Australian Securities and Investments Commission v Mercorella (No 3) [2006] FCA 772

FEDERAL COURT OF AUSTRALIA

Australian Securities and Investments Commission v Mercorella (No 3) [2006] FCA 772

PRIVILEGE – legal professional privilege – where creditors sought legal advice regarding obtaining security over debt owed by operator of managed investment scheme – where creditors knew scheme in financial difficulty – security obtained – whether solicitors' files regarding the securities and their enforceability privileged – whether advice sought to obtain unfair advantage over other creditors – whether improper purpose – where documents giving effect to securities did not reflect reality of transactions HELD: The security documents were brought into existence for an improper purpose. Communications between the creditors and their solicitors concerned with the creation of those documents were not privileged. Corporations Act 2001 (Cth) Evidence Act 1995 (Cth) Bankruptcy Act 1966 (Cth)

Mann v Carnell (1999) 201 CLR 1 cited Esso Australia Resources Ltd v Commissioner of Taxation (1999) 201 CLR 49 referred to Grant v Downs (1976) 135 CLR 674 referred to Trade Practices Commission v Sterling (1979) 36 FLR 244 referred to Health & Life Care Ltd v Price Waterhouse (1997) 69 SASR 362 followed Ainsworth v Wilding (No 2) [1900] 2 Ch 315 referred to Allen Allen & Hemsley v Deputy Commissioner of Taxation (New South Wales) (1989) 86 ALR 597 referred to R v Manchester Crown Court; Ex parte Rogers [1999] 4 All ER 35 referred to Cook v Pasminco Ltd (No 2) (2000) 107 FCR 44 referred to Varawa v Howard Smith & Co Ltd (1910) 10 CLR 382 referred to Attorney-General (Northern Territory) v Kearney (1985) 158 CLR 500 discussed Commissioner of Australian Federal Police v Propend Finance Pty Limited (1997) 188 CLR 501 considered R v Bell; Ex parte Lees (1980) 146 CLR 141 discussed Southern Equities Corporation Ltd (in liq) v Arthur Andersen & Co (1997) 70 SASR 166 followed O'Rourke v Darbishire [1920] AC 581 referred to Baker v Evans (1987) 77 ALR 565 referred to Re Moage Ltd (in liq); Sheahan v Pitterino (1998) 82 FCR 10 referred to Kennedy v Lyell (1883) 23 Ch D 387 referred to Handley v Baddock [1987] WAR 98 referred to DSE (Holdings) Pty Ltd v Intertan Inc (2003)135 FCR 151 cited Mitsubishi Electric Australia Pty Ltd v Victorian Work Cover Authority (2002) 4 VR 332 cited Pratt Holdings Pty Ltd v Commissioner of Taxation (2004) 136 FCR 357 discussed Gartner v Carter; In the Matter of Gartner Wines Pty Ltd [2004] FCA 258 considered Barclays Bank Plc v Eustice [1995] 4 All ER 511 considered Richardson v Mellish (1824) 2 Bing 229 referred to Re Jacob Morris (deceased) (1943) 43 SR (NSW) 352 referred to Harriton v Stephens (2004) 59 NSWLR 694 referred to Waller v James [2006] HCA 16 cited Harriton v Stephens [2006] HCA 15 cited Cattanach v Melchior (2003) 215 CLR 1 referred to AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION v GUISEPPE ANTONIO MERCORELLA AND SEABAY INVESTMENTS PTY LTD SAD 160 of 2005 MANSFIELD J 21 JUNE 2006 ADELAIDE