Vitruvian Investments Pty Ltd v Sharif

• Jurisdiction: Australia Federal only
• Court: Federal Court
• Judgment Date: 15 May 2023
• Neutral Citation: [2023] FCA 471
• Date: 15 May 2023

Federal Court of Australia

Vitruvian Investments Pty Ltd v Sharif [2023] FCA 471

File number:	WAD 153 of 2022
Judgment of:	JACKSON J
Date of judgment:	15 May 2023
Catchwords:	DISCOVERY - interlocutory application - legal professional privilege - where plea results in implied waiver of privilege - consideration of whether waiver extends to disputed documents - application dismissed
Cases cited:	Australian Competition and Consumer Commission v Prysmian Cavi E Sistemi Energia S.R.L. (No 10) [2015] FCA 763; (2015) 235 FCR 593 Commissioner of Taxation v Rio Tinto Limited [2006] FCAFC 86; (2006) 151 FCR 341 Council of the New South Wales Bar Association v Archer [2008] NSWCA 164; (2008) 72 NSWLR 236 Craine v Colonial Mutual Fire Insurance Co Ltd (1920) 28 CLR 305 DSE (Holdings) Pty Limited v Intertan Inc [2003] FCA 384; (2003) 127 FCR 499 Esso Australia Resources Limited v Commissioner of Taxation (Cth) [1999] HCA 67; (1999) 201 CLR 49 Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd [2013] HCA 46; (2013) 250 CLR 303 Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V. (No 6) [2019] FCA 337 Liquorland (Australia) Pty Ltd v Anghie [2003] VSC 73; (2003) 7 VR 27 Macquarie Bank Limited v Arup Pty Limited [2016] FCAFC 117 Mann v Carnell [1999] HCA 66; (1999) 201 CLR 1 Nea Karteria Maritime Co Ltd v Atlantic & Great Lakes Steamship Corporation (No 2) [1981] Com LR 138 Osland v Secretary to the Department of Justice [2008] HCA 37; (2008) 234 CLR 275 Poland v Hedley [2023] WASCA 69 Sharif v Vitruvian Investments Pty Ltd [2023] FCA 426 Telstra Corporation Ltd v BT Australasia Pty Ltd (1998) 85 FCR 152 Thomason v Campbelltown Municipal Council (1939) 39 SR (NSW) 347 Vic Hotel Pty Ltd v DC Payments Australasia Pty Ltd [2015] VSCA 101
Division:	General Division
Registry:	Western Australia
National Practice Area:	Commercial and Corporations
Sub-area:	Commercial Contracts, Banking, Finance and Insurance
Number of paragraphs:	26
Date of hearing:	Determined on the papers
Counsel for the Plaintiff:	Mr ML Bennett
Solicitor for the Plaintiff:	Bennett
Counsel for the Defendant:	Mr JS Slack-Smith
Solicitor for the Defendant:	Hall & Wilcox

ORDERS

		WAD 153 of 2022
BETWEEN:	VITRUVIAN INVESTMENTS PTY LTD (ACN 630 548 846) Plaintiff
AND:	AHMAD WALID OBAID SHARIF Defendant

order made by:	JACKSON J
DATE OF ORDER:	15 May 2023

THE COURT ORDERS THAT:

1. The defendant's interlocutory application dated 26 April 2023 is dismissed.

2. Costs reserved.

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

REASONS FOR JUDGMENT

JACKSON J:

1. These reasons concern an interlocutory application by the defendant, Mr Sharif, for production of certain documents which the plaintiff, Vitruvian Investments Pty Ltd, has discovered. Vitruvian claims legal professional privilege over the documents. Mr Sharif accepts that the documents were subject to legal professional privilege when they came into existence, but says that the privilege has since been waived. Vitruvian accepts that it has waived privilege over one relevant document, but it does not accept that the waiver extends to these particular documents.

2. In accordance with common practice, Colvin J, before whom the matter is listed for trial, has referred the interlocutory application to a different judge to inspect the disputed documents so as to determine whether the waiver does extend to each of them. The application was thus referred to me and by the consent of all concerned, I have determined it on the papers, including with the benefit of the transcript of a hearing before Colvin J on 4 May 2023.

3. I adopt and do not repeat the background Colvin J gave in Sharif v Vitruvian Investments Pty Ltd [2023] FCA 426 at [1]‑[3]. That judgment was given in a different proceeding, WAD 127 of 2022, where Mr Sharif sought relief under the Corporations Act 2001 (Cth) in relation to alleged oppressive conduct by Vitruvian. This proceeding is related to that one, being the one which his Honour describes (at [2]) where Vitruvian seeks declarations that a cancellation of Mr Sharif's shares in Vitruvian and subsequent transactions were not invalid.

4. The waiver of privilege has occurred as a result of a plea in Vitruvian's statement of claim. The present version of that pleading is a draft dated 15 July 2022; his Honour has given leave to amend in terms of the draft. Paragraph 52 of the statement of claim pleads that in cancelling Mr Sharif's shares in Vitruvian, Vitruvian acted honestly at all times. In his defence, Mr Sharif denies this. Vitruvian has thus put its state of mind in issue, a step which is capable of giving rise to a waiver of legal professional privilege over documents that are relevant to that issue.

Principles

5. This is a question of discovery, so the common law applies rather than the Evidence Act 1995 (Cth): Esso Australia Resources Limited v Commissioner of Taxation (Cth) [1999] HCA 67; (1999) 201 CLR 49 at [16]. The basic principle, laid down in Mann v Carnell [1999] HCA 66; (1999) 201 CLR 1 at [29], is that an implied waiver of legal professional privilege arises if there is inconsistency between the conduct of the client whose privilege it is and maintenance of the confidentiality of the communications over which privilege is claimed. In assessing whether such inconsistency exists the Court will, where necessary, be informed by considerations of fairness, but the waiver does not come about by way of some overriding principle of fairness operating at large.

6. 'Issue waiver', as the present kind of waiver is called, is a form of implied waiver: Commissioner of Taxation v Rio Tinto Limited [2006] FCAFC 86; (2006) 151 FCR 341 at [43]. Relevantly here, the waiver comes about because Vitruvian's conduct in pleading that it acted honestly in cancelling the shares is inconsistent with the continued confidentiality of certain legal advice, because Vitruvian's plea has necessarily put in issue the character or contents of that advice: see Rio Tinto at [54]. Or, as it was put in Telstra Corporation Ltd v BT Australasia Pty Ltd (1998) 85 FCR 152 at 168, where a party relies on a cause of action, an element of which is the party's state of mind, the party is taken to have waived privilege in respect of legal advice which the party had before or at the time of the relevant events that is material to the formation of that state of mind. Another way of describing what happens when there is an implied waiver may be found in the judgment of Allsop J (as he then was) in DSE (Holdings) Pty Limited v Intertan Inc [2003] FCA 384; (2003) 127 FCR 499 at [58]:

… the party entitled to the privilege makes an assertion (express or implied), or brings a case, which is either about the contents of the confidential communication or which necessarily lays open the confidential communication to scrutiny and, by such conduct, an inconsistency arises between the act and the maintenance of the confidence, informed partly by the forensic unfairness of allowing the claim to proceed without disclosure of the communication. …

(original emphasis)

7. However it is described, inconsistency is at the heart of the enquiry: Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V. (No 6) [2019] FCA 337 at [24] (Stewart J); see also Poland v Hedley [2023] WASCA 69 at [76] (Quinlan CJ, Murphy and Beech...