Supreme Court New South Wales Medium Neutral Citation: Australian Securities and Investments Commission v Park Trent Properties Group Pty Ltd [2015] NSWSC 342 Hearing dates: 19 and 26 March 2015 Date of orders: 31 March 2015 Decision date: 31 March 2015 Jurisdiction: Equity Division Before: Sackar J Decision: See [61] - [62] Catchwords: PRACTICE AND PROCEDURE – application to set aside notice to produce – privilege – legal professional privilege – waiver – implied waiver – conduct – whether conduct inconsistent with maintenance of privilege Legislation Cited: Corporations Act 2001 (Cth) Australian Securities and Investments Commission Act 2001 (Cth) Uniform Evidence Act 1995 (NSW) Cases Cited: Attorney-General (NT) v Maurice (1986) 161 CLR 475 Commissioner of Taxation v Rio Tinto Ltd (2006) 151 FCR 341 Buzzle Operations Pty Ltd (in liq) v Apple Computer Australia Pty Ltd (2009) 74 NSWLR 469 Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543 Derby & Co Ltd v Weldon (No 10) [1991] 2 All ER 908 Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd (2013) 250 CLR 303 Ferella v Official Trustee in Bankruptcy (2010) 188 FCR 68 Mann v Carnell (1999) 201 CLR 1 National Australia Bank Ltd v C & O Voukidis Pty Ltd (No. 2) [2015] NSWSC 258 State of Victoria v Davies (2003) 6 VR 245 Texts Cited: JD Heydon, Cross on Evidence (10th ed, 2015, LexisNexis Butterworths) Category: Procedural and other rulings Parties: Australian Securities and Investments Commission - plaintiff Park Trent Properties Group Pty Ltd – defendant Representation: Counsel: Mr T Prince – plaintiff Mr J Hewitt – defendant Solicitors: Mr Mark Pangbourne, solicitor for the Australian Securities and Investments Commission – plaintiff HWL Ebsworth – defendant File Number(s): 2014/331307 Publication restriction: n/a Judgment Procedural background 1. This matter is listed for hearing before me for seven days commencing 3 June 2015. The primary proceedings concern action taken by the plaintiff (ASIC) against the defendant (PTPG) seeking, inter alia, injunctions under ss 1324(1) and 1101B(1) of the Corporations Act 2001 (Cth) and declaratory relief. 2. ASIC's basic allegation is that PTPG is acting in contravention of s 911A of the Corporations Act by operating a business, which partly consists of the provision of financial services, without an Australian Financial Services Licence (AFSL). This conduct is said to include promoting and recommending to members of the public the use of Self-Managed Superannuation Funds as a means of investing in real property. 3. ASIC commenced a formal investigation into the affairs of PTPG on 19 July 2013. Notices pursuant to ss 19, 30 and 33 of the Australian Securities and Investments Commission Act 2001 (Cth) were served on numerous persons and entities associated with PTPG. Many documents were obtained and analysis was conducted of the books and records of PTPG. Interviews were also conducted with clients of PTPG. 4. The matter was originally listed before me on 2 February 2015 for an interlocutory hearing. The parties' materials in support of their respective positions had been served prior to the hearing by reason of certain directions. These materials comprised affidavits and submissions. They included three affidavits of Mr Robert McGregor, affirmed on 10 and 19 December 2014 and 2 March 2015 respectively, and the defendant's submissions on the interlocutory application. ASIC filed the affidavit of Mr Martin Stockfeld sworn on 12 March 2015 and the affidavit of Mr Bruce Standfeld sworn on 6 November 2014. 5. Instead of proceeding with the interlocutory hearing I offered the parties, and they accepted, an expedited final hearing. The matter was at that time listed for four days, commencing 7 April 2015. 6. Two issues were identified by the parties requiring, as they saw it, preliminary determination. First, the question of the admissibility of certain transcripts of ASIC's investigations and, second, whether privilege had be waived in a particular regard. The privileged material was sought to be obtained by a notice to produce. I will return to this shortly. I fixed 19 March 2015 for those arguments. 7. In the conduct of its investigations, ASIC obtained from PTPG a document styled as a "Compliance Manual" (Compliance Manual). This document was prepared by Mr Stuart Walton, a partner at HWL Ebsworth. Mr Walton was engaged by PTPG on the basis of his expertise in financial services regulatory issues. The Compliance Manual was finalised around 20 January 2014 and addresses a number of topics including financial services laws, general consumer laws and marketing regulations. 8. On 9 February 2015 ASIC issued a notice to produce directed to PTPG and requesting production of: 1. All documents which record communications between Park Trent Properties Group Pty Ltd, its officers, agents or employees (the Park Trent entities) and HWL Ebsworth Lawyers, its partners, agents or employees (the HWL persons) in connection with the seeking or obtaining of the compliance reviews, advice or training referred to in: (a) paragraphs 10, 11, 13, 14, 17, 18 and 34(c) of McGregor #1 (b) paragraph 3 of McGregor #3 2. All documents of the Park Trent entities reviewed by Mr Walton and referred to in paragraphs 17, 18 and 34(c) of McGregor #1; 3. All documents which record recommendations or advice provided by Mr Walton or the HWL persons in respect of compliance reviews undertaken by him or them in respect of Park Trent's operations and documents. 4. All documents which record communications between: (a) the Park Trent entities and the HWL persons; or (b) the Park Trent entities themselves; In respect of the identification of material for removal of material from documents of Park Trent as referred to in paragraphs 17, 18 and 34(c) of McGregor #1 5. All documents which record the communications between Park Trent entities and its clients referred to at paragraph 35(a) of McGregor #1. 6. All documents which record communications between Park Trent entities in relation to the identification of material for removal from the Park Trent website referred to in paragraph 6 of McGregor #3. 1. On 25 February 2015 PTPG had filed an application to set aside the whole of this notice to produce. Objection was taken to the production of the documents listed at [1]-[4] on the basis that those paragraphs call for documents which are privileged because they are primarily communications between PTPG and HWL Ebsworth, their legal advisors. An objection to production of the documents listed at [6] on the basis of privilege is maintained although ASIC indicated at the first hearing that the only documents ASIC sought were documents to which no privilege attaches. (T 12.47-13.5) The objection to producing the documents referred to at [5] is put on the basis of relevance only. (T 13.5-7) 2. I heard submissions on the privilege point on 19 March 2015 and reserved judgment. The question of the transcripts was resolved on an informal basis. 3. After I reserved judgment on 19 March 2015, I took the view that it would be desirable to hear further argument. The reason was, quite simply, that the defendant was due to file its evidence to be relied on at the final hearing on Wednesday 25 March 2015 and it seemed to me to be desirable to consider that evidence and hear any further argument that may be thought relevant in the context of that evidence. 4. On Wednesday 25 March 2015 six statements (two unsworn) were emailed to my associate. I had the advantage of reading those materials prior to the resumption of argument on Thursday 26 March 2015. For procedural reasons, the trial has now been adjourned until 3 through 12 June 2015. 5. At the resumed hearing, ASIC tendered the following of the statements: * Affidavit of Robert McGregor dated 24 March 2015; * Affidavit of Jenae Johnston of dated March 2015; * Affidavit of Aneta Velevska dated 25 March 2015; and * Affidavit of Evita Wilson of dated March 2015. 1. Counsel for PTPG tendered the index to the Court Book prepared by ASIC. 2. I heard further argument on the privilege point on 26 March 2015, and reserved again. Legal Principles 1. ASIC accepts that the material subject to the notice to produce is privileged. The question to be determined is whether that privilege has been waived. 2. ASIC puts the argument that privilege has been waived on two bases. The first is that by seeking to rely, as they submit, on the fact that the defendant received legal advice and acted in compliance with that legal advice in order to resist relief being granted in the proceedings, PTPG has waived privilege regarding those matters pursuant to s 122(2) of the Uniform Evidence Act 1995 (NSW). Secondly, ASIC puts that by voluntarily disclosing the substance of part of the advice received, namely the Compliance Manual, PTPG has lost privilege in relation to the whole of the advice pursuant to s 126 of the Evidence Act. 3. These two sections provide as follows: 122 Loss of client legal privilege: consent and related matters (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 the client or party concerned has acted in a way that is inconsistent with the client or party objecting to the adducing of the evidence because it would result in a disclosure of a kind referred to in section 118, 119 or 120. (3) Without limiting subsection (2), a client or party is taken to have so acted if: (a) the client or party knowingly and voluntarily disclosed the substance of the evidence to another person; or (b) the substance of the evidence has been disclosed with the express or implied consent of the client or party. (4) The reference in paragraph (3)(a) to a knowing and voluntary disclosure does not include a reference to a disclosure by a person who was, at the time of the disclosure, an employee or agent of the client or party or of a lawyer of the client or party unless the employee or agent was authorised by the client, party or lawyer to make the disclosure. (5) A client or party is not taken to have acted in a manner inconsistent with the client or party objecting to the adducing of the evidence merely because: (a) the substance of the evidence has been disclosed: (i) in the course of making a confidential communication or preparing a confidential document; or (ii) as a result of duress or deception; or (iii) under compulsion of law; or (iv) if the client or party is a body established by, or a person holding an office under, an Australian law-to the Minister, or the Minister of the Commonwealth, the State or Territory, administering the law, or part of the law, under which the body is established or the office is held; or (b) of a disclosure by a client to another person if the disclosure concerns a matter in relation to which the same lawyer is providing, or is to provide, professional legal services to both the client and the other person; or (c) of 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. (6) This Division does not prevent the adducing of evidence of a document that a witness has used to try to revive the witness's memory about a fact or opinion or has used as mentioned in section 32 (Attempts to revive memory in court) or 33 (Evidence given by police officers). 126 Loss of client legal privilege: related communications and documents If, because of the application of section 121, 122, 123, 124 or 125, this Division does not prevent the adducing of evidence of a communication or the contents of a document, those sections do not prevent the adducing of evidence of another communication or document if it is reasonably necessary to enable a proper understanding of the communication or document. Preliminary issue – substance of the legal advice 1. The parties accept that the substance of the legal advice received by PTPG has not been disclosed; in fact, this is ASIC's very complaint. As such, ASIC submits that the waiver is not affected by s 122(5) of the Evidence Act because, as s 122(5)(a)(iii) applies to pre-trial production, it makes reference to the "substance" of the document which has been disclosed under the compulsion of law. 2. I raised with the parties the question of whether the substance of the advice is, in fact, disclosed by the Compliance Manual. It could be argued that there would be no point in having sought and obtained legal assistance if the substance of the advice given was not disclosed by the Compliance Manual. 3. PTPG submitted in response that if that premise were correct, then the Compliance Manual embodies the legal advice given and has already been disclosed. 4. If it were to be said that the substance of the documents was disclosed by Mr McGregor's affidavits, ASIC submits that this is not a case where a question concerning waiver has arisen merely because of a disclosure compelled by law. ASIC says that PTPG has done far more than disclose the contents of an otherwise privileged document; ASIC argues that, in fact, PTPG prepared and served material intended to give it a forensic advantage in the proceedings. 5. I have proceeded on the agreed position of the parties that the substance of the material over which it is said privilege has been waived has not been disclosed. Another preliminary issue – interlocutory stage of the proceedings 1. PTPG submitted at the first hearing that questions of implied waiver are ordinarily addressed by reference to pleadings or affidavits, citing the remarks of Dawson J in Attorney-General (NT) v Maurice (1986) 161 CLR 475 at 481. PTPG initially argued that as PTPG had not yet served its evidence for the final hearing, any argument of implied waiver must have its genesis in PTPG's Defence. As ASIC did not suggest that the waiver had come about as a consequence of PTPG's Defence, PTPG argued there could be no implied waiver. This argument became irrelevant at the resumed hearing of the matter following the service and filing of PTPG's evidence for the final hearing. 2. In any event, I do not think the remarks of Dawson J support the proposition put by PTPG. His Honour refers to pleadings and affidavits, but certainly does not foreclose the possibility of questions of waiver arising at a preliminary or interlocutory stage. It is clear that privilege may be waived, for example, by the production of a document during discovery without a claim of privilege being made concerning the document. As a consequence, I am satisfied that it is possible for PTPG to have waived privilege over the materials sought in the notice to produce notwithstanding the fact that the implied waiver is said to have come about as a result of PTPG's conduct leading up to the interlocutory hearing. Yet another preliminary issue – civil penalty proceedings 1. It must be borne in mind that this matter takes place in the context of civil penalty proceedings. PTPG submits that the Court must be informed by considerations of fairness in making a determination and that these should include the seriousness of the allegations and the fact that privilege is a fundamental common law right. 2. The concept of fairness in the context of determining whether privilege has been waived is not referrable to overriding principles of fairness operating at large but rather to the question of whether it would be fair in the circumstances, given the conduct of the client and any inconsistency between this conduct and the claim to privilege, to maintain the privilege. This is articulated at [29] of Mann v Carnell (1999) 201 CLR 1 (Mann v Carnell). PTPG relies on Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543 at [9]-[11]: Legal professional privilege 9 It is now settled that legal professional privilege is a rule of substantive law which may be availed of by a person to resist the giving of information or the production of documents which would reveal communications between a client and his or her lawyer made for the dominant purpose of giving or obtaining legal advice or the provision of legal services, including representation in legal proceedings. It may here be noted that the "dominant purpose" test for legal professional privilege was recently adopted by this Court in Esso Australia Resources Ltd v Federal Commissioner of Taxation in place of the "sole purpose" test which had been applied following the decision in Grant v Downs. 10 Being a rule of substantive law and not merely a rule of evidence, legal professional privilege is not confined to the processes of discovery and inspection and the giving of evidence in judicial proceedings. Rather and in the absence of provision to the contrary, legal professional privilege may be availed of to resist the giving of information or the production of documents in accordance with investigatory procedures of the kind for which s 155 of the Act provides. Thus, for example, it was held in Baker v Campbell, that documents to which legal professional privilege attaches could not be seized pursuant to a search warrant issued under s 10 of the Crimes Act 1914 (Cth). 11 Legal professional privilege is not merely a rule of substantive law. It is an important common law right or, perhaps, more accurately, an important common law immunity. It is now well settled that statutory provisions are not to be construed as abrogating important common law rights, privileges and immunities in the absence of clear words or a necessary implication to that effect. That rule, the expression of which in this Court can be traced to Potter v Minahan, was the foundation for the decision in Baker v Campbell. It is a rule which, subject to one possible exception, has been strictly applied by this Court since the decision in Re Bolton; Ex parte Beane. Cases in which it has since been applied include Bropho v Western Australia, Coco v The Queen and Commissioner of Australian Federal Police v Propend Finance Pty Ltd. The possible exception to the strict application of that rule was the decision in Yuill. 1. PTPG submits in reliance on this authority that a "clear showing" of waiver is necessary in the circumstances. I agree. Waiver of privilege pursuant to s 122(2) 1. The articulation of s 122(2) differs slightly to the common law test as expressed in Mann v Carnell. It is clear, however, that the tests are, in effect, the same: see Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd (2013) 250 CLR 303 at [30]-[32] per French CJ, Kiefel, Bell, Gaegler and Keane JJ (footnotes omitted): 30. According to its strict legal connotation, waiver is an intentional act done with knowledge whereby a person abandons a right (or privilege) by acting in a manner inconsistent with that right (or privilege). It may be express or implied. In most cases concerning waiver, the area of dispute is whether it is to be implied. In some cases waiver will be imputed by the law with the consequence that a privilege is lost, even though that consequence was not intended by the party losing the privilege. The courts will impute an intention where the actions of a party are plainly inconsistent with the maintenance of the confidentiality which the privilege is intended to protect. 31. In Craine v Colonial Mutual Fire Insurance Co Ltd, it was explained that "'[w]aiver' is a doctrine of some arbitrariness introduced by the law to prevent a man in certain circumstances from taking up two inconsistent positions … It is a conclusion of law when the necessary facts are established. It looks, however, chiefly to the conduct and position of the person who is said to have waived, in order to see whether he has 'approbated' so as to prevent him from 'reprobating'". In Mann v Carnell, it was said that it is considerations of fairness which inform the court's view about an inconsistency which may be seen between the conduct of a party and the maintenance of confidentiality, though "not some overriding principle of fairness operating at large". 32. Those considerations, articulated in relation to waiver at common law, apply with equal force in relation to the statutory question posed by s 122(2) of the Evidence Act, and made applicable by s 131A of that Act to the determination of a question of waiver of client legal privilege arising in the context of pre-trial discovery. That question is whether the client or party concerned "has acted in a way that is inconsistent with the client or party objecting to" the production of a document. 1. The test as expressed in Mann v Carnell by Gleeson CJ, Gaudron, Gummow and Callinan JJ at [28]-[29] is as follows: 28. At common law, a person who would otherwise be entitled to the benefit of legal professional privilege may waive the privilege. It has been observed that "waiver" is a vague term, used in many senses, and that it often requires further definition according to the context. Legal professional privilege exists to protect the confidentiality of communications between lawyer and client. It is the client who is entitled to the benefit of such confidentiality, and who may relinquish that entitlement. It is inconsistency between the conduct of the client and maintenance of the confidentiality which effects a waiver of the privilege. Examples include disclosure by a client of the client's version of a communication with a lawyer, which entitles the lawyer to give his or her account of the communication, or the institution of proceedings for professional negligence against a lawyer, in which the lawyer's evidence as to advice given to the client will be received. 29. Waiver may be express or implied. Disputes as to implied waiver usually arise from the need to decide whether particular conduct is inconsistent with the maintenance of the confidentiality which the privilege is intended to protect. When an affirmative answer is given to such a question, it is sometimes said that waiver is "imputed by operation of law". This means that the law recognises the inconsistency and determines its consequences, even though such consequences may not reflect the subjective intention of the party who has lost the privilege. Thus, in Benecke v National Australia Bank, the client was held to have waived privilege by giving evidence, in legal proceedings, concerning her instructions to a barrister in related proceedings, even though she apparently believed she could prevent the barrister from giving the barrister's version of those instructions. She did not subjectively intend to abandon the privilege. She may not even have turned her mind to the question. However, her intentional act was inconsistent with the maintenance of the confidentiality of the communication. What brings about the waiver is the inconsistency, which the courts, where necessary informed by considerations of fairness, perceive, between the conduct of the client and maintenance of the confidentiality; not some overriding principle of fairness operating at large. 1. ASIC, however, relies upon the decision of the Full Federal Court in Commissioner of Taxation v Rio Tinto Ltd (2006) 151 FCR 341 (FCT v Rio Tinto) to support the proposition that there will be a waiver of privilege where a party to proceedings expressly or impliedly makes an assertion about the contents of a privileged document, or puts the contents of a privileged document in issue and therefore lays the privileged document open to scrutiny. At [52]-[53] the Court (Kenny, Stone and Edmonds JJ) considered that: 52. These authorities show that, where issue or implied waiver is made out, the privilege holder has expressly or impliedly made an assertion about the contents of an otherwise privileged communication for the purpose of mounting a case or substantiating a defence. Where the privilege holder has put the contents of the otherwise privileged communication in issue, such an act can be regarded as inconsistent with the confidentiality that would otherwise pertain to the communication. 53. In recent years, Full Courts of this Court have twice given detailed consideration to the application of implied (or issue) waiver. Amongst the matters considered by the Court in Adelaide Steamship Co Ltd v Spalvins (1998) 81 FCR 360 was whether the primary judge had correctly held that the Australian Securities Commission (ASC) had waived privilege in relation to communications referred to in certain affidavits relied on by the ASC to justify a pleadings amendment. (To the extent that Spalvins is contradicted by Esso regarding the application of the Evidence Act 1995 (Cth), Spalvins does not of course state the law (see [43]).) Referring to two decisions of the High Court preceding Mann (namely, Maurice and Goldberg), the Court (Olney, Kiefel and Finn JJ) postulated, at 371, that issue waiver was "no more than a particular manifestation of the principles applying either to waiver by disclosure or to implied consent to disclosure". The Court continued, also (at 371): The usual type of case said to illustrate issue waiver at common law is one in which, in order to establish a particular right, claim or defence a party who previously has been legally advised, or has provided advice, needs to show that the advice given did, or did not, have a particular character, for example, that it was not negligent where the claim is for professional negligence against the adviser: see Kershaw v Whelan [1996] 1 WLR 358; that it was not based on full information or was not meaningful, in an undue influence claim: see Inche Noriah v Shaik Allie Bin Omar [1929] AC 127 at 130-131; see also Bester v Perpetual Trustee Co Ltd [1970] 3 NSWLR 30 and Brusewitz v Brown [1923] NZLR 1106 or that it did not address or properly address a matter which, if addressed or properly addressed, would defeat or call into question the right or claim asserted as in claims where the applicant has to demonstrate he or she acted with or without adequate knowledge of the matters: see Thomason v Campbelltown Municipal Council (1939) 39 SR (NSW) 347; Hongkong Bank of Australia Ltd v Murphy [1993] 2 VR 419; Pickering v Edmunds (1994) 63 SASR 357. In other words the cases are ones in which, in the substantive proceeding brought, the privilege holder has put in issue the very advice received. We observe in passing that it is questionable whether advice can properly be said to be in issue in a proceeding merely because it may be relevant to an issue in it: see Rhone-Poulenc Rorer Inc v The Home Indemnity Company (3rd Cir 1994) 32 F (3d) 851 at 863; save, perhaps, where the proceeding is between client and legal adviser and the advice is relevant to the adviser's defence of that proceeding: see Lillicrap v Nalder & Son [1993] 1 WLR 94; 1 All ER 724. As we have seen, this correctly summarises the effect of previous authorities, such as Thomason, United States Surgical and Benecke. Referring to the observation of Kirby J in Ampolex Ltd v Perpetual Trustee Co (Canberra) Ltd (1996) 70 ALJR 603 at 607 that a mere reference to legal advice will not amount to disclosure, the Spalvins Court found that, for the most part, the ASC had done no more than this and had not, therefore, waived privilege. 1. The Court went on to say at [72] that: 72. The Commissioner has not, however, simply said that the eight privileged scheduled communications were relevant to reaching his state of satisfaction or exercising his discretions. Nor has he said that he took them into account in so doing. We interpolate that a document may be relevant to a decision without evidencing any matter taken into consideration in the making of it (as, eg, an instrument conferring authority to make the decision). The Commissioner could have identified his bases for satisfaction and exercises of discretion by listing the matters he took into account in each case, but he did not do so. Instead, he identified his bases for satisfaction and exercises of discretion as the matters evidenced in the scheduled documents. In so doing, the Commissioner did more than make an assertion about the relevance of these communications. In his particulars, the Commissioner has said that he took into account the matters evidenced by numerous documents, including the eight privileged scheduled documents. In so doing, the Commissioner has made an assertion that puts the contents of these eight documents in issue, or necessarily lays them open to scrutiny, with the consequence that there is an inconsistency between the making of the assertion and the maintenance of the privilege. 1. In Ferella v Official Trustee in Bankruptcy (2010) 188 FCR 68, Yates J said at [65]: 65. In Federal Commissioner of Taxation v Rio Tinto Ltd (2006) 151 FCR 341 a Full Court of this Court held (at [45]) that where implied waiver is alleged, a court is bound to analyse the acts or omissions of the privilege holder that are said to be inconsistent with the maintenance of the privilege. The Full Court later observed (at [52]) that the waiver will be established where the privilege holder has expressly or impliedly made an assertion about the contents of an otherwise privileged communication for the purpose of mounting a case or substantiating a defence. Thus where the contents of the otherwise privileged communication is put in issue that act will be regarded as inconsistent with the confidentiality that would otherwise pertain to the communication. However the question is not simply whether the holder of the privilege has put that person's state of mind in issue but whether that person has directly or indirectly put the contents of the otherwise privileged communication in issue: see at [65]. Indeed, even the fact that the holder of the privilege makes clear that the advice was relevant or contributed to a particular course of conduct would not be sufficient to waive the privilege unless, possibly, the contents of the legal advice (and not merely the fact of the advice) are specifically put in issue by relying on the contents of the advice to vindicate a claimed state of mind: at [67]. 66. Significantly, in the present case, paragraph 23 of the defence does not plead reliance by the respondent on legal advice in coming to the position that the respondent was not in a position to take the steps alleged by the applicants or that those steps would be inappropriate. Indeed, the respondent does not plead the existence of any legal advice or any awareness of such advice. In these circumstances I am unable to discern how it can be the case that the pleading of paragraph 23 of the defence makes any assertion, expressly or impliedly, about the contents of an otherwise privileged communication. The pleading of paragraph 23 of the defence does not constitute an implied waiver of the privilege that has been claimed. 1. ASIC submits that by filing and serving Mr McGregor's affidavits of 10 and 19 December 2014 (McGregor #1 and McGregor #3 respectively) and its submissions on ASIC's application for interlocutory relief, PTPG "sought to deploy" the fact that it had sought and obtained legal advice and had implemented that advice. That PTPG sought to resist interlocutory relief on this basis is clear from the submissions that were filed and served prior to 2 February 2015. 2. The affidavits in question set out the circumstances leading to the production of the Compliance Manual in some detail. In McGregor #1 at [10]-[18] Mr McGregor details the engagement of Mr Walton by PTPG, the content of the Compliance Manual, the launch of the Compliance Manual, seminars conducted by Mr Walton and training to be provided to PTPG employees by Mr Walton. Mr McGregor also deposes that Mr Walton conducted a review of working documents used by PTPG on a daily basis to ensure their compliance with financial services laws. Mr McGregor says that he was informed by Mr Walton that Mr Walton had identified a small amount of material for removal because he believed that material could be construed as providing financial product advice. 3. In McGregor #3, Mr McGregor outlines in more detail the training seminars conducted by Mr Walton for PTPG employees early in 2014. He goes on to outline that Mr Walton attended the PTPG offices in December 2014 to provide training in relation to the issues contained within the Compliance Manual. 4. At the resumed hearing of the matter Counsel for ASIC continued to rely upon the materials filed earlier but in addition drew attention to those portions of the tendered affidavits (referred to at [13]) which invoke the Compliance Manual and its implementation. Counsel for ASIC noted that the affidavits made no reference to receipt of legal advice, but said that it is an obvious inference that the steps referred to in the affidavits were a result of legal advice. 5. ASIC argues that this conduct must result in a waiver of privilege because it was only by examining the advice given that it could be determined whether or not PTPG had changed its practices in order to comply with its legal obligations such that the Court would be inclined to refuse the relief sought by ASIC. ASIC submits that to allow PTPG to rely upon the evidence they proposed to put before the court at the interlocutory hearing without giving ASIC the opportunity to interrogate the underlying advice would have been to give PTPG an unfair advantage in the litigation. 6. ASIC says that this argument can also be framed by reference to the fact that, by asserting that it had a present and future intention to adopt a particular course of conduct, PTPG asserted it had a particular state of mind. This state of mind, ASIC submits, was necessarily informed by the advice received from HWL Ebsworth, and it was the existence of this state of mind which was relied on by PTPG in saying that the Court should be inclined to refuse the relief sought by ASIC. In these circumstances, ASIC submits there must have been a waiver of privilege. 7. PTPG submits to the contrary that there is no relevant conduct in connection with the final hearing of the matter that gives rise to inconsistency with the maintenance of privilege over the material subject to the notice to produce. PTPG argues that, until the affidavits were read at the interlocutory hearing and the submissions relied upon, PTPG were entitled to resile from reliance on those documents. Relying on State of Victoria v Davies (2003) 6 VR 245 (Davies) at [30], PTPG says that until such time as the material was read there could be no implied waiver. That paragraph is in the following terms: 30 Although in his first ruling his Honour refrained from deciding whether privilege had been waived, in his second ruling, published at the same time, he concluded, as I have stated I understand his ruling, that waiver had occurred by the listing of the particular surveillance videos in the appellant's amended court book index and thus the categorising of them as documents it intended to tender or otherwise intended to use at the trial. His Honour applied the correct test for determining whether there had been an implied waiver, namely, whether the conduct of the party claiming privilege was inconsistent with the continued assertion of the privilege. But I respectfully consider the conclusion at which his Honour arrived by applying the test to be erroneous. The videos were merely listed, that is, enumerated, as is done in an affidavit of documents. I cannot think that the giving, properly, of their dates and places is a waiver of their contents. They were not "included" or supplied and their contents were not "set out" or reproduced as visual images in whole or in part. As Gibbs CJ stated in Attorney-General (NT) v Maurice by reference to authority, it has been held that the privilege in respect of a document is not waived by the mere reference to that document in pleadings or in an affidavit, although the position would be different if the document is reproduced in full in the pleading or affidavit. Dawson J said in the same case that for waiver to happen the content of the communication itself must be revealed. Moreover, they were described as "brought into existence for the dominant purpose of litigation", which makes it clear that they were asserted to be privileged from production on the ground of legal professional privilege: compare Esso Australia Resources Ltd v Commissioner of Taxation. It may be accepted that by listing them the appellant categorised them as material it then intended to tender or otherwise use at trial. But it had not at that stage used them and it was at liberty to resile from that intention at any time before it actually carried it into effect. I conclude, therefore, that, since what the appellant had done was, in my opinion, not inconsistent with its continued assertion of privilege or – to put the matter concretely – since the surveillance videotapes had not been tendered or otherwise used and their content had not been otherwise revealed, legal professional privilege in them had not been impliedly waived by the appellant. I have found it unnecessary to consider the appellant's argument that there could be no waiver because the listing was done under the compulsion of an order. 1. PTPG also made reference to the observation in JD Heydon, Cross on Evidence (10th ed, 2015, LexisNexis Butterworths) at [25010] that a party who, in interlocutory proceedings, refers to the fact legal advice has been obtained, does not thereby waive privilege at the final hearing. 2. ASIC submits that the fact that, as it transpired, McGregor #1 and #3 were not read does not alter the fact that there was a loss of privilege. ASIC says that it was service of these materials, along with the submissions, that affected the waiver of privilege. It is clear that unread affidavits are not privileged documents: see Buzzle Operations Pty Ltd (in liq) v Apple Computer Australia Pty Ltd (2009) 74 NSWLR 469 at [10]-[12]. 3. The observation in Cross on Evidence refers to the case of Derby & Co Ltd v Weldon (No 10) [1991] 2 All ER 908 at 917-918. In that case, which concerned tape recordings of privileged information, Vinelott J made the following observations: Mr. Purle submitted that there is no general rule that when, adopting the word used by Mustill J. in Nea Karteria Maritime Co. Ltd. v. Atlantic & Great Lakes Steamship Corporation (No. 2) [1981] Com. L. R. 138, 139, material has been "deployed" in court in an interlocutory application, privilege that could otherwise be claimed in relation to that and associated material has been waived. In the instant case, he submitted, if the plaintiffs waived any privilege in the course of the application for the Mareva injunction they did so in discharge of their duty to make full disclosure and should not be taken to have waived privilege altogether; they can assert privilege at the trial. I reject that submission. There are, of course, clearly contexts where a party who refers in interlocutory proceedings to the fact that he has obtained legal advice and who states the effect of that advice does not thereby waive privilege. 1. After referring to three examples, being an application for summary judgment whereby the plaintiff would ordinarily state that they had been advised that the defendant had no defence (without waiving privilege) in addition to two instances where the fact legal advice had been obtained or the disclosure of the effect of that legal advice did not waive privilege, Vinelott J went on to say: In both those cases what was material in the interlocutory proceedings was the fact that the plaintiff had been given advice to a particular effect and not the substance of the advice or the extent of the instructions given to the lawyer. In the instant case, the plaintiffs deployed Mr. Baker's and Mr. Di Donna's evidence in answer to the claims made by Mr. Comer and Mr. Price as to the knowledge of the plaintiffs and the ambit of Network's retainer. Moreover, these very matters have been brought into issue by Mr. Lyndon-Stanford. 1. I accept ASIC's submission, with respect to the learned author, that the statement in Cross on Evidence is expressed at too great a level of generality. The remarks of Vinelott J support the proposition that whether or not privilege has been waived will turn on the facts of each case and the extent to which the party claiming privilege has "deployed" the relevant material. The instant case is quite different to one such as Davies where the material had merely been referenced, such that Batt JA (Callaway and Chernov JJA agreeing) considered "I cannot think that the giving, properly, of their dates and places is a waiver of their contents. They were not "included" or supplied and their contents were not "set out" or reproduced as visual images in whole or in part." In the instant case much more has been done to put the content of the relevant material in issue. 2. I do not accept PTPG's submission that the material must have been read or otherwise relied upon at the interlocutory phase in order for privilege to have been waived. As pointed out by Counsel for ASIC, the application of this principle would lead to absurdity as parties would not be able to seek privileged material in circumstances where privilege had been waived until, potentially, a hearing was well underway and all the relevant evidence read. 3. PTPG argues that making submissions concerning action taken to comply with the Corporations Act in circumstances where ASIC's evidence at both an interlocutory and final stage would deal with those matters cannot be inconsistent with the maintenance of privilege, or such that the maintenance of privilege is unfair. PTPG says that evidence of PTPG's efforts to ensure compliance was part of ASIC's evidence at the interlocutory stage and, further, would appear to be part of ASIC's case for final hearing. PTPG says that in such circumstances there is no inconsistency in PTPG making submissions concerning ASIC's evidence while also maintaining its claim for privilege. 4. In response, ASIC accepts that ASIC's case refers to the fact that PTPG received legal advice. ASIC says, however, that they did not deploy this fact in the way PTPG attempted to; that is, to suggest that an interlocutory injunction should be refused because PTPG had received and acted in compliance with legal advice. In such circumstances, ASIC says there has been conduct inconsistent with the maintenance of privilege. 5. As I have already commented, at the resumed hearing on 26 March 2015, ASIC relied upon certain portions of statements to be relied upon at the final hearing to further buttress the argument that the Compliance Manual would play a role in the proceedings, by reason of the fact that the proposed evidence of Ms Johnston and (at least) Mr McGregor would be deployed, along with the compliance reviews it appears were regularly conducted by the defendant, at least on the issue of relief. 6. In argument, Counsel for the defendant perfectly appropriately and candidly confirmed this position. The defendant's case will be that it was never in breach of the Act. If it was, its case will be that it was not in breach after the introduction of its new methodology of doing business, the adoption of the Compliance Manual and the compliance reviews thereafter conducted by, amongst others, Mr Walton. As a fall-back position, if the court were ultimately to find that it was in breach at all relevant times, PTPG would rely on introducing the Compliance Manual and the compliance reviews to resist the more extreme injunctive relief that will apparently be sought. 7. ASIC's submission at the resumed hearing was that the materials provided by PTPG only fortify its entitlement to access to advice of various kinds as identified in the notice to produce. Counsel for ASIC relied upon, in part, a decision of Davies J of this Court delivered 20 March 2015: National Australia Bank Ltd v C & O Voukidis Pty Ltd (No. 2) [2015] NSWSC 258. 8. In that case, his Honour ruled that there had been a waiver of privilege but only for a limited purpose. That limited purpose was in support of an amendment application which his Honour had dealt with and dismissed. Whilst he speculated that the plaintiff's state of mind as influenced or otherwise by legal advice may have been relevant to credit, he found that as it was no longer an issue in the proceeding there was no longer any waiver entitling access by the defendant to the legal advice. 9. Counsel for ASIC submitted, first, that this supported the argument that earlier affidavit material could be relied upon if the issue remained relevant. Here it is submitted that the Compliance Manual and the reviews were going to play a part at the interlocutory stage and will play a part at the final hearing, hence relevance has been maintained. That is clearly correct. Secondly, if this was not accepted, ASIC submitted that Davies J erred and that once the confidentiality is gone it is gone not only for all purposes but for all time. For reasons that will become clear it is not necessary for me to address whether his Honour was correct on this point. 10. Counsel for the defendant again submitted that nothing in the affidavit material it proposes to deploy at the trial fortifies the argument that privilege in any sense has been waived, whether it is in relation to the Compliance Manual or the compliance reviews. 11. Without intending any criticism, it is plain that the statements that are proposed to be relied upon at the trial have been carefully drawn. The defendant has never claimed any privilege in relation to, for example, the Compliance Manual. The only question raised at the earlier hearing of this application and still at the heart of the matter is whether there has been in any relevant sense an inconsistency. 12. The plain reality is that the Compliance Manual and compliance reviews will loom, not only with respect to liability questions but undoubtedly in relation to any relief. 13. The defendant wants to take, and understandably so, full advantage of its conduct and state of mind in both addressing the complaints and concerns of ASIC and reacting accordingly. That reaction was governed wholly or partially by the advice obtained from HWL Ebsworth. One of the partners of that firm, Mr Walton, has clearly been retained to play an ongoing role in the compliance reviews. To disclose what I regard as the effect, or if you like the result, of the advice but not the advice itself both in relation to the Compliance Manual and the reviews amounts to an inconsistency. Waiver of privilege: disclosure of part of the advice received 1. In the alternative, ASIC submits that the fact that Ms Johnston, the Chief Operating Officer of PTPG, disclosed the Compliance Manual constitutes a disclosure of part of the substance of the advice received. ASIC says that the disclosure of the Compliance Manual by Ms Johnston was not compelled by law because ASIC cannot require a privilege holder to produce legally privileged material. On this basis, ASIC submits that the disclosure of the Compliance Manual by PTPG must be considered a voluntary one. ASIC notes that Ms Johnston was legally represented at the time of disclosure and no point concerning privilege was taken at that time. 2. The application of s 126 of the Evidence Act, as applied by s 131A to pre-trial production, has the consequence that where privilege has been waived in respect of particular documents, other documents which are "reasonably necessary to enable a proper understanding of the communication or document" will be subject to a similar waiver of privilege. On this basis, ASIC seeks the documents subject of the notice to produce. 3. In response, PTPG argues that the premise upon which ASIC puts this argument is unsound. PTPG says that it is unlikely a valid claim for privilege could have been maintained over the Compliance Manual, because the Compliance Manual was prepared for purposes other than the provision of legal advice by HWL Ebsworth to PTPG. Further, PTPG submits that even if the Compliance Manual were privileged and privilege has been waived, it does not follow that PTPG has waived privilege over the documents sought in the notice to produce because the Compliance Manual does not refer to or disclose the privileged advice from HWL Ebsworth in relation to the compliance reviews. 4. Finally, PTPG reiterates that the Compliance Manual was to be served as part of ASIC's evidence on the interlocutory hearing and it appears that it will form part of ASIC's evidence at the final hearing. In these circumstances, PTPG says that there is no relevant conduct of PTPG that is inconsistent with the maintenance of privilege. 5. In my view ASIC's arguments recorded in [58] and [59] above are correct. Conclusion 1. It seems inescapable that the defendant will want to make use of the Compliance Manual, which came about after it consulted with the solicitors HWL Ebsworth. The ongoing compliance reviews are also to be done with the advice and guidance, it seems, of the solicitors. On issues of liability, but certainly on the question of relief, the defendant will want the Court to consider and accept that having attempted to engage, unsuccessfully, with ASIC it adopted both a responsible and reasonable course of consulting and retaining solicitors to advise. That position was clearly going to be advanced at the aborted interlocutory hearing in opposition to the relief then sought. 2. To seek to take advantage of that course of conduct is clearly open to the interpretation at the very least that the direction taken was done on advice so as to disclose the effect of it. Against that backdrop, to invite favourable consideration on at least the question of relief creates the unfairness and inconsistency in the defendant's position. It wants to take advantage of the effect of the advice as I see it, and yet wants to maintain confidentiality in respect of it. It should not as a matter of fairness be permitted to approbate and reprobate in the relevant sense. 3. However one looks at it I consider that there has been a waiver of privilege. 4. Accordingly I consider the defendant is obliged to respond to the notice to produce and divulge the various documents sought. I am mindful this potentially raises an important point for the parties and accordingly I will hear them on the terms and conditions of any final orders I make, if that is desired, and of course on the question of costs. Amendments 11 May 2015 - removed Microsoft Word field prompt "Click here to enter text" from coversheet 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. Decision last updated: 11 May 2015