In the matter of Metal Storm Limited (in liquidation) (receivers and managers appointed)

1. [1]

   HER HONOUR: I have been asked to determine whether a claim for litigation privilege made by the cross-claimant, The Australian Special Opportunity Fund LP (ASOF), is well-founded. The claim is made over three documents comprising communications between ASOF’s solicitor and an expert witness whom ASOF has decided not to call. The claim is challenged by the cross-defendant, Equity Trustees Wealth Services Limited (Equity Trustees).

Facts

1. [2]

   In April 2017, ASOF filed an affidavit of John Young attaching an expert report. In about mid-November 2019, ASOF decided not to rely on Mr Young’s report and informed Equity Trustees, who approached Mr Young to see whether he would give evidence in their case. On 16 November 2019, Mr Young sent an email to the solicitors for both parties asking whether there was any problem with him giving evidence for Equity Trustees. Mr Young also forwarded to both parties a portion of a letter from ASOF’s former solicitors, retaining him on 23 November 2016. ASOF’s solicitor replied that, although he would respond more completely the next day, Mr Young’s obligation of confidentiality was said to be owed to ASOF rather than ASOF’s former solicitors. On 17 November 2019, Mr Young rejoined, saying that he considered his contract with ASOF’s former solicitors to be invalidated for non-payment and also considered that his company, JY Strategies LLC, had no contract with ASOF.

2. [3]

   On 18 November 2019, ASOF’s solicitors sent an email to Mr Young attaching a letter over which a claim for privilege is made.

3. [4]

   On 20 November 2019, Equity Trustees’ solicitors communicated with ASOF’s solicitors and Mr Young, seeking to ascertain whether ASOF’s solicitors had written to Mr Young “more completely” as indicated and also suggesting to Mr Young that he was at liberty to be called as Equity Trustees’ witness.

4. [5]

   On 21 November 2019, Mr Young sent an email to ASOF’s solicitor over which a claim for privilege is made. On 22 November 2019 at 7.17 am, ASOF’s solicitor replied to Mr Young and a claim for privilege is made over that email as well.

5. [6]

   At 10.40 am on 22 November 2019, Mr Young sent an email to Equity Trustees’ solicitor advising:

6. [7]

   Equity Trustees asked Mr Young for a copy of the letter to which he referred and gave various assurances that it was not seeking to infringe upon his obligations of confidentiality and also suggested that, if he gave evidence, he was subject to various protections under Australian law. Mr Young replied:

7. [8]

   On 22 November 2019, Equity Trustees served a Notice to Produce on ASOF calling for communications with Mr Young from 1 November 2019 on. On 26 November 2019, the final hearing in these proceedings commenced.

Evidence and submissions

1. [9]

   An affidavit has been sworn by ASOF’s solicitor in support of the claim for privilege, deposing at [6]:

2. [10]

   ASOF submitted that the evidence of its solicitor clearly supported a claim for litigation privilege and the mere fact that a party decides not to call a witness does not have the result that any communications with that witness fall outside section 119 of the Evidence Act 1995 (NSW). Equity Trustees submitted that, as ASOF had already made a decision not to call Mr Young at the time of the communications in question, then any communications with Mr Young after having made that decision did not satisfy the requirements of section 119. Rather, Equity Trustees was concerned that the communications may have been directed to deterring Mr Young from giving evidence at all. Equity Trustees submitted that the Court should inspect the documents and ASOF did not oppose this course, and I have done so.

Law

1. [11]

   Section 119(a) of the Evidence Act provides:

2. [12]

   I have not found a case with similar facts to those at hand, but the principles are not controversial. ASOF bears the onus of establishing its claim for privilege and this is not achieved simply by resort to a verbal formula or ritual: Grant v Downs (1976) 135 CLR 674 at 689 per Stephen, Mason and Murphy JJ; Mitsubishi Electric Australia Pty Ltd v Victoria WorkCover Authority (2002) 4 VR 332; [2002] VSCA 59 at [11] per Batt JA, with whom Charles and Callaway JJA agreed. As Young J explained in AWB Ltd v Cole (No 5) (2006) 155 FCR 30; [2006] FCA 1234 at [30]: (citations omitted)

3. [13]

   In 789Ten Pty Ltd v Westpac Banking Corporation Ltd (2005) 215 ALR 131; [2005] NSWSC 123, Bergin J noted at [41] that “professional legal services” is not defined in the Act and her Honour had regard to a definition in the then Legal Profession Act 2004 (NSW) (now in section 6 of the Legal Profession Uniform Law (NSW)). At [44]:

4. [14]

   Her Honour, at [41], relied on the following exposition of “in relation to” from Law Society of New South Wales v Bruce (1996) 40 NSWLR 77 at 84, per Giles CJ at Comm D:

5. [15]

   The question of fact is whether the communications between ASOF’s solicitor and Mr Young were for the dominant purpose of ASOF being provided with professional legal services relating to these proceedings. The affidavit of ASOF’s solicitor does not assist greatly as he has recited the words of section 119(a) but has not provided underlying facts to support a finding as to how these communications are the embodiment of that section.

6. [16]

   Having read the three documents, it seems to me that the dominant purpose of the communications was for ASOF’s solicitors to inform Mr Young of ASOF’s position in respect of his retainer of 23 November 2016: the parties to the retainer, its terms, whether the retainer remained on foot, the obligations of the parties and whether each had performed their obligations, the suggested contractual consequences of Mr Young’s actions, both past and contemplated, and what ASOF had instructed its solicitors to do about this.

7. [17]

   It is not clear, on the face of the documents, how this purpose falls within the description of providing ASOF with professional legal services relating to these proceedings. The affidavit of ASOF’s solicitors does not provide other facts which shed light on the matter. Whilst an ancillary effect of the communications, perhaps unintended, was to discourage Mr Young from giving evidence, the dominant purpose is to put forward a contractual construction of Mr Young’s retainer in circumstances where the client has decided not to use his services further in these proceedings. It does not appear to me on the available evidence to meet the requirements of section 119(b). ASOF has not discharged the onus of establishing litigation privilege.