Allen and Allen and Ors

[2015] FamCA 433

FAMILY COURT OF AUSTRALIA

ALLEN & ALLEN AND ORS [2015] FamCA 433

FAMILY LAW – PRACTICE AND PROCEDURE – Where the 14^th respondent, who is a successor to the 13^th respondent as trustee of a trust, seeks access to confidential documents and notes of confidential communication between the 13^th respondent and his solicitors – Where the 13^th respondent claims client legal privilege - Consideration of the meaning of “client” in the Evidence Act 1995 (Cth) and the common law – Where the privilege which is possessed by the 13^th respondent does not pass to the 14^th respondent unless knowledge held by the 13^th respondent is disclosed by him to the 14^th respondent – Consideration of the principles of issue waiver – Where it is found there has been no specific issue waiver – Where it is not accepted that any general issue waiver exists – Application dismissed

Evidence Act 1995 (Cth)
Family Law Act 1975 (Cth)

Adelaide Steamship Co Ltd v Spalvins (1998) 81 FCR 360
Commissioner of Taxation v Rio Tinto Ltd (2006) 229 ALR 304
DSE Holdings Pty Ltd v Intertan Inc (2003) 127 FCR 499
Farrow Mortgage Services (In Liq) v Webb (1996) 39 NSWLR 601
Mann v Carnell (1999) 201 CLR 1
Osland v Secretary, Department of Justice(2008) 234 CLR 275
Retravision (NSW) Ltd v Copeland (Unreported decision of Young J, Supreme Court of New South Wales, 8 October 1997)
Tabcorp Holdings Ltd v Victoria (Unreported decision of Sifris J,  Supreme Court of Victoria, 13 June 2013)

Telstra Corporation Ltd v BT Australasia Pty Ltd (1998) 85 FCR 152

Thomason v Campbelltown Municipal Council (1939) 39 SR (NSW) 347

APPLICANT: Ms Allen

1^st RESPONDENT: Mr W Allen

3^rd RESPONDENT: Ms B Allen

4^th RESPONDENT: Mr C Allen

5^th RESPONDENT: Ms D Allen

6^th RESPONDENT: Ms E Allen

7^th RESPONDENT: F Nominees

8^th RESPONDENT: Ms G

9^th RESPONDENT: Mr H

10^th RESPONDENT: Mr J

11^th RESPONDENT: Mr K

13^th RESPONDENT: Mr L

14^th RESPONDENT: Mr CC as trustee for AM Trust

INTERVENORS  : Mr D & Mr CP (Receivers)

FILE NUMBER: SYC 3842 of 2008

DATE DELIVERED: 10 June 2015

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Watts J

HEARING DATE: 22 May 2015

REPRESENTATION

COUNSEL FOR THE 13^TH RESPONDENT: Mr Auld

SOLICITOR FOR THE 13^TH RESPONDENT: Delaney Lawyers

COUNSEL FOR THE 14^TH RESPONDENT: Mr Elliott

SOLICITOR FOR THE 14^TH RESPONDENT: Gye Associates  

SOLICITOR FOR INTERVENORS: HWL Ebsworth Lawyers

Orders

1. Subject to orders 5, 6 and 7 made by this court on 22 May 2015, the Application by the 14^th respondent for orders in the Application in a Case filed 9 April 2015, and for orders 1, 2 and 3 in Exhibit 44, be otherwise dismissed.

2. The application in paragraph 4 of Exhibit 44 be listed for mention at 3.00pm on 16 June 2016.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Allan & Allan and Ors has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 3842 of 2008

Ms Allen

Applicant

And

Mr W Allen

1^st Respondent

And

Ms B Allen

3^rd Respondent

And

Mr C Allen

4^th Respondent

And

Ms D Allen

5^th Respondent

And

Ms E Allen

6^th Respondent

And

F Nominees

7^th Respondent

And

Ms G

8^th Respondent

And

Mr H

9^th Respondent

And

Mr J

10^th Respondent

And

Mr K

11^th Respondent

And

Mr L

13^th Respondent

And

Mr CC

14^th Respondent

And

Mr D & Mr CP (Receivers)

Intervenors

REASONS FOR JUDGMENT

INTRODUCTION

1. The 13^th respondent is the former trustee of the AM Trust who claims payment from any assets which remain in the trust, for expenses incurred in exercising his duties as trustee.

2. The 14^th respondent is the current trustee who seeks to resist that claim, saying that the trust suffered losses as a result of the way in which the 13^th respondent carried out his duties as trustee.

3. In conducting those duties, the 13^th respondent obtained legal advice from time to time connected to these long running proceedings. The 14^th respondent wishes to see the confidential documents and notes of confidential communication between the 13^th respondent and his solicitors. The 13^th respondent claims client legal privilege (referred to in submissions, and commonly, as legal professional privilege).

IS THE 14^TH RESPONDENT A CLIENT?

1. Counsel for the 14^th respondent did not argue that the 13^th and 14^th respondents were “joint clients” (s 124 of the Evidence Act 1995 (Cth) (“the Evidence Act”)) nor had a “common interest” (s 122(5)(b) of the Evidence Act). In Farrow Mortgage Services (In Liq) v Webb (1996) 39 NSWLR 601 Sheller JA (with whom Waddell A-JA agreed) said:

   Two or more persons may join in communicating with the legal adviser for the purpose of retaining his or her services or obtaining his or her advice. The privilege which protects these communications from disclosure belongs to all the persons who joined in seeking the service or obtaining the advice. The privilege is a joint privilege. So is it also if one of a group of persons in a formal legal relationship communicates with a legal adviser about a matter in which the members of the group share an interest. Communications by one partner about the affairs of the partnership or a trustee about the affairs of the trust are examples. Implicit in the relationship is the duty or obligation to disclose to other parties thereto the content of the communication. Accordingly no privilege attaches to such communications as against others who, with the client, share an interest in the subject matter of communication. But the parties together are entitled to maintain privilege against the rest of the world. [emphasis added]

   This statement should be taken to apply to persons who were trustees at the same time as the communication between the lawyer and the trustee took place.

2. Counsel for the 14^th respondent argued that 14^th respondent is a “client” within the meaning of s 118 of the Evidence Act by virtue of s 117 of the Evidence Act, which defines “client” to include:

   (f) a successor to the rights and obligations of a client, being rights and obligations in respect of which a confidential communication was made.

3. Under s 117 of the Evidence Act, the 14^th respondent is the successor of the 13^th respondent.

4. Had the 13^th respondent given privileged documents to the 14^th respondent, the 14^th respondent (as current trustee) would be able to maintain the same claim for privilege against adducing the documents in evidence as was enjoyed by the 13^th respondent (see Retravision (NSW) Ltd v Copeland (Unreported decision of Young J, Supreme Court of New South Wales, 8 October 1997 at pages 5 to 8); Tabcorp Holdings Ltd v Victoria (Unreported decision of Sifris J, Supreme Court of Victoria, 13 June 2013 at [143])).

5. However, in this case, the reverse situation is being argued.

6. Counsel for the 14^th respondent argues that notwithstanding that the confidential communication and documents have not been disclosed to him, as a “client” he has the same rights as the 13^th respondent, including the right to waive the privilege.

7. Under the Evidence Act client legal privilege can be lost by a client knowingly and voluntarily disclosing to another person the substance of the evidence (s 122(2)) or by a client giving consent (s 122(1)). The 14^th respondent cannot do the former because he does not know the content of the communications with the lawyer, nor does he have the documents. The 14^th respondent also cannot waive privilege by giving consent, since his consent is otiose given he neither has knowledge of the communication, nor possession of the documents and the 13^th respondent has not given up the privilege but rather actively seeks to maintain it.

8. There is a further difficulty with the argument of counsel for the 14^th respondent; common law, not the Evidence Act, governs pre-trial procedures[1].

   [1] Mann v Carnell (1999) 201 CLR 1at [23]; Esso Australia Resources Ltd v Federal Commissioner of Taxation (1999) 201 CLR 49 at [18] to [28]; Osland v Secretary, Department of Justice(2008) 234 CLR 275 at [49]

9. The High Court in Mann v Carnell (1999) 201 CLR 1 said at [28]:

   Legal professional privilege exists to protect the confidentiality of communications between lawyer and client.  It is the client who is entitled to the benefit of such confidentiality, and who may relinquish that entitlement.

10. At no time has the 14^th respondent been the client of the solicitors who provided the legal advice. The ambit of the common law doctrine of legal professional privilege is not replicated exactly in the Evidence Act. Neither counsel were able to find any case where the extended definition of “client” in s 117 of the Evidence Act is found in the common law. The 14^th Respondent is not “the client” at common law.

11. I conclude that the legal professional privilege resides in the 13^th respondent. It does not pass to the 14^th respondent unless that knowledge held by the 13^th respondent is disclosed by the 13^th respondent to the 14^th respondent.

12. The 13^th respondent may claim legal professional privilege against the 14^th respondent. The general challenge to the 13^th respondent’s client legal privilege based upon the 14^th respondent being the successor of the 13^th respondent, therefore fails.

ISSUE WAIVER

1. Counsel for the 14^th respondent submits that the second reason why the 13^th respondent cannot claim privilege is that both specific and general issues which the 13^th respondent has raised in his case, has led to a loss of privilege.

2. It is submitted that specific waiver arises out of the very claim made by the 13^th respondent for indemnity out of the trust asset in the amount of $600,000, which puts in issue what advice his lawyers gave, and whether the lawyers did the work which was charged for in the invoices. The 13^th respondent’s claim against the trust largely represents the total of those invoices.

3. The 13^th respondent’s affidavit, sworn 19 February 2015 (at [51]), contains a statement that he has reviewed all of the invoices that were issued to him by his lawyers and he has satisfied himself that the work billed was undertaken in accordance with his instructions, and the charges were in accordance with the solicitor/client cost agreement.

4. Counsel for the 14^th respondent claims that the 13^th respondent’s reliance upon these invoices immediately raises issues about what work was done, what time was spent by the lawyers, and whether the invoices are an appropriate reflection of what the 13^th respondent instructed his lawyers to do. Accordingly, it is argued that a specific issue waiver arises from the 13^th respondent’s own case.

5. Issue waiver is a particular example of implied waiver of client legal privilege. The High Court has set the objective test for the implied waiver of privilege in Mann v Carnell (at [29]) where the majority (Gleeson CJ, Gaudron, Gummow and Callinan JJ) stated:

   What brings about the waiver is the inconsistency, which the courts, where necessary informed by considerations of fairness, perceive, between the conduct of the client and maintenance of the confidentiality; not some overriding principle of fairness operating at large...

6. Modern discussions on the concept of “issue waiver” in Australia commence with Thomason v Campbelltown Municipal Council (1939) 39 SR (NSW) 347[2].

   [2] For example, see discussions of this decision in Commissioner of Taxation v Rio Tinto Ltd (2006) 229 ALR 304 per Kenny, Stone and Edmonds JJ from [48] and DSE Holdings Pty Ltd v Intertan Inc (2003) 127 FCR 499 per Allsop J from [36]

7. The Full Court of the Federal Court has considered “issue waiver” in detail on a number of occasions[3]. In Adelaide Steamship Co Ltd v Spalvins (1998) 81 FCR 360 the Full Court of the Federal Court determined that the matter before them involved disclosure waiver not issue waiver and that privilege had not been waived by implication[4]. However in relation to issue waiver the Full Court stated:

   On the present appeal reference was also made to, and the respondents sought to rely upon, what was described as "issue waiver". In our view however it is no more than a particular manifestation of the principles applying either to waiver by disclosure or to implied consent to disclosure. The usual type of case said to illustrate issue waiver at common law is one in which, in order to establish a particular right, claim, or defence a party who previously has been legally advised, or has provided advice, needs to show that the advice so given did, or did not, have a particular character, for example that it was or was not negligent where the claim is for professional negligence against the adviser: see Kershaw v Whelan [1996] 1 WLR 358; that it was not based on full information or was not meaningful, in an undue influence claim: see Inche Noriah v Shaik Allie Bin Omar [1929] AC 127 at 130-131; see also Bester v Perpetual Trustee Co Ltd [1970] 3 NSWR 30 and Brusewitz v Brown [1923] NZLR 1106 or that it did not address or properly address a matter which, if addressed or properly addressed, would defeat or call into question the right or claim asserted as in claims where the applicant has to demonstrate he or she acted with or without adequate knowledge of a matter: see Thomason v Campbelltown Municipal Council (1939) 39 SR (NSW) 347; Hongkong Bank of Australia Ltd v Murphy [1993] 2 VR 419; Pickering v Edmunds (1994) 63 SASR 357. In other words the cases are ones in which, in the substantive proceeding brought, the privilege holder has put in issue the very advice received. We observe in passing that it is questionable whether advice can properly be said to be in issue in a proceeding merely because it may be relevant to an issue in it: see Rhone-Poulenc Rorer Inc v The Home Indemnity Company (3rd Cir 1994) 32 F (3d) 851 at 863; save, perhaps, where the proceeding is between client and legal adviser and the advice is relevant to the adviser's defence of that proceeding: see Lillicrap v Nalder & Son [1993] 1 WLR 94; 1 All ER 724.[5]

   [3] Adelaide Steamship Co Ltd v Spalvins (1998) 81 FCR 360; Telstra Corporation Ltd v BT Australasia Pty Ltd (1998) 85 FCR 152 and Commissioner of Taxation v Rio Tinto Ltd (2006) 229 ALR 304.

   [4] Per Olney, Kiefel and Finn JJ at 375.

   [5] Per Olney, Kiefel and Finn JJ at 371-372.

8. This passage was subsequently endorsed by a differently constituted Full Court of the Federal Court in Commissioner of Taxation v Rio Tinto Ltd (2006) 229 ALR 304 as correctly summarising the effect of previous authorities on issue waiver[6]. The Full Court in this case also noted at [54] that whilst Adelaide Steamship was decided before Mann, the passage did not require modification in light of the ratio in Mann:

   Although the Full Court was necessarily guided by the authorities prior to Mann, there is little, if anything, in the passage quoted above that would require modification to take account of Mann. It is plain enough that the majority in Mann also saw the 'issue waiver' cases as a species of waiver, to which the same basic principle applied. Their Honours' analysis in Spalvins emphasises, as does the majority in Mann, that waiver comes about because the privilege holder's conduct is inconsistent with the continued confidentiality of the communication because he or she has put in issue the character or contents of the communication in pursuing a right or claim, or has created a situation where another party must reasonably do so by way of a defence

   [6] Per Kenny, Stone and Edmonds JJ at [53].

9. What the 13^th respondent has done is point to invoices he has received from his lawyers, and say he is satisfied he properly owes his lawyers the amounts claimed by them in those invoices. The 13^th respondent does not need to show that the advice so given:

   ·did, or did not, have a particular character;

   ·was or was not negligent; or

   ·was not meaningful.

25.The 13^th respondent has not put in issue the very advice received. The advice the 13^th respondent received cannot properly be said to be in issue in these proceedings merely because it may be relevant to an issue in the proceedings. The 13^th respondent’s conduct, in relying upon the invoices, is not inconsistent with the continued confidentiality of his communication with his lawyers.

1. Accordingly, I find there has not been any specific issue waiver.

2. Counsel for the 14^th respondent further submits there is an issue waiver in the broader sense. It is submitted that the 13^th respondent will need to satisfy the court, if he is to receive any payment, that he was acting in the best interests of the trust and discharging his duties as trustee at all times, and “that obviously throws up what advice he receives and whether he acted in accordance with it or not, that is his burden”. I do not accept the premise of that submission. What the 13^th respondent has to establish is that he properly owes his lawyers the amounts claimed by them in their invoices. It is my understanding that it is the 14^th respondent who seeks to make out the case that the 13^th respondent has not acted in the best interests of the trust and discharged his duties as trustee. I therefore do not accept any general issue waiver exists.  

IMPLIED WAIVER

1. The 14^th respondent did not press a general submission of implied waiver based on what is in documents which the 13^th respondent has already disclosed, but wishes to argue that the 13^th respondent has impliedly waived client legal privilege in respect of particular documents referred to in paragraph 31 of the Affidavit of Mr KE, filed 20 May 2015. Directions in relation to that argument will be made when the parties come back before the court on 16 June 2015.

I certify that the preceding twenty-eight (28) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Watts delivered on 10 June 2015.

Associate: 

Date: 10.6.2015