TerraCom Ltd v Australian Securities and Investments Commission

• Jurisdiction: Australia Federal only
• Court: Full Federal Court (Australia)
• Judgment Date: 07 September 2022
• Neutral Citation: [2022] FCAFC 151
• Date: 07 September 2022

Federal Court of Australia

TerraCom Ltd v Australian Securities and Investments Commission [2022] FCAFC 151

Appeal from:		TerraCom Ltd v Australian Securities and Investments Commission [2022] FCA 208
File number(s):	NSD 248 of 2022
Judgment of:	O'CALLAGHAN, JACKSON AND HALLEY JJ
Date of judgment:	7 September 2022
Catchwords:	PRACTICE AND PROCEDURE – legal professional privilege – whether primary judge erred in holding that legal professional privilege waived over whole of forensic report commissioned by lawyers
Cases cited:	Ghosh v NineMSN Pty Ltd (2015) 90 NSWLR 595 House v The King (1936) 55 CLR 499 Minister for Immigration and Border Protection v SZVFW (2018) 264 CLR 541 TerraCom Ltd v Australian Securities and Investments Commission [2022] FCA 745 UBS AG v Tyne (2018) 265 CLR 77
Division:		General Division
Registry:		New South Wales
National Practice Area:		Commercial and Corporations
Sub-area:		Regulator and Consumer Protection
Number of paragraphs:	38
Date of last submission/s:	9 August 2022
Date of hearing:	Determined on the papers
Counsel for the Appellant:	Mr MR Elliott SC
Solicitor for the Appellant:	Horton Rhodes Lawyers
Counsel for the Respondent:	Dr SB McNicol AM QC with Mr R Chaile
Solicitor for the Respondent:	HWL Ebsworth Lawyers

ORDERS

		NSD 248 of 2022
BETWEEN:	TERRACOM LTD Appellant
AND:	AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION Respondent

order made by:	O'CALLAGHAN, JACKSON AND HALLEY JJ
DATE OF ORDER:	7 SEPTEMBER 2022

THE COURT ORDERS THAT:

1. The appellant serve a redacted version of the “Project Rex Report” prepared by PricewaterhouseCoopers Consulting Australia Pty Ltd and dated 16 December 2019 by 4pm on 14 September 2022, consistently with the redactions made in the version of the report provided to the Court and marked “Annexure B”.

2. The appeal otherwise be dismissed.

3. The appellant pay the respondent’s costs of the appeal.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

THE COURT:

Introduction

1. This is an appeal from an order made by a judge of this court dismissing a proceeding brought by TerraCom Ltd (the appellant), in which it sought a declaration that legal professional privilege attached to a particular document, being a “Project Rex Report” prepared by PricewaterhouseCoopers Consulting (Australia) Pty Ltd (PwC) dated 16 December 2019 (the PwC report or report), such that the appellant was not obliged to produce it to the respondent (ASIC).

2. It was agreed that the appeal would be dealt with on the papers.

3. The learned primary judge asked and answered the three questions argued below as follows:

1. Was the PwC report prepared for the dominant purpose of the appellant’s lawyers providing it with legal advice or legal services?

Answer: Yes.

2. If it was, and in that sense legal professional privilege attached to it, was privilege over the whole or any part of the report waived by the appellant?

Answer: Privilege was waived over part of the PwC report.

3. If privilege over only part of the report was waived, did that have the result that privilege over the whole report was lost?

Answer: Yes.

4. The appellant did not challenge the primary judge’s answers to questions 1 and 2. The notice of appeal contains a single ground which relates to his Honour’s answer to question 3.

The relevant facts

5. The primary judge summarised the relevant facts in his reasons. That which appears under this heading is derived from them.

6. The proceeding below arose out of an investigation by ASIC of suspected contraventions of the Corporations Act 2001 (Cth) by the appellant and its current and former officers and employees in relation to the testing, certification, and sale of coal during a period from late 2016 to early 2020.

7. As part of the investigation, ASIC executed a warrant at the appellant’s Blair Athol mine site offices in March 2021. In May 2021, ASIC also issued a notice to the appellant to produce books and documents.

8. The warrant caused the PwC report to be seized by ASIC and thereby come into its possession. The report was also caught by the notice to produce. Pending resolution of the privilege dispute before the primary judge, the parties agreed to a standstill arrangement.

9. On 13 August 2019, the appellant terminated the employment of a commercial general manager, Mr Justin Williams, in circumstances in which he made serious allegations against the appellant and its officers and employees with regard to the falsification of certificates of analysis of coal that it exported.

10. By letter of engagement dated 22 August 2019, the appellant appointed Ashurst “to act for and advise [it] on issues arising in relation to allegations of misconduct that former employee Justin Williams has made against the company and certain company personnel”, to “[c]ommunicate with, and engage, PwC for forensic support in the investigation”, and to “[p]repare a preliminary report of the allegations following the initial interview, and plan for further investigations (in conjunction with PwC)”.

11. By letter of engagement dated 29 August 2019, the appellant appointed PwC to prepare a report to enable Ashurst to provide legal advice.

12. On 3 September 2019, Mr Williams commenced a general protections application against the appellant in the Fair Work Commission. He made various allegations including that the appellant procured that certificates of analysis used as the basis for its commercial invoices to customers were fraudulently altered by the superintending company that produced such certificates of analysis. He alleged that he had detailed discussions with the appellant’s CEO, Mr Danny McCarthy, about that conduct but that Mr McCarthy had instructed him to continue doing it.

13. On 5 December 2019, Mr Williams commenced a proceeding under the Fair Work Act 2009 (Cth) in the Federal Circuit Court of Australia, naming six individual respondents, each of whom was an officer of the appellant. Among other things, Mr Williams made allegations similar to those that he had made in the Fair Work Commission concerning the appellant’s alleged falsification of coal analyses.

14. On 16 December 2019, the PwC report was produced.

15. On 9 March 2020, an article was published in the Australian Financial Review (AFR). It reported that Mr Williams had made allegations of the appellant’s coal analysis being faked with major laboratories’ help. It reported that the appellant had highlighted that its “independent forensic investigation” had found no wrongdoing.

16. On 12 March 2020, the appellant published an open letter to shareholders in the AFR. The letter addressed two topics, one of which was “Legal Dispute with Justin Williams”. The letter referred to the dispute with Mr Williams concerning the termination of his employment, and stated relevantly as follows:

As previously stated, [the appellant] took allegations that its CEO and CFO had been involved in a scheme relating to the fake analysis of coal samples seriously and an independent forensic investigation was conducted and found no evidence of wrongdoing.

… for Mr Williams to suggest [the appellant] was involved in an international conspiracy to undertake false testing is ludicrous.

17. On 2 April 2020, ALS Ltd, a global testing, inspection and certification business, published an Australian Securities Exchange announcement and media release. It stated that the independent forensic investigation which it...