Cassaniti v Paragalli

[2006] NSWSC 160

CITATION:	Cassaniti v Paragalli [2006] NSWSC 160
HEARING DATE(S):	16/03/06
JUDGMENT DATE :	20 March 2006
JURISDICTION:	Equity Division
JUDGMENT OF:	Barrett J
DECISION:	Order for access to affidavit
CATCHWORDS:	PROCEDURE - access to documents in court file - where non-party solicitor ordered to file affidavit - party seeks access to such affidavit after filing - solicitor makes submissions - solicitor's duty with respect to money in trust account - solicitor's duty of confidentiality - whether content of affidavit subject to privilege in favour of solicitor's client - whether plaintiff's application for access is "instituting proceedings"
LEGISLATION CITED:	Criminal Code 1995 (Cth), s.135.4(1) Evidence Act 1995, ss.118, 132 Felons (Civil Proceedings) Act 198, s.4 Legal Profession Act 1987, s.57B Legal Profession Act 2004, s.255(1) Revised Professional Conduct and Practice Rules 1995, rule 2 Uniform Civil Procedure Act 2005, s.68 Uniform Civil Procedure Rules 2005, rules 1.8, 1.9
CASES CITED:	Cassaniti v Paragalli [2006] NSWSC 50 Hammond v Scheinberg (2001) 52 NSWLR 49 Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd [2004] NSWSC 40 Knight v FP Special Assets Ltd (1992) 174 CLR 178
PARTIES:	Sam Peter Cassaniti - Plaintiff Michelle Paragalli - First Defendant Rocco Paragalli - Second Defendant Antonio Paragalli - Third Defendant Joseph Paragalli - Fourth Defendant
FILE NUMBER(S):	SC 5011/04
COUNSEL:	Mr D.M. Loewenstein - Plaintiff Mr M.B. Oakes SC - Mr J. Andriano
SOLICITORS:	Leonard Legal - Plaintiff

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BARRETT J

MONDAY, 20 MARCH 2006

5011/04 SAM PETER CASSANITI v MICHELLE PARAGALLI & 3 ORS

JUDGMENT

1 When this matter first came before me on 16 March 2006, the court file contained a sealed envelope marked:

“Confidential affidavit of John Andriano sworn 15 March 2006, ordered to be filed on 13 March 2006. This envelope not to be opened without consent of Galluzzo Andriano, solicitors, telephone [phone] attention: John Andriano or an order of the court.”

2 The affidavit of Mr Andriano contained in the envelope came to be sworn and filed by him as a result of the following order made by Gzell J on 13 March 2006:

“Each of the fourth defendant and John Adriano file in court by no later than 4.00pm on Wednesday 15 March 2006 an affidavit setting forth when any of the said moneys were dispersed or withdrawn from the trust account of John Adriano and by whom the moneys are presently held.”

3 This order was later rectified under the slip rule by substituting “Andriano” for “Adriano”. The reference to “the said moneys” is a reference to a sum of $131,374.15 in respect of which Campbell J had previously found that there remained in force a binding agreement between the plaintiff and the defendants for its retention pending the resolution of a dispute: see Cassaniti v Paragalli [2006] NSWSC 50 (9 February 2006). When the affidavit of Mr Andriano was filed on 15 March 2006, Gzell J made, upon an ex parte application made by Mr Oakes SC on Mr Andriano’s behalf, the confidentiality order that caused it to be placed in the envelope marked in the way to which I have referred.

4 On 16 March 2006, I heard an oral application by the plaintiff for access to Mr Andriano’s affidavit. Mr Loewenstein of counsel appeared for the plaintiff. Mr Oakes SC appeared for Mr Andriano and indicated that, because of the view Mr Andriano took of his duties as a solicitor, there was no consent to the making of the order sought. Mr Andriano’s position is that he must, consistently with those duties, put before the court all considerations relevant to the making of the order sought. It is to be noted that he was previously the solicitor for the fourth defendant. It was in that capacity that he came to hold relevant moneys and to be subjected to the order of 13 March 2006. The retainer ended shortly before 13 March 2006.

5 When there emerged a possibility that moneys may have been paid out inconsistently with the agreement referred to in the declaration made by Campbell J, orders were made with a view to, first, preventing dissipation of the moneys and, second, discovering their whereabouts. On 9 March 2006, it was ordered that the fourth defendant not deal with or dispose of the sum of $131,374.15 formerly in Mr Andriano’s trust account (or property into which it had been converted). On 13 March 2006, it was ordered that Mr Andriano not distribute any of the relevant moneys from his trust account. It was also ordered that he swear and file the affidavit with which I am now concerned.

6 Mr Loewenstein’s position, on the plaintiff’s behalf, is quite straightforward. Given the agreement found by Campbell J to exist (being an agreement between the plaintiff and the defendants, including the fourth defendant), the plaintiff has an interest in the preservation of the moneys the subject of the agreement. He should therefore have access to Mr Andriano’s affidavit in order to obtain information relevant to that matter so that he may protect his position.

7 Mr Oakes, on behalf of Mr Andriano, makes, in essence, four points. I shall outline all four before discussing and dealing with them.

8 First, Mr Oakes referred to s.255(1) of the Legal Profession Act 2004 which says that a law practice must hold trust money deposited in a general trust account of the practice “exclusively for the person on whose behalf it is received” and must disburse the trust money “only in accordance with a direction given by the person”. It was, I think, accepted by the plaintiff that the relevant “person” in relation to the relevant moneys in Mr Andriano’s trust account is the fourth defendant. On this basis, it was submitted by Mr Oakes that Mr Andriano was under an obligation, because of the Act (and, one imagines, also as a matter of contract and fiduciary duty), to apply the moneys only as directed by the fourth defendant, whatever may have been the rights and wrongs of that from the perspective of any contract to which the fourth defendant was a party. That position, I note, would have changed on 13 March 2006 when the order regarding dealings with the money by Mr Andriano was made: see the penultimate sentence of paragraph [5] above.

9 Second, Mr Oakes referred to rule 2 of the Revised Professional Conduct and Practice Rules 1995 made by the Council of the Law Society of New South Wales under s.57B of the Legal Profession Act 1987 on 24 August 1995. Rule 2 is as follows:

“2.1 A practitioner must not, during, or after termination of, a retainer, disclose to any person, who is not a partner or employee of the practitioner’s firm, any information, which is confidential to a client of the practitioner, and acquired by the practitioner during the currency of the retainer, unless:

2.1.1 the client authorises disclosure;

2.1.2 the practitioner is permitted or compelled by law to disclose; or

2.1.3 the practitioner discloses information in circumstances in which the law would probably compel its disclosure, despite a client’s claim of legal professional privilege, and for the sole purpose of avoiding the probable commission or concealment of a felony.
2.2 A practitioner’s obligation to maintain the confidentiality of a client’s affairs is not limited to information which might be protected by legal professional privilege, and is a duty inherent in the fiduciary relationship between the practitioner and the client.”

10 As rule 2.2 makes clear, the obligation of confidentiality arising under rule 2.1 is, in effect, an explicit version of the obligation that has its source in the trust and confidence reposed in a solicitor by his or her client. Mr Oakes emphasised that this duty of confidentiality is distinct from the privilege which, at common law or under the Evidence Act 1995, attaches to lawyer-client communications and is a privilege belonging to the client.

11 Third, Mr Oakes referred to the Evidence Act provisions about client legal privilege, particularly s.118. Reference was also made to s.132. Mr Oakes regarded these provisions as directly applicable to the question of access to Mr Andriano’s affidavit now before me. The provisions are as follows:

“ 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 or a lawyer,
for the dominant purpose of the lawyer, or one or more of the lawyers, providing legal advice to the client.”

“ 132 Court to inform of rights to make applications and objections

If it appears to the court that a witness or a party may have grounds for making an application or objection under a provision of this Part, the court must satisfy itself (if there is a jury, in the absence of the jury) that the witness or party is aware of the effect of that provision.”

12 Fourth and finally, Mr Oakes drew my attention to s.4 of the Felons (Civil Proceedings) Act 1981:

“ 4 Leave to sue required for persons convicted of serious indictable offences

A person who is in custody as a result of having been convicted of, or found to have committed, a serious indictable offence may not institute any civil proceedings in any court except by the leave of that court granted on application.”

13 Because of this provision, it is submitted, the plaintiff, who is currently serving a term of imprisonment, is barred from bringing the current application for access to the affidavit, unless this court grants leave under the section.

14 Before proceeding to deal with the four matters raised, I record that I have now read the affidavit in question. This course was agreed to by both Mr Loewenstein and Mr Oakes as being necessary to a proper determination of the matters before me. Having read the affidavit, I have put it back into the envelope and resealed the envelope. I turn now to the four matters raised by Mr Oakes.

15 As to the first matter based on s.255(1) of the Legal Profession Act (which no doubt also reflects contractual and fiduciary duties), little really needs to be said. A contractual obligation owed by the lawyer’s client to some other person cannot, as between the lawyer and the client, qualify or deny the lawyer’s duty to deal with and disburse trust moneys as the client directs. It is, of course, otherwise if a court order directed to the lawyer intervenes. But no such order was in place here in the period between the making of Campbell J’s declaration on 9 February 2006 and the orders affecting Mr Andriano referred to in the last two sentences of paragraph [5] above.

16 In relation to the second matter – the solicitor’s duty to maintain his or her client’s confidentiality (as an incident of the solicitor’s fiduciary position and by virtue of rule 2) – it can, I think, be said that the content of any instructions a client gives to the solicitor as to retention or payment of money held in the solicitor’s trust account for the client (and also the fact of the giving of the instructions) are within the duty of confidentiality. The solicitor must therefore not divulge those instructions, or anything done in pursuance of them, without the client’s consent or compulsion of law (including an order of a court).

17 As to the third matter (client legal privilege), I am not satisfied that either s.118 or s.132 is of direct relevance to the present situation. Grant of the access Mr Loewenstein seeks on behalf of the plaintiff will not, of itself, be the adducing of evidence. It is the process of adducing evidence that is regulated by s.118. Evidence in affidavit form is adduced only when a party succeeds in putting that affidavit before the court in such a way that its content becomes part of the body of evidence to be taken into account by the court in determining some question in issue. Inspection of an affidavit by a party – even inspection with a view to deciding whether some attempt should later be made by the party to introduce the content into evidence – does not itself amount to the adducing of evidence.

18 I am nevertheless of the opinion that the court should, on the present application be astute to recognise and to concern itself generally with the safeguarding of any privilege with respect to the content of Mr Andriano’s affidavit that is of such a nature that it would be protected by s.118 if there were an attempt to adduce as evidence the content of that affidavit. Section 68 of the Uniform Civil Procedure Act 2005 and rules 1.8 and 1.9 of the Uniform Civil Procedure Rules 2005 point in that direction – as, of course, do common law rules as to privilege. Affidavit content that would be protected by s.118 is, in terms of the Uniform Civil Procedure Rules, “privileged information” as defined in the dictionary at the end of the rules, with the result that the affidavit is a “privileged document” as so defined. Those definitions import the Evidence Act tests. It is true that rule 1.9 contemplates that a claim based on “privileged information” or “privileged document” will be made at the point at which production of a document is required, as distinct from the time at which an application for access to a document already produced is under consideration. But even if no written rules apply, considerations based on common law rules about legal professional privilege, as distinct from any statutory provisions or rules of court, would cause the court to be astute in the way I have mentioned.

19 In relation to the Felons (Civil Proceedings) Act matter, I refer to certain things I have been told from the bar table. The plaintiff is, as I have said, currently serving a term of imprisonment. I was informed that he was convicted after trial upon several counts of “defrauding the Commonwealth” (this may or may not refer to the conspiracy offence created by s.135.4(1) of the Criminal Code 1995 (Cth)). The precise offence, the statutory provision contravened and the sentence or sentences to which the plaintiff was subjected were not the subject of evidence before me. It was nevertheless submitted that s.4 applies because of conviction of “a serious indictable offence”.

20 The expression “serious indictable offence” is not defined by the Felons (Civil Proceedings) Act. It takes its meaning from s.21 of the Interpretation Act 1987:

“ ’serious indictable offence’ means an indictable offence that is punishable by imprisonment for life or for a term of 5 years or more.”

The same section defines “indictable offence”:

“’ indictable offence’ means an offence for which proceedings may be taken on indictment, whether or not proceedings for the offence may also be taken otherwise than on indictment.”

21 In the absence of evidence about the plaintiff’s conviction, I cannot conclude that he was convicted of an “indictable offence”. Nor, therefore, can I conclude that he was convicted of a “serious indictable offence”. That being so, I cannot hold that s.4 of the Felons (Civil Proceedings) Act 1981 has any bearing on the present application.

22 Let it be assumed, however, that the plaintiff’s conviction was a conviction of a “serious indictable offence” (thereby passing over the question whether the Interpretation Act definitions comprehend offences against Commonwealth statute law). That leads to the question whether the plaintiff, in making the present application for access to the affidavit, is doing something caught by the expression “institute any civil proceedings”. The point has been made that Mr Andriano, by whom the affidavit was filed in conformity with the court’s order, is not a party to these proceedings. Nor is he named as a respondent to any notice of motion filed in the proceedings, although he has, by counsel, appeared and been heard upon the plaintiff’s oral application for access.

23 There was reference, in the course of submissions, to the commonplace situation where, in proceedings between A and B, an order of a Mareva kind is made against a bank or financial institution to preserve moneys in an account pending trial. The position of such an organisation is referred to as follows at page 99 of P. Biscoe, “Mareva and Anton Piller Orders” (2005):

“In Australia it now seems to be established that a freezing order may be made against a third party without joining it as a defendant. This was the procedure followed in the leading third party case of Cardile v LED Builders Pty Ltd (1999) 198 CLR 380. There freezing orders were made against not innocent third parties, but they were not made against defendants to the substantive proceedings. Instead they were made respondents to an interlocutory application and the orders were made against them on that application. An analogy may be drawn with a respondent to a third party subpoena.”

24 In the present case, as I have said, Mr Andriano is not a party in either of the senses thus referred to. That, it is said, means that the oral application marks a new departure and represents the first occasion on which he has been made the subject of a claim for relief – with the result that the application entails the institution of proceedings against him. But status as a party is not an essential pre-requisite to the power of a court to make an order binding on a person. This is borne out by the cases about costs orders against non-parties: see, for example, Knight v FP Special Assets Ltd (1992) 174 CLR 178.

25 Whatever the position regarding the party status of Mr Andriano may be, I am not satisfied that the present application by the plaintiff for access to his affidavit involves, in concept, any application against him that might warrant a finding that there is the institution of some new proceeding. The affidavit was sworn and filed by Mr Andriano because the court so ordered. It is now part of the court file. The plaintiff’s application for access is thus an application to inspect a document forming part of the court file. It is, in nature, quite different from an application by a non-party for such access: see, for example, Hammond v Scheinberg (2001) 52 NSWLR 49; Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd [2004] NSWSC 40. The plaintiff is a party and is seeking access to a document which the court has seen fit to require be created and filed for the purposes of proper determination of the controversy before it. Mr Andriano, as the deponent of the affidavit, may have an interest in the question of access but the application is not an application for any order directed to or binding on him. It is no more than an application made in the course of the existing proceedings and does not involve the instituting of any proceedings.

26 I pass now to the merits of the matter. As I have said, I have read the affidavit. Having done so, I am of the opinion that it contains information within the solicitor’s duty of confidentiality (being the duty referred to in rule 2 of the Revised Professional Conduct and Practice Rules) and that that information relates to what s.118 of the Evidence Act describes as “a confidential communication made between the client and a lawyer”. But the purpose for which the confidential communication was made was not, in the words of s.118, “the dominant purpose of the lawyer … providing legal advice to the client”. The sole purpose of the communication was to let the lawyer know the client’s wishes and instructions in relation to moneys in the lawyer’s trust account. On that basis, I am satisfied that such indirect application as s.118 may have via the definitions of “privileged document” and “privileged information” in the Uniform Civil Procedure Rules does not operate to preclude the grant of access the plaintiff seeks; nor do common law rules as to legal professional privilege. It follows that neither a duty of the court of the kind referred to in s.132 of the Evidence Act nor any analogous common law requirement or expectation arises.

27 The plaintiff has a clear interest in the content of the affidavit as, indeed, do all the parties to the proceedings. Having regard to the obvious purpose of the order requiring filing of the affidavit, I am satisfied that the interests of justice warrant grant of the access the plaintiff seeks. No privilege of the kind that arises under s.118 of the Evidence Act or analogous common law rules will be compromised by such access. And the fact that access will be compelled by order of the court means that Mr Andriano’s professional duty to maintain client confidentiality will not be breached.

28 I order that the plaintiff may have access to and inspect the affidavit of John Andriano sworn on 15 March 2006 and held in a sealed envelope in the court file in these proceedings.

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