Wheeler & Ors t/as PricewaterhouseCoopers v Aoyin Group Ltd

The plaintiffs, the partners at the relevant time of PricewaterhouseCoopers (“PwC”), commenced these proceedings against Aoyin Group Limited (“Aoyin”) in the District Court of NSW to recover unpaid fees.

Aoyin brought a cross claim which caused the proceedings to be transferred to this Court.

By that cross claim, Aoyin contends that, in or about 5 February 2015, it engaged PwC to provide advisory and professional services in connection with the establishment of a locally-incorporated, authorised deposit-taking institution (“ADI”) and obtain regulatory authorisation from the Australian Prudential Regulation Authority (“APRA”) to carry on a banking business.

In its cross claim, Aoyin alleges that:

By its cross claim Aoyin alleges that, relevantly, PwC breached its contractual and general law duties of care in providing the advisory services in that, immediately after the allotment of shares in Aoyin, on or around 29 October 2015, PwC failed to (relevantly):

Aoyin claims damages for what it contends to be wasted expenditure incurred in pursuing this project from 29 October 2015 onwards.

The proceedings are set down for hearing for 8 days commencing on 17 May 2021.

I am now dealing with a dispute as to whether Aoyin has waived privilege in relation to communications it received between October 2014 and September 2015 from its then solicitors, Baker McKenzie.

Thus, by notice of motion filed on 10 February 2021, PwC seeks orders that Aoyin produce communications from Baker McKenzie in respect of which a claim for privilege has been made.

I have been greatly assisted by the written submissions I have received from counsel for PwC and Aoyin. Much of what appears in these reasons concerning uncontroversial background matters is taken with gratitude from those submissions.

Some measure of agreement has been reached in relation to this dispute.

What remains in dispute is whether Aoyin has waived privilege in relation to three categories of documents referred to in a subpoena that PwC has directed to Baker McKenzie.

Those documents are communications from Baker McKenzie to Aoyin in relation to:

PwC seeks the documents in [13(a) and (c)] for the period between the Information Memorandum (23 March 2015) and the Replacement Information Memorandum (11 September 2015) and the documents in [13(b)] for the slightly longer period from when Baker McKenzie first started acting for Aoyin (1 October 2014) to the date of the Replacement Information Memorandum (11 September 2015).

There is no dispute that, on the face of things, the documents sought are privileged.

The dispute is as to whether Aoyin has acted in a way that is inconsistent with its maintenance of that privilege.

In that regard, s 122(2) of the Evidence Act 1995 (NSW) provides that:

The relevant principles were recently summarised by Macfarlan JA [1] in GR Capital Group Pty Ltd v Xinfeng Australia International Investment Pty Ltd [2] where his Honour said: [3]

The documents sought are said by PwC to relate to the issues of whether:

There is no dispute that the documents are relevant.

Although the debate ranged more widely, I can resolve the issue by reference to evidence given by Aoyin’s founder, Mr Ou Yang (Owen) Chen in his affidavit of 13 November 2018 as follows:

In these paragraphs, Mr Chen gives evidence of advice given to Aoyin by Baker McKenzie in July 2015 (that is, within the range in which the documents sought are directed), that Aoyin should:

Mr Chen has here disclosed advice Baker McKenzie gave to Aoyin concerning, first, the general issue of transferability of its shares after allotment.

In those circumstances, I accept the following submissions made by Mr Nixon SC and Ms Bathurst for PwC:

This submission is directed to the proposition that Aoyin has waived privilege over documents concerning advice given by Baker McKenzie regarding “the restrictions on the transfer of shares” (see the reference in (c) to advice given by Baker McKenzie “about that very issue”). It follows from my acceptance of that submission that Aoyin should disclose documents in the category referred to at [13(c)] above, being advice Baker McKenzie gave concerning the transfer of, or transferability of, shares in Aoyin.

In the evidence set out at [21] above Mr Chen has also disclosed advice Baker McKenzie gave Aoyin concerning the need to demonstrate to APRA compliance with APRA’s Fit and Proper Requirement.

The “Client Document Checklist” referred to in the Information Memorandum and the Replacement Information Memorandum, in effect, reflected APRA’s Fit and Proper Requirement.

Thus, Mr Nixon and Ms Bathurst submitted, and it was not disputed, that:

In my opinion, it would be inconsistent for Aoyin:

For those reasons, PwC should be granted access to the documents produced by Baker McKenzie responsive to the categories referred to at [13(b)] above but confined to “the Client Document Checklist referred to in the Information Memorandum or the Replacement Information Memorandum”.

I did not detect any submissions from Mr Nixon and Ms Bathurst directed in terms to the remaining category referred to at [13(a)] (the issue or allotment of Aoyin shares generally). I can see no basis on which to conclude that Aoyin has waived privilege over that very broad category of documents.

For those reasons, I order that the Cross-Defendant be granted access to the documents within Packet 201700252324001-S-5 that are responsive to paragraphs 7 (subject to excision of the opening words “the IM or the Replacement IM, including”) and 8 of the subpoena and dated between 1 October 2014 and 11 September 2015.

As to the costs of PwC’s motion, my preliminary view is that costs should be PwC’s costs in the cause.

If either party contends for a different order, the parties should confer and agree on a timetable for short written submissions. I shall deal with any dispute on the papers.