Federal Court of Australia

CIP Group Pty Ltd v So (No 7) [2024] FCA 1437

ORDERS

THE COURT ORDERS THAT:

1.    The claim for privilege identified by Mr Marcus Watters in his submissions filed on 1 October 2024 be upheld.

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

REASONS FOR JUDGMENT

COLLIER ACJ:

1    On 4 September 2024, I made orders in this proceeding referable to an amended interlocutory application filed by the applicants and the 2nd to 13th respondents on 14 June 2024. Materially, I ordered as follows:

3.     By 16 September 2024, the legal representatives of the 22nd respondent are to review:

(a)     the documents identified in rows 1 to 5 (inclusive) and 7 to 13 (inclusive) in Annexure B of the CIP 19 August submissions;

(b)    the documents identified in Annexure C of the CIP 19 August submissions; and

(c)     the documents identified in rows 3, 14, 16 to 20 (inclusive) in Annexure D of the CIP 19 August submissions.

4.     Following the review in paragraph 3 above, by 16 September 2024, the legal representatives of the 22nd respondent is to identify to Marcus Watters, within:

(a)    the documents identified in rows 1 to 5 (inclusive) and 7 to 13 (inclusive) of Annexure B of the CIP 19 August submissions;

(b)     the documents identified in Annexure C of the CIP 19 August submissions;

(c)     the documents identified in rows 3, 14, 16 to 20 (inclusive) in Annexure D of the CIP 19 August submissions;

the documents which the legal representatives of the 22nd respondent consider:

(d)     should be produced to the other parties in the proceeding;

(e)     should be produced to the other parties in the proceeding but with redactions to be applied where there is a valid claim for legal professional privilege over the redacted parts or the redacted parts are irrelevant;

(f)     should not be produced to the other parties in the proceeding because there is a valid claim for legal professional privilege over the entirety of those documents or they are irrelevant.

5.     By 23 September 2024, Mr Watters is to file and serve any written submissions which identify and explain the basis for any opposition by him to the outcome of the review performed by the legal representatives of the 22nd respondent as reflected in the documents or parts thereof identified to be produced pursuant to paragraph 4 above.

6.     If Mr Watters makes submissions pursuant to paragraph 5 above, then:

(a)     by 26 September 2024, the legal representatives of the 22nd respondent will file and serve an affidavit exhibiting their version of the documents over which Mr Watters has identified a dispute and briefly identifying the reason for their proposal to produce each of the disputed documents or parts thereof;

(b)     Mr Watters’ claim for privilege, as identified by his submissions pursuant to paragraph 5 above, will be determined on the papers by the honourable Court; and

(c)     the 22nd respondent must not produce the documents identified in paragraph 4 above to the other parties in the proceeding until further order.

2    Before the Court are the submissions of Mr Marcus Watters, the receiver appointed by Ultimate Investment Portfolio Pty Ltd to various companies including the 2nd to 13th respondents in this proceeding (Receiver), made pursuant to those earlier Orders. Also before the Court is an affidavit of Ms Madelyne Louise Inch dated 8 October 2024, made by Ms Inch on behalf of the 22nd and 23rd respondents. The 22nd and 23rd respondents are respectively Mr Paul Wong, a lawyer with the law firm Thynne + Macartney, and the law firm Thynne + Macartney itself (respondents).

3    It is common ground that bills of costs were produced by the respondents to the Receiver, for whom they act as lawyers. Following my orders of 4 September 2024, Ms Inch of law firm Hall & Wilcox conducted a review of the relevant bills of costs. An outcome of the review was that 11 invoices, being bills of costs (11 invoices), be produced without specified redactions which had previously been made to those invoices (redactions in issue).

4    The Receiver opposed the removal of the redactions in issue, and maintained privilege over the 11 invoices as claimed in his earlier affidavits dated 19 July 2024 and 12 August 2024.

respondents’ affidavit

5    The grounds on which the respondents now seek the 11 invoices to be produced with the redactions in issue removed, are summarised in Ms Inch’s affidavit as follows:

(a)    the relevant entries are directly relevant to at least one issue raised by the pleadings in the proceeding; and

(b)    either there is no valid claim for legal professional privilege on the face of the relevant entries or, where there is a prima facie claim, there is no privilege because the fraud exception applies.

receiver’s submissions

6    In his submissions, the Receiver reiterated his position outlined in his earlier July and August affidavits to maintain privilege over all material, and made reference to his reliance on Carey v Korda [2012] WASCA 228.

7    Relevantly, the Receiver’s July affidavit disclosed the four categories referable to which the Receiver redacted entries in the 11 invoices:

    Category 1 – Document is privileged and confidential because it is a communication that shows a request made by the Receiver for legal advice or the content of legal advice given to him generally or on a particular point.

    Category 2 – Document is privileged and confidential because it discloses the existence of a request made by the Receiver for legal advice or the existence of legal advice given to him generally or on a particular point.

    Category 3 – Document is privileged and confidential because knowing its content, its existence or its timing (individually or as part of a sequence of work a person can identify from reading the Thynne + Macartney Invoices Schedules) would disclose the nature of legal advice given to the Receiver, or the matters he sought legal advice about, from which a person could discern matters considered by him when instructing Thynne + Macartney and counsel in the conduct of existing litigation or potentially contentious (future litigation) matters in the receivership. This includes information about the Receiver’s strategy during, and when trying to avoid or minimise the risk of, litigation,

    Category 4 – Document is privileged and confidential because it relates to the Receiver’s decisions about compromising, or trying to compromise, litigation and threatened litigation or disputes in the course of the receiverships.

8    The Receiver assigned each redacted entry a corresponding category for redaction in his July affidavit.

CONSIDERATION

9    Similar claims of privilege as made by the Receiver were examined by the Court of Appeal of Western Australia in Carey. In that case, in relation to a claim of legal professional privilege over a solicitor’s bill of costs made by a receiver, Murphy JA set out relevant principles as follows:

[62]    The privilege “may be availed of by a person to resist the giving of information or the production of documents which would reveal communications between a client and his or her lawyer made for the dominant purpose of giving or obtaining legal advice or the provision of legal services”: Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission [2002] HCA 49 ; (2002) 213 CLR 543 [9]. The privilege is available where the document expressly reveals the privileged communication, or where the content or nature of the privileged communication may be inferred from the document: Commissioner of Australian Federal Police v Propend Finance Pty Ltd [1997] HCA 3 ; (1997) 188 CLR 501, 569; AWB Ltd v Cole [2006] FCA 571 ; (2006) 152 FCR 382 [132]–[133].

[63]     A solicitor’s bill of costs may fall into that category of document: Commissioner of Australian Federal Police v Propend Finance Pty Ltd (569) per Gummow J; Ainsworth v Wilding (1900) 2 Ch 315 at 325; Packer v DCT [1985] 1 Qd R 275 at 282; Lake Cumbeline Pty Ltd v Effem Food Pty Ltd (t/as Uncle Ben’s of Australia) (1994) 126 ALR 58 at 68; Hodgson v Amcor Ltd (No 2) [2011] VSC 204 [59]–[65]; R v Manchester Crown Court, Ex parte Rogers [1999] 1 WLR 832 at 839; Cook v Pasminco Ltd (No 2) [2000] FCA 1819 ; (2000) 107 FCR 44 [46]. This line of cases emanates from Chant v Brown (1852) 9 Hare 790; 68 ER 735. In that case, Mr Melton had a power of appointment in favour of any one or more of his children with regard to an estate which, in default of appointment, would go to all of the children. Mr Melton appointed the estate to one of his children, who concurred in mortgaging the property to a third party. A solicitor (Mr Brown) had acted for Mr Melton on the appointment, and for Mr Melton and the mortgagee on the mortgage, and had received the proceeds of the mortgage on behalf of Mr Melton. The proceeds of the mortgage were applied for Mr Melton’s benefit. Mrs Chant, one of Mr Melton’s other children, brought an action to set aside both the appointment that had been made, and the mortgage that had been entered into, on the grounds that the appointment was a fraud upon the power and the mortgagee had notice of the fraud. Mrs Chant also sued the solicitor. The plaintiff sought to interrogate the solicitor’s clerk about a document, a bill of costs, which the clerk had copied from a draft bill of costs which itself had been prepared from the attendance books of the solicitor. The plaintiff sought to tender the evidence to impeach the title of the mortgagee, which rested upon, ultimately, the validity of the appointment. The bill of costs made reference, amongst other things, to both the appointment and the mortgage. The Vice-Chancellor, Sir G J Turner, found that the solicitor’s bill of costs was privileged. His Lordship reasoned that the appointment and the mortgage were, in effect, one transaction and that the solicitor (who had acted for Mr Melton and the mortgagee) could not have been compelled to give evidence which could be used against the mortgagee. His Lordship stated that “[a]n attorney’s bill of costs is, in truth, his history of the transactions in which he has been concerned; and if he cannot be called to prove the facts I think his clerk cannot be called to prove the history of them” (9 Hare 790, 794; 68 ER 735, 737). It appears that his Lordship was referring to the solicitor’s history, revealed in the bill of costs, of the instructions received and the advice given.

[64]    Whether, and to what extent a bill of costs is privileged, will depend upon a consideration of the circumstances in which the claim for privilege occurs, and the nature and details of the entries made in the bill in question.

[65]    An example of potential relevance to this case may be given. If the solicitor in a bill of costs recorded no more than “to my attending at settlement on X date in the sale of Y property to Z”, the entry would not ordinarily be privileged as it would not reveal the content or nature of legal advice sought or given. The attendance of the solicitor at settlement is, on this hypothesis, a matter to which no confidentiality attaches. The inference that the solicitor was instructed by the client to attend at settlement, and to give any consequential advice in connection with the settlement, would be drawn from the fact that the solicitor had attended at settlement. By the time the bill came to be issued, insofar as the client had instructed the solicitor to attend settlement and (it may be inferred) to give any necessary consequential advice in that regard, those instructions (at that level of generality), could no longer be regarded as a confidential communication.

[66]    In my view, at least where the existence of the retainer is no longer confidential, a useful guide in determining whether the bill of costs would reveal privileged communications, will often be whether disclosure of the bill would be tantamount to waiving privilege in the underlying communications with which the bill expressly or implicitly deals. The relationship between the two was observed by Tamberlin J in Lake Cumbeline v Effem Foods; cf AWB Ltd v Cole [135]–[139].

[67]    In Lake Cumbeline v Effem Foods, the applicants sued the respondents for misrepresentation, and part of the damages claimed included costs incurred by the applicants in other litigation. The nature of the applicants’ claim meant that, in general terms, the retainer of the solicitors in the other litigation was not, in itself, a matter of subsisting confidentiality. One of the questions before Tamberlin J was whether the applicants, by providing memoranda of fees and similar material in support of their damages claim, impliedly waived legal professional privilege in the underlying documents to which the memoranda of fees and the like referred. His Honour found that the privilege had not been waived by the disclosure of the memoranda of fees and other documents, and observed (68):

In Packer a distinction is drawn between detailed bills of costs and the ledger cards there under consideration which were made simply for the purpose of recording movements of money and which did not necessarily relate to matters referable to the relationship of solicitor and client. It is pointed out, for example, that a bill of costs sometimes embodies a solicitor’s history of the transaction and recites the nature of the professional service in respect of which it is proposed to charge fees. In such a case, if a bill of costs shows the nature of the instructions or the advice it will be privileged and disclosure of it may waive privilege. If it does not disclose such information then it will not be privileged and production of it will not amount to waiver.

…

The memoranda … are simply recording, in outline form, the work which has been undertaken by the solicitors and in respect of which the charges are raised and do not disclose the content of the communications, advices, briefs or conferences.

[68]    It is also conceivable that whilst none of several entries in a bill of costs might itself reveal, directly or by implication, the content or nature of legal advice given or received, the entries might, when read together and in sequence, enable an inference to be drawn as to the nature or content of some privileged communication. It is, at least in that sense, as I would understand it, that the solicitor’s chronological history of the transactions in a bill of costs may be “valuable” to the party seeking disclosure: cf Daily Express (1908) Ltd v Mountain (1916) 32 TLR 592 at 593; Packer v DCT (282, 285–286). However, insofar as individual entries in a bill of costs, in themselves, would disclose privileged communications, it would ordinarily be unnecessary to consider further whether the “history” narrated by the bill would yield an inference in that regard.

10    Further, as Murphy JA noted in Carey at [96], work done by a solicitor will often be of the non-privileged kind, such as writing letters to the other side. As was noted earlier, and as has been also made clear time and time again, privilege can only be asserted in respect of documents which would reveal communications between a client and his or her lawyer made for the dominant purpose of giving or obtaining legal advice or the provision of legal services.

11    In applying principles to the privilege claims before the Court of Appeal, Murphy JA went on to say:

[88]     Moreover, in the ordinary course, the elements of the claim to legal professional privilege should not be left to implication. Ordinarily it would be expected that they would be the subject of direct evidence by someone who is familiar with the nature and purpose of the underlying communications over which privilege is claimed.

[89]     For these reasons, in my view, the Receivers’ affidavit evidence was insufficient to ground properly the claims for privilege.

12    In the present case, unlike in Carey, the Receiver has given direct sworn evidence that privileged communications would be revealed should the redactions in issue be removed. In particular, I note the detailed evidence of the Receiver in his July affidavit as to why the redacted material should be privileged, such that the reasons for any privilege attaching would not be left to implication. I also note as relevant the Receiver’s concern about future litigation involving parties to these proceedings and him.

13    Further, examining the original material in the 11 invoices prior to the redactions in issue being made, I am satisfied that there is material which would reveal confidential legal advice given by the lawyers to the Receiver.

14    Finally, it is unclear to me how the fraud exception on which the respondents rely in this instance would apply in respect of legal advice given by a law firm to a receiver administering the property of a company under receivership.

15    On balance, I consider that the Receiver’s claim for privilege, as identified by his submissions filed on 1 October 2024, be upheld.

16    No submissions were made in respect of costs.

Associate:

Dated:    12 December 2024

SCHEDULE OF PARTIES