The recent decision of Justice Jessup of the Federal Court of
Australia in Crisp, in the matter of ACN 069 895 585 Pty Ltd
(in liq) v ACN 069 859 585 Pty Ltd (in liq) (Crisp) has upheld
a liquidator's claims of privilege over communications with
legal advisers relating to legal costs.
The former liquidator of a company made an application to the
Court seeking orders for his remuneration. A creditor of the
company filed an objection to the orders.
During discovery in the proceedings, the liquidator claimed
privilege over communications with his legal advisors relating to
the preparation of other current and contemplated proceedings.
The creditor challenged the liquidator's claims and argued
that Liquidator had waived privilege in those documents by bringing
proceedings for approval of his remuneration. The creditor claimed
that by seeking confirmation from the Court of the reasonableness
of his costs, the liquidator had put in issue the content of
communications with his legal advisors thereby opening the
documents to scrutiny.
Justice Jessup rejected the creditor's argument. He found
the question of whether it was reasonable for a liquidator to pay
for legal advice does not necessarily put in issue the nature of
the advice received.
The judge observed that some instances may arise where privilege
could be lost in respect of specific communications with legal
advisors where circumstances dictated. However, the creditor's
claim in this case was not argued in relation to specific documents
but on the basis that legal professional privilege was waived in
relation to all documents by the very fact of the application for
remuneration. The judge rejected that argument and observed that it
would be regrettable if a liquidator was discouraged from obtaining
legal advice because of an apprehension that privilege in such
advice could be lost in subsequent claims for remuneration.
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This was an interlocutory decision about the appointment of a tutor for the child appellant, to carry on his proceedings.
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