Australian Securities and Investments Commission v Mercorella (No 3) [2006] FCA 772

Australian Securities and Investments Commission v Mercorella (No 3) [2006] FCA 772

Legal professional privilege was denied in relation to documents created for the Sobey interests for the purpose of establishing securities and executing a deed which, on the prima facie evidence, were brought into existence for the improper purpose of giving those interests an unfair advantage over other creditors by presenting a structure (including recitals) that did not reflect the true nature of the underlying transactions. The privilege did not protect these communications, as they were made to further an improper purpose, falling within the 'fraud on justice' exception. Privilege was upheld only as to documents where the legal advice sought concerned what could lawfully be done to...

Parties
Plaintiff: Australian Securities and Investments Commission; First Defendant: Guiseppe Antonio Mercorella; Second Defendant: Seabay Investments Pty Ltd ACN 097 021 773; Claimant (privilege): Anthony Sobey; Claimant (privilege): Tracey Sobey; Claimant (privilege): ACN 114 392 577 Pty Ltd; Solicitor (producer of Documents): Paul Tanti; Receiver and Manager, Liquidator: Colin Nicol
Jurisdiction
Australia
Judgment Date
21 June 2006
Procedural Posture
Proceedings Relating to Managed Investment Scheme and Privilege Claims / Interlocutory Application on Legal Professional Privilege
Outcome
Legal professional privilege denied or maintained in part—see ruling; documents created for an improper purpose ordered not to be treated as privileged; liberty to apply for further directions given.
Legal Topics
Legal Professional Privilege, Fraud Exception to Privilege, Managed Investment Schemes, Insolvency—liquidation, Evidence—production of Documents
Corporations Law Evidence Law Insolvency Law Legal Professional Privilege Fraud Exception to Privilege Managed Investment Schemes Insolvency—liquidation Evidence—production of Documents

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Parties

Australian Securities and Investments Commission

Plaintiff

Guiseppe Antonio Mercorella

First Defendant

Seabay Investments Pty Ltd ACN 097 021 773

Second Defendant

Anthony Sobey

Claimant (privilege)

Tracey Sobey

Claimant (privilege)

ACN 114 392 577 Pty Ltd

Claimant (privilege)

Paul Tanti

Solicitor (producer of Documents)

Colin Nicol

Receiver and Manager, Liquidator

Procedural Posture

Proceedings Relating to Managed Investment Scheme and Privilege Claims / Interlocutory Application on Legal Professional Privilege

Legal Issues

  1. 1 Whether legal professional privilege attaches to documents created for the Sobey interests by solicitors in connection with security arrangements over the assets of a managed investment scheme and its operator, where there is an allegation that the documents were created for an improper purpose, namely to gain an unfair advantage over other creditors, and whether the 'fraud' (iniquity) exception to privilege applies.

Ratio Decidendi

Legal professional privilege was denied in relation to documents created for the Sobey interests for the purpose of establishing securities and executing a deed which, on the prima facie evidence, were brought into existence for the improper purpose of giving those interests an unfair advantage over other creditors by presenting a structure (including recitals) that did not reflect the true nature of the underlying transactions. The privilege did not protect these communications, as they were made to further an improper purpose, falling within the 'fraud on justice' exception. Privilege was upheld only as to documents where the legal advice sought concerned what could lawfully be done to...

Court Disposition

Legal professional privilege denied or maintained in part—see ruling; documents created for an improper purpose ordered not to be treated as privileged; liberty to apply for further directions given.

Orders

  • The documents in the List of Documents produced for the summons for examination and the production of documents of Paul Tanti filed on 8 December 2005 in respect of which Sobey interests have legal professional privilege are those numbered PT.1 9, 19, 31, 39, 44, 45, 47, 53, 54, 61, 63, 64, 66-69, 71, 72, 76-79, 82,...
  • The documents in the List of Documents produced for the summons for examination and the production of documents of Paul Tanti filed on 7 February 2006 in respect of which Sobey interests have legal professional privilege are those numbered PT.4 15-17, 21-25, 31-40, 42-50, 53-58, 60, 63, 67, 68, 70, 74, 78-80, 91,...