Allstate Life Insurance Co & Ors v Australia & New Zealand Banking Group Ltd & Ors [1995] FCA 1081

NOT FOR DISTRIBUTION IN THE FEDERAL COURT OF AUSTRALIA) NEW SOUTH WALES DISTRICT REGISTRY) No NG 381 of 1994 GENERAL DIVISION ) BETWEEN: ALLSTATE LIFE INSURANCE CO and the parties listed as applicants in Annexure A to the third further amended statement of claim. Applicants AND: AUSTRALIA & NEW ZEALAND BANKING GROUP LIMITED and the parties listed as respondents in Annexure B to the third further amended statement of claim. Respondents CORAM: Lindgren J PLACE: Sydney DATE: 19 December 1995

REASONS FOR JUDGMENT (No 20) (Skadden Arps' motion for production for inspection) There is before the Court a motion brought by the first cross-respondent ("Skadden Arps") by notice of motion filed on 30 November 1995, seeking an order that the 6th, 11th, 12th, 13th, 14th and 15th applicants, (the "Ariel Entities"), pursuant to O 15 r 11 (d) of the Federal Court Rules, produce for inspection "all daily activity reports, without redaction, a sample of which is annexed at pages 3-12 of annexure 'A' to the affidavit Jeffrey Noel Babington Lees sworn 30 November 1995 in support of [the] motion, contained in a draft list of documents of the Ariel Entities". The expression "without redaction" means "without editing". The way in which the issue arises is that the Ariel Entities have given discovery of the daily activity reports referred to in the sense of having listed them in their list of documents but they have blackened out certain data relating to particular securities. The particular item of information on which the argument has focused is the "market value" of the securities. It is not clear to me how some of the securities referred to in the daily activity reports in respect of which the blackening out has occurred are or may be relevant to any issue in these proceedings, but this does not matter for present purposes. The fact is that they have been discovered, there has been no debate about their relevance, and some of them such as the senior subordinated debentures issued by Linter Textiles Corporation Limited itself, are clearly potentially relevant. The claim for privilege is sought to be made in an affirmation of Jack N. Mayer, affirmed 7 December 1995. He says that the information in question has been blackened out because in arriving at the market value figures, the Ariel Entities took into account legal advice. He says that he sought legal advice concerning, amongst other things, the status of various legal proceedings, "because the value of such holdings was integrally connected to, and derived in part from, the status of litigation relating to those holdings". The "holdings" to which he refers are, of course, the Ariel Entities' holdings referred to in the daily activity sheets. Mr Mayer goes into further detail in his affirmation as to the attorneys with whom he had conversations. He says that the conversations were conducted over the telephone and that the advice included an assessment by the respective attorneys of the risks, costs and attendant delays in litigation. It was not disputed that legal professional privilege would attach to such advice communicated in those conversations. It is the next step which has given rise to contention. Mr Mayer says that in the course of the conversations, a specific value and/or range of values was ascribed to the bonds held by the Ariel Entities, and that he used the knowledge which he gained in the conversations in determining the values to be shown for the securities in question. I quote from his affirmation as follows: "Specifically, the value of the securities that are subject to litigation derive in large measure from the risks, recovery prospects, costs and attendant delays in litigation, matters concerning which, with respect to the litigated interests, I rely not upon myself or my co-workers, but upon advice of counsel, including values that were ascribed to Linter Textiles bonds in the course of meetings with counsel. Accordingly, the value that I ascribed to such interests derived primarily from my conversations with counsel."