FEDERAL COURT OF AUSTRALIA

Kenquist Nominees Pty Limited v Campbell (No 5) [2018] FCA 853

File number:

NSD 1364 of 2015

Judge:

THAWLEY J

Date of judgment:

18 June 2018

Catchwords:

PRACTICE AND PROCEDURE – application for discovery of documents – legal advice privilege – where non-party to proceeding resisted order requiring respondents to produce discovered documents on the basis that discovery would reveal communications subject to legal advice privilege – where confidential bundle of sample documents provided to Court for examination – whether sample documents privileged

PRACTICE AND PROCEDUREwaiver of legal advice privilege whether privilege attaching to sample documents waived by limited disclosure to third party

Cases cited:

Archer Capital 4A Pty Ltd v Sage Group Plc (No 2) (2013) 306 ALR 384

Asahi Holdings (Australia) Pty Ltd v Pacific Equity Partners Pty Limited (No 4) [2014] FCA 796

Australian Rugby Union Ltd v Hospital Products (1999) 165 ALR 253

AWB Ltd v Cole (2006) 152 FCR 382

AWB Ltd v Cole (No 5) (2006) 155 FCR 30

Balabel v Air India [1988] Ch 317

Cargill Australia Ltd v Viterra Malt Pty Ltd (No 8) [2018] VSC 193

Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501

Commissioner of Taxation v Pratt Holdings Pty Ltd (2004) 136 FCR 357

Commissioner of Taxation v Pratt Holdings Pty Ltd (2005) 225 ALR 266

Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543

Desane Properties Pty Ltd v New South Wales [2018] NSWSC 173

DSE (Holdings) Pty Ltd v InterTAN Inc (2003) 135 FCR 151

Esso Australia Resources Limited v Commissioner of Taxation (1999) 201 CLR 49

Gotha City v Sotheby’s [1998] 1 WLR 114

Grant v Downs (1976) 135 CLR 674

Kamasaee v Commonwealth (No 2) [2016] VSC 404

Kenquist Nominees Pty Limited v Campbell (No 2) [2016] FCA 911

Lakatoi v Walker [1999] NSWSC 156

Mann v Carnell (1999) 201 CLR 1

Osland v Secretary, Department of Justice (2008) 234 CLR 275

Date of hearing:

3 May 2018

Registry:

New South Wales

Division:

General Division

National Practice Area:

Commercial and Corporations

Sub-area:

Corporations and Corporate Insolvency

Category:

Catchwords

Number of paragraphs:

113

Counsel for the Applicant:

Mr A S Martin SC and Mr T L Bagley

Solicitor for the Applicant:

Corrs Chambers Westgarth

Counsel for the First, Second and Third Respondents:

Ms J D Little

Solicitor for the First, Second and Third Respondents:

Norton Rose Fulbright Australia

Counsel for the Fourth Respondent:

Mr P Jammy

Solicitor for the Fourth Respondent:

Wotton + Kearney

Counsel for the Fifth Respondent:

Mr L T Livingston

Solicitor for the Fifth Respondent:

Sparke Helmore Lawyers

Counsel for QRxPharma Limited:

Mr T Maltz

Solicitor for QRxPharma Limited:

Arnold Bloch Leibler

ORDERS

NSD 1364 of 2015

BETWEEN:

KENQUIST NOMINEES PTY LIMITED ACN 008 797 225 AS TRUSTEE FOR THE KENQUIST SUPERANNUATION FUND

Applicant

AND:

PETER CAMPBELL

First Respondent

MICHAEL QUINN

Second Respondent

JOHN HOLADAY (and others named in the Schedule)

Third Respondent

QRXPHARMA LIMITED ACN 102 254 151

Other

JUDGE:

THAWLEY J

DATE OF ORDER:

18 JUNE 2018

THE COURT ORDERS THAT:

1.    The parties file within 7 days agreed short minutes of order reflecting the reasons for decision or, failing agreement, arrange within 14 days for the matter to be relisted.

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

REASONS FOR JUDGMENT

THAWLEY J:

1    By interlocutory application filed on 16 November 2017, the applicant sought orders requiring the respondents to produce for inspection in unredacted form a set of 1,542 documents referred to as the discovered documents.

2    QRxPharma Limited (QRx) resists an order requiring the respondents to produce the discovered documents on the basis that discovery of the documents would reveal communications which were subject to legal advice privilege. This case is concerned solely with the legal advice limb of legal professional privilege.

3    With the consent of the parties, QRx provided the Court with a confidential bundle of 48 sample documents from the set of 1,542 discovered documents. It is intended that the parties would apply the Courts determination in respect of those sample documents to the remaining discovered documents in order to resolve the dispute over the status of the remaining documents.

4    The applicant challenged QRxs claims that the sample documents should not be produced for inspection, dealing with the documents in three categories:

(1)    first, the applicant asserted that certain communications contained in the sample documents were not privileged for specific reasons which it was considered desirable to examine, because it would be useful to the parties in seeking to resolve the dispute so far as concerns the remaining documents – these were Documents 1, 2, 3, 14, 22, 23 and 24; and

(2)    secondly, the applicant asserted that QRx waived privilege attaching to certain communications by providing the communications to third parties, in particular the fourth respondent (Morgans) – these were Documents 4, 5, 13, 15, 16, 18 to 23, 33 to 38, 45 and 48;

(3)    thirdly, the applicant asserted that privilege did not attach to Documents 7 to 12, 27 to 32, 40, 43, 44 and 47 and I was asked to inspect these documents and determine whether they were privileged.

5    The claim of privilege was abandoned by QRx with respect to Documents 6, 17, 25, 26, 39, 42 and 46. Counsel for QRx properly indicated that QRx would re-examine the discovered documents in order to determine whether there were documents in respect of which the claim for privilege should be abandoned for the same reasons for which privilege was abandoned in relation to these documents.

Background

6    The background to the principal proceeding is set out in the decision of Yates J in Kenquist Nominees Pty Limited v Campbell (No 2) [2016] FCA 911 at [3]-[15]. In summary, the applicant commenced the proceeding as a representative proceeding pursuant to Part IVA of the Federal Court Act 1976 (Cth) on behalf of itself and other persons (group members) who obtained a security interest in QRx under certain rights issues, placements and plans, or otherwise on the financial market operated by the Australian Securities Exchange Limited (ASX) during the period 6 November 2009 to 25 June 2012.

7    The applicant claims that QRx breached its disclosure and capital raising obligations in relation to three capital raisings undertaken in 2009, 2010 and 2011 by failing to disclose to the ASX and to potential investors information that would have been material to making a decision to invest in QRx. It is alleged that the group members suffered loss or damage by reason of QRxs disclosure and capital raising contraventions.

8    The proceeding was brought against the first to third respondents as directors of QRx at the relevant time; against the fourth respondent, Morgans, which acted as lead manager, joint lead manager and underwriter in relation to the three capital raisings; and against the fifth respondent, DibbsBarker, as legal advisor to QRx.

RELEVANT PRINCIPLES

Overview of legal advice privilege

9    The present dispute, which is concerned with pre-trial disclosure and inspection rather than the adducing of evidence, is to be determined according to the common law rather than the Evidence Act 1995 (Cth): Esso Australia Resources Limited v Commissioner of Taxation (1999) 201 CLR 49 at [17]-[28] (per Gleeson CJ, Gaudron and Gummow JJ); at [64] (per McHugh J).

10    Legal advice privilege may be availed of by a person to resist the giving of information or the production of documents which would reveal communications between a client and his or her lawyer made for the dominant purpose of giving or obtaining legal advice: Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543 at [9], per Gleeson CJ, Gaudron, Gummow and Hayne JJ.

11    The dominant purpose is a prevailing or paramount purpose or one which predominates over other purposes: AWB Ltd v Cole (2006) 152 FCR 382 at [105], per Young J; Archer Capital 4A Pty Ltd v Sage Group Plc (No 2) (2013) 306 ALR 384 at [11], per Wigney J. The purpose for which a communication is made is a question of fact to be determined objectively from the nature of the relevant communication, the content of the communication, the relevant commercial context and the relationships between the parties: Commissioner of Taxation v Pratt Holdings Pty Ltd (2005) 225 ALR 266 at [30], per Kenny J; AWB at [110]. Notwithstanding that the purpose must be determined objectively, evidence of subjective purpose is relevant and although not necessarily conclusive, can be decisive: Esso at [172], per Callinan J; AWB Ltd v Cole (No 5) (2006) 155 FCR 30 (AWB No 5) at [44(2)], per Young J; Archer at [11]; Asahi Holdings (Australia) Pty Ltd v Pacific Equity Partners Pty Limited (No 4) [2014] FCA 796 at [32]. Of course, mere assertion that disclosure may tend to reveal privileged material is inadequate: DSE (Holdings) Pty Ltd v InterTAN Inc (2003) 135 FCR 151 at [29].

12    The relevant time for ascertaining purpose is when the communication was made. If the communication or a component of it was the provision of a copy document, it is the purpose of the creation of the copy which is relevant, ascertained at the time the copy was created: Asahi at [30].

13    Privilege extends to documents from which the nature and content of a legally privileged communication might be inferred: Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501 at 569, per Gummow J; Commissioner of Taxation v Pratt Holdings Pty Ltd (2004) 136 FCR 357 at [20] (per Finn J), [88] (per Stone J); Lakatoi v Walker [1999] NSWSC 156 at [15], per Rolfe J. Examples include: communications between various legal advisers of the client, draft pleadings, draft correspondence with the client, documents with a lawyers handwritten annotations and bills of costs. Privilege extends to internal documents or parts of documents of the client, or of the lawyer, reproducing or otherwise revealing communications which would be covered by privilege: AWB No 5 at [46].

14    Privilege extends to a copy of a non-privileged document where the dominant purpose for bringing the copy into existence was to obtain legal advice: Propend, as modified by the dominant purpose test in Esso. Although this principle applies to documents, it should be recognised that the privilege protects communications of which the copy documents might form a component or from which the nature and content of a privileged communication might be inferred. If a client makes a copy of a non-privileged communication or document and sends it to a lawyer without a dominant purpose of obtaining legal advice (or for confidential use in litigation), the copy would not be privileged. The Propend principle also applies to a document copied by a lawyer for the dominant purpose of giving legal advice.

15    The concept of legal advice is not to be narrowly construed as formal advice as to the law; it extends to advising about what should prudently be done in a relevant legal context but does not extend to purely factual or commercial advice: DSE at [45]; Archer at [12]. Where a lawyer has been retained for the purposes of providing legal advice in relation to a particular transaction, communications between the lawyer and client relating to the transaction will prima facie be privileged, notwithstanding they do not contain advice on matters of law; it is usually enough that they are directly related to the performance by the lawyer of his or her professional duty as legal adviser to the client: AWB No 5 at [47]; DSE at [51]-[52].

16    Particularly in the context of protracted or complex transactions, where information is passed between lawyer and client as part of a continuum aimed at keeping both informed so that advice may be sought and given as required, privilege may attach: Balabel v Air India [1988] Ch 317 at 330; Pratt at [87], per Stone J; DSE at [38].

17    Courts may examine the documents the subject of the privilege dispute in order to determine whether the nature and content of the documents support the privilege claim by throwing light on the purpose for which they were brought into existence: Grant v Downs (1976) 135 CLR 674 at 689, per Stephen, Mason and Murphy JJ; AWB No 5 at [44(12)]; Asahi at [36].

18    The onus of establishing that privilege applies such that disclosure may be resisted is on the person asserting the privilege: Grant at 689.

19    A number of the sample documents comprise a print out of an email chain. Where the relevant document comprises an email chain, I refer to the most recent in time email as the lead email. It is the lead email which has been discovered, and which comprises the principal communication. The dominant purpose of making that lead communication is important to the analysis of the treatment of other emails in the chain. Often, the lead email forwards, or replies to, an email chain. Whilst the analysis turns each time on the particular document (a print out of the communication being the lead email and any chain), it is perhaps useful to make the following observations (disregarding for present purposes any question of waiver of privilege):

(1)    If the communication being the lead email was not made for the dominant purpose of obtaining or giving legal advice, then it may nevertheless be appropriate to redact parts of the lead email or subsequent emails in the chain, or attachments to the lead email, if the content or nature of a privileged communication might be inferred from the document if it were left unredacted – see: paragraph [13] above.

(2)    If the dominant purpose of the communication being the lead email was the giving of legal advice by a retained lawyer, then it may be that the email chain will be privileged because the subsequent emails in the chain are to be regarded, in effect, as copies of documents furnished by the lawyer with the advice being the lead email. The lead email is a communication of legal advice, with the subsequent emails in the chain being components of that communication (in effect, copies of documents) provided by the lawyer for the dominant purpose of providing the legal advice (and perhaps also constituting copies of communications to the lawyer for the purpose of obtaining the advice). If the dominant purpose of the lawyer notionally making the copy of the email chain beneath the lead email was to provide the email chain to the client as part of the communication of legal advice, that email chain is privileged.

(3)    If the dominant purpose of the communication being the lead email was the obtaining of legal advice from a retained lawyer, then the email chain may also be privileged because that email chain is, in effect, a copy of communications provided to the lawyer for the dominant purpose of obtaining legal advice. The forwarding of a chain of emails might constitute or be treated as “material prepared for submission to the legal adviser” or “components” of the privileged communication being the lead email: Propend at 571. So far as concerns the email chain forwarded with the lead email, the inquiry centres on the dominant purpose of the client in making what is, in effect, a copy of the email chain. It is at the point in time when the email chain is notionally copied (when it is notionally copied by forwarding or replying) that the question of dominant purpose must be analysed – see: paragraph [12] above. At that time, the whole chain is generally notionally copied (by forwarding or replying) as a component of the lead email, even though it may be that only particular emails in the chain were regarded as relevant or significant to the obtaining of advice. The dominant purpose of making the copy of the chain is often, if not generally, to put particular emails in the chain for submission to the lawyer. I did not exclude the possibility that it is appropriate in a particular case to treat the forwarding of an email chain as an act of copying each email in the chain individually, rather than a single act of copying the chain, such that one would need to analyse the dominant purpose of each act of copying. However, the circumstances were not such in the present case for such an approach to be taken.

20    The third category above was considered in Kamasaee v Commonwealth (No 2) [2016] VSC 404 at [43]-[47]. Macaulay J held that ‘forwarding’ an antecedent chain of emails to a lawyer to obtain advice amounted to making a copy of the email chain for the dominant purpose of providing it to the lawyer for advice. It did not matter that the earlier emails themselves were non-privileged communications. See also Desane Properties Pty Ltd v New South Wales [2018] NSWSC 173 at [178]-[181], per Robb J; Cargill Australia Ltd v Viterra Malt Pty Ltd (No 8) [2018] VSC 193 at [33]-[36], per Macaulay J.

Overview of waiver of privilege

21    A person who would otherwise be entitled to the benefit of legal advice privilege may waive that privilege: Mann v Carnell (1999) 201 CLR 1 at [28], per Gleeson CJ, Gaudron, Gummow and Callinan JJ.

22    The test for waiver is whether there has been an inconsistency between what a client has done and maintenance of the privilege. It does not matter whether the client subjectively intends to waive the privilege. The High Court observed in Mann at [29]:

Waiver may be express or implied. Disputes as to implied waiver usually arise from the need to decide whether particular conduct is inconsistent with the maintenance of the confidentiality which the privilege is intended to protect. When an affirmative answer is given to such a question, it is sometimes said that waiver is imputed by imputed operation of law. This means that the law recognises the inconsistency and determines its consequences, even though such consequences may not reflect the subjective intention of the party who has lost the privilege.

23    Implied waiver of privilege reflects a judgment that the conduct of the party entitled to the privilege is inconsistent with the maintenance of the confidentiality which the privilege is intended to protect; that judgment is to be made in the context and circumstances of the case, and in the light of any considerations of fairness arising from that context: Osland v Secretary, Department of Justice (2008) 234 CLR 275 at [45], per Gleeson CJ, Gummow, Heydon and Kiefel JJ.

24    It is the challenger of the privilege who bears the onus of demonstrating waiver of privilege: Archer at [100].

25    A limited disclosure of the existence, and the effect, of legal advice may not be inconsistent with maintenance of confidentiality in the terms of the advice; it depends on the circumstances of the case: Mann at [30]-[32]; Osland at [49].

FIRST CATEGORY: WHETHER particular DOCUMENTS ARE PRIVILEGED

26    As noted above, the applicant challenged QRxs claims for resisting production by the respondents, dealing with the documents in three categories. The first category (like the third) concerns particular documents and whether they are privileged. The documents in this category are Documents 1, 2, 3, 14, 22, 23 and 24. Documents 22 and 23 are also in the second category as documents in respect of which the applicant claims privilege has been waived, if in fact they are privileged at all.

Documents 1, 2 and 3

27    Documents 1, 2 and 3 are documents which formed part of the file maintained by DibbsBarker in respect of its work in relation to the 2009 capital raising. Each of these documents contains handwriting of a lawyer or lawyers at DibbsBarker, a firm retained by QRx to provide legal advice. The handwriting was placed on the documents before they were scanned by DibbsBarker in June 2015.

28    Document 1 is an unsigned draft engagement letter between QRx and Morgans with amendments shown in mark-up and a handwritten amendment. The evidence does not disclose whether the mark-ups comprise the work of DibbsBarker or whether they were made by QRx or Morgans or indeed some other person or entity.

29    Document 2 is a print out of an email dated 20 October 2009. The print out is from the computer of Piny Ly, a lawyer at DibbsBarker. It contains handwriting from which certain matters can be inferred, including the nature of certain legal work which DibbsBarker would be or was then performing.

30    Document 3 is a one page letter addressed to McKenna, Long & Aldridge from the Department of Health & Human Services, providing a decision from that Department. It contains a handwritten annotation of a lawyer at DibbsBarker. I note that, in respect of Document 3, Counsel for QRx conveyed at the hearing his instructions that a copy of the document with the annotation redacted would be produced for inspection.

31    Document 2 was printed out by an employee of DibbsBarker. Documents 1 and 3 were either printed out by an employee of DibbsBarker or otherwise provided to that firm. In any event, each document was a copy of a document which that firm held for the purpose of providing advice to QRx. A lawyer or lawyers of that firm then annotated the documents in order to be in a position to provide advice to QRx. The printing out of the documents or the communication of the documents to DibbsBarker and the annotating of them was, I infer, for the dominant purpose of providing legal advice. The annotations might tend to reveal the topic to which advice was directed and might tend to indicate the content of the advice. The documents are privileged.

32    It is not to the point that the documents, had they been produced by some person in unannotated form, might not have been privileged. The issue concerns the documents actually discovered.

Documents 14

33    Document 14 is an email from a partner of DibbsBarker (Lis Boyce) to seven officers of QRx, Philip Podzebenko of Herbert Smith Freehills (a firm also retained by QRx), three individuals at WE Buchan and three individuals at Brightline Media. The evidence included (at [78] of the affidavit of Mr Jonathan Milner sworn on 20 February 2018):

(a)    WE Buchan is an Australian public relations company which QRx engaged to advise in relation to QRx’s investor relations and public announcements;

(b)    Brightline Media is a public relations company based in Alexandria, Virginia which QRx engaged to assist with the preparation of QRx’s public announcements;

(c)    draft QRx press releases and other public announcements were regularly circulated to WE Buchan and Brightline Media, together with QRx’s legal advisers, for review; and

(d)     draft amendments and suggestions made by QRx’s legal advisers were often sent to or copied to representatives of WE Buchan and Brightline Media as part of the same email chain for practical reasons to ensure that all amendments (made by the legal advisers) were incorporated and seen by each of QRx’s advisers.

34    Beneath the lead email from DibbsBarker (the most proximate in time) are other emails. The applicant contended that the lead email was to be regarded as purely commercial or not for the dominant purpose of communicating legal advice. Having inspected the lead email, I am satisfied that it is a privileged communication from QRxs lawyers. It is the lead email which is the relevant communication for present purposes. The emails which are part of the historical chain to the lead email are to be treated in this instance as attachments to that privileged communication, being, in effect, a copy of the email chain made by the lawyer who authored the lead email for provision to the client with the advice. They are also copies of email communications received by her for the dominant purpose of obtaining her advice.

Document 22

35    Document 22 is an email from the Managing Director of QRx to a number of people including Geoff Cairns (DibbsBarker), Piny Ly (DibbsBarker), Morgans and officers of QRx. The attachments to the email (which were not included in the confidential bundle) appear from their names to be the then-current drafts of transaction documents or documents related to the proposed transactions.

36    There was evidence to the effect that the Managing Director of QRx sent documents of this nature to the partner of DibbsBarker in order to obtain his advice in respect of the documents. In a transaction of this nature, that course is to be expected. In my view, and having regard to the observations of Stone J in Pratt at [87] and [88] and of Allsop J (as his Honour then was) in DSE at [52], [56] and [59], the email is privileged. The fact that the email and attachments were also sent to others, including Morgans, gives rise to a question of waiver which is dealt with below. However, noting that the email was sent not only to lawyers, I should state that I consider the dominant purpose of the communication was one of obtaining legal advice.

Documents 23 and 23A

37    Document 23 is an attachment to an email, Document 23A. Document 23A is substantially similar to Document 22. Document 23A is privileged for the same reason as Document 22.

38    Document 23 is a draft document sent for the dominant purpose of obtaining legal advice. Document 23, as an attachment to the email which is Document 23A, is to be treated in the same way as one would treat a copy of a document communicated by a client to his or her lawyer for the dominant purpose of obtaining advice. The copy document (Document 23) is privileged: Propend at 543-544 (per Gaudron J) at 571-572 (per Gummow J).

Document 24

39    Document 24 is an email from the Chief Financial Officer and Company Secretary of QRx (Chris Campbell) to six officers of QRx, Lis Boyce of DibbsBarker, three employees of WE Buchan and three employees of Brightline Media. It was also copied to Philip Podzebenko of Herbert Smith Freehills.

40    The lead email forwarded a chain comprising a second email (between two officers of QRx) and a third email sent by Herbert Smith Freehills to QRx. This third email is privileged irrespective of the fate of the lead email.

41    It is apparent from the context that the public relations advisers were, by the lead email, sent the third email because they would need to know the content of the advice in performing their tasks for QRx. This is a limited and specific disclosure of the third email which would not constitute a waiver of privilege in the third email. The disclosures of the third email to other officers of QRx and to Lis Boyce were also not such as to constitute a waiver of privilege in the third email, those disclosures also being for a limited purpose and not inconsistent with maintaining confidentiality in the privileged communication.

42    The purpose of the lead email was to communicate the privileged comments of Herbert Smith Freehills to six officers of QRx, six individuals employed by two public relations firms and to Lis Boyce of DibbsBarker for all of those people to consider before providing their comments on the draft documents. I am not prepared to infer that the purpose of the lead email which predominated was that of obtaining the advice of DibbsBarker, although that is clearly one of the purposes for which the email was sent. Accordingly, the lead email is not privileged. However, the attachments to it are. These are documents which record the substance of the advice provided by Herbert Smith Freehills, being the changes Herbert Smith Freehills suggested to a proposed 8 July ASX announcement and a proposed QRx press release.

43    The second email, between Ed Rudnic (QRx) and Chris Campbell (QRx), simply forwarded without comment the third email (which had been in any event sent to both Ed Rudnic and Chris Campbell). The second email does not appear to have been sent for the dominant purpose of obtaining or giving legal advice and is not privileged for that reason. It is not necessary to consider whether it is privileged as, in effect, an attachment to the lead email, that email not being privileged. It cannot be regarded as, in effect, a copy of a communication provided to a lawyer to obtain legal advice. It is not privileged.

SECOND CATEGORY: WHETHER WAIVER OF PRIVILEGE

44    The second issue is whether privilege has been waived in respect of a number of documents. The relevant documents are Documents 4, 5, 13, 15, 16, 18 to 23, 33 to 38, 45 and 48.

45    The principal argument on this issue was that QRx waived privilege in respect of certain communications because it made disclosures to Morgans which were inconsistent with the maintenance of the confidentiality which the privilege is intended to protect.

46    In its written submissions, the applicant advanced five propositions in support of this contention:

(1)    First, the evidence disclosed that Morgans occupied a dual role of manager and underwriter in relation to the three capital raisings. The applicant submitted that, in being involved in the due diligence process and receiving the 2009 Legal Opinion (provided by DibbsBarker and described below), Morgans was not acting as financial adviser or agent of QRx. Rather, it was acting as an arms length contractual counterparty.

(2)    Secondly, Morgans role as underwriter of the 2009 capital raising (and subsequent capital raisings) put it in a position of conflict with QRx. The applicant noted that Morgans obtained the same underwriting fee whether or not it subscribed for shares in QRx. Accordingly, Morgans interest lay in QRx setting the lowest subscription price for the shares so as to maximise the chance of the share issue being fully subscribed. QRxs interest lay in it obtaining the highest subscription price.

(3)    Thirdly, the critical legal advice, the 2009 Legal Opinion, was sent to Morgans in its capacity as underwriter and both the advice and due diligence process were conditions precedent to Morgans accepting its obligations as underwriter. This application was argued principally by reference to the 2009 capital raising but the same or substantially similar issues apply with respect to the 2010 and 2011 capital raisings.

(4)    Fourthly, the 2009 Legal Opinion was not provided to Morgans with any restrictions on its use (or alternatively, without any restrictions on its use in legal proceedings). Further, Morgans was said to have been provided with access to legal advice without any restrictions on the use to which it could put that advice once accessed. This was submitted to have the consequence that Morgans was able to use the advice in the defence of this proceeding. It was submitted that the conduct of QRx and Morgans was inconsistent with the maintenance of the confidentiality that the privilege is intended to protect. It was submitted that this analysis applied to Documents 20, 33 to 38, 45 and 48. It was further submitted that QRx, in copying Morgans into emails between itself and DibbsBarker or sending emails to Morgans and DibbsBarker, acted inconsistently with the maintenance of legal advice privilege, effecting a waiver of privilege in Documents 5, 13, 15, 16, 18, 21 to 23, 41 and 47.

(5)    Fifthly, if privilege had been waived over the 2009 Legal Opinion then privilege was also waived in respect of documents necessary to understand that advice.

47    The applicant referred to DSE and Archer. The applicant noted that in DSE, an investment bank had been engaged as the exclusive financial advisers to the company client: DSE at [12]. Allsop J (as his Honour then was) inferred that there was a clear obligation of confidence owed to the company by the investment bank and that the lawyer was authorised to communicate privileged material to the investment bank if they considered that the investment bank should know of the material or they had requested it: DSE at [22]. His Honour treated the investment bank as the clients agent: DSE at [100], [105].

48    In Archer, Deutsche Bank AG was appointed Sages exclusive financial adviser. Wigney J noted that the decision in Pratt, decided by a Full Court of this Court after DSE, made it clear that it was not necessary for there to be an agency relationship between Deutsche and Sage for the communications to be privileged (see also Asahi at [38]), but held that in fact there was a limited agency relationship between Sage and Deutsche and [law firm Allen & Overy], similar to that found by Allsop J in DSE: at [43]. Deutsche was also a member of the proposed lending syndicate and, in that role, had its own legal advisers, Norton Rose: Archer at [95]. His Honour held:

104.    In relation to the applicants main point, that Deutsche had a dual role, whilst Sage does not take issue with the fact that Deutsche was also a potential financier in relation to the transaction, there is a paucity of evidence in relation to the nature or implications of this additional role.  There is, in particular, no evidence that any of the Deutsche officers who sent or received any of the relevant communications or documents were associated in any way with Deutsches involvement as financier.  Nor is there any evidence that any of the documents sent to Deutsche were sent to it in its capacity as financier, as opposed to financial adviser.  Indeed, the specific evidence in relation to each document is to the contrary. 

108.    In light of this evidence, the mere fact that three documents were sent or copied to Norton Rose does not mean that there has been conduct inconsistent with the confidentiality that the privilege otherwise attaching to these documents or communications is designed to protect. The available inference is that they were sent to Sages advisers and a third party otherwise associated with the Proposed Transaction for a limited purpose and on a confidential basis.

109.    There is in my opinion no basis for concluding that the disclosure of communications or documents to Deutsche effected a waiver of privilege otherwise attaching to those communications or documents simply because Deutsche had another role in relation to the Proposed Transaction beyond being Sages financial adviser. That fact alone does not establish any relevant inconsistency with the maintenance of confidentiality of the documents. Indeed, the evidence earlier referred to supports the contrary conclusion.

49    The question of waiver turns on all of the circumstances. It may be accepted that the degree to which the interests of the disclosing person coincide or diverge from the interests of the person to whom the privileged communication was disclosed is relevant to the conclusion as to whether the disclosure was conduct inconsistent with maintaining confidentiality in the otherwise privileged communication. The mere fact that the parties interests are not completely aligned, or even that they are opposed in particular respects, does not have the necessary consequence that the conduct in disclosing the communication effects a waiver of privilege. It is necessary to be precise about how the interests are said to diverge and how this is said to relate to the content of the privileged advice said to have been waived and to the acts said to be inconsistent with maintenance of the confidentiality the privilege is intended to protect.

50    The applicant relied on three documents in particular for the purpose of assessing the relationship between Morgans and QRx:

(1)    the 2009 Underwriting Agreement between QRx and Morgans in respect of the 2009 capital raising;

(2)    the 2009 Management Questionnaire, which Morgans required QRx to complete in connection with the capital raising; and

(3)    the 2009 Due Diligence Planning Memorandum, which governed the due diligence process carried out by the Due Diligence Committee in respect of the capital raising.

2009 Underwriting Agreement

51    Clause 6 of the 2009 Underwriting Agreement imposed an obligation on Morgans to purchase shares in QRx if there was a shortfall in the number of shares subscribed in the capital raising. Clause 4.1 provided that, amongst other matters, Morgans obligations were contingent on QRx conducting the due diligence process and providing Morgans with a legal opinion for Morgans benefit. Clause 4.1(a) provided:

Conditions precedent

The obligation of the Underwriter to subscribe for the Placement Shortfall Securities under clause 6 is conditional on:

(a)    (Due Diligence)

(i)    the due diligence program having been properly implemented and carried out in accordance with the Due Diligence Planning Memorandum to the satisfaction of the Underwriter (acting reasonably) on the date of this agreement;

(ii)    the Due Diligence Report being signed by the relevant person(s) and delivered to the directors of the Company and to the Underwriter, on the date of this agreement and accompanied by:

(A)    a legal opinion from DibbsBarker (acting as legal adviser to the Company) in a form acceptable to the Underwriter signed and addressed to and for the benefit of each member of the Due Diligence Committee, the board of the Company and the Underwriter as observer to the Due Diligence Committee; and

(B)    all other opinions, sign-offs and reports referred to in the Due Diligence Report (including, without limitation, management certificates) in the form acceptable to the Underwriter and signed and addressed to and for the benefit of, amongst others, the Underwriter as observer to the Due Diligence Committee;

(iii)    by 4pm on the day which is 3 Business Days immediately preceding the Announcement Date, the Company delivers to the Underwriter answers to the Due Diligence Questionnaire in form and substance acceptable to the Underwriter, signed by those members of management of the Company as agreed with the Underwriter.

52    The legal opinion provided to Morgans under clause 4.1(a)(ii)(A) was pleaded by Morgans in its defence. Paragraph 17 of the defence, so far as it concerned the 2009 Underwriting Agreement (as opposed to the agreements relating to the 2010 and 2011 capital raisings), included admissions that Geoff Cairns of DibbsBarker was the legal adviser to QRx and that DibbsBarker gave legal advice to QRx with regard to the content of various transaction documents. Paragraphs 17.4 to 17.6 provided:

17.4    Dibbs Barker gave legal advice to QRxPharma with regard to:

(a)    the functions and responsibilities of the 2009 Due Diligence Committee (2009 DDC);

(b)     steps to be taken to ensure that the 2009 Transaction Documents did not contain any misleading or deceptive statements; and

(c)     QRxPharmas potential liability in connection with the offer of securities as part of the 2009 Capital Raising, and the content of the 2009 Transaction Documents;

17.5     Dibbs Barker prepared a legal opinion (the 2009 Legal Opinion) which was addressed and provided to Morgans, amongst others, in which confirmed that it had no reason to believe that:

(a)     the 2009 Transaction Documents contained a statement that was misleading or deceptive;

(b)     the 2009 Transaction Documents omitted any information required by the Corporations Act or omitted any other information that would make the documents misleading; or

(c)     the conduct or statements in connection with the 2009 Transactions Documents were misleading or deceptive or likely to mislead or deceive;

17.6     In terms of the 2009 Morgans Engagement, Morgans was entitled to, and did, rely on the 2009 Legal Opinion;

53    Similar pleadings concerned the 2010 and 2011 capital raisings. As noted above, this application was argued principally by reference to the 2009 capital raising.

54    The applicant emphasised clause 18.15 of the 2009 Underwriting Agreement which provided:

Relationship

The Company acknowledges and agrees that the Underwriter is acting solely in the capacity of an arms length contractual counterparty to the Company with respect to the Capital Raising (including in connection with determining the terms of the offering contemplated by this agreement) and not as a fiduciary to the Company or any other person. Additionally, neither the Underwriter nor any Indemnified Party is advising the Company or any other person as to any legal, tax, investment, financial, accounting or regulatory matters in any jurisdiction. The Company shall consult with its own advisors concerning such matters and shall be responsible for making its own independent investigation and appraisal of the transactions contemplated by this agreement, and the Underwriter and all Indemnified Parties shall have no responsibility or liability to the Company with respect thereto. Any review by the Underwriter or either of them of the company, the transactions contemplated by this agreement or other matters relating to such transactions will be performed solely for the benefit of the Underwriters and shall not be on behalf of the Company.

55    QRx was under an obligation in clause 3.2(a) to provide access to information reasonably requested by Morgans. Clause 3.2 provided:

Support, access and information

The Company must at its own cost:

(a)    provide to the Underwriter the reasonable support of, and reasonable access to, its senior executives and management and/or any proposed Placement Investor associated with the Capital Raising, in the appointment of any sub-underwriter and in the marketing of the Capital Raising, and use reasonable endeavours to provide (and procure third parties to provide) the Underwriter with such information as the Underwriter may reasonably request; and

(b)    in conjunction with the Underwriter, market, promote and advertise the Capital Raising at the times, to the extent and in the form and manner as the Underwriter may reasonably request.

56    There was no express obligation of confidence in the 2009 Underwriting Agreement.

2009 Management Questionnaire

57    The 2009 Management Questionnaire confirmed that the purpose of the due diligence process included providing Morgans with the information it required to determine whether it should underwrite the raising:

The purpose of the Questionnaire to be completed on behalf of the Issuer [QRx] is to ensure that, in respect of the placement (Placement) and the Share Purchase Plan (SPP), together known as the Transaction or transaction (unless the context otherwise requires), that the Issuer and RBS Morgans Corporate Limited (and to the extent of any participation Noble Financial Capital Markets) (together the Lead Managers) are fully informed about the Issuer, including its position and prospects, and the Transaction. Certain representations, covenants and warranties on the answers to questions covered in this Questionnaire will be sought in the proposed Placement Agreement and / or Underwriting Agreement between the Issuer and the Lead Managers.

58    Morgans retained its own legal advisers.

2009 Due Diligence Planning Memorandum

59    Morgans executives acted as observers on the Due Diligence Committee, whose members were expressly bound by obligations of confidentiality. Those members were officers of QRx and Mr Geoff Cairns, a partner of DibbsBarker.

60    Clause 4.7 of the Due Diligence Planning Memorandum included:

Membership

… It is noted that no officer, employee or agent of RBS Morgans (the Lead Manager) to the Transactions, is a member of the Committee.

The Lead Manager may attend all or any meetings of the Due Diligence Committee as an observer. It will receive or have access to copies of all documents distributed to Due Diligence Committee members. The Lead Manager will also receive the benefit of the legal, accounting and other sign-offs and certificates referred to in this Due Diligence Planning Memorandum. Should any officer, employee or agent of the Lead Manager attend any such meetings of the Committee and as a general acknowledgement by the Committee, it is further noted that neither RBS Morgans nor any officer, employee or agent, of RBS Morgans, has been involved in the preparation of Transaction Documents and has not authorised the issue of the securities the subject of the Transactions.

61    Clause 7.1 of the Due Diligence Planning Memorandum provided:

Confidentiality and Security

Complete confidentiality and security of sensitive information must be emphasised to all Committee members.

All reports and material produced for circulation and consideration by the Committee shall be regarded as confidential by members of the Committee and are not to be reproduced or used for purposes other than for purposes which directly relate to the Transaction and preparation of the Transaction Documents, unless they are required to be produced to a regulatory authority or are needed by the member in relation to any actual or potential claim against the member in relation to the issue of the Transaction Documents.

62    Morgans was aware of the obligation of confidentiality on the members of the Due Diligence Committee, the Due Diligence Planning Memorandum having been provided to Morgans. Its executives were present when the Due Diligence Planning Memorandum was adopted by the members of the Due Diligence Committee. It does not matter that the observers did not themselves undertake an express obligation of confidentiality – cf: Australian Rugby Union Ltd v Hospital Products (1999) 165 ALR 253 at [44], per Sackville J. A reasonable participant would have understood from the circumstances that the confidentiality in sensitive information exchanged in the due diligence process should be respected.

Consideration

63    The disclosures made to Morgans were made confidentially and for a limited purpose. It may be accepted that the interests of Morgans and QRx were not completely overlapping and further that, in some limited respects, their interests were opposed. Morgans provided both management services and underwriting services. To the extent that the capital raisings were not fully subscribed and the conditions precedent were met, Morgans would have to underwrite. Both Morgans and QRx had an interest in the capital raisings going ahead and being successful. On the other hand, their interests diverged or were opposed so far as the issue or subscription price was concerned. None of the legal advice was shown to go to the subscription price nor to any dispute between QRx and Morgans.

64    It is natural enough in this commercial context, as expanded upon below, for QRx to disclose privileged communications to Morgans without attracting the judgment that QRxs conduct in disclosing the privileged material was inconsistent with the maintenance of confidentiality in those communications: Mann at [30]-[32]; Osland at [45].

65    It is true that the 2009 Underwriting Agreement did not contain an express obligation of confidentiality. However, the 27 September 2010 Morgans retainer under which Morgans was named Lead Manager and Bookrunner contained the following acknowledgement:

The Company [QRx] should be aware that the Lead Manager and/or its related bodies corporate may be providing or may in the future provide financial or other services to other parties with conflicting interests. However, consistent with our long-standing policy to hold in confidence the affairs of our customers, we will not use confidential information obtained from the Company except in connection with our services to, and our relationship with, the Company, nor will we use on the Companys behalf any confidential information obtained from any other customer.

66    In oral submissions, Counsel for the applicant submitted that the conduct which was inconsistent with maintaining confidentiality was QRx authorising Morgans to use confidential information in connection with Morgans services to, and relationship with, QRx. This submission was advanced by reference to the words set out immediately above. An earlier retainer, dated 23 October 2009, contained a substantially similar acknowledgement. It was submitted that these words authorised Morgans to use the confidential material provided to it, including the 2009 Legal Opinion, in these proceedings. I reject that submission. Those words – which appear in the retainer letter under the heading Certain Acknowledgements simply indicate that Morgans might also be providing services to other parties whose interests might conflict with those of QRx, and that Morgans would keep confidential any information obtained from QRx; Morgans would not use that information except in connection with its services to and relationship with QRx (as distinct from its services to and relationship with other clients). The pleading by Morgans in its defence of these proceedings of the 2009 Legal Opinion was not done “in connection with” Morgans’ services to and relationship with QRx and is not a matter which was relevantly authorised by the statement made by Morgans in its retainer letter sent to QRx.

67    The 29 September 2010 Morgans retainer under which Morgans was named Lead Manager contained the following (at cl 9.2):

The Company may provide to the Lead Manager under clause 9.1 certain non-public proprietary information concerning the Company and/or the Equity Raising (the Confidential Information). The Lead Manager agree [sic] that they will not without the prior written consent of the Company disclose any Confidential Information to any person other than its Related Bodies Corporate, respective officers, employees, representatives, auditors and advisers on a need to know basis. This restriction does not apply to:

(a)     any Confidential Information which becomes publicly available other than as a result of the Lead Manager breaching their obligations under this Agreement; or

(b)     any Confidential Information the Lead Manager is requested or required to disclose by any law or any competent authority or body.

68    The better view of the entire arrangement between the parties is that Morgans was under an express obligation of confidence in that it could not disclose confidential information to the world at large obtained by reason of its retainer with QRx. In any event, I would infer an obligation of confidentiality in the circumstances, that obligation being for Morgans to maintain confidentiality in the communications of legal advice made to it by QRx – cf: Archer at [100]-[102]; Gotha City v Sothebys [1998] 1 WLR 114 at 122, per Staughton LJ. The fact that Morgans could use the communications for its purposes and the purposes of managing and underwriting the capital raisings does not detract from this. It could not be said that Morgans was at liberty to disclose to the world at large the privileged communications received by Morgans from QRx as and when they were received, those communications being provided by QRx to Morgans for the purpose of furthering their joint interest in successful capital raisings.

69    I do not accept the applicants submission that Morgans was provided the 2009 Legal Opinion without any restrictions on the use to which it could put that document. The 2009 Legal Opinion was provided to Morgans for a specific and limited purpose in circumstances not inconsistent with QRx maintaining confidentiality in the communication.

70    I take the same view with respect to the other documents identified at paragraph 46(4) above. It may be accepted that Morgans could use the documents for its own purposes; it cannot be accepted that it could disclose them as it wished.

71    It was also submitted that, even if QRx did not waive privilege, Morgans waived QRxs privilege by relying upon the 2009 Legal Opinion in its defence. Three matters were said to give rise to that conclusion:

(1)    The advice was provided to Morgans for its benefit: clause 4.1(a)(ii)(A) of the 2009 Underwriting Agreement.

(2)    To the extent Morgans was subject to the confidentiality obligations in the Due Diligence Planning Memorandum, it was subject to a carve-out for use in defending legal proceedings: clause 7.1.

(3)    Accordingly, Morgans had actual or ostensible authority to waive privilege over the 2009 Legal Opinion in defending the proceeding.

72    It does not follow from the fact that Morgans was provided the 2009 Legal Opinion, which had been obtained in part for its benefit, that Morgans therefore had a right to disclose that advice to the world at large. Privilege in the 2009 Legal Opinion rested with QRx. As contemplated by the 2009 Underwriting Agreement, QRx provided the 2009 Legal Opinion to Morgans for the specific and limited purpose of facilitating the 2009 capital raising, in which both Morgans and QRx were interested. This was a limited disclosure which did not have the effect of waiving QRxs privilege. It did not authorise Morgans to waive QRxs privilege in the 2009 Legal Opinion.

73    As to the submission concerning the Due Diligence Planning Memorandum, it is correct that Morgans was provided access to copies of documents distributed to Due Diligence Committee members under clause 4.7 of the Due Diligence Memorandum and would be provided with the benefit of legal sign-offs. However, it was not entitled to the contractual obligations and rights (in respect of confidentiality and the litigation carve-out) provided by clause 7.1 to members who were actively involved, beyond being mere observers, in the due diligence process. These facts do not give rise to any actual or ostensible authority to waive privilege.

74    Some of the relevant disclosures were not made to Morgans. The disclosures referred to above (in respect of the first issue) to Brightline Media and WE Buchan were not acts inconsistent with the maintenance of the confidentiality that the privilege was intended to protect. Each was under an express obligation of confidentiality. The disclosures to them, recorded elsewhere in these reasons, were limited and not such as to waive privilege – cf: Spotless Group Ltd v Premier Building and Consulting Group Pty Ltd (2006) 16 VR 1 at [30], per Chernov JA.

THIRD CATEGORY: REMAINING DOCUMENTS

Document 7

75    Document 7 is an email from Chris Campbell (QRx) to Piny Ly (DibbsBarker), copied to Rob Sauer and Geoff Cairns (DibbsBarker). It contains a chain of emails. The lead email contains an express request for legal advice and is a privileged communication.

76    The emails in the chain are also privileged because they are, in effect, a copy of an email chain, or copies of communications provided to the lawyer for the dominant purpose of obtaining legal advice.

Documents 8, 10 and 12

77    Documents 8, 10 and 12 are emails from Mr Michael Schroeder of QRx to various QRx employees and consultants, copied to persons from Hyman Phelps & McNamara (HPM), a United States law firm engaged as external legal advisers to advise QRx in its dealings with the United States Federal Drug Authority (FDA). As to Document 8, QRx only pressed its privilege claim with respect to a redacted version of the document, contained at page 172 of Exhibit JOM-3. It did not press its claim over the attachment to Document 8.

78    The evidence included (at [65] of the affidavit of Mr Jonathan Milner sworn on 20 February 2018):

(a)     Michael Schroeder (and prior to Mr Schroeder, Gary Pace) was responsible for managing QRxs communications with the FDA;

(b)     the preparation of QRxs correspondence with the FDA involved input from various QRx employees;

(c)     HPM were QRxs external US attorneys that managed QRxs correspondence and interactions with the FDA and provided legal advice in relation to the FDA regulatory framework;

(d)     QRx consulted with HPM on FDA correspondence and documents prior to the relevant correspondence or document being sent or submitted to the FDA;

(e)     QRx consulted HPM in this way for the purpose of receiving legal advice in relation to the content of these communications;

(f)     Dr Holaday regarded it as important that HPM, and in particular Josephine Torrente, were copied to QRx emails concerning the FDA process and any proposed QRx communications with the FDA so that:

(i)     HPM were kept up-to-date as to relevant FDA submission deadlines and the preparation of draft documents to be provided to the FDA; and

(ii)     HPM could provide feedback on draft FDA documents and other proposed FDA communications; and

(iii)     all comments and advice QRx received from HPM were seen by relevant QRx employees.

79    Document 8, in the form found at page 172 of Exhibit JOM-3, has been over-redacted. In the second of the three redactions, the first and second sentences ought not to be redacted. The third sentence is appropriately redacted. The final sentence should not be redacted. The first and third redactions are appropriate. The redactions, as modified, are appropriate because the redacted sentences disclose privileged communications from Josephine Torrente of HPM or privileged requests made by her for comments on particular topics.

80    Privilege has appropriately been claimed over Documents 10 and 12. I infer from the content of the email which is Document 10 that the dominant purpose of it is to obtain comments from HPM in circumstances which attract privilege. The dominant purpose of the email which is Document 12 is to convey between QRx officers the content of a privileged communication between HPM and QRx.

Document 9

81    Document 9 is an email from Chris Campbell (QRx) to Dermot Sullivan (Bryan Cave LLP) and Geoff Cairns (DibbsBarker), and copied to Julia Yetsenga (QRx). Bryan Cave LLP was a United States law firm retained to provide legal advice in relation to a number of matters including corporate governance, employment, intellectual property and securities law. The text of the email indicates that it is a request for legal advice made of both Bryan Cave LLP and DibbsBarker. It is privileged.

Document 11

82    Document 11 is an email from Chris Campbell of QRx to Warren Stern of QRx, copied to John Holaday of QRx and Geoff Cairns of DibbsBarker, dated 9 November 2009. That lead email discloses a further three emails; that is, there is a chain of four emails. The lead email is a communication which was for the dominant purpose of communicating to QRx officers advice received from Geoff Cairns by the second-most recent email. The lead email is privileged.

83    The three emails which were forwarded by the lead email are privileged. The most recent email after the lead email was authored by Geoff Cairns and contains his advice, and is privileged. The third and fourth emails had been sent to Mr Cairns to obtain his advice. The third and fourth emails in Document 11 are privileged. They are to be treated as communications attached to Geoff Cairns’ advice, which was copied (together with its attachments) and forwarded internally within QRx. In the form in which Document 11 has been discovered, the whole of it is privileged. I observe that the third and fourth emails, had they been discovered individually and without the first two emails would not have been privileged.

Document 27

84    Document 27 is an email from Michael Quinn (QRx) to Geoff Dolphin (Innovation Capital, a shareholder in QRx in 2010). QRx only presses a claim for privilege in respect of a redacted version of the document, in the form found at pages 173 to 177 of Exhibit JOM-3.

85    The lead email in the redacted version is unredacted. That is appropriate because it is clearly not a communication made for a purpose which attracts privilege. It is that email which is the relevant communication. In making that communication, Michael Quinn forwarded to Geoff Dolphin an email chain comprising the second to eighth emails. The purpose of forwarding that chain with the lead email was not to seek or obtain legal advice. The forwarding of the chain disclosed legal advice but not in a way which would amount to waiver. To the extent the forwarding of the chain reveals privileged communications, they should be redacted.

86    The second-most recent email is from Geoff Cairns of DibbsBarker to Geoff Dolphin and Chris Campbell (QRx), copied to Michael Quinn (QRx). It contains legal advice and has been appropriately redacted. The second email is a response to a request for advice made in the fourth email in the chain. The fourth email has been appropriately redacted. The third email is a communication made in between the request for advice and the provision of the advice and was made, I infer, for the dominant purpose of DibbsBarker providing the requested advice. The third email has been appropriately redacted.

87    The eighth and final email in the chain is a privileged communication from Chris Campbell (QRx) to Geoff Cairns providing instructions or seeking advice. The seventh email is a privileged response from Geoff Cairns. The sixth email, from Chris Campbell to Geoff Dolphin and Geoff Cairns was, I infer, sent for the dominant purpose of QRx obtaining advice from Geoff Cairns. It was appropriately redacted. The fifth email is a communication of legal advice from Geoff Cairns and has been appropriately redacted.

Documents 28

88    Document 28 is an email from John Holaday (QRx) to Chris Campbell (QRx) and Janette Dixon (QRx). It forwarded an email sent by Michael Chanin (Bryan Cave LLP) to John Holaday. Document 28 was said to attach a draft press release, being an attachment to the lead email. In fact, it appears that there is more than one attachment.

89    The evidence included (at [91] of the affidavit of Mr Jonathan Milner sworn on 20 February 2018):

(a)    prior to receiving Michael Chanin's email, Dr Holaday requested that Mr Chanin review and provide comments on a draft QRx press release;

(b)     Dr Holadays purpose in sending the email at Document 28 was to provide Mr Chanins comments on the draft press release to Chris Campbell (the QRx CFO) and Janette Dixon; and

(c)     Dr Holaday regarded it as important that Janette Dixon be provided with Mr Chanins comments because Ms Dixon was involved in QRxs negotiations with China Aoxing, the entity described in the attachment title.

90    I admitted paragraph [91(c)] above subject to relevance. I do not regard that paragraph as relevant to the question of whether privilege attaches.

91    The lead email was not sent for the dominant purpose of giving or obtaining legal advice. It was sent for the dominant purpose of communicating to other officers of QRx legal advice which had been received by John Holaday of QRx. It is privileged because it discloses the nature of the legal advice received. The second email in the chain should be redacted as it contains a privileged communication. The attachments to the lead email, assuming that they disclose the nature or content of legal advice received from Michael Chanin, are also privileged.

Document 29

92    Document 29 is an email from John Holaday (QRx) to Peter Farrell, Michael Quinn, Peter Campbell and Gary Pace (all of QRx), copied to Chris Campbell (QRx) and Michael Chanin (Bryan Cave LLP). It has four attachments.

93    The evidence included (at [93] of the affidavit of Mr Jonathan Milner sworn on 20 February 2018):

(a)    Dr Holaday sought advice of Michael Chanin (Bryan Cave LLP) in relation to the draft documents attached to the email;

(b)     Dr Holadays purpose in sending the email at Document 29 was to circulate the documents sent to Dr Holaday by Michael Chanin to QRx's senior management.

94    The email was not sent for the dominant purpose of giving or obtaining legal advice. It was sent for a number of purposes, one of which was to communicate to other officers of QRx draft documents prepared by Bryan Cave LLP which had been received by John Holaday of QRx. Although the dominant purpose of the communication was not one which attracts privilege, it should be redacted to the extent it would disclose the nature or content of legal advice received. Disclosure of the attachments would have the effect of disclosing the nature and content of the legal advice provided to QRx in the form of draft documents. Accordingly, the attachments are privileged and not required to be produced for inspection.

95    Further, the nature and content of the legal advice might be inferred from the first paragraph under the salutation to an extent sufficient to warrant that paragraph being redacted. The third paragraph under the salutation should be redacted for the same reason.

Document 30

96    Document 30 is an email from John Holaday to Ed Rudnic, Warren Stern, Michael Schroeder, Gary Pace and Janette Dixon (QRx), blind copied to a personal email address of John Holaday. QRx only presses its claim for privilege over redacted portions of the email in accordance with page 178 of Exhibit JOM-3. It does not press its claim for privilege over the attachment to Document 30.

97    The dominant purpose of the communication was not one of obtaining or giving legal advice and the claim for privilege over the whole email was appropriately abandoned. The redactions are appropriately made because the nature and content of legal advice from Ms Torrente (HPM) and instructions for legal advice would be inferred if the redactions were not made: AWB No 5 at [46].

Document 31

98    Document 31 is an email from Ed Rudnic (QRx) to other officers of QRx, forwarding a chain of emails beginning with one (the second email) from Ms Torrente to John Holaday and Ed Rudnic (both of QRx) copied to two lawyers from HPM. The second email, in turn, responded to an email (the third email) from John Holaday. There is also a fourth and fifth email in the chain.

99    The lead email is not privileged; it was not sent for the dominant purpose of obtaining or giving legal advice. It was sent for the dominant purpose of forwarding legal advice which had been received from Ms Torrente (in the second email). The nature or content of the advice cannot be inferred from its terms.

100    The email chain which was forwarded by the “lead email” is, however, privileged. It comprises Ms Torrente’s advice and the emails she attached to her advice. The nature and content of legal advice would be disclosed by the second and fifth emails, and the nature and content of advice or instructions would be disclosed by or inferred from the third and fourth emails.

Document 32

101    Document 32 is a print out of an email from Warren Stern (QRx) to John Holaday (QRx), copied to other officers of QRx. It contains an email chain between Ms Torrente (HPM) and officers of QRx.

102    The lead email was not sent for the dominant purpose of obtaining or giving legal advice. Although the affidavit described it as responding to an email from Ms Torrente, that is not correct. It forwarded an email (and chain) from Ms Torrente to Warren Stern. The dominant purpose of the lead email was to forward legal advice from Ms Torrente and to discuss the legal advice which had been received and steps which should be taken in light of that advice. That is not a purpose which attracts any privilege. However, production of the lead email would result in disclosure of the nature or content of the legal advice which had been received. For that reason, the lead email need not be produced.

103    The chain of emails which follow the lead email are privileged, being communications the dominant purpose of which was the obtaining or giving of legal advice.

104    It follows that the whole of Document 32 is privileged.

Document 40

105    Document 40 is an email from David Allen (Hawkesbury Partners) to Michael Johnston (Morgans) and Geoff Cairns (DibbsBarker), copied to two employees of Hawkesbury Partners, Chris Campbell and John Holaday (both of QRx) and an address styled Sydney Corporate (associated with Morgans).

106    The second email in the chain is a privileged communication, being a communication made by Michael Johnston to Geoff Cairns for the benefit of QRx obtaining advice in respect of a particular document. The lead email, which responds to this second email, was sent for the dominant purpose of Hawkesbury Partners providing its suggested changes to the document. I infer that the dominant purpose of the lead communication was for these proposed changes to be provided to Geoff Cairns for his consideration in the context of Geoff Cairns providing the advice which had been requested by QRx.

107    Accordingly, the lead email and the second email are both privileged. The second email attached an email chain which was provided to Geoff Cairns by the second email for the purpose of him providing the requested advice. These are privileged.

Document 43

108    Document 43 is an attachment to a host email. The host email is not one which the applicant has sought to inspect.

109    The unchallenged evidence was to the effect that the dominant purpose of sending the host email was to provide QRxs board and senior management with the attachment (which was one of two attachments to the host email). The attachment was said to have been prepared by Ms Torrente (HFM) with input from statisticians and clinicians. This document is a draft of a document prepared by a lawyer for consideration by the client. It is privileged.

Document 44

110    Document 44 is an attachment to a host email. The host email is not one which the applicant has sought to inspect.

111    I infer from the terms of the host email that Document 44 was an electronic document provided to Geoff Cairns for his consideration and advice. The document is privileged under the principle in Propend.

Document 47

112    Document 47 was an attachment to a host email contained at Exhibit JOM-3, pages 147 to 149. The attachment is a draft legal opinion and is privileged.

Conclusion

113    The conclusions have been set out above. The parties should file within 7 days agreed short minutes of order reflecting the reasons for decision or, failing agreement, arrange within 14 days for the matter to be relisted.

I certify that the preceding one hundred and thirteen (113) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Thawley.

Associate:

Dated:    18 June 2018

SCHEDULE OF PARTIES

NSD 1364 of 2015

Respondents

Fourth Respondent:

MORGANS CORPORATE LIMITED ACN 010 539 607

Fifth Respondent:

DIBBSBARKER