FEDERAL COURT OF AUSTRALIA Insurance Australia Limited v Crisp [2012] FCA 469 Citation: Insurance Australia Limited v Crisp [2012] FCA 469 Appeal from: Application for leave to appeal: Crisp, in the matter of ACN 069 895 585 Pty Ltd (in liq) v ACN 069 859 585 Pty Ltd (in liq) [2012] FCA 148 Parties: INSURANCE AUSTRALIA LIMITED v GLENN ANTHONY CRISP File number: VID 245 of 2012 Judge: BROMBERG J Date of judgment: 27 April 2012 Catchwords: APPEAL AND NEW TRIAL – application for leave to appeal interlocutory judgment – s 24(1A) Federal Court of Australia Act 1976 (Cth) – legal professional privilege – application by liquidator for legal costs incurred in course of liquidation – interlocutory decision that documents relevant to legal costs incurred, are privileged – whether decision is open to dispute – whether substantial injustice – leave to appeal granted. Legislation: Corporations Act 2001 (Cth) s 511 Federal Court of Australia Act 1976 (Cth) s 24(1A) Cases cited: Décor Corporation Pty Ltd and Anor v Dart Industries Inc (1991) 33 FCR 397 Commissioner of Taxation v Rio Tinto Limited (2006) 151 FCR 341 BHP Billiton Petroleum (Bass Strait) Pty Ltd v Esso Australia Resources Pty Ltd [2007] VSC 281 Esso Australia Resources Pty Ltd v BHP Billiton Petroleum (Bass Strait) Pty Ltd [2007] VSCA 224 Daniels Corporation International v Australian Competition and Consumer Commission (2002) 213 CLR 543 Ace Insurance Ltd v Trifunovski [2012] FCA 235 Date of hearing: 27 April 2012 Place: Melbourne Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 15 Counsel for the Applicant: Mr S Habib SC with Ms R Francois Solicitor for the Applicant: William Roberts Lawyers Counsel for the Respondent: Mr A Phillips Solicitor for the Respondent: Rothwell Lawyers IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 245 of 2012 BETWEEN: INSURANCE AUSTRALIA LIMITED ACN 000 016 722 Applicant AND: GLENN ANTHONY CRISP Respondent JUDGE: BROMBERG J DATE OF ORDER: 27 APRIL 2012 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. Leave is granted to the applicant to institute an appeal from that part of the judgment of Jessup J given on 5 March 2012, which is raised by the applicant's draft notice of appeal dated 19 March 2012. 2. Costs be reserved. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 245 of 2012 BETWEEN: INSURANCE AUSTRALIA LIMITED ACN 000 016 722 Applicant AND: GLENN ANTHONY CRISP Respondent JUDGE: BROMBERG J DATE: 27 APRIL 2012 PLACE: MELBOURNE REASONS FOR JUDGMENT 1 The applicant has applied for leave to appeal from part of the interlocutory judgement of Jessup J given on 5 March 2012. Pursuant to s 24(1A) of the Federal Court of Australia Act 1976 (Cth) leave is required in order for an appeal to be brought. The principles guiding the Court's discretion to grant leave are well known. The leading authority is Décor Corporation Pty Ltd and Anor v Dart Industries Inc (1991) 33 FCR 397, in which Sheppard, Burchett and Heerey JJ considered at 398-399 that, for the general run of cases in which leave to appeal is sought, the two guiding considerations are: • whether in all the circumstances, the decision is attended with sufficient doubt to warrant it being reconsidered by a Full Court; and • whether substantial injustice would result if leave were refused, supposing the decision to be wrong. 2 As the Full Court emphasised at 399-400, in the following passage, these considerations provide general guidance, and there will be cases that raise special considerations. The Full Court relevantly said: In our opinion, the principles discussed in Niemann and in the other cases to which we have referred, provide general guidance which a court should normally accept. However, there will continue to be cases raising special considerations, and the court should not regard its hands as tied in any case beyond this; that by s 24(1A) the legislature has evinced a policy against the bringing of interlocutory appeals except where the court, acting judicially, finds reasons to grant leave. When the court comes to exercise its discretion on a particular application, an important distinction to be observed is that between the common interlocutory decision on a point of practice concerning which the High Court has given (see Adam P Brown Male Fashions Pty Ltd v Phillip Morris Inc (1981) 148 CLR 170 at 177) a strong warning that "a tight reign" should be kept on appeals - and an interlocutory decision determining a substantive right - where leave will more readily be granted. Although the judgements of Jordan CJ in Re Will of Gilbert (deceased) (1946) 46 SR (NSW) 318 at 323 and of the majority of the High Court in Adam P Brown Male Fashions Pty Ltd v Phillip Morris Inc (supra) are not concerned with the question of the granting of leave, they emphasise this distinction, which was applied to the granting of leave in Ex parte Bucknell (1936) 56 CLR 221 and in Sharp (supra). In the present case, the interlocutory decisions in respect of which leave is sought are certainly attended with difficulty and their correctness is open to dispute. 3 The judgement below concerns a claim of legal professional privilege by the respondent, ("Mr Crisp"), in relation to some 557 documents discovered by Mr Crisp ("the privileged documents"). Mr Crisp was formerly the liquidator of ACN 069 895 585 Pty Ltd (in liquidation). In the proceeding below, Mr Crisp seeks an order for his remuneration pursuant to s 511 of the Corporations Act 2001 (Cth). 4 The applicant, Insurance Australia Limited ("IAL"), is a creditor in the liquidation, the defendant in the proceeding below, and an objector to Mr Crisp's application. In the judgement below, Jessup J dismissed IAL's application that Mr Crisp produce the privileged documents for inspection. IAL had challenged the claims for privilege on the basis that Mr Crisp had impliedly waived the privilege which would otherwise have attached to the documents. The privileged documents are professional communications between Mr Crisp and his legal advisors relating to proceedings or contemplated proceedings in which Mr Crisp was or would have been a party in the course of the liquidation. 5 The principal issue before Jessup J was whether by bringing his application for his remuneration, including for the costs which he incurred in seeking and obtaining professional legal services, Mr Crisp had made assertions inconsistent with the maintenance by him of his claim of privilege. The assertions said by IAL to have been made by Mr Crisp are set out at [8] of the judgement as follows. IAL asserts that the plaintiff's case necessarily involves expressed or implied assertions that the legal costs were in fact incurred by the plaintiff; that those costs were incurred by him as liquidator; and the costs concerned advice and other legal work relating to matters properly the subject of the liquidation; that none of the costs were referable to work or advice concerning any matter that could not reasonably be charged to the liquidation; that the costs were reasonably incurred, both in nature and in amount; that the fees paid in relation to the legal work and the legal work itself were required and necessary to progress the liquidation; and that the plaintiff acted reasonably upon receipt of legal advice. IAL says that it is entitled and desires to test each of those assertions, thereby making them controversial in the proceeding. It says that by making the assertions, the plaintiff necessarily placed the contents of every document over which a claim for privilege might otherwise lie in issue and opened them up for scrutiny. 6 Jessup J rejected IAL's contention. His Honour relied upon a distinction his Honour regarded had been made by the Full Court in Commissioner of Taxation v Rio Tinto Limited (2006) 151 FCR 341, between the making by a privilege-holder of an assertion about the relevance of the privileged communications, and the making of an assertion about the contents of those communications. Only an assertion about content is to be regarded as inconsistent with the maintenance of the privilege. 7 Jessup J found, as a matter of fact, that Mr Crisp had not made assertions about the contents of the privileged documents. His Honour considered at [9] that: [t]he proceeding as such is not concerned with the contents of the documents over which privilege would lie as such. To exemplify the point, his Honour continued: For example, the question whether it was reasonable for the plaintiff to obtain and to pay for legal advice at a particular point does not necessarily put in issue the nature of the advice received. 8 The finding made by Jessup J seems to be based on his Honour's conclusion that in the context of the kind of claim pursued by Mr Crisp, the making of that claim did not entail the making of an assertion about the contents of the privileged documents. 9 IAL contends that the approach taken by Jessup J is at odds with the approach adopted by the Victorian Supreme Court in BHP Billiton Petroleum (Bass Strait) Pty Ltd v Esso Australia Resources Pty Ltd [2007] VSC 281 (Hargrave J) and the Court of Appeal in Esso Australia Resources Pty Ltd v BHP Billiton Petroleum (Bass Strait) Pty Ltd [2007] VSCA 224 (Maxwell ACJ and Chernov JA). In that case and relying upon a joint venture agreement between Esso and BHP, Esso brought a counter-claim seeking reimbursement of one-half of its expenditure, including for the costs incurred by it in litigation. The Court of Appeal agreed with Hargrave J that by the making of its counter-claim, Esso made an assertion about the contents of those documents for which it claimed legal professional privilege. 10 At [18], the Court of Appeal said: Esso's counter-claim puts in issue whether its expenditure on legal costs fell within the operating agreement and that, in turn, depends on the nature and purpose of the legal work which occasioned the payments. The documents in question are plainly relevant to these issues. By making its claim for reimbursement, Esso made an assertion about the contents of the documents. Esso thereby laid the documents open to scrutiny. It would plainly be inconsistent for it now to maintain a claim for confidentiality in respect of them, even if we accepted the possibility that Esso might choose not to rely on the documents in the proceeding. 11 Jessup J considered, and at [13] of his reasons for judgment, distinguished BHP Billiton by reason of the nature of the legal issues involved in the making of that claim and "the more common place situation of a liquidator applying for his or her remuneration". 12 IAL contends that the basis upon which Jessup J distinguished BHP Billiton was insufficient to displace the cogent and persuasive reasoning of Hargrave J and the Court of Appeal. 13 In my view, Jessup J was not faced with a common interlocutory decision on a point of practice. His Honour determined an issue of substantive law (Daniels Corporation International v ACCC (2002) 213 CLR 543 at [9] to [11] (Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne, and Callinan JJ)) and of general importance (Ace Insurance Limited v Trifunovski [2012] FCA 235 at [8] and [9]). The decision which his Honour was required to make is attended with difficulty. In light of the reasoning in BHP Billiton, I consider that the correctness of the decision may fairly be regarded as open to dispute. 14 If Jessup J's decision is wrong, the consequence for IAL is that it will be wrongly denied access to over 500 documents (which may be assumed to be relevant by reason of those documents having been discovered) and it will be required to conduct the proceeding below without the benefit of inspection of those documents. I am satisfied that substantial injustice would result if leave were refused, supposing the judgement of Jessup J to be wrong. 15 I will grant leave for IAL to institute an appeal. I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bromberg. Associate: Dated: 8 May 2012