified:

(1)    20 February 2008: Oxiana released its end of year financial accounts for the year ended 31 December 2007.

(2)    28 February 2008: Oxiana entered a Mezzanine Facility for US $140 million, an Intercreditor Deed, and an amended and restated LNSA.

(3)    2 March 2008: Oxiana and Zinifex entered a Merger Implementation Agreement.

(4)    3 March 2008: The merger was announced.

(5)    16 April 2008: Oxiana issued its quarterly report on mining and exploration activities for the first quarter of 2008 and held a briefing on it.

(6)    17 April 2008: Oxiana held its Annual General Meeting.

(7)    9 May 2008: The Explanatory Memorandum or Scheme Booklet for the proposed merger is sent to Zinifex shareholders.

(8)    16 June 2008: The scheme meeting of Zinifex shareholders was held which approved the merger.

(9)    20 June 2008: A court hearing was held which approved the merger.

(10)    1 July 2008: The merger was implemented.

(11)    8 August 2008: The original refinancing date under the LNSA was extended to 30 November 2008.

(12)    25 November 2008: an announcement to the Australian Stock Exchange was made. Mr Mitic says that this announcement corrected the non-disclosures.

10    Mr Mitic’s second further amended statement of claim against OZ Minerals defines the “Relevant Period” as the period from 28 February 2008 until the implementation of the merger on 1 July 2008.

Legal principles concerning legal professional privilege

11    There was no dispute about the legal principles to be applied to determine whether the communications were subject to legal professional privilege and whether that privilege had been waived. Twelve key principles were summarised by Young J in AWB Ltd v Cole (No 5) [2006] FCA 1234; (2006) 155 FCR 30, 44-47 [44]. That statement has been quoted on many occasions. I repeat it only because several of the principles were emphasised by OZ Minerals in its submissions:

(1) The party claiming privilege carries the onus of proving that the communication was undertaken, or the document was brought into existence, for the dominant purpose of giving or obtaining legal advice. The onus might be discharged by evidence as to the circumstances and context in which the communications occurred or the documents were brought into existence, or by evidence as to the purposes of the person who made the communication, or authored the document, or procured its creation. It might also be discharged by reference to the nature of the documents, supported by argument or submissions: see Grant v Downs [1976] HCA 63; (1976) 135 CLR 674 at 689; Commissioner of Taxation (Cth) v Pratt Holdings Pty Ltd [2005] FCA 1247; (2005) 60 ATR 466; and AWB v Cole at [63].

(2) The purpose for which a document is brought into existence is a question of fact that must be determined objectively. Evidence of the intention of the document’s maker, or of the person who authorised or procured it, is not necessarily conclusive. It may be necessary to examine the evidence concerning the purpose of other persons involved in the hierarchy of decision-making or consultation that led to the creation of the document and its subsequent communication: see AWB Ltd v Cole (No 1) [2006] FCA 571; (2006) 152 FCR 382 at [110].

(3) The existence of legal professional privilege is not established merely by the use of verbal formula: Grant v Downs at 689 per Stephen, Mason and Murphy JJ. Nor is a claim of privilege established by mere assertion that privilege applies to particular communications or that communications are undertaken for the purpose of obtaining or giving “legal advice”: National Crime Authority v S (1991) 29 FCR 203 at 211-212 per Lockhart J; Candacal Pty Ltd v Industry Research and Development Board [2005] FCA 649; (2005) 59 ATR 615; 223 ALR 284 at [70]; Seven Network Ltd v News Ltd [2005] FCA 142 at [6]-[8]. If assertions of that kind are received in evidence in support of the privilege claim, their conclusionary nature can leave unclear what advice was really being sought. There will be cases in which a claim of privilege will not be sustainable in the absence of evidence identifying the circumstances in which the relevant communication took place and the topics to which the instructions or advice were directed: Kennedy v Wallace [2004] FCAFC 337; (2004) 142 FCR 185 (Kennedy v Wallace) at [12]-[17] per Black CJ and Emmett J and [144]-[145] and [166]-[171] per Allsop J; see also Southern Equities Corp Ltd (in liq) v Arthur Andersen & Co (No 6) [2001] SASC 398.

(4) Where communications take place between a client and his or her independent legal advisers, or between a client’s in-house lawyers and those legal advisers, it may be appropriate to assume that legitimate legal advice was being sought, absent any contrary indications: Kennedy v Wallace [2004] FCA 332; (2004) 208 ALR 424 at [65] per Gyles J; affirmed on appeal, Kennedy v Wallace at [23]-[27] per Black CJ and Emmett J. In Kennedy v Wallace, Black CJ and Emmett J inclined to the view that in the ordinary case of a client consulting a lawyer about a legal problem in uncontroversial circumstances, proof of those facts alone will provide a sufficient basis for a conclusion that legitimate legal advice is being sought or given.

(5) A “dominant purpose” is one that predominates over other purposes; it is the prevailing or paramount purpose: AWB v Cole at [105]-[106]; Commissioner of Taxation (Cth) v Pratt Holdings at [30] per Kenny J.

(6) An appropriate starting point when applying the dominant purpose test is to ask what was the intended use or uses of the document which accounted for it being brought into existence: Pratt Holdings Pty Ltd v Commissioner of Taxation [2004] FCAFC 122; (2004) 136 FCR 357 at [35] per Finn J.

(7) The concept of legal advice is fairly wide. It extends to professional advice as to what a party should prudently or sensibly do in the relevant legal context; but it does not extend to advice that is purely commercial or of a public relations character: Balabel v Air India [1988] Ch 317 at 323 and 330; Nederlandse Reassurantie Groep Holding NV v Bacon & Woodrow [1995] 1 All ER 976 at 983; Three Rivers District Council v Governor and Company of Bank of England (No 6) [2005] 1 AC 610 at [2006] FCA 1234; 155 FCR 30] AWB LTD v COLE (No 5) (Young J) 45 [43]-[44], [59]-[60], [114] and [120]; Dalleagles Pty Ltd v Australian Securities Commission (1991) 4 WAR 325 at 332-333; DSE (Holdings) Pty Ltd v InterTAN Inc [2003] FCA 1191; (2003) 135 FCR 151 at [25]- [71]; and AWB v Cole at [100]-[101].

(8) Legal professional privilege protects the disclosure of documents that record legal work carried out by the lawyer for the benefit of the client, such as research memoranda, collations and summaries of documents, chronologies and the like, whether or not they are actually provided to the client: Daniels at [44] per McHugh J; Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501 at 550 per McHugh J (Propend); Dalleagles at 333-334 per Anderson J; Trade Practices Commission v Sterling [1979] FCA 33; (1979) 36 FLR 244 at 245-246 per Lockhart J (Sterling); and Kennedy v Lyell (1883) 23 Ch D 387 at 407; Lyell v Kennedy (No 3) (1884) 27 Ch D 1 at 31 per Bowen LJ; Propend Finance Pty Ltd v Commissioner of Australian Federal Police (1995) 58 FCR 224 per Lindgren J.

(9) Subject to meeting the dominant purpose test, legal professional privilege extends to notes, memoranda or other documents made by officers or employees of the client that relate to information sought by the client’s legal adviser to enable him or her to advise: Sterling at 246. The privilege extends to drafts, notes and other material brought into existence by the client for the purpose of communication to the lawyer, whether or not they are themselves actually communicated to the lawyer: Saunders v Commissioner of Australian Federal Police (1998) 160 ALR 469 at 472.

(10) Legal professional privilege is capable of attaching to communications between a salaried legal adviser and his or her employer, provided that the legal adviser is consulted in a professional capacity in relation to a professional matter and the communications are made in confidence and arise from the relationship of lawyer and client: Waterford v Commonwealth [1987] HCA 25; (1987) 163 CLR 54 at 96 per Dawson J; see also Deane J at 79-82. Some cases have added a requirement that the lawyer who provided the advice must be admitted to practice: see Dawson J in Waterford at 96; GSA Industries (Aust) Pty Ltd v Constable [2002] 2 Qd R 146 at 150; Glengallan Investments Pty Ltd v Arthur Andersen [2002] 1 Qd R 233 at 245. However, in Commonwealth v Vance [2005] ACTCA 35; (2005) 158 ACTR 47, the Full Court (Gray, Connolly and Tamberlin JJ) did not regard the possession of a current practising certificate as an essential precondition to the availability of legal professional privilege: at [23]-[35]. The same view was taken by Lee J in Candacal at [99], by Gillard J in Australian Hospital Care (Pindara) Pty Ltd v Duggan [1999] VSC 131 at [111], and by Downes J in McKinnon v Secretary, Department of Foreign Affairs and Trade [2004] AATA 1365; (2004) 86 ALD 780 at [51].

(11) Legal professional privilege protects communications rather than documents, as the test for privilege is anchored to the purpose for which the document was brought into existence. Consequently, legal professional privilege can attach to copies of non-privileged documents if the purpose of bringing the copy into existence satisfies the dominant purpose test: Propend at 507 per Brennan CJ, 544 per Gaudron J, 553-554 per McHugh J, 571-572 per Gummow J, and 587 per Kirby J. In Propend at 512, Brennan CJ added a qualification to this principle: if an original unprivileged document is not in existence or its location is not disclosed or is not accessible to the persons seeking to execute the warrant, and if no unprivileged copy or other admissible evidence is made available to prove the contents of the original, the otherwise privileged copy loses its protection.

(12) The Court has power to examine documents over which legal professional privilege is claimed. Where there is a disputed claim, the High Court has said that the court should not be hesitant to exercise such a power: Esso; see also Grant v Downs at 689. If the power is exercised, the court will need to recognise that it does not have the benefit of submissions or evidence that might place the document in its proper context. The essential purpose of such an inspection is to determine whether, on its face, the nature and content of the document supports the claim for legal professional privilege.

12    OZ Minerals also emphasised the remarks of Young J in AWB Ltd v Cole (No 5) [2006] FCA 1234; (2006) 155 FCR 30, 47 [46] that courts eschew a narrow or technical approach to legal professional privilege and that courts recognise that the legal advice limb extends beyond material that is literally a communication, or a record of a communication, of legal advice or instructions. It extends to any document prepared by a lawyer or client from which one might infer the nature of the advice sought or given: Commissioner of Australian Federal Police v Propend Finance Pty Ltd [1997] HCA 3; (1997) 188 CLR 501, 569 (Gummow J).

13    As to waiver of privilege, the leading decision is the decision of the High Court in Mann v Carnell [1999] HCA 66; (1999) 201 CLR 1. The question there was whether the Chief Minister of the Australian Capital Territory had waived privilege over legal advice when it was disclosed to another member of the Legislative Assembly of the Australian Capital Territory. The disclosure occurred after a litigant had complained to the member about the conduct of the ACT government in litigation. A majority of the High Court of Australia (Gleeson CJ, Gaudron, Gummow, Kirby and Callinan JJ) held that privilege had not been waived. The following propositions emerge from the joint judgment of Gleeson CJ, Gaudron, Gummow and Callinan JJ:

(1)    since it is the client who is entitled to the benefit of the confidentiality of legal professional privilege, it is the client who may relinquish that entitlement and waive privilege: 13 [28];

(2)    the client may waive privilege by inconsistency between (i) the client’s conduct and (ii) the maintenance of the confidentiality of the communications: 13 [28];

(3)    waiver may be express or implied but in either case it is determined objectively: 13 [29];

(4)    in cases of implied waiver there is a need to decide whether particular conduct is inconsistent with the maintenance of the confidentiality which the privilege is intended to protect. The concept of inconsistency is informed, where necessary, by considerations of fairness between the conduct of the client and maintenance of the confidentiality not some overriding principle of fairness operating at large: 13 [29];

(5)    not every voluntary disclosure of a document to a third party will waive privilege: 14 [30]; and

(6)    there are circumstances where disclosure to a third party for a limited and specific purpose does not amount to a waiver of privilege in the litigation: 14 [32] citing Gotha City v Sotheby’s [No 1] [1998] 1 WLR 114 where the owner of a picture who wished to sell it through Sotheby’s sent to Sotheby’s a copy of legal advice received concerning the picture. The plaintiff, who claimed to own the picture, failed in its claim that privilege had been waived.

The seven representative documents over which OZ Minerals claims privilege

14    The seven representative documents over which there remains an issue between the parties concern claims to legal professional privilege. Those documents have been discovered by OZ Minerals as well as its former legal advisers, Clayton Utz.

15    The challenges to OZ Minerals’ claims of legal professional privilege over the seven representative documents fall into three categories. Those categories are as follows:

(1)    Implied waiver: where Mr Mitic says that OZ Minerals has impliedly waived privilege over documents which fall within the scope of issues in dispute in proceedings it has brought against its former legal advisers, Clayton Utz.

(2)    Third party: where Mr Mitic says that OZ Minerals’ has not demonstrated that its communications with third parties is privileged.

(3)    Basis unclear: where Mr Mitic says that the basis for OZ Minerals’ claim to privilege is not clear.

Documents over which implied waiver is alleged: Representative Documents 2, 6, 7, 8, and 27

16    Mr Mitic’s challenge to OZ Minerals’ claims for legal professional privilege in this category broadly concerns whether privilege has been waived by OZ Minerals over legal advice given by its former legal advisers, Clayton Utz. It is common ground that there was a waiver of privilege over some communications when OZ Minerals commenced legal proceedings against Clayton Utz.

17    There is a puzzle about Mr Mitic’s claims concerning implied waiver. Mr Mitic has no claim against Clayton Utz in the primary proceedings, although his claim against OZ Minerals might be apportioned if (i) it is successful, and (ii) Clayton Utz is found to be liable in the ancillary proceedings. Mr Mitic has an interest in the documents concerning advice from Clayton Utz for that reason. But OZ Minerals and Clayton Utz have a powerful, direct interest in the documents concerning advice from Clayton Utz. OZ Minerals has a direct interest in waiving privilege over any document which contains communications which assist it to show that Clayton Utz is liable. And Clayton Utz has a direct interest in challenging a claim to privilege by OZ Minerals over any document which contains communications which assist to show that Clayton Utz is not liable. The puzzle is that OZ Minerals and Clayton Utz have reached agreement concerning the documents over which privilege can be claimed. Both of these parties have seen all the documents. Yet Mr Mitic, who has not seen the documents, challenges OZ Minerals’ claim to privilege over some of them. In effect, his assumption was that for strategic reasons, or by error, (i) OZ Minerals is claiming privilege and not relying upon documents that would assist its own case against Clayton Utz, or (ii) Clayton Utz is not challenging privilege over relevant documents that would assist its claim where privilege has been waived. It is not necessary for me to speculate on this puzzle. I accept that the challenges to privilege before me are to be determined on their own terms.

18    The approach taken by OZ Minerals to implied waiver is described in an affidavit filed by one of OZ Minerals’ solicitors, Mr Jack.

19    OZ Minerals accepts that any privilege in respect of communications between Oxiana and Clayton Utz has been waived where that privilege relates to the issues raised in proceeding VID 603 of 2014 and paragraphs 169-204 of OZ Minerals’ (further amended) defence. For simplicity, I will refer to the issues in dispute in that proceeding and those paragraphs as the Clayton Utz issues.

20    The dispute between OZ Minerals and Mr Mitic concerning implied waiver is therefore whether various documents fall within the scope of the Clayton Utz issues.

21    Paragraph 27 of OZ Minerals’ statement of claim in VID 603 of 2014, and paragraph 172 of its defence in the primary proceedings, describe the alleged role and function of Clayton Utz in respect of the Proposed Merger:

27.     The role and function of Clayton Utz in respect of the Proposed Merger included:

(a)    to perform legal due diligence in respect of the Proposed Merger (Legal Due Diligence);

(b)    to be a member of the Oxiana Due Diligence Committee;

(c)    to prepare a Due Diligence Planning Memorandum;

(d)    as part of the Legal Due Diligence, to prepare a Due Diligence Legal Work Plan (Legal Work Plan) and then carry out the work required by the Legal Work Plan (Required Legal Work); and

(e)    to prepare and provide to Oxiana a Legal Due Diligence Report (Legal Due Diligence Report),

(collectively, the Due Diligence Legal Services).

22    In Clayton Utz’s pleaded (amended) defence in VID 603 of 2014, paragraph 27, it denies that its legal due diligence services were other than as follows:

27.    In answer to paragraph 27, Clayton Utz:

(a)     says that the legal due diligence services it was engaged to provide to Oxiana in relation to the Merger included:

(i)     being a member of the Oxiana Due Diligence Committee;

(ii)     preparing the draft Due Diligence Planning Memorandum (which was later adopted by the members of the Oxiana Due Diligence Committee);

(iii)     preparing the LegalWork Plan and then carrying out the work described in the Legal Work Plan; and

(iv)     preparing and providing Oxiana and the Oxiana Due Diligence Committee with the Legal Due Diligence Report,

(collectively the Oxiana Legal Due Diligence Services)…

23    Clayton Utz also pleads that it did not commence carrying out the Due Diligence Legal Services until after the Merger Implementation Agreement was signed on 2 March 2008. The merger was implemented on 1 July 2008. Further, the relevant period for trading of Oxiana securities, relied upon in Mr Mitic’s statement of claim against OZ Minerals and defined as the “Relevant Period”, was the period from 28 February 2008 until 1 July 2008.

24    Although OZ Minerals concedes that it has waived privilege over documents concerning the Clayton Utz issues, it says that it has not waived legal professional privilege over separate matters on which it sought legal advice from Clayton Utz, which were not within the scope of the Due Diligence Legal Services. OZ Minerals describes these separate matters as Discrete Legal Services. However, OZ Minerals accepts that even in relation to the Discrete Legal Services it has waived privilege where the Discrete Legal Services advice is relevant to the issues in dispute in OZ Minerals’ proceedings against Clayton Utz.

25    Mr Mitic emphasises that the issues in the case against Clayton Utz might require consideration of matters arising (i) before the Relevant Period, such as matters that were notified to Clayton Utz from the time of its engagement in mid-2007, and (ii) after the Relevant Period, until 25 November 2008, when OZ Minerals disclosed its debt position. I accept, and counsel for OZ Minerals properly conceded, that documents which existed before the Relevant Period, as well as those that were created after it, might nevertheless be relevant to matters during the period of that process. For instance, in relation to the time after the Relevant Period, a simple example given by counsel for OZ Minerals would be an admission of the existence of some fact during the Relevant Period. It would not matter if this admission by Clayton Utz were after the Relevant Period or even after 25 November 2008. As to the time before the Relevant Period, at [178] of OZ Minerals’ defence, OZ Minerals pleads that Clayton Utz was engaged to provide legal services to Oxiana from 1 July 2007 until 30 June 2008. Documents existing from 1 July 2007, before the due diligence process began, could conceivably affect the issues in the Relevant Period such as if they affected the construction of the scope of matters in the Legal Work Plan.

26    However, I do not accept Mr Mitic’s submission that documents that are outside the Relevant Period and which do not affect anything in the Relevant Period are currently relevant to matters in issue between OZ Minerals and Clayton Utz. Counsel for Mr Mitic gave an example of the following hypothetical circumstance which was said to illustrate this point:

(1)    Clayton Utz is found to have breached its duty of care during the Relevant Period;

(2)    by reason of conduct after the implementation of the merger on 1 July 2008 but before the Disclosure Date of 25 November 2008, Clayton Utz’s breach is rectified; and

(3)    Mr Mitic is entitled to damages assessed as at 25 November 2008.

27    Counsel for Mr Mitic said that in this scenario an apportionment of damages would require the Court would need to consider Clayton Utz’s conduct after the Relevant Period for the purpose of assessing whether it had performed its duties in the period after the Relevant Period but before the Disclosure Date.

28    The problem with this example is that it is wholly hypothetical. It is not Clayton Utz’s pleaded case. Counsel for Mr Mitic submitted that this could become an alternative pleaded case by Clayton Utz’s simply by the addition of a new particular to [53(C)] of Clayton Utz’s defence in VID 603 of 2014. I do not need to speculate upon whether such an alternative case could be pleaded, with leave, merely by the addition of a particular. The short point is that there is currently no such case and no such issue in dispute.

29    With that background, I turn to a consideration of the documents over which Mr Mitic says that legal professional privilege has been waived.

30    Representative Document 6. This document is described in Mr Jack’s evidence as comprising hand written notes dated 29 May 2008 which appear on the face of the document to record a confidential telephone discussion between Ms Moloney of Clayton Utz and Ms Peril, for the dominant purpose of Clayton Utz providing legal advice to Oxiana. Mr Jack says that Ms Peril informed him that at various times she spoke to Ms Moloney for the dominant purpose of obtaining legal advice in relation to funding of a break fee.

31    Counsel for OZ Minerals submitted that the “break fee” to which Mr Jack refers is a fee under the Merger Implementation Agreement between Oxiana and Zinifex. He said, without demur from counsel for Mr Mitic, that the break fee was the fee which must be paid if one of those companies decided not to proceed with the merger.

32    Mr Mitic submitted that this document should be inspected on the basis that if privilege does apply then that privilege may have been waived because the funding of the break fee is a matter that may bear on the materiality of Oxiana’s refinancing obligations which is an issue that is central to OZ Minerals’ allegations against Clayton Utz. Mr Mitic says that the potential commercial implications of Oxiana’s refinancing obligations if funding of the break fee became necessary is referred to by Gryphon Partners in Representative Document 13.

33    I accept that there would be a waiver of privilege in relation to matters such as the potential commercial implications of Oxiana’s refinancing obligations if funding of the break fee became necessary. Indeed, such matters are disclosed in the unredacted part of Representative Document 13 under the heading “Commercial Implications of Not Completing the Merger”. An example is the following unredacted passage from that document:

Oxiana would continue to face considerable funding hurdles, including the need to raise significant new equity to meet current re-financing requirements and the possible immediate requirement to fund the $55 million break fee. This will place a refinancing obligation of in excess of $0.5 billion within a short timeframe (at a time when financing markets have shown the potential to suffer severe short term liquidity issues).

34    However, there is a difference between commercial risks that might bear upon alleged breaches of duty pleaded in relation to the Clayton Utz issues and legal questions such as construction of the meaning of documents, independently of the Clayton Utz issues. Legal advice about the latter do not fall within the scope of the Clayton Utz issues. After reading the various communications in Representative Document 6, with one exception, I am satisfied that the communications are privileged.

35    The one exception is a factual statement at the commencement of the memorandum which says “additional $30m in cost overruns has been identified”. Although this statement might have been made in connection with the remainder of legal advice which is independent of the Clayton Utz issues, it is arguable that it is a statement that relates to the Clayton Utz issues and, hence, the conduct of OZ Minerals in commencing litigation against Clayton Utz is inconsistent with the maintenance of confidentiality in the factual statement.

36    It is not necessary to reach any final conclusion about this matter because OZ Minerals undertook to “unredact” this statement in Representative Document 6.

37    Representative Document 2. This document is described in Mr Jack’s evidence as comprising an email from Ms Moloney of Clayton Utz to Mr Sells (Chief Financial Officer, Oxiana), Ms Higgins and Ms Peril dated 29 May 2008. Mr Jack says that he is informed by Ms Higgins that she had requested legal advice from Clayton Utz in relation to the break fee and that the email was a confidential communication for the dominate purpose of Oxiana being provided with that legal advice.

38    Mr Mitic says that the advice appears to include analysis under the heading “Relevant Provisions of the LNSA”. He reiterates that the LNSA is a “Financing Document” in respect of which OZ Minerals pleads contravening conduct by Clayton Utz.

39    Again, as counsel for OZ Minerals submitted, there is a difference between any facts concerning alleged contraventions by Clayton Utz in its advice during the Relevant Period and legal advice concerning the construction of terms in the LNSA and issues such as whether the break fee could be drawn down under the LNSA.

40    Having reviewed the document, with one exception, I do not consider that privilege has been waived in relation to Representative Document 2 for broadly the same reasons as I have given in relation to Representative Document 6.

41    The exception is a factual statement in Representative Document 2 on the final page. Again, although the rest of the legal advice which is independent of the Clayton Utz issues, my preliminary conclusion was that it is arguable that this statement is connected to the Clayton Utz issues and therefore privilege over this part of the communication had been waived. It is not necessary to reach any final conclusion about this matter because OZ Minerals undertook to “unredact” this part of the document. The statement (which uses capitalised terms that are not defined elsewhere) is as follows:

We understand that US $60M of the undrawn Debt Support Facility Commitment has already been allocated to fund Cost Overruns. In addition we understand that a further US $30M in Cost Overruns has been identified in the most recent Project Construction Certificate.

42    Representative Document 8. Mr Jack describes this document as dated 29 May 2008 and containing communications between, on the one hand, Ms Moloney and, on the other hand, Ms Peril, Mr Sells and Ms Higgins. Mr Jack says that Ms Higgins informs him that the communications were confidential and for the dominant purpose of Oxiana obtaining and being provided with legal advice in relation to the break fee.

43    Mr Mitic again says that the fact that there was a potential funding requirement in relation to the break fee is a matter that may bear on the materiality of Oxiana’s refinancing obligations.

44    Having reviewed the document, I do not consider that privilege has been waived in relation to Representative Document 8 for broadly the same reasons as I have given in relation to Representative Document 6.

45    Representative Document 7. Mr Jack describes this document as being advice and drafting of a letter to Oxiana’s banks requesting a waiver of the requirement under the LNSA for the Zinifex entities to accede as guarantors. He also says that Representative Document 7 includes communications in relation to advice about drafting of a letter to Oxiana’s banks requesting a waiver of the 8 August 2008 refinancing date under the Intercreditor Deed. He says that it comprises of communications dated 7 July 2008 between Ms Moloney, Ms Peril, Ms Lee (former General Counsel of OZ Minerals), Ms Wellings (Group Treasurer of OZ Minerals from 1 July 2008) and Ms Higgins. He says that Ms Higgins informs him that the communications are confidential and were obtained for the dominant purpose of Oxiana being provided with, and obtaining, legal advice.

46    Mr Mitic says that OZ Minerals has waived privilege in relation to this document because advice from Clayton Utz about the terms of any letter requesting a waiver of the refinancing date may bear upon Clayton Utz’s advice as to the likelihood of a refinancing extension and, therefore, the materiality of the refinancing provisions. He says that the draft letter may refer to representations by OZ Minerals’ financiers as to the likelihood of an extension being granted which may bear upon Clayton Utz’s advice in this regard.

47    For the reasons I have explained at [25]-[28] above, although Representative Document 7 is dated 7 July 2008 (ie after the Relevant Period) this does not necessarily mean that privilege can be maintained. However, having reviewed the communications, I do not consider that they raise any matter which is relevant to any of the Clayton Utz issues during the Relevant Period.

48    Representative Document 27. OZ Minerals says that this document is concerned with advice in relation to the financing of Oxiana’s Sepon mine in the Laos Martabe Project in Indonesia. In his affidavit, Mr Jack describes document 27 as:

comprising a confidential communication from Ms Moloney of Clayton Utz to Ms Peril dated 29 April 2008… that it was provided to Oxiana for the dominant purpose of providing legal advice to Oxiana in response to a request from Ms Peril in relation to the structure of the proposed refinancing relating to Oxiana’s Sepon mine.

49    Mr Mitic refers to page 8 of the document which, in the redacted version, contains the heading “Oxiana’s obligations under the LNSA”. Mr Mitic reiterates that the LNSA is one of the financing documents which OZ Minerals was required to refinance pursuant to the terms of the Intercreditor Deed (which is pleaded as the “refinancing agreement”). Mr Mitic says that Clayton Utz’s advice in relation to the terms of this document (and the materiality of those terms) is in issue in the Clayton Utz proceeding. He says that the advice about the proposed refinancing of the Sepon facility may bear upon the materiality of OZ Minerals’ obligations to refinance the LNSA and Mezzanine facilities.

50    Having reviewed the legal advice in Representative Document 27, I do not consider that the redacted parts of the document contain any communication that is relevant to the Clayton Utz issues.

Documents involving third party communications over which privilege is challenged: Representative Document 13

51    Representative Document 13. This document is described in Mr Jack’s evidence as comprising an email from Mr O’Connor of Gryphon Partners addressed to Mr Stanley of Morgan Stanley and Mr Loveday of Oxiana. He says that it is copied to Mr Lester of Oxiana and Ms Higgins. He says that the document attaches a draft Board Paper with some comments marked up. Mr Jack also says that the redacted portion of the draft Board Paper is a section headed “Legal Implications of Not Completing the Merger”. Mr Jack says that Ms Higgins informs him that Clayton Utz were engaged by Oxiana to provide legal advice in relation to the legal implications of not completing the merger and that the email and attachment were a confidential communication recording Clayton Utz’s legal advice on that matter.

52    Mr Mitic says that there is nothing in the unredacted parts of the document to suggest the Clayton Utz’s advice has been reproduced in the document and attributed to them. Mr Mitic says that it may be the case that the redacted portion merely records the views of Oxiana’s executives or third party advisors whose views, even if at some stage they were advised by Clayton Utz, are not privileged merely because they are expressed in a document that has itself been prepared for the dominant purpose of a lawyer providing legal advice or legal services.

53    Whether or not the document itself records that it reproduces the advice of Clayton Utz, the unchallenged evidence of Mr Jack is that Ms Higgins told him that the document is a confidential communication (ie between interested parties) recording Clayton Utz’s legal advice. The only part of the document which records legal advice is the redacted section. Having read that section, I have no hesitation in accepting Mr Jack’s evidence. It was not suggested by Mr Mitic that the communication of this document between interested parties had impliedly waived privilege.

Documents over which the basis for the privilege claim is challenged as unclear: Representative Document 15

54    Representative Document 15. Mr Jack describes this document as a memorandum from Mr Hegarty (the CEO of Oxiana) to Oxiana’s directors dated 21 May 2008. He says that Ms Higgins informs him that she sought and obtained legal advice for Oxiana from Clayton Utz in relation to matters in Mr Hegarty’s memorandum and that the redacted portion records confidential legal advice provided by Clayton Utz. He says that the memorandum was confidential and sent from the CEO of Oxiana to the remaining directors of the company for the dominant purpose of conveying to them the legal advice that was provided to Oxiana.

55    Mr Mitic says that like Representative Document 13, there is nothing in the unredacted parts of this document to suggest that Clayton Utz’s advice has been reproduced or attributed to the directors. He says it may be the case that the redacted portion merely records the views of Oxiana’s CEO whose views, even if he was at some stage advised by Clayton Utz, when expressed in a document do not make that document one that has been prepared for the dominant purpose of a lawyer providing legal advice or legal services. This is not the case in Representative Document 15.

56    I have reviewed this document. The redacted parts are clearly privileged.

Conclusion

57    Each claim for legal professional privilege in Representative Documents 2, 6, 7, 8, 13, 15, and 27 is upheld subject to the undertakings given by OZ Minerals to “unredact” the passages mentioned in these reasons in Representative Documents 2 and 6. In circumstances in which legal professional privilege continues over the remainder of the redacted parts of the seven Representative Documents it is unnecessary to make any order to this effect.

58    Although Mr Mitic has been unsuccessful in this challenge to legal professional privilege it does not follow that the usual order should be made that he should pay OZ Minerals’ costs of this application. In particular, when the application was commenced, Mr Mitic nominated 20 representative documents pursuant to my orders. OZ Minerals subsequently abandoned its claim for privilege over nine of those 20 documents. The abandonment of OZ Minerals’ claim for privilege over 45% of the documents over which privilege had initially been claimed in this application is a strong reason weighing against the success of OZ Minerals in this application for making no order as to costs.

59    OZ Minerals submits that it should be entitled to some of its costs in circumstances in which (i) it is successful and (ii) Mr Mitic abandoned his challenge to privilege over eight of the remaining documents nominated by Mr Mitic together with the 20 documents nominated by OZ Minerals. However, as counsel for Mr Mitic rightly said, Mr Mitic’s conduct in not pressing claims for privilege over documents which he has not seen in light of submissions and evidence received is less significant in the exercise of my costs discretion than OZ Minerals’ abandoning claims to legal professional privilege over its own documents where some or all of those claims for privilege might have precipitated this application. Although OZ Minerals’ conduct in abandoning its claims to legal professional privilege over some of these documents was appropriate and laudable, Mr Mitic’s persistence with his challenge in relation to the remaining seven documents must also be understood in that light, even bearing in mind the puzzle to which I referred above at [17]. Further, after a close reading of the seven representative documents in this case, I considered it strongly arguable that privilege had been waived over passages in two of them. A claim for privilege over those passages was not abandoned after the hearing.

60    On balance, I consider that the appropriate order as to the costs of this application between Mr Mitic and OZ Minerals is that there be no order as to costs.

61    Since orders (1) to (3) below were not opposed, the appropriate orders are as follows:

(1)    By 10 November 2015, OZ Minerals and Zinifex are to serve on all other parties a list of any further Challenged Documents in respect of which they no longer press their claims for legal professional privilege, as a result of their abandoning their privilege claims in respect of various Representative Documents.

(2)    All Challenging Parties have liberty to apply, on two business days’ notice, for the matter to be relisted for the determination of any remaining claims of legal professional privilege as contemplated by the Court’s Order 10 of 28 September 2015.

(3)    Costs reserved with respect to Allens’ challenge to the Zinifex claims for privilege.

(4)    There be no order as to the costs of Mr Mitic’s challenges to OZ Minerals’ claims for privilege.

Associate:    

Dated:    28 October 2015