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Carrafa v Asfar (No. 2)

Carrafa v Asfar (No. 2)

Case [2022] NSWSC 1177 1 September 2022

Client Privilege

Admissibility of Evidence

Civil Litigation & Procedure

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Supreme Court

New South Wales

Medium Neutral Citation: Carrafa v Asfar (No. 2) [2022] NSWSC 1177
Hearing dates: 21 November 2021
Date of orders: 1 September 2022
Decision date: 01 September 2022
Jurisdiction: Equity
Before: Slattery J
Decision:
See paragraph [119]

Catchwords:
PRIVILEGE – CLIENT PRIVILEGE – Evidence Act1995, s 122 – plaintiffs are trustees of the estate of a bankrupt – the plaintiffs contend that in 2016 the executor of an estate, the first defendant, held certain real property on trust for the bankrupt – the second and third defendants are creditors of the estate of the bankrupt – the fourth defendants are the solicitors for the second and third defendants – the second and third defendants secure the appointment of the plaintiffs as trustees of the estate of the bankrupt in place of the official receiver – the second and third defendants seek freezing orders against the real property said to be held by the first defendant on trust for the bankrupt – the plaintiffs’ claim that the second and third defendants pursued the freezing orders acting as fiduciaries on behalf of the plaintiffs – the second and third defendants reach a settlement agreement with the first defendant in which the real property held by the first defendant is sold, and the proceeds of sale are distributed partly to the second and third defendants and partly to the first defendant – the plaintiffs allege the settlement agreement was made dishonestly in breach of the second and third defendants’ claimed fiduciary duty to the plaintiffs and in part by concealment from the plaintiffs and had the effect of fraudulently disadvantaging the other creditors of the bankrupt estate – fourth defendants issue notice to produce to the plaintiffs for documents passing between the plaintiffs and their solicitors – plaintiffs claim client privilege in respect of the documents – fourth defendants contend the plaintiffs have waived client privilege in the documents and the documents should be produced without redaction, because the plaintiffs have put in issue that the settlement agreement was concealed from them and the legal advice given to the plaintiffs is the source of the plaintiffs’ knowledge of the settlement agreement – whether client privilege has been waived – whether the plaintiffs have acted inconsistently with their objecting to the adducing of the evidence on grounds of client privilege within Evidence Act, s 122 (2).

Legislation Cited:
Bankruptcy Act 1966 (Cth)
Conveyancing Act1919, s 37A
Evidence Act 1995, s 122, s 125
Partnership Act1892, s 10
Real Property Act, s 74I

Cases Cited:
Barnes v Addy (1874) LR 9 Ch App 244
Carrafa v Asfar [2020] NSWSC 530
Cleveland Investments Global Pty Ltd v Ficaro Pty Ltd [2016] NSWSC 473
Commissioner of Taxation v Rio Tinto Ltd (2006) 151 FCR 341
Council of theNew South Wales Bar Association v Archer (2008) 72 NSWLR 236
CSR Limited v Eddy (2008) 70 NSWLR 725
DSE Holdings Pty Ltd v Intertan Inc (2003)…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Carrafa v Asfar (No. 2)

Details

AGLC: Carrafa v Asfar (No. 2) [2022] NSWSC 1177
Case: [2022] NSWSC 1177
Decision Date: 01 September 2022

CaseChat Overview and Summary

In the case of Carrafa v Asfar (No. 2), the plaintiffs, who are trustees of a bankrupt's estate, alleged that in 2016, the executor of the estate held certain real property on trust for the bankrupt. The second and third defendants, who are creditors of the estate, sought freezing orders against the real property. The fourth defendants, who are the solicitors for the second and third defendants, issued a notice to produce documents to the plaintiffs. The plaintiffs claimed client privilege in respect of the documents, which the fourth defendants argued had been waived due to the plaintiffs' contention that they were concealed from them and the legal advice provided to the plaintiffs is the source of their knowledge of the settlement agreement.

The legal issues the court was required to decide were whether the plaintiffs had waived client privilege in the documents and whether the plaintiffs had acted inconsistently with their objection to the adducing of the evidence on grounds of client privilege. The court needed to determine whether the plaintiffs had put the contents of the privileged documents in issue, which would result in the waiver of client privilege under section 122(2) of the Evidence Act 1995.

The court held that the plaintiffs had not waived client privilege because they had not put the contents of the privileged documents in issue. The court found that the plaintiffs had only alleged that they were concealed from them and had not sought to prove the contents of the privileged documents. The court also held that the plaintiffs had not acted inconsistently with their objection to the adducing of the evidence on grounds of client privilege because they had not put the contents of the privileged documents in issue.

The court ordered that the plaintiffs were not required to produce the documents to the fourth defendants without redaction. The court held that the plaintiffs had not waived client privilege and had not acted inconsistently with their objection to the adducing of the evidence on grounds of client privilege. The court found that the plaintiffs' allegation that they were concealed from them did not result in the waiver of client privilege because they had not put the contents of the privileged documents in issue.

Orders