Temwell Pty Ltd v DKGR Holdings Pty Ltd [2003] FCA 1349 (21 November 2003)

Last Updated: 24 November 2003

FEDERAL COURT OF AUSTRALIA

Temwell Pty Ltd v DKGR Holdings Pty Ltd [2003] FCA 1349

TEMWELL PTY LTD (ACN 082 656 157) -v- DKGR HOLDINGS PTY LTD (formerly known as DYNAMIC DATA SYSTEMS PTY LTD) (In Liquidation) (ACN 062 778 616), mCOM SOLUTIONS INC, DRAGON VENTURES. COM INC, mCOM SOLUTIONS AUSTRALIA PTY LTD (In Liquidation) (ACN 091 375 950), DAVID HAINS, ROBERT VAN ZANTEN, DRAGONVENTURES.COM LTD, RICHARD HAINS and IAN MORRIS KIEFEL

AND

mCOM SOLUTIONS INC. and mCOM SOLUTIONS AUSTRALIA PTY LTD (In Liquidation) (ACN 091 375 950) v TEMWELL PTY LTD (ACN 082 656 157), SLADEMERE PTY LTD (ACN 082 656 139), SHEPRIDGE PTY LTD (ACN 082 696 077), GEOFFREY MICHAEL TAUBER, MORRY FRAID, ROGER ENRIQUEZ

V 663 of 2000

RYAN J

21 NOVEMBER 2003

MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	V 663 of 2000
BETWEEN:	TEMWELL PTY LTD (ACN 082 656 157) Applicant
AND:	DKGR HOLDINGS PTY LTD (formerly known as DYNAMIC DATA SYSTEMS PTY LTD) (In Liquidation) (ACN 062 778 616) First Respondent
	mCOM SOLUTIONS INC. Second Respondent
	DRAGON VENTURES. COM INC Third Respondent
	mCOM SOLUTIONS AUSTRALIA PTY LTD (In Liquidation) (ACN 091 375 950) Fourth Respondent
	DAVID HAINS Fifth Respondent
	ROBERT VAN ZANTEN Sixth Respondent
	DRAGONVENTURES.COM LTD Seventh Respondent
	RICHARD HAINS Eighth Respondent
	IAN MORRIS KIEFEL Ninth Respondent
AND BETWEEN:
	mCOM SOLUTIONS INC. and mCOM SOLUTIONS AUSTRALIA PTY LTD (In Liquidation) (ACN 091 375 950) Cross-Claimants
AND:
	TEMWELL PTY LTD (ACN 082 656 157) SLADEMERE PTY LTD (ACN 082 656 139) SHEPRIDGE PTY LTD (ACN 082 696 077) GEOFFREY MICHAEL TAUBER MORRY FRAID ROGER ENRIQUEZ Cross-Respondents

JUDGE:	RYAN J
DATE:	21 NOVEMBER 2003
PLACE:	MELBOURNE

REASONS FOR RULING (NO 14) ON APPLICANT'S CALL FOR PRODUCTION

OF PRIVILEGED DOCUMENTS IN CATEGORIES 3 AND 4

Category 3

1 The third category of presumptively privileged documents of which Temwell seeks production by the mCom respondents has been described as follows:-

`3. All documents prepared by or for your clients, Griffith Hack or Minter Ellison (including advices of solicitors or counsel) concerning:

i. the inclusion of the admissions that the assignment was of no binding effect and that our client did not in fact consent to the assignment, in your clients' Defence dated 21 December 2000; and

ii. the withdrawal of those admissions.'

2 In various versions of its amended statement of claim Temwell had alleged, amongst other things;

`20D. Thereupon, the first respondent settled the sale of its business to the second respondent, and assigned all its rights in the Application Software to the second respondent.

21. The applicant has never consented to such assignment and accordingly it is unlawful and of no binding effect.'

3 The response to those allegations in the defence of the mCom respondents as it stood up to September 2002 was:

`21. Subject to the following, they admit that the assignment is of no binding effect. They otherwise do not admit the allegations made in paragraph 21. They say further that:

(a) by the letter dated 22 February 2000 ... ... ... the applicant stated, in part, as follows:

... ... ... ... ...

(b) in good faith, the seventh respondent interpreted the letter as constituting written consent by the applicant to an assignment by the first respondent to a nominee of the seventh respondent of all of its right, title and interest under the Licence Research and Commercialisation Agreement;

(c) the seventh respondent nominated the second respondent as the purchaser of the assets and business of the first respondent and made loans to the first respondent;

(d) in good faith, and believing that the applicant had provided written consent to an assignment by the first respondent to a nominee of the seventh respondent of all of its right, title and interest under the Licence Research and Commercialisation Agreement, the second respondent entered into an agreement dated 1 March 2000 (`the mCom Agreement') with the first respondent pursuant to which it purchased the business and assets of the first respondent and took an assignment of the first respondent's right, title and interest under the Licence Research and Commercialisation Agreement;

(e) the second respondent admits that, neither at 1 March 2000 nor at 24 March 2000, being the date of settlement of the mCom Agreement, did the applicant in fact consent to the assignment.'

4 On 13 September 2002, the mCom respondents obtained leave from Merkel J to withdraw the admission in paragraph 21 of their defence as it then stood. In support of that application the present solicitor for the mCom respondents deposed;

`The need for the amendment arose during the course of preparation of witness affidavits and the taking of instructions for those affidavits. In the light of that work it is apparent that the qualified admission in the original defence filed on 21 December 2000 should be withdrawn. As a result of that work the pleadings of the mCom respondents have been reviewed by ourselves and counsel. The mCom respondents in particular seeks leave to amend its defence to withdraw the admission contained in paragraph 21 that the assignment was of no binding final effect and to plead unconditionally reliance by the mCom respondents on the letter of 22 February 2000 ...'

5 Counsel for Temwell have pointed to an affidavit filed in relation to earlier interlocutory proceedings in this action by Mr Benny Browne of Griffith Hack who were then acting as solicitors for the mCom respondents. That affidavit included this statement;

`I am instructed by my clients and believe that at all times up to and beyond the institution of these proceedings, they believed that there was a valid consent on the applicant's part to assignment of the rights of DDS under the LRC agreement.'

6 Counsel for Temwell have also pointed, by way of example, to a statement by David Hains in a substantive affidavit filed as part of the mCom respondents' evidence-in-chief. In that affidavit, after referring to the letter from Enriquez of 22 February 2000, Hains has deposed;

`Upon its receipt I believed and proceeded on the basis that Temwell had agreed to DDS assigning its rights under the LRC Agreement and the 1998 Transaction Documents.'

7 It is then contended that the discrepancy between that assertion and the admission in the defence before it was withdrawn by leave "calls for an explanation." In a related way, it is said that a party who puts in issue a state of mind or belief to which legal advice has, or is likely to have, contributed has impliedly waived legal professional privilege in respect of that advice.

8 In my view this contention is misconceived. The explanation for the application for leave to withdraw the admission, which Merkel J obviously accepted, was that a mistake had been made by the mCom respondents' legal advisers in framing the relevant part of the defence. Any advice given in late 2002 in relation to the necessity, or desirability, of rectifying that mistake could not have contributed to the formulation by any relevant actor of a state of mind or belief in February or March 2000. Accordingly, I decline to require the mCom respondents to disclose any documents in Category 3.

Category 4

9 Documents in this category of those of which the solicitors for Temwell have sought production have been described as follows;

`4. All documents prepared by or for your clients and/or Minter Ellison (including advices of solicitors or counsel) concerning the matters referred to in paragraphs 1 and 2 of your clients' Further and Better Particulars dated 18 January 2002.'

10 The further and better particulars referred to in that description recited;

`The Second Respondent acquired the knowledge of the applicant not having consented to the assignment referred to in paragraph 21(e) of the amended defence dated 25 May 2001 in or about December 2000 during the course of obtaining legal advice shortly before the filing of the defence to the amended statement of claim on 21 December 2000;

"The Second Respondent is not in a position to provide any further particulars in response as to do so would constitute a waiver of its legal professional privilege which it is not required to do."'

11 Those particulars obviously refer to "knowledge" based on legal advice received in or about December 2000 about the effect of the letter of 22 February 2000. As indicated at [8] above, that "knowledge" could not have had any bearing on the mCom respondents' belief about the effect of that letter or any reliance by them on its purported effect in February or March 2000 or at any time before the present proceedings were commenced. Therefore, consistently with my ruling in respect of Category 3 documents, I decline to require disclosure of any documents in Category 4.

I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Ruling herein of the Honourable Justice Ryan.

Associate:

Dated: 21 November 2003

Counsel for the Applicant and Cross Respondents:	Mr C D Golvan SC with Mr W Rothnie
Solicitors for the Applicant and Cross Respondents:	Meerkin & Apel
Counsel for the mCom Respondents and Cross-Claimants:	Mr J L Sher QC with Mr J Delany SC
Solicitors for the mCom Respondents and Cross-Claimants:	Minter Ellison
Date of Hearing:	10 November 2003
Date of Ruling:	21 November 2003