Federal Court of Australia

Nipps (Administrator) v Remagen Lend ADA Pty Ltd, in the matter of Adaman Resources Pty Ltd (Administrators Appointed) (No 3) [2021] FCA 628

ORDERS

THE COURT ORDERS THAT:

 1.   Documents numbered 1 to 8 (in Schedule 1 to the reasons for judgment) be provided to the Perth Registry, in a sealed envelope marked to the attention of the District Registrar and bearing a reference to these orders, to be retained by the District Registrar on a confidential basis and unopened, so that the envelope may be delivered in due course to the associate to a judge to be allocated by the National Operations Registry for the purpose of inspecting the documents and determining the privilege claims.

2.    The interlocutory application is otherwise referred to the National Operations Registry for allocation to a judge of this Court for the purpose of inspecting the documents and determining the privilege claims.

3.    Costs reserved.

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

REASONS FOR JUDGMENT

BANKS-SMITH J:

1    On 13 May 2021 the defendant (Remagen) issued a notice to produce documents to the first plaintiff (Administrators), second plaintiff (Adaman Resources) and the third plaintiff (Adaman Minerals). The recipients have apparently complied or were willing to comply with the notice, but certain officers sought to be heard as interested parties, asserting that some of the documents constitute privileged communications, and that they are entitled to assert the privilege. There was no contest that the relevant directors, Daniel Sweeney, Mark Rowsthorn and Nicholas Anderson (Directors) together with the company secretary, John Fitzgerald, had standing to be heard. However, Remagen denies that they are entitled to assert privilege and asserts that any privilege was the privilege of Adaman Resources. Remagen notes that the Administrators of Adaman Resources have not purported to assert the privilege on the company's behalf.

Introduction

2    This interlocutory application has been brought in broader proceedings commenced by the Administrators seeking validation of their appointment. Those proceedings remain on foot and have become the vehicle for a number of applications. That position seems likely to continue. It is not necessary to set out the background to the administrations in any detail, as it is summarised in Nipps (Administrator) v Remagen Lend ADA Pty Ltd, in the matter of Adaman Resources Pty Ltd (Administrators Appointed) [2021] FCA 520 (Nipps v Remagen (No 1)) and Nipps (Administrator) v Remagen Lend ADA Pty Ltd, in the matter of Adaman Resources Pty Ltd (Administrators Appointed) (No 2) [2021] FCA 577 (Nipps v Remagen (No 2)). Similarly, it is not necessary to re-define all relevant terms. Generally speaking, I will adopt the defined terms from those previous reasons.

3    Many parties have been joined as interested parties in this broader proceeding. In this particular application, both counsel referred to the Directors and Mr Fitzgerald together as the Interested Parties and I will adopt that term.

4    The Interested Parties filed an affidavit of Nicholas Madders, who holds a practising certificate issued by the Victorian Legal Services Board. They also rely upon evidence that has been given by Mr Fitzgerald (affidavit of 3 May 2021) (Fitzgerald Affidavit) and Mr Nipps (affidavit of 13 May 2021, being the Third Nipps Affidavit).

5    At the outset it is appropriate to describe the roles of certain persons and entities.

6    Mr Sweeney, Mr Rowsthorn and Mr Anderson were at the relevant time and remain directors of Adaman Resources. Whether Simon Raftery, the managing director of Remagen, was also entitled to act as a director of Adaman Resources at all material times is the subject of dispute: Nipps v Remagen (No 1) at [10].

7    Mr Fitzgerald is the chief financial officer and company secretary of Adaman Resources. He is also the company secretary of the subsidiaries in the Adaman Group. His affidavit discloses that he was actively involved in the events leading up to the appointment of the Administrators and was included in meetings with, relevantly, the Directors.

8    Craig Bradshaw is the chief executive officer (CEO) of Adaman Resources, and a director of some of its subsidiaries, being relevantly the fourth, fifth and eighth plaintiffs. According to the Fitzgerald Affidavit, Mr Bradshaw was present at the Adaman Resources Board meeting of 1 May 2021 when resolutions were passed appointing the Administrators to (relevantly) Adaman Resources and Adaman Minerals.

9    Rivet Finco Pty Ltd is a secured creditor of Adaman Gold pursuant to a syndicated loan note subscription agreement. The debt under the SLNSA was assigned to Rivet Finco on or about 23 April 2021. As explained in Nipps v Remagen (No 1) at [32], demand has been made under that agreement.

10    There is a dispute between, on the one hand, the Directors and, on the other, Remagen and its related parties, as to the circumstances of the appointment of the Administrators to Adaman Resources and Adaman Minerals. The dispute is the subject of the Separate Proceedings: Nipps v Remagen (No 2) at [6]. However, it is important context that each of the emails over which privilege is claimed was written in the period immediately preceding the appointment of the Administrators (that is, between 16 April 2021 and 30 April 2020) and at a time when, at least until 4.15 pm on 30 April 2021, Mr Raftery was also a director of Adaman Resources.

11    This application concerns nine emails. They are listed in schedule 1 to these reasons. I have amended the schedule (which reproduces the information in a schedule prepared by Mr Madders) by deleting references to claims for litigation privilege (not pursued) and common interest privilege (not relied upon). There was little dispute between the parties about the principles to be applied, although it will be necessary to address some of those principles in further detail. However, Remagen's main contention is that Mr Madders, in providing the advice to which he refers in his affidavit and for which privilege is claimed, was not acting for the Interested Parties but for Adaman Resources.

Mr Madders' evidence

The retainer

12    Mr Madders deposed as follows (the second plaintiff being Adaman Resources):

Since 16 March 2021, I have been engaged as an in-house lawyer by Blondie Trading Pty Ltd (Blondie) on behalf of the Rivet Group of Companies (Rivet Group). For the purposes of my employment, the Rivet Group comprises Blondie, its related bodies corporate, and any entity that is connected with Blondie by a common interest in an economic enterprise.

The Chief Executive Officer, majority shareholder and Chairman of Blondie is Mark Rowsthorn, to whom I directly report. Mr Rowsthorn is also a director, Chairman and shareholder of the second plaintiff.

While employed for the Rivet Group, I am required to perform the duties assigned to me by Blondie and any other duties reasonably required by the Rivet Group. In this way, I am not limited by my contract of employment to providing legal advice only to entities or people within the Rivet Group, and am from time to time directed by Mr Rowsthorn to provide legal advice to entities and people other than my employer.

Shortly after I was engaged by Blondie, Mr Rowsthorn introduced me to John Fitzgerald, Daniel Sweeney, and Nicholas Anderson (collectively, with Mr Rowsthorn, the Interested Parties). Mr Fitzgerald is the company secretary of the second plaintiff and Mr Sweeney and Mr Anderson are directors of the second plaintiff. During our introduction, Mr Rowsthorn explained to the Interested Parties that whilst I was employed by Blondie on behalf of the Rivet Group, I was available to provide them with legal advice and could provide advice on various legal issues, including their directors' duties. I did not know Mr Fitzgerald, Mr Sweeney or Mr Anderson before this introduction.

Immediately from the introduction, each of the Interested Parties engaged me for legal advice, either by emails, calls or at meetings, which legal advice was provided to each of them.

Documents 1, 2 and 3

13    Mr Madders gave evidence as to the basis for the privilege claims for the 9 relevant emails and attachments. As to the first group, he deposed:

Documents 1 to 3 are part of the same email chain dated 16 April 2021.

Document 3 is the primary document in the chain, and comprises two emails from me to the Interested Parties and Craig Bradshaw, requesting instructions from the Interested Parties about the attachments to the emails. I prepared both attachments at the request of Mr Rowsthorn on behalf of the Interested Parties. The first attachment is a draft of the minutes of a meeting of the board of directors of the second plaintiff held 15 April 2021. The second attachment is a draft of a shareholder emergency capital request, discussed at the meeting on 15 April 2021. I included Mr Bradshaw in my email as he was present at the meeting of the board on 15 April 2021.

Documents 1 and 2 comprise a continuation of the email chain commenced by document 3, and comprises instructions and confirmation of instructions.

In the lead up to the creation of documents 1 to 3, the Interested Parties (individually and collectively) asked me to provide legal advice on the interpretation of the constitution of the second plaintiff, the interpretation of the shareholders agreement referred to at paragraph 16(b) above, the potential liability of officers of the second plaintiff if the second plaintiff were to trade while insolvent, and corporate governance generally. It was in that context that I prepared document 3 and its attachments.

Document 4

14    As to document 4, Mr Madders relevantly said:

Document 4 is an email from me to Mr Fitzgerald and Mr Bradshaw, copied to Mr Rowsthorn, Mr Anderson and Mr Sweeney, with two attachments, in which I provide legal advice to the Interested Parties and request instructions from them in relation to matters set out in the email, and its attachments. The first attachment is a draft of the minutes of a meeting of the board of directors of the second plaintiff held 19 April 2021, which I prepared at the request of Mr Rowsthorn on behalf of the Interested Parties. The second attachment is an excel spreadsheet which is referred to in, and is an attachment to, the minutes of the meeting. I included Mr Bradshaw in my email as he was present at the meeting of the board on 19 April 2021.

In the lead up to the creation of document 4, the Interested Parties (individually and collectively) asked me to provide advice relating to the duties and liabilities of officers of the second plaintiff in the context of insolvency and in relation to their duties to act in the best interests of the second plaintiff. Document 4 was brought into existence during the course of me providing advice regarding the foregoing issue, and for the dominant purpose of giving such advice to the Interested Parties.

Documents 5, 6, 7 and 8

15    As to the emails passing between one of the Administrators, Mr Wight, and Mr Madders between 28 and 30 April 2021, Mr Madders relevantly said:

At the time I sent my emails to Mr Wight it was contemplated that he might be an administrator of the second plaintiff. Before sending the emails in documents 5-8, I spoke with Mr Wight about sending material about the administration to him, and he told me I could share confidential materials with him. That was the basis on which I wrote to, and shared information with, Mr Wight.

In the lead up to the creation of documents 5, 6, 7 and 8, the Interested Parties (individually and collectively) asked me to provide legal advice as to the process for the appointment of administrators. Documents 5, 6, 7 and 8 were brought into existence in this context, as confidential communications with Mr Wight to receive views and information, including about documents in connection with the voluntary administration of the second plaintiff, for the purpose of providing the Interested Parties with the legal advice they sought from me. In each of documents 5-8 I asked Mr Wight questions connected with the voluntary administration process to obtain information for the purpose of providing the Interested Parties with legal advice. These questions related to the process to follow in the voluntary administration process such as whether one set of appointment documents may be used for all of the companies for the Adaman Group rather than a set of appointment documents for each entity. I asked these questions because I have never been involved in a voluntary administration process before.

Documents 7 and 8 contain attachments.

The attachment to document 7 is a run sheet that I prepared in connection with the voluntary administration of second plaintiff. It is watermarked privileged and addressed to, and intended for, Mr Rowsthorn and Mr Anderson and I prepared it as a way of communicating the legal advice it contains to Mr Rowsthorn and Mr Anderson. I provided a copy of the run sheet to Mr Wight on a confidential basis as the incoming administrator following a meeting with him where he said to me words to the effect of 'provide any relevant documents to me in advance of the appointment'.

The attachments to document 8 are drafts of a letter of demand, board minutes, appointment documents for voluntary administration and a pre-appointment remuneration letter. I prepared each of these attachments and provided them to Mr Wight on a confidential basis.

Before I sent the email that is document 8 to Mr Wight, I printed the documents which were to be the attachments and went through them in person with Messrs Rowsthorn and Anderson. I separately went through the documents with Mr Fitzgerald on the phone.

After those conversations, I sent document 8 and its attachments to Mr Wight on a confidential basis. I did that in order to obtain his views on the appointment documents only, including whether the appointment documents were in proper form, for the purpose of me giving legal advice to the Interested Parties about the documents and the process for the voluntary administration of the second plaintiff. I wanted Mr Wight to confirm that he was comfortable with one set of appointment documents being used for all of the companies for the Adaman Group rather than a set of appointment documents for each entity. Mr Wight had previously arranged to send me precedents of the appointment documents which I had populated. I attached the letter of demand to this email for Mr Wight's information only and on a confidential basis.

Document 9

16    As to document 9, Mr Madders deposed:

Document 9 is an email from me to Mr Rowsthorn, copied to Mr Anderson and Mr Fitzgerald, forwarding an email attachment (being a letter of demand) from an employee of SMS Mining Services Pty Ltd to Mr Fitzgerald for the second plaintiff. In document 9, I provide legal advice to Mr Rowsthorn, Mr Anderson and Mr Fitzgerald in connection with the letter of demand.

17    I also note that according to schedule 1, document 9 contained comments regarding counsel's opinion. I infer that disclosure may have the effect of disclosing counsel's opinion, an opinion that can readily be accepted to be confidential and of the nature of legal advice.

Principles

18    Legal professional privilege may take two forms - advice privilege or litigation privilege. Legal advice privilege covers communications between a lawyer in their professional capacity and the client if the communications are confidential and for the dominant purpose of seeking legal advice: The Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission [2002] HCA 49; (2002) 213 CLR 543 at [9] (Gleeson CJ, Gaudron, Gummow and Hayne JJ).

19    The High Court in Glencore International AG v Commissioner of Taxation [2019] HCA 26; (2019) 265 CLR 646 confirmed that legal professional privilege is an immunity from compulsion to produce documents, its justification to be found in the public interest of the enhancement of the administration of justice by facilitating the representation of clients by legal advisors: at [21]-[29].

20    It will not always be the case that advice is given to directors as the directing mind and will of the company. There are occasions where directors will seek and are entitled to seek advice in their personal capacity. It cannot be assumed that advice they may seek is for the benefit of the company, and so potentially available to all directors and then to any liquidators of a company going forward. Advice on matters such as conflicts, personal duties and obligations and the ramifications of any breach are perhaps obvious examples where advice may be sought and given to directors in their personal capacity. Other examples include where allegations are made against one director by other directors on behalf of the company. The director is clearly entitled to obtain confidential legal advice as to their personal position and there is no obligation to disclose such advice to the company or other directors. Directors should be free to seek such advice without the threat of compulsory disclosure.

21    Even where advice is given to a company, it will not always be the case that all directors are entitled to inspect it: see authorities collected in Hammond v Quayeyeware Pty Ltd [2021] FCA 293 at [196]-[200]. Privilege may be asserted against some directors. However, that is not an argument relied upon by the Interested Parties in this case - they maintain that they received the advice personally.

22    The present scenario is not straightforward. Mr Madders does not purport to have a formal written retainer clarifying his role. His role as in-house counsel for a group which has links to a creditor of subsidiary members of the Adaman Group suggests he is at risk of being in a position of conflict in providing advice. Some of his purportedly confidential communications have been copied to Mr Bradshaw who is not a director, but the CEO. Some of his purportedly confidential communications have been with Mr Wight, one of the Administrators. Remagen has raised these matters, and, in fairness, it should be noted that Remagen did not have Mr Madders' affidavit evidence at the time it queried and sought to challenge the privilege claims and filed its written submissions.

23    Having regard to those matters, some further principles should be recorded.

24    A contract of retainer is not essential to the existence of a relationship between lawyer and client or to the existence of client legal privilege: Hawksford v Hawksford [2008] NSWSC 31 at [17] (White J); and Rambaldi v Mullins (No 2) [2016] FCA 977 at [196] (Murphy J).

25    A client in relation to a lawyer is a person for whom the lawyer performs legal services and whether a relationship of that kind exists is to be determined by reference to the intentions of the parties objectively ascertained: Apple Computer Australia Pty Ltd v Wily [2002] NSWSC 855 at [7] (Barrett J).

26    The party claiming privilege has the onus of demonstrating the dominant purpose of the communication. The onus might be discharged by evidence of the circumstances and context in which the communication occurred or by evidence of the purpose of the person who made the communication. It might also be discharged by reference to the nature of the document itself: AWB Limited v Honourable Terence Rhoderic Hudson Cole (No 5) [2006] FCA 1234; (2006) 155 FCR 30 at [44] (Young J) (AWB (No 5)). The purpose is determined objectively, and is not necessarily conclusively informed by the subjective intention of the communicator: AWB (No 5) at [44].

27    The Court has power to examine the communication, but that power is discretionary: Grant v Downs (1976) 135 CLR 674 at 689 (Stephen, Mason, Murphy JJ). If there is a dispute it should not hesitate to inspect: AWB (No 5) at [44].

28    Privilege is not established by the use of verbal formula or by assertion that the communication involved 'legal advice': AWB (No 5) at [44]. However, where the parties have put evidence before the court beyond the use of a verbal formula, the court should not unnecessarily pay regard to material which cannot be known to the party challenging the claim to privilege: State of New South Wales v Jackson [2007] NSWCA 279 at [24] (Giles JA, Mason P and Beazley JA agreeing). Therefore, such material that is in evidence should be considered before deciding whether or not it is appropriate to inspect.

29    Legal advice extends to advice as to what should prudently and sensibly be done in the relevant legal context: AWB Limited v Honourable Terence Rhoderic Hudson Cole [2006] FCA 571; (2006) 152 FCR 382 at [100] (Young J) (AWB (No 1)).

30    Legal professional privilege extends to any document prepared by a lawyer or client from which there might be inferred the nature of the confidential advice sought or given: Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501 at 569 (Gummow J).

31    Confidential communications between a client and third party made for the purpose of the lawyer providing advice to the client may remain privileged notwithstanding that the advice is also communicated to a third party who is not an agent of the client: Pratt Holdings Pty Ltd v Commissioner of Taxation [2004] FCAFC 122; (2004) 136 FCR 357 at [41]-[42] (Finn J). The question is what was the intended use (or uses) for which the communications were brought into existence. If a communication is made for the dominant purpose of a client seeking and obtaining legal advice from its lawyer, the dominant purpose test will be satisfied: Archer Capital 4A Pty Ltd as trustee for the Archer Capital Trust 4A v Sage Group plc (No 2) [2013] FCA 1098 at [22] (Wigney J); Pratt Holdings at [35]; and State of New South Wales v Betfair Pty Ltd [2009] FCAFC 160; (2009) 180 FCR 543 at [29], [40] (Kenny, Stone and Middleton JJ).

32    It follows that if a communication is not solely as between lawyer and client but as between multiple persons, for example where a document is communicated by its author to several other persons, including the author’s legal adviser by (for example) a circular email, it is also important to ask what was the dominant purpose of that email communication: AWB (No 1) at [107], [114].

33    Further, the inclusion of a third party in a communications between a client and a lawyer will not waive privilege unless the inclusion of a third party in the communication means that the communication is no longer confidential. That question will be answered by determining whether the person who made the communication, or the person to whom the communication was made, was under an express or implied obligation not to disclose its contents: Slea Pty Ltd v Connective Services Pty Ltd [2017] VSC 361 at [23] (Almond J).

34    Legal professional privilege may be waived expressly or impliedly if anything is done that is inconsistent with the maintenance of the confidentiality of the communication where the Court, informed by considerations of fairness, considers that the conduct is inconsistent with the maintenance of the privilege: Mann v Carnell [1999] HCA 66; (1999) 201 CLR 1 at [28]-[29] (Gleeson CJ, Gaudron, Gummow and Callinan JJ).

35    The onus of establishing waiver lies upon the party seeking to displace the existence of the legal professional privilege: Betfair at [29], [40].

Consideration

36    Remagen contends that:

(a)    the Court has only Mr Madders' evidence as to the purpose of the advice he gave and to whom and so it should be treated with caution;

(b)    viewed properly, Mr Madders was providing advice to the Interested Parties as the officers and company secretary of Adaman Resources, being the controlling mind of Adaman Resources, and not in any individual capacity;

(c)    so much is supported by the nature of the advice, being advice as to matters that would properly be given to the company and not the Interested Parties personally, and the fact that Mr Fitzgerald was not a director of Adaman Resources;

(d)    so much is also supported by the fact that Mr Madders was employed by the Rivet Group, said to include a secured creditor of members of the Adaman Group, and Mr Madders would be in a clear position of conflict and unable to provided independent advice to the Interested Parties; and

(e)    further, the inclusion of Mr Bradshaw and Mr Wight in communications supports a conclusion that advice was given to the company, or, further as to the communications with Mr Wight, a conclusion that any privilege was waived.

37    I am satisfied that there was a lawyer and client relationship between Mr Madders and the Interested Parties, and that he provided advice to the Interested Parties and not to Adaman Resources (whether or not all communications were confidential in nature is another question to which I will return). I have formed this view taking into account a number of matters.

38    Importantly, Mr Madders gave express evidence to that effect in his affidavit and was not cross-examined. He was quite specific about the persons for whom he acted and, for example, there is no suggestion that he acted for all directors (it being uncontentious that Mr Raftery was also formally a director up until 30 April 2021, although his position from that date onwards remains in dispute). Mr Madders was specifically introduced to (only) Mr Fitzgerald, Mr Sweeney and Mr Anderson. At the time that he was introduced to them, he was told that he could give them advice on directors' duties. Mr Madders said that he gave advice to each of them.

39    Mr Madders gave evidence (set out above) as to the purpose and nature of the advice he provided to the Interested Parties. That included, he said, legal advice on the interpretation of the constitution of Adaman Resources, the interpretation of the shareholders agreement, the potential liability of officers of Adaman Resources if it were to trade while insolvent and corporate governance generally, and legal advice about the documents and the process for the voluntary administration of Adaman Resources. Some of that advice can reasonably be assumed to be advice of a personal nature, for example advice as to personal obligations and duties. Some of the advice sought was broader and may have included the type of advice that might be sought by a company itself. However, the mere fact that a company might also seek such advice does not necessarily mean that if directors seek the advice they are doing so on behalf of the company. They may well have a personal interest in understanding those matters, particularly in the context of the administration regime where directors are empowered to resolve to appoint administrators to a company. Therefore, the nature of the advice sought itself does not persuade me that Mr Madders was providing advice to the Interested Parties in their capacity as the controlling mind of Adaman Resources, and so was advising the company.

40    Mr Fitzgerald was not a director of the company, but its company secretary. It was submitted that his duties and obligations to the company are distinct from those of a director, and so it is unclear why he would have received advice about, for example, directors' duties. However, as an officer of the company who was very much personally involved in the events and meetings of April 2021, I do not find it surprising that he might seek advice about his personal position that might assist him, for example, in carrying out his duties and in assisting the Directors in the exercise of their duties. I am not persuaded that the distinction in formal roles between Mr Fitzgerald and the Directors in the context of this matter, having regard to the history of the appointment of the Administrators, is sufficient to justify a conclusion that Mr Madders was not advising the Interested Parties in their personal capacity.

41    Remagen also relies on the presence of Mr Madders at two meetings of the Board of Adaman Resources, held on 15 April 2021 and 19 April 2021. Mr Madders did not mention his attendance in his affidavit (and it would have been preferable for completeness had he done so). The minutes record that Mr Madders attended but do not record that he said anything or provided any advice.

42    Remagen submitted that it should be inferred from the minutes and from the fact that he drafted the minutes that he was present in order to give advice about the matters being discussed, those matters being related to the company, such as the need for further capital raising, and not matters that related to the Interested Parties personally.

43    Further, counsel relied on the following extract from the minutes:

The Chairman noted that Adaman had received advice that there was a mechanism in Adaman's constitution for Adaman to achieve a quorum in certain circumstances where a quorum could not be achieve to enable resolutions to be passed.

44    Counsel for Remagen submitted that this statement indicates that Mr Madders gave advice on that matter, and it was clearly advice given to the company.

45    I cannot responsibly infer that it was Mr Madders who gave such advice to the company. By that time, Gilbert + Tobin were acting for Adaman Resources. The wording suggests that the advice had already been received - not given at the meeting. I take into account that Mr Madders deposed separately to having provided advice to the Interested Parties on the constitution, but whether that was in relation to the quorum or other matters is unknown. Even if it were in relation to the constitution, the Interested Parties may have had a legitimate reason to seek that advice separately, having regard to their own duties and positions.

46    Counsel for the Interested Parties submitted that Mr Madders' presence is evidence of nothing further than the fact that he attended the meetings, and there is no reason why the Interested Parties could not invite their own lawyer to attend. I do not find the evidence as to Mr Madders' presence particularly useful in determining whether or not he was generally advising Adaman Resources or the Interested Parties. The fact of his attendance does not of itself outweigh Mr Madders' more specific evidence as to the nature of his role and the purpose for which the particular advice that is now the subject of the privilege claims was given.

47    Another relevant matter is the role of Gilbert + Tobin. Although the date from when they commenced advising is unclear, it is apparent that Gilbert + Tobin were advising the Adaman Group (or, at least, Adaman Resources) from around early April 2021. So much is apparent from communications between Gilbert + Tobin and the Administrators in the period prior to their appointment as Administrators, as reported in the Administrators' Declaration of Independence, Relevant Relationships and Indemnities (DIRRI) (see Nipps v Remagen (No 1) at [24]).

48    Remagen referred to the DIRRI (attached to the Third Nipps Affidavit) and it is useful to extract parts of it:

This appointment was referred to us by Gilbert & Tobin … who were recently approached by the Companies to provide legal work for them.

…

Barry Wight of Cor Cordis was contacted by Gilbert & Tobin by telephone around early April 2021 to enquire about the ability of the Cor Cordis Perth Office to undertake an insolvency-related appointment for a mining company.

In the period from early April 2021 to 27 April 2021 there were a few conversations between Barry Wight and Gilbert & Tobin regarding a potential insolvency appointment.

On 27 April 2021, Barry Wight attended a meeting with Gilbert & Tobin and certain directors of the Companies, namely Nicholas Anderson and Mark Rowsthorn, along with their in-house legal counsel.

On 28 and 29 April receptively, Barry Wight engaged in some communications with legal counsel representing the Companies in respect of the timing of the appointment of Administrators to the Companies and the documentation required to give effect to an appointment.

The purpose of the communications and meetings were to:

•    obtain sufficient information about the Companies and their financial position to discuss the solvency of the Companies;

•    explain the options available to the Companies and the nature and consequences of an insolvency appointment, and

•    consider providing a consent to act.

No remuneration was received for the above matters.

In our opinion, these matters do not affect our independence for the following reasons:

•    the Courts and relevant professional bodies specifically recognise the need for practitioners to provide advice on the insolvency process and the options available and do not consider that such advice results in a conflict or is an impediment to accepting an appointment;

•    the nature of the discussions and meetings is such that they would not be subject to review and challenge during the course of this appointment;

•    no advice was given as part of such meetings to any directors or former directors regarding their personal circumstances; and

•    the pre-appointment discussions and meetings will not influence our ability to be able to fully comply with the statutory and fiduciary obligations associated with this appointment in an objective and impartial manner.

49    This document is important. It confirms that Adaman Resources had separate representation by Gilbert + Tobin from around early April 2021. That is a strong factor suggesting that Mr Madders was separately representing the personal interests of the Interested Parties. The statement that no personal advice was given to the Directors at 'such meetings' regarding their personal circumstances is consistent with the position that Gilbert + Tobin were advising the company, not Mr Madders.

50    However, the DIRRI also contains this curious statement:

On 28 and 29 April respectively, Barry Wight engaged in some communications with legal counsel representing the Companies in respect of the timing of the appointment of Administrators to the Companies and the documentation required to give effect to an appointment.

51    I accept Remagen's submission that the reference to 'legal counsel' in the extract is a reference to Mr Madders, in contradistinction to Gilbert + Tobin. So much is consistent with the descriptions of documents 5, 6, 7 and 8 that are dated 28 and 29 April 2021. Mr Wight's statement reflects his subjective view that he communicated with Mr Madders on those occasions on the basis that information was being sought on behalf of the Companies. I address the significance of this when I address those documents specifically below, suffice to say at this point that Mr Wight's statement does not persuade me that Mr Madders was advising Adaman Resources generally or that Mr Madders was not providing legal advice to the Interested Parties.

52    Finally on the topic of the lawyer and client relationship, Remagen contends that Mr Madders had obligations to the Rivet Group, and because Rivet Finco, said to be part of that group, claims to be a creditor of Adaman Gold (although not Adaman Resources), Mr Madders was not in a position to provide independent advice to the Interested Parties. It follows, it was contended, that it is open to infer that any advice was given to Adaman Resources.

53    Remagen's submission is based on the line of authorities collected and discussed by Wigney J in Archer Capital 4A as to in-house counsel and independence: at [59]-[74]. The cases reviewed by Wigney J involved circumstances where the independence of the in-house employee counsel was questioned in the context of advice given to the employer company and whether it attracted privilege. His Honour referred to authorities that suggest that in addition to the dominant purpose test, in order for communications to be subject to legal professional privilege, there is a separate requirement that in-house counsel must act independently of their employer. If personal loyalties, duties or interests do not influence the professional legal advice given, then the requirement for independence will be satisfied. Relevant authorities include Australian Hospital Care (Pindara) Pty Ltd v Duggan [1999] VSC 131 at [37], [54], [67]-[68] (Gillard J); Seven Network Ltd v News Ltd [2005] FCA 142 at [4]-[5] (Tamberlin J); and Rich v Harrington [2007] FCA 1987 at [46] (Branson J).

54    In Dye v Commonwealth Securities Ltd (No 5) [2010] FCA 950 Katzmann J expressed the view (at [15]) that the content of the requirement of independence may have been overstated, observing that the view that legal professional privilege may be arise where the legal adviser is professionally qualified and acting in a professional capacity.

55    In Archer Capital 4A Wigney J concluded that:

[72]    I doubt that much turns on the apparent difference of opinion of Katzmann J in Dye and Branson J in Rich. Whilst Branson J considered that the requirement of independence was separate to the requirement that the communication meet the dominant purpose test, it is difficult to see how the two elements are not inextricably linked. A communication between a lawyer and his or her employer is unlikely to satisfy the dominant purpose test if the lawyer was not employed as a lawyer (that is, the relationship between the lawyer and the employer was not professional) or the lawyer was not consulted in his or her professional capacity as a lawyer (for example, if they were consulted to provide commercial advice, or provide an administrative service, or were consulted as a partner or officer of the firm or company, not as a lawyer). A communication between the lawyer and his or her employer in those circumstances would not be privileged because it would not meet the dominant purpose test, not because the lawyer was not independent. On the other hand, if the relationship between the employer and lawyer was professional (in the sense that he or she was employed as a lawyer) and they were consulted in that professional context to provide legal advice, the resulting communication is likely to satisfy the dominant purpose test. It is difficult to see any reason in principle why to attract privilege in those circumstances it would be necessary to also satisfy some element of independence on the part of the employed lawyer, for example, by proving that the lawyer was not subject to pressure or other interference arising from the employment relationship.

[73]    Were it necessary for me to decide, I would err on the side of concluding that there is no separate requirement of independence in the case of privilege claims where the relevant lawyer is an employed or in-house lawyer. The better view is that any requirement of independence on the part of an in-house lawyer is an aspect of the relationship between the lawyer and the employer (client) and the capacity in which the lawyer is consulted. Legal professional privilege will attach to a confidential communication between an employer and its employed solicitor if it is established that the communication arises as a result of the employer consulting the employed solicitor in a professional capacity in relation to a professional matter that arises from the relationship of lawyer and client.

56    Remagen was content that Wigney J's observations be adopted, however it relied on those observations in a scenario where Mr Madders was employed as in-house counsel not by the Interested Parties, but by the Rivet Group. Remagen did not contend that Mr Madders was quarantined from providing advice to the Interested Parties because of his duties to the Rivet Group, but rather submitted that Mr Madders would not have the requisite level of independence insofar as his relationship with the Interested Parties was concerned.

57    I accept that Mr Madders may well have been placed in a position where he was required to carefully consider whether his obligations to the Rivet Group prevented him from providing legal advice to the Interested Parties or might compromise that advice. That may well depend upon matters such as: first, the scope of his role for the Rivet Group; second, whether Mr Rowsthorn had sought or received any advice from him related to the Rivet Finco funding; and third, whether he had any other involvement in advising the Rivet Group on matters involving the alleged debt due by Adaman Gold to Rivet Finco and its enforceability or proof, or the Adaman Group affairs generally.

58    The evidence as to the first matter is limited, and as to the second and third, there is none. However, Mr Madders has said that he was entitled to provide legal advice to third parties, despite the terms of his employment, and that from time to time he was directed to do so. The Interested Parties knew that Mr Madders was employed by the Rivet Group but chose to seek his advice regardless. Mr Fitzgerald, Mr Sweeney and Mr Anderson must have known of Mr Rowsthorn's connection with the Rivet Group. However, there is no evidence they knew anything about Mr Madders' role with the Rivet Group that might have compromised his independence with respect to the advice they were seeking. There is no suggestion they expressed or had any concern about his capacity to provide them with independent advice. Mr Madders said he spoke with them separately and the nature of the advice that he provided appears to have been relevantly directed to circumstances pertaining to Adaman Resources, rather than about circumstances relating to Adaman Gold's indebtedness to Rivet Finco or relating to the Rivet Group more generally.

59    Ultimately, having regard to these matters, I have come to the view on the limited evidence before me that Mr Madders, when consulted by the Interested Parties, had the independence necessary to attract legal professional privilege in respect of communications that would otherwise satisfy the dominant purpose test.

60    I might add that objectively the position that Mr Madders found himself in - advising Mr Rowsthorn personally and third parties outside of the Rivet Group - is not without considerable risk when it comes to competing and conflicting interests: but the evidence does not go so far in this instance in itself to undermine the privilege claimed.

61    I will now turn to the particular documents.

62    I consider documents 1, 2 and 3 should be inspected by the Court. The reason the documents were provided to Mr Bradshaw is not clearly addressed. Whilst Mr Madders states that they were copied to Mr Bradshaw because he was present at the relevant meeting, he was the CEO of Adaman Resources, not a director, and it is not apparent on the face of the evidence why, if the documents were confidential, they were provided to the CEO, or how any circumstances of confidentially were relayed to him. Mr Madders does not state that any information was sought from Mr Bradshaw for the purpose of providing any advice to the Interested Parties. In light of these doubts, I consider that assessment of the merits of the claim for privilege would be aided by requiring the Interested Parties to produce the relevant documents for inspection by a judge of this Court to adjudicate the privilege claim. The documents might bear something on their face that assists in determining that question.

63    The same reasoning applies with respect to document 4, which was also provided to Mr Bradshaw, but as to which no instructions were apparently sought.

64    Documents 5, 6, 7 and 8 should also be produced for inspection by a judge of this Court. The difficulty in determining the claim absent inspection is that Mr Wight was provided with communications which, I infer from the contents of the DIRRI that I have noted above, he did not perceive to be communications as to which confidentiality in favour of the Interested Parties (as against in favour of Adaman Resources) attached. The documents were also provided in circumstances where it was anticipated Mr Wight would be appointed as an administrator of the company and so would have an ongoing position of control in relation to Adaman Resources (and the other plaintiff companies). It is also unclear why a Gilbert + Tobin lawyer (Peter Bowden) would have been included in some of the communications. Again, a review of the documents may assist in understanding the context in which it is claimed the advice contained in the communications was confidential and provided without any waiver of privilege. I have not disregarded the fact that the relevant emails are said to be marked 'legal professional privilege' or that Mr Madders said in his affidavit that Mr Wight told him he could share 'confidential' materials with him, but I maintain the view that there is sufficient uncertainty as to the basis upon which confidential documents were shared to justify inspection.

65    I am satisfied that the Interested Parties are immune from any obligation of production of document 9 on the basis of advice privilege. Whilst the letter of demand is not privileged, I accept that the dominant purpose of the email from Mr Madders, an email that apparently also disclosed comments of counsel, was to provide confidential legal advice about the demand to the recipients. I accept that officers of a company might seek personal advice about their position upon a company's receipt of a demand. I am not persuaded that any legal advice must have been provided by Mr Madders to the debtor company.

Orders

66    I will make an order for the production of the documents numbered 1 to 8 to the Perth Registry, marked to the attention of the District Registrar, and to be retained by the District Registrar unopened and on a confidential basis, so that they may be delivered in due course to the associate to a judge to be allocated by the National Operations Registry for the purpose of inspecting the documents and determining the privilege claims. It is not appropriate that I inspect the documents, having regard to my ongoing role in both this and the Separate Proceedings.

67    I will hear from the parties as to costs in due course.

Associate:

Dated:    10 June 2021

SCHEDULE 1

SCHEDULE OF PARTIES