New South Wales Supreme Court CITATION : In the matter of Bauhaus Pyrmont Pty Ltd (in liq) [2006] NSWSC 543 This decision has been amended. Please see the end of the judgment for a list of the amendments. HEARING DATE(S) : 18, 24, 31 May 2005 JUDGMENT DATE : 6 June 2006 JURISDICTION : Equity JUDGMENT OF : Austin J DECISION : All claims for privilege unsuccessful. Access granted to subpoenaed materials. CATCHWORDS : PRACTICE & PROCEDURE - subpoenaed documents - claims to privilege - application of Evidence Act principles under UCP Rules – EVIDENCE - client legal privilege - liquidator's examination proceedings - litigation funding agreement - participation by funder in conferences and correspondence with lawyers - whether privileged under s 118 or s 119 - whether privilege waived under s 122(2) or (4) - common interest privilege under s 122(5)(b) - loss of privilege through abuse of power under s 125 - whether grounds to attribute creditor's improper purpose to liquidator LEGISLATION CITED : Evidence Act 1995 (NSW), ss 117, 118, 119, 122, 125 Uniform Civil Procedure Rules 2005 (NSW), rule 1.9 Apple Computer Australia Pty Ltd v Wily [2002] NSWSC 855 Attorney-General (NT) v Kearney (1985) 158 CLR 500 Australian Rugby Union Ltd v Hospitality Group Pty Ltd (1999) 165 ALR 253 Balabel v Air India [1988] 1 Ch 317 Farrow Mortgage Services Pty Ltd (in liq) v Webb (1996) 39 NSWLR 601 General Manager, WorkCover Authority of NSW v Law Society of NSW [2006] NSWCA 84 Lam Soon v Molit (No 55) (1996) 70 FCR 34 Meteyard v Love (2005) 56 ACSR 487 CASES CITED : Mitsubishi Electric Australia Pty Ltd v Victorian WorkCover Authority (2002) 4 VR 332 Newcrest Mining (WA) Ltd v Commonwealth (1993) 40 FCR 507 Pratt Holdings Pty Ltd v Commission of Taxation (2004) 136 FCR 357 Re Excel Finance Corporation Ltd; Worthey v England (1994) 52 FCR 69 Re Global Medical Imaging Ltd [2001] NSWSC 476 Rickard Constructions Pty Ltd v Rickard Hails Moretti Pty Ltd [2006] NSWSC 234 Southern Cross Airlines Holdings Ltd (in liq) v Arthur Andersen & Co (1998) 84 FCR 472 Southern Equities Corporation Ltd v West Australian Government Holdings Ltd (unreported, Supreme Court of Western Australia, 5 May 1993, per Master Adams). Van Der Lee v State of New South Wales [2006] NSWCA 286 Waterford v Commonwealth (1987) 163 CLR 54 Andrew Hugh Jenner Wily as liquidator of Bauhaus Pyrmont Pty Ltd (in liq)(P/R1) Andrew Timothy Roberts (D1/A1) PARTIES : Ross Arnold McDiven (D2/A2) Karen Maree Pederson (D3/A3) James Warren Herbert Byrnes (R2) ACN 089 518 721 (formerly Consolidated Byrnes Holdings Pty Ltd) (R3) FILE NUMBER(S) : SC 1486/06 COUNSEL : S A Kerr with P Kulevski (As) G Lucarelli (R1) Clayton Utz (As) SOLICITORS : Landerer & Co (R1) James Byrnes (in person and for R3) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION AUSTIN J TUESDAY 6 JUNE 2006 1486/06 IN THE MATTER OF BAUHAUS PYRMONT PTY LTD (IN LIQUIDATION) JUDGMENT 1 HIS HONOUR: These reasons for judgment relate to an application by the three defendants for access to documents produced on subpoena, subject to claims of client legal privilege, by the plaintiff's solicitors and a third party. 2 On 1 March 2006 a Deputy Registrar of the court issued examination summonses under s 596A of the Corporations Act to three examinees, on the application of Andrew Wily as liquidator of Bauhaus Pyrmont Pty Ltd (in liq) ("the Company"). The examinees are Andrew Roberts, chief executive officer of Multiplex Ltd, Ross McDiven, a senior executive of Multiplex, and Karen Pedersen, in-house counsel of the Multiplex Group. I shall call them "the Roberts parties". In light of the ensuing litigation, described below, the examinations have not taken place and the examination dates have been vacated. 3 I was informed in submissions that, prior to 20 April 2002, all of the shares in the Company were held by the Multiplex Group, and the Roberts parties were all directors of the Company. On 20 April 2002 the shares in the Company were sold to companies controlled by James Byrnes and Ian Widdup respectively. Since that date, Mr Widdup has been a director of the Company. 4 The Company was placed into voluntary administration on 25 June 2002 and liquidation on 19 September 2003. Christopher Palmer was appointed liquidator. On 23 September 2005, by resolution of creditors, Mr Palmer was replaced as liquidator by Mr Wily. The Roberts parties allege that Mr Byrnes or a company related to him is funding Mr Wily in relation to the examination summonses. I shall refer to evidence indicating that this is not contested. 5 Mr Wily has given evidence, in his affidavit made on 6 April 2006, that his purpose in seeking to examine the Roberts parties is to investigate four matters. The first relates to fees of $2,538,105 charged by Multiplex to the Company. Mr Wily says that accounting documents suggest Multiplex charged that amount for adviser fees, project management fees and a guarantee fee. He says there is "some suggestion" that an invoice for that amount was created after the event and backdated, in an attempt to justify the charge. He does not specifically identify the source of the suggestion, or any basis for it. He refers to certain documents that are not in evidence before me. 6 The other three matters for investigation, according to Mr Wily, relate to "GST and input tax credits", "possible insolvent trading" and "voidable transactions". The parts of his affidavit explaining those matters have not been read on the present applications. 7 Mr Wily's evidence is that he has formed no final view as to the merits of any of the potential claims, and he has instructed his solicitors to apply for examination summonses in order to investigate these four matters. The evidence before me is consistent with the proposition that his grounds for wishing to investigate have been supplied to him by statements made by Mr Byrnes. 8 By an interlocutory process filed on 8 March 2006 ("the principal interlocutory process"), the Roberts parties seek the following relief: (1) an interim injunction restraining Mr Wily from undertaking any of the proposed examinations; (2) a direction that the examination summonses be stood over pending determination of the interlocutory process (in substance this has occurred); (3) an order giving the Roberts parties access to the affidavit filed in support of the application for issue of examination summonses; (4) an order setting aside Mr Wily's decision to apply for the issue of examination summonses; (5) an order requiring Mr Wily to provide to the court a report detailing all his dealings with Mr Byrnes and any companies of which Mr Byrnes or his wife is a director or shareholder (including proposals or agreements for funding the examinations or legal proceedings against the Roberts parties or any Multiplex entity, and correspondence relating to legal action involving the Roberts parties or any Multiplex entity); (6) an order removing Mr Wily as liquidator of the Company, and appointing some other fit person in his place; (7) directions that Mr Wily be examined on oath as to the causes of the winding up of the Company, and for an investigation into his conduct as liquidator. 9 Central to these claims for relief are the assertions by the Roberts parties that the examination summonses have been issued for an improper purpose, and that Mr Wily has not formed his own view, independently of Mr Byrnes, that the examinations are necessary for the proper conduct of the liquidation. In written submissions made to the court on 6 April 2006, the Roberts parties said: "Ultimately, the case turns upon the Applicants' contention that the Liquidator is no more than a 'puppet' or a conduit for Mr Byrnes who is in fact making all relevant decisions in relation to the conduct of the liquidation and that the only reason for the issue of the summons is the embarrassment Mr Byrnes thinks will be occasioned to the Applicants which, it is apparent he believes will result in some payment of money for his benefit." 10 On 22 March 2006 I decided, for ex tempore reasons delivered on that occasion, that it was appropriate for the various categories of relief sought in the principal interlocutory process to be raised together, having regard to their common factual substratum. I granted leave for the matter to go forward as an interlocutory process in the examination summons proceeding. 11 The principal interlocutory process has not yet been heard, but there have been many directions hearings about it and other interlocutory applications. At one stage it was contemplated that I would hear the principal interlocutory process as Corporations Judge on 30 and 31 May and 1 June 2006, but delay associated with other applications made it necessary to abandon that proposal. Both sides have informed the court that they wish to have the issues resolved with expedition. I have observed that to be true. A great deal of legal work has been done on both sides without any discernible indication of intentional delay. 12 The hearing of the principal interlocutory process was delayed after the Roberts parties served a notice to produce on Mr Wily, and subpoenas on various persons and entities including Landerer & Co, Mr Byrnes and a company now called ACN 089 518 721 Pty Ltd and formerly called Consolidated Byrnes Holdings Pty Ltd (which I shall refer to as "CBH"). I granted leave for the notice to produce and subpoenas to be issued, over opposition by Mr Wily, for the ex tempore reasons that I gave on 22 March 2006. Much of the time at directions hearings has been taken up identifying and refining claims based on client legal privilege, and identifying the privilege issues needing determination by the court. In the result, the parties have identified 17 documents over which Mr Wily, or Landerer & Co on his behalf, have a contested claim for privilege, and 7 such documents in the case of Mr Byrnes/CBH. Landerer & Co's 17 documents 13 The 17 documents are identified in an annexure to the affidavit of Zoe Bojanac, a solicitor employed by Landerer & Co, made on 26 April 2006. I shall set out the identification of each document in issue, and Ms Bojanac's evidence about the document. 14 Documents 6 and 7 were produced from Landerer & Co's file No 02100041. According to Ms Bojanac (affidavit, para 6), the firm was acting on behalf of Mr Byrnes and the file concerned preparation of a Master Funding Agreement setting out the terms upon which litigation funding could be made available by Mr Byrnes to Mr Wily with respect to claims that may be available to Mr Wily as liquidator of the Company. Of the remaining 15 documents, 14 were produced from file No 02100044, the file relating to the examination proceedings, where the client is identified as Mr Wily. The other document (document 83) was received by Landerer & Co from Mr Byrnes on 21 March 2006. 15 Ms Bojanac's evidence about the 17 documents is as follows: (a) Document 6 : File note dated the 22-12-05, prepared by Peter Downie of Landerer & Co re conference/discussions with Jim Byrnes. This was prepared by hand by Mr Downie during a discussion with Mr Byrnes. The note records instructions received from Mr Byrnes (affidavit, para 11). (b) Document 7 : E-mail dated 12-12-05, from Peter Downie of Landerer & Co to Jim Byrnes. This contains advice as to certain amendments made to a draft of the Master Funding Agreement (affidavit, para 12). (c) Document 36 : File note dated 1-3-06, prepared by Zoe Bojanac of Landerer & Co re telephone conversation with Jim Byrnes. One of several documents relating to instructions and communications between Landerer & Co and ALF concerning the issue of examination process, and dealing with such matters as potential examinees and suggested counsel (affidavit, para 26). (d) Document 38 : E-mail dated 3-3-06, from Zoe Bojanac of Landerer & Co to Andrew Wily of Armstrong Wily; and Document 39 : E-mail dated 6-3-06, from Andrew Wily to Zoe Bojanac. Two of several documents relating to instructions and communications with the liquidator's office concerning the issue of the examination summonses, and dealing with such matters as preparation of process and settling and execution of the liquidator's affidavit in support of the examination summonses (affidavit, para 23). (e) Document 48 : E-mail dated 10-3-06, from Zoe Bojanac of Landerer & Co to Andrew Wily and Tony Hamilton of Armstrong Wily; and Document 49 : E-mail dated 10-3-06, from Jim Byrnes to Zoe Bojanac of Landerer & Co and to Andrew Wily and Tony Hamilton of Armstrong Wily; and Document 53 : File note dated 13-3-06, prepared by Zoe Bojanac of Landerer & Co in relation to telephone conversation with Jim Byrnes; and Document 55 : E-mail dated 14-3-06, from Zoe Bojanac of Landerer & Co to Jim Byrnes; and Document 56 : E-mail dated 15-3-06 from Zoe Bojanac of Landerer & Co to Jim Byrnes; and Document 58 : E-mail dated 15-3-06: from Jim Byrnes to Andrew Wily and Tony Hamilton of Armstrong Wily and Zoe Bojanac and Martin Deutsch of Landerer & Co; and Document 59 : E-mail dated 15-3-06, from Jim Byrnes to Zoe Bojanac and Martin Deutsch of Landerer & Co and Andrew Wily and Tony Hamilton of Armstrong Wily. Seven of a group of documents relating to instructions and communications with ALF concerning the examinees' challenge to the examination summonses, and dealing with such matters as instructions in response to the various allegations being made against the liquidator and/or Mr Byrnes and information relevant to the matters to be investigated at the public examinations (affidavit, para 28). (f) Document 57 : File note dated 15-3-06, prepared by Zoe Bojanac of Landerer & Co in relation to conference with Lee Aitken, George Lucarelli, Jim Byrnes and Martin Deutsch. Ms Bojanac's file note of a conference in Mr Lucarelli's chambers on 15 March 2006, recording matters discussed and advice given during the conference (affidavit, para 29). (g) Document 57A : File note dated 15-3-06, prepared by Zoe Bojanac of Landerer & Co re conference with Mr Lucarelli and Mr Hamilton. The note relates to a discussion following the conference referred to in the notes to document 57, concerning evidentiary matters arising in the present proceeding (affidavit, para 30). (h) Document 61 : E-mail dated 15-3-06, from Zoe Bojanac of Landerer & Co to Jim Byrnes. This e-mail refers to certain matters discussed in the conference referred to in the notes to document 57 (affidavit, para 29). (i) Document 63 : File note dated 17-3-06, prepared by Zoe Bojanac of Landerer & Co in relation to conference with Jim Byrnes, Lee Aitken, Tony Hamilton, Martin Deutsch and John Landerer. One of a group of documents relating to instructions and communications with the liquidator's office concerning the examinees' challenge to the examination summonses, and dealing with such matters as instructions in response to the various allegations being made against the liquidator, advice to the liquidator and other matters relevant to the public examinations (affidavit, para 25). (j) Document 83 : File note dated 21-3-06, prepared by Zoe Bojanac of Landerer & Co in relation to conference with Jim Byrnes and Tony Hamilton of Armstrong Wily on 21-3-06. This file note records instructions and information received at a conference between Mr Hamilton of the liquidator's office and Mr Byrnes on 21 March 2006. 16 For present purposes it should be noted that 14 of the 17 documents are described as involving Mr Byrnes, in communication with Landerer & Co and/or Mr Wily or his firm. The exceptions are documents 38 and 39, which are e-mails between Landerer & Co and Mr Wily concerning the issue of the examination summonses; and document 48 which is an e-mail from Landerer & Co to Armstrong Wily relating to the challenge to the examination summonses. Mr Byrnes' 7 documents 17 Mr Byrnes has provided the court with the following handwritten description of the documents over which he claims privilege: "(1) funding agreement; (6) draft letter sent by accident to MPX; (7) response to press release; (11) advice and offer to Wily re funding and causes of action; (13) 21-6-05 to Wily re scale of fees; (20) funding other terms to Palmer O'Brien; (21) response dealing with terms of offer to O'Brien." Submissions on privilege 18 Mr Wily submitted that the documents for which privilege has been claimed are protected by s 119, and in some cases s 118 of the Evidence Act 1995 (NSW). In the alternative, he submitted that the documents were protected by "common interest privilege" under s 122(5) (b). Mr Byrnes adopted Mr Wily's submissions. 19 The Roberts parties contended that none of the documents is protected by client legal privilege because: (a) none of the documents is protected by s 118 or s 119, principally because the "client" for the purposes of those sections has not been satisfactorily identified; (b) privilege has been waived for the purposes of s 122; (c) each of them falls within the exception contained in s 125. 20 Submissions were made, correctly, on the basis that these provisions of the Evidence Act are applicable to the production of the documents in contest here. Rule 1.9 of the Uniform Civil Procedure Rules 2005 (NSW) applies, inter alia, if the court orders a person by subpoena to produce a document to the court. That is the case here. According to Rule 1.9(3), a person may object to producing a document on the ground that the document is a privileged document. "Privileged document" is defined in the Dictionary to the Uniform Civil Procedure Rules to mean a document that contains privileged information. "Privileged information" is defined, relevantly, to mean information of which evidence could not, by virtue of the operation of Division I of Part 3.10 of the Evidence Act 1995, be adduced in the proceedings over the objection of any person. Sections 118, 119, 122 and 125 are in Division I of Part 3.10. Sections 118 and 119 21 I shall first consider whether the disputed documents are privileged within s 118 or s 119. I shall consider Mr Wily's alternative claim based on "common interest privilege" later. 22 The sections are in the following terms: "118. Legal advice Evidence is not to be adduced if, on objection by a client, the court finds that adducing the evidence would result in disclosure of: (a) a confidential communication between the client and a lawyer; or (b) a confidential communication made between 2 or more lawyers acting for the client; or (c) the contents of a confidential document (whether delivered or not) prepared by the client or a lawyer; for the dominant purpose of the lawyer, or one or more of the lawyers, providing legal advice to the client." "119 Litigation Evidence is not to be adduced if, on objection by a client, the court finds that adducing the evidence would result in disclosure of: (a) a confidential communication between the client and another person, or between a lawyer acting for the client and another person, that was made; or (b) the contents of a confidential document (whether delivered or not) that was prepared; for the dominant purpose of the client being provided with professional legal services relating to an Australian or overseas proceeding (including the proceeding before the court), or an anticipated or pending Australian or overseas proceeding, in which the client is or may be, or was or might have been, a party." 23 The definitions in s 117 do not assist in the present case. Specifically, the definition of "client" assumes the primary meaning and extends it in various ways not presently germane. 24 The onus is on the party resisting production or access to prove the basis for the privilege that is claimed. This includes establishing a relevant lawyer/client relationship, as well as the dominant purpose of the making of a communication or the preparation of a document: Mitsubishi Electric Australia Pty Ltd v Victorian WorkCover Authority (2002) 4 VR 332, at 337 per Batt JA; ASIC v Rich [2004] NSWSC 1089. The purpose for which a document is created is a question of fact: Waterford v Commonwealth (1987) 163 CLR 54. 25 In Apple Computer Australia Pty Ltd v Wily [2002] NSWSC 855, one of the issues was whether solicitors acting for creditors of Buzzle who had petitioned to have Mr Wily appointed liquidator of that company, and were also acting for the parties providing litigation funding for Mr Wily's examination proceedings in respect of Buzzle, were acting for Mr Wily as client, for the purposes of ss 118 and 119. After referring to authorities, Barrett J said (at [11]): "'Client', in its ordinary signification, must there be regarded as referring to a person who, in respect of some legal matter within the scope of professional services normally provided by lawyers, has, with the consent of the lawyer, come to stand in a relationship of trust and confidence to the lawyer entailing duties of the lawyer to promote the person's interests, to protect the person's rights and to respect the person's confidences." He rejected, as too wide, a submission that a person is a "client" whenever a lawyer owes that person an express or implied obligation of confidentiality. He held that Mr Wily was not the client of the lawyers who were acting for the creditors and the funders, even though the creditors and funders had an interest in seeing Mr Wily succeed in making maximum recoveries and were Mr Wily's allies. The lawyers did not provide legal services to him, and were not obliged to prefer and promote his interests as fiduciaries. 26 The evidence as to the identity of Landerer & Co's clients is unclear. Ms Bojanac identifies Mr Byrnes as the client for the preparation of the Master Funding Agreement and says that it was an agreement setting out the terms upon which litigation funding could be made available by Mr Byrnes to Mr Wily with respect to claims by Mr Wily as liquidator of the Company (affidavit, para 6). But later she says that Mr Wily's legal costs in the present proceeding are being funded by Australian Litigation Funders Pty Ltd ("ALF") pursuant to the Master Funding Agreement, and that Mr Byrnes is a director of ALF (affidavit, paras 18 and 19). In giving evidence about documents 49, 55, 56, 58 and 59, she describes those documents as e-mails to or from Mr Byrnes and says they relate to "instructions and communications with ALF". Similarly, she describes the file notes which are documents 36 and 53 as notes of meetings with Mr Byrnes relating to "instructions and communications" with ALF. But the mere fact that Mr Byrnes was involved in discussions on occasions when advice was given does not necessarily mean he was a client for relevant purposes: cf Southern Equities Corporation Ltd v West Australian Government Holdings Ltd (unreported, Supreme Court of Western Australia, 5 May 1993, per Master Adams). 27 The evidence includes several letters written by Mr Byrnes under the letterhead of ALF. ALF has a website, launched in March 2006, which gives as the contact address an e-mail address of Mr Byrnes. Under the heading "About Australian Litigation Funders": the website says that ALF was formed to take over work undertaken by a number of companies previously run and owned by the Byrnes Group. It claims that ALF's managing director, Mr Byrnes, is very well-known in insolvency circles, and gives a description of the work he carried out during his "mandate to assist Mr Alan Bond extract him from his personal bankruptcy in the mid-1990s". Under the heading "Our Strengths", the website says that ALF has contracted Mr Byrnes exclusively for three years, describing him as "one of the wiliest characters in corporate Australia" and referring to his ability in problem-solving and his ability to get a group to negotiate. 28 There is no adequate evidentiary basis for me to infer that Landerer & Co acted at any relevant time for ALF. Counsel for Mr Wily submitted that the court should treat evidence that the firm acted for Mr Byrnes as amounting to evidence that it acted for both Mr Byrnes and ALF. The court was encouraged to "lift the corporate veil". Presumably the intended consequence of this submission would be findings that Landerer & Co acted for Mr Byrnes in the preparation of the Master Funding Agreement, and also for ALF once it was identified as the proposed funder, and that the firm has continued to act for them while concurrently acting for Mr Wily in respect of the present proceeding. But those findings would be inconsistent with the evidence. According to Ms Bojanac, Mr Byrnes was the client for the preparation of the Master Funding Agreement, a task that appears to have been undertaken in December 2005, according to the dates of the documents over which privilege is claimed. Of its nature, that task was finite rather than ongoing. The natural inference from the circumstances is that the work was done before Mr Wily embarked on the examination proceedings which ALF is funding. I can see no basis in the evidence for resisting that inference. 29 My conclusion, that Landerer & Co acted for Mr Byrnes in the preparation of the Master Funding Agreement, and acted later for Mr Wily in respect of the examination proceedings, and did not act for ALF at any stage, has consequences for the privilege claims. 30 The evidence adduced with respect to documents 6 and 7 satisfies me that they are privileged documents within s 118, subject to the issues under ss 122 and 125. Document 6 is a file note of a discussion between solicitor and client, at which instructions were received. Document 7 is an e-mail from solicitor to client giving advice as to amendments to the client's draft agreement. The documents seem to be confidential documents created for the dominant purpose of the lawyer providing legal advice to the client. For this purpose "legal advice" is construed broadly to include advice as to what should prudently and sensibly be done in the relevant legal context: Balabel v Air India [1988] 1 Ch 317, at 330 per Taylor LJ (with whom Lord Donaldson MR and Parker LJ agreed); General Manager, WorkCover Authority of NSW v Law Society of NSW [2006] NSWCA 84 at [77] per Handley, Hodgson and McColl JJA. 31 Document 36 is in a different category. It was made over two months later, attributable to a file in which Mr Wily was the client. It is not established by the evidence that Mr Byrnes remained a client of Landerer & Co at that time. Document 36 is said to be a file note to relating to "instructions and communications" about such matters as potential examinees and suggested counsel, but the communications were between the solicitor and a person other than the client, who was not in a position to give instructions as client in respect of the matter. That being so, the evidence does not establish that the communication was confidential or that the file note is a confidential document. As Bergin J pointed out in Rickard Constructions Pty Ltd v Rickard Hails Moretti Pty Ltd [2006] NSWSC 234, at [33], a confidential obligation may be implied out of relationships other than the relationship of solicitor/client. But the evidentiary foundation for such implication is missing here. Section 118 therefore does not apply. 32 There is no evidentiary foundation for contending that, for the purposes of the communications evidenced by the e-mails and file notes in this category, Mr Byrnes was acting as the agent of Mr Wily, and in those circumstances there is no ground for treating what are essentially third-party communications as protected by legal advice privilege. The correct approach is for the court to identify the person who is the client in substance. The observations about legal advice privilege by Finn J (with whom Merkel J agreed) in Pratt Holdings Pty Ltd v Commission of Taxation (2004) 136 FCR 357 at 364, are apposite: "This privilege should not be given such rein as would allow the legal adviser unilaterally to bring third-party communications under the umbrella of lawyer-client communications notwithstanding that the third party was not the client's agent for the purpose." 33 Counsel for Mr Wily submitted that the communication was protected by s 119, but in my view the absence of evidence pointing to confidentiality also means that s 119 does not apply. Additionally, the evidence does not satisfy me that the communication to which the file note relates, and the file note itself, were made and prepared for the dominant purpose of professional legal services relating to the anticipated examination proceedings. 34 Documents 49, 53, 55, 56, 58 and 59 are in the same category as document 36, and are not privileged for the same reasons. 35 Documents 38, 39 and 48 seem, on the evidence, to be privileged under s 118. They are communications between solicitor and client, the client being Mr Wily, relating to matters the subject of legal advice. 36 Document 57 is a file note of a conference with Mr Lucarelli of counsel, attended by representatives of Landerer & Co, Mr Byrnes and Lee Aiken. There was no representative of Mr Wily present, and the evidence does not justify an inference that Mr Lucarelli was acting for Mr Byrnes on that occasion. As I have said, the evidence does not enable me to conclude that Mr Byrnes was a client of the firm at that time. 37 Mr Aitken is, according to Ms Bojanac, a legal academic and retired barrister. There is evidence that he ceased to hold a practising certificate as a barrister on 30 June 2005. In his letter to the solicitors for the Roberts parties dated 23 March 2006, written using the letterhead of ALF, Mr Byrnes described Mr Aitken as "our senior claims manager, former practicing [sic] barrister". Under the heading "Our Strengths", ALF's website makes claims about the abilities of Mr Byrnes and then says: "Mr Byrnes in conjunction with Mr Lee Aitken, a insolvency expert and non-practicing Barrister are able to find clever and simple solutions to complex problems [sic]." 38 The main significance of the evidence about Mr Aitken's status is that, as he does not hold a current practising certificate, communications by or to him are deprived of the protection of privilege that would attach to communications by or to a practising lawyer: Attorney-General (NT) v Kearney (1985) 158 CLR 500, at 510 per Gibbs CJ. In any event, nothing in the evidence would enable me to conclude that Mr Aitken had been retained in a legal capacity on behalf of Landerer & Co's client, Mr Wily. It is not necessary to decide whether he was purporting to act in a legal capacity on behalf of Mr Byrnes or ALF, because the evidence has not established that either of them was Landerer & Co's client at the time. 39 The mere fact that otherwise privileged communications take place at a meeting of lawyers and client in the presence of non-clients does not justify the conclusion that the client has expressly or intentionally waived privilege in those communications: Australian Rugby Union Ltd v Hospitality Group Pty Ltd (1999) 165 ALR 253, at 263 [44]. But document 57 has not been shown to be a confidential document prepared for the dominant purpose of providing legal advice, or for the dominant purpose of a client being provided with professional legal services in relation to a proceeding or pending proceeding. 40 Document 57A seems, on its face, to be protected by s 118 or s 119, subject to issues arising under ss 122 and 125. It is a note of a conference between counsel, solicitor and a representative of the client concerning evidentiary matters in a legal proceeding. Document 83 is in the same category. 41 Document 61 is not privileged because it is a communication between Landerer & Co and a non-client (Mr Byrnes), and it refers to matters discussed in the conference to which the non-privileged document 57 relates. 42 Document 63 is not protected by s 118, because the evidence does not establish that the file note records a confidential communication between client and lawyer, or that the file note is a confidential document, for the purpose of the lawyer providing legal advice to the client. This is because of the presence at the conference of Mr Byrnes and Mr Aitken. However, it seems to me, given that the subject of the conference related to responses to allegations made against Mr Wily in the context of the examination proceedings, that it was a confidential document prepared for the dominant purpose of Mr Wily being provided with professional legal services relating to the examination proceeding, and is therefore protected by s 119 (subject to ss 122 and 125). 43 In summary, subject to ss 122 and 125, the claims for privilege have been made out in respect of documents 6, 7, 38, 39, 48, 57A, 63 and 83. The claims have not been made out with respect to documents 36, 49, 53, 55, 56, 57, 58, 59 and 61. 44 Mr Byrnes appeared as an unrepresented litigant, and on behalf of CBH, at the hearings with respect to privilege. Section 120, which gives an unrepresented party some limited privilege protection for confidential communications and documents prepared for conducting proceedings, does not seem to be applicable here, as Mr Byrnes is not a party to the examination proceedings and comes before the court only in response to subpoenas issued to him and CBH. Therefore his claims for privilege must be brought within s 118 or s 119. 45 As to his documents other than documents (1) and (11), there is nothing to indicate that they relate to any lawyer-client relationship. The documents are: a document described only as "draft letter sent by accident to MPX", a "response to press release", a document called "to Wily re scale of fees", a document called "funding other terms to Palmer O'Brien", and a "response dealing with terms of offer to O'Brien". 46 As to document (1), described only as "funding agreement", it seems to me appropriate to infer, in the context, that the document is the Master Funding Agreement prepared for the purpose of funding Mr Wily's examination proceedings. In Re Global Medical Imaging Ltd [2001] NSWSC 476, Santow J held that a litigation funding agreement expressed by its parties to be confidential is within the scope of s 119. I respectfully agree. That is, Mr Wily is able to make a claim to privilege in respect of the funding agreement, on the ground that it was prepared for the dominant purpose of his being provided with the professional legal services of his own lawyers in the examination proceedings (cf Apple Computer Australia Pty Ltd v Wily [2002] NSWSC 855 at [19]). Submissions made on behalf of Mr Wily show that he wishes to assert a privilege claim in respect of the funding agreement, including the copy of it produced by Mr Byrnes. 47 The same analysis applies to document (11), described as "advice and offer to Wily re funding and causes of action". 48 The fact that the Master Funding Agreement is between Mr Wily and ALF rather than Mr Byrnes does not undermine my conclusion, which is based on the proposition that Mr Wily rather than Mr Byrnes is entitled to and does claim privilege over these documents. It was submitted that ALF and Mr Wily entered into the funding agreement without the approval required by s 477(2B) of the Corporations Act. Mr Wily's evidence is that the agreement is subject to creditor approval under that section and that in due course he intends to seek the approval of creditors. In the circumstances the absence of compliance with s 477(2B) does not seem to me to bear on the issue of privilege. Section 122 49 Primary attention was directed to the following parts of s 122: "(1) This Division does not prevent the adducing of evidence given with the consent of the client or party concerned. (2) Subject to subsection (5), this Division does not prevent the adducing of evidence if a client or party has knowingly and voluntarily disclosed to another person the substance of the evidence and the disclosure was not made: (a) in the course of making a confidential communication or preparing a confidential document; … (4) Subject to subsection (5), this Division does not prevent the adducing of evidence if the substance of the evidence has been disclosed with the express or implied consent of the client or party to another person other than: (a) a lawyer acting for the client or party; … (5) Subsection (2) and (4) do not apply to: … (b) a disclosure to a person with whom the client or party had, at the time of the disclosure, a common interest relating to the proceeding or an anticipated or pending proceeding in an Australian court or a foreign court." 50 I heard some strenuous and at times baffling submissions as to whether the treatment by Mr Byrnes and counsel for Mr Wily of the document described in submissions as MFI 2 (and eventually Exhibit A9) constituted waiver of privilege over the document or some wider class of documents. I am not satisfied that the facts, most of which I observed, amounted to any waiver of Mr Wily's privilege, although it does appear that Mr Byrnes has waived any privilege of his in respect of that particular document (but not other documents, having regard to the principles stated by French J in Newcrest Mining (WA) Ltd v Commonwealth (1993) 40 FCR 507, at 509; see also RJ Desiatnik, Legal Professional Privilege in Australia (2nd ed, 2005), p164-5). To the extent that there was common interest privilege shared by Mr Byrnes and Mr Wily, his unilateral waiver did not necessarily destroy Mr Wily's privilege: Farrow Mortgage Services Pty Ltd (in liq) v Webb (1996) 39 NSWLR 601, at 619. But the question does not need to be pursued because, in my opinion, the document is not privileged under either s 118 or s 119. It is an e-mail by a non-client to the client and his solicitor making proposals with respect to the conduct of the client's litigation, and is not on its face a confidential communication made for the dominant purpose of the client being provided with professional legal services. 51 I have found that Mr Wily is entitled to claim privilege in respect of the copy of the Master Funding Agreement produced by Mr Byrnes (document (1)), and the associated document (11). However, Mr Widdup has given evidence indicating that a substantial part of the contents of the Master Funding Agreement has been disclosed, in a fashion constituting waiver of any claim to privilege over the document. 52 In his affidavit made on 1 May 2006, Mr Widdup deposed that Mr Hamilton of Armstrong Wily rang him on about 5 April 2006 and invited him to attend a meeting with Mr Hamilton and Mr Wily "regarding the details of the Settlement Deed between Multiplex Constructions and Multiplex Bauhaus". He attended the meeting the next day, and was asked about the intent of the Settlement Deed and how the GST worked, and how it was intended to finalise the outstanding issues between the parties to the Deed. 53 He gave evidence that during the meeting, he had the following conversation with Mr Wily: Mr Widdup: "Why am I being asked?" Mr Wily: "We are going for Multiplex." Mr Widdup: "Are you funded?" Mr Wily: "We have an agreement with Jim Byrnes." Mr Widdup: "This is news to me I am a director of the Company and creditor and I have never seen a Notice of a Creditors Meeting." Mr Wily: "It is not necessary." Mr Widdup: "What's the deal?" Mr Wily: "Byrnes gets 75% and must pay all our costs and fund Landerer's legal costs." Mr Widdup: "Holy Moly! 75% is huge. I thought a Creditor's Meeting was mandatory." Mr Widdup: "No it's not." 54 That is evidence that Mr Wily knowingly and voluntarily disclosed to Mr Widdup the substance of the funding agreement. The disclosure was not made in the course of making a confidential communication or preparing a confidential document. The evidence establishes waiver by Mr Wily of his claim to privilege in respect of Mr Byrnes' documents (1) and (11), and also Landerer & Co's documents 6 and 7. The remaining questions (considered below) are whether that disclosure is protected by common interest privilege, and whether s 125 applies. 55 Ms Bojanac's description of the privileged documents also raises an issue of waiver. Given my findings that, in March and April 2006, Mr Byrnes was not relevantly a client of Landerer & Co, and Mr Aitken was not a practising lawyer, documents 57A, 63 and 83 (and also documents 36, 49, 53, 55, 56, 57, 58, 59 and 61, which are not otherwise privileged for the reasons I have given) are documents the substance of which has been disclosed to third parties (Mr Byrnes and Mr Aitken) either knowingly and voluntarily by Mr Wily, or with his express or implied consent by Landerer & Co, in circumstances falling within s 122(2) or (4). 56 But s 122(2) and (4) are subject to s 122(5). Counsel for Mr Wily relied on s 122(5)(b). That provision raises the questions whether: · Mr Widdup was, on 6 April 2006; and · Mr Byrnes was, in March-May 2006; a person with whom Mr Wily had a common interest relating to the examination proceedings. 57 It has been said that a "common interest in relation to" proceedings is an identity between genuine interests, and should be distinguished from the contingent intersection of selfish interests: Rickard Constructions Pty Ltd v Rickard Hails Moretti Pty Ltd [2006] NSWSC 234, at [51] per Bergin J. The concept of "common interest" has been explored in cases in the liquidation context: for example, Farrow Mortgage Services Pty Ltd (in liq) v Webb (1996) 39 NSWLR 601; Southern Cross Airlines Holdings Ltd (in liq) v Arthur Andersen & Co (1998) 84 FCR 472. As Sheller JA observed in the Farrow Mortgage case (at 609), "common interest" is not in this context a rigidly defined concept, and a mere common interest in the outcome of litigation will be sufficient to enable any party with that interest to rely on it. In the Rickard Constructions case, at [56], Bergin J emphasised that in deciding whether a common interest exists, each case must be considered on its own facts. 58 In the Southern Cross case (at 480), Drummond J held that the creditors of a company in liquidation have a common interest with the liquidator in relation to anticipated proceedings by the liquidator against third parties. Consequently if the liquidator makes a report to creditors which deals with possible avenues of recoupment of funds for their benefit, disclosure in that report that the liquidator has good grounds for pursuing the claims against a third party is disclosure to persons with a common interest not constituting waiver of privilege. Drummond J based his reasoning on the liquidator's obligation to exercise his or her powers and functions for the benefit of creditors, and to keep them informed of the progress of the liquidation. 59 I am not satisfied that Mr Widdup had a common interest with Mr Wily relating to the examination proceedings at the time of disclosure, such as would protect Mr Wily's disclosure under s 122(5)(b). He gave evidence that he indirectly holds 100% of the shares of the Company, but I am not able to conclude that there is any prospect of a distribution to contributories in the winding up of the Company. He claimed to Mr Wily that he was a creditor, but that was in the context of pointing out that there had been no meeting of creditors before the funding agreement was entered into. There is nothing in the conversation to suggest that Mr Wily's disclosure of a substantial part of the content of the agreement was made to Mr Widdup in his capacity as creditor, analogously to the liquidator's report to creditors that was addressed in the Southern Cross case. There is no suggestion that he was purporting to discharge any of his duties as liquidator to keep creditors informed, for if he were, he would have communicated with creditors in general rather than only with Mr Widdup. My conclusion is that Mr Wily has waived privilege in respect of the funding agreement which is document (1), and consequently also document (11), and documents 6 and 7. 60 In my view Mr Byrnes has a common interest with Mr Wily in the examination proceedings, arising out of his position as a substantial creditor of the Company, and perhaps also his position as controller of ALF, which is funding the proceedings and stands to receive 75% of any recoveries. Counsel for the Roberts parties noted that Multiplex is also a creditor of the Company. He submitted that, if the reasoning in the Southern Cross case is applied on the basis that Mr Byrnes has common interest privilege as a creditor, there is no basis for denying Multiplex access to documents shared between Mr Wily and Mr Byrnes. He said that if it were otherwise, Mr Wily would be in the position of preferring one creditor to another, contrary to his duty as liquidator to act objectively in a manner that gives due regard to and balances the interests of all creditors (cf Lam Soon v Molit (No 55) (1996) 70 FCR 34, at 49). 61 I do not accept these submissions. In my view the identification of a common interest requires consideration of all relevant facts existing at the time of the communication. A liquidator's report disclosing legal advice about recoveries may be shared with creditors without waiver of privilege, because of their common interest with the liquidator in the recoveries. But where the communications relate to contested proceedings that have been brought against a creditor, and are specific communications about the proceedings rather than a report for creditors generally, the recognition of a common interest between the liquidator and the creditor who actively participates in the preparation of the proceedings does not, in my view, entail the conclusion that the creditor who is the defendant shares that common interest. 62 It therefore seems to me that Mr Byrnes can rely on common interest privilege in respect of communications between him and Mr Wily or Landerer & Co, such as document 83. Documents 57, 57A and 63 raise an additional problem because of the presence of Mr Aitken. According to the evidence, Mr Aitken did not participate in a legal capacity and he was not an agent for Mr Wily or Mr Byrnes. His capacity was as an employee or agent of ALF. ALF has an obvious interest in the examination proceedings, because it is funding them and stands to gain 75% of any recoveries. Its interest in the successful outcome of recoveries, and in the examination proceedings as a step along the way, is in common with the interest of Mr Wily, just as the interest of one partner in partnership litigation is in common with the interests of the other partners. I regard the facts and decision in the Rickard Constructions case as analogous and applicable. There Bergin J held that the plaintiff and a funder had a common interest in the most advantageous conduct of the proceedings, after analysing the type of funding, the funding arrangements, the relationship between the funder and the funded party, and the nature of their respective interests. 63 I therefore conclude that, because of common interest privilege, there has been no waiver of privilege by disclosure of documents or evidence to Mr Byrnes or Mr Aitken, but Mr Wily has waived privilege in relation to the contents of the Master Funding Agreement because of his disclosure to Mr Widdup. Section 125 64 This section is in the following terms: "125 Loss of client legal privilege: misconduct (1) This Division does not prevent the adducing of evidence of: … (b) a communication or the contents of a document that the client or lawyer (or both), or the party [who is not represented in the proceeding by a lawyer], knew or ought reasonably to have known was made or prepared in furtherance of a deliberate abuse of a power. (2) For the purposes of this section, if the commission of … the abuse of power is a fact in issue and there are reasonable grounds for finding that: (a) … the abuse of power was committed; and (b) a communication was made or document prepared in furtherance of … the abuse of power; the court may find that the communication was so made or the document so prepared. (3) In this section: "power" means a power conferred by or under an Australian law." 65 It was accepted, for the purposes of the hearing on issues of privilege, that the powers of a liquidator, as an eligible applicant, to apply under s 596A for the issue of examination summonses and then to conduct the examinations under s 597 are "powers" within s 125 (cf Van Der Lee v State of New South Wales [2006] NSWCA286 at [24] per Mason P; [68] per Santow JA). The claims for relief by the Roberts parties in the principal interlocutory process, and the contentions they make to support those claims for relief, relate to abuse of the liquidator's power, and therefore abuse of power is a fact in issue. Section 125(2) therefore applies if there are reasonable grounds for finding that the abuse of power was committed, and that the communications and documents for which privilege is claimed were made or prepared in furtherance of the abuse of power. 66 In my opinion there are reasonable grounds for finding that Mr Byrnes has at all relevant times intended to use the examination proceedings for an improper purpose and to induce Mr Wily to abuse his powers to seek the issue of examination summonses and to conduct examinations. These "reasonable grounds" are supplied by Mr Byrnes' correspondence, which is in evidence. 67 On 23 May 2002 Mr Byrnes wrote to the directors of Multiplex Constructions (NSW) on the letterhead of Multiplex Bauhaus. He complained of the company's refusal to provide a tax indemnity in connection with completion of the sale of Bauhaus Pyrmont to himself and Mr Widdup, and claimed that there was approximately $3 million in profit in Bauhaus Pyrmont improperly retained by Multiplex. He alleged that officers of Multiplex created fictitious agreements and/or loan accounts. He threatened that the directors of Multiplex Constructions (NSW) would be prosecuted by civil prosecution for aiding and abetting. On the face of the letter, its purpose appears to have been to involve the directors in resolving outstanding issues between Mr Byrnes and the Multiplex executives and the lawyers with whom he was dealing, by threatening proceedings against the directors. 68 On 7 November 2002 Mr Byrnes wrote on CBH letterhead to Mr McDiven of Multiplex, demanding that Mr McDiven, Mr Roberts and Ms Petersen sit down and talk with him "to avoid an embarrassing section 81 examination, and a Demand from a liquidator for a substantial repayment of money". He warned that Mr Widdup was "no friend of Multiplex", and that Mr Widdup thought he could "capitalise on Andrew [Mr Roberts] as a weak link, who would not want this sort of publicity or the scrutiny of a Summons". Mr Byrnes said, apparently disingenuously, that this was a type of behaviour he disliked. On a fair reading, the letter threatens the Roberts parties with examinations and demands and adverse publicity, in order to persuade them to negotiate his claims favourably to him. 69 On 7 March 2005 Mr Byrnes wrote on his own letterhead to Clayton Utz (solicitors for Multiplex), claiming to have been contacted by various sections of the media including the Sydney Morning Herald and an executive producer at 60 Minutes. He said. "your client's director, Young Andrew, is doing his absolute best to create a nightmare for himself". He referred to a conversation Mr Roberts allegedly had with a journalist, and an allegation allegedly made by Mr Wily to a journalist that Multiplex Constructions owed Bauhaus $4 million. Mr Byrnes said that he was trying to help and asked for a meeting. On a fair reading, this letter threatened the Roberts parties with adverse publicity if they did not negotiate favourably with Mr Byrnes. Although Mr Byrnes professed not to want to deal with the media, the compelling inference from his mentioning his contacts with the media is that he did so in order to imply a threat. 70 On 31 March 2005 Mr Byrnes wrote on CBH letterhead to the chairman of Multiplex. He alleged that the company's problems in London could pale into insignificance compared with its problem in Sydney. He asserted that Mr Widdup had had a preliminary interview with the NSW police about the Multiplex Bauhaus transaction. He claimed that he was contacted almost daily by the media, and that some journalists had "formed a view as to culpability" to the effect that Multiplex had used a false instrument to unlawfully defraud Bauhaus of $1.6 million. He said that he preferred to resolve his problems without engaging or involving the police, and urged the chairman to instruct Multiplex's lawyers to resolve the issues. Like the previous letter, this letter conveys a threat (this time the threat is of adverse media publicity and also police investigation) by the technique of referring to such matters and professing to oppose any such course. 71 On 14 April 2005 Mr Byrnes wrote on his own letterhead to Clayton Utz, seeking contact particulars for the directors of Multiplex Bauhaus for the receipt of documents. He added: "Given that I have expressed my concerns, and having been no stranger to being on the receiving end of pressure, normally I do not mind taking a bit of pain and pressure, if I am being justly rewarded. This is currently not the case, and there has been no indication that it will be the case. I have no reason to continue to shoulder the burden, created by others." On a fair reading, the letter threatens a course that involves service of documents, and conveys the idea that this can be avoided if Mr Byrnes is "justly rewarded". 72 On 26 April 2005 Mr Byrnes wrote again on his own letterhead to Clayton Utz. The purported purpose of the letter was to confirm several matters for consideration by Clayton Utz and advice to their client Multiplex, and the preparation of "the appropriate notice to Australian Stock Exchange". It is a rambling letter but in my view, it conveys menace. 73 Mr Byrnes referred to "Sharkie Raymond", described as a legendary Australian boxer, former bodyguard and "construction demolisher", known by Mr Byrnes for 20 years, "given that I have had a very interesting and colourful life". He said Mr Raymond's company was owed money by Multiplex from two different jobs and was never paid. He gave an account of putting Mr Raymond in touch with Mr Widdup (who had been a director of Multiplex), so that Mr Raymond could find out why Multiplex had not paid him. Mr Byrnes said that during a conversation apparently involving himself and Mr Widdup, Mr Raymond alleged that a Multiplex project manager had sought a bribe of $50,000 and when the bribe was not paid, the site manager threatened to destroy Mr Raymond's business, and proceeded to do so. 74 Then Mr Byrnes alleged that a deal had been done between Multiplex and Mr Raymond, that Mr Raymond should put his company into administration and "let it go down", owing money to the Commissioner of Taxation and subcontractors, but Multiplex would pay Mr Raymond and his partner $500,000 and award them a new contract. This would save Multiplex $1.4 million, according to Mr Byrnes' allegation. But, Mr Byrnes alleged, Multiplex did not perform this contract and were guilty of fraud. He claimed that the chairman of Multiplex had dealt with Mr Raymond's complaints at a personal level. He alleged that Mr Raymond had been contacting other creditors who had been mistreated by Multiplex and he said: "Sharkie Raymond, much like myself, is a person seen by others to be a person capable of bringing about sufficient pressure to resolve such disputes, and so other people will gravitate to him for assistance". 75 Referring to his dispute in relation to the Multiplex Bauhaus company, Mr Byrnes said: "Multiplex do not seem to want to try, in any way, shape or form, to resolve and settle the matter, and I can either be a pacifier or an instigator, depending on the mood I take. As Multiplex do not wish to do the right thing and meet their financial obligations, then I will have no alternative but to band together a number of disgruntled and angry people, and bring about actions against Multiplex which will, no doubt, see various members of the Roberts family extraordinarily embarrassed, some of them charged, and quite possibly, substantially financially disadvantaged." 76 Later he said that Mr Raymond, Mr Widdup and himself would: "no doubt come together and provide the appropriate information to the appropriate parties, which will no doubt cause significant embarrassment to the Multiplex directors, and to the company. With no doubt, this will lead to criminal charges being laid. It will no doubt lead to major inquiries with respect to the company's operations and management, which will include John Roberts [the chairman of Multiplex] and Andrew Roberts, and Ross McDiven." 77 Mr Byrnes said he intended to start short-selling Multiplex shares and demanded that Multiplex prepare a notice to the Stock Exchange about his claim and the potential for the individuals he named to be charged with fraud. He provided his mobile telephone number "on the off chance that you would like to reconsider and get very serious about settling" with Mr Raymond, himself and Mr Widdup. He said that this should "not be interpreted as demanding money with menaces". 78 Compared with his other letters, the letter of 26 April adds a dimension to his threats because there, Mr Byrnes has combined his demands with demands made by Sharkie Raymond, legendary boxer, bodyguard and construction demolisher, raising a suggestion of a threat of physical harm. 79 On 1 March 2006 Mr Byrnes sent an e-mail to Mr McDiven, on the subject "bend over". He referred to the fact that this court had set down examinations for Mr McDiven, Mr Roberts and Ms Petersen and said that the liquidator would also examine Multiplex's bankers, lawyers and other officers. He alleged that "George" had backdated an invoice and had taken $1.5 million, something that was an unfair preference and an uncommercial transaction. He alleged that when Multiplex sold the Bauhaus company they "took all the assets rendering it valueless", leaving a $2.6 million debt. He contended that the three directors, Mr Roberts, Mr McDiven and Ms Petersen, may personally be liable "arising out of insolvent trading". He alleged other wrongdoing in the Bauhaus accounts, which is impossible to decipher from his letter. He promised that the liquidator's examination "will make the Royal Commission seem like Sunday School" and would "shed a great deal of light on Andrew's management ability", with resulting loss of investor confidence. He said the liquidator wanted money and would mount claims of 15 plus million dollars but he would settle for about half. He made an offensive personal comment about Multiplex's lawyer. 80 On 31 March 2006 Mr Byrnes wrote a letter on ALF letterhead to individual lawyers at Clayton Utz. The letter related in some way to an estimate of costs. At one stage he said: "I am not going away. There is always a bigger and tougher bully around the corner!" 81 On 10 April 2006 Mr Byrnes sent an e-mail to a Clayton Utz partner saying: "I have decided that the only way that justice can truly be severed [sic] is for your client Mr Roberts to be charged, tried convicted and jailed. I now propose to lay criminal charges against Roberts personally. Would you like to discuss this matter?" 82 Later on the same day, he sent another e-mail to the same lawyer referring to provisions of the Taxation Administration Act with respect to false statements, and asserting that contravention of these provisions can be prosecuted by private prosecution. He said he had an ex-Multiplex staff member who would confirm various matters regarding false statements and backdating of fees. He said he understood the directors would throw a Multiplex executive to the wolves in order to protect the chief executive, Mr Roberts. He sent a blind copy of this e-mail to the executive concerned. He asked for a meeting. 83 Taken together, these letters show that Mr Byrnes intended, over an extended period of time, to take such steps as were available to him to cause embarrassment to the Roberts parties in a public forum, and to apply pressure to the Roberts parties so as to extract favourable financial settlements from them. Plainly he saw the liquidation and the examination proceedings as a means for him, with the co-operation of Mr Wily, to apply such pressure. 84 Counsel for Mr Wily invited the court to discount Mr Byrnes' threats, in effect by reference to his flamboyant character. Submissions of that kind might, perhaps, be given some weight in a final hearing after the oral evidence has placed the court in a position to make an assessment of the witness' character. But even then, the court will not lightly disregard or discount the significance of threats deliberately made in correspondence for the purpose of inducing favourable negotiations. At the present time, the question for me to address is about "reasonable grounds" for making findings. For present purposes, I take Mr Byrnes to have meant what he said and what he implied. 85 The jurisdiction of the court to set aside examination proceedings initiated for an improper purpose is well established: Re Excel Finance Corporation Ltd; Worthey v England (1994) 52 FCR 69. In Meteyard v Love (2005) 56 ACSR 487, at 497 [45], Basten JA (with whom Beazley JA agreed, and Santow JA agreed on this point) said that "use of the Court's processes to inflict financial or other collateral harm will always be improper", and using the examination process to cause inconvenience or embarrassment is an abuse of the process of the court. It follows that a liquidator's use of the examination process to cause embarrassment to the examinees in a public forum and to apply pressure on them to settle favourably with a claimant is an abuse of power. 86 But the power said to have been abused is a power vested in and exercised by the liquidator, Mr Wily, and not by Mr Byrnes. The question is whether, in light of Mr Byrnes' attitude, there are reasonable grounds for finding that Mr Wily has committed or is committing an abuse of power by commencing and prosecuting the examination proceedings against the Roberts parties. There are several matters of evidence which, cumulatively, lead me to the conclusion that such reasonable grounds are present. 87 First, Mr Wily's statement of the purposes of the examinations corresponds with issues raised by Mr Byrnes' correspondence, implying that the matters Mr Wily wishes to investigate are matters of concern to Mr Byrnes. 88 Secondly, it is plain from Ms Bojanac's descriptions of documents that Mr Byrnes has been involved, to a substantial degree, in the processes surrounding preparation for the examinations. Mr Byrnes communicated with Landerer & Co about such matters as potentially examinees; he suggested counsel; he was involved in giving instructions and communications concerning the challenge by the Roberts parties to the examination summonses, and about allegations made against the liquidators. He participated in conferences with Mr Wily's lawyers with respect to the examination proceedings and the examinees' challenge. 89 Thirdly, when Landerer & Co wrote to Mr Wily on 1 March 2006 reporting on the issue of the examination summonses, they noted that Mr Byrnes had "indicated that further examination summonses and orders for production are to be issued and that he will be writing to us in this regard shortly". There is nothing to indicate that further examination summonses have been issued, but that does not necessarily indicate that Mr Byrnes' views were disregarded or were not influential. 90 Fourthly, on 15 March 2006 Mr Byrnes sent an e-mail to Mr Wily and Landerer & Co (MFI 2, Exhibit A9) proposing that certain points about costs and the merits of an application be made to Clayton Utz in correspondence. Again, there is no evidence that Mr Wily acted on these suggestions by Mr Byrnes, but they should not be disregarded simply for that reason. 91 I regard the e-mail of 15 March 2006 and the letter of 1 March 2006 as significant, because they form part of a pattern of communications Mr Byrnes has had with Mr Wily and Landerer & Co with respect to the examination proceedings. A single communication of "instructions" by an interloper might be regarded as a matter of no significance. But frequent interventions, evidently not rebuffed, are matters highly relevant to the relationship between the intervener and the person exercising the power, and the extent to which the former's abusive purpose can be attributed to the latter. 92 Finally, there are various contextual matters going to the relationship between Mr Wily and Mr Byrnes that support the inference that Mr Wily's purpose in pursuing the examinations is Mr Byrnes' purpose. Mr Byrnes is a person who has a strong interest, as creditor and indirect funder, in the outcome of the examination proceedings. He has threatened those proceedings against the examinees for the purpose of inducing them to settle his claims favourably to him. A corporate entity that he controls is funding the examination proceedings. Under the Master Funding Agreement ALF (and indirectly Mr Byrnes) stands to receive a return of 75% of any realised proceeds. 93 Taken together, all these matters provide a basis for an inference that there are reasonable grounds for finding that Mr Wily shares Mr Byrnes' purpose and is therefore abusing his powers as liquidator with respect to the examination proceedings. A liquidator in Mr Wily's position, in circumstances where the funder's managing director is participating very actively in matters related to the relevant proceedings, might have endeavoured to clarify the respective roles of the funder and himself in some fashion, such as by correspondence with the lawyers. Indeed, it seems to me that a reasonable liquidator in such a position should have done so, if the funder's participation had reached the level of Mr Byrnes' participation in the present case. Clarification was needed so that the lawyers would act only with the liquidator's instructions, and for the purpose of preserving client legal privilege. No such clarifying correspondence has been tendered. On the contrary, Mr Wily's evidence speaks vaguely about an unattributed "suggestion" (affidavit, para 17.4), and at various points Ms Bojanac's affidavit elides the positions of Mr Wily, Mr Byrnes and ALF. The absence of any evidence rebutting the inference, except by vague assertion, is a matter to be taken into account. 94 I have therefore decided that there are reasonable grounds for inferring, on the basis of the evidence, that Mr Wily shared Mr Byrnes' improper purpose of using the examination proceedings to embarrass the Roberts parties in a public forum and to apply pressure on them to settle favourably with Mr Byrnes. It follows that he has abused his statutory powers to seek the issue of examination summonses and to conduct examinations, and that s 125(2)(a) is satisfied. 95 The next question is the one raised by s 125(2)(b), namely whether there are reasonable grounds for finding, in respect of each document over which privilege is claimed, that the document was prepared in furtherance of the commission of the abuse of power. I have considered the evidence about each of the 17 Landerer & Co documents for which privilege is claimed. The documents are e-mails and file notes relating to various aspects of the examination process, including funding. Reasonable grounds arise because the documents, in their nature, are in furtherance of the examination process, and there are reasonable grounds for finding that the examination process arises out of and implements an abuse of power. Consequently the ingredients of s 125(2) are satisfied in respect of each of the 17 Landerer & Co documents, and so by force of that subsection, it is open to the court to find that the documents were in fact prepared in furtherance of the commission of the abuse of power. I so find. 96 In light of that finding, one turns to s 125(1)(b). That raises the question whether the client or lawyer knew or ought reasonably to have known that each document was prepared in furtherance of a deliberate abuse of power. My findings under s 125(2) imply that the abuse of power in the present case has been deliberate, and that Mr Wily ought reasonably to have known, in respect of each of the 17 documents, that the document was prepared in furtherance of that abuse of power. Consequently privilege cannot be maintained for any of the 17 documents. 97 As to documents (1) and (11), the funding arrangements entered into between Mr Wily and ALF were in furtherance of the improper purpose and abuse of power, because funding put Mr Wily in a position to seek the examination summonses and proceed towards the examinations. Therefore communications about funding, and documents reflecting the funding arrangements, were communications made and documents prepared in furtherance of the commission of Mr Wily's abuse of power. Subsection 125(2) applies. 98 For the purposes of s 125(1)(b) Mr Byrnes was aware of all of the facts and circumstances that have led me to conclude that there are reasonable grounds for finding an abuse of power by Mr Wily. He therefore "knew or ought reasonably to have known" that documents (1) and (11) were prepared in furtherance of Mr Wily's abuse of power, which was a deliberate abuse of power. Mr Wily was aware of the matters which I have held to be reasonable grounds to support a finding of abuse of his powers to commence and conduct the examination proceedings, and he was aware of the role that the funding agreement would play in the examination proceedings. Consequently privilege cannot be maintained in respect of documents (1) and (11). 99 The process of reasoning that has led me to this conclusion cannot be applied to the other documents over which Mr Byrnes claims privilege, because his description of the documents is so deficient that I cannot tell whether they relate to furtherance of Mr Wily's abuse of power or (at the other extreme) have nothing whatever to do with the examination proceedings. I have held that the deficiency of description cuts away the privilege claim in limine. Conclusions 100 Some of the documents for which privilege has been claimed are not protected by s 118 or s 119. These are Landerer & Co's documents 36, 49, 53, 55, 56, 57, 58, 59 and 61; Mr Byrnes' documents (6), (7), (13), (20) and (21); and MFI 2 (Ex A9). There has been a waiver of privilege in respect of Mr Byrnes' documents (1) and (11) and Landerer & Co's documents 6 and 7, by virtue of Mr Wily's statements to Mr Widdup, not saved by s 122(5). Were it not for s 125, Landerer & Co's documents 38, 39, 48, 57A, 63 and 83 would be privileged under either s 118 or s 119. Any loss of privilege through waiver in respect of documents 57A, 63 and 83 is reversed by the application of s 122(5)(b). But s 125 applies to the otherwise privileged documents (and the documents generally) to deprive them of their privileged status. Consequently there is no successful claim for privilege in respect of any of the documents. 101 I have reached these conclusions without finding it necessary to inspect the documents. ********** 06/07/2006 - In the sentence beginning "My findings", the word "both" before "Mr Wily", and the words "and his lawyer" have been deleted. - Paragraph(s) 96 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.