Bell and Bell
[2009] FMCAfam 595
•24 April 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| BELL & BELL | [2009] FMCAfam 595 |
| FAMILY LAW – Property – legal professional privilege – whether privilege has been waived by disclosure waiver – whether privilege has been waived by issue waiver. |
| Evidence Act 1995 (Cth) Family Law Act 1975 (Cth), ss.90C, 90G (1)(b)(i) and (ii),90K(1)(a), 90K(1)(c), Trade Practices Act1974 (Cth) ss.51A, 51AC, 52 |
| Australian Unity Health Ltd v Private Health Insurance Administration Council [1999] FCA 1770 AWB Ltd v Cole and Another (No.5) (2006) 155 FCR 30 Bennett v Chief Executive Officer of the Australian Customs Service (2004) 140 FCR 101 Blomley v Ryan (1956) 99 CLR 362 Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 Derry v Peek (1889) 14 App Cas 337 Macquarie Bank Limited v B [2006] FamCA 1052 Mann v Carnell (1999) 201 CLR 1 Naylor v Naylor [2006] FamCA 1437 Newcrest Mining (WA) Limited v Commonwealth of Australia and Another (1993) 40 FCR 507 Osland v Secretary, Department of Justice (2008) 234 CLR 275 Peninsula Development Group (Tannum Sands) Pty Ltd v Retail Shop Leases Tribunal & Anor [2006] QSC 398 Secretary, Department of Justice v Osland (2007) 95 ALD 380 |
| Applicant: | MS BELL |
| Respondent: | MR BELL |
| File Number: | BRC 1150 of 2009 |
| Judgment of: | Burnett FM |
| Hearing date: | 24 April 2009 |
| Date of Last Submission: | 24 April 2009 |
| Delivered at: | Brisbane |
| Delivered on: | 24 April 2009 |
REPRESENTATION
| Counsel for the Applicant: | Mr North SC |
| Solicitors for the Applicant: | Jones Mitchell Lawyers |
| Counsel for the Respondent: | Mr Forrest |
| Solicitors for the Respondent: | Hartley Healy |
THE COURT ORDERS BY CONSENT UNTIL FURTHER ORDER:
That in this Order, unless the context necessarily requires “children” means [X], born in 1998 (now 10 years of age) and [Y], born in 2001 (now 7 years of age).
That within 28 days of this Order, the parties attend upon SUSAN LEWIS for the purpose of the preparation of a Family Report, to be paid for by the parties, to ascertain the appropriate care arrangements for the children.
That until further Order, MR BELL and MS BELL, their Servants and/or Agents be and are hereby restrained from removing or causing or allowing the children, [X] (born in 1998) and [Y] (born in 2001) to be removed from the Commonwealth of Australia, unless agreed in writing by both parties thirty (30) days prior to the proposed departure date and/or an Order of the Court.
That the Marshall and all officers of the Australian Federal Police and the Police Forces of the States and Territories are requested and authorised to give effect to these Orders by placing the name of the said children on the Airport Watch List in force at all points of arrival and departure in the Commonwealth of Australia and to maintain the children’s name on the Watch List until further Order of the Court.
The solicitors for the Father must immediately notify the Marshall and the Australian Federal Police Family Law team at Brisbane of these Orders by telephone and provide a copy of these Orders to the Marshall, the Australian Federal Police and the Queensland Police as soon as possible.
The Registry Manager must notify the Department of Immigration and Ethnic Affairs of these Orders, and the Department is requested to assist in ensuring that the Father and Mother do not breach these injunctions.
That both of the children’s passports are to be delivered to the solicitor for the Father, Hartley Healy Solicitors, who are to hold the passports on trust for the parties and are not to be released to either parent without the consent of both parents or an Order of the Court exercising jurisdiction under the Family Law Act 1975.
AND THE COURT ORDERS:
That the wife’s application to have the matter transferred to the Family Court of Australia be dismissed.
That the wife file and serve on or before 8 May 2009 a supplementary affidavit addressing the issue concerning the share transfer which took effect on 10 September 2008 and that such affidavit be filed on or before 8 May 2009.
That the wife provide to the husband forthwith for inspection a copy of the written advice prepared by Messrs Jones Mitchell lawyers referred to in paragraph 2.1 of the letter to Hartley Healy Solicitors dated 16 September 2008 and a copy of advice given pursuant to section 90G(1)(b) of section 90C of the Family Law Act financial agreement darted 22 January 2007 including, if any, written advice or any record or records of any oral advice.
That the wife’s solicitors be granted leave to inspect the file of Collas Moro Ross Solicitors provided to the Court in accordance with the subpoena issued by the husband, and the wife’s solicitors be given leave to inspect and copy.
That unless an application for costs is made by either party within fourteen (14) days of the date for any other costs order, the wife pay the husband’s costs of and incidental to the application to be assessed on the standard basis.
IT IS NOTED that publication of this judgment under the pseudonym Bell & Bell is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE |
BRC 1150 of 2009
| MS BELL |
Applicant
And
| MR BELL |
Respondent
REASONS FOR JUDGMENT
(Revised from Transcript)
Introduction
The parties to this application are principally engaged in an application brought by the wife seeking relief pursuant to s.90K of the Family Law Act 1975 (Cth) (the Family Law Act) to set aside a s.90C financial agreement entered into between the parties on 16 September 2002 and another entered into on 22 January 2007. In the course of that proceeding, the husband caused to be issued subpoenae addressed to various third parties. The respondents to the various subpoenae objected. Aspects of the subpoenae have been resolved and consent orders in respect of a number of the respondents to subpoenaed material agreed to orders submitted in a minute of 6 April.
The consent did not dispose of all the matters. The husband still pursues the answering of subpoenae directed to the wife's former solicitors, Messrs Jones Mitchell Lawyers. In a draft to proposed orders, the husband seeks orders in the following terms:
“The wife provide to the husband forthwith a copy of:
(a)All of the written advices, files notes and memoranda prepared by Jones Mitchell Lawyers with reference to para.2.1 of their letter to Hartley Healy Solicitors dated 16 September 2008, annexure "TLB4" of the husband's affidavit filed 2 April 2009; and
(b)All written instructions by the wife including records of oral instructions provided by the wife recorded in file notes and memoranda of the circumstances leading up to, at the time of and subsequent to the date of the financial agreement as referred to in the letter dated 16 September 2008.”
Although not articulated in the draft of orders submitted, the applicant also sought orders for disclosure of the file of the solicitors who advised the wife at the making of the 2007 binding financial agreement.
To appreciate the purpose and ambit of the disclosure sought, it is necessary to explain some of the background facts. The husband and wife entered into a binding financial agreement pursuant to s.90C of the Family Law Act on 22 January 2007. They had earlier entered into a like agreement in 2002. The wife claims in her amended initiating application for the later agreement, together with the first agreement, to be set aside pursuant to s.90K because they were induced by fraud.
In her affidavit filed on 11 February 2009, she deposes to suffering depression and matrimonial difficulties. She says she was prescribed medication and referred to a psychiatrist whom she says she consulted at the material time. She makes allegations that she was emotionally threatened by the husband. This conduct is said to support a contention that the agreements ought be set aside and particularly the later agreement on the basis that the agreement was obtained by fraud under s.90K(1)(a) or one in respect of the making of which was effected by the husband engaging in conduct that was, in all the circumstances, unconscionable. The concepts of unconscionable conduct and fraud are relatively well-settled in common law. See Blomley v Ryan (1956) 99 CLR 362; Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447; and Derry v Peek (1889) 14 App Cas 337.
It is necessary to recognise the nature of the allegations to appreciate the ambit of the inquiry to be undertaken at trial and also to address the submissions that the application is one that ought be referred to the Family Court because it involves allegations of fraud and unconscionability. I will address that matter later.
Needless to say, the husband denies the allegations. Aside from the broad allegations made by the wife in her affidavit, the material is otherwise lacking in particulars. There are no pleadings that will enable to the parties to more precisely refine the issues and that, of course, may give rise to issues concerning the adequacy of disclosure. If so, it will be important to see that care is taken to ensure the affidavits address any discrete claims.
The husband maintains the material ought to be produced despite its problems with the wife's former solicitors (there may be an issue arising under a lien) and despite the claims of privilege maintained by her on the hearing of the application. Mr North, senior counsel for the husband, submitted in summary that the material ought to be produced because it was not subject to privilege either:
a)because while there was advice privilege originally protecting that material from production, privilege was waived; so called disclosure waiver; and/or
b)privilege has been waived by raising the advice of an issue in the proceeding; so called issue waiver.
Disclosure Waiver
Dealing first with disclosure waiver; it was common between the parties that the documents, when they were originally brought into existence, constituted communications which were the subject of legal professional privilege. Before proceeding to an examination of the principles governing the approach to be taken, it is first necessary to consider the factual context. In a letter dated 16 September 2008, from the wife's then solicitors addressed to the husband's solicitors, her solicitor wrote, inter alia:
“I have received instructions to act on behalf of the applicant wife Ms Bell in relation to a number of matters arising out of the breakdown of her marriage with her husband, Mr Bell. I note that you have previously acted for Mr Bell in relation to the parties' s.90C Financial Agreement dated 22 January 2007.”
And more particularly then at paras.2.1 and 2.2, the solicitors continued:
“2. Property Settlement
2.1
2.2 (a)
Although para.2.2 sets out the grounds to be relied upon it, it informs the remarks particularly at paragraph 2.1 being:
“The detailed instructions of the circumstances leading up to:
at the time of…the date of the financial agreement.”
They are the matters that are particularly relevant to the allegations of unconscionability or fraud entitling relief under s.90K which then of itself would have the effect of rescission.
The most significant words contained in the letter requiring careful examination are the following:
“On the basis of those instructions, I have advised (the wife) that the agreement should be set aside pursuant to section 90K(1)FL of the Family Law Act 1975.”
It is those words that Mr North contends constituted the disclosure waiver in terms of established principle. The issue of disclosure waiver has been examined by the High Court in the recent past in the decision of Mann v Carnell (1999) 201 CLR 1 and more recently revisited in the decision of Osland v Secretary, Department of Justice (2008) 234 CLR 275.
In Mann v Carnell (supra), the majority observed concerning waiver commencing at para.28:
“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. It is inconsistency between the conduct of the client and the maintenance of the confidentiality which effects a waiver of the privilege.
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. …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 the maintenance of the confidentiality; not some overriding principle of fairness operating at large.”
The issue was recently revisited in Osland v Secretary, Department of Justice (supra). Significantly, there were helpful observations made by the majority (Gleeson CJ, Gummow, Heydon and Kiefel JJ) in that decision concerning the issue of “fairness” which are relevant in the context of this case. Their Honours’ remarks explain the term in this context and assist despite the fact that Oslandv Secretary, Department of Justice (supra) was a case which was readily distinguishable on its own facts. Oslandv Secretary, Department of Justice (supra) was a case involving a question of waiver in the context of an application for the production of documents under FOI legislation, that being an advice referred to by the Victorian Attorney General in a press release as advice received justifying an administrative decision.
The relevant principles are succinctly detailed in the judgment of Kirby J who agreed with the majority on this point but expressed his own reasons. His Honour initially observed that that case may not, in any event, be one which involved questions of legal professional privilege. However, despite that observation he proceeded to determine the issue of whether or not privilege was waived if it existed.
In proceeding to examine that issue, he commenced at p.310 by stating:
“91. The issue of waiver arises in this appeal in relation to one document only, namely the joint advice. The question, to be decided by reference to the principle of imputed waiver, is whether, whatever the subjective intention of the Attorney General in publishing the press release upon which the appellant relies, the objective fact of that publication was incompatible with a continued insistence by the respondent or legal professional privilege, and made such insistence unwarranted and unfair in the circumstances.
92. Each of these words is important. "Unwarranted" signifies a legal conclusion, namely that enough has been disclosed of the subject communication to evince conduct “inconsistent with the maintenance of the confidentiality which the privilege is intended to protect.” Effectively, the client cannot have it both ways. It cannot provide part of the confidential information (inferentially that part which favours its position) to others, whilst demanding that everything else (which may reveal that position in a different light) be treated as confidential. The use of the word "unfair" does not mean that all the decision-maker has to do is weigh up the respective “fairness” of the positions of the client and its opponent and decide the question of waiver according to such generalised considerations. But consideration of “fairness” may be relevant to whether there is an inconsistency between the conduct said to amount to waiver and the maintenance of the privilege.
93. In deciding what the law requires, a court considers the supposed waiver in the context of all the relevant circumstances. What is normally involved (as here) is a question of fact and degree. The search is not for the actual or imputed intention of the party said to have waived its privilege. It is a search for the objective consequence of that party's conduct in revealing some, but not all, of the particular legal advice.
His Honour's observations about "unwarranted" were observations confined to his judgment. However, insofar as his Honour made remarks directed to "unfairness" and the processes of assessment to determine that question, they also reflect the views of the majority (See Gleeson CJ, Gummow, Heydon and Kiefel JJ at paras.45 and 49).
The significant emphasis of the majority in determining questions of waiver as matters of fact or degree was upon the evident purpose (see para.48). This is best illustrated by the majorities’ examination and endorsement of the processes adopted by the Victorian Court of Appeal[1]. At this juncture, it is worth noting that the Court of Appeal had the benefit of argument concerning the decision of the Full Court of the Federal Court of Australia in Bennett v Chief Executive Officer of the Australian Customs Service[2], a decision to which I will refer and which provides a factually close analogy to the facts of this case.
[1] Secretary, Department of Justice v Osland (2007) 95 ALD 380.
[2] (2004) 140 FCR 101.
At para.34 of the decision in Oslandv Secretary, Department of Justice (supra) the majority noted with approval that Maxwell P, agreeing with Tamberlin J in Bennett v Chief Executive Officer of the Australian Customs Service (supra) said the disclosure of a conclusion expressed in a legal advice without disclosing reasons may or may not result in a waiver of privilege depending upon a consideration of the whole of the context in which it occurs. The majority then quoted at para.35 from Maxwell P’s reasons observing his reasons in part were that:
“Amongst the circumstances relevant to determining inconsistency, it is clear from Carnell and Bennett that the purpose for which the privilege holder made the disclosure is highly relevant. The question here was whether the use made by the Minister of the disclosed portion of the privileged communication – more particularly, the purpose for which the conclusion was disclosed – was inconsistent with the maintenance of confidentiality in respect of the content of the advice.”
(Emphasis added)
The reasons of Maxwell P noted by the majority proceeded to examine the purpose of disclosure before determining that, in that case, there was no waiver.
However, the majority did not express a purpose test as such. They did, however, clearly consider the purpose or object of the disclosure as a material consideration when determining, as a matter of fact and degree, the assessment of the question of waiver.
It is also worthy of note that the decision of the Full Court of the Federal Court in Bennett v Chief Executive Officer of the Australian Customs Service (supra) was not the subject of significant debate by the Court. It can be inferred from the majority's treatment of the decision of the Full Court of the Federal Court in Bennett v Chief Executive Officer of the Australian Customs Service (supra) that it was noted with approval.
I have already noted Bennett v Chief Executive Officer of the Australian Customs Service (supra) appears clearly as a case on point. Although the circumstances of that case were again somewhat convoluted as the appeal arose from an adverse determination concerning an FOI request, the underlying facts were essentially parallel to those in this instance. In that case, Bennett and the CEO of Customs were in dispute. Bennett had commenced proceedings against the CEO of Customs and a letter giving rise to allegations of waiver was the subject of examination.
At para.5 in the judgment of Tamberlin J, he recited the offending parts of the correspondence. Relevantly, they stated:
“(2) AGS [Australian Government Solicitor] has now advised Customs that Public Service Regulation 7(13) does not prohibit all public comment by an officer on matters of public administration. Rather, the sub-regulation must be construed or "read down" so as not to apply the public comment on matters of administration which are not already on the public record…
…
(9) AGS has advised Customs that your client is not correct in asserting that he is not subject to the Act and Regulations if he makes public statements about Customs' related matters in his capacity as President of the COA [Customs Officers Association]. It is a matter for your client, in the light (perhaps) of legal advice provided by you, whether he adheres to or moderates his position on this question.”
(Emphasis added)
His Honour proceeded:
6. The above extracts express the substance of the advice that was given by the Australian Government Solicitor in each of the paragraphs. In my view, it would be inconsistent and unfair, having disclosed and used the substance of the advice in this way, to now seek to maintain privilege in respect of the relevant parts of that advice which pertain to the expressed conclusion. It may perhaps have been different if it had been simply asserted that the client has taken legal advice and that the position which was adopted having considered the advice, is that certain action will be taken or not taken. In those circumstances, the substance of the advice is not disclosed but merely the fact that there was some advice and that it was considered. However, once the conclusion in the advice is stated, together with the effect of it, then in my view, there is imputed waiver of the privilege. The whole point of an advice is the final conclusion. This is the situation in this case.
7. As Kirby J points in Ampolex v Perpetual Trustee Company (Canberra) Ltd (1996) 70 ALJR 603 at 607:
“I agree that a mere reference to the existence of legal advice would not amount to the waiver of its contents. Rolfe J appears to have acknowledged this distinction by later rulings to which I was taken during the course of argument. But at least in respect of the substance of the legal advice supporting Ampolex's assertion about the correct ratio, which is in contest here, it is strongly arguable that the public reference the supporting legal advice, waived the privilege as to the precise content of their legal advice on that point. I cannot say that the ruling is attended by such doubt as to promise a substantial prospect of a grant of special leave to appeal to this Court.” (Emphasis added).
8. The reference to Rolfe J is to the observations of his Honour in Ampolex v Perpetual Co (Canberra) Ltd (1996) 40 NSWLR 12. In that case, Rolfe J had to consider whether there had been a waiver of legal professional privilege in legal advice given to Ampolex by counsel. His Honour considered what was meant by “the substance” and
“the effect” of advice or relevant evidence for the purposes of s.122(2) of the Evidence Act 1995 (Cth). At 19, His Honour said:
“In my opinion the substance of the advice may well be disclosed if the ultimate conclusion, without the supporting reasoning process, is revealed. At that stage there has been, in my opinion, a disclosure of the substance of the advice i.e. what the advice is. Further the ultimate conclusion, whilst it may be as a “result” or a “consequence” of the reasoning is more than that: in its own right it is the essence or vital part of the advice. Some advices may be very short and answer the question whether (sic) minimum of reasoning or, in some circumstance (sic) without any.
(Emphasis added).
9. The same approach was taken by the Full Federal Court after referring to Ampolex in Adelaide Steamship Co Ltd v Spalvins (1998) 81 FCR 360 at 376-377.
10. In the present case, the primary Judge considered that the existence of waiver was a question of degree as to whether the disclosure amounted to waiver of the privilege. His Honour at [35] of his judgment said:
“To disclose the legal position or stance that a lawyer has advised to a client to take is, in my view, not inconsistent with the maintenance or confidentiality in the communication giving the advice (which may have much detail or lack of such detail), at least where oppression is not being essayed by such disclosure. It has never, in my experience, been contended to the contrary, although it is an every-day occurrence for solicitors to tell their client's opponents…that their clients have been advised to take some specified course or stance. No doubt there are cases of which this may perhaps be one, where there are questions of degree as to whether the detail the advice has also been disclosed to such an extent that it lacks congruity to make the disclosure but seek to keep the actual advice confidential. (Emphasis added).”
His Honour then proceeded at para.13 to conclude:
13. “Various expressions are used in the formulation of principles relating to waiver of legal professional privilege, such as reference to “the substance”, “effect” or “content” of the advice. The weight of authorities, in my view, supports the conclusion that the disclosure of the conclusion reached in or course of action recommended by, an advice can amount to waiver of privilege in respect of the premises relating to the opinion which has been disclosed, notwithstanding that this reasoning is not disclosed. By way of illustration, if there is a disclosure that a client has been advised that interpretation “A” is preferable to interpretation “B” of a legislative provision, then even if there is no disclosure of the reasoning leading to that conclusion, the reasoning and content of the advice may be waived, including the factual premises and circumstances leading to that conclusion.”
Giles J ultimately accepted that reasoning. He noted with approval the succinct observations of Goldberg J in Australian Unity Health Ltd v Private Health Insurance Administration Council [1999] FCA 1770 where at [18] he stated:
“…It seems to me that by stating the respondent’s view of the rule, and that legal advice supports that view, the existence of legal advice is being disclosed, the contents of which say that it supports the respondent’s view of the rule.”
However it needs to be observed that in the High Court and in the Victorian Court of Appeal a slight difference of approach between Tamberlin J and Giles J was the subject of some comment. However, the observations of Maxwell P on that point do not appear to have any bearing upon the reasoning for present purposes.
It follows that the current position can be summarised as follows. First, in the context of out of Court communication the principles governing waiver of legal professional privilege are grounded in common law.
Second, the question to be decided by reference to the principles of imputed waiver is whether, whatever the subjective intention of the party referring the other to the subjective material, the objective fact that that reference was incompatible with the continued insistence by the respondent upon legal professional privilege and had made such insistence unfair in the circumstances.
Third, in considering unfairness it does not mean that all the decision-maker has to do is weigh up the respective fairness of the positions of the client and its opponent to decide the question of waiver according to generalised considerations. Considerations of fairness may be relevant to whether there is an inconsistency between the conduct said to amount to waiver and the maintenance of privilege.
Fourth, that question of fairness is itself one of fact and degree.
Fifth, fact and degree in part can be assessed by reference to the purpose or object for which the material is purported to have been disclosed and used, such as whether it was being used by a party to litigation for forensic advantage.
Sixth, the disclosure of the conclusions reached in, or course of action recommended by, an advice can amount to a waiver of privilege in respect of premises relating to opinions which have been disclosed, notwithstanding the reasoning hasn't been disclosed.
Seventh and finally, disclosure of one conclusion but not another in an advice does not necessarily amount to a waiver in respect of the non-disclosure conclusions. However, if conclusions and reasonings are so inter-connected that they cannot be separated or isolated then it may be that the whole of the advice on which the conclusions are based must be considered to have been waived.
I have earlier detailed the material parts of the subject matter addressed by the wife's solicitors to the husband's solicitors. To re-state them, materially it states:
“Ms Bell has provided me with detailed instructions of the circumstances leading up to, at the time of and subsequent to the date of the financial agreement.
On the basis of those instructions I have advised Ms Bell that the financial agreement should be set aside pursuant to s.90K(1)(c) of the Family Law Act 1975. The grounds upon which Ms Bell relies to set aside the agreement include...”
Before examining the principles a comparison of that letter to the letter which was under consideration in Bennett v Chief Executive Officer of the Australian Customs Service (supra) is instructive. In Bennett v Chief Executive Officer of the Australian Customs Service (supra) the solicitor, AGS, employing the language of the third person as opposed to the first person (which was used in the present case) proceeded to state:
“He 'has now advised' its client Customs.”
In this case the client was Ms Bell. Here the solicitor stated:
“I have advised.”
The use of the active voice is instructive.
In Bennett v Chief Executive Officer of the Australian Customs Service (supra) the solicitor proceeded to inform the addressee of the subject matter of the advice, in that case a regulation. In this case the solicitor informed the addressee of the subject matter of this advice, namely "the agreement", clearly referring to the financial agreement addressed in the preceding sentence.
Finally, in Bennett v Chief Executive Officer of the Australian Customs Service (supra) the solicitor detailed the "substance", "effect" or "content" of the advice. Namely, the subject regulation did not prohibit public comment. Here the “substance”, “effect” or “content” of the advice was revealed, that is the agreement should be set aside pursuant to s.90K(1)(c) of the Family Law Act. Arguably, the grounds which follow in para.2.2 of the letter address the reasons, but in any event the authorities are clear that the reasons themselves do not need to be disclosed to effect a waiver.
It is plain from a close examination of the language of the letter that the letter discloses more than the mere fact that advice had been obtained, considered and a position adopted, having considered the advice. Here it states a view and advances the legal advice as justification for that position.
As the Court in Bennett v Chief Executive Officer of the Australian Customs Service (supra) determined, the production of such a letter designed clearly for a forensic purpose of the kind alluded to by Maxwell P in Oslandv Secretary, Department of Justice (supra) demonstrates a purpose or intent relating to the use of the document which has also the further effect of establishing the unfairness.
As with Bennett v Chief Executive Officer of the Australian Customs Service (supra) in this case the maintenance of privilege would be unfair to the husband, in the sense of there being an inconsistency between disclosing the fact of the conclusion of the independent advice, by the wife to the husband, but her wishing to maintain the confidentiality of the advice itself.
Against those matters it was submitted on behalf of the wife that there had been no implied waiver. It was said that it could not be said that the wife's former solicitor had done anything more than say that it was the wife's position, after having taken advice from him, that the agreement should be set aside.
For reasons which I have earlier outlined, I do not agree. I think the language of the letter speaks for itself and does not support that contention.
Further, it was submitted that although only the ultimate conclusion of the advice given was disclosed the actual substance of the advice the solicitors had given had not been disclosed for any forensic or commercial advantage. Again, with respect, I do not agree.
Clearly, the object of the letter was to discourage the husband from litigating the point. It cannot be said that in the event that the husband acceded to the wife's request there would not be achieved some forensic or commercial advantage in the proceedings by reason of that conduct. Had the husband acquiesced to the wife's request then the parties would have been spared the cost and expense of further litigation and, of course, the risk of an outcome that might be adverse or differing to the outcome in the agreement in the result if the litigation proceeds.
It follows that I consider that the wife by her conduct has effected a disclosure waiver of the privilege in respect of the advice of 16 September 2008.
The parties did not address me on the issue of the waiver of associated material. The form of order seeks a very broad range of disclosure. Whilst it is well-settled that a voluntary disclosure of privilege documents can result in a waiver of privilege over those documents and associated material the test to be applied to determine the scope of any waiver of associated material is whether the material the party has chosen to release from privilege represents the whole of the material relevant to the same subject issue or subject matter – see AWB Ltd v Cole and Another (No.5) (2006) 155 FCR 30; and Newcrest Mining (WA) Limited v Commonwealth of Australia and Another (1993) 40 FCR 507.
Until the husband has reviewed the advice I do not think that he can properly advance a claim for all the material sought in his application. I will entertain a further application if that is warranted. In the meantime the disclosure under this head will be limited to the advice alone.
Issue Waiver
The second point raised by Mr North was that the privilege was waived by operation of principles relevant to issue waiver in respect of advice given preceding the s.90 Binding Financial Agreement. In order to understand this particular aspect of the application it is necessary to understand the evidence supporting the wife's application.
The evidence principally commenced at para.26 and proceeds through to para.53 of the wife's affidavit filed 11 February 2009. Those paragraphs summarise the relevant history which include allegations concerning her entry into two separate binding financial agreements; allegations that she was kept out of relevant information by the husband; allegations concerning her own alleged precarious mental state; allegations of pressure being brought to bear upon her to sign an agreement; and allegations of non-disclosure of assets.
These allegations formed the grounds to attack the binding financial agreement.
In the decision of the Family Court of Naylor v Naylor [2006] FamCA 1437 the matter of issue waiver in the context of the s.90K application was expressly considered. That decision has not been reviewed on appeal. It was a factually similar case to that presently before me. Commencing at para.62 Her Honour concluded in these terms:
“62. …I am satisfied it is relevant to the sort of questions posed by the Court of Appeal in Chen and supports the likelihood the husband received legal advice that had a bearing on the allegation of reliance and which may raise doubts as to alleged reliance on it.
63. There is an inconsistency between the husband's asserted maintenance of legal professional privilege on the one hand, and his claim that there has been a miscarriage of justice by reason of a misrepresentation (which should result in final orders for financial agreements being set aside) on the other, having regard to the onus he bears, as discussed at paragraph (15). To succeed, the husband will have to adduce evidence of his state of mind at the relevant time (10 March 2004) and its basis. He must prove reliance and to meet that claim the wife is entitled to adduce evidence that he received advice from an independent third party, being his solicitors
64. In reaching this conclusion I accept that the putting in issue of the relevant state of mind and (necessarily) asserting reliance on the representations of the wife are the starting points for the examination of alleged issue waiver. The likely chronological coincidence of the legal communication and the establishment of state of mind is relevant but not determinative. I am satisfied that advice relevant to the alleged reliance...is central to the disposition of the husband's claims; the confidential communications are necessarily laid open. In those circumstance (sic) a relevant inconsistency arises; the privilege holder's conduct is inconsistent with the continued confidentiality of the communication because the husband has created a situation where the other party must reasonably put in issue the character and/or contents of the communication by way of defense (sic). There is a high probability that the advice is relevant to the husband's state of mind and reliance on the representations; his belief as to the value of the shares is a significant issue in the case.”
For an analogous situation outside the matrimonial context – see also Peninsula Development Group (Tannum Sands) Pty Ltd v Retail Shop Leases Tribunal & Anor [2006] QSC 398 (21 December 2006).
The wife's submissions in respect of the position advanced by Mr North for the husband were broadly that there had been no issue waiver because state of mind was not an issue. Her submission relied on the observations contained in para.19 of Macquarie Bank Limited v B [2006] FamCA 1052 (26 June 2006), a decision of the Family Court by Le Poer Trench J. At para.19 His Honour referred to Dr Desiatnik’s text on legal professional privilege, where the author stated:
“…For the doctrine of implied waiver to operate, it must also be shown that:…the legal advice in question was relevant in the formation of that state of mind or belief or that the advice in some way becomes an issue in the action.”
In essence, his submission was that there would be no issue of reliance in the context of an s.90K application because of the 90K requirements. In particular, 90K provides that:
“(1) A court may make an order setting aside a financial agreement or a termination agreement if, and only if, the court is satisfied that:
(a) the agreement was obtained by fraud (including non‑disclosure of a material matter); or
…
(b) the agreement is void, voidable or unenforceable; or
…
(3) A court may, on an application by a person who was a party to the financial agreement that has been set aside, or by any other interested person, make such order or orders (including an order for the transfer of property) as it considers just and equitable for the purpose of preserving or adjusting the rights of persons who were parties to that financial agreement and any other interested persons.
…”
In order to determine that application it was submitted a Court would have to have regard to the requirements for the making of financial agreements as provided for in s.90G., which in part requires that a financial agreement is binding on the parties to an agreement if and only if in particular:
“Section 90G When Financial Agreements Are Binding
90G(1)…
(b)the agreement contains, in relation to each party to the agreement, a statement to the effect the party to whom the statement relates has been provided, before the agreement was signed by him or her, as certified in an annexure to the agreement, with independent legal advice from a legal practitioner as to the following matters:
i)the effect of the agreement on the rights of that party;
ii)the advantages and disadvantages, at the time the advice was provided, to the party making the agreement; and
…”
Putting aside for the moment the issue of unconscionability alleged on the part of the wife against the husband, it is plain from a reading of the wife’s affidavit (particularly of para.47) that she does make allegations that there was material non-disclosure by the husband prior to the time of the agreement. She says:
“47. Also, unbeknown to me, at the time I signed the agreement:
(a) Was the real value of Mr Bell's interest in the family company. The interest was of considerable value. I am now aware from land title searches that the company is the registered owner of 5 real properties situated in South-East Queensland. If Mr Bell's interest in the company had been disclosed, I might not have entered into the agreement.
(b) Mr Bell did not disclose to me the fact that he was a director of the company, [H] Pty Ltd. I am unable to tell from the ASIC searches which have recently been conducted whether Mr Bell had a shareholding in that company at the time we entered into the agreement.
(c) Mr Bell and I were jointly liable for the Firstmac Limited loan which is secured by way of a mortgage registered over the title to Mr Bell's property at [M]. The loan is for $859,099.17. The agreement provides for
Mr Bell to retain the [M] property, but there is no provision for the loan to be refinanced or discharged nor for Mr Bell to indemnify me in relation to further liability in respect of it. As at the date of this affidavit Mr Bell and I remain jointly liable for the said loan.”
At least in relation to the earlier part of that paragraph in the affidavit a basis arises for a determination of the matter of whether or not the agreement was induced by fraud. Fraud being really defined in shorthand terms by the well-known decision of the House of Lords in Derry v Peek (supra) being whether the material representation made to induce the agreement was made fraudulently (i.e. with wilful knowledge of its falsity) or recklessly (i.e. without caring if his representation is true or false). The House of Lords formulation has, I think, not ever been improved upon. There it was determined that in order to establish fraud it is necessary to prove the absence of an honest belief in the truth of that which has been stated. In the words of Lord Herschell:
“Fraud is proved when it is shown that a false representation has been made knowingly or without belief in its truth or recklessly, careless, whether it be true or false. It is also a trite proposition that fraud can be effected by both words and conduct and both by action and omission.”
In this instance, it seems that conduct and omission are relied upon by the wife in her claim. Accepting that to be the case then it seems to me that it is difficult to comprehend that there would not have been reliance, despite the fact that it is said that the requirements of s.90G(1)(b)(i) and (ii) of the Family Law Act do not of themselves strictly import a requirement for reliance.
Where a lawyer provides advice pursuant to s.90G(1)(b)(i) or (ii) it seems inconceivable to me that it would not be relied upon, particularly when one has regard to the duty of a lawyer, to provide such advice. Indeed, if advice were provided but rejected a lawyer acting responsibly would require a waiver particularly where it was apparent to him that any advice provided is contra-indicated by conduct intended by a client. That is to say, if having received advice which was adverse to the agreement, a client persisted in proceeding to enter into such an arrangement a reasonable lawyer acting out of concern for his own welfare would, of course, ensure that such an acknowledgement and waiver was sought from his client, if for no other reasons but to protect himself. It follows in my view that in the absence of any disclaimer that there must, or would, have been some element of reliance upon the advice of a lawyer prior to the entry into the agreement.
It was further submitted that in any event I should be persuaded to follow the decision of Le Poer Trench J in Macquarie Bank Limited v B (supra). While at para.50 his Honour usefully sets out the matters that need to be considered by a Court before there may be any implied waiver of legal professional privilege arising from issue waiver and while I certainly accept his Honour's comments in relation to the need to demonstrate reliance, particularly in a case of fraud, the facts of that case, of course, are somewhat different to the facts in the present case and upon that basis the authority is distinguishable.
Ultimately, it might be said that the facts come back to the question of reliance, but I have in effect two competing decisions of the Family Court which, quite arguably, are inconsistent. In the face of the two inconsistent decisions I think it is preferable to be guided by the decision which more closely reflects the facts of this case. I can see a scope for argument in Macquarie Bank Limited v B (supra), although, as I have noted, I think the principle of reliance itself is critical.
It follows then that for the reasons that I have just addressed I am satisfied that this is a case of issue waiver where the wife by her conduct in prosecuting this claim has waived privilege in relation to the s.90G advice. However, for reasons that I have earlier addressed in relation to the scope of the waiver I am not entirely satisfied with the breadth of disclosure presently sought.
As in the earlier instance, I think the principles governing the breadth of waiver apply universally to the issue of legal professional privilege, irrespective of whether the waiver is one of a disclosure waiver or issue waiver. And so it follows that orders for disclosure will be in the terms that I will outline in a moment.
Transfer to Family Court
Finally on the matter of transfer, an application was made by the wife for the matter to be transferred to the Family Court. In broad terms, as I understand the argument, it was broadly put that this is a novel application and ought be heard by the Family Court at first instance.
I have to confess I see nothing novel about arguments concerning fraud or unconscionability. They are concepts which are well-settled at common law. Indeed, they are concepts which have a broad purview in commercial disputes and particularly those which are picked up in the Trade Practices Act 1974 (the TPA), which imports the common law and also, in discrete situations adopts some more particular instances of unconscionable behaviour as provided for in ss.51A and 51AC of the TPA.
The term "fraud", of course, does not appear in the TPA, although it is often confused with claims brought under s.52 in relation to misleading and deceptive conduct. But notwithstanding that, as I have noted, the term "fraud" is one that has been well-defined and well-understood by lawyers since at least the late eighteenth century and the words of Lord Herschell have really not been improved upon.
Unconscionability, of course, has a more recent origin, but even still the seminal decision in the field of unconscionability is that of the High Court in Blomley v Ryan (supra), which dates back to the 1950s. It cannot be said that there is anything novel about a field of law which has been extant for in excess of 50 years.
The terms, of course, are well-understood by common lawyers and I do not think that there is anything from my reading of s.90K of the Family Law Act which suggests that the terms adopt any peculiar or unusual context in the matrimonial field. Indeed, it would be counter intuitive to suggest that just because the circumstances of the alleged fraud or unconscionable conduct occurred in a matrimonial context some differing standards ought apply.
It follows that I do not propose to make any orders transferring the application to the Family Court. That application will be refused.
Separate Hearing
Mr Forrest also submits that the Court ought deal with the s.90K application on a discrete basis and that it should be treated as a discrete issue. I do not think there was any dispute between the parties about that matter. In fact, I think that is the most sensible approach. Clearly, if the s.90K application fails there will be no need to review the entire history.
The matters pertinent to the s.90K application are confined in their ambit and it would seem to me the s.90K application can be disposed of with reasonable expedition and efficiency which would be to the advantage of all parties. So I will make directions in relation to that and set a timetable for the disposition of that part of the application.
Costs
Finally, there is the matter of costs. At this stage I have not heard the parties in relation to costs. However, unless an application is made by either party within 14 days of the date for any other costs order I propose to order the wife pay the husband’s costs of and incidental to the application to be assessed on the standard basis.
I certify that the preceding seventy-five (75) paragraphs are a true copy of the reasons for judgment of Burnett FM
Associate: Beverley Schmidt
Date: 16 July 2009
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