Banksia Mortgages Ltd v Croker
[2010] NSWSC 535
•27 May 2010
CITATION: Banksia Mortgages Limited v Croker and Ors [2010] NSWSC 535 HEARING DATE(S): 17 May 2010
JUDGMENT DATE :
27 May 2010JUDGMENT OF: Schmidt J DECISION: 1. The e-mails between Alan Curnow and Daniel James Fitzgerald on 10 November 2005 that are annexure J to the affidavit of Alan Samuel Chick sworn 13 April 2010 were and remain privileged, other than the final two sentences in Mr Fitzgerald’s email.
2. The defendants produce the documents that are referred to in the Notice to Produce dated 23 October 2009 a copy of which is annexed to the motion and marked with the letter A.CATCHWORDS: PROCEDURE - legal professional privilege - advice given by in-house solicitor - both legal advice, commercial advice and comment - independence of solicitor - legal advice privileged, commercial advice and comment not privileged - communication between defendants and solicitor used as basis for affidavit sworn by solicitor to defend plaintiff's claim for summary judgment - waiver in defendants' communication thereby established LEGISLATION CITED: Evidence Act 1995
Uniform Civil Procedure Rules 2005CATEGORY: Procedural and other rulings CASES CITED: ASIC v Rich [2004] NSWSC 923
Federal Commissioner of Taxation v Rio Tinto Ltd [2006] FCAFC 86; (2006) 151 FCR 341
Divall v Mifsud [2005] NSWCA 447
Esso Australia Resources Ltd v Commissioner of Taxation (Cth) [1999] HCA 67; (1999) 201 CLR 49
Mann v Carnell [1999] HCA 66; (1999) 201 CLR 1
Rich v Harrington [2007] FCA 1987; (2007) 245 ALR 106
Seven Network Limited v News Ltd [2005] FCA 142
Sovereign v Bevillesta [2000] NSWSC 521
Sydney Airports Corp Ltd v Singapore Airlines Ltd [2005] NSWCA 47
Telstra Corporation Limited v Minister for Communications, Information Technology and the Arts (No 2) [2007] FCA 1445
Three Rivers District Council v Governor and Company of the Bank of England [2004] UKHL 48PARTIES: Banksia Mortgages Limited - Plaintiff
Leslie William Croker - First Defendant
Ruth Christine Corker - Second Defendant
Carigan Pty Limited - Third Defendant
FILE NUMBER(S): SC 2009/295278 COUNSEL: Mr P Bolster - Plaintiff
Mr R Newell - DefendantsSOLICITORS: Kell Moore - Plaintiff
Simmons & McCartney - Defendants
SCHMIDT JIN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION
THURSDAY, 27 MAY 2010
JUDGMENT2009/295278 BANKSIA MORTGAGES LIMITED v CROKER AND ORS
: This judgment deals with a motion filed by the plaintiff in April 2008, which the parties agreed should be dealt with before the adjourned hearing (see Rule 1.9 of the Uniform Civil Procedure Rules 2005). Two orders were finally sought:
2 An order that the defendants produce the documents that are referred to in the Notice to Produce dated 23 October 2009 a copy of which is annexed hereto and marked with the letter A."
"1 An order that the e-mails between Alan Curnow and Daniel James Fitzgerald on 10 November 2005 that are annexure J to the affidavit of Alan Samuel Chick sworn 13 April 2010 were and remain privileged.
The legal professional privilege claim
2 There were two emails for which legal professional privilege was claimed which passed between the plaintiff’s Risk Manager, Mr Curnow and its in-house solicitor, Mr Fitzgerald. The two emails were inadvertently produced to the defendants, in answer to a notice to produce. At issue was whether or not the plaintiff had met the onus which fell upon it to establish the privilege claimed.
3 Section 118 of the Evidence Act 1995 provides:
- " 118 Legal advice
Evidence is not to be adduced if, on objection by a client, the court finds that adducing the evidence would result in disclosure of:
(a) a confidential communication made between the client and a lawyer, or
(b) a confidential communication made between 2 or more lawyers acting for the client, or
(c) the contents of a confidential document (whether delivered or not) prepared by the client, lawyer or another person,
for the dominant purpose of the lawyer, or one or more of the lawyers, providing legal advice to the client."
4 It is apparent that Mr Fitzpatrick is a lawyer who is employed to perform both legal and commercial functions. It was not in issue that both at common law and under the Evidence Act such an employee may give legal advice which is privileged. The definition of ‘client’ in s 117(1)(a) of the Evidence Act includes a lawyer’s employer. There is no question that the advice provided by Mr Fitzpatrick to Mr Curnow by email was a ‘confidential communication’ as defined in s 117(1). Mr Fitzpatrick undoubtedly had a duty not to disclose the advice he had so given. The question to be determined is thus whether the dominant purpose of providing the confidential communication was in order to provide legal advice.
5 Both Mr Curnow and Mr Fitzgerald gave affidavit evidence and were cross examined. Mr Fitzpatrick is a solicitor who operates a sole practice, as well as being employed by the plaintiff as its corporate solicitor. His own practice accounts for around 20% of his professional time. He conducts that practice from his office at the plaintiff’s premises in Melbourne and maintains his practicing certificate and has his own indemnity insurance. He has no qualifications as a financial advisor and provides no financial advice to the plaintiff.
6 Mr Fitzpatrick reports to the plaintiff’s managing director. At the time the plaintiff operated with a team of about 5 or 6, at the management level. Mr Fitzpatrick is not a member of the plaintiff’s credit or lending committees. Mr Curnow is a member of that committee. Mr Fitzpatrick is also the plaintiff's Compliance manager and is responsible for the plaintiff’s risk management programme. He denied systematically providing commercial advice to the plaintiff. He regarded compliance as a part of the overall risk managerial function. His role was to chair the overall risk programme and his participation in committees was to give consideration to legal issues, not commercial matters. The plaintiff holds three financial services licences. The Company Secretary provides quarterly returns to ASIC on financial matters. Mr Fitzpatrick has dealings with ASIC in relation to the two prospectuses which the plaintiff issues each year. He and the company secretary negotiate commercial insurance policies for the plaintiff. On Mr Fitzpatrick's evidence, commercial aspects of the business are the responsibility of other officers. He is not consulted about them.
7 In cross examination, Mr Fitzpatrick also explained that he was the author of documents in use in the plaintiff’s business, such as the prospectuses. He did not prepare transactional documents, which were either prepared by others in house, or by external legal advisers.
8 Mr Fitzpatrick’s employment agreement was in evidence. It appeared to be a standard form document for ‘full time managers’, which had annexed to it a position description, with the plaintiff having the discretion to add to or vary the duties there specified. The duties specified were:
To represent the interests of The Banksia Financial Group in its dealing with other parties as directed.
To act as Chairman of the group's Risk Management operation and oversee the function of the Risk Management program.
To act as Compliance Officer for the group's Compliance Committee in overseeing the function of the group's Compliance Programs for all AFS Licensed entities.
To be responsible for the separate group entities AFS Licensing.
To participate in production of all disclosure documents required by Corporations Act (prospectuses and PDS).
To act as Chairman of the Risk Management program's Insurance Committee.
To act as Chairman of the Risk Management program's Legal and Regulatory Committee.
To jointly operate with the Company Secretary the group's HR function including maintaining a current Staff Manual and Fair Work Act compliant contracts of employment.
To advise the individual staff, senior management, the Managing Director and the Board on legal issues impacting on TBFG operations.
To draft all legal documentation and maintain quality drafting standards for all loan and mortgage documentation in the use by TBFG.
To maintain professional liaison with TBFG panel legal firms to ensure loan/mortgage documentation is applied and Banksia is providing full professional services.
To assist TBFG in maintaining currency with its markets and the industry and liaising with financial services bodies (IFSA, MIAA) and regulatory bodies (eg: ASIC).
To undertake legal research on specific matters in order to provide full advice to TBFG.
To undertake other duties as directed by the Board or the group's Managing Director.
Observe the requirement of the anti-money laundering regime adopted by The Banksia Financial Group.
Duties as directed by The Banksia Financial Group.
9 There are no formal provisions in the contract calculated to protect Mr Fitzpatrick's independence as a legal adviser. It was Mr Fitzpatrick’s evidence that he maintains files for his private practice, as well as for his work for the plaintiff. Day to day he provides legal advice to the plaintiff’s officers and staff, for the purpose of conducting the plaintiff’s banking business. There are no written protocols governing how such advice may be sought from Mr Fitzpatrick.
10 Mr Curnow’s evidence was that he had dealt with the defendant’s application for finance in 2005. He sought legal advice by email from Mr Fitzgerald and had received an email reply. It was these emails which were here in issue. Mr Fitzgerald was not provided with a copy of the defendants' loan application and was not involved in the decision to lend, which was not made at that time. Mr Fitzpatrick was provided with the information provided in the email and was referred to the website of the firm Skyder. He was asked to give certain legal advice. He was not asked whether the loan should be approved. His reply was passed onto the credit analyst to deal with. The final arbiter of approval of the loan was the credit committee.
11 Mr Fitzpatrick answered the question asked of him by Mr Curnow and added some additional comments in his email response. Mr Curnow did not pursue the other matters dealt with by Mr Fitzpatrick. Mr Fitzpatrick explained in cross examination that these comments were not legal advice. He suggested in his email that he and Mr Curnow should speak. They did not do so. Mr Curnow explained that he had not sought commercial advice from Mr Fitzpatrick and did not perceive that anything which Mr Fitzpatrick might have had to add, was relevant to the decision as to whether to lend. He had not sought further advice from Mr Fitzpatrick. He assumed that anything which he had to add had nothing to do with the contents of the defendants' application.
12 It was the evidence of Mr Curnow that he was seeking legal advice and that of Mr Fitzpatrick that he understood that was what he had been asked to provide. That evidence was not challenged. It was the defendants’ case that their purpose was not determinative. Given Mr Fitzpatrick’s role and the nature of his response to Mr Curnow’s request, it was apparent that there was no necessary independence between Mr Fitzpatrick and the plaintiff, with the result that the advice which he gave, even when sought by Mr Curnow as legal advice, was not privileged.
13 The starting point is a consideration of the purpose for which the advice given was sought. Like the common law, section 118 is concerned with ‘the dominant purpose of the lawyer, or one or more of the lawyers, providing legal advice to the client’. That is an objective test, but the subjective intentions of those responsible for bringing the emails in question into existence is entitled to be given weight and may be decisive (see Esso Australia Resources Ltd v Commissioner of Taxation (Cth) [1999] HCA 67; (1999) 201 CLR 49 at [172] per Callinan J). The evidence that it was Mr Curnow’s purpose to obtain legal advice and Mr Fitzpatrick’s purpose to provide it must thus be given proper consideration.
14 Conversely, it may also not be overlooked that not all of Mr Fitzpatrick’s duties were those of a lawyer giving legal advice. He had a broader role. That is not an unusual position for in-house solicitors such as Mr Fitzpatrick. As discussed in Sydney Airports Corp Ltd v Singapore Airlines Ltd [2005] NSWCA 47 at [23]:
"An in-house solicitor is, by reason of his or her position, more likely to act for purposes unrelated to legal proceedings than an external solicitor, whom in the normal course, has no relevant function other than that involving legal proceedings and/or legal advice. In determining whether or not a document was brought into existence for a purpose which was both privileged and dominant, the status of the legal practitioner was not irrelevant."
15 It follows that when advice is sought of an in-house solicitor, the fact of that solicitor’s status is a relevant matter to consider, in determining whether the advice given by the solicitor was legal advice.
16 In Sydney Airports Corp Ltd the in-house solicitor was cross examined as to the purpose of the advice given. There was no such cross examination in this case. The purpose to which Mr Curnow and Mr Fitzpatrick deposed was not challenged, although Mr Fitzpatrick was cross examined on the basis that part of the advice which he gave was not legal advice, but rather commercial advice and that contrary to his recollection and that of Mr Curnow, they had later discussed his email. Mr Fitzpatrick could not recollect such a discussion, nor could Mr Curnow. Mr Fitzpatrick’s evidence was:
Q. In your affidavit you say that when you - you are familiar with the Email the subject of the dispute today in court?
A. Yes.
Q. It is the email of 10 November to you from Mr Curnow and your response?
A. Yes.
Q. You say as you understood it you were being asked to determine the legality of this entity as described in Mr Curnow's Email?
A. Yes.
Q. You agree that the remark:" As a ... of ability to service." You agree that that was not legal advice. It was in fact commercial advice was it not?
A. It is more of a comment by me.
Q. You but you would agree it is in the nature of commercial advice would it not?
A. It has that flavour about it yes.
Q. When you say: "I personally would refuse the loan on a completely different basis and I will tell you about that when we speak". You were again I put it to you giving commercial advice?
A. No, I think that was just straight out comment by me.
Q. Straight out comment? Can you explain what you mean by that?
A. Well, I don't see it as a commercial advice at all. In fact I don't recall any further discussion ever emanating after that Email so it was just a statement I made, a comment I made which as far as I am aware went nowhere.
Q. Went nowhere?
A. Yes.
Q. So far as you recall you never had further discussion about it?
A. No.
Q. As far as you were aware no one ever sought to have a further discussion about it?
A. Not that I am aware.
Q. You do not recall?Q. I am going to suggest to you that Mr Curnow did ask you what you meant and that you did have a conversation about that comment?
A. I don't have a recollection of that.
A. No.
17 On this evidence it is apparent that Mr Fitzpatrick provided the legal advice which had been sought of him, but also volunteered two other statements. The first he viewed as commercial advice and the second a comment, which did not amount to advice and which was not taken up by Mr Curnow. In relation to the final comment, Mr Fitzpatrick explained in his affidavit what he was alluding to. That evidence was not challenged and confirms that the last comment which Mr Fitzpatrick made in the email was not legal advice. Mr Curnow’s evidence was that he had not sought either the commercial advice, or the comment which Mr Fitzpatrick made and took no account of them. He did not pursue Mr Fitzpatrick’s invitation to have a further discussion, not regarding anything more which he had to say, as relevant to the commercial decision which had to be made by the credit committee as to whether or not the loan would be made.
18 It follows logically from this evidence that the two final sentences of Mr Fitzpatrick’s email were not privileged. They were not provided as legal advice. No other basis for privilege was claimed. There remains to be considered whether the balance of the email, in which Mr Fitzpatrick purported to give the legal advice sought of him, was privileged.
19 That turns on whether the privilege otherwise attaching to legal advice was not available in relation to advice given by Mr Fitzpatrick, because he lacked necessary independence, as the defendants argued. The notion of independence was developed at common law. I am not satisfied that any necessary independence was lacking in Mr Fitzpatrick’s case.
20 The parties referred to various authorities to support their arguments. Branson J in Rich v Harrington [2007] FCA 1987; (2007) 245 ALR 106, had to consider the question of privilege in a context where proceedings had been brought against the members of a partnership, where the legal adviser who had provided the advice in respect of which privilege was claimed was one of the partners. Her Honour had regard to the views expressed by Tamberlin J in Seven Network Limitedv News Ltd [2005] FCA 142:
"4 The dominant purpose test has particular importance in relation to the position of in-house counsel because they may be in a closer relationship to the management than outside counsel and therefore more exposed to participation in commercial aspects of an enterprise. The courts recognise that being a lawyer employed by an enterprise does not of itself entail a level of independence. Each employment will depend on the way in which the position is structured and executed. For example, some enterprises may treat the in-house adviser as concerned solely in advising and dealing with legal problems. As a matter of commercial reality, however, both internal and external legal advisers will often be involved in expressing views and acting on commercial issues.
38 In carrying out this task, I am cognisant of the fact that there is no bright line separating the role of an employed legal counsel as a lawyer advising in-house and his participation in commercial decisions. In other words, it is often practically impossible to segregate commercial activities from purely "legal" functions. The two will often be intertwined and privilege should not be denied simply on the basis of some commercial involvement. In the present case, however, I am persuaded that Mr Philip was actively engaged in the commercial decisions to such an extent that significant weight must be given to this participation. In many circumstances where in-house counsel are employed there will be considerable overlap between commercial participation and legal functions and opinions. As can be seen from the specific rulings below, I am not persuaded that in this proceeding Mr Philip was acting in a legal context or role in relation to a number of the documents in respect of which privilege was claimed. Nor am I persuaded that the privilege claims were based on an independent and impartial legal appraisal."5 The authorities recognise that in order to attract privilege the legal adviser should have an appropriate degree of independence so as to ensure that the protection of legal professional privilege is not conferred too widely. Commercial reality requires recognition by the courts of the fact that employed legal advisers not practising on their own account may often be involved to some extent in giving advice of a commercial nature related to the giving of legal advice. Such involvement does not necessarily disqualify the documents relating to that role from privilege. The matter is necessarily one of fact and degree and involves a weighing of the relative importance of the identified purposes.
...
21 At [46] Branson J concluded:
"46 I am not persuaded that Tamberlin J in Seven Network Ltd v News Ltd intended to conflate the criteria for a claim of client legal privilege in the way suggested by the above submissions. The requirement that the legal adviser be independent is principally concerned with the nature of the relationship between the client who claims client legal privilege and the legal adviser. The requirement that the communication be made for the dominant purpose of obtaining legal advice or to conduct or aid in the conduct of litigation in reasonable prospect is concerned with the object and subject matter of the communication. Each criterion must be satisfied before a claim for client legal privilege will succeed."
22 In Seven Network Limited Tamberlin J had regard to a judgment of the House of Lords in Three Rivers District Council v Governor and Company of the Bank of England [2004] UKHL 48, and said:
"11 The principles concerning legal professional privilege were considered recently by the House of Lords in Three Rivers District Council v Governor and Company of the Bank of England [2004] UKHL 48 at [28], [34] and [38]. At [28], Lord Scott (with whom Lords Roger, Carswell and Brown agreed) said:
- "There is a strong public interest that ... in civil cases the claimant should succeed if he is entitled to do so and should fail if he is not, that every trial should be a fair trial and that to provide the best chance of these desiderata being achieved all relevant material should be available to be taken into account. These are the administration of justice reasons to be placed in the balance. They will usually prevail." (Emphasis added)
12 At [38] his Lordship continued:
- "If a solicitor becomes the client's 'man of business', and some solicitors do, responsible for advising the client on all matters of business, including investment policy, finance policy and other business matters, the advice may lack a relevant legal context. There is, in my opinion, no way of avoiding difficulty in deciding in marginal cases whether the seeking of advice from or the giving of advice by lawyers does or does not take place in a relevant legal context so as to attract legal advice privilege. In cases of doubt the Judge called upon to make the decision should ask whether the advice relates to the rights, liabilities, obligations or remedies of the client either under private law or public law. If it does not, then, in my opinion, legal advice privilege would not apply. If it does so relate then, in my opinion, the judge should ask himself whether the communication falls within the policy underlying the justification for legal advice privilege in our law. Is the occasion on which the communication takes place and is the purpose for which it takes place such as to make it reasonable to expect the privilege to apply? The criterion must, in my opinion, be an objective one." (Emphasis added)"
23 In Telstra Corporation Limited v Minister for Communications, Information Technology and the Arts (No 2) [2007] FCA 1445, Graham J was again dealing with a claim for privilege in relation to in-house counsel’s advice. His Honour said at [33] to [36]:
"33 In Waterford the court accepted that in some circumstances legal advice may be accompanied by advice of another kind which can be separated from it. In such circumstances, only the legal advice will be privileged. However, if the legal advice contains extraneous matter which cannot be separated from it, the legal advice will not lose its privilege for that reason (per Mason (as his Honour then was) and Wilson JJ at 66 and per Dawson J at 103).
34 Legal professional privilege is not limited to express advice about the law. Too literal a requirement of identifying legal advice as express advice about the law would place undue emphasis on formalism and undermine the privilege (per Allsop J in DSE (Holdings) Pty Ltd v InterTAN Inc (2003) 135 FCR 151 at [52].
35 In my opinion an in-house lawyer will lack the requisite measure of independence if his or her advice is at risk of being compromised by virtue of the nature of his employment relationship with his employer. On the other hand, if the personal loyalties, duties and interests of the in-house lawyer do not influence the professional legal advice which he gives, the requirement for independence will be satisfied.
36 In the case presently before the Court, there is no evidence, as I have earlier remarked, going to the independence of the internal legal advisers involved in the communications said to have been brought into existence for the dominant purpose of providing or receiving legal advice. There is nothing to indicate from the description of the six documents with which the Court is presently concerned that they must be documents for which privilege is properly claimed. Different considerations may apply if, say, the documents in question were opinions expressed by identified senior counsel where one might start off with the premise that by its nature the document would have privilege attaching to it. This is not such a case."
24 In this case, I am satisfied that the evidence shows that Mr Fitzpatrick had necessary independence. While Mr Fitzgerald had other duties, which are properly to be regarded as commercial, amongst his duties Mr Fitzpatrick had the function of providing legal advice when sought of him by employees of the plaintiff such as Mr Curnow. This function was undoubtedly an important one for the plaintiff, given the business which it conducted. In the course of that business, Mr Curnow sought legal advice from Mr Fitzpatrick and received it. The subject of the advice sought was undoubtedly such that had the advice been provided by an external lawyer, there could be no question that it attracted privilege at common law and under s 118 of the Evidence Act. The evidence does not permit of the conclusion that the nature of Mr Fitzpatrick’s employment relationship with the plaintiff was such that when he gave legal advice he was at risk of being compromised. Nothing in the evidence would lead to a general conclusion that his personal loyalties, duties and interests would influence the professional legal advice which he gave in accordance with his employment contract. Nor was anything of the kind suggested to him in cross examination in relation to the particular advice sought of him in this case.
25 To my mind, on the evidence there was nothing in Mr Fitzpatrick’s other duties, interests or loyalties, which could conceivably be thought to have influenced the professional legal advice which he was asked to give Mr Curnow on this occasion and which he understood he was giving. Significant weight must be given to these subjective intentions, the Evidence Act contemplating as it does, that an employee such as Mr Fitzpatrick may give legal advice which is privileged.
26 It must be concluded that Mr Fitzpatrick had the necessary independence for privilege to attach to the legal advice which he gave. It follows that the privilege claimed has been established, other than in relation to the last two sentences of Mr Fitzpatrick’s email, where he expressed an opinion and made a comment which went beyond the legal advice which he had been asked to provide. No privilege attaches to those sentences, but I am satisfied that they were not such as to alter the character of the legal advice which had been sought of him and which he earlier provided.
Waiver of privilege
27 The second set of emails in relation to which privilege was claimed were emails provided by one of the defendants, Mrs Croker, to the defendants’ former solicitor, Mr Richard Louis Mitry. It was not in issue that privilege attached to this communication at common law and under the Evidence Act. Section 119 of the Evidence Act provides:
"119 Litigation
Evidence is not to be adduced if, on objection by a client, the court finds that adducing the evidence would result in disclosure of:
(a) a confidential communication between the client and another person, or between a lawyer acting for the client and another person, that was made, or
(b) the contents of a confidential document (whether delivered or not) that was prepared,
for the dominant purpose of the client being provided with professional legal services relating to an Australian or overseas proceeding (including the proceeding before the court), or an anticipated or pending Australian or overseas proceeding, in which the client is or may be, or was or might have been, a party."
28 The plaintiff claims that privilege in those emails was waived. The plaintiff accepted that an onus falls on it to establish waiver. Section 122 of the Evidence Act provides:
" 122 Loss of client legal privilege: consent and related matters
(1) This Division does not prevent the adducing of evidence given with the consent of the client or party concerned.
(2) Subject to subsection (5), this Division does not prevent the adducing of evidence if the client or party concerned has acted in a way that is inconsistent with the client or party objecting to the adducing of the evidence because it would result in a disclosure of a kind referred to in section 118, 119 or 120.
(3) Without limiting subsection (2), a client or party is taken to have so acted if:
- (a) the client or party knowingly and voluntarily disclosed the substance of the evidence to another person, or
(b) the substance of the evidence has been disclosed with the express or implied consent of the client or party.
(5) A client or party is not taken to have acted in a manner inconsistent with the client or party objecting to the adducing of the evidence merely because:
- (a) the substance of the evidence has been disclosed:
- (i) in the course of making a confidential communication or preparing a confidential document, or
(ii) as a result of duress or deception, or
(iii) under compulsion of law, or
(iv) if the client or party is a body established by, or a person holding an office under, an Australian law—to the Minister, or the Minister of the Commonwealth, the State or Territory, administering the law, or part of the law, under which the body is established or the office is held, or
(c) of a disclosure to a person with whom the client or party had, at the time of the disclosure, a common interest relating to the proceeding or an anticipated or pending proceeding in an Australian court or a foreign court.
29 The waiver is claimed to have flown from the affidavit sworn by Mr Mitry on 20 October 2009, which the defendants relied on when resisting an application for summary judgment at an earlier point in the proceedings. The defendants succeeded in the case which they then advanced. Mr Mitry deposed in his affidavit that:
"1 I am a solicitor employed by the solicitor for the Defendants in this matter. Together with Rick Mitry, I have had day-to-day carriage of this matter.
2 On about 19 September 2009, I was informed by Rick Mitry, and believe that Mrs Ruth Croker notified him that she had come into possession of information which she believed would lend support to the position of the Defendants in the matter.
4 Since 22 September 2009, I have read several emails from Mrs Croker and been involved in various discussions with her. These emails and discussions are the basis of my knowledge and believe for(sic) the matters contained in the remainder of this affidavit.(sic) derives. Where I say in this affidavit that I have been informed of something by someone I mean that I have been informed of that thing and believe it."3 On about 22 September 2009, Mr Mitry informed me that he received that day an email from the Second Defendant, Mrs Croker, that day containing information about concerning the position of the Defendants in relation to the present proceedings.
30 The affidavit then details the circumstances in which a finance broker, Sam Hraiki, came to represent the Crokers in obtaining refinance, including an approach to the plaintiff; the purpose for which the borrowings were being sought; advice which Mr Hraiki had given to the Crokers; the Crokers’ operations as graziers; explanations given to the plaintiff by Mr Hraiki; documents prepared by Mr Hraiki, including an investment strategy proposal annexed to the affidavit; other documents which the plaintiff required of the Crokers; their investment of $1.6 million with Skyder Investments; how Mr Hraiki became late in making interest repayments in 2006; promises then made by Mr Hraiki about payment of what was owing and how the Crokers attempted to service the loan.
31 Waiver was defended on the basis that the defendants had not established waiver; that it was not fair and indeed, unprecedented for privilege in instructions given to a legal adviser in the course of litigation to be lost by waiver and that what was necessary to establish under s 122(2) of the Evidence Act had not been established. Those submissions may not be accepted.
32 In ASIC v Rich [2004] NSWSC 923, Austin J was concerned at hearing with various questions of waiver. He observed;
"9 A distinction is sometimes drawn between "disclosure" waiver and "issue" waiver, although they may be simply different examples of the application of the principle stated in Mann v Carnell . In the case of "disclosure" waiver, a party behaves inconsistently with the maintenance of privilege by disclosing part, but not all, of a privileged communication. In the case of "issue" waiver, a party behaves inconsistently with the maintenance of the privilege by putting in issue the state of mind of a person in circumstances where that state of mind is likely to have been influenced by a privileged communication."
33 His Honour went on:
- "13 Here, the defendants rely on "disclosure" waiver. They say that ASIC has disclosed part of the communication that occurred at the meeting on 21 November 2001, thereby waiving part of a protected communication, in circumstances where fairness dictates that the waiver of that part should result in waiver of the rest of the communication. They rely on Attorney-General for the Northern Territory v Maurice (1986) 161 CLR 475 at 488, where Mason and Brennan JJ said:
- "The holder of the privilege should not be able to abuse it by using it to create an inaccurate perception of the protected communication. Professor Wigmore explains: '[W]hen his conduct touches upon a certain point of disclosure, fairness requires that his privilege shall cease whether he intended that result or not. He cannot be allowed, after disclosing as much as he pleases, to withhold the remainder' (Wigmore, Evidence in Trials at Common Law (1961), vol 8, para 2327, p 636). In order to ensure that the opposing litigant is not misled by an inaccurate perception of the disclosed communication, fairness will usually require that waiver as to one part of a protected communication should result in waiver as to the rest of the communication on that subject-matter."
34 In this case the disclosure occurred at an earlier point in the proceedings. Not only did Mr Mitry then disclose by his affidavit that he had received instructions from Mrs Croker and that they were contained in the emails which he identified, he also disclosed the contents of the emails, or at least parts of them. It was not contended that the emails dealt with anything other than factual matters, but clearly, given the resistance to their production they must contain other matters not disclosed in Mr Mitry’s affidavit. This disclosure of factual matters about which instructions had been received is not surprising. The affidavit was used in order that the plaintiff's claim for summary judgment could be defended. That exercise, undoubtedly, required evidence to be put on.
35 The necessary consequence of the disclosure of part of the communications received from Mrs Croker by email, is that the maintenance of a claim for privilege in the emails at this stage of the proceedings, is inconsistent with that earlier disclosure. The result of the course taken is that as well as what is contained in the affidavit being disclosed, the privilege which attached to Mrs Croker’s email communications with her solicitor as to those matters was also waived by the filing and service of Mr Mitry’s affidavit. While the emails were confidential communications which were privileged and to which s 119 of the Evidence Act attached, once their contents were disclosed, or partially disclosed as they were, that privilege was lost.
36 It was argued for the defendants that it was relevant that the affidavit was not to be further relied on in the proceedings. That is not determinative of the question which lies between the parties.
37 At common law, the question of waiver of legal professional privilege is concerned with notions of fairness between the conduct of the client and the maintenance of the privilege (see Mann v Carnell [1999] HCA 66; (1999) 201 CLR 1). Where there is conduct which is inconsistent with the maintenance of the privilege, it does not matter that the privilege holder did not subjectively intend to lose the benefit of the privilege (see Federal Commissioner of Taxation v Rio Tinto Ltd [2006] FCAFC 86; (2006) 151 FCR 341 at [p 343]).
38 Here there was voluntary disclosure of parts of Mrs Croker’s communications, in the course of the proceedings. It was not claimed that there was any mistaken belief that the there would be no loss of privilege in the emails by which those communications were conveyed. There was no suggestion that any mistake had been made in the disclosure of the communications, or that the disclosure had been inadvertent. Even in such a case, in Divall v Mifsud [2005] NSWCA 447, the Court of Appeal took the view that a privileged statement revealed in an answer given by a witness in cross examination, when counsel had failed to object, meant that there had been knowing and voluntary disclosure and that privilege was thereby lost. Here, there was no such failure. There was here not even a suggestion that this was a situation such as that considered by Austin J in Sovereign v Bevillesta [2000] NSWSC 521 at [23] of a:
"case where everything indicates an intention to claim privilege in respect of the document and what has gone wrong is attributable to sheer inadvertence or carelessness.”
39 The disclosure here in question was made by affidavit on which the defendants relied to their advantage in order to resist summary judgment. That was a voluntary disclosure. In terms of s 122(3) of the Evidence Act, there can thus be no question that there was knowing and voluntary disclosure of the communication and that none of the exceptions under s 122(5) arise in those circumstances.
40 While the defendants may themselves not wish to rely further on the affidavit, what was disclosed is plainly relevant to what remains in issue between the parties and that is material on which the plaintiff may wish to rely at the further hearing, even if the defendants do not. In these circumstances fairness could not permit the defendants to have partially revealed Mrs Croker’s communication to their advantage and to now claim privilege in relation to the balance of the communication.
41 In Mann the High Court was concerned with the question of whether the conduct of the client was inconsistent with the maintenance of the confidentiality between the lawyer and the client which the privilege is designed to protect. It was observed:
[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" [37] . 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 [38] , 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."
"[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 [33] . 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 [34] . 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 [35] , 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 [36].
42 Here there was disclosure by the lawyer of the client’s email communications, on the instructions of the client, in order to achieve the benefit of resisting an order for summary judgment. It follows that as a matter of fairness between these parties, it may not now be asserted that this disclosure may be ignored, or that it did not constitute a waiver of the privilege lying in those email communications.
Orders
43 For the reasons given, I order that:
1. The e-mails between Alan Curnow and Daniel James Fitzgerald on 10 November 2005 that are annexure J to the affidavit of Alan Samuel Chick sworn 13 April 2010 were and remain privileged, other than the final two sentences in Mr Fitzgerald’s email.
- 2. The defendants produce the documents that are referred to in the Notice to Produce dated 23 October 2009 a copy of which is annexed to the motion and marked with the letter A.
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