EPAS Ltd v AMP General Insurance Ltd
[2007] QCA 212
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- Notable Unreported Decision
- Appeal Determined (QCA)
- EPAS Ltd v AMP General Insurance Ltd[2007] QCA 212
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EPAS Ltd v AMP General Insurance Ltd[2007] QCA 212
EPAS Ltd v AMP General Insurance Ltd[2007] QCA 212
SUPREME COURT OF QUEENSLAND
CITATION: | EPAS Ltd & Ors v AMP General Insurance Ltd [2007] QCA 212 |
PARTIES: | EPAS LIMITED ACN 010 642 314 TERRANCE ROBERT JAMES |
FILE NO/S: | Appeal No 2650 of 2007 SC No 3544 of 2000 and SC No 3543 of 2000 |
DIVISION: | Court of Appeal |
PROCEEDING: | General Civil Appeal |
ORIGINATING COURT: | Supreme Court at Brisbane |
DELIVERED ON: | 27 June 2007 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 20 June 2007 |
JUDGES: | Jerrard and Keane JJA and White J Separate reasons for judgment of each member of the Court, each concurring as to the orders made |
ORDER: | 1.Appeal dismissed 2.Appellant to pay EPAS' costs on the standard basis 3.Appellant's application for joinder dismissed 4.Appellant to pay costs of respondents to joinder application on the standard basis |
CATCHWORDS: | PROCEDURE – COURTS AND JUDGES GENERALLY – COURTS – OTHER MATTERS – where ASIC caused two separate proceedings to be brought in relation to restoring a superannuation trust fund – where EPAS is plaintiff in one proceeding and defendant in the other – where the same counsel and solicitors act for plaintiff in both matters – whether the court should exercise its inherent jurisdiction to control its officers to restrain the lawyers from acting for EPAS as plaintiff PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – PROCEDURE UNDER RULES OF COURT – PARTIES – OTHER MATTERS – whether lawyers should be joined as parties to appeal Australian Securities and Investments Commission Act 1989 (Cth), s 50 Australian Securities Commission v Deloitte Touche Tohmatsu (1996) 138 ALR 655, applied Geelong School Supplies Pty Ltd v Dean [2006] FCA 1404, distinguished Somerville v Australian Securities Commission (1995) 131 ALR 517, applied |
COUNSEL: | P L O'Shea SC, with S E Brown, for the appellant J H Dalton SC for the respondent |
SOLICITORS: | Minter Ellison for the appellant Corrs Chambers Westgarth for the respondent |
- JERRARD JA: In this matter I have read the reasons for judgment of Keane JA, and the orders proposed by His Honour, and respectfully agree with those. The appellant is really complaining about the way in which the Australian Securities and Investments Commission ("ASIC") is exercising the power granted to it by s 50 of the Australian Securities and Investments Commission Act 1989 (Cth), rather than really complaining about the role of the lawyers. It does not suggest there is any risk of a breach of fiduciary duty to EPAS, or to Trust Company Superannuation Services Limited ("TCSSL"), in either action, and it does not allege that there is any danger of misuse of confidential information. That no doubt is a consequence of the fact that the instructions all come from the ASIC, and none from the non-existent directors or office holders of EPAS.
- The manner in which the appellant put its complaint – a contention that this Court should exercise its inherent jurisdiction to control the officers of the court, namely the lawyers acting for EPAS – is really only available as an argument because the two proceedings taken by the ASIC are no longer being dealt with “in house”, as they were when they began. The appeal record reveals that the Statements of Claim in each proceeding were apparently prepared by the same lawyers within the ASIC, and no complaint was made then, or until some years later and after “outside” lawyers were instructed by ASIC. The matters discussed in Young v Murphy [1996] 1 VR 279 demonstrates why two separate actions may be needed, with the second action being necessary to establish liability for a breach of the duties owed by the directors to EPAS, as distinct from liability for alleged knowing participation by those directors in what is said to be a breach of trust by EPAS.
- The appellant has not shown any reason to restrain the lawyers currently acting for EPAS for continuing to act for both plaintiffs, particularly because the ASIC is the moving party who gives the instructions in both.
- KEANE JA: In action S3544 of 2000 the plaintiff, EPAS Limited ("EPAS"), seeks orders against a number of defendants. These orders are aimed at restoring the fund known as The Employees Productivity Award Superannuation Fund ("the Fund") which was allegedly depleted by acts or omissions of individual defendants who were involved in the management of EPAS when it was trustee of the Fund. EPAS alleges it is liable to make good losses to the Fund suffered by reason of its own breaches of trust which resulted from those acts or omissions. The eighth defendant, AMP General Insurance Limited ("AMP"), issued a number of policies of insurance to EPAS which EPAS contends provided EPAS and some of the individual defendants with insurance cover against liability for the losses in respect of which EPAS sues.
- In action S3543 of 2000, the plaintiff is Trust Company Superannuation Services Limited ("TCSSL") which succeeded EPAS as trustee of the Fund. In that action, TCSSL seeks the same relief which is sought by EPAS in S3544 of 2000. The defendants, including AMP, are the same as in S3544 of 2000, save that EPAS is also sued as a defendant. Against EPAS it is alleged that, because of the allegedly negligent mismanagement of the Fund when it was trustee of the Fund, it is liable to restore the Fund. AMP also issued a policy of insurance to TCSSL.
The application at first instance
- In February 2007, in S3544 of 2000, AMP applied to the learned primary judge for orders restraining the solicitors and counsel who represent EPAS in that action from continuing to act in that capacity. This application was brought on the basis of the inherent jurisdiction of the Supreme Court to control the conduct of its officers. It was argued by AMP that EPAS' lawyers cannot, consistently with their fiduciary obligations to EPAS, act both for and against EPAS in closely related matters, and that a "fair-minded reasonably informed member of the public" would conclude that it was inconsistent with the proper administration of justice that these lawyers might continue to act for EPAS as plaintiff in S3544 of 2000 when EPAS was also a defendant in S3543 of 2000. No attempt was, however, made to suggest that the lawyers in question should be restrained from continuing to act for TCSSL in S3543 of 2000.
- The learned primary judge rejected AMP's arguments and dismissed its application with costs. The kernel of the learned primary judge's reasoning supporting that decision appears in the following paragraphs of her Honour's judgment:
"It is clearly against AMP’s commercial interest for the proceeding to be conducted in such a way that EPAS falls on its sword. But that is not the issue. The issue is whether it is contrary to the due administration of justice and the integrity of the judicial process for the same solicitors and counsel to act for EPAS in S3544/2000 and against it in S3543/2000.
EPAS was a trustee. It has a continuing duty to restore the trust fund, and if it is successful in the litigation, it will hold the proceeds of the litigation on behalf of the trust (i.e. on behalf of the beneficiaries). There is no inherent vice in a corporate trustee acknowledging its own wrongdoing and then seeking to recover losses from delinquent directors and auditors who caused or contributed to the losses. On the contrary, it is in the public interest that proceedings of that type be brought.
It has not been shown that the possible defences adverted to by AMP have not been considered by those conducting the litigation. Further they are raised in defence to the claims against the eighth defendant. If indeed EPAS has no liability to make good the losses, it is likely that that will afford a defence to the eighth defendant.
More than six years have passed since the proceedings were instituted. At the time they were instituted the plaintiff’s cases were being conducted by solicitors and counsel in the office of ASIC; the present solicitors and counsel commenced to act about a year ago. There has been no explanation proffered for the delay in bringing these applications. It is clear that the present solicitors and counsel have done much work on behalf of the plaintiffs in the last year. On the other hand the action is a long way from trial and so it is unlikely that any irreparable harm would be done to EPAS if the legal practitioners were restrained from acting.
In all the circumstances, I am unpersuaded that it would be contrary to the due administration of justice and the integrity of the judicial process for the solicitors and counsel to continue to act for EPAS.
A procedural point was taken as to whether these applications were properly brought against the legal practitioners in proceeding S3544/2000, when they are not parties to that proceeding. While the applications could have been brought by the institution of a fresh proceeding, there was nothing improper or invalid about the way in which they were brought.
I dismiss the applications."[1]
- The "possible defences" to which her Honour adverted included, in particular, provisions of the trust deed, under which EPAS was appointed trustee of the Fund, whereby it would be liable for losses incurred by the Fund only if EPAS' conduct involved fraud or wilful default. As yet, fraud or wilful default has not been alleged against EPAS.
The issues in this Court
- AMP appeals against the decision of the learned primary judge, relying upon essentially the same arguments (although elaborated in different ways) that were agitated before the learned primary judge. AMP has also applied to have the lawyers joined as parties to the appeal. I will deal with that application after first addressing the merits of the appeal.
- On behalf of AMP, Mr O'Shea SC, who appeared with Ms Brown of Counsel, pointed to the circumstance that, in S3544 of 2000, EPAS lawyers had filed a statement of claim which asserted that EPAS was liable to restore the Fund which had been depleted by its breaches of trust. Mr O'Shea argued that EPAS had an arguable defence to the liability which its lawyers had caused it to confess, so that this confession could not be in the best interests of EPAS. Mr O'Shea also emphasised that it was only by the "stratagem" of bringing a separate action by each of EPAS and TCSSL that EPAS did not appear as plaintiff and defendant on opposite sides of the record in one action. In order to understand the absence of merit in these arguments, it is necessary first to have an appreciation of the legislative basis on which these two actions have been brought.
The legislative basis for the actions by EPAS and TCSSL
- Each of action S3543 and S3544 was instigated by the Australian Securities and Investments Commission ("ASIC"). Under the Australian Securities and Investments Commission Act 1989 (Cth) ("the Act"), ASIC has power to investigate suspicions of fraud or dishonesty in the management of bodies corporate. Section 50 of the Act provides relevantly as follows:
"50 Commission may cause civil proceeding to be begun
Where, as a result of an investigation …, it appears to the Commission to be in the public interest for a person to begin and carry on a proceeding for:
(a)the recovery of damages for fraud, negligence, default, breach of duty, or other misconduct, committed in connection with a matter to which the investigation or examination related; or
(b)recovery of property of the person;
the Commission:
(c)if the person is a company - may cause …
…
such a proceeding to be begun and carried on in the person’s name."
- It is common ground that ASIC caused each action to be begun and carried on in the name of TCSSL and EPAS respectively. It is ASIC which instructs the lawyers who represent EPAS in S3544 of 2000, not the individuals who formerly constituted its directing mind and will. Those lawyers also act for TCSSL on ASIC's instructions in S3543 of 2000. They do not act for EPAS in that action.
- Ms Dalton SC, who appeared for EPAS and its lawyers, told the Court that the action by EPAS as plaintiff was necessitated by the circumstance that TCSSL could not sue the former officers of EPAS for loss suffered as a result of the breach of duties owed to EPAS.[2] It may be noted that TCSSL has, in fact, made such claims in its pleadings, but the consideration identified by Ms Dalton, together with the circumstance that separate policies of insurance were issued by AMP to EPAS and TCSSL, affords an explanation for the bringing of actions by both EPAS and TCSSL. To say, as Mr O'Shea does, that it is only the existence of two proceedings which prevents the appearance of EPAS on both sides of the record, is to say no more than that the form of each proceeding reflects the substance of the instructions given to the lawyers for EPAS and TCSSL by ASIC. There is no suggestion by AMP that ASIC was not entitled to give those instructions.
Discussion of AMP's arguments
- It is to be emphasised that AMP does not seek a stay of one or other of the actions on the basis that the prosecution of two actions seeking essentially the same relief, ie the restoration of the Fund, is vexatious or an abuse of the process of the Court. Nor does AMP contend that the absence of any evident intention on the part of EPAS to contest the claims made against it by TCSSL in S3543 of 2000 means that there is no real controversy between TCSSL and EPAS in that proceeding and, therefore, that proceeding, involving as it does federal jurisdiction, should be stayed for want of a "matter" which might engage the judicial power of the Commonwealth.[3]
- The essential thrust of the argument raised by AMP is that the lawyers engaged by ASIC pursuant to the statutory power vested in ASIC by s 50 of the Act should be prevented from acting for EPAS in the prosecution of its claim in S3544 of 2000 because they were also engaged by ASIC to act for TCSSL in S3543 of 2000 in which EPAS is named as a defendant. This argument is not concerned with issues relating to the substantive rights and obligations of the parties, but is driven by an adherence to a misplaced punctilio in matters of procedure.
- Insofar as AMP's argument is put on the basis of an apprehension of breach of fiduciary duty by EPAS lawyers, it is to be emphasised that the lawyers who represent EPAS as plaintiff in S3544 do not represent EPAS in S3543 of 2000. They are, therefore, not in the position of being obliged to serve two masters at the same time. It is well-established that such a position is impossible for a fiduciary; but here no danger arises that EPAS lawyers in S3544 of 2000 may sacrifice EPAS' interests.
- Mr O'Shea argued that EPAS' confession in S3544 of 2000 that it is liable to restore the Fund depleted by its breaches of trust demonstrates a willingness by EPAS' lawyers in this action to sacrifice its interests, especially where there is an arguable defence to the claim that EPAS is liable to restore the Fund. But in S3544 the proposition that EPAS is liable to restore the Fund is not a confession which may lead to a judgment, or other detriment, against EPAS. In truth, it is an assertion of the basis on which it claims to be entitled to indemnity from AMP in respect of EPAS' obligations to its former beneficiaries. EPAS' assertion of its liability may lead to a judgment in its favour; and Mr O'Shea did not identify any detriment likely to flow to EPAS from the assertion in S3544 of 2000 of its liability to restore the Fund.
- There is simply no evidence which might suggest any misconduct by the lawyers for EPAS, which would engage the jurisdiction of the Supreme Court to control its officers to prevent an apprehended breach of fiduciary duty to EPAS by them. This aspect of AMP's argument must be rejected.
- On behalf of AMP, it was also argued that the continued role of the lawyers for EPAS was apt to imperil confidence in the due administration of justice; and that, in order to determine whether the role played in these proceedings by the lawyers engaged by ASIC to act for EPAS in S3544 of 2000 is an affront to the due administration of justice, one must look at the proceedings through the eyes of a fair-minded and reasonably informed member of the public.[4]
- The utility of such a test may be doubted where there are real disputes as to the extent of the knowledge of the "reasonably informed member of the public" of the material facts, or where questions of statutory interpretation may bear upon the conclusions of the "reasonably informed member of the public". In this case, however, the material facts of which the reasonable member of the public would be aware are in short compass and are obvious; and there can be no doubt as to the correct interpretation of the Act.
- It will readily be accepted that a fair-minded and reasonably informed member of the public would appreciate that both S3543 and S3544 of 2000 are being pursued in the public interest for the recovery of losses suffered by beneficiaries of the Fund as a result of the wrongful depletion of the Fund. It would also be readily understood by a reasonably informed member of the public that this is happening pursuant to ASIC's exercise of the statutory authority conferred upon it by s 50 of the Act. The paragon postulated by AMP would also know that the lawyers engaged for EPAS by ASIC are not seeking to act upon the conflicting instructions of two masters. The fictional arbiter would also understand that any ground of defence which might properly be raised by EPAS can be raised by AMP so that a proper judgment on the merits will be able to be rendered by the court. Once the reasonable member of the public was informed of these matters, it is impossible to suppose that he or she would be in any way affronted by the role played by the lawyers acting for EPAS.
- The informed observer postulated by AMP would also appreciate that, in S3544 of 2000, EPAS lawyers were actually engaged by ASIC to act on its behalf in the name of EPAS to seek the restoration of the Fund, and that the lawyers were not engaged by those formerly in control of EPAS to act contrary to that objective in either S3544 of 2000 or S3543 of 2000. On behalf of AMP it was said that the decision of Young J in Geelong School Supplies Pty Ltd v Dean[5] was authority for the conclusion that, even in such a case, a reasonably informed and fair-minded observer would conclude that the lawyers for EPAS should be prevented from continuing to act for it in S3544 of 2000 so that justice should not only be done but should manifestly and undoubtedly be seen to be done. In Geelong School Supplies v Dean, Young J restrained lawyers who had acted for members of a corporate joint venture who were involved in litigation with their co-venturers from continuing to act for the corporate joint venture vehicle in that litigation. But that case is readily distinguishable from the present. Here, the lawyers for EPAS are not required to act against EPAS in S3544 of 2000; and, more importantly, they are not in a position where there is a conflict in their obligation to act in the litigation with undiluted loyalty to those instructing them.
- Mr O'Shea disavowed any criticism of ASIC's decision to instruct the same set of lawyers to pursue the two actions, but nevertheless sought to make an argument that the assertion in S3544 of 2000 by EPAS that it was under a legal liability to reimburse the Fund was not consistent with the best interests of EPAS having regard to the arguable defence available to it that it could be liable only for wilful defaults. It was said that the same lawyers could not be relied upon to give advice only in the best interests of EPAS where they were also acting for TCSSL in S3543 of 2000. Associated with this argument was the contention that s 50 of the Act did not authorise ASIC to act upon a view of the public interest which was broader than or inconsistent with the best interests of EPAS. These arguments make a number of assumptions for which there is no basis in fact, principle or authority. At the threshold of these arguments are the assumptions that ASIC is not able to make its own mind up about the manner in which it will pursue a decision under s 50 of the Act without the advice of the lawyers, and that it has not made a fully informed decision arrived at independently of advice from the lawyers. There is no evidentiary basis for either view.
- Secondly, AMP's arguments assume that the "public interest" which ASIC may legitimately have in view for the purposes of exercising the powers conferred by s 50 of the Act is confined to "the best interests of the company" on whose behalf ASIC decides to commence proceedings. This assumption is falsified by the language of s 50 of the Act. It is, of course, impossible to accept that when the legislature used the phrase "in the public interest" in s 50, it actually meant to say "in the best interests of the company". There is no authority which supports such a narrow view of the scope of the "public interest" in s 50 of the Act; indeed, there is compelling authority to the contrary.
- Australian Securities Commission v Deloitte Touche Tohmatsu[6] affords a strong example of a decision by ASIC under s 50 of the Act, which was held to have been made in the public interest even though it was contrary to the wishes of the company expressed by independent directors who were not involved with any alleged wrongdoing. In that case, the Full Court of the Federal Court approved of observations by Lockhart J in Somerville v ASC[7] which make two points of present relevance. The first point is that, having regard to the language and remedial character of s 50 of the Act, ASIC may properly take a broad view of the public interest.[8] The second point is that, for the purposes of litigation commenced pursuant to s 50 of the Act, it is ASIC which is the client which provides instructions on behalf of the company to the lawyers engaged in the litigation instigated by ASIC's decision. Even though the proceeds of a successful cause of action must be applied to the benefit of the company, it is ASIC which is, for the purposes of the litigation brought under s 50 of the Act, the client to whom the lawyers acting in the name of the company owe their undivided loyalty. In this regard, the Full Court of the Federal Court said:
"Observations as to the function of ss 49 and 50 were made, in passing, by Lockhart J in Somerville v Australian Securities Commission (1995) 60 FCR 319 ; 131 ALR 517. The issue there was removed from the present context and concerned claims for legal professional privilege and for public interest immunity made by the ASC, arising in proceedings caused to be brought by the ASC under s 50. Lockhart J said (at FCR 324-5; ALR 523):
Sections 49 and 50 thus reflect the important role of the Commission in the area of public policy and law enforcement by pursuing criminal and civil remedies for contravention of the Corporations Law.
Section 50 was considered by Lindgren J in [his second judgment in the present matter] … in the context of whether 'the appearance to the Commission' that it was in the public interest for a person to begin and carry on a proceeding was or was not a decision under an enactment for the purposes of the ADJR Act. His Honour held that it was not because it was not a 'final or operative and determinative' decision as those expressions were explained by Mason CJ in … Bond … Lindgren J said at 570 that s 50 conferred an 'extraordinary power' on the Commission to cause a proceeding to be begun and carried on, not in the name of the Commission, but in the name of another person in respect of a cause of action of that other person. The section gives the Commission a power not available to it under the general law and renders lawful an act by it which would otherwise be unlawful …
An evident function of s 50 is to permit the Commission, acting in the public interest, to cause proceedings to be taken where persons or corporations have suffered loss or harm arising from fraud, negligence or misconduct, but do not have the resources to maintain expensive and complicated litigation. The section cannot be invoked without the intervention of the Commission. In the case of a company, the Commission may cause the proceeding to be begun and carried on in the company's name whether it consents or not. Doubtless the reason for the Commission being empowered to commence and carry on a proceeding if the person is a company without the person's consent is that the company would often be the party who has engaged in the relevant misconduct, a view endorsed by Lindgren J in [his second judgment] at 580-1. But in the case of natural persons, their consent for the proceeding to be begun and carried on in their names is essential. Consent of a natural person to the commencement and carrying on of the proceeding in that person's name is an essential precondition to the exercise of the power of the Commission to invoke s 50; and it seems to me that the consent must be available at all relevant times during the progress of the litigation. If, for example, settlement negotiations take place, in my view settlement cannot be achieved without the consent of the person in whose name the proceeding has been brought. The person may not be able to require the Commission to settle the matter on the person's terms, but the Commission could not conclude a settlement without the consent of the person.
Lockhart J went on to say (at FCR 325; ALR 523–4):
The Commission is the active party throughout the litigation from its commencement to its conclusion. It sues in the name of the person, but the cause of action on which the proceeding is based is not created by the ASC Law in general or s 50 in particular. The cause of action must arise from the general law, whether statutory or the common law. Fruits of the litigation, if any, will benefit the person in whose name the proceeding has been brought, not the Commission. The bringing of the proceeding follows, as s 50 itself says, where it has been preceded by an investigation or from a record of an examination, in either case conducted under Pt 3 of the ASC Law which relates to 'investigations and information gathering' or under a corresponding law.
For it to appear to the Commission to be in the public interest that a person begin and carry on a proceeding under s 50, the appearance must be as a result of the investigation or record of the examination as the case may be. There must be a causative link between the investigation and the formation by the Commission of its view that it appears to it to be in the public interest for the proceeding to be begun and carried on (see Deloitte at 570 per Lindgren J). It is not necessary that the relevant investigation be concluded before the Commission may invoke s 50. It may continue for some time thereafter; but something must have arisen in the investigation as a result of which, in a causative sense, it appears to the Commission to be in the public interest for a person to begin and carry on the relevant proceeding."[9]
- In Somerville v Australian Securities Commission, Lockhart J went on to say:
"Whether the proper description of the applicant in a proceeding brought pursuant to s 50 is merely the name of the person for whose benefit the proceeding is bought, without reference to the Commission, or the Commission suing in the name of the person concerned, is a matter of debate. In my opinion, the Commission is not a party to the proceeding, so the proper description of the applicant or plaintiff is merely the name of the person for whose benefit the proceeding is brought. Some useful analogies may be found in the case of relator actions or actions commenced by next friends: see Daniell's Chancery Practice (8th ed, 1914), p 101; Milanese v Harburger [1980] VR 652 (Jenkinson J), and Lightning Ridge Mining NL v Jacombe [1978] 1 NSWLR 253.
…
Once the proceeding has been commenced under s 50 there clearly exists a solicitor/client relationship which will provide the foundation for the operation of the litigation limb of the doctrine of privilege. The client is the person in whose name the proceeding has been brought by the Commission under s 50. It is not the Commission itself. As mentioned earlier, the Commission causes the action to be begun for the benefit of the person in whose name the proceeding is brought.
Where it has appeared to the Commission to be in the public interest for a person to begin and carry on the proceeding for recovery of damages or loss sustained by the person, the cause or causes of action on which the proceeding is based are vested in the person, not the Commission. The fruits of the litigation accrue to the person, not the Commission. The Commission is not a party to the litigation, notwithstanding that it will be liable for costs which it incurs for the person and, perhaps, for the costs which that person may become liable to pay to the defendant to the litigation. The party to the litigation is the person in whose name the proceeding is brought. The privilege is therefore that of the person (and this includes a company where the Commission brings a proceeding in a company's name).
In practice, of course, it is the Commission that has brought the action in the name of the person. The documents to which legal professional privilege may attach will include (though not exhaustively) communications between the Commission and the solicitor retained by it to act for the client in the litigation pursuant to s 50. There may be some communications between the client and that solicitor, but in general I expect that the communications would be between the Commission itself and the solicitor, as it is the Commission that is conducting the litigation. Communications between the solicitor engaged by the Commission and third parties, if made for the sole purpose of use in the litigation, will also be protected. Because the proceeding is, in substance, brought by the Commission in the name of the relevant person or company, there will be an extension of the class of documents to which privilege will attach because of the intervention of the Commission itself and the interposition of it between the solicitor for the client and the client himself. Communications may pass between the Commission and the client, or between the Commission and the solicitor, or between the solicitor and the client directly.
Though the class of documents attracting privilege may be extended, there is no extension of the doctrine of legal professional privilege itself. The litigation is commenced and conducted by the Commission in the client's name. The Commission acts on the client's behalf for the purposes of litigation and is to be treated as if it were the client. Analogies may be found in relator actions, in actions where insurers cause proceedings to be brought in the name of the insured pursuant to rights conferred by insurance policies, and in actions by next friends or guardians ad litem. They are all analogies, and so must be treated with caution. I see no difficulty with the concept that the Commission is the alter ego of the client, a notion which can be accommodated within the established principles of legal professional privilege. But it must be remembered that the client is the person in whose name the proceeding is brought, not the Commission.
The client is represented by the Commission. Communications between the Commission and the solicitor for the client (in practical terms that is the solicitor for the Commission) will attract the operation of legal professional privilege if they answer the usual tests which attract the operation of the doctrine (including the sole purpose test) on the basis that the Commission sues in the name of the plaintiff."[10]
- In my respectful opinion, these observations accurately summarise the relationship between ASIC, EPAS and its lawyers. They afford clear support for the view that EPAS lawyers in S3544 of 2000 must act upon the sole instructions of ASIC in relation to the prosecution of that claim.
- For the sake of completeness, I should also say that it is possible to take the view that it is in the best interests of a trustee company to acknowledge its legal liability and seek to recover indemnity for that liability, and thereby extinguish the liability. Whether or not such a decision is in the best interests of the company is a matter for assessment by those responsible for the company's decision. The decision-maker designated by law for that purpose in cases such as the present is ASIC. It cannot be assumed, as the appellant does, that the decisions made by ASIC in this case were not made taking the best interests of EPAS into account. AMP expressly disavowed any such suggestion, and the Court cannot act on the assumption, unsupported by evidence, that somehow ASIC's lawyers failed to draw the consideration of EPAS' best interests to ASIC.
- The appellant's arguments simply fail to recognise that, as is clearly established, it is ASIC which speaks for EPAS in giving instructions to the company's lawyers for the purpose of proceedings instituted by ASIC. It is not for the Court to second guess the wisdom of ASIC's decisions in this regard, or the basis on which they were made in the absence of a direct challenge to those decisions by ASIC, and in advance of a determination of the facts relevant to the claims the pursuit of which ASIC has facilitated. In any event, as has been said, the Court was not invited to review ASIC's decisions.
- In my respectful opinion, the learned primary judge was correct in rejecting AMP's chimerical obligations to ASIC's arrangements for the legal representation of EPAS in S3544 of 2000.
The applications for joinder
- As I mentioned earlier, AMP applied formally to join the counsel and solicitors as respondents so as to regularise AMP's naming them and proceeding against them as respondents to the appeal. For the reasons I have given, I consider that there is no reason to accede to AMP's application for joinder.
Orders
- The appeal should be dismissed, and AMP should pay the costs of the respondent to be assessed on the standard basis. No order was sought by lawyers in relation to the costs of the substantive appeal.
- I would dismiss AMP's application for joinder, and order that AMP pay the costs of the respondents to that application to be assessed on the standard basis.
- WHITE J: I have read the reasons for decision of Keane JA and the additional observations of Jerrard JA and agree with all that their Honours have said. There is nothing more that I can usefully add and I agree as to the orders proposed by Keane JA.
Footnotes
[1] EPAS Ltd v James & Ors [2007] QSC 38 at [11] – [17].
[2] Young & Ors v Murphy & Anor [1996] 1 VR 279.
[3] Cf s 76(ii) and s 77(iii) of the Commonwealth Constitution. See DMW v CGW (1982) 151 CLR 491 at 501; Fencott v Muller (1983) 152 CLR 570 at 607 – 608.
[4] Geelong School Supplies Pty Ltd v Dean [2006] FCA 1404 at [28].
[5] [2006] FCA 1404.
[6] (1996) 138 ALR 655.
[7] (1995) 60 FCR 319.
[8] (1996) 138 ALR 655 at 680.
[9] (1996) 138 ALR 655 at 676 – 677.
[10] (1995) 131 ALR 517 at 524 – 527.