Curtain and Curtain
[2018] FamCA 769
•27 September 2018
FAMILY COURT OF AUSTRALIA
| CURTAIN & CURTAIN | [2018] FamCA 769 |
| FAMILY LAW – PRACTICE AND PROCEDURE – Subpoenas – Legal professional privilege – Whether privilege attaches to file of solicitor in proceedings before another court – Dominant purpose – Whether there has been waiver of any privilege that may attach to the file by the disclosure of a letter containing a settlement offer. |
| AWB Limited v Honourable Terence Rhoderic Hudson Cole (No 5) [2006] FCA 1234 Commissioner of Taxation v Rio Tinto Limited [2006] FCAFC 86 Grant v Downs (1976) 135 CLR 674 Mann v Carnell (1999) 201 CLR 1 Stamp & Stamp [2007] FamCA 420 Trade Practices Commission v Arnotts Ltd (No 2) [1989] FCA 248 |
| APPLICANT: | Ms Curtain |
| RESPONDENT: | Mr Curtain |
| FILE NUMBER: | ADC | 4409 | of | 2013 |
| DATE DELIVERED: | 27 September 2018 |
| PLACE DELIVERED: | Adelaide |
| PLACE HEARD: | Adelaide |
| JUDGMENT OF: | Berman J |
| HEARING DATE: | 13 September 2018 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms Pyke QC |
| SOLICITOR FOR THE APPLICANT: | Jordan & Fowler Barristers & Solicitors |
| COUNSEL FOR THE RESPONDENT: | Mr McQuade |
| SOLICITOR FOR THE RESPONDENT: | Piper Alderman |
Orders
That the respondent’s objection to the inspection of documents produced by Mr KK pursuant to the subpoena issued 9 May 2018 is dismissed.
That leave is given to the applicant to inspect all file notes, correspondence and other documents produced by Mr KK in respect of the said subpoena.
That the applicant be restrained and an injunction granted restraining her, or her agents from communicating the contents of or providing copies of any documents produced by Mr KK pursuant to the subpoena to any other person including the duly authorised officers or agents of W Pty Ltd or Q Trust SAVE AND EXCEPT her legal advisors from time to time.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Curtain & Curtain has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT ADELAIDE |
FILE NUMBER: ADC 4409 of 2013
| Ms Curtain |
Applicant
And
| Mr Curtain |
Respondent
REASONS FOR JUDGMENT
INTRODUCTION
On 26 July 2016 judgment was delivered and orders were made by way of property settlement and the alteration of the interests of Ms Curtain (“the applicant”) and Mr Curtain (“the respondent”).
By Initiating Application filed 29 November 2017 the applicant seeks that pursuant to s 79A(1)(a) of the Family Law Act 1975 (Cth) (“the Act”) the orders for property settlement be set aside.
As part of the proceedings the applicant caused a subpoena to issue on 9 May 2018 directed to Mr KK seeking that he produce the following documents:-
·[Y]our file(s) or other documents relating to [the respondent] and [E] Pty Ltd re [W] Pty Ltd.
The respondent filed a Notice of Objection on 31 May 2018 and listed the grounds of objection as follows:-
1. Evidence of collusion between [Mr LL] and [the applicant] whereby he states in a email dated 1 September 2017 that “[Ms MM] and I have agreed that the first order of business is to help [the applicant] get her farm back.”
2. [Mr KK’s] files relate to a legal dispute with [W] Pty Ltd and the company directors following the final Berman court judgment and completion of the [J Town] Extension on 28th October 2016.
3.The claim to access the entire file is too board (sic) on dates, with no details to any specific files that the party is seeking.
4. Documents within the file are subject to Legal Privilege between [E] Pty Ltd, [the respondent] and [W] Pty Ltd.
5.Documents within the file are subject to Legal Privilege between [E] Pty Ltd, [the respondent] and other parties.
6.Background documents prior to the engagement with [W] Pty Ltd are commercially sensitive.
7.Documents within the file post family court final orders on 25th July 2018 are commercially sensitive.
8.Files on corporate and litigation strategy are commercially sensitive.
9.Notes within the file are personnel (sic) notes of [Mr KK].
Mr KK is the respondent’s solicitor engaged to conduct litigation between E and W Pty Ltd (“WPL”). The solicitor’s file has been produced and the objection seeks to oppose the applicant inspecting the solicitor’s file.
The respondent’s counsel argues that inspection should not occur because the documents are irrelevant to the current proceedings and in any event are the subject of legal professional privilege.
BACKGROUND
In preparation for the final hearing, the applicant had sought to establish the nature and extent of the relationship between the respondent (or E) and WPL as trustee of Q Trust.
The following appears in the applicant’s Trial Affidavit filed 15 February 2016:-
[Q] Trust
80.I believe that this trust is effectively controlled by [Mr LL] a businessman interested in [investment] projects.
81.The trustee is [WPL] of which [the respondent] is a director but not a shareholder.
82.I am unable to say what if any interest, entitlement, or expectation [the respondent] has in the trust.
The respondent sought to clarify his involvement with Q Trust at [51] of his Trial Affidavit filed 30 March 2016:-
In 2014 I became a director of [W Pty Ltd]. I received no remuneration as a director but all my travel costs are reimbursed. I do not own any shares in the company. I also provide consultancy work for the company from time to time, as a South Australian representative. This work is undertaken on an ‘as needs basis’, with payment of $70 per hour and a motor vehicle costs allowance of $346.15 per week for travel costs incurred (i.e. for travel to construction sites and meetings).
The respondent disclosed income from WPL but not any valuable interest in Q Trust.
The respondent’s Financial Statement filed 1 April 2016 and the respondent’s List of Assets and Liabilities did not disclose any interest in WPL or Q Trust.
The applicant received advice that the respondent may well be seeking legal remedy against the trust and made contact with Mr LL, the CEO of WPL, who forwarded correspondence to the applicant setting out the basis of the respondent’s employment in the following terms:-
For this, he was requesting a salary of $200K p.a., plus car allowance and all expenses, and after securing the grants and completing the project we would assign to him a 20% shareholding in [Q Trust].
In particular, a copy of a letter that was sent by Mr NN on behalf of Q Trust to the respondent on 18 February 2013 confirms the employment arrangements in the following terms:-
Good morning [Mr Curtain],
This letter is to confirm the intention upon your employment with [WPL] to issue you or your nominee with 20% equity in the [Q Trust] by way of an issue of Units in the Trust. At the time of your commencement of employment, these Units will issue as well as your election to the board of the company.
Further it is the intention of [WPL] to issue you with a 20% carrying equity in any future … entity subject to your performance as set out in your employment contract.
The applicant contends that the letter of offer was not disclosed to the applicant and if it had been, she contends she would have explored whether the offer of equity in Q Trust and “a 20% carrying equity” in future developments represented a valuable interest held by the respondent.
The respondent filed his Affidavit on 13 February 2018 which confirms that he had a contractual relationship with WPL and Q Trust. Specifically, the following paragraphs would appear to represent the respondent’s position at the time of the preparation of his financial statement and the final hearing:-
36.1/4/2016 [the respondent’s] Affidavit and Financial Statement – filed with the Family Court. Page 8 listed [WPL] – director and nil shareholder.
37.1/4/2016 I confirm that I had no share in [W Pty Ltd] at the time of the signing financial statement. [WPL] had loans and debts to other related companies within the [WPL] Group and [OO] Super Fund. The company [WPL] had no equity due to internal company borrowings, and the company was seeking a sub division approval to separate the Common User Export Facility, from [OO] Super Fund. The construction of the [J Town] … extension was underway, however not completed for a further 7 months until 28th October 2016. The company was seeking a joint venture partners to develop the next stage of the land side bulk storage infrastructure and investment into the transhipping vessel. All approaches to various investment companies were unsuccessful to date. …
In his Affidavit filed 3 August 2018 the respondent contends at [40]:-
I was open in my communication to my ex wife in the offer of a share in the establishment of transhipping operations. My ex wife dismissed the development and establishment of the transhipping operation as never being realised, even though my ex wife knew I was project managing the construction and building the extension and upgrade to the [J Town] from 21 October 2014 to 28 October 2016.
STATUS OF THE DISPUTE BETWEEN E, THE RESPONDENT AND WPL
The respondent provided to the applicant’s solicitors correspondence between solicitors acting for WPL and his solicitor Mr KK dated 27 July 2017. That letter forms Exhibit “2” in the proceedings. It appears that whilst WPL disputed the respondent’s entitlement to a 20 percent interest in the company (or trust), they were prepared to settle the dispute on the following terms:-
Our client’s offer
The last offer made to your client in an attempt to resolve the disputes and issues between them was as follows:
1.Our clients make a payment to your client of the sum of 1.3 million.
2.Payment of the settlement sum occur as follows:
2.1$50,000 within two business days of execution of the Deed;
2.2$100,000 by 17 July 2017; and
2.3$1,150,000 when the joint project settles (likely to be between 17 August and 30 September 2017).
The respondent apparently rejected the offer.
The Offer of Settlement dated 27 July 2017 and other relevant documents in respect of the dispute with WPL were provided to the applicant’s solicitors in the respondent’s letter to them dated 27 March 2018.That letter forms Exhibit “1” in the proceedings. He denies that the applicant has a claim under s 79A(1)(a) of the Act on the basis that at the time he prepared his financial statement he held a genuine belief that Q Trust was in debt and as such no value could attach to the terms of the contract with WPL. He subsequently discovered that as at 30 June 2016 the company had equity of $2,122,644.14.
RELEVANCE OF DOCUMENTS
The test for relevance was stated by the Federal Court in Trade Practices Commission v Arnotts Ltd (No 2) [1989] FCA 248:-
[44]Without restricting this inquiry, it is convenient to address the present application in the first instance by reference to two questions:
(1) Does the material sought have an apparent relevance to the issues in the principal proceedings, i.e., is adjectival, as distinct from substantive, relevance established? Does the subpoena have a legitimate forensic purpose to this extent? This involves a consideration of the matter from the standpoint of Arnotts.
(2)Is the subpoena seriously and unfairly burdensome or prejudicial? This is to look at the matter from the point of view of Mattingly.
…
[46]The test of adjectival relevance is satisfied if the material has apparent relevance. In my opinion, the documentation called for here could possibly throw light on the issues in the main case. In my opinion, adjectival relevance is established. …
I do not consider that the applicant has embarked upon a frivolous exercise in the hope that the solicitors file may provide a basis to support her application to set aside the final orders.
The applicant has identified the correspondence that she contends should have been disclosed prior to the final hearing. Moreover, it appears that the correspondence provided by the respondent to the applicant’s solicitors provide some basis for the applicant’s contention that the respondent seeks damages for a breach of his employment contract and terms of engagement with WPL and Q Trust.
This would appear to overcome any argument about “fishing”. The documents contained in the solicitor’s file are the subject of a proper “target” by the applicant.
I find that there is apparent relevance.
LEGAL PROFESSIONAL PRIVILEGE
The consideration of the respondent’s objection to the application to inspect documents is not in the context of any application to adduce evidence. Accordingly, common law rules apply. See Mann v Carnell (1999) 201 CLR 1.
The onus rests with the party seeking to rely upon privilege to establish its existence.
The proper approach is to consider whether the document was created for the “dominant purpose” of obtaining legal advice. If that test is satisfied then the document attracts privilege.
In Grant v Downs (1976) 135 CLR 674 at 677 Barwick CJ considered relevant principle to the “dominant purpose” test as follows:-
…a document which was produced or brought into existence either with the dominant purpose of its author, or of the person or authority under whose direction, whether particular or general, it was produced or brought into existence, of using it or its contents in order to obtain legal advice or to conduct or aid the conduct of litigation, at the time of its production in reasonable prospect, should be privileged and excluded from inspection.
In AWB Limited v Honourable Terence Rhoderic Hudson Cole (No 5) [2006] FCA 1234 Young J observed at [44]:-
… The onus might be discharged by evidence as to the circumstances and context in which the communications occurred or the documents were brought into existence, or by evidence as to the purposes of the person who made the communication, or authored the document, or procured its creation. It might also be discharged by reference to the nature of documents, supported by argument or submissions. …
Accordingly, I must apply an objective test to determine whether the documents were brought into existence for the dominant purpose of litigation or legal advice.
It is submitted that the respondent on his own behalf, or as director of E, engaged the legal services of Mr KK “for the dominant purpose of obtaining legal advice in respect of potential litigation against [WPL].”
A consideration of the respondent’s affidavits and by reference to Exhibits “1” and “2” would support, at least in part, the respondent’s contention that the documents comprising Mr KK’s file relate to the provision of legal advice and/or potential litigation in respect of a dispute with WPL.
The respondent’s solicitor has not filed an objection. It is the respondent that objects to the documents being inspected on the basis of relevance and privilege.
The respondent’s counsel argues that once the spectre of privilege is raised and it is asserted that the engagement of solicitors is for the dominant purpose of legal advice or litigation, then all of the documents are covered by the claim of privilege. I reject that contention.
The respondent has the onus of establishing that each document as may comprise the solicitor’s file has as its dominant purpose legal advice. The respondent has failed to prepare a list of the documents comprised in the solicitor’s file to provide sufficient detail to enable the applicant, and if necessary the Court, to consider whether a claim of privilege can be maintained in respect of each document described. It is not required that the content of the document be disclosed which would render the claim of privilege nugatory, but is sufficient detail as necessary to establish the nature of the document. The onus rests more heavily on the respondent in circumstances where he maintains the claim of privilege as opposed to his solicitor.
As matters presently stand, no information or description in respect of the purpose of each of the documents to which a claim of privilege is maintained have been provided.
It is the respondent’s position however that a list of documents will be prepared within a short period of time. The concern is that this has not been done to date.
WAIVER
The High Court considered the issue of waiver of privilege at common law in Mann v Carnell in the following statement:-
[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.... 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.
In Commissioner of Taxation v Rio Tinto Limited [2006] FCAFC 86 the Full Court of the Federal Court of Australia considered the authorities and summarised the position as follows:-
[52]These authorities show that, where issue or implied waiver is made out, the privilege holder has expressly or impliedly made an assertion about the contents of an otherwise privileged communication for the purpose of mounting a case or substantiating a defence. Where the privilege holder has put the contents of the otherwise privileged communication in issue, such an act can be regarded as inconsistent with the confidentiality that would otherwise pertain to the communication.
The question of waiver is to be determined by a consideration of whether the privilege holder’s conduct is inconsistent with the maintenance of the confidentiality of the communication.
In Stamp & Stamp [2007] FamCA 420 the wife sought to set aside orders under s 79A(1)(a) of the Act on the basis of the state of her mental health at the time that the orders were made.
The trial Judge rejected that there had been a waiver of privilege. Finn J agreed and said:-
[13]I agree with her Honour’s analysis that the only issue which the wife had placed in issue to that time, and then only by means of the letter from her solicitors dated 16 December 2004, was “the status of her health at the time she entered into the consent orders as affecting her capacity to provide proper instructions”.
…
[17]It may well be that once affidavits are filed (bearing in mind that there are no pleadings in this court), different issues may emerge which might justify a further application and indeed an order for inspection.
May and Boland JJ disagreed with Finn J and said:-
[60]The wife has raised the issue about her capacity to provide proper instructions. That issue is inconsistent with the maintenance of her usual right to procedural legal privilege. She must be taken to have waived her right to that privilege. Accordingly we are satisfied that there was an error of principle and leave should be granted.
The respondent has stated that at the time of the preparation of his financial statement and his list of assets and liabilities in preparation for the trial, he did not disclose any interest in Q Trust because he believed that there was no equity or value in the trust and it was only following the production of the financial statements for 2016 that he acknowledged Q Trust held substantial equity.
Moreover, the correspondence comprising Exhibits “1” and “2” provide details of the offer made by WPL to settle the respondent’s claim and then the rejection of the offer in his letter to the applicant’s solicitors of 27 March 2018.
In consideration of the above matters I find that privilege does not attach to the documents produced by Mr KK pursuant to the subpoena issued.
A concern has been raised by the respondent that if documents are able to be inspected by the applicant, there is a risk that their contents will be conveyed to Mr LL in his capacity as the CEO of WPL.
The respondent’s apprehension arises by his belief that Mr LL was in contact with the applicant as evidenced by his letter to her of 7 August 2017 being Annexure “A” to her Affidavit filed 29 November 2017. The following extract identifies the respondent’s concerns:-
After a meeting in Brisbane between [Mr NN], [Ms MM], [the respondent] and myself, he admitted guilt, but only after we showed compelling evidence. His engagement with us finally terminated in November 2016. We are still trying to find out the quantum of theft.
Only when we started to realise the depth and consistent pattern of his fraud and deception did we discover that you may also have been a victim of this behaviour. Perhaps his remuneration package including future shareholding had been well understated for his Family Court evidence?
The purpose of this letter is to firstly apologise to you for withholding information about the proposed shareholding, as we try not to get involved in family disputes. We are truly sorry about this after hearing the outcome of your case, now that we are in full knowledge of your ex-husband’s dishonesty and lack of integrity.
Secondly, we are agreeable to stand witness in any court to verify the above facts and hope this assists in getting some justice for you and your children.
It would be untenable were the documents contained in the respondent’s solicitor’s file to be provided to WPL.
I propose to put in place an injunction that would restrain the applicant, her servants or her agents from communicating copies of any of the subpoenaed documents or the content of same to WPL, its duly authorised officers or agents.
I make orders as appear at the commencement of these reasons.
I certify that the preceding fifty-one (51) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Berman delivered on 27 September 2018.
Associate:
Date: 27 September 2018
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