Ding and Ding (No. 3)

[2017] FamCA 1186

FAMILY COURT OF AUSTRALIA

DING & DING (NO. 3) [2017] FamCA 1186

FAMILY LAW – LEGAL PROFESSIONAL PRIVILEGE – where husband’s document comes into the wife’s possession – privilege claimed – ruling in a trial that privilege not lost.

Family Law Act 1975 (Cth)

Attorney-General of the Northern Territory & Kearney (1985) 158 CLR 500
Baker & Campbell [1983] HCA 39; (1983) 153 CLR 52
British American Tobacco Australia Services Limited & Laurie [2011] HCA 2
Commissioner of Australian Federal Police & Propend Finance Pty Limited (1997) 188 CLR 501
Council of the New South Wales Bar Association & Archer  [2008] NSWCA 164
Esso Australia Resources Ltd & Commissioner of Taxation [1999] HCA 67; 201 CLR 49; 168 ALR 123; 74 ALJR 339
Expense Reduction Analysts Group Proprietary Limited and Others & Armstrong Strategic Management and Marketing Proprietary Limited [2013] HCA 46Grant & Downs (1976) 135 CLR 674
Hancock & Rinehart [2016] NSWSC 12
Kang & Kwan & 2 others [2001] NSWSC 698
Mann & Carnell [1999] HCA 66; 201 CLR 1; 168 ALR 86; 74 ALJR 378
P&B Industries Proprietary Limited & Anthony Porter (No. 3) [2007] VSC 133
R & Bell;  ex parte Lees (1980) 146 CLR 14
Southern Equities Corporation Ltd (in liq) & Arthur Andersen & Co (1997) 70 SASR 166
The Attorney-General for the Northern Territory & Maurice, [1986] HCA 80; (1986) 161 CLR 475
Varawa & Howard Smith & Co Limited (1910) 10 CLR 382
Vic Hotel Proprietary Limited & DC Payments Australasia Proprietary Limited (2015) 321 ALR 191
Westminster Airways Limited & Kuwait Oil Company Limited [1951] 1 KB 134
Woollahra Municipal Council & Westpac Banking Corporation (1994) 33 NSWLR 529

APPLICANT: Ms Ding

RESPONDENT: Mr Ding

FILE NUMBER: ADC 4389 of 2012

DATE DELIVERED: 15 June 2017

PLACE DELIVERED: Adelaide

PLACE HEARD: Adelaide

JUDGMENT OF: Cronin J

HEARING DATE: 15 June 2017

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr McQuade

SOLICITOR FOR THE APPLICANT: Harry Alevizos

COUNSEL FOR THE RESPONDENT: Ms Pyke QC

SOLICITOR FOR THE RESPONDENT: Jaak Oks Lawyers

Orders

1. The document sought to be adduced into evidence is protected by legal professional privilege

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 Ding & Ding 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 4389 of 2012

MS DING

Applicant

And

MR DING

Respondent

RULING

1. This is a ruling in a trial that has run over four days in two parts, relating to property proceedings.  Sadly, the proceedings themselves have been extant for five years, and apart from beginning in the Federal Circuit Court, have also been extended by collateral proceedings in the District Court of South Australia, where action was brought against the wife by a family-related entity.  That extended litigation history is a reason why this ruling is approached with some hesitation and caution.

2. The trial itself is in its concluding stages and this ruling concerns legal professional privilege.  It is not entirely clear to me at the moment what would happen to the contentious letter, to which I shall refer in a moment, consequent upon this ruling.  The wife who seeks the ruling has closed her case.  There is no application to reopen it.  The contentious letter has been in the wife’s possession for years.  There are issues about how the letter could be admitted into evidence.  I suspect, too, that the facts surrounding the letter are unique.  For those reasons, I considered it prudent to think about this ruling overnight.

3. The contentious letter has not been shown to the Court, although it was apparently exhibited to an affidavit filed some time ago in the Federal Circuit Court.  That fact, along with how it currently comes to be in the possession of the wife’s legal practitioners, has also been the cause of angst and, I consider that point under the heading of Fairness in a moment.  I am also urged to inspect the letter, and I shall deal with that quite specifically.

4. The contentious letter was written on 29 March 2010.  It is said to be written by the husband’s solicitor, but it is also asserted, and I have no evidence of this, that the husband’s solicitor also acted for the husband’s sister.  She is a party to these proceedings but has not participated in any way.  Whether the advice contained in the letter was specific or generic, I do not know.

5. The fundamental substantive property dispute concerns three real properties but also shareholdings in a company.  In her evidence, the wife claims that the husband’s disposition of his interest in those properties and the shares should be set aside and then the property divided.  The letter dated 29 March 2010 precedes the transfers by the husband but it would seem that, by the letter’s date, he had already, somehow, permitted the reconstruction of the company shareholding with his sister so that his interest in the company was reduced to one per cent, giving his sister absolute control over any net equity that the two persons may have had in the company’s assets.

6. Although it is still apparently contentious, the wife’s counsel argue that in and around the time of the letter, the marriage was “in difficulty.”  As the wife’s case is closed, I can confidently say that is not her evidence.  Whilst her trial affidavit said:

   By about 2008/2009, our marriage became increasingly strained and I suspected that the husband and I would ultimately separate.

7. That was not her evidence in cross-examination.  She said her problem lay with the husband’s family, not the husband.  She was unhappy in 2008 or 2009, but she did not tell the husband.  She said she wanted to move out of the husband’s parents’ home where the family had then lived.  She said the husband disappointed her, but the reason was his family.  She went further and said she never wanted to separate and did not tell the husband that she did.  She volunteered:

   We were both very happy with each other.

8. She then went on to say that the cause of her unhappiness was that the husband listened to his family.  Those sentiments continued until 2012 when, in June, they did separate, but she said that, even at that time, there was still some emotion there.  In the context of a letter written to the husband in March 2010, that evidence has some importance.  The husband’s evidence corroborates the wife’s version of the state of their relationship at that time.

9. As for these transfers, the husband’s evidence is the only evidence so far before the Court, because the wife had no knowledge of the financial affairs.  Her knowledge was gained after separation, when her solicitor did some title searches.  She was able to give evidence of what the husband told her, but even that has to be seen in the context of her own knowledge of the legal proceedings that went on in the early years of the marriage, about the husband trying to get a business licence.

10. In that setting also, the husband transferred his property interests, as did at least one of his brothers, he says, based on family arrangements.  The restructuring of the company shareholding was also said by the husband to be because he could not get a licence to operate a health business and his sister had asked him to cooperate.  I am conscious that there were obvious family arrangements here, because this is a large family, all of whose members appear to have professional careers and qualifications.

11. It was only in cross-examination of the wife that she was asked about the letter.  It was not in her evidence-in-chief.  Its context, too, has some bearing on whose version I should accept.  The wife was asked whether she had a safety deposit box and she agreed she did.  She was then asked whether she had been ordered by the District Court of South Australia for it to be opened and she agreed.  In that safety deposit box, she confirmed that there were all sorts of things, such as rings, bracelets, gold coins and a pendant with a diamond, but she then confirmed that none of those had been included as her assets.  When asked why, she said did not know that she had to, because she thought it would be divided.  In the context of a person who has legal advice, that seems a rather strange response.

12. Whether all of that is relevant remains to be seen.  Counsel for the husband then moved in cross-examination to the letter that is now contentious.  She asked the wife whether there was a letter dated 29 March 2010 from the husband’s solicitor to the husband in that box.  She agreed there was.  She confirmed the letter was addressed to the husband.  She was asked where it was, and she confirmed that it was still with the District Court.  She was asked how she got the letter and she said that she found it on the husband’s desk.  She made reference, at that time, to the fact that when the husband moved out of the home, it was on his desk.  It is not entirely clear to me what she means.

13. She was asked then why she kept it in the box and she said that it was correspondence and she thought that it was important.  She again confirmed that when she saw it, it was on the husband’s desk and that it was with his personal papers, along with some foreign currency.  She confirmed that she only recognised her name on the letter and that she had assumed that the husband had read it.  She asked the husband, she said, why her name was on the letter and he said that it was not important.  She was then asked whether she discussed the letter again after the parties had separated and she said that she had not.  She said the discussion had taken place several years before.  I interpreted that to mean that it was before June 2012.

14. What happened between when she first saw it and when it ended up in the safety deposit box is not clear at all on the evidence.  She confirmed that the box was opened some time after 2011, but she put the letter into the safety deposit box in 2011.  She confirmed again that she did not understand the content of the letter, notwithstanding, her name was on it.

15. She was asked why she put the letter into the box in 2011 and she said that when she moved out of the home in which she had lived with the husband’s parents, she collected all of the papers, and then she said that she later put it – meaning, I understood, the letter – in the box with the passports and other documents such as social security letters.  Finally, she was asked where the letter was in 2017 and she confirmed that it was still in the District Court.  Thus, the letter sat in the wife’s possession or control for a long time and only came to light, apparently, in the District Court proceedings, well after the parties’ separation.  That, too, has some bearing on these proceedings because the husband’s position is that he did not know of the letter until the examination in the District Court.

16. The husband’s version was that he had no discussion with the wife about the letter.  In fact, that makes sense if he had not seen it.  There is no evidence before me that he sought the advice that is said to be in the letter.  His version and that of the wife, are therefore in direct conflict.

17. Before dealing with the determination of which version I accept, it is important to understand the bases upon which the wife argues that the letter is not privileged.  There are two bases:

    (1)First, she asserts that the husband has waived any privilege that he may have in respect of that letter.

    (2)Secondly, she asserts that it is not covered by privilege in any event, because:

    (a)first, the husband was perpetrating a fraud on the state revenue;  and

    (b)secondly, perpetrating a fraud on the wife.

18. The waiver issue is said to arise because the husband’s evidence was that he did not, at any time before the transfers of the properties, turn his mind to the question of any future claim by the wife.  The fraud is said by the wife to arise in two ways:

    (1)First, he did not concern himself with the consideration shown in the transfer and, as such, had not allowed the revenue authorities to receive their proper duty entitlement.

    (2)Secondly, he anticipated or knew of a possible claim by the wife for future property settlement.

19. One of the significant arguments put by counsel for the wife is that the problem could easily be resolved by the Court examining the letter.  This gives rise to the question of inspection.  It sounds like a simple solution, but there are problems associated with it.  Inspection of documents in relation to a determination about disputed legal professional privilege is well-known, and because the inspection has been encouraged enthusiastically by the highest Court in Australia, I think it is important to consider the authorities.

20. In Esso Australia Resources Ltd & Commissioner of Taxation [1999] HCA 67; 201 CLR 49; 168 ALR 123; 74 ALJR 339, Gleeson CJ and Gaudron and Gummow JJ said after observing that a claim for privilege is not conclusively established by use of a verbal formula, a court should not be hesitant to exercise its power to examine the documents.

21. In Grant & Downs (1976) 135 CLR 674, which obviously preceded Esso, the High Court said that the power to inspect was recognised and it was that, in many instances, the character of the documents, the subject of the claim would illuminate the purpose for which it was brought into existence.  But a number of Courts have urged caution against that, for example, Woollahra Municipal Council & Westpac Banking Corporation (1994) 33 NSWLR 529. That is, the Court should not be able to proceed upon evidence describing the documents and the circumstances of their creation, and should not unnecessarily pay regard to material which cannot be shown to the party challenging the claim to privilege.

22. Inspection is not peculiar to Australia.  Jenkins LJ in Westminster Airways Limited & Kuwait Oil Company Limited [1951] 1 KB 134 said:

    There is nothing in the rule or in the authorities to constrain the Court to hold that in every case where a claim to privilege is made and disputed, that the party seeking production is entitled to come to the Court and, as it were, demand as of right that the Court should go behind the oath of the opposite party and itself inspect the documents.  The question whether the Court should inspect the documents is one which is a matter for the discretion of the Court and, primarily, for the judge at first instance.

23. This subject was again considered last year by Brereton J at the Supreme Court of New South Wales in Hancock & Rinehart [2016] NSWSC 12 where his Honour said:

    …it has often been observed that a party is not entitled to insist on the court inspecting the documents, it being a matter for the discretion of the judge, who will only do so if there is good reason. While those comments have been made in response to requests by applicants for production asking the court to go behind the affidavit evidence in support of the claim and inspect the documents, they apply a fortiori where the claimant, having adduced insufficient evidence otherwise to sustain the claim, requests the court to inspect the documents (to the exclusion of the applicant).

24. I interpolate there that there are distinct similarities between Hancock and the issue before me.  I agree with the approach of Brereton J, but there is another aspect.  All of the authorities establish that inspection is essentially an issue for the trial judge.  The authorities also support the reticence of judges in order to overcome a lack of evidence from the person seeking to maintain the privilege. 

25. It is well understand why a trial judge would be cautious about taking a step that might prejudice the hearing, and as was said by the Full Court of this Court in Jess & Jess, it is possible that a judge, having inspected a document and found that it was privileged, might consider that that the information of which they were then aware was such that they could not continue to hear the case. 

26. The authority for that proposition comes from the High Court again in British American Tobacco Australia Services Limited & Laurie [2011] HCA 2. There, the majority, Heydon, Kiefel and Bell JJ, said of a bias application in circumstances where the trial judge had, at an interlocutory hearing, found that there had been fraud, the following:

    …In addition to the possibility of the evidentiary position changing, a reasonable observer would note that the trial judge's finding of fraud was otherwise expressed without qualification or doubt, that it was based on actual persuasion of the correctness of that conclusion…

    Their Honours went on to say that in the circumstances of that unusual case:

    …a reasonable observer might possibly apprehend that at the trial the court might not move its mind from the position reached on one set of materials even if different materials were presented at the trial – that is, bring an impartial mind to the issues relating to the fraud finding…

27. There are distinct similarities between that authority and the case before me.  In addition to the risks that I have just mentioned, what can get lost is the whole purpose of the inspection process.  There is a distinction between inspecting a document to see whether it contains a privileged communication, and inspecting a document for the purposes of making a quantitative or, for that matter, a qualitative assessment of the contents of the document.  The latter amounts to an assessment of evidence, and in particular, the Court is being asked to make an objective judgment where there might be a number of other possible interpretations. 

28. Thus, it seems to me that what I am invited to do, is not just an inspection to determine whether privilege exists but whether the privilege is lost.  In all of those circumstances, I decline to inspect the document because of the potential consequences for this trial, having regard to the following matters.  First, the trial has progressed a long way towards conclusion.  Secondly, this document has been in the wife’s possession for a long time.  Thirdly, there are other possible explanations behind the purpose of the letter.  Importantly, the doubt to which I later turn about whether the husband ever had it at the time the advice was given, is a question of fact in the trial. 

29. That leads to the second preliminary issue, which is the question of fairness.  In a very eloquently and strongly put submission, counsel for the wife said that fairness still dictated how the assessment of the issue of fraud – and indeed, the loss of the privilege, if it ever existed – can be considered.  The wife relies upon a passage from Mann & Carnell [1999] HCA 66; 201 CLR 1; 168 ALR 86; 74 ALJR 378, a decision of the High Court, on the issue of waiver. There, Gleeson CJ, supported by Gaudron, Gummow and Callinan JJ, said that the Court had to look at the question of the inconsistency of conduct in relation to the protection by the person who held the privilege.

30. Fairness has a role to play, but as their Honours observed, it is not some overriding principle at large.  The legal professional privilege entitlement is enshrined in the law for a purpose, and only where the person entitled to the privilege acts inconsistently with it, and thereby takes advantage of the other party, does the fairness consideration arise.  That is because the privilege is seen by the law as important.  The unusual if not unique feature of this case is that the wife and her lawyers know what the controversial letter says. 

1. It is also contentious how the advisers came into the possession of that letter, but I am not asked to deal with any associated issue.  Even with their knowledge of the letter and contents, I can only speculate whether the basis upon which it is said the husband acted inconsistently with its contents is correct.  I am still convinced the determinative issue is whether the husband knew of the letter.  Absent a clear finding that he did, inferences drawn from the letter – or indeed, specific recitation of his instructions to the practitioners and, indeed, the practitioners’ advice thereupon – may simply be speculative. 

2. Here, counsel for the wife says that there is no suggestion of impropriety on the part of the lawyers.  I am not aware of any evidence that the husband sought the advice said to be contained in the letter.  I have evidence of another transaction relating to the shares in a family company, which precedes the date of the letter.  Here, therefore, fairness cannot be the overriding principle but rather only examined in the context of the conduct of the husband’s maintenance of his right of confidentiality. 

3. It is significant that the husband objected, from the earliest opportunity, to this letter being tendered in the Federal Circuit Court.  There is an inference here that there was agreement between lawyers that the letter would be returned to the husband’s solicitor and that the affidavit, which was filed in the Federal Circuit Court and upon which – or attached to which, the letter was made, would be withdrawn.  That indicates not just that the husband maintained his privilege but that the wife’s solicitor agreed that it was his right to maintain the privilege. 

4. How that agreement fell apart has not been explored, but under the circumstances, I could not find that the husband has acted inconsistently with his privilege.  The issue in relation to waiver can only arise in this case from what has been said in cross-examination.  It is now submitted on behalf of the wife that the husband acted inconsistently with his privilege by the answers that he gave in cross-examination.  Again, that in part depends on a finding as to whether or not he knew, at the relevant time, of the existence of the letter, but in addition, it is not appropriate by cross-examination to compel the husband to act inconsistently with his privilege. 

5. Where the wife’s counsel knows the question is to be put for that purpose without the husband being given an opportunity to obtain advice and to consider, in particular, section 135 of the Evidence Act, which relates to prejudice and fairness, the fairness in that regard also arises from an underlying assumption that the husband had seen the letter and, even if he had, had understood its purport.  In the outcome, therefore, I do not accept that some issue of fairness to the wife overrides the issue of the maintenance of the confidentiality of the privilege. 

6. Of the two issues that I have to determine here, I can deal with the revenue issue first.  There is no evidence before me as to what obligation, if any, the husband had.  He was always the vendor, and he says that he left the issue of the consideration in the transfer document to the conveyancer, not the solicitor who authored the contentious letter.  No money changed hands between the parties.  The purchaser was the one who apparently tendered the transfer to the relevant authorities.  There is no evidence of any conspiracy between the vendor and the purchaser to defeat the revenue.  As such, there is no basis to find that to the extent that the letter addresses anything, the husband perpetrated a fraud on the revenue. 

7. Legal professional privilege is a well-examined beast.  It is a creature of the common law but is now enshrined in the Evidence Act.  Counsel for the wife submitted that R & Bell; ex parte Lees (1980) 146 CLR 141 is a case that indicates that the principle is perhaps not that sacrosanct. I disagree. In Bell, the High Court unanimously held that the communication in confidence to her lawyer by a wife of her address, where a child who was the subject of the disputed proceedings was held, was not privileged.  Disclosure could there be compelled by the Family Court in order to prevent frustration of an order granting custody of the child to the husband where the wife had disappeared, taking the child with her. 

8. There is no order here akin to the welfare of a child.  Bell precedes the Evidence Act, where the privilege issue is now enshrined in the statute.  Accordingly, the decision in Bell does not assist. 

9. There are authorities, such as Baker & Campbell [1983] HCA 39; (1983) 153 CLR 52 and The Attorney-General for the Northern Territory & Maurice, [1986] HCA 80; (1986) 161 CLR 475 which address the issue much more clearly.

10. The privilege has been described as an important element in the protection, according to the law, of the privacy and liberty of the individual, which is an essential mark of a free society (see Wilson J’s remarks in Baker & Campbell (supra) as of fundamental importance to the protection and preservation of those rights, the dignity and equality of the ordinary citizen under law.  That was a reference to Baker & Campbell by Deane J.  In Attorney-General & Maurice (supra), Deane J said that the privilege was a fundamental right which related, in that particular case, to the privilege against self-incrimination. 

11. On the question of waiver, the starting point is to determine whether or not there is sufficient justification to depart from the privilege that I have just referred to.  In Mann & Carnell (supra), Gleeson CJ, along with Gaudron, Gummow and Callinan JJ, said at common law, a person who would otherwise be entitled to the benefit of the privilege may waive it.  They said:

    [28]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.

12. Their Honours went on to say that:

    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.

13. Their Honours then said:

    [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.

14. Further it was said:

    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;.

15. So significant a principle is it that it its importance can be recognised by the High Court’s decision later in Expense Reduction Analysts Group Proprietary Limited and Others & Armstrong Strategic Management and Marketing Proprietary Limited [2013] HCA 46. There, a number of documents which were the subject of legal professional privilege were mistakenly labelled as non-privileged in the appellant’s list of documents and inadvertently disclosed to the respondent’s solicitors. The respondent’s solicitors refused to return them and asserted that their clients had no obligations to return the documents, since the privilege had been waived.

16. The High Court held that the issue of waiver should never have been raised as the appellants had not acted inconsistently with the maintenance of their privilege. 

17. According to its strict legal connotation, waiver is an intentional act done with knowledge, whereby the person abandons that right or privilege by acting inconsistently with that right or privilege.  In some cases, waiver will be imputed, as I have said, but the Courts will impute an intention where the actions are plainly inconsistent with the maintenance of the confidentiality.  I stress the word plainly.

18. The waiver here is said to arise because the husband put his state of mind in issue.  In Vic Hotel Proprietary Limited & DC Payments Australasia Proprietary Limited (2015) 321 ALR 191, the Victorian Court of Appeal held that putting a state of mind in issue will not, of itself, give rise to a waiver that is relevant to the existence of that state of mind. With respect, I agree. To waive the privilege, more than putting one’s state of mind in issue is necessary. There must be conduct inconsistent with maintaining the confidentiality of the legal advice.

19. In Council of the New South Wales Bar Association & Archer  [2008] NSWCA 164, Hodgson JA said:

    It is not enough to bring about a waiver of client legal privilege that the client is bringing proceedings in which the content of the privileged communications could, as a reasonable possibility, be relevant and of assistance to the other party. For the client to do this is not inconsistent with the maintenance of the privilege, and does not give rise to unfairness of the type in question. What would involve inconsistency and relevant unfairness is the making of express or implied assertions about the content of the privileged communications, while at the same time seeking to maintain the privilege. In this respect, it may be sufficient that the client is making assertions about the client’s state of mind, in circumstances where there were confidential communications likely to have affected that state of mind.

20. Nothing about the husband’s statements, his evidence or his conduct could be seen as inconsistent with the maintenance of the privilege.

21. The next issue concerns whether there is no privilege because of a fraud by the husband on the wife.  To that end, the Court must look at the evidence.  Before doing so, the authorities are again of some assistance.  At common law, communications between a lawyer and a client lose their privilege if they are made for the purpose of furthering or assisting a crime or fraud, see Southern Equities Corporation Ltd (in liq) & Arthur Andersen & Co (1997) 70 SASR 166 and, in particular, a statement by Doyle CJ at [174].

22. Importantly, and I think all counsel agree, it is not so much that the privilege is lost, but because of the fraud, the privilege does not attach.  Thus, the exception to privilege is not limited to crime or fraud in the technical sense, but may be extended to communications made for an illegal purpose.  See, for example, P&B Industries Proprietary Limited & Anthony Porter (No. 3) [2007] VSC 133 per Hollingworth J. But it can also occur where the communication is a step in, or is preparatory to, or in aid of, what has been called a civil fraud. That is, it is the carrying out of a fraud not amounting to a crime, but for which the Courts would effectively otherwise give relief, in other words, for perpetrating a fraud on the Court. (See Varawa & Howard Smith & Co Limited (1910) 10 CLR 382).

23. Fraud includes all forms of fraud and dishonesty, such as fraudulent breach of trust, fraudulent conspiracy, trickery and sham contrivances, but it also relates to issues associated with not complying with Court orders, specifically knowing that the Court is being misled.  That proposition comes from Attorney-General of the Northern Territory & Kearney (1985) 158 CLR 500, where Gibbs CJ said that:

    …legal professional privilege will be denied to a communication which is made for the purpose of frustrating the processes of the law itself, even though no crime or fraud is contemplated.

24. That, however, gives, also, rise to the question of how one approaches not only who bears the onus of proof, but also the level of satisfaction.  I draw some assistance from a judgment of Santow J in the New South Wales Supreme Court in Kang & Kwan & 2 others [2001] NSWSC 698. There his Honour said:

    Thus where it is alleged that the communication falls outside the ambit of protection for legal professional privilege it is not sufficient for the party seeking to resist the claim for legal privilege merely to state or assert that the communication was made in furtherance of a fraud or other illegal purpose but must adduce admissible evidence

25. The authority for that proposition comes from Commissioner of Australian Federal Police & Propend Finance Pty Limited (1997) 188 CLR 501. Santow J went on to say:

    Although the standard of proof is not required to the level of proof on the balance of probabilities that the communication was made in the commission of a fraud or other improper purpose, there must be “something to give colour to the charge”, some evidence at a prima facie level that has foundation in fact grounding such a claim.

26. His Honour then said:

    Consistent with the reasoning in Propend, the standards for establishing reasonable grounds will depend on the circumstances, though must still be sufficient to “give colour to the charge”, that is at a prima facie level. Thus if a person challenging privilege is clearly not in a position to lead very much evidence concerning purpose, as where the other party has exclusive access to that evidence, the Court may be satisfied with relatively less evidence. In contrast, much more evidence may be required where the party challenging improperly obtained access to that evidence.

27. This case is clearly the latter, because the wife has been in possession of this letter for a number of years and her lawyers, more recently.  The same sort of reasoning can be seen from Brennan CJ’s decision in the Propend case that I have already referred to.  There, his Honour said:

    I state the criterion as "reasonable grounds for believing" because (a) the test is objective and (b) it is not necessary to prove the ulterior purpose but there has to be something "to give colour to the charge", a "prima facie case" that the communication is made for an ulterior purpose. The purposes that deny the protection of privilege for a communication (whether documentary or oral) between a client and the client's solicitor or counsel include the furthering of the commission of an offence.

28. The dilemma here again arises because it is fundamental to first establish that the husband knew of the letter or the communication before he could maintain its confidence.  If I am satisfied that he did not know of the letter, then, clearly, all of whatever is asserted to a waiver or to be illegal conduct is of no relevance.

29. This brings me back, then, to the question of his knowledge and the disputed evidence.  I have already referred to the standard of proof.  Whilst the wife must show there is a prima facie case of fraud, and I have agreed with the authorities that that test is a very low bar, that assertion, again, is of no relevance unless the husband was privy to the advice.  I was urged to look at the document itself, and I have already indicated that, in my view, it is fraught with danger to do so, but I am equally conscious of the problem associated with making the finding that I am urged to make here, particularly by counsel to the wife, that I should decide which of the two versions is correct.

30. The problem also arises in that, notwithstanding the statement by Brennan CJ about “colour to the charge” and the prima facie nature of the issue, I see no reason why I should depart from section 142 of the Evidence Act, that is, the balance of probabilities.  It seems to me that I still have to determine the question of which of the two versions is more probable and that has to be determined, not on the basis of a prima facie case or looking at some “colour to the charge”, but rather whether or not I accept one of the two versions as more probable.  Is it more probable in this case that there was no conversation between the husband and wife, as asserted by the wife?  Is it more probably than not that the wife simply took the letter, as asserted by the husband?  There is no evidence as to where the letter was kept, until it entered the safety deposit box.  On my assessment of the evidence at this preliminary stage, it would seem that it was in the wife’s possession for some time.

31. I have already set out the evidence of the wife and it does not give me a lot of assistance.  The wife relies only on the fact that she saw her name.  I do not consider that I can conclude from that that the letter refers to anything in relation to the husband’s conduct, vis-à-vis the wife.  Why would it, where the evidence of the wife is that there was no problem with the husband at that particular time?  There is no evidence that the husband sought the advice said to have been given in the letter.  If the letter was so controversial, why did the wife hide it in the safety deposit box when she knew nothing of its contents because of her English language skills?  If the letter was scooped up with all of the other papers when the move between houses occurred, why was only that letter put in the box?  All of that evidence tends to suggest that there was some surreptitious act on her part, because she saw, as she said, it was important.  Why it was important remains a mystery.

32. I am conscious that the box contained other controversial items said not to belong to the wife.  There is also the judgment against the wife by the District Court for taking money from the business inappropriately, such that – and I do not need to deal with this in any way – that court made a judgment against the wife which, I understand, is still outstanding.  The only reason I know anything about that is because there was discussion at the commencement of these proceedings that the wife is seeking an order by way of either indemnity from the husband or, alternatively, that he make the payment.  It is quite clear that something happened in those proceedings, adverse to the wife.

33. So significant was this box that the judge apparently directed the parties’ solicitors to be present when it was opened, but its contents were quarantined by the District Court.  There is the evidence of the husband that he knew nothing of the letter until the District Court proceedings.  That evidence is sworn.  I do not know whether credit affects this determination, because I have not concluded the case, nor have I heard final submissions.  But of the two versions about that letter, the husband’s version seems to be the more probable.  As such, I could not find that he was aware of the existence of the letter and, accordingly, could not find that he waived the privilege in the way in which it is asserted that he has by counsel for the wife.

34. I therefore rule that the document retains its privileged status.

I certify that the preceding sixty-four (64) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 15 June 2017.

Associate: 

Date:  19 July 2017