R v Hutson (Ruling No. 5)[2025] QDCPR 1

DISTRICT COURT OF QUEENSLAND

Background

1. [1]
   The defendant faces trial on the following charges:

   1. Dishonest use of position with the intention of gaining an advantage – s. 184(2) of the Corporations Act 2001 (Cth). (Counts 1 and 3). These two offences are respectively alleged to have occurred on or about 10 July 2015 and on or about 4 August 2015.
   2. Failure to exercise powers or discharge duties for a proper purpose on or about 13 July 2015 – s. 184(1) of the Corporations Act 2001 (Cth). (Count 2).
   3. Fraud as a director to the value of $30,000 or more between 6 August 2015 and 2 October 2015 – s. 408C(1)(a) of the Criminal Code (Qld). (Count 4).
   4. Attempting to pervert the course of justice on or about 10 April 2016 – s. 140 of the Criminal Code (Qld). (Count 14).
2. [2]
   Counts 5 – 13 inclusive on the present indictment have been discontinued.
3. [3]
   Some of the factual background is summarised in an earlier interlocutory judgment in these proceedings in R v Hutson^[1] (“Judge Williamson’s judgment”). Due to the subsequent discontinuance of counts 5-13, his Honour’s observation at [7](e) of the judgment is now redundant.
4. [4]
   Some further detail is desirable for the purposes of this ruling, although I will attempt to simplify what are complicated and convoluted factual allegations. In doing so, I will omit or gloss over some of the finer details, while retaining the essential relevance of the allegations. Some of it has been taken from material placed before the Court at various other interlocutory hearings of this matter, but it is uncontentious and the facts placed before the Court on the hearing were merely highlighting aspects of that factual background. Both G8’s and the prosecution’s submissions were premised on a broad understanding of the factual allegations.
5. [5]
   At the relevant time, the defendant was both a director and the chair of G8 Education Limited (“G8”). G8 was, at the relevant time, involved in a take-over attempt of a rival childcare educator, Affinity, and had engaged the law firm McCullough Robertson to advise on the takeover attempt.
6. [6]
   Ms Mary-Anne Brady was a junior solicitor employed by McCullough Robertson and undertook work in relation to G8’s takeover attempt. Her contact with G8 was through the defendant. McCullough Robertson held substantial funds in trust on behalf of G8 as part of that work.
7. [7]
   The defendant is alleged, in part, to have acted dishonestly in relation to some of G8’s funds in different ways.
8. [8]
   She is alleged to have arranged the transfer of $15 million from G8 to the trust account of another law firm, Mills Oakley, ostensibly for the purposes of a joint venture proposal with an entity called Isola. This had nothing to do with the Affinity takeover, but a little over $8.5 million of those funds are, in effect, alleged to have funded unauthorised purchases of Affinity shares by a third party at the defendant’s instigation. Those funds were transferred from the Mills Oakley trust account to settle those purchases by 3 August 2015.
9. [9]
   By 4 August 2015 the Isola joint venture proposal had failed. On that date, G8’s managing director requested the defendant to arrange the return of the $15 million held on trust with Mills Oakley.
10. [10]
    On the same day, the defendant is alleged to have arranged the transfer of $10 million from the trust funds held by McCullough Robertson to the Mills Oakley trust account. It is alleged this was done to cover up the shortfall of over $8.5 million caused by the Affinity share purchases by the third party.
11. [11]
    On or about 5 August 2015 Mills Oakley returned the $15 million held on trust to G8. However, on the prosecution case, the $10 million transferred to Mills Oakley from McCullough Robertson would eventually have to be accounted for.
12. [12]
    It is also alleged that over broadly the same period, the defendant, through a privately operated company, purchased a number of shares in ANZ bank for a total cost of $928,500. It is convenient to ignore the fact her company was the purchaser, and to just refer to her as the purchaser. It is alleged that she used part of the balance of the initial transfer of $15 million to the Mills Oakley trust account to effect those purchases. The settlement for those purchases occurred on or about 11 August 2015.
13. [13]
    The Affinity shares that had been purchased by the third party were sold by 10 September 2015. The defendant is alleged to have requested a refund of the principal from the third party, which occurred, and was deposited into the Mills Oakley trust account on 22 September 2015. At this stage, the Mills Oakley trust account held all of the $10 million that McCullough Robertson had transferred, save for the $928,500 allegedly used by the defendant to purchase her shares.
14. [14]
    The takeover bid for Affinity had failed by 29 September 2015. On that day, G8’s Chief Financial Officer requested Ms Brady to return all funds held by McCullough Robertson on trust for the Affinity takeover bid. That necessarily meant that the $10 million transferred to Mills Oakley had to be returned to McCullough Robertson.
15. [15]
    On 29 September 2015, a cheque was drawn on the defendant’s account in the sum of $928,500 payable to McCullough Robertson. There was apparently some delay in that cheque clearing. On 1 October 2015, internal authorisation was given for payment of the $10 million on trust from McCullough Robertson to G8. That authorisation referred to the sum of $928,500 which was received from the defendant and, separately, the balance, which was received from Mills Oakley.

G8’s claim of LPP.

16. [16]
    It is against that background that G8’s claim of LPP must be assessed.
17. [17]
    A concise summary of the tests for LPP is found at [40]-[43] of Judge Williamson’s judgment. No party takes issue with its accuracy. It is advice privilege that is the subject of the present application.
18. [18]
    Ms Brady provided investigators with a written statement on 17 October 2023. Relevantly, she was shown an email trail dated 30 September 2015. Broadly, it refers to G8’s Company Secretary and Chief Financial Officer, Mr Christopher Sacre, wanting to transfer certain funds, and the defendant not wanting that transfer to go ahead until other funds had been received, and for them to all be transferred together. It also refers to Ms Brady speaking with the defendant.
19. [19]
    Ms Brady, in her statement, says she has a recollection of the brief conversation with the defendant, but in effect declined to recite it unless required to by the Court, or if satisfied that G8 waives any such privilege. It does not.
20. [20]
    The applicant, G8, bears the onus of proving that the communication is privileged.^[2] In this case, I need not draw inferences from the material in order to assess the claim as each party has agreed that it is appropriate that I receive a confidential statement from Ms Brady outlining what her recollection of the conversation is.^[3] The statement was obtained by G8, and so its Counsel knows its contents. The prosecution does not.
21. [21]
    G8 submits that Ms Brady was a solicitor employed on legal matters concerning G8’s takeover bid for Affinity. It submits that the conversation is directly related to the matters on which McCullough Robertson was retained, and therefore the conversation is privileged. While it is accepted that records of trust account transactions may not be privileged, the subject matter here is a conversation related to the subject of the retainer, and not merely a physical record of a transaction.
22. [22]
    On the other hand, the prosecution contends that the course of events not the subject of any claim suggests that the conversation related to administrative matters concerning the trust account, and not the provision of advice. Further, it is argued that if the communication does amount to the provision of advice, it will fall within the so-called “fraud exception” and so not be privileged.^[4] G8 did not wish to be heard on any consideration of the “fraud exception”.

Is the conversation privileged?

23. [23]
    Having read and considered that statement, I am satisfied that the content of the conversation, in so far as it is able to be recalled by Ms Brady, relates to matters falling within the bounds of the matter on which McCullough Robertson was retained by G8.
24. [24]
    Although there is something of an administrative nature to the subject of the communication, it amounts to the giving of instructions concerning how G8’s instructions in the matter are to be acted on and, although in the context of the movement of the funds through the trust account, is of a broader nature than only that. I note that it has been recognised that a broad approach is taken to determining whether a communication relates to advice.^[5] The records of the movement of those funds are unlikely to be privileged,^[6] but I am satisfied that the conversation was conducted for the dominant purpose of legal advice in the terms of the retainer entered into. In the circumstances of this matter, it will be privileged unless the prosecution can show that it falls within the so-called fraud exception.

The Fraud Exception

A preliminary issue

25. [25]
    The defendant did not participate in this application, until her representatives heard in the course of oral submissions, that the prosecution also relied on the fraud exception to the claim for legal professional privilege. On her application, she was permitted to make written submissions on the issue.
26. [26]
    In essence, she contends that, if I were to make a finding adverse to the defendant, this “could give rise to an apprehension of bias such that his Honour ought not hear the trial”. It is further contended that I should “refuse to make any findings of fact” in disposing of G8’s application. The submissions are made in the context of it being well-known that it is intended that I preside at the defendant’s lengthy trial, listed to commence next month.
27. [27]
    G8 did not wish to be heard in response. The prosecution resists the contention, essentially on the basis that, given the low threshold for the test, I would not be making a finding binding in any sense on the conduct of the trial.^[7]
28. [28]
    In my view, I should decide the prosecution’s submission as to the application of the fraud exception, but not for the reasons it suggests.
29. [29]
    I have before me an issue that requires determination in order to dispose of G8’s application. More than that, I had received written submissions and heard all oral submissions before the defendant sought to be heard on the issue. She was afforded procedural fairness by being permitted to make the submissions she saw fit. Those submissions do not suggest that a finding adverse to her is not open on the overall material, and they do not suggest there is some defect in the manner in which the application has been heard.
30. [30]
    Notwithstanding the breadth of the defendant’s final submission, her submissions are limited to the possibility of a recusal application being brought in the future. None of the authorities cited in those submissions refer to the appropriateness of declining to deal with an issue raised in an adversarial contest before a presiding judge. Those touching on the issue of bias are all illustrations of when perceived bias may be raised, some of them on the basis of earlier findings by the same judicial officer, but none deal with a judicial officer declining to exercise jurisdiction in case a recusal application were to be brought in the future.
31. [31]
    Notably, there is no recusal application on foot; it is merely the possibility that is raised. As there is no such application, I need not consider the merits, or otherwise, of the prosecution’s submissions, and the authorities mentioned in the previous paragraph are of no assistance.
32. [32]
    In my view, I am properly seized of the issue in dispute, and no interested party has suggested the application should be commenced afresh before another judicial officer. I cannot detect any proper reason to decline to determine the issue of whether the fraud exception applies to the claim of privilege. In particular I consider it would be inappropriate to accede to the defendant’s submission merely because there is some possibility of future inconvenience in the conduct of the trial.

Does the exception apply?

33. [33]
    The law will not protect conversations which would otherwise be privileged where the communications are “criminal in themselves, or intended to further any criminal purpose”.^[8] It is a principle founded in considerations of public policy.
34. [34]
    The party resisting the claim of privilege need not establish that the exception applies on the balance of probabilities, but there must be more than a mere assertion. The standard of satisfaction has variously been expressed in terms of requiring something “to give colour to the charge”^[9] and of requiring satisfaction of a prima facie case that the communication is made for an ulterior purpose.^[10] The last-mentioned test highlights the fact that the circumstances that justify denying the privilege will vary. It has been observed that the exception may apply in relation to conduct subsequent to the commission of the crime or offence being alleged, and which is undertaken with a view to concealing it.^[11]
35. [35]
    While not actually knowing what the content of the conversation was, the prosecution contend that it can be inferred that the defendant was stalling the Chief Financial Officer’s demand for the return of all moneys that had been held by McCullough Robertson for the Affinity takeover bid so as to cover up her various fraudulent uses of G8’s money.
36. [36]
    I am satisfied, in all of the circumstances, that this is a case which falls within the exception, and that legal professional privilege cannot attach to the subject conversation. While I have observed that the conversation was of broad import, the timing of it, the fact it occurred in the context of the delay in the transfer of the funds from McCullough Robertson to G8 and the inference that is open that the defendant was delaying the transfer of the funds to ensure that it was not apparent that she had used some for her own purposes means that a prima facie case has been established that the communication by the defendant was for the ulterior purpose of attempting to evade detection of earlier conduct. In those circumstances it would be contrary to public interest to allow privilege to attach to the communication.
37. [37]
    The parties will be invited to make submissions as to what order, if any, should be made in relation to disclosure of Ms Brady’s latest statement.