FEDERAL COURT OF AUSTRALIA

Sadie Ville Pty Ltd v Deloitte Touche Tohmatsu (A Firm) (No 5) [2018] FCA 2066

ORDERS

THE COURT ORDERS THAT:

1.    The application (pursuant to the liberty to apply afforded by paragraph 3 of the orders dated 15 August 2018) by the partners who are subject to paragraph 1 of the orders dated 15 August 2018 (the Production Order), for an order that they be excused from complying with the Production Order or that the Production Order be discharged, be dismissed.

2.    Paragraph 1 of the orders dated 11 September 2018 (by which the Production Order was stayed until further order) be vacated.

3.    Paragraph 1 of the orders dated 15 August 2018 (ie, the Production Order) be varied by substituting “14 February 2019” for “12 September 2018”.

4.    The application by the applicant for orders as set out in the proposed amended interlocutory application attached to its submissions dated 5 November 2018 be dismissed.

5.    In relation to the costs of the applications referred to in paragraphs 1 and 4 above:

(a)    by 4.00 pm on 31 January 2019, the applicant file an outline of submissions of no more than two pages;

(b)    by 4.00 pm on 7 February 2019, the respondents file an outline of submissions of no more than two pages; and

(c)    the issue of costs be determined on the papers.

6.    Pursuant to r 35.13(b) of the Federal Court Rules 2011, any application for leave to appeal these orders be filed by 4.00 pm on 1 February 2019.

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

REASONS FOR JUDGMENT

MOSHINSKY J:

Introduction

1    On 15 August 2018, I made an order (the Production Order) to the effect that the first respondent (DTT), other than Mr Saayman and any other partner directly involved in the relevant engagements, produce the documents in categories 5 to 9 of the respondents’ list of documents dated 3 April 2018.

2    My reasons for making that order were published on 26 July 2018: Sadie Ville Pty Ltd v Deloitte Touche Tohmatsu (A Firm) (No 3) [2018] FCA 1107 (the July 2018 Reasons). I also published reasons for the form of orders on 15 August 2018: Sadie Ville Pty Ltd v Deloitte Touche Tohmatsu (A Firm) (No 4) [2018] FCA 1218 (the August 2018 Reasons). These reasons should be read together with the July 2018 Reasons and the August 2018 Reasons. I will adopt the abbreviations used in those reasons.

3    The partners who are subject to the Production Order (the Uninvolved Partners) have made an application pursuant to the liberty to apply afforded by paragraph 3 of the orders dated 15 August 2018 for an order that they be excused from complying with the Production Order or that the Production Order be discharged. The main basis upon which the application is made is that Mr Saayman (who successfully claimed the privilege against self-incrimination and the privilege against exposure to penalties) has custody of the documents and will not release them to the Uninvolved Partners. The evidence indicates that Mr Saayman has obtained the original files for the relevant engagements (comprising both hard copy documents and soft copy (ie, electronic) documents on compact disks (CDs)). Prior to Mr Saayman obtaining the documents, they were held by DTT’s in-house lawyers in the “litigation room” in the firm’s Sydney offices (the Litigation Room). It is unclear how Mr Saayman (who is based in Brisbane) obtained the documents. The Litigation Room is secured by swipe card access, and access is limited to DTT’s litigation team. Mr Saayman has also obtained custody of a laptop computer containing a copy of many of the relevant documents. It is unclear how Mr Saayman obtained the laptop, which had also been in the Litigation Room.

4    Further, it seems that Mr Saayman has password protected (or encrypted) certain files on the firm’s computer system that contain copies of the documents and will not release the password.

5    In these circumstances, the Uninvolved Partners contend that they are unable to produce the documents and seek to be relieved from complying with the order.

6    For the reasons set out below, I am not persuaded that the Uninvolved Partners should be excused from complying with the Production Order or that the Production Order should be discharged. Accordingly, the application made by the Uninvolved Partners is to be dismissed.

The evidence

7    In support of the application described above, the Uninvolved Partners rely upon:

(a)    two affidavits of David Murray, one of the Uninvolved Partners, dated 6 September 2018 and 27 September 2018;

(b)    two affidavits of Paul Taylor, a partner of the firm specialising in forensic technology, dated 27 September 2018 and 1 November 2018; and

(c)    an affidavit of Anthony Lee, a solicitor, dated 1 November 2018 (the Fourth Lee Affidavit). Mr Lee is the in-house solicitor with the carriage of this proceeding on behalf of DTT. He is based in Melbourne.

Mr Saayman did not provide an affidavit for the purposes of the hearing of the present application.

8    In opposition to the application, Sadie Ville relies upon:

 (a)    an affidavit of Timothy Finney, a solicitor, dated 19 October 2018; and

(b)    two affidavits of Nigel Carson, a forensic investigator, dated 24 October 2018 and 31 October 2018.

9    I gave leave for limited cross-examination of certain witnesses to take place. Mr Taylor, Mr Murray and Mr Lee were cross-examined.

10    The parties tendered a number of documents in addition to those annexed to the affidavits.

11    The hearing proceeded on the basis that it was open to the parties to rely on the evidence that was before the Court at the hearing that took place on 29 June 2018 (in relation to the claim for privilege against self-incrimination and privilege against exposure to penalties).

Factual findings

12    I make the following findings based on the affidavit evidence, documentary evidence and cross-examination. In addition to these findings, the findings contained in the July 2018 Reasons are also relevant.

13    The record-keeping practice of DTT at the time of the relevant engagements (2010 and 2011) was as follows:

(a)    The statutory audit or review file compiled by the audit or review engagement team consisted of one or more bound manila-type folders containing both hard copy documents and soft copy documents (the Statutory Audit / Review File). The soft copy documents were stored on a CD inside a plastic sleeve at the front of the manila-type folder, and this CD contained the electronic portion of the Statutory Audit / Review File.

(b)    A backup copy of the soft copy documents stored on the CD would be saved to a secured client folder on DTT’s audit network drive (the Audit Network Drive Backup Copy). This file was not a complete copy of the Statutory Audit / Review File, because it would not contain the hard copy documents in the manila-type folder which formed part of the Statutory Audit / Review File.

(c)    The Statutory Audit / Review File would, upon the conclusion of the audit or review, be archived by the audit or review engagement team.

(d)    A second, secured client “administration” folder was available on the audit network drive for the audit or review engagement team to store other documents created or collated during the course of the statutory audit or review.

14    If an audit or review matter becomes litigious, the DTT in-house legal team obtains access to the relevant Statutory Audit / Review Files in archives, and access to the secured client folder on the audit network drive containing the relevant Audit Network Drive Backup Copy and the relevant secured client “administration” folder on the audit network drive. Mr Lee accepted during cross-examination that DTT had internal policies “that required that, once the firm became aware of a litigation risk in relation to … a particular audit, then the files relating to that audit should be collected by the in-house legal team and, thereafter, held in a secure place”. Mr Lee accepted that his understanding was that “the files that were collected from firm computers and drives and backup facilities and archive facilities were the property of the partners of the firm, the partners who comprised the firm”.

15    A number of different versions of the relevant documents, or copies of the relevant documents, were referred to in the evidence:

(a)    The Statutory Audit / Review Files for the relevant engagements (ie, the audit of Hastie’s financial statements for the financial year ended 30 June 2010, the review of Hastie’s financial statements for the half-year ended 31 December 2010, and the audit of Hastie’s financial statements for the financial year ended 30 June 2011) (the Hastie Statutory Audit and Review Files). As indicated above, these files comprise both hard copy documents (in manila-type folders) and soft copy documents on CDs (inside a plastic sleeve at the front of the manila-type folders). In the oral evidence, these files were sometimes referred to as the “manila set”. The quantity of hard copy documents is roughly comparable to 15 lever arch folders.

(b)    The Audit Network Drive Backup Copies for the relevant audit and review engagements (the Hastie Audit Network Drive Backup Copies). As indicated above, this is a copy of the soft copy documents forming part of the Hastie Statutory Audit and Review Files.

(c)    Documents pertaining to the relevant audit and review engagements in the secured client “administration” folder on the audit network drive.

(d)    Documents on a laptop computer that was produced by DTT to the liquidators of Hastie in the course of the Examination Proceeding (the Produced Laptop). The documents on the laptop include a copy of the soft copy documents forming part of the Hastie Statutory Audit and Review Files.

(e)    A USB drive that was provided by DTT to the liquidators of Hastie in the course of the Examination Proceeding (the Produced USB). This was also referred to in the evidence as the Westworth USB.

(f)    Hard copy documents produced by DTT to the liquidators of Hastie in the course of the Examination Proceeding (the Produced Hard Copy Documents). Approximately 40 lever arch folders of hard copy documents were produced to the liquidators.

(g)    Images of the laptop computers of Mr Saayman and Mr Moore (the Computer Images).

(h)    Documents pertaining to the relevant engagements stored on a database used by DTT’s internal and external lawyers and referred to as the Relativity database (the Relativity Database). The documents on this database include: a complete copy of the Hastie Statutory Audit and Review Files; documents pertaining to the engagement to prepare the investigating accountants’ report for inclusion in the Pathfinder and the Prospectus; and the ARMC Minutes of 26 August 2011.

(i)    Documents stored on a laptop computer that is held by Clifford Chance, the firm of solicitors acting for DTT in this proceeding (the CC Laptop). The documents on the laptop include: a copy of the soft copy documents forming part of the Hastie Statutory Audit and Review Files; and the ARMC Minutes of 26 August 2011.

I put to one side the two USB drives that were provided by Mr Lee to Graeme Conn for the purposes of Mr Taylor’s inspection (referred to below) and the two USB drives that were provided to Mr Carson.

16    In relation to the Computer Images, I note the following. In a letter dated 13 May 2015, the solicitors acting for Mr Moore and Mr Saayman in connection with the Examination Proceeding stated that they were “instructed that there are … Images of Mr Moore’s and Mr Saayman’s laptop computers …” and that these may contain documents that were responsive to a category of documents that had been sought.

17    In relation to the Relativity Database, I note the following matters. The relevant documents were uploaded to the database between August 2015 and October 2015. The documents can be accessed by members of DTT’s in-house legal team and Clifford Chance. In addition, DTT staff members who are acting under the direction of DTT’s in-house legal team can access the documents in certain circumstances.

18    In relation to the CC Laptop, I note the following matters. The laptop was originally obtained by DTT’s in-house legal team in around October 2015. The relevant documents were loaded onto the laptop for use by DTT’s then external lawyers, Ashurst, for the purposes of conducting litigation on behalf of DTT brought by the liquidators of Hastie. The CC Laptop was provided by Ashurst to Clifford Chance in around July 2016. The laptop has remained in the custody of Clifford Chance since then.

19    On 5 March 2018, the Court made orders for discovery in the proceeding: see the July 2018 Reasons at [5]. Subject to any claims for privilege, DTT was required to produce the discovered documents by 4.00 pm on 10 April 2018.

20    On 3 April 2018, the respondents filed and served their list of documents, verified by the First Lee Affidavit. In [5] of the First Lee Affidavit, Mr Lee stated that the documents set out in Part 2 were in the control of DTT but he claimed privilege from production of each of those documents on the grounds set out in Part 2.

21    Mr Lee accepted during cross-examination that he was “given responsibility for collecting the documents on behalf of Deloittes for the purposes of discovery in this proceeding”. He also gave evidence during cross-examination (which I accept) that at the time he made the First Lee Affidavit (3 April 2018) the Hastie Statutory Audit and Review Files were secured in the Litigation Room. Mr Lee gave the following evidence in relation to the “manila set” (being the Hastie Statutory Audit and Review Files):

… So your evidence is that as at April 2018 that manila set was held in a secure way by the in-house legal team in the litigation room in the Sydney office; is that right?---That’s correct.

Mr Lee also accepted during cross-examination that “it was part of [his] responsibility to keep those potentially discoverable documents in a place and in a form that made them accessible to [him], acting on behalf of the first respondent”. It follows that, as at April 2018, DTT’s legal team held the Hastie Statutory Audit and Review Files on behalf of DTT (that is, the partners of DTT at the relevant times for the purposes of the proceeding).

22    On 18 June 2018, Mr Lee made the Third Lee Affidavit. Mr Lee stated at [6]:

The documents comprising the Privileged Material [that is, the documents over which privilege was claimed] are maintained securely and access to them is limited to domain administrators within [DTT’s] IT services team and/or [DTT’s] in-house litigation team. Otherwise, [DTT] partners and staff can only access the Privileged Material with the consent of Reuben Saayman and a member of [DTT’s] in-house litigation team.

23    During cross-examination in relation to the present application, Mr Lee sought to clarify some aspects of the above paragraph. He said that it was “clumsily worded” and “conflated two different issues”. The first issue was the “manila set”, which Mr Lee believed was securely maintained in the Litigation Room (as at 18 June 2018). He said that he had not seen the documents in the room at this time, but this was his assumption. The second issue was that, where he stated that access was limited to DTT’s IT services team, he was referring to the network folders. Later in the cross-examination, Mr Lee further explained that when he referred to “access” he was referring to access to a folder as distinct from accessing the contents of individual documents. He stated that he did not know if the people referred to in [6] of his affidavit could access the individual documents.

24    On 29 June 2018, the hearing in relation to DTT’s claim based on the privilege against self-incrimination and the privilege against exposure to penalties took place.

25    On 26 July 2018, the July 2018 Reasons were published.

26    On 15 August 2018, the August 2018 Reasons were published and the Production Order was made.

27    Mr Murray was made aware of the Production Order by Matthew Broadford, a consultant to the firm who acts in the firm’s practice protection area.

28    On 28 August 2018, Mr Murray telephoned Mr Lee and they had a conversation. (This date appears in Mr Murray’s affidavit. In oral evidence he said the conversation was on about 20 August 2018.) Mr Murray was asked during cross-examination why he spoke with Mr Lee. Mr Murray responded that he knew that Mr Lee was involved with the case “so I rang Mr Lee to find out what I needed to do in this matter”. It does not appear that Mr Murray had had any previous involvement in connection with discovery in this proceeding.

29    Between 29 August 2018 and 5 September 2018, an email exchange took place between Mr Murray and Mr Saayman. The emails, which are annexed to Mr Murray’s first affidavit, are set out below. Mr Murray said during cross-examination that: he obtained legal advice from DTT’s external lawyers, Clifford Chance, as to how he should approach the matter; and he had some discussions with Clifford Chance about the way in which he should approach Mr Saayman. Mr Murray also said during cross-examination that he drafted the emails and then had Clifford Chance review them.

30    On 29 August 2018, Mr Murray sent an email to Mr Saayman:

Dear Reuben

I expect you are aware that we have been instructed by the Court to produce the following records.

•    File including working papers for the audit of Hastie Group Limited’s financial statements for the financial year ended 30th June 2010

•    File including working papers for the review of Hastie Group Limited’s financial statements for the half year ended 31st December 2010

•    File including working papers for the audit of Hastie Group Limited’s financial statements for the financial year ended 30th June 2011

•    File and working papers in relation to the Investigating Accountants Report contained in the Pathfinder Prospectus and Prospectus issued by Hastie Group Limited in June 2011

•    ARMC Minutes 26th August 2011.

It is my understanding that all of these documents, comprising hard and soft records, are currently with you or under your control.

Can you confirm that you have the records and advise whether I am able to access them or advise if you are willing to release the records to me.

Regards

[David]

31    On 30 August 2018, Mr Saayman responded by email:

Dear David

I confirm that all the records referred to below are secured and under my control. The court has found that, on the grounds of privilege against self-incrimination, I may refuse to produce these records. I intend to exercise my right to keep these records under my control and not to release nor provide access to these records.

Regards

Reuben Saayman

32    On 5 September 2018, Mr Murray sent a further email to Mr Saayman:

Dear Reuben

Thank you for your email.

Please may I ask you to clarify a couple of points.

First, what do you mean when you refer to the documents being secured and under your control, and Secondly when you say you intend not to release or provide access to the records, does that mean you will not be willing to allow anyone else to access them.

Regards

David

33    On the same day, Mr Saayman responded by email:

Dear David

The records as listed below [are] under my control in the following manner:

1.    The physical files and back up disks have been locked up securely and only I have the keys to these records.

2.    The electronic files have been password protected and only I know the password to these files.

I further confirm that, on the basis set out below, I am not intending to give anyone access to any of these records.

Kind regards

Reuben Saayman

34    A further email exchange took place between Mr Murray and Mr Saayman between 24 September 2018 and 27 September 2018. The emails are annexed to Mr Murray’s second affidavit and are set out below.

35    On 24 September 2018, Mr Murray sent an email to Mr Saayman:

Dear Reuben,

You state in your email below that the physical files [and] back up discs are locked up. Are you willing to tell me where they are located?

Regards

David

36    On 25 September 2018, Mr Saayman responded by email:

Dear David

The physical files, back up disks and computer containing the backups are under my control and I can confirm that these are not on any Deloitte premises.

Kind regards

Reuben Saayman

37    On 26 September 2018, Mr Murray sent the following email to Mr Saayman:

Dear Reuben

Thank you for your email.

I note that the files, back up disks and computer are not located on Deloitte Premises. However I need to know whether they are located at premises which I could have access to. Can you therefore let me know where these items are physically located. For example are they being stored at our offsite records storage.

Regards

David

38    On 27 September 2018, Mr Saayman responded by email:

Dear David

These items are not on any Deloitte premises nor a location controlled and accessible by any Deloitte partners or staff. The locations are controlled by me and unless I provide that access, which I stated below I am not willing to do, you are not able to access these items.

Kind regards

Reuben Saayman

39    Based on the email exchanges between Mr Murray and Mr Saayman and the evidence generally, I find that Mr Saayman now has custody of the following:

(a)    the Hastie Statutory Audit and Review Files, being files for the relevant audit and review engagements;

(b)    the file and working papers pertaining to the investigating accountants’ report engagement;

(c)    the ARMC Minutes of 26 August 2011; and

(d)    the Produced Laptop.

40    Further, based on the email exchanges and the evidence generally, I find that Mr Saayman has encrypted the following files (the Encrypted Files) on the firm’s computer system:

(a)    the Hastie Audit Network Drive Backup Copies; and

(b)    the documents pertaining to the relevant audit and review engagements in the secured client “administration” folder.

41    It is unclear when the Hastie Statutory Audit and Review Files and the other documents referred to in [39] above were taken out of the Litigation Room and obtained by Mr Saayman. Mr Lee stated during cross-examination that he first became aware that they were no longer in the Litigation Room around the time that Mr Saayman emailed Mr Murray and stated that he had the files (ie, about 30 August 2018). It is also unclear when the encryption took place.

42    Mr Lee gave evidence during cross-examination that: he did not authorise Mr Saayman to “get into the Litigation Room”; and he (Mr Lee) did not participate in any communications with anybody in which there was any discussion of the manila set being permitted to be removed from the Litigation Room.

43    Mr Lee was asked questions during cross-examination about how the documents came to be held by Mr Saayman. He gave the following evidence:

… Did you enquire whether any precautions were in place to ensure that that manila set was not removed from the litigation room?---The litigation room was secured.

How was it secured?---It’s only swipe card access.

And what do you have to do to get a swipe card to let you access?---Well, you go to the office services and – yes, but access is restricted.

Okay. And who decides who gets a swipe card?---The litigation team.

Right. … Was Mr Saayman ever given a swipe card?---It’s – well, not that I’m aware of. It’s – it’s – it goes by our building access pass. So - - -

But you’re the person in charge, you’re the person responsible for keeping these documents secure. So did you check to see who had access to the litigation room?---It’s my understanding that it has just been limited to the litigation team.

Okay. Right. So can you tell his Honour how is it that the manila set got out of the litigation room and got into Mr Saayman’s possession?---I – I don’t know.

Don’t know?---I don’t know.

(Emphasis added.)

44    Mr Lee also gave evidence during cross-examination that:

(a)    he has not made any inquiries to find out whether anybody authorised Mr Saayman to get the files from the Litigation Room;

(b)    he does not know whether Mr Saayman went into the Litigation Room or not;

(c)    he does not know when the files were removed from the Litigation Room;

(d)    he has not been involved in any discussions about the possibility of someone with appropriate IT expertise using access to the firm’s IT system generally to try to find clues or techniques by which that person might be able to break the encryption code that applies to the Encrypted Files; and

(e)    he has not made any inquiries to try and find out on what date the encryption was applied.

45    In relation to the Produced Laptop, Mr Lee gave the following evidence during cross-examination:

Now, the produced laptop was returned by the liquidators to Clifford Chance in late November 2017; correct?---That’s correct.

Where is the produced laptop now?---I believe it’s with Mr Saayman.

It was provided to Clifford Chance in November. Have you made any inquiries as to how it got from Clifford Chance to Mr Saayman?---So my understanding is that that laptop was in our litigation room.

Okay. What’s the basis for your understanding, Mr Lee?---Don’t know how I know but it’s just, you know, working with my team, supervising my team.

Right. Do you have any knowledge of how that laptop got from the litigation room to Mr Saayman?---No.

46    In relation to the Produced USB and the Produced Hard Copy Documents, Mr Lee was asked whether he had made any inquiries as to where those documents were now. He answered “No”. In re-examination, he said that they “would be with the liquidators”.

47    In relation to the Computer Images, Mr Lee was taken during cross-examination to the letter dated 13 May 2015 referred to at [16] above. He was asked whether he was aware of the existence of the Computer Images prior to the day of cross-examination. He answered “No”.

48    Mr Murray gave evidence during cross-examination that:

(a)    he was not aware of the CEO or the Board of the firm taking any action to get the audit files back from Mr Saayman;

(b)    he had not made any inquiries as to when the encryption was applied to the files that he understood to be encrypted; and

(c)    he has not spoken to the CEO, any member of the Board, or any person within the IT department about steps that the firm could take to break the encryption that has been applied to the files that are still on its server.

49    The evidence relied upon by DTT includes evidence from Mr Taylor concerning the time it may take to access the Encrypted Files. On or around 26 September 2018, Mr Lee copied the two Encrypted Files onto two USB drives. He provided these to Mr Conn of the Deloitte Forensic Technology team in Melbourne, who uploaded the files to a computer to enable them to be accessed by Mr Taylor. Mr Taylor logged on and inspected the files and then loaded them into software known as Passware. Mr Taylor ran “brute force” attacks on the files using the default settings on the Passware software program. The default settings run through a number of different ways or means of attempting to break a password, including “dictionary attacks”. In his second affidavit, Mr Taylor stated that the first “brute force” attack process had been unsuccessful in locating a password to decrypt the files.

50    Mr Taylor estimated in his first affidavit that it would take over 12,600 years to complete the further “brute force” attack process described in [11]-[12] of that affidavit.

51    Although Mr Taylor is a partner of the firm specialising in forensic technology, he is not part of the IT services team and does not have knowledge of the IT infrastructure used within the firm. He was asked questions during cross-examination about the firm’s backup systems, but did not have familiarity with such systems. Mr Taylor gave evidence (and I accept) that: he has “no knowledge of whether IT personnel at Deloitte control access to servers and backup systems”; and he does not “have any experience of gaining access to backup systems within Deloitte”.

52    In relation to whether there are other backups of the relevant documents, Mr Murray gave the following evidence during cross-examination:

… So the legal team, on your understanding, has collected the backups of the original audit files?---I’m not sure of that. I cannot guarantee that. That’s up to the legal team.

…

… So just to be clear, Mr Murray, are you telling his Honour that you have made inquiries as to whether there are other copies of the audit file anywhere on the network that have not been encrypted by Mr Saayman?--- No, I have not.

You have not made inquiries?---No.

53    Mr Lee gave the following evidence during cross-examination:

Have you enquired whether backups of the drives maintained on the Deloittes IT system include any part of what ultimately became the final audit file?---No because I didn’t – didn’t need to, and I’m not aware of any backups.

Right. So the answer to my question is, no, you have not made any inquiries?---No.

Right. And so your assumption is that there are none?---Well, the [order] required us to discover the audit files. And the audit files are the manila files. So why – why would I have to go beyond - - -

So you have not looked for documents that contain copies of the audit file or copies of parts of the audit file?---No.

Consideration

54    The circumstances described above are extraordinary and troubling. An order was made for production of certain relevant documents by the Uninvolved Partners. The documents were, at least at the time that the respondents’ list of documents was prepared, held by DTT’s in-house lawyers on behalf of DTT. The documents were located in the secure Litigation Room, access to which was limited to DTT’s litigation team by a swipe card access system. Yet somehow the documents have been obtained by Mr Saayman and he is refusing to release them. The circumstances appear to be designed to bring about a situation where the Uninvolved Partners can argue (as they have on this application) that they are unable to produce the documents in accordance with their discovery obligations.

55    The circumstances in which Mr Saayman obtained the documents from the Litigation Room have not been explained in any detail in the material before the Court. Remarkably, very little, if anything, has been done to investigate how Mr Saayman obtained the documents. In particular, Mr Lee, the in-house lawyer with the carriage of the proceeding on behalf of DTT, gave evidence that:

(a)    he did not know how it was that the manila set got out of the Litigation Room and into Mr Saayman’s possession;

(b)    he has not made any inquiries to find out whether anybody authorised Mr Saayman to get the files from the Litigation Room;

(c)    he does not know whether Mr Saayman went into the Litigation Room or not;

(d)    he does not know when the files were removed from the Litigation Room; and

(e)    he does not know how the Produced Laptop got from the Litigation Room to Mr Saayman.

56    Likewise, in relation to the Encrypted Files, the circumstances in which the encryption occurred have not been explained in any detail. It is unclear how and when this occurred. Mr Lee gave evidence that he has not made any inquiries to try to find out on what date the encryption was applied. Similarly, Mr Murray gave evidence that he has not made any inquiries as to when the encryption was applied to the relevant files.

57    In the absence of a detailed explanation of how Mr Saayman obtained the documents, I am not satisfied that the Uninvolved Partners are unable to produce the documents. The series of events appears to have been designed to bring about a situation where the Uninvolved Partners could argue that they are unable to produce the documents. If the events were so designed, and involved not just Mr Saayman but others as well, it may well be the case that the Uninvolved Partners can produce the documents. In circumstances where the Uninvolved Partners have not provided a full explanation of how Mr Saayman obtained the documents – or even made inquiries to try to find this out – I am not satisfied that they are unable to produce the documents. The Uninvolved Partners are seeking to be excused from complying with the Production Order. Alternatively, they seek an order that the Production Order be discharged. It is incumbent on the Uninvolved Partners on an application such as this to demonstrate that they are unable to comply with the order. For the reasons indicated, the Uninvolved Partners have not satisfied me that they are unable to produce the documents.

58    Further and in any event, the evidence indicates that there are, or may well be, other copies of the relevant documents accessible to the Uninvolved Partners. In particular:

(a)    There was evidence about the Produced USB. This was produced to the liquidators of Hastie in the course of the Examination Proceeding. It may well contain documents pertaining to the relevant engagements and thus documents covered by the Production Order. Even if the Produced USB is with the liquidators of Hastie, there is no evidence to suggest that it would not be returned upon request.

(b)    Similarly, the Produced Hard Copy Documents may well include documents pertaining to the relevant engagements, and thus documents that are covered by the Production Order. As with the Produced USB, if these documents are with the liquidators of Hastie, there is no evidence to suggest that they would not be returned upon request.

(c)    There was evidence regarding the Computer Images. I infer that these comprise a copy of the files on Mr Saayman’s laptop and Mr Moore’s laptop. Given that they were both involved in the relevant engagements, their laptops may well have contained many documents pertaining to those engagements, and thus many documents covered by the Production Order. It does not appear that any search has been conducted to locate the Computer Images.

59    The Uninvolved Partners submit that any such documents are not covered by the Production Order on the basis that the order refers only to the original documents (ie, the Hastie Statutory Audit and Review Files) and not to copies of those documents. I do not accept this submission. The original discovery order of 5 March 2018 (set out at [5] of the July 2018 Reasons) required DTT to give discovery of: “its audit files (however titled) and working papers” for the relevant engagements; Hastie’s ARMC meeting packs and minutes for a certain period; and the file and working papers in relation to the investigating accountants’ report contained in the Pathfinder and the Prospectus. In making discovery, the respondents identified a number of categories of documents, including categories 5 to 9 as set out at [7] of the July 2018 Reasons. In my view, it is too narrow a construction of the categories to treat them as covering only one particular set of the documents, namely the set of documents that was in the Litigation Room. Many of the relevant documents are soft copy documents and it is artificial to treat one version as the original document and other versions merely as copies. No doubt, it would be sufficient for the Uninvolved Partners to produce the documents in categories 5 to 9 that were in the Litigation Room, without needing to produce each other copy of those documents. However, I do not accept the submission that documents on the Produced USB and documents forming part of the Produced Hard Copy Documents and the Computer Images are not required to be produced because they are copies.

60    Another way in which it may be possible for the Uninvolved Partners to comply with the Production Order is if other backup copies exist. The evidence of Mr Lee was to the effect that the Audit Network Drive Backup Copy is the only backup copy that is created of the soft copy documents forming part of each Statutory Audit / Review File. However, Mr Lee did not display familiarity with the firm’s general backup system and no witness was put forward who had familiarity with such matters. It may well be the case that, as a large professional services firm, the firm makes regular backups of its computer system, including the audit network drive. This is supported by cl 2.9.1 of the firm’s current Information Security Acceptable Use Policy (Ex 2), which states that “[i]nformation saved to shared drives is automatically backed up daily and archived monthly”. If so, this would result in backups being made of the Hastie Audit Network Drive Backup Copies and the secured “administration” folder on the audit network drive. No inquiries have been made to see whether or not such backups exist. More generally, it does not appear that any investigation has been undertaken to see if there are backups of relevant documents on the firm’s computer system. Generally, one gets the impression that it is convenient for the Uninvolved Partners if they are unable to get the documents and they have not tried very hard to overcome the present impediments.

61    I note that a complete copy of all of the documents covered by the Production Order resides on the Relativity Database. Further, copies of many of the documents covered by the Production Order are stored on the CC Laptop. The Uninvolved Partners contend that these copies are covered by legal professional privilege on the basis that they were brought into existence for the dominant purpose of preparing for, or for use in, existing or contemplated judicial proceedings: see Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501; Heydon JD, Cross on Evidence (11th Aust ed, 2017), [25275]. On the face of things, this contention appears to be correct. However, I note the potential application of the qualification expressed by Brennan CJ in Propend at 512: “if an original unprivileged document is not in existence or its location is not disclosed or is not accessible to the person 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 privileged copy loses the privilege”. Further, if it were the case that DTT’s lawyers were involved in Mr Saayman obtaining the documents that were in the Litigation Room in order to bring about a situation where the Uninvolved Partners could argue that they are unable to produce the documents in accordance with their discovery obligations, the observations made by Gummow J in Propend at 570 would appear to be apposite. It is unnecessary for present purposes to take these issues any further.

62    The Uninvolved Partners rely heavily on the decision of the New South Wales Court of Appeal in Griffin v Sogelease Australia Ltd (2003) 57 NSWLR 257 (Griffin), particularly at [21], [25]-[35] per Tobias JA (Meagher JA and McColl JA agreeing). The issue dealt with by the Court of Appeal, as described at [29], concerned order 4 of the primary judge’s orders. That order was directed to Mr Griffin, requiring him to produce the subject documents to Mrs Griffin and/or her solicitors. In circumstances where the primary judge had held that production of the documents could provide evidence of a series of dispositions designed to hide the proceeds of fraud, the issue as framed by Tobias JA was whether the fact that Mr Griffin was required by the Court’s order to produce the documents to Mrs Griffin and/or her solicitors, rather than directly to Sogelease, took the primary judge’s order outside the reach of Mr Griffin’s privilege against self-incrimination. The primary judge proceeded on the basis that this was the case, but the Court of Appeal disagreed. Tobias JA stated (at [30]) that, in his opinion, objection to the production of documents based on the privilege against self-incrimination is available to any person who, by compulsory process, is required to produce the relevant documents. Tobias JA stated (at [34]-[35]):

34    With respect, it is my opinion that what his Honour did in the present case infringed these principles. By ordering Mr Griffin to produce the relevant documents to Mrs Griffin or her solicitors he was requiring their production by compulsory process, that is, by order of the court. Although Mr Griffin was not required to produce the documents directly to Sogelease he was indirectly required to do so for, once they were in the possession of Mrs Griffin or her solicitors, she was obliged, by the order for discovery against her, to list the documents and produce them for inspection. In my opinion, such an order was impermissible and constituted, without statutory warrant, a justified abrogation of Mr Griffin’s rights.

35    In so holding, I have not overlooked the points made by his Honour in par [34] of his judgment and which I have set out (at 262 [20] supra). There is, of course, nothing to suggest that Mr Griffin gained possession of the relevant documents in the present case by inappropriate or unlawful means. But once he had obtained possession then, in my opinion, he was entitled to object to any mandatory order requiring him to produce them in contravention of his right not to do so based upon his privilege against self-incrimination. Given the uncompromising terms in which the High Court in Reid has expressed itself as to there being “no real exception” to the privilege, except where it is abridged by statute or waived, it is not for this Court to create an exception to the otherwise unqualified nature of the privilege based on the fact, if it be the fact, that the person claiming the privilege has deliberately obtained possession of the documents, whether lawfully or unlawfully, for the very purpose of frustrating their production by some other person who might otherwise be bound to produce them. In any event, it was not suggested that, in this case, Mr Griffin either obtained possession of the documents from Mrs Griffin unlawfully or that he did so for the express purpose of frustrating any obligation she may have to disclose them pursuant to any order of discovery made against her.

63    In my view, the issue before the Court on the present application is very different to that considered by the Court of Appeal in Griffin. The Production Order is to the effect that the first respondent, other than Mr Saayman and any other partner directly involved in the relevant engagements, produce the documents in categories 5 to 9 of the respondents’ list of documents. Unlike the order under consideration by the Court of Appeal, the Production Order does not require a person who is entitled to claim the privilege against self-incrimination to produce documents. It does not, for example, require Mr Saayman to produce the relevant documents to the Uninvolved Partners. The question before me on the present application is whether the Uninvolved Partners should be excused from complying with the Production Order or the Production Order be discharged. That is a very different issue to that considered by the Court of Appeal in Griffin.

64    The Uninvolved Partners place emphasis on the fact that approximately 230 of the partners who comprise DTT (being the partners at the relevant times for the purposes of the proceeding) have since left the firm. It is submitted that those who have left the firm do not have control of any relevant documents. For there to be any practical substance in this point it would be necessary to show that none of the Uninvolved Partners has possession, custody or power in respect of the relevant documents. Otherwise, there would not appear to be a need, from a practical point of view, to vary or vacate the order.

65    The evidence includes various copies of the partnership agreement of the firm, and the parties have made submissions about the effect of the terms of that agreement. I do not consider it necessary on this application to analyse the partnership agreement in detail. However, I note the following matters. Pursuant to cl 4.1(a), all Firm Property (which is broadly defined) “is owned by the Equity Partners in their Pro-rata Portions”. Clause 4.1(b) provides that a Partner is not entitled to require the realisation or distribution of the Firm Property, or “for the Firm Property to be otherwise dealt with, except as expressly contemplated by this contract”. The question for discovery purposes is whether the Uninvolved Partners have possession, custody or power in respect of the relevant documents. This does not necessarily require a dealing with the relevant documents, therefore I do not consider it necessary to identify an express provision in the partnership agreement of the type contemplated by cl 4.1(b) before it can be said that a partner has possession, custody or control of the relevant documents. I note that cl 7.12 refers to Firm Property “so far as practicable” being vested in a Deloitte Entity “to hold upon trust for the Equity Partners”. There is no evidence to suggest that such vesting has occurred in relation to the relevant documents. Clause 7.12(b) provides that if, notwithstanding cl 7.12(a), any Firm Property is vested in any Partner, that Partner “will hold it upon trust for the Equity Partners”. Again, there is no evidence to suggest that such vesting has occurred in relation to the relevant documents. The provisions of the partnership agreement do not, in my view, establish that the Uninvolved Partners do not have possession, custody or power in respect of the relevant documents. To the contrary, on the basis that the relevant documents are “Firm Property”, the agreement provides that the documents are owned by the Equity Partners.

66    The Uninvolved Partners rely on Trade Practices Commission v TNT Management Pty Ltd (1984) 56 ALR 647 (TNT) at 695-696 per Franki J. The passage relied upon forms part of a ruling made on 6 September 1983 in relation to a subpoena duces tecum issued to a Mr Rochfort. The High Court dealt with an earlier subpoena duces tecum directed to Mr Rochfort in Rochfort v Trade Practices Commission (1982) 153 CLR 134 (Rochfort). In TNT, Franki J was dealing with a subpoena dated 1 August 1983. As noted in TNT at 690, on 20 October 1981 a general meeting of members of the National Freight Forwarders’ Association (NFFA) had been held at which a resolution had been passed that the records of the association shall be in the custody of Mr Rochfort as the employee of the association and that he shall have no authority to make such documents or records available to any person or entity save with the express approval of the committee of the association or its chairman. In a ruling dated 22 August 1983 (TNT at 690-693), Franki J adjourned an application by Mr Rochfort to be relieved from production of the documents and afforded the Trade Practices Commission an opportunity to issue subpoenas to the members of the NFFA. The next ruling is dated 6 September 1983 (TNT at 693-696). Franki J noted that the Commission had now served a further 13 subpoenas against a number of corporations to produce the same documents (TNT at 693). Senior counsel for Mr Rochfort did not admit that all of those served were current members of the NFFA, but said that there were no current members of the NFFA who had not received subpoenas (TNT at 693). At 693-694, Franki J set out the responses of each of the defendants and the other persons who or which had been served.

67    Franki J then proceeded to consider whether Mr Rochfort should be relieved from production of the documents. Franki J proceeded on the basis that the privilege against exposure to penalties is available to a corporation (consistently with an assumption that had been made by the High Court in Rochfort): TNT at 694-695. The position, however, has now changed: Environment Protection Authority v Caltex Refining Co Pty Limited (1993) 178 CLR 477 (regarding the privilege against self-incrimination). Franki J then considered the question of what the Court should do where property is held by a person, such as Mr Rochfort, on behalf of a number of persons in whom the possession, custody and control are vested and at least some of them claim that the production of the documents would expose them to a civil penalty: TNT at 695-696. Franki J noted that, unlike the position considered by the High Court, Mr Rochfort was a servant of the NFFA. Having held that the property of an unincorporated association belongs to all the members, Franki J held that an order for production cannot be made “where the documents are not in the sole possession or power of the party called upon to produce them or the property is not in the possession of the person against whom the order is sought”. In Franki J’s opinion, it was necessary that subpoenas be issued to “all parties who have possession of the documents sought by a subpoena”. Franki J held that the documents the subject of the subpoena to Mr Rochfort were the property of all the members of the NFFA and Mr Rochfort did not have the necessary possession, custody or control of the documents for him to be required to produce the documents the subject of the subpoena. Franki J also stated that: “I can see no reason why any valid claim for privilege against exposure to a civil penalty should be denied to a person in respect of a subpoena to produce property of which it [ie, the person] is an owner together with other persons.” He also stated: “Accepting as I do that such a claim may be made, the next question is whether a claim is to be defeated because the other [owner] or other owners raise no objection. In my opinion this would be illogical and I would uphold a valid claim against exposure to a civil penalty by any member of the NFFA.” The Uninvolved Partners submit, in their submissions dated 5 November 2018, that this “principle” applies here. As I understand it, this submission is to the effect that where a valid claim for privilege against exposure to penalties is raised by some of the joint owners of documents, this should not be defeated simply because other joint owners raise no objection (or, by parity of reasoning, cannot claim the privilege).

68    I do not accept this submission. First, it is not clear from the passage at 696, that Franki J was stating any such general principle. The conclusion was expressed in relation to the members of the NFFA rather than more generally, and no authority was cited for any such general principle. Secondly, the context in which Franki J made the ruling was very different from the present case. In particular, Franki J was dealing with a subpoena directed to Mr Rochfort, who was an employee of the NFFA, and in circumstances where the resolution of 20 October 1981 had been passed. The present context is very different. The discovery order is directed to the Uninvolved Partners themselves and there is no equivalent resolution. Thirdly, in a later passage at 696, Franki J dealt with the 13 subpoenas that the Commission had issued since the ruling on 22 August 1983. In respect of these subpoenas, Franki J held that “[a]ny documents produced in answer to any of these subpoenas by any person to whom a subpoena was issued without any claim for privilege are available in the ordinary way as documents produced in answer to a subpoena”. It will be recalled that the Commission had been afforded the opportunity to serve subpoenas on the members of the NFFA. Although some of the persons served contended that they were not members (see TNT at 694), it is noteworthy that Franki J considered that the documents produced in response to these subpoenas were available in the ordinary way; he did not limit this to documents produced only by non-members.

69    I note that in [20] of Sadie Ville’s submissions dated 5 November 2018, it is stated that Mr Saayman was not involved in the audit engagement for the financial year ended 30 June 2010, referring to Mr Finney’s affidavit dated 19 October 2018, annexure “TF-2”, tab 11, p 166. This may call into question the basis of Mr Saayman’s claim based on the privilege against self-incrimination and the privilege against exposure to penalties in respect of the documents for that engagement. However, it is not necessary to decide this issue for the purposes of this application. Further, the point was not the subject of detailed submissions; the focus of the hearing was on whether the Uninvolved Partners should be excused from complying with the Production Order. Accordingly, I do not propose, at least at this stage, to revisit Mr Saayman’s privilege claim.

70    Sadie Ville submits that, if necessary, Sabre orders should be made to require the Uninvolved Partners to obey the Production Order by enforcing their presently enforceable rights to recover the files and obtain disclosure of the password: see Sabre Corporation Pty Ltd v Russ Kalvin’s Hair Care Company (1993) 46 FCR 428. Attached to Sadie Ville’s submissions dated 5 November 2018 is a proposed amended interlocutory application setting out the orders that are sought in this regard. In light of the views that I have expressed above regarding the ability of the Uninvolved Partners to produce the documents covered by the Production Order, I am not persuaded, at least at this stage, that Sabre orders are necessary.

71    In its further submissions dated 27 November 2018, Sadie Ville submits that the Production Order should be varied so as to no longer excuse Mr Saayman. Sadie Ville submits that: the privilege against self-incrimination operates only to protect a person from being compelled to produce such evidence against himself or herself; it does not entitle its holder to disable other persons from producing documents that might incriminate the holder; and, for this reason, Mr Saayman’s claim to privilege against self-incrimination in respect of the materials obtained by him in the unauthorised manner indicated by the evidence is not a bona fide claim to privilege and cannot be maintained: see BTR Engineering (Australia) Ltd v Patterson (1990) 20 NSWLR 724 at 728-729 and, by analogy, Tan v Commissioner of New South Wales Police [2012] NSWSC 1580 at [126] (regarding legal professional privilege). In my view, this submission goes beyond the scope of the application that is presently before the Court. I therefore decline to deal with the submission at this stage.

Conclusion

72    For the reasons set out above, the Uninvolved Partners’ application, pursuant to the liberty to apply order, is to be dismissed. In its submissions dated 27 November 2018, Sadie Ville requested an opportunity to be heard as to the basis and quantum of any costs order. Accordingly, I will give the parties the opportunity to file short written submissions on costs, with a view to dealing with this issue on the papers.

Associate:

Dated:    24 December 2018