FEDERAL COURT OF AUSTRALIA Australian Securities and Investments Commission v Mercorella (No 4) [2006] FCA 873 AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION v GUISEPPE ANTONIO MERCORELLA & ANOTHER SAD 160 of 2005 MANSFIELD J 30 JUNE 2006 ADELAIDE IN THE FEDERAL COURT OF AUSTRALIA SOUTH AUSTRALIA DISTRICT REGISTRY SAD 160 OF 2005 BETWEEN: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION APPLICANT AND: GUISEPPE ANTONIO MERCORELLA FIRST RESPONDENT SEABAY INVESTMENTS PTY LTD SECOND RESPONDENT JUDGE: MANSFIELD J DATE OF ORDER: 30 JUNE 2006 WHERE MADE: ADELAIDE THE COURT ORDERS THAT: 1. The application on behalf of Anthony Sobey, Tracey Sobey and ACN 114 392 577 Pty Ltd for an extension of time within which to seek leave to appeal from the interlocutory judgment of 21 June 2006 is refused. 2. Leave to Colin Nicol to inspect those documents in the bundles marked for identification PT1, PT2 and PT4 in respect of which the judgment of 21 June 2006 determined that no legal professional privilege existed. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA SOUTH AUSTRALIA DISTRICT REGISTRY SAD 160 OF 2005 BETWEEN: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION APPLICANT AND: GUISEPPE ANTONIO MERCORELLA FIRST RESPONDENT SEABAY INVESTMENTS PTY LTD SECOND RESPONDENT JUDGE: MANSFIELD J DATE: 30 JUNE 2006 PLACE: ADELAIDE REASONS FOR JUDGMENT 1 On 21 June 2006, I gave judgment in this matter on an interlocutory application involving the determination of disputed claims that documents produced to the Court should not be available for examination by Mr Nicol because they were the subject of legal professional privilege: see Australian Securities and Investments Commission v Mercorella (No 3) [2006] FCA 772. I found that certain documents were privileged from inspection, and that other documents were not privileged from inspection. 2 Certain of the disputed documents, which I found were not privileged from inspection, fell into a category of documents which, applying routine principles and, on occasions, involving looking at the document, simply did not amount to documents in respect of which legal professional privilege attaches. The other category of documents to which I found legal professional privilege did not attach comprised a number of documents which I found had been brought into existence to record, or for the purpose of, communications for an improper purpose. The judgment was structured so that those in the first category were first identified, and those in the second category were identified only to the extent to which they were not already found not to be privileged. 3 The documents in those two categories have now been isolated, and can be held back from inspection. 4 Mr Nicol now seeks to inspect the documents. 5 At the time of judgment, no application for leave to appeal was made. The time within which an application for leave to appeal from that interlocutory judgment may be made has now expired (see O 52 r 10(2A)(b)). As solicitors for Anthony Sobey, Tracey Sobey and ACN 114 392 577 Pty Ltd, (the Sobey interests) informally notified my Associate that they wished to oppose the inspection of the documents found not to be privileged, I called the matter on today. The Sobey interests have made an oral application for an extension of seven days from today's date within which an application for leave to appeal from the interlocutory judgment may be made. 6 There is no evidentiary material before the Court in support of the application. Senior counsel for Mr Nicol has accepted the facts put forward from the bar table on behalf of the Sobey interests. They are that at the time the judgment was delivered, and up to now, senior counsel for the Sobey interests has been overseas and has been unable to be easily contacted for the purposes of giving advice as to whether grounds for seeking leave to appeal exist; that junior counsel for the Sobey interests has been available at all times but due to junior counsel being involved in the conduct of another trial, has not given advice as to whether grounds for seeking leave to appeal exist; and, thirdly, that the solicitor handling the matter after the judgment was delivered and at some unspecified time went overseas and is presently overseas, and will not return until Tuesday next, 4 July 2006. There is no information, one way or the other, as to whether the solicitor with the conduct of the matter made any arrangements with any other solicitor in the firm to complete getting instructions in a timely manner. 7 The Court may fix a further time within which an application for leave to appeal from the interlocutory judgment should be granted. The likelihood of leave to appeal being granted is a relevant consideration: see Deighton v Telstra Corporation Ltd [1997] FCA 1568 (Lee, Heerey and Nicholson JJ). So too are the reasons for the delay: see Croker v Philips Electronics Australia Limited [2000] FCA 1731 (Stone J). 8 I do not propose to grant the extension of time within which to make an application for leave to appeal. In my view, accepting what has been put on behalf of the Sobey interests, the delay in seeking leave to appeal is not adequately explained. In particular, the fact that junior counsel was engaged in a trial for the last several days is not, of itself, a reason why such advice as was necessary to be obtained from junior counsel could not be obtained. In addition, it is not satisfactorily explained why the solicitors acting for the Sobey interests could not, before the instructing solicitor went overseas, have done more to obtain instructions. It is not explained whether that solicitor handed the conduct of the matter to another solicitor during his absence, or simply left to go overseas, leaving the matter in abeyance and on the assumption that an extension of time application made after the elapse of the seven day period would be made and would be successful. Of course, I accept that senior counsel has been overseas and has been unavailable. If that were the critical issue to the grant of the extension of time, I would have granted the extension of time sought (subject to considering whether there is any merit in the putative appeal). It was not argued that senior counsel's advice was necessary. In my view, this is a matter upon which junior counsel could readily have advised or, indeed, the solicitor with the conduct of the matter could have done so. 9 The solicitor appearing for the Sobey interests today has not put anything to indicate that there is any likelihood of leave to appeal being granted. I raised the question of whether some distinction should be made between the two categories of documents which I have described above. That was because there may have been different considerations of principle, and of injustice to the Sobey interests, in relation to the two categories of documents: see Decor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 398-400. However, that invitation was not taken up. The application for an extension of time within which to seek leave to appeal was not sought to be refined by reference to one or other of those categories of documents. So far as I can see, and I accept that I have not had the benefit of any submissions suggesting an arguable legal error either in the identification of the law or in its application, the determination of the issues raised concerning legal professional privilege involved the application of well settled principles. In the case of the category of documents for which privilege was not found to exist because of the purpose for which they were brought into existence, nothing has been put to suggest that the characterisation of those documents was factually erroneous. On the assumption that it was not factually erroneous, the application of well settled principles led to the orders which were sought. 10 For those reasons, in my view, the present application for an extension of time within which leave to appeal should be granted is refused. I have not overlooked the fact that the application is for a relatively short period of a further seven days but, in the circumstances, that does not weigh sufficiently to exercise the discretion which I have to grant the extension of time. Nor have I overlooked the consequence of implementing the decision - namely, that the documents may be inspected even if the decision were erroneous. 11 The problem for the Sobey interests is that nothing has been put to identify an arguable error, and so the prejudice which is said to flow or which is said might flow is on a hypothesis which has not been sought to be made out. In those circumstances, the possibility of error asserted but not explained does not weigh heavily in the scales in the exercise of the discretion which I have. 12 Accordingly, I will now permit Mr Nicol to inspect the documents in respect of which I have found that no privilege exists. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mansfield. Associate: Dated: 4 July 2006 Counsel for the Liquidator: M Hoffmann QC Solicitor for the Liquidator: Minter Ellison Counsel for the Sobey Interests: R Chrzaszcz Solicitor for the Respondent: Robert Chrzaszcz & Associates Date of Hearing: 30 June 2006 Date of Judgment: 30 June 2006