Delaney and Delaney and Ors

[2009] FamCA 752

FAMILY COURT OF AUSTRALIA

DELANEY & DELANEY AND ORS [2009] FamCA 752

FAMILY LAW – EVIDENCE – LEGAL PROFESSIONAL PRIVILEGE – Waiver of privilege

Evidence Act 1995 (Cth)

Mann v Carnell (1999) 201 CLR 1
Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd [2008] NSWSC 1070
Southern Cross Airlines Holdings Ltd (in Liq.) v Arthur Andersen & Co (a firm) and others (1998) 28 ACSR 455
In the Marriage of LP and KD McMillan (2000) 26 Fam LR 653
Telstra v BT Australasia [1998] 85 FCR 152
Thomason v Campbelltown Municipal Council (1939) 39 SR (NSW) 347
Hongkong Bank of Australia Ltd v Murphy [1993] 2 VR 419
Pickering v Edmunds (1994)
Ampolex Ltd v Perpetual Trustee Co (Canberra) Ltd (1995) 37 NSWLR 405

APPLICANT: Ms N Delaney

1^st RESPONDENT: Mr R Delaney and Mr D Delaney (Legal Personal Representatives for the late husband)

2^nd RESPONDENT: Mr R Delaney

3^RD RESPONDENT: Delaney Management Pty Limited

4^TH RESPONDENT: S Facility Pty Limited

5^TH RESPONDENT: Delaney Holdings Pty Limited

FILE NUMBER: SYC 7471 of 2008

DATE DELIVERED: 19 August 2009

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Judicial Registrar Loughnan

HEARING DATE: 6 August 2009

REPRESENTATION

COUNSEL FOR THE APPLICANT WIFE & MS L & A SOLICITORS PTY LTD: Mr G. Richardson SC with Mr P. Connor

SOLICITOR FOR THE APPLICANT: A Solicitors Pty Ltd

COUNSEL FOR THE 1^ST RESPONDENT & B SOLICITORS: Mr R. Dubler SC

SOLICITOR FOR THE 1^ST RESPONDENT: B Solicitors

COUNSEL FOR THE 2^ND RESPONDENT & C SOLICITORS: Ms M Devere

SOLICITOR FOR THE 2^ND RESPONDENT: C Solicitors

THE 3^RD RESPONDENT: No appearance for or on behalf of the third respondent

THE 4^TH RESPONDENT: No appearance for or on behalf of the fourth respondent

THE 5^TH RESPONDENT: No appearance for or on behalf of the fifth respondent

Orders

1. Leave is granted to the parties to inspect the contents of the file of A Solicitors produced on 19 June 2009 but only documents dated up to and including a letter from A Solicitors to the husband dated 30 April 2007.

2. The Subpoena addressed to C Solicitors dated 17 July 2009 is set aside.

3. The Subpoena addressed to B Solicitors dated 17 July 2009 is set aside.

IT IS NOTED that publication of this judgment under the pseudonym Delaney & Delaney and Ors is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC7471 of 2008

MS N DELANEY

Applicant

And

MR R DELANEY AND MR D DELANEY
(Legal Personal Representatives for the late husband)

First Respondent

MR R DELANEY

Second Respondent

DELANEY MANAGEMENT PTY LTD

Third Respondent

S FACILITY PTY LTD

Fourth Respondent

DELANEY HOLDINGS PTY LTD

Fifth Respondent

REASONS FOR JUDGMENT

1. The substantive proceedings are for property settlement. Following the death of the husband in May, 2009 those proceedings are continued pursuant to s 79(8) by his legal personal representatives, who are his sons. In the context of those proceedings there are a number of interlocutory proceedings. Some interim and interlocutory issues have been resolved by agreement and otherwise. The issues dealt with in these reasons arose in the context of an application to restrain the wife’s solicitors from acting for her. In addition to those injunction proceedings there remain to be dealt with disputes about the return of personalty and the wife’s quiet enjoyment of a residential property. In the context of the injunction proceedings preliminary issues fell to be determined including objections to evidence, applications to set aside subpoenas and for leave to inspect documents produced on subpoena and on a Notice to Produce. These reasons address those last mentioned preliminary issues.

Applications

1. Orders are sought on behalf of the First Respondents in their Amended Response to an Application in a Case filed 31 July 2009. Among other orders sought, the First Respondents seek:

   “1.That [Ms L] and [A Solicitors] be restrained from acting on behalf of the wife.

   2.That the Wife be restrained from instructing [Ms L] and [A Solicitors] and Counsel instructed by Ms [L] and [A Solicitors].

   ….

   10.Pending further Order the Wife shall have the right of sole occupation of the former matrimonial home and shall:

   10.1Keep the property in good order and repair;

   10.2Maintain the property in a presentable condition; and

   10.3Shall be responsible for all outgoings and expenses in relation to the former matrimonial home with the exception of Council rates and insurance and shall make all such payments as and when they fall due.

   10.4The Wife be restrained from allowing any person(s) to live at the former matrimonial home for a period longer than seven (7) days.

   11.That the Wife make available for collection by the First Respondents all personal effects of the late [husband] including clothing, watches, personal documents and papers held at the former matrimonial home, models and paintings of boats.

   12.That the First Respondents, upon seven (7) days notice in writing to the Wife, be permitted to attend the former matrimonial home to undertake an inspection of the property, such inspection to take place no more than one day per month.

2. I note that the First Respondents do not press that part of paragraph 2 that extends to counsel instructed on behalf of the wife. Thus the First Respondents no longer seek to restrain the wife or her solicitors from instructing her current counsel.

3. The subjects of these reasons are:

   ·    objections of the First Respondent to evidence relied on by the wife in the injunction proceedings;

   ·    competing applications seeking to set aside and for leave to inspect in relation to subpoenas addressed to firms of solicitors instructed and formerly instructed on behalf of the husband; and

   ·    an application for leave to inspect a file produced by the wife’s solicitors in relation to work performed on the husband’s instructions.

Documents read

Documents relied upon by First Respondents

1.Application Initiating Proceedings of the wife filed 16.12.2008 (for reference only);

2.Amended Application Initiating Proceedings of the wife filed 25.3.2009 (for reference only);

3.Amended Response to an Application in a Case filed 31 July 2009;

4.Affidavit of Ms H filed 19.6.2009;

5.Affidavit of  R Delaney filed 31 July 2009;

6.A Solicitors’s file produced to the Court on 19 June 2009.

7.Affidavits of Dr Y filed 23 February 2009 and 28 April 2009.

Orders made 5.5.2009, and 19.6.2009

Documents relied upon by the Applicant Wife

1.Affidavit of the Wife sworn on 7 April 2009.

2.Affidavit of the wife sworn on 15 July 2009.

3.Affidavit of the wife sworn on 31 July 2009.

4.Affidavit of Ms L sworn on 31 July 2009.

5.Amended application initiating proceedings filed on 25 March 2009.

6.Subpoena to C Solicitors.

7.Subpoena to B Solicitors.

8.Notice of objection – C Solicitors dated 17 July 2009.

9.Notice of objection – B Solicitors filed 29 July 2009.

The hearing

1. Not all of the parties took active part in the proceedings. An interesting aspect of the case has R Delaney as one of the First Respondents and also as the Second Respondent.

2. Prior to the hearing I had the assistance of Case Outline documents which identified the written evidence relied on and an outline of the arguments to be made in relation to some of the issues before the Court.

3. When the hearing commenced I was told of the abovementioned preliminary matters to be dealt with prior to or in the course of the determination of the application to restrain the wife’s lawyers from acting. Senior counsel for the wife said that the privilege arguments had to be decided first and because of the importance of those issues in the overall context of the case, it was likely that there would be a Review and a stay sought in relation to those issues. Senior counsel for the First Respondents did not agree that a Review was inevitable. I flagged that it may not be possible to rule on the preliminary points without reserving the decision and that is what occurred.

4. Counsel spoke to the relevant aspects of their written submissions and judgment was reserved.

5. Senior counsel for the Applicant Wife and the First Respondents and Ms Devere on behalf of the Second Respondent, joined in a request that the substantive proceedings be allocated to a judge for management as soon as practicable and I requested the docket registrar to facilitate that allocation. It is highly desirable that the pre-trial stages of this litigation be managed by a judge. The future forecast by senior counsel for the wife of de novo hearings of preliminary issues in interlocutory matters will cause delay and expense and should be avoided.

The Facts

1. As the scope of the enquiry on 6 August 2009 was reduced to preliminary issues, much of the evidence was not relevant to my deliberations. Nevertheless it may be useful to record the following background.

2. The husband was born in 1927. He died in May 2009.

3. The wife was born in 1950 and as at the date of the hearing is 59 years of age.

4. The husband had three children:

   R Delaney;

   D Delaney, now 58 years of age; and

   SB, now 55 years of age.

5. The husband and wife started living together in 1978 (according to the wife) or 1982 (according to the husband). They were married in 1985 and separated in November 2008. There are no children of their marriage.

6. In November 1966 the husband registered a company, S Facility Pty Ltd.

7. In October 1970 the husband registered Delaney Management Pty Limited.

8. In November 1973 the husband registered Delaney Holdings Pty Limited.

9. From 1973 the husband established various companies which form part of the Delaney Group of Companies. As at 1982 he had interests in:-

   ·B Company;

   ·T Company;

   ·D Company;

   ·U Company.

10. In November 1973, Mr LE established a trust called the “[Delaney] Family Trust”. Mr LE was Settlor and the late Husband and Mr P were Trustees.

11. The wife contends that she and the husband commenced living together in 1978.

12. On 16 May 1979 the husband’s son, R, was appointed as an additional Trustee.

13. In 1980 the husband, D, and his wife and Mr and Mrs N entered partnership in the V Facility. The husband registered a company in February 1980.

14. On 25 September 1980 the husband registered a company L Facility Pty Limited.

15. The husband contends that he and the wife commenced living together in 1982.

16. In 1989 the husband and D Delaney purchased PT Company and D managed that enterprise.

17. In October 1993 Mr P resigned as a Trustee of the Trust.

18. In around March 2007 the husband at the urging of the wife and a banker called …, was advised to get his affairs in order, to get his financial affairs into a greater state of clarity, as he was diagnosed with a terminal illness.

19. That lead to a solicitor from A Solicitors attending at the home pursuant to a retainer. A meeting was held on 13 March 2007 and thereafter A Solicitors gave advice to the husband as to family succession, business assets, corporate structures and the like and his testamentary wishes and how those wishes could be made effective in the event of disputes. Advice was provided in a letter dated 30 April 2007. The file created by A Solicitors under this retainer has been produced by the wife’s solicitors on a Notice to Produce. The First Respondents assert that that file evidences confidential communications about the husband’s affairs.

20. The parties separated in about November 2008. Strangely Dr Y reported the husband was in good spirits in December 2008 but was adversely affected by his separation from the wife when he saw him in January 2009. That evidence is not explained anywhere.

21. The wife instructed A Solicitors and her Application for Property Settlement was filed on 16 December 2008. She sought 50% of the assets of the husband and wife.

22. On 19 February 2009, solicitors acting for the husband wrote to the wife’s Solicitors raising, among other issues, the question of conflict (annexure “A” Wife’s Affidavit sworn 15 June 2009).

23. On 23 February 2009 the husband’s lawyers wrote to the wife’s lawyers annexing the original advice in the form of the letter of 30 April 2007.

24. On 5 March 2009 A Solicitors wrote on behalf of the wife to B Solicitors asserting that the claim of a conflict was without basis.

25. On 17 March 2009 B Solicitors wrote to the wife’s solicitors to the effect that they were instructed by the husband not to pursue the conflict issue.

26. Orders and directions were made on 18 March 2009.

27. The wife filed an amended Application for Final Orders on 25 March 2009. The wife sought orders, among others, under section 106B and seeking to receive 50% on the value of the net property of the husband and wife and of the Trust (paragraphs 6 and 7 of her Amended Application).

28. On … May 2009 orders were made appointing D Delaney as Case Guardian for the husband. The matter was otherwise adjourned to 3 July 2009 for directions and management. Orders were also made for partial/interim property orders and certain injunctive orders. Sadly, during the course of that day, the husband died.

29. On 19 May 2009 the wife filed an Application in a Case seeking orders under the Corporations Act 2001 and interim spousal maintenance.

30. In June 2009, probate was granted of the Last Will and Testament of the late husband.

31. On 26 May 2009 counsel for the executors informed the wife’s solicitors that their conflict would again be raised.

32. On 19 June 2009 orders were made by consent for the ongoing management of various of the Delaney companies, with the balance of the outstanding applications adjourned to 6 August 2009 for hearing. The file of A Solicitors commenced in 2007 as to Succession Planning Advice given to husband was produced and an order was made that the file be sealed pending further order, not to be opened without written agreement of the parties or an order of the Court.

33. On 3 July 2009 the wife’s application for expedition was refused by Registrar Crawford.

34. On 17 July 2009 a Subpoena to Produce Documents issued to C Solicitors at the request of the wife. On 17 July 2009 C Solicitors prepared a Notice of Objection in relation to the subpoena addressed to that firm, nominating legal professional privilege as the basis for the objection.

35. On 17 July 2009 a Subpoena to Produce Documents issued to B Solicitors at the request of the wife.

36. On 29 July 2009 B Solicitors filed a Notice of Objection in relation to the subpoena addressed to that firm, nominating legal professional privilege as the basis for the objection.

37. In the case of each of the subpoenas an order was made on 31 July 2009 for production by 5 August 2009. Documents have been produced, inspection has been sought and is opposed.

The Law

1. Senior Counsel told me that they disagreed as to whether the Evidence Act 1995 applies to the arguments. Looking at their case outline documents it is hard to identify the point of difference. Mr Richardson for the wife said something like – the Act does not apply to a hearing of an interim or interlocutory issue. Mr Dubler contends that it does. I note from his written submissions that Mr Richardson agrees that on questions of pre-trial discovery and the like, the Evidence Act does not apply.

2. There can be no real controversy about this. In Mann v Carnell (1999) 201 CLR 1 the majority [Gleeson CJ, Gaudron, Gummow and Callinan JJ] addressed the question of the applicable law in relation to pre-trial discovery and said:

   17.The Evidence Act applies in relation to all proceedings in the Supreme Court of the Australian Capital Territory, including the subject proceedings (ss 2, 4). However, the provisions of the Act which concern what is called client legal privilege, in accordance with the general scheme of the Act, are expressed in terms which relate to the adducing of evidence. The reason for this was explained in the report of the Australian Law Reform Commission which proposed the legislation, and which said[9]: "The Terms of Reference limit the Commission to considering the application of the privilege in the courtroom where evidence is sought to be given."

   and later:

   26. The Full Court of the Federal Court in this case, following Adelaide Steamship, approached the matter on the basis that the central issue was to be resolved by reference to ss 118 and 122 of the Evidence Act. They concluded that the confidential disclosure to Mr Moore of the contents of the privileged communications from the legal advisers of the Australian Capital Territory did not result in loss of the privilege. They held that the case fell within s 122(2)(a), and that s 122(4), which they said applied to disclosures by someone other than the client or an agent or employee of the client, did not operate[16].

   27. Consistently with this Court's decision in Northern Territory of Australia v GPAO[17] and its reasoning in relation to the appeal in Esso[18], it must be concluded that the Full Court in the present case erred in deciding that the applicable law was to be found (derivatively) in the Evidence Act. …..

3. As was said by learned senior counsel for the wife, it may not matter much whether these issues are determined by reference to the Evidence Act or the common law. However, I am asked to rule on two different circumstances. The objections to evidence must be determined by reference to the Evidence Act. The issue there is whether certain material is admitted into evidence in the injunction proceedings. On the other hand the applications to set aside subpoenas and for leave to inspect documents produced do not involve that issue and therefore the Evidence Act does not apply.

4. Section 4 of the Evidence Act 1995 relevantly provides:

   (1)  This Act applies to all proceedings in a federal court or an ACT court, including proceedings that:

   (a)  relate to bail; or

                    (b)  are interlocutory proceedings or proceedings of a similar kind; or

   (c)  are heard in chambers; or

   (d)  subject to subsection (2), relate to sentencing.

51. Section 118 of the Evidence Act 1995 provides:

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, lawyer or another person;

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

52. Section 117 of the Evidence Act relevantly defines ‘client’:

"client" includes the following:

…..

(e)  if a client has died--a personal representative of the client;

(f)  a successor to the rights and obligations of a client, being rights and obligations in respect of which a confidential communication was made.

53. Section 122 of the Evidence Act 1995 provides:

Loss of client legal privilege: consent and related matters

(1)  This Division does not prevent the adducing of evidence given with the consent of the client or party concerned.

(2) Subject to subsection (5), this Division does not prevent the adducing of evidence if the client or party concerned has acted in a way that is inconsistent with the client or party objecting to the adducing of the evidence because it would result in a disclosure of a kind referred to in section 118, 119 or 120.

(3)  Without limiting subsection (2), a client or party is taken to have so acted if:

(a)  the client or party knowingly and voluntarily disclosed the substance of the evidence to another person; or

(b)  the substance of the evidence has been disclosed with the express or implied consent of the client or party.

(4)  The reference in paragraph (3)(a) to a knowing and voluntary disclosure does not include a reference to a disclosure by a person who was, at the time of the disclosure, an employee or agent of the client or party or of a lawyer of the client or party unless the employee or agent was authorised by the client, party or lawyer to make the disclosure.

(5)  A client or party is not taken to have acted in a manner inconsistent with the client or party objecting to the adducing of the evidence merely because:

(a)  the substance of the evidence has been disclosed:

(i)  in the course of making a confidential communication or preparing a confidential document; or

(ii)  as a result of duress or deception; or

(iii)  under compulsion of law; or

(iv)  if the client or party is a body established by, or a person holding an office under, an Australian law--to the Minister, or the Minister of the Commonwealth, the State or Territory, administering the law, or part of the law, under which the body is established or the office is held; or

(b)  of a disclosure by a client to another person if the disclosure concerns a matter in relation to which the same lawyer is providing, or is to provide, professional legal services to both the client and the other person; or

(c)  of a disclosure to a person with whom the client or party had, at the time of the disclosure, a common interest relating to the proceeding or an anticipated or pending proceeding in an Australian court or a foreign court.

(6)  This Division does not prevent the adducing of evidence of a document that a witness has used to try to revive the witness's memory about a fact or opinion or has used as mentioned in section 32 (Attempts to revive memory in court) or 33 (Evidence given by police officers).

54. As to the common law, in Mann v Carnell (1999) 201 CLR 1 the majority High Court, found:

‘28.    At common law, a person who would otherwise be entitled to the benefit of legal professional privilege may waive the privilege.  It has been observed that "waiver" is a vague term, used in many senses, and that it often requires further definition according to the context.  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 maintenance of the confidentiality which effects a waiver of the privilege.  Examples include disclosure by a client of the client's version of a communication with a lawyer, which entitles the lawyer to give his or her account of the communication, or the institution of proceedings for professional negligence against a lawyer, in which the lawyer's evidence as to advice given to the client will be received.

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.  Thus, in Benecke v National Australia Bank, the client was held to have waived privilege by giving evidence, in legal proceedings, concerning her instructions to a barrister in related proceedings, even though she apparently believed she could prevent the barrister from giving the barrister's version of those instructions.  She did not subjectively intend to abandon the privilege.  She may not even have turned her mind to the question.  However, her intentional act was inconsistent with the maintenance of the confidentiality of the communication.  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 maintenance of the confidentiality; not some overriding principle of fairness operating at large.’

Issues

1.  The First Respondents’ objection to annexure E to wife’s affidavit of 15 July 2009

1. Annexure E comprises a letter from B Solicitors to A Solicitors dated 25 February 2009 that is marked “Without Prejudice Save as to Costs” and a letter provided under cover of the first mentioned letter, from A Solicitors to the husband dated 30 April 2007. The letter of 30 April 2007 is a letter of advice resulting from the husband’s instructions to A Solicitors in 2007.

2. The First Respondents rely on a decision of the NSW Supreme Court in Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd [2008] NSWSC 1070. In that decision, Barrett J was dealing with section 122 of the Evidence Act 1995.

3. Barrett J went on to find:

   ….

   20. In summary, therefore, I accept the position put by NGC in relation to the particular question. Sections 122(2) and 122(4) cannot operate in a case where the content of a privileged document is communicated to a person who is already in possession of that content. This is because that communication is not one that reveals or makes known that content. It therefore does (NOT) sic “disclose” the content. But that that is not to say that the particular communication may not carry with it or be followed by a form of consent on the part of the person enjoying privilege that is destructive of the privilege apart altogether from the operation of ss 122(2) and 122(4).

4. The argument made on behalf of the wife is that despite the formal assertion in the title of the letter, the letter of 25 February 2009 is not privileged. The letter does not address settlement discussions. The letter is headed “Re [Delaney] Family Law Matter”. Neither the title nor the content is addressed to A Solicitors s in any capacity other than as the wife’s solicitors. The submission is that the February letter encloses a communication said to attract privilege but there has been no effort to have A Solicitors agree not to show that letter to their client. A Solicitors received the letter of 25 February 2009 in the context of the Delaney proceedings. They act for the wife in those proceedings. They were obliged to show the letter of 30 April 2007 to the wife. Thus the document has been disclosed to the wife.

Conclusion

1. As to the letter of 30 April 2007 - as I understand the wife’s evidence, she was present during most if not all of the meetings that gave rise to the instructions that lead to the advice in the letter. One meeting was held on 13 March 2007. The wife says that because of the husband’s deafness, she was required to assist communications between the solicitors and the husband. There is no evidence that the wife received a copy of the letter at that time.

2. The letter of 25 February 2009 does not address settlement. The device “Without prejudice” alone, does not make it privileged. As to the attached letter of 30 April 2007, there can be no disclosure of a document which the wife has already seen (Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd above). There is no evidence that the wife had previously seen the letter of 30 April 2007. There is a reference to the letter in correspondence but there is no evidence. By attaching the letter of 30 April 2007 to the letter of 25 February 2009 to her solicitors, the earlier letter was disclosed to the wife. Therefore any privilege has been waived. The objection is disallowed.

2.  The First Respondents also object to annexures I, J, K & L to the wife’s affidavit of 15 July 2009

1. The documents in question were created as a result of the husband’s consultations with Mr G, solicitor.

2. The wife and husband attended on Mr G, gave him instructions and received his advice. The wife says that Mr G was a long term acquaintance (there is evidence of some interaction with him as early as 1979) and family friend and that she recommended that the husband retain him.

3. The note dated 15 September 2006 which comprises annexure I, is a note made by Mr G of matters he discussed with the husband and wife on 14 September 2006. The wife says the note was given to the husband and her on their way back after the meeting of 14 September 2006 and that she and the husband read the note together.

4. The wife recalls that the letters that are annexures J and K, were faxed to the former matrimonial home and that she and the husband discussed the contents of those letters when they received them.

5. As to the note dated 7 September 2006 from the husband to Mr G that comprises annexure L - the wife has the original note in her possession. The husband gave the note to her and she was present when the husband gave the note to Mr G. She also copied the note and gave it to Mr T (a solicitor at A Solicitors) at the meeting on 13 March 2007.

6. The First Respondents argue that the privilege is not lost:

   ·    Firstly, it is submitted that it is possible that the wife and husband were both clients of Mr G. That is possible because there are 2 letters from Mr G relevant here and one was addressed to the husband and one to both the husband and wife. If they were both clients then the wife needed the husband’s consent to reveal the privileged material.

   · Secondly, it is submitted that pursuant to s122(5)(a), if confidential between client and lawyer is with a third party under the cloak of confidence then the privilege is not lost.

7. It is the unchallenged evidence of the wife in relation to the husband’s involvement with Mr G that:

   “when I attended meetings with my husband, there was no occasion when I was asked to absent myself from any part of the discussion. I recall several occasions when the husband said to [Mr G]:

   ‘Speak freely, there is nothing you can’t say in front of [the wife].’

   I recall an occasion in or about 1979 when my husband said to [Mr G] in my presence:

   ‘[The wife] is part of the business and there is nothing concerning my affairs that you are not free to discuss with her or in her presence.’”

8. It is submitted on behalf of the wife that those circumstances reflect an extraordinarily wide waiver of privilege. It is submitted that it would be contrary to law for the wife to be consensual invitee to a communication or discussion and to be prevented from adducing evidence about those communications or discussions.

Conclusion

1. As the learned author notes in Uniform Evidence Law[1] “The High Court accepted in Mann v Carnell (1999) 201 CLR 1 that confidential disclosure will not necessarily mean that privilege is retained.”

   [1] Eighth edition by Stephen Odgers para 1.3.11140

2. In my view the husband waived privilege in relation to the course of communication with Mr G. Lest it be said that that proposition rests entirely with the uncorroborated evidence of the wife, I understand that Mr G is available. Indeed that he has provided an affidavit for the wife in the substantive proceedings.

3.  The wife seeks access to an A Solicitors file

1. The file was opened in 2007 in relation to advice sought by the husband as to family succession, business assets, corporate structures and the like and his testamentary wishes and how those wishes could be made effective in the event of disputes. The First Respondents oppose access on the basis of legal professional privilege.

2. To repeat the relevant circumstances

   ·In around March 2007 the husband, at the urging of the wife and also a banker called …, was advised to get his affairs in order, to get his financial affairs into a greater state of clarity, as he was diagnosed with a terminal illness.

   ·That lead to a solicitor from A Solicitors attending at the home pursuant to a retainer. There was a meeting on 13 March 2007 and thereafter A Solicitors gave advice to the husband as to family succession, business assets, corporate structures and the like, his testamentary wishes and how those wishes could be made effective in the event of disputes.

   ·A file was created by A Solicitors as a result.

   ·These proceedings commenced in December 2008.

   ·A Notice to Produce issued to the wife and on 19 June 2009 that file was produced. Access was granted to the estate’s lawyers. Ms H of B Solicitors swore an affidavit, among other things, as to the contents of the file.  That affidavit is relied upon by the estate in the injunction proceedings.

   ·An order was made that the file be sealed pending further order, not to be opened without written agreement of the parties or an order of the Court.

3. The First Respondents assert that that file evidences confidential communications.

4. It is submitted on behalf of the wife that as a consequence of implied waiver of privilege said to be constituted by Ms H’s affidavit and the disclosure of the letter of advice of 30 April 2007, the wife is entitled to access to the file. The argument runs that if there was a waiver in relation to the letter of 30 April 2007 then, at the minimum, the A Solicitors file up to and including that date is also no longer privileged. If the husband waived privilege in relation to the advice then, privilege is waived for the instructions etc. If that argument does not find favour, it is submitted that the detailed description provided by Ms H in her affidavit of 15 June 2009 amounts to partial disclosure of the contents of the file and therefore, privilege is waived. It is submitted that the use of that evidence by the First Respondents requires that the wife be able to test it and therefore have access to the file. In that regard learned senior counsel referred to the discussion about fairness in Mann v Carnell (1999) 201 CLR 1.

5. It is submitted on behalf of the First Respondents that the substance of the advice is not disclosed in the affidavit of Ms H. Learned senior counsel referred to a decision of the Federal Court of Australia in Southern Cross Airlines Holdings Ltd (in Liq.) v Arthur Andersen & Co (a firm) and others in support of the proposition that there can be disclosure of topics, without disclosure of the substance of advice.

Conclusion

1. The burden of proof falls on the wife. I have rejected the objection in relation to the admission into evidence of the letter of advice to the husband from A Solicitors of 30 April 2007. It follows that the privilege has been waived in relation to the file insofar as it contains material up to and including that letter. I so find.

2. In her affidavit of 15 June 2009 Ms H identifies only two documents or category of documents that post date the letter of advice of 30 April 2007. They are described as:

   4.  The file contains the following:

   …

   4.15. File note of conversation with the Husband of 19 September 2007 in respect of the letter of advice of 30 April 2007 and during which the Husband informs the solicitor Mr [T] the husband’s opinion of his total net worth.

   4.16. Copy letter from […], Practice Manager of [A Solicitors] to the husband dated 24 June 2008 recording “… we have now completed the matter in accordance with your instructions, and our retainer is now at an end.”

3. In relation to the level of detail in paragraph 4 of Ms H’s affidavit it is submitted on behalf of the First Respondents that the authorities in respect of conflict injunctions require the identification of the category or type of confidential communication with some specificity before a potential conflict is made out. With respect, I do not know that to be the case.

4. From the Full Court of this Court in In the Marriage of L P and K D McMillan (2000) 26 Fam LR 653 there is:

   86.    Again, as earlier indicated, we adopt what was said by Mullane J. in Griffis, in reliance on Mills and Thevenaz, that the client need only prove “a prima facie case as to confidential material, the disclosure or use of which by the solicitor in the course of the conduct of the current proceedings for the present client would be prejudicial to the applicant”.

   87.    In other words, the client need only give evidence that he has provided confidential information to the solicitor (or in this case, the law clerk/secretary).  The client does not have to divulge the content of that information.  (See Mills and also Lindenmayer J. in Stewart).  In the present case, we consider it sufficient, as we said earlier, that the husband has sworn that he had given instructions to Mr Pitts as to how he wished his “matter to be conducted and the position to be put to the wife”.  It is obvious that such matters would come within the description of “confidential information”.

5. Therefore we know that “instructions to Mr Pitts as to how he wished his “matter to be conducted and the position to be put to the wife”, is sufficient but we do not know if a less detailed description would have been adequate.

1. However, in Southern Cross Airlines Holdings Ltd (in Liq.) v Arthur Andersen & Co (a firm) and others Drummond J of the Federal Court of Australia found that disclosure of the substance of advice required the disclosure of the conclusion and the critical steps by which the conclusion was reached. There is nothing about the descriptions in 4.15 & 4.16 that reveal the substance of the advice in the sense of revealing the conclusion and the critical steps by which the conclusion was reached.

2. The wife has not established that privilege is waived to the file beyond contents dated 30 April 2007.

4.  The wife seeks access to documents produced on subpoena by C Solicitors

1. The First Respondents and C Solicitors object.

2. The subpoena sought production of:

   “Documents” means letter of advice, correspondence, facsimile transmissions, electronic mails, file notes, memoranda, accounting records, agreements, statements, invoices, receipts, notes of meetings, authorities, consents, photographs and any form of electronic media.

   The entirety of the Documents held in your file or by your firm relating to instructions from and advice provided to the late [husband] or any other person on his behalf or in respect to advice provided or to be provided to him in the period 1 January 2005 to 25 March 2009 in relation to:

   ·    Your file denoted as matter No. […] and described as “[The husband] – Commercial Advice”; and on other occasions “Exposure of Assets – Family Law Proceedings”’

   ·    Your file denoted as matter No. […] and described as “Wills Single Person / Power of Attorney”;

   ·    Family Court matter no. SYC7471/2008;

   ·    The appointment of [R Delaney] as a director of each of the companies listed in schedule 1 hereto in 2006; and

   ·    Any contemplated or potential property settlement proceedings between [the husband] and [the wife].

   Schedule 1

   [M Facility] Pty Limited;

   [S Facility] Pty Limited;

   [I] Pty Limited;

   [DNR] Holdings Pty Limited;

   [Delaney Management] Pty Limited;

   [W Facility] Pty Limited;

   [CE Facility] Pty Limited;

   [WP Facility] Pty Limited;

   [V Facility] Pty Limited;

   [L Facility] Pty Limited; and

   [Delaney] Holdings Pty Limited

3. On 29 July 2009 C Solicitors prepared a Notice of Objection in relation to the subpoena addressed to that firm, nominating legal professional privilege and that the subpoena was issued for an improper purpose as the bases for the objection.

4. It is submitted on behalf of C Solicitors that the subpoena was wrongly addressed to the Managing Partner and should have been addressed to the Proper Officer or named individuals. There was no earlier formal complaint about this and someone signed a document as “Managing Partner”. I told the parties that I would cure that formal defect if the subpoena survived the substantive challenge.

5. In the case of this subpoena and a subpoena issued on the same date to B Solicitors, an order was made on 31 July 2009 for production by 5 August 2009. Documents have been produced, inspection has been sought and is opposed.

6. The substantive objections in respect of both subpoenas are the same. In each case the First Respondents claim legal professional privilege and in each case the wife argues that the privilege has been lost.

1. Here the wife argues that in seeking to be relieved of the consequences of abandoning the conflict claim on 17 March 2009, the First Respondents raise the issue of the states of mind of the husband and of the First Respondents. It is submitted that they thereby waive legal professional privilege in relation to the legal advice they had on this issue which affected those states of mind. The First Respondents say the claim was abandoned when the husband understood the wife’s property claim to be for 50% of the property of the husband and wife. They say things changed with the wife’s amended application of 25 March 2009 seeking part of the trust assets. It is argued on behalf of the wife that there would have been a consideration of trust assets in any event and that, having raised the basis on which the abandoned claim of conflict was revived, it would be unfair not to allow the wife to explore the advice given.

2. I was referred to a decision of the Full Court of the Federal Court in this regard. In Telstra v BT Australasia [1998] 85 FCR 152, commencing at pages 165 the Full Court said:

   At common law it has also been held, in cases in which the state of mind of a party was in issue in the proceedings, that evidence could be called to establish the terms of legal advice, relevant to that party's state of mind, provided to that party. Thus, in Thomason v Campbelltown Municipal Council (1939) 39 SR (NSW) 347, where it was necessary for the defendant to prove what knowledge the plaintiff had as to her legal rights, Jordan CJ held that privilege could not be invoked to prevent proof of relevant legal advice provided to her.

   In Hongkong Bank of Australia Ltd v Murphy [1993] 2 VR 419 Smith J held that, in raising and persisting with issues which concerned legal advice it received, Hongkong Bank was to be treated as having waived the privilege in respect of such advice. His Honour said (at 439):

   "In this case, if the plaintiff is permitted to rely on a claim for privilege for the documents in question, the fact-finding task of the court will be seriously compromised. There is a real possibility of the court being misled."

   In Pickering v Edmunds (1994) 63 SASR 357 Duggan J held that where, by their pleadings, the plaintiffs put in issue their state of mind and knowledge of the legal effect of a deed, evidence could be led as to relevant legal advice received by them. His Honour said (at 362):

   "In the present case the conduct of the respondents is such as to make the issue of their appreciation of the legality or otherwise of the trust deed of crucial importance in the case. An effective trial on that issue could not take place in the absence of evidence as to what legal advice they received on the matter. Furthermore the appellants would be unfairly deprived of the opportunity to put material before the court on this key issue. It is true that the respondents did not raise directly the legal advice they received. However they did put in issue their understanding of the legal effect of the earlier deed based on information they had received."

   In Ampolex Ltd v Perpetual Trustee Co (Canberra) Ltd (1995) 37 NSWLR 405 Giles CJ Comm D at 411 relied upon Attorney-General (NT) v Maurice in concluding that:

   "GPG Nominees and Allied ... having exposed to scrutiny their corporate states of mind, being states of mind to which their legal advice is likely to have contributed, GPG Nominees and Allied can not withhold the advice from their opponent. I emphasise that the legal advice is likely to have contributed to the states of mind of GPG Nominees and Allied as was plain from the dates of and descriptions of the documents: were that not so, the principle may not have applied."

   The decisions of the High Court in Attorney-General (N T) v Maurice and Goldberg v Ng are cases concerning imputed waiver of privilege. In each case the party whose privilege was in issue had made some relevant use of the privileged material: the issue was whether such use constituted an implied waiver of the privilege. The High Court held in each case that such issue was to be determined by reference to considerations of fairness, and not by reference to the actual intention of the party who had made use of the material.

   A similar approach was taken by the Court of Appeal in Benecke v National Australia Bank (1993) 35 NSWLR 110. In that case Gleeson CJ stated (at 111-112):

   "The law permits the search for truth in legal proceedings to yield, in certain circumstances, to the public interest in publicising the secrecy of communication between lawyer and client. In the present case, however, the appellant herself lifted the veil of secrecy by giving the version of the communications. Thereafter there was no reason in principle why the pursuit of the truth should not take its course, or why the Court should be inhibited in seeking to ascertain the true facts concerning those communications."

   The other cases referred to above are not cases in which there had been partial disclosure of a privileged communication or other use of such a communication. They are rather cases in which, unless waiver of such privilege was imputed to a party, the fact finding task of the court with respect to issues raised by that party would have been compromised. It was contended by senior counsel for the BT parties that the decisions in those cases are not supported by High Court authority.

   We accept that such cases are not directly supported by Attorney-General (NT) v Maurice and Goldberg v Ng. However, they are, in our view, supported by the principles behind the undue influence and legal professional negligence cases.

   A party who initiates an undue influence case puts in issue in the proceeding the quality of his or her consent or assent (Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 per Deane J at 474). The quality of such consent or assent will ordinarily be affected by relevant legal advice received by the party. The principle that requires that in such circumstances the party not be entitled to maintain the confidentiality of such advice is one of fairness which goes to the integrity of the legal process. To allow a party to put in issue the quality of his or her consent or assent whilst, at the same time, withholding evidence relevant to that issue, would be to allow him or her unfairly to handicap the opposing party to the proceeding, and to compromise the ability of the court realistically to determine the issue. There is, in our view, little, if any, difference in principle between the undue influence cases, the partial disclosure cases such as Benecke v National Australia Bank, and the "other use" cases such as Attorney-General (NT) v Maurice and Goldberg v Ng. In the three classes of cases the law implies a consent to the use of the privileged material, or, what is in reality the same thing, a waiver of the privilege, if by reason of some conduct of the party otherwise entitled to the privilege, it would be unfair to the other party, in a way which goes to the integrity of the legal process, for the privilege to be maintained.

   The legal professional privilege cases are, in our view, to be analysed in the same way. The quality of any particular legal advice, and the extent, if any, to which it was causative of loss and damage, can only properly be assessed once it is placed in the context of the totality of legal advice received by the client. The client, by bringing the proceeding, is taken to have consented to the use of the privileged material, or to have waived reliance on the privilege which would otherwise attach to such material. Reliance on the privileged nature of the material would, in the circumstances, be unjust and would inhibit the proper functioning of the legal process.

   Where, as in this case, a party pleads that he or she undertook certain action "in reliance on" a particular representation made by another, he or she opens up as an element of his or her cause of action, the issue of his or her state of mind at the time that he or she undertook such action. The court will be required to determine what was the factor, or what were factors, which influenced the mind of the party so as to induce him or her to act in that way. That is, the party puts in issue in the proceeding a matter which can not fairly be assessed without examination of relevant legal advice, if any, received by that party. In such circumstances, the party, by putting in contest the issue of his or her reliance, is to be taken as having consented to the use of relevant privileged material, or to put it another way, to have waived reliance on the privilege which such material would otherwise attract.

   The above analysis seems to us to be consistent with the approach of McLelland J in United States Surgical Corp v Hospital Products International Pty Ltd (unreported, Supreme Court, NSW, McLelland J, 13 October 1981) -- (as noted in Ritchie's Supreme Court Procedure (NSW) at 8545-8547):

   "In the Thomason case, the plaintiff was asserting a right to claim damages in a statutory context which rendered it implicit in such an assertion that the plaintiff had not effectively exercised her option to take the alternative course, notwithstanding that on the pleadings the onus of proving the effective exercise by the plaintiff of that option, and in an evidentiary sense the onus of proving the plaintiff's knowledge of her legal rights, in each case rested on the defendant. So that it may be that the criterion that the otherwise privileged party must have himself raised the fact and nature of the advice as an issue in the case is too rigidly stated. Nevertheless, before the privilege can be said to have been lost on this principle, one must at least be able to identify some element or feature of the claim made, or the evidence adduced, by the party otherwise entitled to the privilege, which would render reliance on the principle unjust."

   In Attorney-General (NT) v Maurice Mason and Brennan JJ said (at 487):

   "A litigant can of course waive his privilege directly through intentionally disclosing protected material. He can also lose that protection through a waiver by implication. An implied waiver occurs when, by reason of some conduct on the privilege holder's part, it becomes unfair to maintain the privilege."

   Within that framework, the conduct of a party which leads to the implication of consent to the use of otherwise privileged material, or to an implied waiver of such privilege, in undue influence cases, legal professional negligence cases and, in my view, the "state of mind" cases, is that of raising for determination in legal proceedings, as an element in the cause of action relied upon, an issue incapable of fair resolution without reference to that material.

   Before returning to the construction of s 122(1) of the Act, some comments should be made, obvious as some of them may be, about the scope and effect of the principle just stated. It does not constitute a broad inroad into legal professional privilege as a "substantive and fundamental common law principle" (Carter v Northmore Hale Davy & Leake (1995) 183 CLR 121 at 122 per Deane J). Nor does it involve any balancing of competing public interests, one in facilitating the application of the rule of law by promoting frank communication between clients and their legal advisers, the other in ensuring that all relevant evidence is placed before a court adjudicating as to the legal rights of parties before it: the recognition of the privilege is itself the outcome of such a balancing process: Waterford v Commonwealth (1987) 163 CLR 54 at 64-65; Carter at 128. Nor is it a consequence of the principle that whenever a person's state of mind is relevant to an issue in proceedings, privilege is taken to be waived in relation to legal advice that may have played part in the formation of that state of mind (so that the principle does not, for example, deny the authority of Kennedy v Lyell (1883) 23 Ch D 387; Lyell v Kennedy (No 2) (1883) 9 App Cas 81). It is unnecessary and inappropriate, having said those things, to attempt to define exhaustively the scope of the principle. Where, however, a party relies on a cause of action, an element of which is the party's state of mind (including the quality of the party's assent to a transaction) the party is taken to have waived privilege in respect of legal advice which the party had, before or at the time of the relevant events, material to the formation of that state of mind.

Conclusion

1. I am not persuaded that the injunction proceedings are proceedings in which the states of mind of the husband or the First Respondents are in issue.

2. The circumstances here do not have the flavour of the circumstances referred to in the Telstra decision. They are not like:

   ·Thomason v Campbelltown Municipal Council (1939) 39 SR (NSW) 347, where it was necessary for the defendant to prove what knowledge the plaintiff had as to her legal rights;

   ·Hongkong Bank of Australia Ltd v Murphy [1993] 2 VR 419 where the plaintiff raised and persisted with issues which concerned legal advice it received;

   ·Pickering v Edmunds (1994) where, by their pleadings, the plaintiffs put in issue their state of mind and knowledge of the legal effect of a deed; nor

   ·Ampolex Ltd v Perpetual Trustee Co (Canberra) Ltd (1995) 37 NSWLR 405 having exposed to scrutiny their corporate states of mind, being states of mind to which their legal advice is likely to have contributed, GPG Nominees and Allied cannot withhold the advice from their opponent.

3. The question in the injunction proceedings is not - why the First Respondents revived the conflict claim after it had been earlier abandoned by their father. The question is - whether the conflict issue can be justifiably revived. Are the facts of the amended relief and or that the First Respondents now stand in their father’s shoes, such as to justify reviving the conflict claim? If so then the First Respondents may be protected from the impact of the earlier abandonment. They are matters appropriately addressed by a consideration of those circumstances rather than by an examination of the states of mind of the husband or of his sons and in that context, by permitting an examination of the detail of legal advice they were given.

4. In my view there is no unfairness to the wife in not being able to explore the advice that prompted a reversal of strategy on conflict. Privilege was not waived.

5. The subpoena to C Solicitors is set aside.

5.  The wife seeks access to documents produced on subpoena by B Solicitors.

1. The First Respondents object.

2. The subpoena sought production of:

   “Documents” means letter of advice, correspondence, facsimile transmissions, electronic mails, file notes, memoranda, accounting records, agreements, statements, invoices, receipts, notes of meetings, authorities, consents, photographs and any form of electronic media.

   1.1    The entirety of the Documents held in your file comprising or relating to instructions from and advice provided to the late [husband] (“the husband”) or any other person on his behalf (including but not limited to any proposed or anticipated case guardian) in relation to Family Court matter no. SYC7471/2008 or any contemplated or potential property settlement proceedings between the husband and [the wife] from the date of your first instructions to the 25 March 2009.

3. On 29 July 2009 B Solicitors filed a Notice of Objection in relation to the subpoena addressed to that firm, nominating legal professional privilege as the basis for the objection.

4. For the reasons set out above the subpoena to B Solicitors is set aside.

I certify that the preceding ninety-nine (99) paragraphs are a true copy of the reasons for judgment of Judicial Registrar Ian Loughnan.

Associate: 

Date: 19 August 2009