d'Apice v Gutkovich

[2010] NSWSC 1336

CITATION:	d’Apice v Gutkovich - Estate of Abraham (No. 1) [2010] NSWSC 1336
HEARING DATE(S):	25, 26, 27 & 28 October 2010
JUDGMENT DATE :	27 October 2010
JURISDICTION:	Equity
JUDGMENT OF:	White J
EX TEMPORE JUDGMENT DATE:	27 October 2010
DECISION:	Claim for privilege upheld.
CATCHWORDS:	PROCEDURE – privilege – where proceedings concern testamentary capacity of deceased – where documents sought under subpoena addressed to deceased’s lawyer who is also lawyer for plaintiff seeking probate – where documents prima facie privileged under Evidence Act 1995, s 119 or common law – application of Uniform Civil Procedure Rules, r 1.9 and Evidence Act to inspection of documents – whether Evidence Act, s 121 precludes privilege claim – whether deceased is “a client” for s 121 – whether privilege waived under Evidence Act, ss 122 or 126
LEGISLATION CITED:	Evidence Act 1995 (NSW) Civil Procedure Act 2005 (NSW)
CATEGORY:	Procedural and other rulings
CASES CITED:	Carbotech-Australia Pty Ltd v Yates [2008] NSWSC 1151 Waugh Asset Management Pty Ltd v Merrill Lynch [2010] NSWSC 197 Chen v City Convenience Leasing Pty Ltd [2005] NSWCA 297 New Cap Reinsurance (in liq) v Renaissance Reinsurance Ltd [2007] NSWSC 258 ML Ubase Holdings Co Ltd v Trigem Computer Inc [2007] NSWSC 859; (2007) 69 NSWLR 577
TEXTS CITED:	Australian Law Reform Commission, Evidence, Report No. 26 (Interim) (1985) Australian Law Reform Commission, Evidence, Report No. 38 (Final)
PARTIES:	Plaintiff: William Reginald d’Apice Defendant: Galina Gutkovich
FILE NUMBER(S):	SC 2009/300599
COUNSEL:	Plaintiff: P Blackburn-Hart SC with D C Price Defendant: T J Morahan
SOLICITORS:	Plaintiff: Makinson & d'Apice Lawyers Defendant: Bryden's Law Office

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

WHITE J

Wednesday, 27 October 2010

2009/300599 William Reginald d’Apice v Galina Gutkovich
Estate of Irene Rachel Abraham (No. 1)

JUDGMENT

1 HIS HONOUR: A claim for privilege is made by the plaintiff, Mr William d'Apice, and arises in response to a subpoena for the production of documents addressed to his partner, Mr Richard d'Apice. The subpoena calls for production of all documents referring to communications between any person from Makinson & d'Apice Lawyers and Dr Mark Wallace in relation to the retainer of Dr Wallace as an expert in these proceedings, and in relation to obtaining an opinion and a sworn affidavit from Dr Wallace.

2 The proceedings concern claims for the grant of probate in respect of a number of instruments said to be testamentary instruments signed by the deceased between September 2003 and December 2004. Questions are raised as to testamentary capacity of the deceased at the time she signed each of the instruments.

3 From at least 2004 the deceased was a client of the firm, Makinson & d'Apice Lawyers. Mr Richard d'Apice acted as her solicitor. Dr Wallace attended the deceased on at least three occasions in 2004, namely on 16 June, 7 July and 17 November 2004, and provided written reports on 17 and 30 June 2004 and 22 December 2004. The former two reports concerned the deceased's capacity to manage her affairs and were prepared in conjunction with proceedings then pending in the Guardianship Tribunal. Dr Wallace's report of 22 December 2004 directly addressed the question of the deceased's testamentary capacity. The plaintiff is named as the executor in the last putative will of 3 December 2004. He seeks probate of that document. There are alternative claims which are unnecessary presently to consider.

4 In these proceedings the plaintiff has served and read two affidavits of Dr Wallace of 4 February and 11 November 2009. In his affidavit of 4 February 2009 Dr Wallace describes the deceased's consultation with him on a number of occasions and his assessments of her. In his second affidavit he produces two of the earlier reports and provides a supplementary report responding to further material provided to him.

5 Mr Richard d'Apice is required to produce documents between himself or any other person in his firm and Dr Wallace which have been brought into existence in relation to the retainer of Dr Wallace to give evidence in these proceedings. On the face of it, the subpoena is apt to call for documents in respect of which privilege, if otherwise available, might be claimed under s 119 of the Evidence Act 1995 (NSW) or would be privileged at common law as being documents brought into existence for the purpose of preparing for existing or contemplated proceedings.

6 The documents for which privilege is claimed under s 119 broadly can be described as follows. First, they include a letter of instruction dated 21 October 2008. During the course of argument the claim for privilege was not maintained in relation to the bulk of that document, but only to a paragraph which referred to the attachment of a draft affidavit and to the draft affidavit in question. The documents also include records of discussions between the plaintiff's solicitors and Dr Wallace for the purpose of his preparing affidavits to be sworn by him. Those records include records of questions asked by the solicitors and statements recorded by the solicitors of what Dr Wallace said to them in relation to his treatment and assessment of the deceased.

7 The documents include draft affidavits and a further draft of letter of instruction of November 2009. They include what I infer to be a draft of a report provided by Dr Wallace, the final version of which is annexure C to his affidavit of 11 November 2009. They include emails between the plaintiff’s solicitors and counsel, and diary notes of discussions with counsel.

8 I am satisfied both at common law and under s 119 of the Evidence Act that the documents when they were brought into existence were privileged. That is subject to the argument that privilege is not available under the Act by reason of s 121(1).

9 In Carbotech-Australia Pty Ltd v Yates [2008] NSWSC 1151, Brereton J held that where there is an objection to the production of documents on subpoena (the first stage of the process of complying with a subpoena), then pursuant to rule 1.9(3) of the Uniform Civil Procedures Rules and the definitions of "privileged document" and "privileged document" in the dictionary to the Rules, the question of whether privilege is available as an answer to production of documents is to be answered by reference to the Evidence Act (at [8]-[10]).

10 However, his Honour held that rule 1.9 does not apply to the second stage where documents are called for production on subpoena, namely whether access to documents produced to the Court should be provided to the parties for inspection. The Evidence Act does not apply to pre-trial procedures analogically and as neither the Civil Procedure Act 2005 (NSW) nor the Rules expressly apply to the second stage, his Honour found that at the stage of inspection the question of whether privilege attaches to the documents and whether such privilege has been waived was to be decided according to common law. His Honour's decision was followed by McDougall J in Waugh Asset Management Pty Ltd v Merrill Lynch [2010] NSWSC 197, where his Honour also held (at [11]) that s 131A (introduced after Carbotech-Australia Pty Ltd v Yates applies only “at the stage of production” of a document to the court, and not to the second stage. I would not depart from these decisions unless I were satisfied that they were clearly wrong. I do not consider them to be clearly wrong.

11 It follows that the following issues arise. First, at the stage of production, the question is whether by reason of s 121(1) the plaintiff cannot claim privilege under s 119 of the Act. Secondly, there is a question as to whether privilege has been waived pursuant to ss 122 or 126 of the Act. If either by reason of s 121(1) or by reason of waiver the plaintiff cannot maintain privilege against production, the question would be whether the plaintiff is entitled to object to inspection of the documents on the ground that he is entitled to litigation privilege at common law and that that privilege is not waived at common law.

12 Both at the stages of resisting production and at the stage of the resisting inspection the Court is entitled to inspect the document for which privilege is claimed and I have done that.

13 Section 121(1) provides as follows:

“ 121 Loss of client legal privilege: generally

(1) This Division does not prevent the adducing of evidence relevant to a question concerning the intentions, or competence in law, of a client or party who has died. ”

14 The words "who has died" qualify both "a client" and "party". The present case concerns the competence in law of the deceased as it concerns her testamentary capacity. The deceased was the client of Mr Richard d'Apice to whom the subpoena is addressed. Hence, counsel for the defendant submits that the deceased is "a client ...who has died" with the result that the plaintiff cannot claim a privilege which is otherwise available to him. It is clear that the deceased is not a party who has died. The question is whether she is "a client" within the meaning of s 121(1).

15 The structure of Division 1 of Part 3.10 of the Act is that under ss 118 and 119, a client can object to the adducing of evidence on the grounds of what may be called legal advice privilege or litigation privilege. Under s 120 a self-represented party can object to the adducing of evidence on the ground of what may be called litigation privilege.

16 In the present case the claim for privilege is not made by the deceased but by the plaintiff who is personally entitled to the privilege in question. This is not a case in which the plaintiff is asserting a privilege as a successor to the deceased, being a privilege which the deceased could have maintained. In my view, the reference to "client or party who has died" in s 121(1) when read in the context of Division 1 is a reference to a client or party who, before death, would have been entitled to object to the adducing of evidence on the grounds of a privilege arising under Division 1.

17 In my view, s 121 does not abrogate a claim for privilege that an executor or putative executor has in his or her own right where the privileged documents or communications are relevant to the intentions or competence of the deceased. That is because the deceased was not the client or the party entitled to that privilege. I think this is consistent with the Australian Law Reform Commission Report on the Evidence Act. In the Australian Law Reform Commission, Evidence, Report No. 26 (Interim) (1985), the Law Reform Commission said of the section which became s 121(1) (at [884]):

" In addition, the privilege will not apply to communications relevant to an issue between parties claiming through the same deceased client - for example, setting aside or resisting a grant of probate on grounds of testamentary incapacity or undue influence ".

18 In the Australian Law Reform Commission, Evidence, Report No. 38 (Final), the Commission said (at [196]):

" Evidence relevant to intention or competence . The interim proposal [viz the interim report] lifted the protection of the privilege in respect of evidence of the intentions or competence of a client or party who has died. This loss of protection would only operate where an issue arises of, for example, testamentary capacity or the intentions of the deceased in a testator's family maintenance case. It does not override rules of substantive law, such as those relating to the construction of the wills and other instruments ".

19 This is all that the Commission has said about the section. If the defendant's submissions were correct, it would seem to follow that in a probate suit concerning testamentary capacity, litigation privilege would not be available either to the persons propounding a will or the persons resisting the grant of probate. Under s 121(1), privilege would not be available in respect of documents brought into existence for the dominant purpose of the client being provided with professional legal services if the documents contain evidence relevant to the question concerning the deceased's competence, but only if the deceased had at some point retained a lawyer so as to fall within the definition of "client" in s 117. In contrast, if the suit concerned the testamentary capacity of a testator who had not retained a lawyer, the usual rules as to the availability of privilege would apply.

20 There seems to me to be no rational basis for such a distinction. On the other hand, it is clear some abrogation of privilege is intended by s 121 (1) and it is not sufficient to focus, as the plaintiff was minded to do, on the far reaching consequences to which the provision might give rise on the defendant’s construction of the provision. It seems to me that the rational construction of the provision and one which fits its context is that it abrogates a claim for privilege which the deceased person as a client or party could have maintained but for his or her death if the privileged documents or communications are relevant to the deceased's intentions or competence.

21 The documents in question are not documents for which the deceased could have claimed privilege. In my view, s 121(1) does not preclude the plaintiff’s claim for privilege.

22 The question is then whether privilege has been waived under s 122(1) or s 126 of the Act. Some parts of the privileged material contain information provided by the plaintiff’s solicitors to Dr Wallace as to the factual background of the dispute and as to Dr Wallace's involvement in providing his opinions in 2004. Some parts record information provided by Dr Wallace to the plaintiff’s solicitors with respect to his actions in 2004 and 2005.

23 Section 122(1) provides that Division 1 of Part 3.10 does not prevent the adducing of evidence given with the consent of the client or party concerned. It was firmly established that consent under paragraph (1) includes a consent that will be imputed to a party on the same principles where at common law a party will be taken to have waived privilege even though he or she did not intend to do so (Chen v City Convenience Leasing Pty Ltd [2005] NSWCA 297 at [29]-[33]).

24 I considered such questions in New Cap Reinsurance (in liq) v Renaissance Reinsurance Ltd [2007] NSWSC 258. I said there that it is not enough to establish imputed waiver under s 122(1) that it may be seen that privileged materials have been used in a way that could be said to influence the content of an expert's report, but rather the question is whether it could be said that such materials influenced the content of the report in such a way that the use or service of the report would be inconsistent with maintaining privilege in the materials so it would be unfair for the parties to rely on the report without disclosure of the materials. I observed that it is proper for the parties' lawyers to influence the content of an expert's report by seeking to have the report produced in a form in which it will be admissible and by providing the expert with assumptions or documents that may well influence the content of the report.

25 I have considered the materials for which privilege is claimed. Undoubtedly, some of the materials can be said to have influenced the content of Dr Wallace's affidavits in that they include a draft of affidavits prepared for his consideration. But I do not consider that the materials could be said to influence the content of Dr Wallace's affidavits or the reports prepared for the purposes of this litigation in a way that would make it unfair for the plaintiff to rely upon his affidavits and reports whilst maintaining the confidentiality of the privileged material. I do not consider that the reading of his affidavits is inconsistent with maintenance of the privilege.

26 In ML Ubase Holdings Co Ltd v Trigem Computer Inc [2007] NSWSC 859; (2007) 69 NSWLR 577, Brereton J considered a similar question by reference to s 126. His Honour said (at [45]):

" [45] ... In my opinion, service and tender of an expert witness’ report in proceedings does not constitute a waiver of the privilege which attaches to communications between the expert and the solicitors who instructed him or her, save to the extent that those communications are associated documents reasonably necessary to an understanding of the report. ‘Proper understanding’ of a document or communication will sometimes, but not always require that documents to which it responds or refers be available. It may very likely be so when the primary document contains a summary or excerpt from an earlier communication, or responds to questions which are not themselves restated in it. But I do not accept that ‘a proper understanding of the communication or document’ involves an appreciation of the manner in which the opinions contained in the document have been formed over time, or the iterations and evolutions through which they have passed. The test is concerned with the comprehensibility of the primary communication or document: if it can be completely or thoroughly understood without more, then access to the related communications or documents is not reasonably necessary. "

27 The privileged communications presently in question are not reasonably necessary for a proper understanding of Dr Wallace's affidavits and reports. I therefore conclude that privilege has not been waived under s 122 or s 126, and I would uphold the objection to production of the documents.

28 If I am wrong in relation to s 121(1), nonetheless for the same reasons I have given in relation to s 122(1) of the Evidence Act, there would be no waiver of the privilege at common law. Consistently with Carbotech-Australia Pty Ltd v Yates and Waugh Asset Management Pty Ltd v Merrill Lynch, the plaintiff would be entitled to resist inspection of documents produced to the Court on the basis of his common law litigation privilege.

29 I think I should have the documents marked for identification as MFI-1 and returned to the plaintiff’s solicitors. They should be kept in a sealed packet in case any question subsequently arises in relation to the accuracy of this decision.

30 MFI-1 should be retained by the plaintiff's solicitors until further order.

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