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(A.C.N. 001 058 138) First Applicant AND: LINDSAY JAMES THOMPSON Second Applicant AND: METWAY BANK LIMITED (A.C.N. 010 831 722) Respondent AND. BETWEEN: METWAY BANK LIMITED (A.C.N. 010 058 138) Cross Claimant AND: LANGWORTH PTY, LTD. (A.C.N, 011 058 138) First Cross Respondent AND: LINDSAY JAMES THOMPSON Second Cross Respondent IUDGE MAKING ORDER: Cooper J. WHERE MADE: Brisbane DATE OF ORDER: 31 October, 1994 MINUTES OF ORDER THE COURT DIRECTS THAT: 1. Within seven (7) days of today the applicants file and serve an affidavit deposing as to whether they or either of them has within its or their power, possession or control any document relating to the actual payment to the first applicant of the sum of $50,000.00 as a loan from a Mr. Bowers and the expenditure of that money as part of the construction costs of the works at Darra, Queensland. 2. If the applicants or either of them has in its or their power, possession or control any document satisfying the descnption in Direction 1 above, the applicants shall produce the same for inspection of the respondent within seven (7) days of the filing of the affidavit referred to 1n Direction 1 above and file a supplementary list of documents including the said documents, if any, within fourteen (14) days of today. The respondent produce for inspection of the applicants documents Al - A42 inclusive set forth in Part Two of Schedule | to the respondent's hist of documents. THE COURT ORDERS THAT: Save in respect of the orders and directions made on 16 July, 1993 and 2 September, 1993, and the directions 1 and 2 above, the respondent's applications as claimed in the notices of motion filed on 18 May, 1993 and 6 August, 1993 be dismissed. Save in respect of the orders and directions made on 16 July, 1993 and 2 September, 1993 and Direction 3 above, the applicants' applications as claimed in the notices of motion filed on 16 July, 1993 and 2 September, 1993 be dismissed. The respondent pay the applicants' exghty percent (80%) of their costs of and incidental to their notices of motion and their defence of the respondent's notices of motion (other than the costs of the hearing on 2 September, 1993) to be taxed if not agreed. The applicants pay the respondent eighty percent (80%) of its costs of and incidental to the notice of motion filed on 18 May, 1993 and the hearing of that motion on 16 July, 1993 to be taxed if not agreed. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. QUEENSLAND DISTRICT REGISTRY GENERAL DIVISION N 14 of BETWEEN: LANGWORTH PTY, LTD, (A.C.N. 001 058 138) First Applicant AND: LINDSAY JAMES THOMPSON Second Applicant AND: METWAY BANK LIMITED (A.C.N. 010 831 722) Respondent AND BETWEEN: METWAY BANK LIMITED (A.C.N. 010 058 138) Cross Claimant AND: LANGWORTH PTY. LTD. (A.C.N. 011 058 138) Fizst Cross Respondent AND: LINDSAY JAMES THOMPSON Second Cross Respondent CORAM: Cooper J. PLACE: Brisbane DATE: 31 October, 1994 REASONS FOR JUDGMENT The applicants commenced proceedings against the respondent by application filed on 31 July, 1992. The proceedings arise out of the first applicant obtaining from the respondent loan funds for a property development at Darra, 2. Queensland, and the engagement of one Garth Donnelly as builder. It is alleged by the applicants that the respondent was responsible for valuing the progress of the works and approving and paying the progress claims. It 1s alleged that the respondent defaulted in its duty to the applicants in discharging these functions and breached its obligations to them whereby the first applicant sustained substantial losses. It 1s further alleged that the respondent induced the first applicant to engage Donnelly as builder by representing that Donnelly was a customer of the bank, a competent builder and financially secure. In fact, it 1s alleged that Donnelly was indebted to the bank for a sum in excess of $1,000,000.00 at the time of the representation, which sum the bank was attempting to recover, and further that Donnelly defaulted in performance of the works. In consequence of the failure of Donnelly to complete the works the first applicant alleges that it sustained substantial damages. The first applicant seeks damages both at common law and under the Trade Practices Act 1974 (Cth) and other relief. The second applicant seeks relief under that Act in respect of a personal guarantee given by him to the respondent as a condition of the loan to the first applicant. The respondent cross-claimed against the applicants to recover the monies outstanding on the loan made by the respondent to the first applicant. On 13 October, 1992 the respondent filed a notice of motion seeking judgment on its cross-claim. The matter came before Beaumont J. on 29 October, 1992. 3. His Honour gave directions for the filing of material by the parties as the summary relief sought by the respondent was contested. Otherwise, he adjourned the notice of motion to a date to be fixed. The timetable fixed by Beaumont J. was not adhered to and the matter was re-listed before Drummond J. on 24 November, 1992. On that occasion his Honour extended the time for the first and second applicants filing any material in reply to the respondent's affidavit material until 4.00 p.m. 27 November, 1992. His Honour also gave the respondent leave to move on | December, 1992, on twenty-four (24) hours notice to the first and second applicants, for an order striking out the application in default of compliance with the directions. On 30 November, 1992 the respondent moved to strike out the applicants' statement of claim for non-compliance with the time limit set by Drummond J. and for judgment on its cross-claim. On i December, 1992 the notice of motion filed on 13 October, 1992 and the notice of motion filed on 30 November, 1992 came on for hearing before Lee J. On that date he ordered as follows :- "ON THE CROSS-CLAIMANT'S MOTION FILED ON 13 OCTOBER 1992: 1. Interlocutory judgment be entered on cross-claim in the sum of $350,000.00 and the cross-respondent have leave to defend the balance of cross-claim subject to the condition that no execution on that judgment to issue and no reliance upon that judgment to ground any petition to wind-up the first cross-respondent without leave of the court being obtained which leave 4. may be applied for on three clear days notice in the event that the cross-respondent default in complying with any other order by way of direction of the Court. The costs of the motion be costs in the cause of the cross-claimant, ON THE RESPONDENT'S MOTION FILED ON 30 NOVEMBER 1992: 1, 2. The motion be dismissed. Costs be costs in the cause." On 18 May, 1993 the respondent by notice of motion sought, following orders :- "1. (a) (b) That pursuant to Order 10 Rule 7 the First and Second Applicants' Amended Statement of Claim be struck out. Alternatively, that pursuant to Order 10 Rule 7 the First and Second Applicants make full and proper discovery by filing an Amended List of Documents within seven (7) days of the date of this Order specifically addressing but not limited to: The following classes of documents: (i) The Second Applicant's banking records; (ii) The First Applicant's financial records; (iii) The original Building Contract between the First Applicant and Garth Stephen Donnelly; (tv) The files maintained by Boland & Co; (v) The files maintained by Mr Brian Boland in his personal capacity; (vi) The Brisbane City Council approved plans; The failure by the First and Second Applicants to provide originals of documents numbered 47, 87, 91, 92, 95, 121, 122, 126, 127, 130, 131 132 and 133 from their List of Documents filed herein on 17 inter alia, the December 1992; (c) The failure by the First and Second Applicants to discover various items of correspondence between the First and Second Applicants, their Solicitors and various other parties. 3. That the Court remove the condition imposed by His Honour Justice Lee in orders made on 1 December 1992 on the interlocutory judgment in the sum of $350,000.00 entered in favour of the respondent on its cross-claim." On 16 July, 1993 the applicants filed in court a notice of motion seeking the following relief :- "1. That pursuant to Order 10 Rule 7 the Respondent Cross-Claimant's Defence and Cross-Claim be struck oul; 2. That Judgment be entered for the Applicants against the Respondent Cross-Claiming for damages to be assessed, together with the costs of the Application to be taxed; 3. Alternatively to 1 and 2, that the Respondent Cross- Claimant forthwith comply with paragraph 5 of the Order of Justice Lee made on the Ist day of December 1992." On 6 August, 1993 the respondent filed a further notice of motion seeking the same relief as the earlier notice of motion, save that paragraph 2 now read :- "2. Alternatively, that pursuant to Order 10 Rule 7 the First and Second Applicants make full and proper discovery by filing a further general List of Documents encompassing all relevant material that is or has been in the power, possession or custody of the First and Second Applicants within seven (7) days of the date of this Order." 6. On 2 September, 1993 the first and second applicants filed in court a notice of motion seeking the same relief as their earlier notice of motion filed on 16 July, 1993, save that paragraph 3 now read :- "3. Alternatively to 1 and 2, that the Respondent/Cross- Claimant make full and proper discovery by filing a further List of Documents encompassing all relevant material that is or has been in the power, possession or custody of the Respondent within seven (7) days of the date of this order." On the hearing of the notices of motion on 16 July, 1993 I ordered, inter alia :- "1. Pursuant to Order 10 Rule 7 the First and Second Applicants make full and proper discovery by filing an Amended List of Documents within seven (7) days of the date of this Order specifically addressing but not limited to: (a) The following classes of documents: (i) The Second Applicant's banking records; (ii) The First Applicant's financial records; (iii) The original Building Contract between the First Applicant and Garth Stephen Donnelly, (iv) The files maintained by Boland & Co.; (v) The files maintained by Mr Brian Boland in his personal capacity; (vt) The Brisbane City Council approved plans; (b) The failure by the First and Second Applicants to provide originals of documents numbered 47, 87, 91, 92, 95, 121, 122, 126, 127, 130, 131, 132 and 133 from their List of Documents filed herein on 17 December 1992; (c) The failure by the First and Second Applicants to discover various items of correspondence between the First and Second Applicants, their Solicitors and various other parties. 2. That inspection be given and taken of any further documents listed in the further affidavit of documents within 7. seven (7) days of the filing and service of the list of documents." The matter came on for further hearing on 2 September, 1993. On that occasion the second applicant, Lindsay James Thompson, was fequired for cross- examination on an affidavit sworn by him in relation to the ctrcumstances giving rise to the making of discovery by the first and second applicants, as was Mr. Bnan James Boland, a solicitor. As neither was available the notices of motion were adjourned to 1 October, 1993. The applicants were ordered to pay the costs of the adjournment. On 2 September, 1993 the respondent conceded that it held financial records of Donnelly which had not been discovered. In consequence I directed :- "3. That the respondent produce for inspection the microfiche copies, or prints from the microfiche, of the accounts maintained at the respondent bank by Donnelly, Murchison Holdings Pry. Ltd. and Flemistone Pry. Ltd. either alone or jointly or jointly with any other entity by 13 September, 1993." Although the majority of the complaints as to discovery were resolved on the two occasions, there remained two issues outstanding. The first related to the adequacy of the applicants' discovery and whether, in the circumstances as to what has occurred, the amended statement of claim ought to be struck out and the stay against execution of the interlocutory judgment lifted in order to enable the respondent to seek to enforce the interlocutory judgment by winding up if necessary. The second related to a claim of legal professional privilege made by the respondent in relation to copies of documents made or obtained by the respondent's solicitors as part of the respondent's preparation for trial. The basis of the respondent's application to stnke out the applicants' amended statement of claim is an alleged faslure on the applicants' part to make proper discovery either by a conscious secreting away of documents or an indifferent attitude to the question of discovery. The disputation as to discovery commenced pnor to the delivery of the applicants' t:st of documents when the respondent sent a letter on 14 December, 1992 outlining its expectations of what the applicants' discovery would contain. Included in the categories of documents expected were documents held by the defaulting builder, the new builder engaged to complete the works, ali subcontractors engaged on the works, the architect involved in the design of the works and others. All of these persons were independent contractors. Notwithstanding this, the respondent contended that their documents were within the applicants' power or possession. Although ultimately the respondent did not press this contention, it generated in the ensuing months substantial correspondence and threats of interlocutory applications. The correspondence continued throughout December and culminated in the applications before the court. The allegations of inadequate discovery came from both sides of the proceedings. The applicants' list of documents was filed on 17 December, 1992. A supplementary affidavit was filed on 16 July, 1993. In Schedule Two the applicants listed thirty-one (31) documents which it was claimed were no longer in the possession or power of the applicants. In paragraphs 3, 4 and 5 of the list, Mr. Boland swore :- "3. The Applicants have had but do not now have in their possession, custody or power the documents enumerated in Schedule Two. 4. The documents referred to in Schedule Two were last in the Applicants' possession, custody or power on 9. or about the various dates set forth in the said Schedule Two hereto. What became of the said documents referred to in Schedule Two hereto, where known, is Set forth in the said Schedule Two. To the best of the Applicants' knowledge, information and belief, the said documents referred to in Schedule Two are now in the possession or power of the persons to whom they were forwarded, given or lodged as the case may be (as set forth in the said Schedule Two). 5. To the best of the Applicants' knowledge, information and belief, neither the Applicants nor their Solicitors nor any other person on their behalf have now, or ever had, in their possession, custody or power any document relating to any matter in question between the Applicants and the Respondents, other than the documents referred to in the Said Schedules One and Two." The respondent was not satisfied that Mr. Boland should swear on behalf of the second applicant and made its dissatisfaction known. In consequence, on 30 July, 1993 the second applicant filed a supplementary list of documents dated 23 July, 1993. In Schedule Two he listed fifty-eight (58) documents which were no longer in his possession or power. In paragraphs 3, 4 and 5 of his list he swore :- "3. The Second Applicant has had but does not now have in his possession, custody or power the documents enumerated in Schedule Two. 4. The documents referred to in Schedule Two were last in the Second Applicant's possession, custody or power on or about the various dates set forth in the said Schedule Two hereto. What became of the said documents referred to in Schedule Two hereto, where known, is set forth in the said Schedule Two. To the best of the Second Applicant's knowledge, information and belief, the said documents referred to in Schedule Two are now in the possession or power of the persons to whom they were forwarded, given or lodged as the case may be (as set forth in the Said Schedule Two). 5. To the best of my knowledge, information and belief, neither myself nor my Solicitors nor any other person on my behalf have now, or ever had, in their possession, 10. custody or power any document relating to any matter in question between the Applicants and the Respondents, other than the documents referred to in the said Schedules One and Two.". The supplementary lists included additional documents failing within some of the categories specified in paragraph 2(a) of the respondent's notice of motion filed 18 May, 1993, which had been produced for inspection but not included in the list, and, included as a handwritten addition as item 30 in Schedule One Part One :- "Dianes of Lindsay James Thompson for the years ending 1990- 12/1991." On 30 August, 1993 the applicants' solicitors sent a facsimile to the frespondent's solicitors which said in part :- "Mr. Boland swore a Supplementary List of Documents on behalf of the Applicant on 14 July 1993. Your client was not satisfied with this List and accordingly, Mr Thompson swore a further Supplementary List on 23 July 1993. We are instructed that the last sentence of paragraph 4 of Mr Thompson's Supplementary List needs further clarification. This will be done in the form of an Affidavit in reply by Mr Thompson which will be served on you today. In essence, most of the documents in Schedule 2 of the Applicant's Supplementary List of Documents are in the possession of Persons unknown as a result of :- (a) Mr Thompson's car being stolen along with his briefcase which contained his 1990 diary and part of the Applicant's file; (b) Mrs Thompson inadvertently throwing out part of the Applicant's file in around November 1992". The 1990 diary has not been produced for inspection. The second It. applicant swore in an affidavit filed on 1 September, 1993 that the diary had been in a briefcase which was stolen, along with his motor vehicle, in December, 1990. He was cross-examined on that affidavit on 1 October. He said that the vehicle was left at his workplace with the bnefcase inside in the week before Chnstmas. The car was left there as he had been at a Chnstmas function and caught a taxi home. The theft, he said, was reported to the New South Wales police and N.R.M.A Insurance. It was not suggested to the second applicant that the theft of the car and briefcase did not occur. The respondent relied, in part, on the applicants' conduct in relation to the diary to found a submission that I should infer that they hold the diary, but are attempting to prevent its production because it damages the applicants' case, or alternatively that their conduct in the matter of discovery 1s cavalier. It was submitted that no person can rationally sign an amended list of documents in July, 1993 and then in August, 1993 say that the diary was lost in 1990. It was further submitted that this conduct had to be viewed in the context of the applicants earlier denying the existence of the diaries in their solicitor's correspondence. The respondent's submission as to the effect of the applicants' solicitor's correspondence is wrong. It is a serious allegation and should not have been made unless it could be sustained on the maternal before the court. The relevant correspondence relied upon by the respondent is contained in the exhibits to the affidavit of Mr. Davies. That matenal records that on 23 February, 1993 the respondent's solicitors wrote a five page letter dealing with a number of matters 12. concerning the applicants' discovery. Included 1n the letter was the following :- "Brian Boland and Lindsay Thompson - file notes We refer you to our letter of 22 January 1993 in which we requested advice from you as to the existence or othermse of any diary or file notes which Messrs Thompson or Boland may have made during the various attendances they allegedly had with representatives of our client bank during 1991. We look forward to your reply in relation to this issue." The letter 1s important because no previous request was made in the letter of 22 January 1993 dealing with discovery which 1s exhibit "JHD20" to the affidavit of Mr Davies filed by the respondent on 18 May, 1993. Further, the matter of inquiry was diary or file notes made during attendances with representatives of the respondent bank in 199]. The applicants were never asked, so far as the correspondence before the court reveals, whether diaries of either Mr. Boland or the second applicant existed. On 26 February, 1993 the applicants' solicitors responded to the letter of 23 February as follows :- "Brian Boland/Lindsay Thompson - File Notes We are instructed that no such file notes exist." On 10 March, 1993 the respondent's solicitors wrote to the applicants' solicitor, which letter said in part :- "Boland/Thompson - File Notes We confirm your advices that no diary or file notes were taken by Brian Boland or Lindsay Thompson during the course of their alleged meetings with representatives of our client or subsequently." The applicants have never contended that there was no 1990 or 1991 diary. 13. The second applicant says that when his solicitors requested the 1990 diary, he told them he had both daines (1990 and 1991). However, when he went to his "stock of diaries" he discovered that the 1990 diary was missing. applicant said :- In evidence, the second "MR COUPER. When did you first become aware that your 1990 diary had been stolen along with your vehicle ?---Only when I became - went looking for it, after my solicitors requested - requested it, and at the time I said that I had both diaries; it wasn't unnil I actually went through my stock of dianes that I discovered that this one was missing and was obviously in my motor vehicle at the time it was stolen. Is your only basis for saying that the diary was in your motor vehicle when it was stolen, that you cannot find the diary now?---I1 would suppose So, yes. You - are you saying that you did not know in December 1990, or at any time thereafter unnl this year, that your diary had been stolen?---I went straight into a new diary in "91, and most of the reference notes that I had were already in - in note form. Now you say in your affidavit: 'The brief case contained my 1990 diary and a number of other documents relating to this case' what were those documents ?---Specifically, I can't - I can't answer that. Do you have any general idea of the nature of the documents relating to this case which you say were in your diary - in your brief case?---No, I can't, I'm sorry. What ts your basis for saying, that a number of other documents relating to this case were in the brief case when it was stolen?---Because there are - I've been questioned about a number of documents that appear to have gone astray, and Some of them would have been in the case with my diary. I don't know specifically which ones. There's an awful lot of documents involved in it." Brian Boland, the applicants' Sydney solicitor, swore an affidavit filed on 13 September, 1993 wherein he deposed :- 14. "14. I would now like to refer to Document No. 30 in the Applicants' Supplementary List of Documents. The handwriting in that List of Documents ts my handwriting. I accept that this document refers to the 1990-12/1991 dianes of Mr Thompson and that this description 1s incorrect. | also accept that this entry has caused some confusion to the Court and to the Respondents and I apologise for this. The document was added to the Supplementary List on the advice of Counsel on the basis that it may be indirectly relevant to the issues in dispute. Mr Thompson informed me when the Supplementary List was amended and I verily believed that he had both ms 1990 and 1991 diaries and the Supplementary List was amended accordingly. Subsequently he advised me after checking his records that his 1990 diary was lost when his motor vehicle was stolen as detailed above. Apart from the 1991 diary that has been discovered, | am informed by Mr Thompson and verily believe that he has no other attendance notes and or file notes. I have no such attendance notes or file notes relevant to the issues in dispute." The assertion that the 1990 diary was in the bnefcase stolen with the car is clearly an inference based on the fact that the diary was not with the other diaries and cannot now be found. However, in the circumstances it does not seem an unreasonable inference. Nor does the execution of a supplementary list of documents in July, 1993 listing in Schedule One Part One the two diaries defy rational explanation, when the diaries were listed at the behest of counsel at a time when apparently nobody had inspected the diaries to see whether they contained any relevant entnes. There 1s nothing inherently incredible in the statement that the second applicant first became aware that the 1990 diary was gone when he was asked to produce it for inspection. The material that the respondent points to in relation to the 1990 diary will not support a finding that the second applicant has perjured himself and is hiding the 1990 diary to avoid making it available for inspection. I accept the second applicant's explanation as to the circumstances in which the 1990 diary came to be included in the supplementary list of 15. documents and as to why it cannot be produced for inspection. The respondent complained that it had obtained copies of documents from third parties which had either onginated from the first or second applicant or had been sent to them or a person acting on their behalf. These documents had not been discovered by the applicants tn the list of documents filed on 16 December, 1992. The explanation given in the supplementary lists of July, 1993 was unsatisfactory because it did not address the originals of documents received by the applicants, or persons acting on their behalf, from third parties, and did not address the general bulk of documents lost as later claimed in the letter of the applicants' solicitors and the affidavits of Mr. Thompson and Mr. Boland. This deficiency was addressed in the applicants' solicitor's letter to the respondent's solicitors of 30 August, 1993 and specifically in the affidavit of the second applicant sworn on that day in which he deposed :- "3. In relation to the remaining Exhibits to Mr Davies' Affidavit, I say, as I have said on numerous other occasions and more lately in the Supplementary List of Documents that I swore on behalf of the Applicants on the 23rd day of July 1993 that the Applicants have made full and complete discovery and have no further documentation to be discovered. 4. Unfortunately, I am unable to advise the Court of the present whereabouts of the remaining documents exhibited to Mr. Davies' Affidavit. I realise that there are a number of documents that are both exhibited to Mr. Davies' Affidavit and in Schedule 2 of the Supplementary List of Documents executed by myself on the 23rd day of July 1993 that would appear to have been in the power possession or custody of the First and Second Applicants at some time. I Say that those documents are no longer in the Applicant's Possession custody or power and are presently in the custody of persons unknown. There are a number of reasons for this (a) Firstly, in December 1990 my motor vehicle 16. was Stolen along with my bnefcase which was in the vehicle. The briefcase contained my 1990 diary and a number of other documents relating to this case. The fact that the vehicle was stolen was reported to both the Waterloo Police Station, New South Wales and the NRMA of New South Wales; (b) I formerly resided at 24 Patterson Street, Concord, New South Wales. By November 1992 Mr Boland had delivered to me all his files in relanon to the action. The files of the Applicants were then being stored at my residence, however, in or about November 1992 they were damaged by rain and my wife inadvertently threw out some relevant files including, I believe, some of the documents referred to in Schedule 2 of the Applicant's Supplementary List of Documenis and some of the Exhubits to Mr Davies' Affidavit; (c) The Applicants' files are extremely voluminous containing a vast amount of documentation that has been retained since late 1990. Whilst the Applicants have tned to retain each and every document that came into their possession custody or power it appears that some documents have gone missing. Apart from the reasons above, I am advised by Mr Boland and I verily believe that he has moved premises on a number of occasions and this may have caused some documents to go missing and I, myself, have moved premises on a number of occasions." In cross-examination the second applicant said :- "MR COUPER: Perhaps I should ask you this question: how many files relating to Langworth did Mr Boland give you?---There were two. What were the contents of those two files?---I didn't open them. They would have been duplications of the files that I had, I'm sure. What did you do with the files when you got them?---Put 17, them in a filing cabinet. Where was the filing cabinet?---The filing cabinet was tn the room I used as an office at 24 Patterson Street Did you have files of your own about Langworth's business at that time ?---Yes. Where were they?---They were in the same file. And how many of your own files did you have?---Oh, on Langworth, there were probably three folders - three manilla folders. Now you say in paragraph 4(b) your wife inadvertently threw out some relevant files. Did she throw out any - sorry, retract that. Did she in fact throw out files ?---Yes. Which, if any, Langworth files did she throw out?---Well, she threw out a lot of other things as well. The - - - No, please answer my question: which, if any, Langworth files, did she throw out?---I can't identify them specifically. Well, you knew - - -?---As I said before, some documents were in my diary in 1990; others were in the shed when the water damage occurred. No, just listen to my question please. I take it you knew in November 1990 that you had two of Mr Boland's files relating to Langworth and three of your own?--Mm. A total of five files. After your wife threw out some files how many Langworth files did you have left?---When the documents - when I got the documents back from my wife and daughter they were just in a brown cardboard box, just all mixed in. Are you able to identify any specific document which you say your wife threw out?---No, I'm sorry, I can't. Do you have any basis for saying that your wife threw out any documents relevant to these proceedings other than the jact that you cannot find certain documents now?---As I said to you, the documents were thrown out inadvertently and Some were retrieved and we've submitted those. We are hiding nothing. 18. 1 take it you found out in November 1992 that some relevant files had been thrown out, did you? Is that what you are Saying ?---No, it was after that. When was it?---lt would have been December." Mr. Boland in this affidavit of 13 September, 1993 dealt with the question of the non-discovery of the documents of which the respondent complained. He said :- "4. I accept that there appear to be a number of documents that were forwarded to myself or Mr Thompson that have not been discovered by the Applicants. The reason for this 1s that those documents are now no longer in my possession, custody or power nor in the possession, custody or power of the Applicants. It is not correct to say that the Applicants have attempted to conceal documentation or have umproperly made discovery. The simple fact is that the documents in question are now no longer in the possession, custody or power of the Applicants and the whereabouts of those documents are unknown. As Mr Thompson points out in his Affidavit sworn 30 August 1993 there are a number of reasons for this. I have perused Mr Thompson's Affidavit of that date and verily believe that some of the reasons are as follows :- (a) In December 1990 his motor vehicle was stolen along with his briefcase and diary of that year. I am informed by Mr Thompson and verily believe that quite apart from his briefcase and diary, documents from the Applicant's file, which were contained in the briefcase, were also stolen. I am informed by Mr Thompson and verily believe that the vehicle was finally located in the Parramatta river and the briefcase, diary and documents in question were never found; (b) I am informed by Mr Thompson and verily believe that he formerly resided at 24 Patterson Street, Concord in New South Wales and that after separating from his wife, she continued to reside at that address and that the Applicant's files were stored in a shed at that residence. I am further informed by Mr Thompson and verily believe that on or around 19. November 1992 part of the Applicant's documentation was damaged by rain and that Mrs Thompson inadvertently threw out various documents that she believed were so damaged as to be useless; (c) In February 1992, my firm, Boland & Co, moved premises from 46 Restwell Street, Bankstown to Kitchener Parade, Bankstown in the State of New South Wales. In January 1993, my office again moved to 68 Victoria Road, Roselle, Sydney in the State of New South Wales. In around February 1992 I held most of the Applicant's files and unfortunately it appears that during the earlier move, certain documents have been misplaced. It has come to my attention that other files involving other clients also appear to have been lost during the move. The reason for this appears to be that the person in my office co-ordinating the move, a Mr Marcus Boland, has informed me and I verily believe that he organised all the loose files, including the Applicants' files, to be placed in boxes and transferred into storage for one week and then he only transferred back what he considered were active matters. It appears that during the transfer, some of the Applicants' documents have been misplaced. 5. A further reason why many of the documents that are dated up to and around July 1991 and have been addressed to myself or the Applicants are no longer in the Applicants' possession, custody or power is that much of that documentation which involved questions of construction would have been handed to Mr Donnelly. It is my opinion that Mr Donnelly, as the builder, should have held relevant orginal documentation relating to construction. Similarly, much of the documentanon relating to construction including defects in construction or the works dated after that date would have been handed to Mr Derrick. This is one reason why some of the originals in the Applicants' documentation are missing. 6. For instance, in relation to the Exhibits to Mr Davies' Affidavit, "JHD2", "JHD4" and "JHD9", it is my opinion that these would have been handed to Mr Donnelly and/or Mr Derrick respectively." 20. The clear impression of the evidence given by Mr Boland and the second applicant was that they had no clear idea of what documents had been lost, when they were lost, or how they were lost. They identified all possible causes of the loss, but beyond the 1990 diary did not, and on their evidence could not, attempt to ascnbe any particular cause to any particular lost document. The respondent submitted that I should not accept this explanation. It submitted that a detailed consideration of the documents Not discovered by the applicants with the documents actually discovered by them demonstrated a conscious culling of documents and selective discovery being made by the applicants. I have looked at the documents and I am not satisfied that any pattern of culling or selective discovery appeared. 1 accept the evidence of the second applicant that when he received the documents back from his wife and daughter what was left were all mixed up in a brown cardboard box. The preparation of a list of documents from a box of mixed documents, where some of the original documents have gone missing, will inevitably lead to reconstructed files with documents missing. Any list then prepared will hkewise have documents missing from it. However, that documents do not appear in the list at vanous points does not mean that the documents have been culled to hide particular documents, it simply means that the list as reconstructed 1s incomplete. There is a further reason I do not accept that Mr. Boland and the second applicant have perjured themselves and deliberately refrained from discovering documents. The respondent has continually been threatening to take action under Order 10 Rule 7 of the Federal Court Rules. Such threats obviously involved the threat that the stay on the interlocutory judgment on the cross-claim would be removed and the respondent would seek to wind up the first applicant. The applicants have consistently 21. stated in correspondence that they have discovered al! relevant documentation in their power, custody of possession and invited the respondent to bring an application to the court 1f the respondent was so advised. The applicants knew that they were at nsk under the order of Lee J. 1f they defaulted in complying with any order or direction of the court. The applicants had nothing to gain and everything to lose by consciously refusing to discover documents. The documents obtained by the respondents from third parties and exhibited in exhibits "JHD22", "JHD37" and "JHD40" to Mr. Davies' affidavit of 18 May, 1993 and exhibits "JHD1" to "JHD2i" to his affidavit filed 6 August, 1993 do not as a whole demonstrate any serious flaws in the case pleaded by the applicants, do not represent any particular category of document and appear to be copies of documents provided by third parties either voluntarily or upon third party discovery. There is therefore no demonstrable gain to the applicants in not disclosing these documents. The continual pressing by the respondent for further discovery to be made has forced the applicants to search harder and has produced some further documents which were included in the supplementary list of documents. The correspondence shows that as documents have been found, eg. the original constitution contract the subject of complaint in paragraph 2(a)(iii) of the notice of motion of 18 May, 1993 which was found in counsel's brief, they have been made available. A positive response to such pressure does not in my view automatically mean there existed a cavalier attitude to discovery because additional documents are produced. The respondent submitted that as additional pre-December, 1992 documents subsequently have been discovered, the original discovery was not properly undertaken in December, 1992. In retrospect it may be that more effort could have been applied in December, 1992. It may also be that disclosure by the 22. applicants of the existence of a range of documents which could not be identified but had been lost may have avoided the present applications, although having regard to the attitude of the respondent as reflected in the correspondence, | doubt it. The respondent has applied continuous and aggressive pressure upon the applicants to discover al! sorts of documents, some of which were clearly not discoverable, and reading the correspondence, appears at times to have been more interested in form rather than substance. For example, on 24 December, 1992 the respondent's solicitors wrote inter alia :- "In this letter we will only make some preliminary observanions in respect of your clients' documents as inspected: 1. Clearly discovery has not been complete. As an example of this we note the failure of your clients to include in their List of Documents a facsimile transmission from Garth Donnelly to Bnan Boulton (sic). This document was included in the pile of inspected material but was not discovered. The document is a facsimile coversheet bearing the date of 23 July 1990 and it refers to further (presumably as yet undiscovered) documents as being attachments to it. In our view, tt is clearly a relevant document. The failure to discover this document raises questions regarding the adequacy of your clients' List of Documents. Can you advise why this document has not been discovered??" That the document was produced for inspection does not suggest the applicants were attempting to hid it. By way of further example, the respondent complained that the applicants have not complied with the order of Lee J. because, inter alia, supplementary lists of documents were not filed unt July, 1993. Again this appears more a complaint as to form rather than of substance, in that the correspondence demonstrates that documents were in fact being produced for inspection by the applicants during this period 23. eg. the personal financial records of the second applicant. The respondent itself did not make complete discovery in December, 1992. For example, documents which the tespondent vigorously denied existed in fact came to light during the heanng of the applications and dunng the adjournment. A perusal of the supplementary lists of documents filed by the respondent demonstrates that they are far from limited to documents which came into existence after December, 1992. Having said all this, the continual complaints of the respondent and the notice of motion of 18 May, 1993 led to the order made on 16 July, 1993 requiring further discovery and the supplementary hsts of documents filed on 16 and 30 July, 1993 by the first and second applicants. Save in respect of a loan transaction I deal with below, I am satisfied that the applicants have discovered all documents which are now within their power, possession or custody. I am satisfied that they do not know what documents were once in their possession, but are no longer in their possession, and they cannot identify by list documents which have been lost or destroyed, and in particular cannot identify the loss or destruction of any particular document from any particular cause. Consequently they cannot say more than they have as to the originals of the copy documents the respondent has obtained from third parties. The likelihood is that there are further documents which fall within that category. I am satisfied that the applicants have neither consciously withheld documents from disclosure nor adopted a cavalier attitude to discovery. The applicants have been shown as having done a less than perfect job in December, 1992; but, the respondent cannot claim that level of performance for itself. There 1s nothing in the conduct of the applicants which would justify the striking out of their amended statement of claim or in ordering the removal of the stay to free the respondent to seek to 24, execute upon its interlocutory judgment. I do not accept that there has been on the part of the applicants or their legal advisers a contemptuous disregard of the court's orders. The respondent by its counsel submitted that I ought to order a further affidavit as to documents relating to the expenditure of $50,000.00 lent by a Mr. Bowers to the first applicant in 1991. This was based on an answer of Mr. Boland that he could not say whether the records of the first applicant which have been discovered dealt with the receipt and expenditure of the sum of $50,000.00. Mr. Boland has sworn an oath that so far as he is aware, all documents which are within the power, possession or custody of the applicants have been discovered. To the extent that the receipt and expenditure of the sum of $50,000.00, although not the source of the funds, 1s a relevant issue, then, any documents dealing with such receipt and expenditure are discoverable. I am uncertain as to whether the documents have been discovered. Mr. Thompson gave the following evidence :- "Are there records of the investment by Mr. Bowers in the construction costs of this project?---There would be. Have they been discovered?---I don't believe so. Why not?---I don't - is it necessary? What records exist in respect of Mr. Bowers' investment in this project?---Well, I don't - 1 don't know. Who would know?---I would suggest that if Mr Boland has a - sent Mr Bowers a letter, Mr Boland would." The appropnate course to put the matter beyond dispute 1s to require that an affidavit be sworn by the applicants deposing as to the existence of any documents in the power, possession or custody of either applicant or both of them relating to the actual payment to 25. the first applicant of the sum of $50,000.00 as a loan from Mr. Bowers and as to the expenditure of that money by the first applicant as part of the construction costs of the works at Darra. If such documents do exist they are to be produced for the inspection of the respondent within seven (7) days of the filming of the affidavit. Save for the above direction for a further affidavit limited to the receipt and expenditure of the $50,000.00 loan and production for inspection, 1f any such documents exist, the respondent's notices of motion of 18 May, 1993 and 6 August, 1993 should be dismissed. The supplementary lists of documents and the sworn evidence of Mr. Thompson and Mr. Boland make the relief sought in paragraph 2 of the respondent's notice of motion of 6 August, 1993 unnecessary. I turn to the question of legal professional privilege claimed by the respondent in respect of the copy documents obtained from third parties. The documents in issue are listed in Schedule One Part Two of the respondent's affidavit of documents and are listed as documents Al to A42 inclusive. It is hard to understand why the claim was persisted in, although it was, when documents A2, A3, Al4, Al7, A23, A24, A25, A27, A29, A30, A34 and A40 were reproduced in exhibits "JHD22", "JHD37" and "JHD40" to Mr. Davies' affidavit filed 18 May, 1993. The disclosure of the documents was not inadvertent. The documents were disclosed to found an argument that full discovery had not been given of all relevant documents. The use by the legal advisers of the documents for the purpose of the litigation constituted a waiver of any legal professional privilege which may have attached to the documents. It is also hard to understand why the claim was persisted in when many of the documents in the exhibits 26. referred to and in exhibits "JHD1" to "JHD21" to Mr. Davies' affidavit filed 6 August, 1993 fell into the same category as the balance documents in Schedule One Part Two, yet no claim for legal professional pnvilege was made for these additional documents in any supplementary list of documents. The claim to legal professional privilege was an issue first raised in correspondence in December, 1992. The persistence in the claim smacks of a stubborn determination to prove a point or a refusal to admit that the position taken was in error. At worst it smacks of an attempt to exclude the applicants from documents which they do not now have so as to put the applicants to the trouble and expense of themselves obtaining copies from the third parties in question. This impression 1s reinforced by the fact that on 2 August, 1993 the applicants' solicitors wrote to the respondent's solicitors asking that they seek instructions to allow inspection of the documents in question and copying of them at a reasonable cost to the applicants. This request was not agreed to. The tegal issue for determination is whether a copy document copred for the sole purpose of obtaining legal advice or use in litgation is privileged where the original document is unpnivileged. The respondent submitted that the test for legal professional privilege was established by the High Court in Grant v. Downs (1976) 135 CLR 674 and National Employers' Mutual General Insurance Association v. Waind (1979) 141 CLR 648. The test was stated by Stephen, Mason and Murphy JJ. in Grant v. Downs thus (at 688) :- "All that we have said so far indicates that unless the law confines legal professional privilege to those documents which are brought into existence for the sole purpose of submission to legal advisers for advice or for use in legal 27. proceedings the pnvilege will travel beyond the underlving rationale to which iw is intended to give expression.. we consider that the sole purpose test should now be adopted as the criterion of legal professional privilege." (See also the judgment of Mason J with whom Barwick CJ., Stephen, Jacobs and Aicken JJ. agreed in Waind at 654, 656). In the present case the respondent submitted that the photocopies of the documents were obtained by the respondent's solicitor solely for the purpose of this litigation, The evidence relied upon was that of Mr. Chapman and Mr. Davies. Mr. Chapman, a solicitor employed by the respondent's solicitors, swore in an affidavit filed on 6 August, 1993 that he considered the pleadings and affidavit material and determined that documentation relating to the design and construction of the building at Darra could be relevant and assist the respondent's preparation for trial. He ascertained that the first applicant's design architect was Wayne Blow & Partners. Mr. Chapman contacted the architects and obtained access to the architect's files relating to the premises. From the files he chose documents which he considered relevant to the action and obtained photocopies of those documents. Mr. Davies, a member of the respondent's solicitors, in an affidavit filed on 6 August, 1993 swore that he formed the view from a perusal of the Pleadings and affidavits filed in the matter that documentation relating to the requirements of Lucas Industries Australia Limited, the lessee of the premises, could be relevant to the litigation. Mr. Davies attended on the lessee, was given access to its records, chose the documents which he considered relevant to the respondent's preparation for trial and obtained photocopies of those documents. The respondent submitted that the evidence of Mr. Chapman and Mr. Davies established that the photocopies came into existence for the sole purpose of the respondent preparing for tnal in the within proceedings. Thus the documents literally fell within the test laid down in Grant y. Downs and Waind In support of the proposition that this was sufficient to cloth the copies with legal professional privilege, the respondent relied upon a decision of Master Weld in Kaye y. Hulthen [1981] Qd.R. 289, which upheld the submission now made. However, the extent to which the decision in Kaye v. Hulthen states the law in Queensland, 1f at all, is a matter of some doubt. In McMahon v. Cooper [1989] 2 Qd.R. 418, Kelly SPJ., with whom Demack J. agreed, said (at 421) :- "The basic submission of counsel for the respondent/plainiff was that the documents in question were privileged. He conceded that the originals would have been discoverable but submitted that the position in relation to photocopies of the documents was otherwise and that production of the Photocopies could not be compelled. From what was decided in a number of the authorities referred to by Master Weld in Kaye v. Hulthen [1981] Qd.R. 289 I think it is clear enough that the situation could arise in which legal professional privilege would not attach to orginal documents so that production of the documents would be compellable whereas such privilege could attach to copies of those documents so that production of the copies would not be compellable. The test is that propounded by the majority in Grant vy. Downs (1976) 136 C.L.R. 674 at 688-689, that is, whether the documents had been brought into existence for the sole purpose of their being submitted to legal advisers for advice or for use in legal proceedings, in which event the privilege attached, whereas in the case of documents which would in any event have been brought into existence for another purpose the privilege would not attach." It 1s unclear whether Kelly SPJ. accepted the reasoning in Kaye vy, Hulthen or simply the effect of the authorities referred to in it, although, the reference to the test in Grant v. Downs in the context may mean that his Honour was of the view that such a test had a separate operation to copy documents as distinct from omginals However Kneipp J. made clear that he did not accept the decision in Kaye v, Hulthen as either binding or correct. His Honour said (at 425) :- "I have had the advantage of reading the reasons prepared by Kelly S.P.J. I agree generally with those reasons and I agree with the orders which his Honour proposes. There are two matters about which I wish to make some brief remarks. The first matter is the decision in Kaye v. Hulthen [1981] Qd.R. 289. In my view the results reached in that decision and in decisions which it applies are anomalous, and there is not any authonty which binds this Court to take the same view. It is not necessary to express any concluded view of the matter in this case. As is demonstrated by Kelly S.P.J., on any view of the matter the facts did not support a claim of privilege." The decision in Kaye v. Hulthen does not stand alone. Hunt J. in McCaskull_v, Mirror Newspapers Ltd, [1984] 1 NSWLR 66 at 70 refused to order production for inspection of copies of unprivileged documents where those copies satisfied the sole purpose test restated by the High Court in Grant v. Downs and affirmed by that court in Waind, O'Reilly v, State Bank of Victona Commissioners (1983) 153 CLR | and Baker_v, Campbel! (1983) 153 CLR 52. Likewise, in Wade v. Jackson's Transport Services Pty, Ltd, [1979] Tas.R. 215 Green CJ. said (at 218) :- "As the copy document in this case was brought into existence Solely for the purpose of defending the proceedings and obtaining legal professional advice, I hold that by virtue of the general principle stated by the High Court in Grant v. Downs (1976) 135 C.L.R. 674 the copy of the notice of injury form is privileged from production." The decisions in Kaye v, Hulthen, Wade v, Jackson's Transport Services Pty, Ltd. and McCaskill v, Mirror Newspapers Ltd, all make reference to the decision of the English Court of Appeal in Watson _v, Cammell Laird & Co, (Shipbuilders & Engineers) Ltd, [1959] | WLR 702 and its application of the decision in The Palermo (1883) 9 PD 6 to cloth the copy document with legal professional pnvilege. However, in the end result each of the Australian cases purports to do no more than apply the principle in Grant vy, Downs to support the conclusion that legal professional privilege attaches to a copy of a document brought into existence for the sole purpose of the litigation where the Original document is unprivileged and production of the onginal may be compelled in the litigation. There is a growing and substantial body of authonty in Australia and overseas against the proposition contended for by the respondent. The Australian cases against the respondent's contention start with the decision of the Victorian Full Court in Shaw vy, David Syme & Co, [1912] VLR 336, a decision I shall return to in more detail later. The recent authorities are conveniently considered beginning with Vardas v, South British Insurance Co, Ltd, [1984] 2 NSWLR 652. In Vardas, Clarke J. rejected the submission that copies of unprivileged documents obtained for the sole purpose of the litigation by a solicitor were privileged in consequence of the decision in Grant vy. Downs. He specifically rejected the reasoning of Hunt J. in McCaskill. His Honour said (at 660-661) :- "...Hunt J founded primarily on the statement of Mason J in Waind (at 654) that the relevant privilege is concerned with the purpose for which a document recording information is brought into existence. He concluded, therefore, that when a copy was brought into existence for submission to a solicitor the sole purpose test was satisfied. I do not, however, read either Grant or Waind as supporting this proposition. 31. Neither of those cases was concerned to distinguish between originals and copies and as I understand the doctnne appearing from those cases it is that the court 1s concerned to inquire into the purpose for which the document in which information is recorded comes into existence. The cases were not concerned with, and do not deal with, the purpose of the mechanical reproduction or copying of a document. I regard the distinction between the collating and recording of information in a document and the mere reproduction of that document as one of substance. Again I find support in Lambert [Lambert v. Home {1914] 3 KB 86] where Cozens- Hardy MR said (at 91): ',..4 defendant who has obtained at his own cost a copy of a document, not in his possession, which is not itself privileged, cannot decline to produce the copy, although he obtained it in anticipation of future lingation. So here a mere reproduction in a physical form of material which was publict juris cannot, I think, be privileged.' And Buckley LJ said (also at 91): '...this 1s privilege based upon reproduction by wniting. In my opinion, no such privilege exists. If it did a copy of a document as distinguished from the onginal would be privileged. The document is not one which has been composed by the writer, or of which the writer is in any way the author. He has done nothing more than reproduce in a physical form that which came into existence in its relevant form when the witness spoke in the box.' Accordingly, I do not find in Grant or Waind any support for the rule expressed in McCaskill. Finally, the application of a rule according privilege to copies of non-privileged documents would lead to absurd and anomalous situations. One is referred to in the 1967 report to which Lord Denning referred [Committee Report No. 16 of the English Law Reform Committee on Privilege in Civil Proceedings referred to by Denning MR in Buttes Gas and Oil Co. v. Hammer (No. 3) [1981] QB 233 at 244]. A third party holds the original and a copy of a document relevant in litigation. One of the adversaries obtains the copy document, It (ie the copy) was not made for the purposes of the litigation and 1s not privileged in the hands of the party who obtained it. Alternatively, he does not accept the third 32. party's offer of the copy but insists on copying the original himself for the purpose of transmitting it to hus solicitor. According to McCaskill and Hulthen it is privileged. I cannot accept that this ts so. In my opinion the position 1s, subject to special cases of which Lyell [Lyell v. Kennedy (No. 3) (1884) 27 Ch.D. 1] is an example, as stated in Bray on Discovery (1885) at 395: 'A copy of a document however is in no better position qua privilege than if the document itself were obtained.' The courts are increasingly concerned to minimize technicalities and to ensure that parties are apprised of the opponent's case pnor to the commencement of the tnal. Every effort is made, in furtherance of the interests of justice, to avoid the waste of time and cost involved when a party is taken by surprise. A rule attaching privilege to copies of non-privileged documents is not within the rationale of the rule underlying the relevant privilege, conducive to expeditious and fair trials, nor consistent with the stnct approach for which Grant speaks." In Nickmar Pty, Lid. v. Preservatice Skandia Insurance Lid, (1985) 3 NSWLR 44, after a review of all of the authorities, Wood J. observed (at 61-62) :- "In my view, it is incorrect to State, as @ general proposition, that a copy of an unprivileged document becomes privileged so long as it is obtained by a party, or its solicitor, for the sole purpose of advice or use in litigation. I think that the result in any such case depends on the manner in which the copy or extract is made or obtained. If it involves a selective copying or results from research, or the exercise of skill and knowledge on the part of a solicitor, then I consider privilege Should apply (Lyell's case). Otherwise, I see no reason, in principle, why disclosure should be refused of copies of documents which can be obtained elsewhere, and in respect of which no relationship of confidence, or legal professional privilege exists. I see nothing in Grant v. Downs or National Employers' Mutual General Insurance Association Lid. v. Waind as requiring a different conclusion. Neither of these cases was concerned to distinguish between copies and originals. While it must be accepted by me that the privilege is concerned 33. with the purpose for which a document recording information is brought into existence, a literal application of the principle to mere reproductions 1s ttkely to produce absurd and anomalous Situations outside the rationale of the principle. In this regard, | respectfully agree with the observation of Clarke J in Vardas (at 661): '4 rule attaching privilege to copies of non- privileged documents is not within the rationale of the rule underlying the relevant privilege, conducive to expeditious and fair tnals, nor consistent with the Strict approach for which Grant speaks.'" The authorities were again reviewed by Debelle J in LN, Taylor Holdings Lid. v. Bond (1991) 57 SASR 21. His Honour concluded (at 34) :- "The Law Reform Commission in England Report No 16, Privilege in Civil Proceedings, p 119 recommended that any distinction between originals and copies for the purposes of privilege should be abolished. The principle accords with logic and with commonsense. Generally speaking, it would be absurd for the copy to be privileged while the original was not. The cases, which hold that copies of unprivileged documents are privileged where the copy was made for use in litigation or for the purpose of obtaining legal advice depend for their authority on the view that the correct time at which to consider the purpose for which the document was brought into existence is the time when the copy was made. There is no reason in principle why that should be so. The making of a copy cannot, in itself, justify attaching privilege to the copy, even if the litigation had actually commenced. If that were so, the mere mechanical reproduction by photocopiers or the like would attract privilege to the documents held by a party and thus defeat the purpose of the rules of discovery. It is more logical to examine the purpose for which the original document came into existence. That not only accords with the principles expressed in Grant vy Downs and in National Employers' Mutual General Insurance Association Lid y. Waind, but it also avoids the anomaly of the copy enjoying a status which is denied the original. There is even less justification for attaching privilege to a copy when the oniginal ts in the public domain. Furthermore, if the copy is privileged and the original not, the illogical, if not absurd, result would be that the question whether an opposing party could inspect the document would 34. depend on whether his solicitor retained the onginal or the copy. The argument is taken up by the editors of Cross on Evidence (4th Aust ed, 1991), par 25275: 'If the solicitor, having made a facsimile of a non- privileged document, returns the copy and retained the orginal, no claim for privilege can be made. Why should it be otherwise when he retains the copy? And where he loses the original but retains the copy so that this may be used at tnal as secondary evidence of the lost document, why should the other parties be denied inspection of this evidence or the right to use it in evidence themselves?'" His Honour's decision was appealed to the Full Court. Olsson J., with whom Matheson J. agreed, cited with approval the relevant statement of principle of Clarke J. in Vardas v, South British Insurance Co, Ltd, at 659-661, part of which is set out above in these reasons. After a review of the cases Olsson J. concluded (at 45) :- "The real question which arises is related to the essential purpose for which original documents in question are brought into existence. If they are not discoverable then, at least on the Australian authorities, neither are the copies. However, on the other hand, uf the reason for the bringing of them into existence is not such as to give rise to a proper claim for legal professional privilege then the copies subsequently made can enjoy no higher status except, perhaps, in the rarest of circumstances. This, it seems to me, is the clear effect of the Australian authorities, which are not substantially in discord with what might be termed the 'core' principle to be derived from the English authonties. Whilst some Australian authorities may leave open for consideration a possible extreme case such as that in Lyell y. Kennedy [(1992) 1 WLR 106], they certainly do not go as far as the Dubai Bank case, nor do I think that the principle should be construed or applied in such a manner. In any event, I entirely agree with Perry J that, on the material before Debelle J, it simply could not be said that it had been established that there was any real risk that compliance with the orders made would disclose the nature of any legal advice tendered to the defendants." 35. Perry J., with whom Matheson J also agreed said (at 46) :- "...Uf the orginal of a document ts not privileged, a copy can be in no different position. It is wrong to accord to a copy a status that is not given to the orginal." and as to Lyell v, Kennedy (No, 3) said (at 46) :- "As to the second point, and the line of cases commencing with Lyell v. Kennedy (No. 3) (1884) 27 Ch D I, I very much doubt that it has any relevant application today. If it does, its application must necessarily be restricted to the very unusual situation where disclosure of a selected group of otherwise discoverable documents would necessarily reveal the content of the advice of a legal practitioner to his client or the nature of a communication between solicitor and chen. No privilege could possibly be involved simply because disclosure would tend to indicate what someone thought were documents relevant to a particular case." Further examples of Australian courts refusing to elevate a copy of an unprivileged document to the status of a privileged document are to be found in the decision of Derrington J. in Thess Contractors Pty, Ltd, v, Terokel] Pty. Ltd. (Queensland Supreme Court, No. 2475 of 1988, 25 September, 1992, Unreported), Master Adams in Fermanis v. W.A. Exim Corporation (Western Australia Supreme Court, No. 8900 of 1991, Unreported) and Byrne J. in Roux v, Australian Broadcasting Commission [1992] 2 VR 577 at 597-600. In England and Wales, if the dominant purpose for which a document is brought into existence is the obtaining of legal advice or for or in anticipation of litigation, then the document attracts legal professional pnvilege (Waugh v. British Railways Board [1980] AC 521). A document which came into existence for some other purpose 1s not privileged even if 1t was obtained by a solicitor for the purposes of 36. litigation (Yentouns vy, Mountain [1991] 1 WLR 607 at 621 CA). A copy of a document, even if made by a solicitor for the purposes of litigation, ts not privileged unless the orginal document 1s pnvileged (Chadwick y. Bowman (1886) 16 QBD 561 DC at 562, Buttes Gas and Oj] Co, v, Hammer (No, 3) [1981] QB 223 at 244; Dubai Bank Ltd. v, Galadan [1990] 1 Ch. 98 CA; Ventouris v. Mountain at 616, 618; Lubnzol Corporation y. Esso Petroleum Co, Lid. [1992] ! WLR 957 at 962-963). And finally, the decision of the Court of Appeal in Lyell vy. Kennedy (No. 3) (1884) 27 Ch.D | is authonty for the proposition that where a selection of documents which a solicitor has copted or assembled betrays the trend of the advice which he or she 1s giving the client, the documents are privileged (Ventouris v. Mountain at 615; Dubai Bank Ltd, v, Galadari (No, 7) [1992] 1 WLR 106 at 109-110; Lubrizol Corporation y, Esso Petroleum at 963). The respondent submitted that the Australian and English authorities which hold that copies of original documents, even when obtained by a solicitor for the purpose of litigation, are not privileged unless the orginal document is privileged are flawed. The basis of the flaw is said to emerge in the reasoning of Master Weld in Kaye vy. Hulthen where he said (at 293-294) :- "Counsel for the applicant/plaintiff contended that the original documents in the possession of the Workers' Compensation Board of Queensland were not prepared for this litigation and were therefore not privileged in this action and that the defendant's obtaining copies of those documents, although for the purpose of this action did not give rise to legal professional privilege in respect of those copies. The submission continued that in considering copies of documents it is appropriate to consider whether, if the original were in the possession of the party against whom production is sought, the original would be discoverable (or 37. producible) and if so then the copy 1s discoverable (or producible). However, if the copies of the documents are made through the use of professtonal selectivity (the Solicitor's, but not his clerk's or any other person's care and skill) for the purpose of litigation then the copies of the documents are not discoverable (or producible) because their revelation would reveal the nature or basis of selection and therefore might reveal the party's legal advisers' view of the case and for that reason legal professional privilege would Protect the copies from discovery or production. In my judgment the whole of this submission is contrary to the clear principle to which I have referred [the rule in Grant v. Downs] and the genesis of its error is the headnote in Lyell v. Kennedy which is as follows: 'K.'s solicitors had for the purposes of K.'s defence in the action procured copies of and extracts from certain entries in public registers, and also Photographs of certain tombstones and houses to be taken, for which K. in his affidavit of documents claimed protection .- Held (affirming Bacon, V.C.), that although mere copies of unprivileged documents were themselves unprivileged, the whole collection, being the result of the professional knowledge, skill, and research of his Solicitors must be privileged - any disclosure of the copies and photographs might afford a clue to the view entertained by the solicitors of their client's case." The fundamental error lies I think in the aphonistic statement in the headnote 'mere copies of unprivileged documents were themselves unprivileged'. As counsel for the defendant rightly pointed out, no statement in these terms appears in the reasons in the case or is deducible from the reasons. Moreover it may be stated that such a rule fails to reflect the true principle which has been mentioned and which uses as its touchstone not the nature, origin or derivation of the documents or communications but the purpose for which they are created or made. Furthermore the suggested tests are in_ themselves inappropnate, particularly by comparison with the clanty of the purpose stated in the principle which has received such 38. high affirmation. The suggested rules would make privilege attractable to documents, for example, by the application of a process of selection however superficial or make privilege a matter of degree depending upon the subtlerv or skill of the Selector or indeed as was argued whether the solicitor or the Solicitor's clerk or some person unconnected with the Solicitor made the selection. Lyell vy. Kennedy (supra), in which Bowen and Fry L.JJ. agreed with the leading judgment of Cotton L.J., ts authority for the proposition that the solicitors for a party to litigation having obtained documents for the purpose of the party's defence for the purpose of instructing his counsel and for the Purpose of conducting the litigation on his behalf those documents were in the party's possession privileged from production for inspection by the opposite side and no more, although Cotton L.J, and Bowen L.J. with whom Fry L.J. agreed as well as agreeing with Cotton L.J. let fall certain dicta which may have been misunderstood and which, in my opinion, certainly are misunderstood if they are regarded as the ratio of the decision." Because of this supposed error of reasoning Weld M. rejected the decision of the Full Court of Victoria in Shaw v. David Syme & Co, {1912} VLR 336. In my view Weld M. was in error in rejecting the reasoning in Shaw v. David Syme & Co, As Weld M. observed, there is no statement of principle in the freasons of the Lord Justices in Lyell v. Kennedy (No. 3) in the terms of the headnote that "mere copies of unprivileged documents were themselves unpnivileged". The Fult Court in Shaw v. David Syme & Co, was conscious of this fact and expressly dealt with the matter in its reasons. The court said (at 341) :- "We think this transcript was not brought into existence for the purposes of the litigation within the true meaning of the rule which gives the privilege here claimed, and it seems to be definitely established by Chadwick v. Bowman [1886] 16 Q.B.D. 561 and Lyell v. Kennedy [1884] 27 Ch.D. 1 that if 39, an original ts not privileged a copy can be in no better position. That 1s not so directly decided in Lyell y, Kennedy 1884] 27 Ch.D, 1 but it must be inferred from what the Count did in that case that such was us view. There the Court would have given discovery of the copies of tombstones, etc. which the party had in his possession, had that been all there was to be said about the mater, that they were copies. But it was put that those copies of tombstones, etc., were collected together in a regular sequence or collecnon, which in that particular case would, if disclosed, have given a clue to the other side as to the plan of campaign of the solicitors defending the action. So the Court refused for that reason, and for that reason only, to order discovery of those copies." (The emphasis is mine). That the Full Court was correct in stating the limited basis upon which the defendant's case was put in Lyell v. Kennedy (No, 3) ts apparent from the statement of the argument of counsel for the defendant in the authonsed report. It says (27 Ch.D. 1 at 12) :- "On the question of item 5 [copies of entries in registers and public records, and of other original documents which were not in the possession custody or control of the defendant] and 7 [photographs of tombstones and houses] we contend that the discretion exercised by the solicitor, or by the agent employed by him, in the choice of a series of extracts and copies, records and registers, and the omission of others, prevents it being a mere servile copying of public documents, which would not be privileged, but that it represents the work of the solicitor's mind, and might be a means of shewing to the Plaintiff the idea entertained by him of his client's case." That this was the basis upon which the privilege was upheld appears from the reasons of Cotton LJ, and Bowen LJ. with each of whom Fry LJ. agreed on this point. Cotton LJ. said (at 26) :- "In my opinion it is contrary to the principle on which the 40. Court acts with regard to protection on the ground of professional privilege that we should make an order for their Production; they were obtained for the purpose of his defence, and it would be to deprive a solicuor of the means afforded for enabling him to fully investigate a case for the purpose of instructing counsel uf we required documents, although perhaps publici juris in themselves, to be produced, because the very fact of the solicitor having got copies of certain bunal certificates and other records, and having made copies of the inscriptions on certain tombstones, and obtained photographs of certain houses, might shew what his view was as to the case of his client as regards the claim made against him. There ts no case, as I have said before, which is exactly in point, but Walsham v. Stainton 2 H. & M. 1, though different in its circumstances, somewhat illustrates the principle to which I am referring, because there, when that case came before Vice-Chancellor Wood, he protected the records and extracts from books which had been made by an accountant for the defendants, who had collected together a number of entries, because the extracts, when put together, shewed the view which he and the Solicitor of the defendants took of the particular fraud which they were there investigating, and the Judge considered that to order the defendants to produce them would be not only giving production to the parties who were asking for Production, but giving them a clue to the advice which had been given by the solicitor, and giving them the benefit of the professional opinion which had been formed by the solicitor and those who had acted in a professional capacity for the defendant." Bowen LJ. said (at 31) :- "A collection of records may be the result of professional knowledge, research, and skill, just as a collection of curiosities is the result of the skill and knowledge of the antiquarian or virtuoso, and even if the solicitor has employed others to obtain them, it is his knowledge and judgment which have probably indicated the source from which they could be obtained. It is his mind, if that be so, which has selected the materials, and those materials, when chosen, seem to me to represent the result of his professional care and skill, and you cannot have disclosure of them without asking for the key to the labour which the solicitor has bestowed in obtaining them." 41. Each Lord Justice qualified his judgment as to future cases. Cotton LJ. said (at 26-27) :- "In my opinion, therefore, in this case, without saying what ought to be done if there were any different case made before the Court with regard to documents like these, u would not be in accordance with the rules which have guided this Court in deciding what is professional privilege in regard to the Production of documents, to order their production." Bowen LJ. said (at 31) :- "I entirely agree, therefore, with what has been said, and without saying what ought to be done in another case, I am satisfied that in this case we could not make the order asked for without infringing the principle on which the Court acts, nor 1s it necessary to say what would be done as to any particular document if a right to inspection were made out." If, as contended for by Weld M. in Kaye vy. Hulthen, their Lordships were applying a general principle that all documents brought into existence by a solicitor for the purpose of litigation were privileged, the limitation would have been unnecessary. The qualifications were necessary for two reasons. Firstly, Bowen LJ. expressly and Cotton LJ. inferentially, dealt with the documents as a collection and not individually. Secondly, the public records and registers were publici juris to which pnvilege did not attach and the mere copying of public documents by a solicitor, or at his direction, would not be privileged; as was recognised by the defendant's counsel in his argument to the court. Further, the decision of Wood VC. in Walsham v. Stainton (1863) 2 H. & M. 1; 71 ER 357 referred to by Cotton LJ. in Lyell v. Kennedy (No, 3), held that counsel's brief, insofar as it contained copies of matter otherwise publici juris, was stnctly to that extent not privileged (at 4;358). Thus the mere obtaining of copies of matter otherwise publict juris for the purpose of advice or litigation would not of itself have rendered the 42. copies privileged The court in Shaw vy, David Syme, in my view, was correct in the Statement that but for risk of interfenng with confidentiality of the communication of advice between the defendant and his solicitor by exposing the thinking of the solicitor in the choice and composition of the copies and extracts of records publici juris, the court in Lyeli_v. Kennedy (No. 3) would have ordered production as to some or all of them because no privilege attached individually. That was the view of Bray in his work on discovery published in 1885. Bray said (at 391-392) :- "As regards documents prepared or obtained by (or by the direction of} the professional legal adviser the privilege must equally attach whether they have been prepared or obtained for his own use or for the purpose of actual communication to the client. Although as a general principle a document cannot acquire privilege merely by the use that is made of it, and therefore a document previously in existence or copy of or extract from such document cannot prima facie be withheld from production on the ground that such document has been obtained or the copy or extract made for privileged purposes, under certain circumstances documents copies and extracts of this nature may acquire a privilege: (and see also a special case of The Palermo, post, p.395). They may acquire a privilege if they have been obtained or made by or by the direction of the professional legal adviser. And the ground on which they can acquire privilege is that they cannot be produced without showing what was the view of the professional legal adviser as to his client's case or the advice which he had given him: they are the materials Selected by his mind and represent the result of his professional care and skill: see Lyell v. Kennedy, 50 L.T. 730 (to be reported in the Law Reports, 26 or 27 Ch.D.) as cited post." Likewise, the editors of the fifth edition of Seton's Judgments and Orders (Volume | London (1891)) noted (at page 80) :- "Copies of documents, though procured by the solr for the purposes of the action, are not privileged, if the originals were not: Chadwick v. Bowman, 16 Q.B.D. 561. A collection of documents publici juris (e.g., entries in public records and registers, and of photographs of tombstones and houses), may be privileged if made for the purposes of the action, and the result of the professional skill of legal advisers: Lyell y. Kennedy, 27 Ch.Div.1." (To like effect see Daniell's Chancery Practice 8th Ed. (1914) London at pages 616- 617). The conclusion and reasoning of the court in Shaw v. David Syme & Co. was independently replicated by the English Court of Appeal in Lambert v. Home [1914] 3 KB 86. In issue was the claim of privilege in respect of a shorthand transcript of proceedings in the county court arranged to be made by the defendant's solicitors in anticipation of further proceedings being taken against the defendant. Cozens-Hardy MR. said (at 90-91) :- "It is admitted that the transcript relates to the matters in question in this action, but it ts contended that the document is privileged - that it is in substance a part of the defendant's brief, as a statement of what some, or possibly all, of the witnesses who were present at the collision have sworn, and that it is not fair to require the defendant to produce that which has been brought into existence under the instructions and at the cost of the defendant in anticipation of the present lingation. Now the proceedings in the county court were public. Any one present could listen and take a note of what the witnesses said. The transcript did not involve any such 'professional knowledge, research and skill' as Bowen L.J. referred to in Lyell v. Kennedy 27 Ch.D. 1, 31. There is no original composition in the document. It is a mere transcript of that which was publici juris. A defendant who has obtained at his own cost a copy of a document, not in his 44. possession, which is not itself privileged, cannot dechine to produce the copy, although he obtained 1 in anticipation of future litigation. So here a mere reproduction in a physical form of material which was publict juris cannot, I think, be privileged." Buckley LJ. said (at 92) :- "It has been sought to sustain the claim to privilege upon the familiar ground that materials coming into existence for the purposes of the trial, or collected by the solicitor for the purposes of the trial, are privileged. The doctrine, in my opinion, is not applicable. The case of Lyell v. Kennedy 27 Ch.D. 1 ts no doubt authority for the proposition that if the solicitor has by search and selection procured coptes of or extracts from sources open to any member of the public the collection may be privileged. The point is best stated by Bowen L.J. (Ibid. at p.31). He says: 'A collection of records may be the result of professional knowledge, research, and skill, just as a collection of curiosities is the result of the skill and knowledge of the antiquarian or virtuoso, and even if the solicttor has employed others to obtain them, it is his knowledge and judgment which have probably indicated the source from which they could be obtained. It is his mind, if that be so, which has selected the materials, and those materials, when chosen, seem to me to represent the result of his professional care and skill, and you cannot have disclosure of them without asking for the key to the labour which the solicitor has bestowed in obtaining them.' In that class of case the solicitor has done original work and by his professional skill and research has obtained a collection of materials to be used for the purpose of the trial. In the present case there is no onginal work or collection of materials leading to a result. The only onginal act done is to reproduce physically material which was publici juris and of which any one was at liberty to avail himself." Lambert _v, Home represents a case of the type falling within the qualification to the judgments expressed by the Lord Justices in Lyell v. Kennedy (No, 3) and the circumstances of the creation of the transcnpt were not such as to cloth what was otherwise unpnivileged material with legal professional privilege. 45. In my opinion the headnote to Lyell v. Kennedy (No, 3) in 27 Ch.D. 1 1s correct, both as to the status of copies of unprivileged documents and as to the limited circumstances in which a collection of copies of matenal otherwise unprivileged may become privileged. The weight of Australian and English authonty since the decision in Lyell v. Kennedy (No, 3) is against the position contended for by the respondent as a matter of precedent and principle. So much of the authority as is based on the reasoning in Kaye _v. Hulthen is, in my respectful view, wrong. Further, a reading of the judgments in Grant v, Downs, National Employers Mutual General Insurance Association y, Waind, O'Reilly y, State Bank of Victona Commissioners and Baker v, Campbell does not show any intention to expand the scope of the then existing privilege or to require differential treatment between original documents and copies of such documents save perhaps 1n the limited circumstances recognised in Lyell y, Kennedy (No. 3). For the above reasons I am of the opinion that legal professional privilege does not attach to the documents AI to A42 identified in Part Two of Schedule One of the Tespondent's lists of documents simply because the copies of the original documents came into existence at the request, or by the conduct, of the solicitors for the respondent for the purposes of the litigation. The respondent did not seek to argue that disclosure of the documents would expose the advice given by the solicitors to the respondent. Neither the description of the copy documents nor the circumstances in which they were obtained suggests that disclosure would expose the legal advice bemng given to the respondent. Such of the documents as have been exposed in the materials on these applications do not suggest any pattern or the nature of any advice being given. The clear impression 1s that the documents were simply regarded as relevant and photocopied on that basis. The copy 46. documents constituted but part of the general pool of information being obtained by the respondent's solicitors for the purpose of the htigation. The documents are to be produced by the respondent for inspection by the applicants. So far as the question of costs is concerned, I have previously ordered that the costs of the hearing on 2 September be paid by the first and second applicants. Otherwise costs remain to be ruled upon. The respondent has substantially failed on its notices of motion and in its claim to withhold production of documents Al - A42 on the basis of legal professional privilege. The respondent was compelled to disclose the existence of microfiche records of the financial accounts of Garth Donnelly and companies associated with him and to admit to the existence of some diary notes of the type the applicants contended existed and had not been discovered in circumstances where the respondent had consistently maintained that such documents did not exist. The applicants were, however, unable to establish that the respondent had failed to make discovery to the extent the applicants alleged in the correspondence of their solicitors or on the hearing of the applications. The applicants therefore did not make out any basis for the striking out of the respondent's defence and for the entry of interlocutory judgment, including damages to be assessed. The respondent's notice of motion filed on 18 May, 1993 led to the order 47, made on 16 July, 1993 directing supplementary lists and to the applicants filing supplementary lists of documents in July, 1993. It should also not be forgotten that it took the respondent's notice of motion of 18 May, 1993 and the order made on 16 July, 1993 to elicit from the applicants a proper explanation as to what had occurred 1n relation to a not insignificant number of the applicants' documents which had not been discovered nor had their absence been explarned. The applicants will be required to swear a further affidavit as to documentation dealing with the receipt and expenditure of the $50,000.00 loan from Mr. Bowers The respective success of the parties 1s sufficiently reflected in an order that the applicants receive 80% of their costs of and incidental to their notices of motion and their opposition to the respondent's notices of motion (other than their costs of 7 September, 1993), but including the costs of the hearings on 16 July and 2 October, 1993. The respondent ought to recover 80% of its costs of and incidental to the notice of motion filed 18 May, 1993 and the hearings on 16 July., 1993. Otherwise, the respondent's failure on its application to strike out the amended statement of claim and to lift the stay on the interlocutory yudgment, together with the failure of its claim to legal professional privilege ought to be reflected in the respondent bearing its own costs of the notice of motion filed 7 August, 1993 and the hearing on 1 October, 1993. THE COURT DIRECTS THAT: 1. Within seven (7) days of today the applicants file and serve an affidavit deposing as to whether they or either of them has within its or their power, possession or control any document relating to the actual payment to the 48, first applicant of the sum of $50,000.00 as a loan from a Mr. Bowers and the expenditure of that money as part of the construction costs of the works at Darra, Queensland 2. If the applicants or either of them has 1n its or their power, possession or control any document satisfying the description in Direction 1 above, the applicants shall produce the same for inspection of the respondent within seven (7) days of the filing of the affidavit referred to in Direction | above and file a supplementary list of documents including the said documents, 1f any, within fourteen (14) days of today. 3. The respondent produce for inspection of the applicants documents Al - A42 inclusive set forth in Part Two of Schedule 1 to the respondent's list of documents. THE COURT ORDERS THAT: 1. Save in respect of the orders and directions made on 16 July, 1993 and 2 September, 1993, and the directions 1 and 2 above, the respondent's applications as claimed in the notices of motion filed on 18 May, 1993 and 6 August, 1993 be dismissed. 2. Save in respect of the orders and directions made on 16 July, 1993 and 2 September, 1993 and Direction 3 above, the applicants' applications as claimed in the notices of motion filed on 16 July, 1993 and 2 September, 49, 1993 be dismissed. 3. The respondent pay the applicants eighty percent (80%) of their costs of and incidental to their notices of motion and their defence of the respondent's notices of motion (other than the costs of the hearing on 2 September, 1993) to be taxed if not agreed. 4. The applicants pay the respondent eighty percent (80%) of its costs of and incidental to the notice of motion filed on 18 May, 1993 and the hearing of that motion on 16 July, 1993 to be taxed if not agreed. I certify that this and the preceding forty-eight (48) pages are a true copy of the reasons for judgment herein of his Honour Justice Cooper. Date: 31 October, 1994 CHO. K M ana. Associate Counsel for the Applicants: Mr. K. Varley Solicitors for the Applicants: Smits Leslie Barwick Counsel for the Respondent: Mr. S. Couper QC. Solicitors for the Respondent: Gadens Ridgeway Date of Hearing: 16 July, 1 September, | October, 1993 Place of Hearing: Brisbane Date of Judgment: 31 October, 1994