Banaszak and Executors of the Estate of Mr S Mandia and Anor (No. 3)

[2014] FamCA 1126

FAMILY COURT OF AUSTRALIA

BANASZAK & EXECUTORS OF THE ESTATE OF MR S MANDIA AND ANOR (NO. 3) [2014] FamCA 1126

FAMILY LAW – EVIDENCE – Legal professional privilege – Waiver because statements in affidavit about state of mind and not having read documents such as were then inconsistent with instructions – Privilege waived.

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

Adelaide Steamship Co Limited and Spalvins [1998] 81 FCR 360
Council of New South Wales Bar Association v Archer [2008] NSWCA 164
Esso Australia Resources Limited v Commissioner of Taxation (1998) FCA 1655; [1998] 83 FCR 511
Macquarie Bank Limited and B and Anor (2006) FLC 93-290
Mann v Carnell (1999) 201 CLR 1
Stamp and Stamp (2007) FamCa 420; (2007) FLC 93-314
Telstra Corporation Limited v BT Australasia Pty Ltd [1988] 85 FCR 152; 156 ALR 634

APPLICANT: Ms Banaszak

RESPONDENT: The Exectuors of the Estate of the late Mr S Mandia

INTERVENER: Mr H Mandia

FILE NUMBER: MLC 6072 of 2012

DATE DELIVERED: 16 December 2014

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: 26, 28 November 2014

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Brown SC with Mr Wraith

SOLICITOR FOR THE APPLICANT: B Solicitors

COUNSEL FOR THE RESPONDENT: Mr Strum

SOLICITOR FOR THE RESPONDENT: Marshalls and Dent

COUNSEL FOR THE INTERVENER: Ms Williams

SOLICITOR FOR THE INTERVENER: Kenna Teasdale Lawyers

Orders

1. That the wife make available to the solicitors for the respondent all of the following

   (a)       all records relating to instruction provided by the applicant to her lawyers from the date on which instructions were given for the preparation of the trial affidavit filed 16 September 2014 to 25 November 2014 and any correspondence between the applicant and her solicitors associated with those instructions.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Banaszak & Executors of the Estate of Mr S Mandia and Anor (No. 3) 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 MELBOURNE

FILE NUMBER: MLC 6072 of 2012

Ms Banaszak

Applicant

And

The Executors of the Estate of the late Mr S Mandia

Respondent

REASONS FOR JUDGMENT

1. In anticipation of a trial between Ms Banaszac (“the applicant”), the executors of the estate of the late Mr S Mandia (“the respondent”) and Mr H Mandia (“the intervener”), I made orders on 12 August 2014 for all parties to file their evidence in chief by affidavit and relevantly in the case of the applicant, that she file an amended initiating application.  The applicant had to do all of that by 16 September 2014. 

2. The applicant and the late Mr S Mandia were said to have been in a de facto relationship and, as there is a critical dispute about that relationship, the Court’s jurisdiction has very much been a live issue.  The jurisdictional fact in dispute is when the relationship came to an end.

3. As part of the interlocutory dispute between the applicant and the respondent, an issue has arisen as to whether or not the applicant has waived legal professional privilege.  The respondent wishes to see the whole (or indeed part, if the Court disagrees with the whole) of the applicant’s solicitor’s file.  The applicant denies there has been such a waiver of privilege at all.  As is not unusual or surprising, the Court’s attention was drawn to, and the focus was upon, the actions of the applicant said by the respondent to be inconsistent with the maintenance of the privilege.

4. It is also necessary to observe that the nature of the interlocutory application which brought the current issue to a head arose from the amended application filed by the applicant to which I have referred.  An argument is yet to be heard relating to the very jurisdiction of this Court.  It is an argument about whether the amended application points to the absence of jurisdiction.  In the context of that disputed jurisdiction, the applicant relied upon two affidavits which the respondent says waived privilege. 

5. In an affidavit filed 25 November 2014, Mr B, the solicitor acting for the applicant said that on 16 September 2014, he delegated the task of drawing the amended initiating application to an employee solicitor Ms E whilst he, with an employee solicitor Mr F, worked on the trial affidavit of the applicant.  He said the afternoon of 16 September 2014 was hectic with several concurrent tasks being undertaken at once which included the final amendments to the affidavit and financial statement.  Those tasks included taking instructions from the applicant “as to the last-minute amendments being made”. 

6. Mr B then said:

   In the hive of activity and under pressure to meet the Court’s deadline, I have been told by Ms [E], and verily believe, that the amended initiating application was prepared at her initiative from the form template downloaded from the Court’s website, without regard to the contents of the previous Applications, and without reference to the client for specific instructions.

7. It was the subject of comment by counsel for the respondent that Ms E was not the deponent of any affidavit.  It was also observed that this hectic activity was taking place on the afternoon of the due date for filing.  The electronic filing program of the Court noted that the documents referred to were sealed by the Court on 16 September 2014, in the case of the affidavit at 4.33 pm and in respect of the amended application at 4.41 pm.  The timetable had been ordered some five weeks before.

8. Section 74 of the Evidence Act 1995 (Cth) provides an exception to the hearsay rule. The applicant relied upon Mr B’s affidavit in circumstances where the statements would otherwise be inadmissible as hearsay. Mr B set out a number of matters that he said were his understanding as distinct from his knowledge. The distinction arises because the exception to the hearsay rule is based on an assumption that the source is reasonably likely to have knowledge of the relevant fact. Inferences may be drawn here that it was Ms E who provided the basis for Mr B’s understanding because her name appears on the applicant’s affidavit as the person before whom the applicant swore the document on 16 September 2014.

9. Mr B’s affidavit then went on to say:

   At the time of signing the amended initiating application, it is my understanding that the Applicant was given the amended initiating application to read but, due to her substantial health problems as outlined in my Affidavits dated 16 July 2014 and 11 August 2014 and her exhaustion and stress (having read her lengthy affidavit on a number of occassions (sic) that day, and in the days leading up to 16 September 2014), she did not review or specifically confirm the amendments made in the amended application other than the amended orders to be sought.

10. Whatever may have been the basis of the statement just referred to, it was not disputed that the applicant actually signed the amended application in the part that litigants are required to sign confirming the truth of the document.

11. Mr B’s affidavit went on to say:

    I understand that the Applicant signed the amended initiating application in the circumstances set out above, and thereafter it was immediately scanned and submitted for eFiling to the Court.  Mindful of the Court’s deadline for filing of the documents, I did not have an opportunity to review the document prior to its submission for eFiling.

    It must also be said that notwithstanding that statement, Mr B too signed a lawyer’s declaration on that form relating to providing to the applicant a copy of the Court’s information brochure.

12. The solicitor then said that the amended initiating application was partly incorrect.  The applicant relied upon an affidavit she filed on 25 November 2014 the relevant parts of which were:

    3.I have read the Affidavit of [Mr B], the principal of the law firm of [B Solicitors] acting on my behalf, dated 25 November 2014 (“the Affidavit of [Mr B]”).

    4.In so far as they are within my knowledge all matters set out in the Affidavit of [Mr B] are true and correct.

    5.In particular I confirm the truth and accuracy of the statements with respect to the pressure to meet with the Court’s deadline on 16 September 2014.  On account of my problems with my health which have been set out in previous Affidavits of [Mr B] in this proceedings, the weeks and days leading up to and including 16 September 2014 were extremely stressful.  I was always suffering ongoing intense pain and constantly fatigued and depressed.

    6.I recall that on 16 September 2014 I read the section of the amended initiating application dealing with the Orders sought but I do not remember reading the other parts of it and I believe that some aspects of those other parts do not accurately reflect my position.  My de facto relationship with [Mr S Mandia] broke down on or about 28 February 2012.

13. The document under consideration in relation to the jurisdictional dispute is the amended initiating application.  It was filed electronically on 16 September 2014.  In respect of the jurisdictional facts, the relevant information was provided by the applicant under cover of the statement of truth to which I have already referred.  She said:

    [25]     Date parties commenced to live together: 01/01/2004.

    She then said:

    [55a]Did your de facto relationship break down on or after 1 March 2009… “No”.

14. Common law principles rather than the provisions of the Evidence Act apply at this stage of the proceedings for the determination of the waiver of privilege issue.  (See Mann v Carnell (1999) 201 CLR 1 at 17).

15. Mr Strum of counsel for the respondent submitted that there had been both disclosure waiver and issue waiver arising from the affidavits of Mr B and the applicant.  He submitted that the statement to which I have referred put those matters in issue and they were susceptible to being tested.  He submitted there was no evidence from Ms E as to how and why the applicant was not described as a party to a de facto relationship that had broken down.  The application filed electronically on 16 September 2014, in setting out the details of the applicant, required a description of the nature of the application.  The form has a specific provision for the following words:

    Party to a de facto relationship that has broken down.

    The author of this amended application did not “cross” that box but rather the option which has the heading of “Other” and the description so given was:

    Party to a de facto relationship.  Separation by exclusion from deceased (sic) life.

    In respect of the respondent, albeit given by the applicant, the description was identical.  Relevantly to the issue of what role Ms E was fulfilling, in two previous applications asserting the description of both the applicant and the respondent, the author had crossed the box relating to a de facto relationship that had “broken down”.  Mr Strum submitted that whilst it was conceivable that information might be inadvertently omitted, it was inconceivable that this information was just conjured up by Ms E without any basis whatsoever.  The question was asked therefore where the description came from to which I have referred.

16. Mr Strum submitted that the applicant had sworn that she had read Mr B’s affidavit and confirmed the details were correct.  She confirmed Mr B’s statement about the pressure to meet the deadline.  Importantly, Mr Strum submitted that the applicant did not assert any error in relation to the affidavit of her evidence in chief notwithstanding that evidence was filed at the same time as the amended initiating application.

17. Mr Strum then referred to the evidence about the applicant’s health issues and he addressed the distinction between the general waiver and the specific issue waiver.

18. Mr Wraith as one of the counsel for the applicant submitted that there had been no waiver.  He submitted that it was extraordinary to suggest that the circumstances gave rise to any waiver.  He pointed to the fact that the applicant deposed that she did not recall reading the changed parts of the application and that the amendment was completed at the initiative of the solicitor without reference to her for instructions.

19. Mr Wraith submitted that the state of mind of the applicant was irrelevant on 16 September 2014 because the jurisdictional fact was not dependent upon her state of mind.  It was submitted that any advice which may be said to have influenced her state of mind as at that date, was therefore not germane to the issue on the proceedings.

20. Importantly, Mr Wraith submitted that the applicant had not placed the substance of her advice in issue and that she had not anywhere relied upon her confidential communications with her solicitor nor any advice from that solicitor regarding the preparation or content of the amended application in support of her case that there had been a breakdown of the relationship.  He submitted that she had not disclosed any confidential communication nor put in issue any confidential communication.  He observed that this was a clear indication of the solicitor making an error in the context of a rush to have a document completed and that it had been made without reference to the applicant.  Thus he submitted, throwing open all of the files for inspection was without precedent and contrary to all of the authorities which maintained the sanctity of the lawyer and client confidentiality.  Absent any reference to the existence of any advice whether explicit or implicit alone the substance of that advice made it unfair to the applicant if the privilege was deemed to have been waived.

21. Legal professional privilege may be lost if a party claiming it acts inconsistently with maintaining the confidentiality of the communications.  The decision in Mann v Carnell (supra) sets out the relevant principle as follows:

    28.At common law, a person who would otherwise be entitled to the benefit of legal professional privilege may waive the privilege. It has been observed that "waiver" is a vague term, used in many senses, and that it often requires further definition according to the context. 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. It is inconsistency between the conduct of the client and maintenance of the confidentiality which effects a waiver of the privilege. Examples include disclosure by a client of the client's version of a communication with a lawyer, which entitles the lawyer to give his or her account of the communication, or the institution of proceedings for professional negligence against a lawyer, in which the lawyer's evidence as to advice given to the client will be received.

    29.Waiver may be express or implied. Disputes as to implied waiver usually arise from the need to decide whether particular conduct is inconsistent with the maintenance of the confidentiality which the privilege is intended to protect. When an affirmative answer is given to such a question, it is sometimes said that waiver is "imputed by operation of law". This means that the law recognises the inconsistency and determines its consequences, even though such consequences may not reflect the subjective intention of the party who has lost the privilege. Thus, in Benecke v National Australia Bank, the client was held to have waived privilege by giving evidence, in legal proceedings, concerning her instructions to a barrister in related proceedings, even though she apparently believed she could prevent the barrister from giving the barrister's version of those instructions. She did not subjectively intend to abandon the privilege. She may not even have turned her mind to the question. However, her intentional act was inconsistent with the maintenance of the confidentiality of the communication. 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.

22. As will therefore be obvious, the question is whether the particular conduct is inconsistent with the confidentiality which the privilege is intended to protect.  It has been said that the making of express or implied assertions about the content of privileged communications while at the same time seeking to maintain the privilege is what points to the inconsistency as well as giving rise to the question about relevant unfairness (see Council of New South Wales Bar Association v Archer [2008] NSWCA 164 at [48]). In my view, if a matter as contentious as the deponent’s state of health is put in issue to explain a lack of attention to the details of a pleading combined with a rather vague assertion that a solicitor made this up, raises real questions about the right of the other party to test that evidence. Testing that evidence is a matter of fairness to the respondent but the applicant cannot simply give part of the picture and expect the respondent to accept the bald statement. Thus, this is a case about not only acting inconsistently with the maintenance of the privilege but also about fairness to the respondent to comprehensively test a proposition which is challenged.

23. In Macquarie Bank Limited and B and Anor (2006) FLC 93-290 Le Poer Trench J set out a checklist of things that the Court should consider in determining waiver. His Honour concluded that it could arise through a pleading, an affidavit, oral evidence or indeed through the contents of a document provided by a party. However, the disclosure had to be seen as relevant or potentially relevant to an issue to be determined by the Court. That disclosure had to illustrate conduct that was inconsistent with the maintenance of the privilege about an issue in the case. In this case, the issue goes to the very jurisdiction of the Court because of the dispute about the ending of the de facto relationship.

24. In Stamp and Stamp (2007) FamCa 420; (2007) FLC 93-314, the majority May and Boland JJ held that the wife had raised the issue about her capacity to provide proper instructions and that that issue was inconsistent with the maintenance of the usual right to maintain the confidentiality of the communications with her lawyers. The Court had no difficulty in that case in saying that there was an inconsistency. The issue had been flagged and involved the explanation of the exposure of, discussion between lawyer and client.

25. The affidavit of the applicant in this case which confirms what Mr B says, sets out that the instructions were not given to Ms E.  To simply say that it was an error and that no consideration had been given to the previous pleaded documents, does not assist.  The inference I have drawn is that the jurisdictional fact is pleaded from and looks remarkably like, the detail in the trial affidavit which was filed on 16 September 2014 virtually simultaneously with the amended application.  It is hard to accept that this was something of Ms E’s initiative or as some sort of “folic” of her own or on the basis of information (as distinct from the downloading of the form) being taken from the Court’s website.  It is difficult to accept that it was simply made up by her.  That is particularly so in circumstances where as I earlier observed, Mr B refers to his “understanding” but there is no affidavit from Ms E.  Further, as observed in the submissions by Mr Strum, the applicant does not say that the details in her trial affidavit are incorrect.  Those details to which my attention was drawn, absent some testing of the evidence, could lead to the conclusion that that is exactly where the amended initiating application was drawn from.

1. In Telstra Corporation Limited v BT Australasia Pty Ltd [1988] 85 FCR 152; 156 ALR 634 the Full Court of the Federal Court said and I adopt the principle here [at 168]:

   Where…a party relies on a cause of action, an element of which is the party’s state of mind (including the quality of the party’s assent to a transaction) the party is taken to have waived privilege in respect of legal advice which the party had before or at the time of the relevant events, material to the formation of that state of mind.

2. The applicant desires that the Court accept that she did not consider the amended application yet she signed the document.  She made no reference in the affidavit to the execution of that document other than that she signed it.  In her affidavit (para 6) she said she recalled reading only the section relating to orders sought but she then added:

   I do not remember reading the other parts of it and I believe that some aspects of those other parts do not accurately reflect my position.

   That statement was made in the context of her assertion that she was “always suffering” in ongoing intense pain and constantly fatigued and depressed.  I am satisfied that she did put her state of mind in issue by those statements.  She did not categorically deny reading the document but rather not remembering so doing and in the context of her fatigue and depression, I find that she has put in issue the instructions she gave that day.  That is particularly so where she acknowledges having sworn the affidavit for her trial evidence and there is no suggestion that the trial evidence is not correct. 

3. One must wonder why the application would not be correct when the trial affidavit is lengthy and detailed.  The statement that she believed some aspects did not accurately reflect her position remains obscure.  I am satisfied that the applicant’s conduct in indicating what sort of communications she was having with her lawyers are clearly inconsistent with the actions of a privilege holder. 

4. Reference was made by counsel for the applicant to Adelaide Steamship Co Limited and Spalvins [1998] 81 FCR 360 where the court observed that the test was a quantitative one looking at whether there was a sufficient disclosure to warrant the loss of the privilege. That decision has been criticised by the Full Court of the Federal Court in Esso Australia Resources Limited v Commissioner of Taxation (1998) FCA 1655; [1998] 83 FCR 511 and I do not apply that test.

5. The only issue therefore is the question of whether or not the conduct in the form of the affidavit of the applicant and Mr B combined, taking into account issues of fairness, is sufficient for the court to find that a person desirous of maintaining the privilege to which they are entitled, has acted inconsistently with that.  The vagueness and obscure comments to which I have referred by the applicant have put in issue just exactly what instructions she was giving to the lawyers.  That is inconsistent with the maintenance of the privilege.

6. I am not satisfied however that the waiver can be extended any more than the particular issue relating to the days immediately prior to the preparation of the affidavit (that is, 16 September 2014) and the period thereafter until 25 November 2014.  Whilst waiver is a broad and wide ranging concept, the applicant has not put in issue any of her communications with her lawyers prior to that particular period of time.

7. For there to be a complete disclosure waiver, my view is that there would need to be some indication referred to indicating that the previous communications or instructions were her instructions from which her lawyers have since departed.  In the evidence, the applicant referred to Ms E’s failure to make the present amending application consistent with the previous applications.  She did not say that it was inconsistent with her previous instructions although that might be implied.  Absent a clear statement to that effect, there was nothing put in issue about her state of mind or her communications with her lawyers in respect of those earlier documents. 

8. I rule accordingly.

I certify that the preceding Thirty Three (33) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 16 December 2014.

Associate: 

Date:  16 December 2014