DING & DING
[2019] FamCAFC 35
•28 February 2019
FAMILY COURT OF AUSTRALIA
| DING & DING | [2019] FamCAFC 35 |
| FAMILY LAW – APPEAL – LEGAL PRIVILEGE – Where the trial judge delivered ex tempore reasons upholding the husband’s claim to legal advice privilege in respect of a letter authored by his solicitors – Where the parties held no property in their own names at the date of trial – Where the wife’s application invoked s 106B of the Family Law Act 1975 (Cth) and sought to set aside specified dispositions from the husband to members of his family in April 2010 – Where the wife asserted that the marriage had been unhappy since 2008 – Where the impugned transactions occurred two months after the letter the subject of the trial judge’s privilege ruling was authored – Where the wife alleged that the husband alienated property interests to members of his family in anticipation of proceedings for property settlement – Section 125 of the Evidence Act 1995 (Cth) considered – Where the relevant question before the trial judge was whether privilege was lost through fraud or implied waiver – Where the trial judge expressed his concern that he would be disqualified if he inspected the letter and refused to inspect the letter – Where the trial judge considered it relevant that the document had been in the wife’s possession for a long time – Where the trial judge found the determinative issue to be whether the husband knew of the letter – Where the trial judge failed to consider whether the inspection of the document might illuminate a potentially false answer given by the husband – Where the trial judge took into account irrelevant considerations – Where discretionary error is established – Appeal allowed. FAMILY LAW – APPEAL – APPREHENDED BIAS – Where the wife applied for the trial judge to recuse himself on the basis of apprehended bias said to arise from findings made within the privilege reasons for judgment – Where the relevant test is whether a fair‑minded lay observer might reasonably apprehend that the trial judge might not bring an impartial mind to the determination of the issues to be decided – Where the wife argued that the trial judge made factual findings on the privilege issue pertaining to central factual issues in the s 106B proceedings – British American Tobacco Australia Services Ltd v Laurie (2011) 242 CLR 283 considered – Where the trial judge had heard six days of evidence – Where the trial judge expressed qualified findings in the privilege reasons – Where, in the circumstances, the fictional observer could not reasonably reach the conclusion that the trial judge might have closed his mind – Where no error is established in the trial judge’s refusal to recuse himself. |
| Family Law Act 1975 (Cth) ss 94(1AA), 106B, 117(1) Evidence Act 1995 (Cth) ss 118, 122, 125, 133 Evidence Act 1995 (NSW) s 125 |
| Bailey v Director-General, Department of Land and Water Conservation (2009) 74 NSWLR 333; [2009] NSWCA 100 Odgers, Stephen, Uniform Evidence Law (Thomson Reuters, 13th edition, 2018) |
| APPELLANT: | Ms Ding |
| RESPONDENT: | Mr Ding |
| FILE NUMBER: | ADC | 4389 | of | 2012 |
| APPEAL NUMBER: | SOA | 89 | of | 2017 |
| DATE DELIVERED: | 28 February 2019 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Adelaide |
| JUDGMENT OF: | Murphy, Kent & O’Brien JJ |
| HEARING DATE: | 19 June 2018 |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 1 November 2017 |
| LOWER COURT MNC: | [2017] FamCA 863 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Roder SC with Mr McQuade |
| SOLICITOR FOR THE APPELLANT: | Harry Alevizos & Associates |
| COUNSEL FOR THE RESPONDENT: | Ms Pyke QC |
| SOLICITOR FOR THE RESPONDENT: | Jaak Oks Lawyers |
IT IS ORDERED THAT
The appeal from the orders made by Cronin J on 1 November 2017 be allowed.
The orders made by Cronin J on 1 November 2017 be set aside.
The matter be remitted for rehearing before a Judge of the Family Court of Australia as might be allocated.
There be no order as to costs of the appeal pursuant to s 117 of the Family Law Act 1975 (Cth).
The Court grants to the appellant a costs certificate pursuant to s 9 of the Federal Proceedings (Costs) Act 1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant in respect of the costs incurred by her in relation to the appeal.
The Court grants to the respondent a costs certificate pursuant to s 6 of the Federal Proceedings (Costs) Act 1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the respondent in respect of the costs incurred by him in relation to the appeal.
The Court grants to each of the parties a costs certificate pursuant to the provisions of s 8 of the Federal Proceedings (Costs) Act 1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to each of the parties in respect of the costs incurred by the appellant and respondent in relation to the rehearing.
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).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT ADELAIDE |
Appeal Number: SOA 89 of 2017
File Number: ADC 4389 of 2012
| Ms Ding |
Appellant
And
| Mr Ding |
Respondent
REASONS FOR JUDGMENT
The wife appeals final orders made by Cronin J on 1 November 2017 dismissing her application for alteration of property interests and spousal maintenance.
During the course of the proceedings leading to those orders, his Honour delivered ex tempore reasons on 15 June 2017 upholding, over the wife’s objection, the husband’s claim to legal advice privilege in respect of a letter authored by his solicitors (“the privilege reasons”).[1] The wife contends that his Honour erred in doing so and that the erroneous ruling led to error in the orders ultimately made.
[1]Ding & Ding (No. 4) [2017] FamCA 1180 (“Ding (No. 4)”).
After publication of the privilege reasons, and while judgment in the substantive proceedings was reserved, the wife applied for his Honour to recuse himself on the basis of apprehended bias said to arise from findings made within the privilege reasons. On 18 October 2017 his Honour refused the wife’s application and delivered reasons for that decision (“the recusal reasons”).[2]
[2]Ding & Ding (No. 3) [2017] FamCA 1178 (“Ding (No. 3)”).
The wife’s Further Amended Notice of Appeal contains seven grounds. They can conveniently be divided into two groups. Grounds 1 and 2 assert, respectively, that his Honour erred in not recusing himself and in upholding the husband’s claim to privilege. The second of those grounds asserts specific error in his Honour’s refusal to inspect the relevant privileged document. The challenges embraced by these two grounds form the major thrust of the appeal.
The remaining five grounds of appeal challenge the substantive orders, asserting specific material errors of fact and errors of law said to be central to his Honour’s refusal to make orders pursuant to s 106B of the Family Law Act 1975 (Cth) (“the Act”).
Where allegations of apprehended bias are raised on appeal, coupled with other discrete grounds, and the determination of the other grounds in favour of the appellant would not lead necessarily to a retrial, the Court should ordinarily deal with the issue of bias first because “[e]ven if a judge is found to be correct, this does not assuage the impression that there was an apprehension of bias”.[3]
[3] Concrete Pty Ltd v Parramatta Design and Developments Pty Ltd (2006) 229 CLR 577 per Kirby & Crennan JJ at [117].
We adopt that approach in these reasons, but it is first necessary to explain how the application for recusal arose and its relationship to the privilege issues.
The Context For The Privilege And Recusal Issues
The parties held no property in their own names at the date of trial. The wife’s application invoked s 106B of the Act and sought to set aside specified dispositions from the husband to members of his family. The wife also contended that the husband was beneficially entitled to other property which was said by the husband to be held on trust.[4]
[4] An alternative claim asserted the transactions were shams. His Honour rejected that claim at [19]. No ground of appeal involves a challenge to that finding.
The parties had married in 2002 and lived with the husband’s parents and extended family from that year until February 2011. Separation occurred in June 2012.
The transactions at the centre of the wife’s forensic focus occurred in April 2010, more than two years prior to separation. The letter the subject of his Honour’s privilege ruling is dated 29 March 2010 (“the 29 March letter”), that is some two weeks prior to the impugned transactions.
Fundamental to the wife’s claims was her assertion that, despite the subsistence of the parties’ relationship for over two years subsequent to the transactions, the marriage had been unhappy since 2008. That assertion was denied by the husband. The resolution of that issue was central to the wife’s s 106B case. That case turned on her assertion that the husband alienated property interests to members of his family in anticipation of proceedings for property settlement, and orders within those proceedings, with the intention of defeating any claim she may have or, irrespective of that intention, which had that effect.[5]
[5] Family Law Act 1975 (Cth) s 106B(1).
The issue so framed was largely dependent upon a decision as to whether the evidence of the wife or husband should be preferred, save for one matter which emerged for the first time only on day six of a seven-day trial conducted over four days in April 2017 and three days in June 2017. That matter concerned the 29 March letter to which we have referred over which the husband claimed privilege. The issue arose after the wife’s case had closed. The husband’s cross‑examination had not concluded and, obviously, final submissions had not been made.
In the course of cross-examining the husband, and immediately after the husband had denied turning his mind “to the question of any future claim for property settlement that the wife may bring”,[6] counsel for the wife called for the production of the 29 March letter. [7] Objection was taken on the ground of legal professional privilege. Counsel for both parties were aware of the contents of the letter but his Honour was not.
[6] Transcript 14 June 2017, p.113 lines 22–24.
[7] Transcript 14 June 2017, p.113 line 32.
There followed a series of exchanges between counsel for both parties and the trial judge in which his Honour sought to clarify not only what matters were being put in issue by the parties in respect of the privilege claim, but also their submissions as to the appropriate approach to be taken to the determination of those issues. We think it fair to say that some considerable confusion remained about those issues.
Section 118 of the Evidence Act 1995 (Cth) (“the EA”) is determinative of whether the relevant claimed privilege attaches and, relevantly, ss 125 and 122 of the EA are each determinative respectively of the question of whether, using the language of the EA, privilege is “lost” because of fraud or implied waiver. Section 118 was alluded to in oral argument before his Honour but no submissions were made by reference to its terms as to whether privilege attached.[8] Section 118 was not referred to in his Honour’s reasons.
[8] The record suggests that s 119 of the Evidence Act 1995 (Cth) may also have been relevant but it was not referred to at all before his Honour.
Nevertheless, and despite some cursory references apparently to the contrary during the proceedings and in the privilege reasons at [17] and [26], there is little doubt that the proceedings before his Honour were conducted on the basis of a concession that privilege attached to the 29 March letter with the relevant questions being whether privilege was lost through fraud or implied waiver. A consequence is that, despite no specific reference being made to the terms of s 118, the concession that the 29 March letter attracted legal advice privilege must also have been a concession that the terms of s 118 were satisfied; if the latter was not conceded, legal advice privilege could not attach.
Therefore, as well as the admitted fact that the 29 March letter was a communication from the husband’s solicitor to him as a client, the concession that the letter attracted privilege is also an admission that the letter was confidential; that it contained legal advice and that it was prepared for the dominant purpose of the husband’s solicitor providing legal advice to him.
Before turning to the wife’s recusal argument and the trial judge’s findings upon which it is founded, it is necessary to explain further the circumstances in which the privilege claim arose, eventuating from the circumstances in which the 29 March letter came to light.
The 29 March Letter And How It Came To Light
The letter the subject of the privilege claim came to light in unusual circumstances. The parties and the husband’s broader family had been engaged in civil litigation in the State courts. During that litigation, the wife was ordered to open a safety deposit box in her name. The 29 March letter was in the box.
His Honour referred, in the privilege reasons, to the wife’s account as to how the letter came into her possession and how it came to be in the safety deposit box. In essence, the wife claimed to have found the letter on the husband’s desk and that she had taken it from the home upon separation because “she thought it was important”. She claimed to have had a conversation with the husband asking him why her name was on the letter and that he had replied that “it was not important”.[9] His Honour said that “[w]hat happened between when she first saw [the letter] and when it ended up in the safety deposit box is not clear on the evidence” and concluded that it has been “in the wife’s possession or control for a long time”.[10]
[9]Ding (No. 4) at [12].
[10]Ding (No. 4) at [13].
In so far as the letter’s provenance in this Court is concerned, the starting point was proceedings commenced by the wife in the then Federal Magistrates Court in November 2012. At an early stage of those proceedings, a copy of the letter was exhibited to an affidavit filed on behalf of the wife. While the record reveals little detail, it seems that privilege was asserted at that time by those representing the husband and, by agreement with the wife, the affidavit was uplifted from the Court file. The proceedings were later transferred to the Family Court of Australia.
We were told by the wife’s senior counsel of the circumstances that saw the letter contained within a sealed envelope both in the proceedings before his Honour and also before this Court:[11]
[COUNSEL FOR THE WIFE:] …As I understand it, the position of [the wife’s trial counsel] is that he found himself in – he was given this letter. He was given it shortly before the trial commenced. He took the view that there were questions as to whether it was properly a privileged letter because he took the view that there were indications of a civil fraud, as it were.
He took some advice about what he should do and his idea was to put it – in effect, not to take advantage of the fact that he had possession of that and, therefore, not to tender it – not to cross-examine it, in that sense, but to put it in a sealed envelope, put it back in the court’s custody and then leave it up to the court as to whether it would be, as it were, reproduced to him, in an effect, having gone out of his custody by him having put it in a sealed envelope. Now, I wouldn’t be critical of that procedure. It does give rise to some complications as to how the matter arose…
[11] Appeal transcript 19 June 2018, p.19 lines 24–36.
Counsel for the wife at trial submitted that in order to decide the privilege issues, it was necessary for his Honour to inspect the document. His Honour declined to do so.
A consequence is that the privilege issues were decided by reference to factual findings made by his Honour. Those factual findings founded the wife’s claim that his Honour should recuse himself by reason of apprehended bias, said to arise by reason of pre-judgment.[12]
Apprehended Bias And The Refusal To Recuse
[12] See, for example, Livesey v New South Wales Bar Association (1983) 151 CLR 288 (“Livesey”).
The Principles Relied Upon By The Trial Judge
His Honour referred to, and placed specific reliance upon, the decision of the High Court in British American Tobacco Australia Services Ltd v Laurie (“British American Tobacco”).[13] His Honour’s recusal reasons can be seen to pay significant regard to the factors which divided the Court in that case. It is, we think, both important and instructive to look at that decision in some detail.
[13] (2011) 242 CLR 283 (“British American Tobacco”).
In British American Tobacco a judge had permitted documents to be adduced in evidence over which privilege was claimed because he was satisfied of fraud within the meaning of s 125 of the Evidence Act 1995 (NSW).[14] A later case, brought by a separate plaintiff, involved a cause of action against British American Tobacco Australia Services (“BATAS”) effectively identical to that in the earlier case. The later case was listed to be heard by the same judge. In an interlocutory application before that judge ahead of the trial, BATAS sought the judge’s recusal. His Honour refused. An appeal against that decision was dismissed, Allsop P dissenting. The High Court allowed the subsequent appeal by a 3–2 majority.
[14] The terms of that section are identical to s 125 of the Evidence Act 1995 (Cth).
Obviously enough, the recusal application in that case occurred in circumstances quite different to the present. Yet, the conclusions which divided the majority (Heydon, Kiefel and Bell JJ) from those in dissent (French CJ and Gummow J in separate judgments) are instructive in a manner shortly to be referred to. First, however, it is important to outline the principles which are not in doubt and which are referred to in the judgments.
French CJ opened his judgment with a quote from an earlier decision of Mason J (as that Chief Justice then was) which is, with respect, fundamental:[15]
It needs to be said loudly and clearly that the ground of disqualification is a reasonable apprehension that the judicial officer will not decide the case impartially or without prejudice, rather than that he will decide the case adversely to one party.
[15] British American Tobacco at [1] quoting from Re JRL; Ex parte CJL (1986) 161 CLR 342 at 352. French CJ also noted that Mason J’s comment was a “caution endorsed in Re Polites; Ex parte Hoyts Corporation Pty Ltd (1991) 173 CLR 78 at 86 per Brennan, Gaudron and McHugh JJ”.
To similar effect, French CJ said “courts should be astute not to defer to that kind of apprehension that is engendered by the anticipation of an adverse outcome, rather than a legitimate concern about partiality”[16] before later saying:[17]
[16] British American Tobacco at [39].
[17] British American Tobacco at [45].
45The scrutiny required of claims of bias based on prior findings by a decision-maker was emphasised, in relation to administrative decisions, by Gaudron and McHugh JJ in Laws v Australian Broadcasting Tribunal [(1990) 170 CLR 70]. Their Honours, after referring to [The Queen v Australian Stevedoring Industry Board; Ex parte Melbourne Stevedoring Co Pty Ltd (1953) 88 CLR 100], [The Queen v The Commonwealth Conciliation and Arbitration Commission; Ex parte The Angliss Group (1969) 122 CLR 546] and [R v Lusink; Ex parte Shaw (1980) FLC 90-884], said [at [100]]:
"When suspected prejudgment of an issue is relied upon to ground the disqualification of a decision-maker, what must be firmly established is a reasonable fear that the decision‑maker's mind is so prejudiced in favour of a conclusion already formed that he or she will not alter that conclusion irrespective of the evidence or arguments presented to him or her."
(Emphasis added.)
The requirement that an apprehension of bias, based on judicial conduct, be "firmly established" is consistent with the most recent decisions of this Court and gives content to the requirement that an apprehension of bias, in that class of case, be reasonable.
(As per original)
Gummow J also referred to that passage and said that reference to apprehended bias being “firmly established” was “important”.[18]
[18]British American Tobacco at [71]–[72].
The relevant inquiry seeks to put both the trial judge – and an appeal court examining that decision – in the position of a lay observer; to see the claim “through the eyes of non-judicial observers”,[19] but not a non-judicial observer ignorant or wilfully blind to a knowledge of the law in general or the issue to be decided.[20] The hypothetical observer “is reasonable and understands that [the trial judge] is a professional judge” but is “not presumed to reject the possibility of pre-judgment”.[21]
[19] British American Tobacco at [48].
[20]British American Tobacco at [46] citing Kirby J in Johnson v Johnson (2000) 201 CLR 488 at 508.
[21] British American Tobacco at [144].
Their Honours in the majority also referred relevantly to what had been said in Livesey:[22]
126In Livesey it was said that a fair-minded observer might entertain a reasonable apprehension of bias if a judge sits to hear a case after the judge has, in a previous case, expressed "clear views" about a question of fact constituting a live and significant issue in the subsequent case or about the credit of a witness whose evidence is of significance on such a question…
(Footnote omitted, emphasis added)
The Differing Conclusions Reached by the High Court in British American Tobacco
[22] British American Tobacco at [126].
The Chief Justice concluded that the judge was correct in refusing to recuse himself saying, relevant to the reasons and resulting arguments in this case:[23]
50In my opinion it is not necessary to go further for the purposes of this appeal than to consider the view of the fair-minded lay observer aware of the following matters:
…
3.The content of Judge Curtis' reasons for the ruling on the matter of legal professional privilege and the information conveyed by those reasons, including the information they conveyed about the nature of the proceedings and the fact that the ruling was not a final determination of fraud…
4.The qualifications stated by Judge Curtis in relation to his findings.
[23] British American Tobacco at [50].
The latter point was emphasised by French CJ in the following paragraph of the judgment:[24]
51…To conclude, as required by [Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337], that the judge might be led to decide the case other than on its legal merits, would require the observer to give no account to the express qualifications made by the judge in his findings in the [earlier] ruling…
[24]British American Tobacco at [51].
As will be seen, it is clear that his Honour placed particular reliance upon precisely that consideration.
What was said by Gummow J also has resonance for the instant case. His Honour referred to the New South Wales equivalent of s 125 of the EA and said in respect of fraud as there referred to, “it is not necessary for the denial of privilege to make a finding beyond the standard of ‘reasonable grounds’”.[25] With resonance for what is argued by the wife in this case, his Honour then quotes the argument on behalf of BATAS as follows:[26]
… The submission is that, in deciding against BATAS in the further discovery application in the [earlier] litigation, his Honour in the 2006 reasons, by failing expressly to frame his findings as being made only on the basis of “reasonable grounds”, went beyond the standard sufficient for the satisfaction of s 125 and so made an adverse finding against BATAS at a higher, more prejudicial, standard. That finding then is said to lead to the conclusion that BATAS should have succeeded on its recusal application in the [current] litigation.
[25] British American Tobacco at [86].
[26] British American Tobacco at [88].
Like French CJ, Gummow J placed significant emphasis upon the qualifying statements made by the trial judge in reaching conclusions as to fraud in the earlier reasons.[27] His Honour also noted that, while the trial judge went further than making findings as to “reasonable grounds” the submissions of BATAS before him urged just such an approach.[28]
[27] British American Tobacco at [95] referring to the qualifications that the finding was “on the present state of the evidence” and “in the absence of evidence to the contrary” and at [96] referring to the qualification “far from expressing my conclusions in terms of finality”.
[28]. British American Tobacco at [92].
Gummow J also referred to what had been said by the High Court in Johnson v Johnson,[29] a case involving remarks by a trial judge during the course of the trial said to be indicative of pre-judgment, and said:[30]
[29] (2000) 201 CLR 488 (“Johnson”).
[30] British American Tobacco at [82]–[83].
82Thirdly, the conclusions in the joint reasons in Johnson were expressed as follows:
"The judge was not to be understood as intending to express a concluded view on the credibility of either party. In particular, he was not to be understood as intending to express such a view about the credibility of the appellant, who had not yet been called to give evidence. His expectation as to the importance of independent evidence, and documentary material, was understandable. An apprehension that he had formed a concluded view on the credibility of witnesses, and would not bring an open mind to bear when he decided the case, would have been unwarranted and unreasonable."
83Fourthly, where, as was the situation in Johnson, the judge in question later explains in court what he or she had intended to convey by an earlier statement in court, the question is whether a reasonable observer would reject that explanation, or whether the explanation could not remove “an ineradicable apprehension of prejudgment”.
(Footnotes omitted; emphasis added)
In reaching, in effect, an opposite conclusion as to what the hypothetical observer might conclude, Heydon, Kiefel and Bell JJ said:
145Whenever a judge is asked to try an issue which he or she has previously determined, whether in the same proceedings or in different proceedings, and whether between the same parties or different parties, the judge will be aware that different evidence may be led at the later trial. Judge Curtis's express acknowledgment of that circumstance does not remove the impression created by reading the judgment that the clear views there stated might influence his determination of the same issue in the [current] proceedings. Allsop P's conclusion was correct. 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, that while the judge did not use violent language, he did express himself in terms indicating extreme scepticism about BATAS's denials and strong doubt about the possibility of different materials explaining the difficulties experienced by the judge, and that the nature of the fraud about which the judge had been persuaded was extremely serious. In the circumstances of this 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. Johnson v Johnson is distinguishable.
(Footnote omitted; emphasis added)
The Trial Judge’s Findings
The Trial Judge’s Privilege Reasons
In three different parts of the privilege reasons, his Honour finds that “there is no evidence that [the husband] sought the advice that is said to be in the letter”.[31] We consider, with respect, that this finding cannot be correct.
[31]Ding (No. 4) at [14], [31] and [61].
First, there was no evidence as to what advice was in the 29 March letter. Nor, until the letter was inspected and the privilege claim determined, could there be any such evidence.
Secondly, if the finding is intended as a finding that there was no evidence of any advice in the letter, that too in our respectful view is an error. As we have earlier sought to explain if, as was the case, it was conceded that the letter attracted privilege it was axiomatically conceded that the letter was confidential and that its dominant purpose was the husband’s lawyer providing legal advice to him.
At [30] of the privilege reasons, his Honour identifies the “determinative issue” as being whether the husband knew of the letter. To similar effect, his Honour finds at [57] that “it is fundamental to first establish that the husband knew of the letter or the communication before he could maintain its confidence”. It seems clear that it is this “determinative issue” which leads his Honour to assert, at [59], that it was necessary to determine “which of the two versions about what happened to this letter is more probable” and that was to be determined by “whether or not I accept one of the two versions as more probable.”
That conclusion led in turn to his Honour finding at [61]:
I find the evidence of the wife 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 it was important. Why it was important remains a mystery.
What is said there has ramifications for Ground 2 which challenges the privilege ruling. However, for the purposes of the recusal challenge in Ground 1, what is said by the wife is that his Honour has plainly made findings, including centrally as to credit (for example, “some surreptitious act on her part”) which would need to be, and should have been, addressed after the evidence and submissions had concluded.
In the privilege reasons, at [6] and [7], his Honour refers to an asserted conflict between statements made by the wife about the state of the marriage and makes findings that there was in fact an inconsistency in that evidence. His Honour finds, at [6] that “the wife’s counsel argues 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” before referring to a passage in the wife’s trial affidavit and saying “[t]hat was not her evidence in cross‑examination”.
The finding made by his Honour and what is said to be an incorrect inference drawn by his Honour from the evidence of the wife remains a live issue; it is contended that his Honour erred factually in those findings. For the purposes of the recusal challenge in Ground 1, the point sought to be made is that it was not necessary for his Honour to make those findings and in doing so his Honour had pre-judged a very important issue which needed to await all of the evidence being heard and submissions being made.
During the proceedings before his Honour, counsel for the wife sought to maintain his submission that his Honour had misinterpreted the wife’s evidence or had drawn a wrong inference from an inconsistency that was said to not, in fact, exist. The following exchange occurred:[32]
MR McQUADE: Well, I – I disagree with your Honour about the inference that can be drawn on the - - -
HIS HONOUR: Well, we can have that in final address but you – you will have to do pretty good hurdle jumping to get over that evidence.
(Emphasis added)
[32] Transcript 14 June 2017, p.111 lines 22–26.
In summary, his Honour resolved the privilege issue by making factual findings in respect of whether the marriage was “unhappy” or “in difficulty” at the time the letter was written (reasons [5] – [10]); the circumstances in which the wife came into possession of the letter ([11] – [14]); and whether the husband knew of the letter and had conversed with the wife about it as she alleged but as he denied ([14]). His Honour then proceeded to address which “version I accept”.
The Trial Judge’s Recusal Reasons
In British American Tobacco, both Gummow J and the majority saw a consideration of the trial judge’s reasons for refusing recusal as relevant in assessing the challenge to that conclusion. Gummow J held that “the hypothetical observer would attend to them in deciding whether the [earlier] reasons had produced a sufficient apprehension of prejudgment”.[33] Their Honours in the majority agreed but decided that, in that case, “[t]he recusal judgment adds nothing of moment to the material on which the hypothetical observer’s statement is to be made”.[34]
[33] British American Tobacco at [70].
[34]British American Tobacco at [138].
The degree of assistance to be gained from the recusal reasons is caveated by what the majority also said:[35]
…Ex hypothesi, a court reviewing the decision of a judge to sit to hear a case in circumstances where apprehended pre-judgment is alleged, but not actual bias, will be reviewing the decision of a judge who is confident of his or her ability to decide the case impartially.
[35] British American Tobacco at [137].
In his reasons for refusing recusal, his Honour sought to describe findings made in the ex tempore privilege reasons in a manner so as to distinguish them from factual findings necessary to be made ultimately in respect of the substantive issues. For example, his Honour referred to making findings in the privilege reasons on “a discrete issue”.[36]
[36]Ding (No. 3) at [35], [41] and [49].
His Honour also sought to point out that, in the privilege reasons, he “noted that there were other matters still to proceed”.[37] He rejected the suggestion that an implication would be drawn by a reasonable and well-informed observer that he “would reject the wife’s case in respect of other matters”[38] or that “the fictional observer would consider that I determined the issue on the basis of rejecting the wife’s evidence generally or even specifically on the basis of credit”.[39]
[37]Ding (No. 3) at [35].
[38]Ding (No. 3) at [41].
[39]Ding (No. 3) at [44].
It will be seen that his Honour refers, at [41], to what the observer “would” conclude as distinct from what he or she “might” do, the latter being the relevant test. The full passage at [41] is, “I reject the suggestion that an implication would be drawn by a reasonable and well-informed observer that I would reject the wife’s case in respect of other matters” (emphasis added). However, his Honour earlier in the reasons correctly states the test[40] and refers to a submission by counsel that his Honour “would not have an impartial mind”[41] (emphasis added). We consider that his Honour’s statement at [41] is made as a reflection of that submission and it cannot reasonably be said that his Honour applied the wrong test.
[40]Ding (No. 3) at [30] citing Johnson.
[41]Ding (No. 3) at [27].
His Honour’s ultimate conclusions can be seen in the following paragraphs of the recusal reasons:
49.In my view, a properly informed and reasonable observer aware of the discrete issue would understand that this was a ruling on which of two versions was the more probable and nothing more… In my view, a reasonable observer would understand that a professional judge who is constantly required to assess evidence would decide a factual dispute between two versions based on which was more probable and that would be done without finding that the wife was untruthful or that her whole case was without foundation…
…
51Because of the stage of the trial at which this issue was raised, the observer would also be aware that there had been discussions between the parties’ lawyers in which it had been accepted at some stage early in the proceedings that the wife acknowledged that the letter was covered by privilege.
52In my view, the connection is missing to show that even if I made a finding and ruled against the wife in respect of the version of evidence she gave about the letter, it amounted to a rejection of other evidence upon which she relied or that I would find against her generally wherever there was a disputed issue of fact. I made the latter clear in the ex tempore reasons given at the time and that there was still further evidence and submissions to be heard.
The reference to “a connection” can be seen to be a reference to Gummow J’s judgment in British American Tobacco:[42]
…The observer would require articulation of the logical connection between the matter in the [earlier] reasons and the apprehended deviation from the course of deciding, on their merits, the issues in the [later] litigation.
[42] British American Tobacco at [89].
Earlier, at [44], his Honour said of the privilege issue that “a ruling was required” and “[t]hat ruling had to be determined on the basis of which version was more probable” (emphasis added). An important part of the wife’s case before this Court is the contention (confirmed as correct by our reference to the transcript) that the wife’s counsel did not seek to have his Honour make findings in respect of contested factual issues by reference to the competing evidence but, rather, by inspecting the 29 March letter.
Why The Wife’s Arguments Should Be Rejected
The central question which this Court must answer in respect of the instant ground is whether it is “firmly established” that his Honour erred in his assessment that the hypothetical observer would not conclude that he might not bring an impartial mind to the determination of the ultimate issues to be decided in the proceedings.
The divided opinions in British American Tobacco might be seen to reflect the fact that such a question does not admit of a ready answer. It does not do so in this case.
The wife asserts, in effect, that the timing of the ruling increases the hypothetical observer’s apprehension. It is argued, for example, that “[i]f there were the possibility of further evidence, then one might have the idea that all of this is, as it were, provisional and subject to further evidence”[43] whereas here the wife’s evidence had closed. The argument proceeds that the factual findings made by the trial judge on the privilege issue pertained to a central – perhaps the central – factual issue in the s 106B proceedings, namely whether the marriage was unhappy or in difficulties at the time of the impugned transactions:[44]
…there was a clear issue before his Honour that his Honour was aware of, that he was going to be asked to find that the marriage was in difficulty. And yet, his Honour has made those observations at paragraph 6 and at paragraph 61 in a published judgment [the privilege reasons] before the submissions are concluded and while the trial is in its course… [H]is Honour then goes on to analyse the criticisms of her evidence and these were, in effect, the criticisms of the wife’s evidence that were made by [the husband’s counsel] – and then finds that all of the evidence tends to suggest that there was some surreptitious act on her part…
[43] Appeal transcript 19 June 2018, p.17 lines 4–5.
[44] Appeal transcript 19 June 2018, p.22 line 43 to p.23 line 4.
We have little difficulty in concluding that the fictional observer would conclude that his Honour might ultimately make findings in respect of those issues adverse to the wife. But, that is not the relevant question. Rather, the question is whether that observer would find that his Honour might have closed his mind or might not move his mind when the evidence had closed and submissions were heard.
Ultimately, we are persuaded that the fictional observer would not have reasonably reached that conclusion. We conclude, as a consequence, that his Honour did not err in refusing to recuse himself.
The context within which the privilege findings were made is important. This case is distinguishable from cases such as British American Tobacco where concluded findings are made by the same judge in a previous case. It is also distinguishable from cases where the relevant determination is made in interlocutory proceedings ahead of a trial. In each of those instances, the adjudicating judge has had no opportunity to hear any evidence in the trial to which the apprehension is directed.
Here, his Honour had heard six days of evidence, albeit that the husband’s cross‑examination had not concluded. Although, admittedly, formalised as findings within a ruling in respect of a specific issue, we consider nevertheless that those findings are much more akin to the expression of views by a judge about an aspect or aspects of a case during a trial or the permissible expression of preliminary views that might require persuasion to change. That is not pre‑judgment if the judge’s mind remains open to be moved from those views when ultimately deciding the issue.[45]
[45] See, for example, Johnson.
It is true that his Honour’s findings were not, in the ex tempore privilege reasons, qualified or caveated to the same extent that they were in his Honour’s later recusal reasons. It is also true that his Honour made findings about the happiness of the marriage or its difficulties and that those issues were argued to be relevant to the wife’s ultimate s 106B case and that, during argument, his Honour indicated to the wife’s counsel in the passage quoted at [48] above that he had a “hurdle” to cross.
Nevertheless, rather than being “clear views” of the type spoken of in Livesey, in our view his Honour’s privilege findings were qualified. For example, echoing we think the transcript exchange earlier referred to, his Honour noted that issues about the difficulties in the marriage were “still apparently contentious”.[46] As the transcript exchange indicates, although the wife faced a “hurdle” his Honour was nevertheless acknowledging that his mind might be moved on that issue through submissions at the end of the trial.
[46]Ding (No. 4) at [6].
Other qualifications are given by his Honour including a specific reference to the relevance of issues under discussion “remains to be seen as the trial is not finished”.[47] Also, having referred to sworn evidence of the husband, his Honour said he did “not know whether credit affects this determination, because I have not concluded the case, nor have I heard final submissions” before concluding that “of the two versions about the letter, the husband’s version seems to be the more probable”[48] (emphasis added).
[47]Ding (No. 4) at [11].
[48]Ding (No. 4) at [63].
Referring again to what was said in particular by French CJ in British American Tobacco earlier quoted, we consider that that the fictional observer would give account, and significant account, to “the express qualifications made by the judge”[49] in his findings in the privilege reasons.
[49]British American Tobacco at [51].
The emphasised phrase above seeks to highlight the fact that the findings were given within a claim that waiver or fraud permitted an otherwise privileged document to be produced. While fraud (in the s 125 of the EA sense) was central to that question, it was not central to the wife’s s 106B claim. The wife apparently asserted within that claim an intention on the part of the husband, and perhaps members of his family acting in conjunction with him, to defeat what she asserted was an anticipated s 79 order. However, it was not necessary for her to prove that intention; it was sufficient if the impugned transactions had that effect. While the wife confronted, on the s 106B case she apparently sought to adduce, forensic difficulties in proving the husband’s intention behind the impugned transactions, her claim did not depend upon the same. However, her claim would fail if she could not prove that, irrespective of any such intention, the impugned transactions were made in anticipation of relevant orders in her favour.
The factual findings made by his Honour, including in respect of the happiness of the marriage, may well have been relevant to that ultimate issue. However, that was not a fact in issue in the privilege proceedings. Rather, his Honour’s findings on that topic in the privilege reasons were relevant to deciding whether an exception to privilege was established so as to permit production of a letter.
The privilege issue was determined by a very experienced trial judge whose reasons reveal he was entirely alive to the ramifications for the trial and findings on the substantive issues not only of inspecting the letter so as to determine the privilege claim (which his Honour referred to more than once) but also to the dangers of pre-judgment in making findings on the privilege issue. As has been pointed out, the fictional observer “is reasonable and understands that [the trial judge] is a professional judge”.[50]
[50] British American Tobacco at [144].
We do not consider that the fictional observer would reasonably apprehend that his Honour might not bring an impartial mind to the determination of the wife’s credit generally or, importantly, in the determination of individual and specific issues relevant to the determination of the ultimate issues.
The Recusal Issue: Conclusion
We are not persuaded of the error asserted in Ground 1.
The Privilege Issue
“Fraud” And The Trial Judge’s Refusal To Inspect The Letter
Fraud for the purposes of s 125, is “not limited to legal fraud in the narrow sense”, it can:[51]
…include the kind of sharp practice often associated with equitable fraud encompassed by the Shorter Oxford Dictionary sense of dishonesty, namely, ‘lack of probity; disposition to deceive, defraud or steal’.
[51] Stephen Odgers, Uniform Evidence Law, (Thomson Reuters, 13th ed, 2018) at 1048–1049 [125.90], citing Santow J in Kang v Kwan [2001] NSWSC 698 (“Kang”).
Crucial to the application of s 125 of the EA is proof that the relevant document was prepared “in furtherance of the commission of a fraud”. Relevant to the s 106B context at the heart of the proceedings before his Honour, it has been said that “obtaining legal advice in the context of an ongoing dishonest or fraudulent undertaking, so that the advice will or may impact upon or inform the client in the course of that undertaking, … will be regarded as being in furtherance of the improper purpose”.[52]
[52]Carbotech-Australia Pty Ltd v Yates [2008] NSWSC 1151 at [26].
His Honour’s privilege reasons posit the question of whether the husband knew of the 29 March letter as “determinative”, saying that “[a]bsent a finding that he did, inferences drawn from the letter are simply speculative”.[53]
[53]Ding (No. 4) at [30].
Later, and to similar effect, his Honour found at [57]–[59]:
57.The wife has been in possession of this letter for a number of years and her lawyers, more recently but 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 all of whatever is asserted as a waiver or illegal conduct is of no relevance.
58. Of the husband’s knowledge, the onus of proof lies with the wife and she has to show a prima face case of fraud. While the test has a very low bar, that is of no relevance unless the husband was privy to the advice. In respect of looking at the document, I am conscious that that [sic] I have the sworn evidence of the husband and that of the wife but objectively, I prefer the husband’s version for the reasons that follow.
59.Notwithstanding what Brennan CJ [said] 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, and decide the matter on the balance of probabilities. That is, which of the two versions about what happened to this letter is more probable? 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.
(Emphasis added)
We consider, respectfully, that his Honour erred in making those findings and positing the husband’s knowledge of the letter as central to a determination of the issue of fraud. Contrary to what his Honour asserts, we are unable to agree that the husband’s knowledge was, in the circumstances of this case, relevant to the question at all.
We have already sought to point out that a concession that the terms of s 118 of the EA had been satisfied such that the letter attracted privilege brought with it a concession that the letter to the husband from his lawyer was confidential and was prepared for the dominant purpose of providing legal advice to the husband. The terms of s 118 also make it clear that the privilege may attach “whether [the document is] delivered or not”.
Privilege attaches at the point of creation of the document. By reference to the terms of s 125 of the EA, the question of whether a document is “prepared … in furtherance of the commission of a fraud” arises when the document is created. Proof that it was may involve evidence as to the husband’s then knowledge of the document, but the corollary does not hold true; the document might satisfy s 125’s requirements even though the husband does not have knowledge of the document. The factual issues which his Honour said were necessary to determine on the balance of probabilities (at [59] of the privilege reasons above) were not in fact so necessary.
His Honour correctly, with respect, identified that it was necessary to identify some “colour to the charge” by the wife of fraud,[54] the mere assertion of the same not being sufficient. We consider, with great respect, that not only were the matters which his Honour considered should be decided on “the balance of probabilities” largely irrelevant, his Honour should not have, as he said he would and did, depart from a consideration of whether there was “colour to the charge”.
[54] Ding (No. 4) at [53]–[55] referring to the judgment of Santow J in Kang citing in turn Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501.
As we have said, the wife did not need to prove any intention on the part of the husband to sustain her s 106B claim, much less any fraudulent intention. She did, though, need to prove that orders in relevant proceedings were “anticipated” notwithstanding the time gap between the impugned transactions and separation. She needed to do so as a person who, to quote Santow J in Kang v Kwan[55] was:
… 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…
[55] [2001] NSWSC 698 at [37]. See also Ding (No. 4) at [55].
It was never established as a fact that the wife had “improperly obtained” the 29 March letter. Nor was that, as a specific consideration, referred to by his Honour as to whether he should inspect the letter. In any event, the treatment of the letter within the Court process marks it as distinguishable from the qualifying statement made by Santow J just quoted. As a result of the concession that the 29 March letter attracted privilege, it was an uncontroversial fact that the husband’s lawyer had authored a letter the dominant purpose of which was the provision of legal advice to the husband. It was an uncontroversial fact that a number of intra-familial transactions had the effect of devolving from the husband to his sister interests in property erstwhile held by the husband. It was also uncontroversial that those interests were transferred about a fortnight after the letter of advice was authored. It was asserted by the wife that the transfers occurred other than for full consideration and were not conducted at arm’s length.
Against that background, the wife’s counsel’s call for production occurred immediately after he asked a question of the husband in cross-examination as to whether “[a]t any time prior to the transfer of the three properties of 20 April 2010, was your attention drawn to a possible future claim for property settlement that the wife may bring”, to which the husband answered “no”.[56]
[56] Transcript 14 June 2017, p.113 lines 28–30.
Although the wife’s counsel, in the unusual circumstances earlier outlined, called for production of the letter, as distinct from seeking to tender it in evidence, there was the potential for its contents to be admissible and for the wife to re-open her case so as to tender it. The wife’s counsel submitted that, in respect of the issue of the privilege being lost through fraud:[57]
[COUNSEL FOR THE WIFE]: Well, I think, your Honour, in regards to the fraud issue, I think your Honour has got no alternative – if your Honour hears the application, your Honour has got no alternative but to look at the letter for yourself.
[57] Transcript 14 June 2017, p.117 lines 37–39.
The almost inevitable implication is that the wife, who like her counsel had seen the letter, considered that the letter would give further “colour to the charge”. In that respect, in Bailey v Director-General, Department of Land and Water Conservation,[58] the Full Court of the Federal Court rejected an argument that inspection pursuant to s 133 of the EA was confined to confirming the effect of evidence otherwise given, holding that the Court’s power “is engaged under the section in any case where ‘a question arises under this Part relating to a document’”.[59] Questions arising under s 125 arise under the relevant Part of the EA (namely, Part 3.10).
[58] (2009) 74 NSWLR 333 (“Bailey”).
[59] Bailey at [57] per Tobias JA; Allsop P & Hodgson JA agreeing. Quoted in Stephen Odgers, Uniform Evidence Law, (Thomson Reuters, 13th ed, 2018) at 1209 [133.60]. The learned author describes other authorities as wrongly interpreting that decision, for example, Tabcorp Holdings Ltd v Victoria [2013] VSC 302 at [97].
The Refusal To Inspect The Letter
Having set out at [15] and [16], the wife’s contentions with respect to fraud and waiver (although not referring to either of s 122 or s 125 of the EA) his Honour moved to address what his Honour called “preliminary issue[s]”.[60] The first such issue identified by his Honour was the wife’s submission that his Honour should inspect the letter.[61]
[60]Ding (No. 4) at [27].
[61]Ding (No. 4) at [17].
Typically, arguments are advanced that a judge should inspect a document for the purpose of ascertaining whether the claim of privilege is properly made – that is, relevantly, whether it satisfies s 118 of the EA. However, the discretion as to whether to inspect is not confined to that issue.[62] Here, the wife’s concession that the terms of s 118 were met, meant that the relevant purpose of inspecting the document was to decide the issue of whether the document was “prepared … in furtherance of the commission of a fraud”.[63]
[62]Evidence Act 1995 (Cth) s 133.
[63]Evidence Act 1995 (Cth) s 125.
His Honour cited a number of authorities dealing with the Court’s power to inspect. Section 133 of the EA was not referred to by his Honour but both the terms of that section and the common law authorities referred to by his Honour make it plain (as was conceded before this Court) that the decision to inspect or not involves the exercise of a judicial discretion. The discrete challenge with respect to inspection embraced by Ground 2 thus necessitates identifying discretionary error.
His Honour expressed his concern, both in argument and in a number of places in the reasons, that if he inspected the letter and concluded that its contents were privileged, he “would be disqualified if [he] disagreed with [the wife’s] position”.[64]
[64] Transcript 14 June 2017, p.117 lines 41–42.
Having referred to, in particular, passages from British American Tobacco his Honour concluded at [25] and [26]:
25. I consider [the prospect of assertions of pre-judgment] is a risk here. In addition, 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 the evidence to make an objective judgment but there might be a number of other possible interpretations.
26. Thus, it seems to me that what I am invited to do, is not just an inspection to determine whether privilege exists but whether 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.
The purpose of the proposed inspection was clear, namely to illuminate the assertion – and, if ultimately led as evidence, to give colour to the charge – that fraud within the meaning of s 125 was established. The contention was that the inspection supplemented, as it were, the factors to which we have earlier referred which were said to give rise to an inference by which s 125 could be satisfied.
His Honour was of course correct to identify the concerns emanating from inspection to which he refers but those matters were inherent in the discretion which needed to be exercised. His Honour was indeed being asked to examine the contents of the letter in order to ascertain if the privilege was lost. Stating that, correctly, as the purpose of the inspection is not in our respectful view a reason for refusing the requested inspection. Rather, the correctly-identified dangers needed to be balanced with any advantages to inspection, the determinant being fairness and the interests of justice.
We have, with respect, some difficulty in understanding the relevance of many of the factual matters referred to in the passages just quoted as informing his Honour’s refusal to inspect.
There is little doubt that his Honour’s task was not assisted by the manner in which the privilege issue was raised. It would have been preferable for the argument to have been raised as an interlocutory application and preferably before another judge. Whatever criticism might flow from that, however, we are unable to see how, when the privilege issue arose as it did and when it did, the length of time that the wife had held the document was relevant to the determination of whether an accepted privilege was lost through s 125 fraud. So too, we are unable to see the relevance of the (unparticularised and unexemplified) “other possible explanations” to which his Honour refers. In addition, we have already said that we consider the husband’s knowledge of the letter was irrelevant to his Honour’s determination.
Even if it be accepted that those matters were relevant to the question of inspection, which respectfully we doubt, in our view his Honour gave no consideration to a very relevant consideration, namely whether inspection might illuminate a potentially false answer given by the husband to the question posed by the wife’s counsel directly relevant to the substantive issues the subject of the trial, in particular whether the impugned transactions were undertaken in anticipation of orders that might be made in the wife’s favour.
The possible ramifications for the trial given the stage it was at, as referred to by his Honour was, with respect, a plainly important consideration. However, those ramifications flowed from only one of the two possible outcomes flowing from inspection. Fairness and the interests of justice, to which his Honour’s attention was properly directed, required, in our view a consideration of the ramifications of both potential outcomes of the suggested inspection.
The alternative outcome of inspection, namely that privilege was lost, would not have the ramifications for the trial postulated by his Honour. Inspection may have had other outcomes, for example an application by the wife to re-open her case and to introduce the letter into evidence, but any such outcomes were quite different to those postulated by his Honour arising from only one of two possibilities.
We are unable to see how his Honour took account of, and weighed in the exercise of his discretion, the matters likely flowing from an inspection substantiating fraud in the s 125 of the EA sense. Those matters were, in our view, highly relevant to the exercise of his Honour’s discretion. In our view, discretionary error is established.
The Fraud Issue: Conclusion
In our opinion, his Honour erred in his assessment of whether the privilege was lost by reason of “fraud” within the meaning of s 125 of the EA. His Honour failed to determine that issue by reference to the matters relevant to that determination and erred in finding that the factual findings made by him were determinative of the same.
We are also of the opinion that in refusing to inspect the 29 March letter, his Honour’s discretion miscarried by reason of taking account of irrelevant considerations and failing to take account of relevant considerations.
Was Privilege Impliedly Waived?
There were three elements to the waiver argument on the part of the wife at trial. First, it was submitted that the husband had waived privilege by leaving the letter of advice opened and accessible in a place where the wife would be likely to find it. Secondly, it was submitted that the husband’s assertions at trial that at the time the letter was created he had not turned his mind to any future claim the wife might make were inconsistent with the maintenance of the privilege. Thirdly, a similar submission was made in relation to the husband’s assertions at trial that at the time the letter was created he had not turned his mind to the adequacy or otherwise of the consideration expressed on the relevant transfer of land.
His Honour found at [34] and [47] of the privilege reasons:
34.The issue in relation to waiver can only arise 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.
…
47.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.
No challenge is made to the statements of principle applied by his Honour. Although the terms of s 122 of the EA were not referred to, the High Court has held that common law principles “apply with equal force in relation to the statutory question”.[65]
[65] Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd (2013) 250 CLR 303 at [32] per French CJ, Kiefel, Bell, Gageler & Keane JJ. The common law principles emerging from Mann v Carnell (1999) 201 CLR 1. See generally Stephen Odgers, Uniform Evidence Law, (Thomson Reuters, 13th ed, 2018) at 1012 [122.60] and 1013 [122.120].
The submissions on behalf of the wife before this Court refer to the following evidence of the husband which emerged in cross-examination:[66]
[COUNSEL FOR THE WIFE]: All right. I will try and break it down. Did you at any time, prior to the transfer of the properties on 20 April 2010, turn your mind to the question of any future claim for property settlement that the wife may bring?---No.
Never?---No.
Do you say that, at any time prior – whether – I will withdraw it. At any time prior to the transfer of the three properties of 20 April 2010, was your attention drawn to a possible future claim for property settlement that the wife may bring?---No.
[66] Transcript 14 June 2017, p.113 lines 22–30.
It has been held by the Full Court in Bilal & Omar[67] that the fact that an inconsistency emerges in cross-examination is irrelevant to the question of inconsistency central to determining loss of the privilege. The Full Court quoted the Full Court of the Federal Court in Commissioner of Taxation v Rio Tinto Ltd[68] as “formulat[ing] the question” namely whether the party has:
68.…made an assertion as part of his case that puts the contents of the privileged scheduled documents in issue, or necessarily lays them open to scrutiny, with the consequence that an inconsistency arises between the making of the assertion and the maintenance of the privilege…
[67] (2015) FLC 93-636 at [42].
[68] (2006) 151 FCR 341 at [68].
The question there posed must be answered by reference to the evidence of the husband quoted above. It will be apparent from what we have earlier said that there was no evidence before his Honour of the contents of the document. As it seems to us, proof of the asserted inconsistency was dependent upon the contents of the document and the claim of implied waiver could not succeed without evidence of that content.
References within the proceedings and in the reasons to the husband’s state of mind in our view obscure the correct enquiry. The husband’s case was to deny the wife’s apparent assertion that he had conspired with his family to deprive the wife of a s 79 entitlement and a denial of the wife’s case that, irrespective of any intention, the impugned transactions did not defeat any anticipated order. The anticipation of any order was a central issue in the wife’s s 106B case. The 29 March letter had the potential to be highly relevant to that issue irrespective of any intention on the part of the husband.
Before this Court, the argument on behalf of the wife was encapsulated by her senior counsel in this way:[69]
Ultimately, the question is simply this: was it consistent with the maintenance of the applicant’s privilege – the husband’s privilege, informed by considerations of fairness, to make assertions to the effect that he hadn’t sought advice, that he hadn’t received advice, that the idea of that in 2010, he was not – it was not on his radar. It was nothing he considered in terms of some form of separation from his wife. If, in fact, there is legal advice which deals with that topic. That really is what the question is in a nutshell. Is it consistent to make an assertion to that effect and, at the same time, maintain the privilege? And it doesn’t just arise – I accept that merely putting a state of mind into issue doesn’t give rise to the necessary inconsistency. It’s a matter of standing back and considering, objectively, whether there is a consistency in that kind of approach.
(Emphasis added)
[69] Appeal transcript 19 June 2018, p.33 lines 18–28.
Later, counsel submitted:[70]
Now, I don’t say that this is precisely this case and I accept that this is a case which is probably very close to the line one way or the other, but we would say there is a real difficulty in terms of fairness and consistency with giving evidence about a matter such as this in the face of having received advice which, in fact, deals with the particular issue. Again, this is a matter that could have been resolved by inspection…
(Emphasis added)
[70] Appeal transcript 19 June 2018, p.33 line 45 to p.34 line 2.
Any implied waiver said to arise by inconsistency with the position sworn to in the transcript extract quoted above depended upon evidence of the contents of the 29 March letter. There was no evidence before his Honour as to what that legal advice was. The passages in the arguments by senior counsel for the wife before us, highlighted in bold above, fall foul of that very point; there was no evidence of advice that dealt “with that topic” or “the particular issue”.
We see no error in his Honour’s conclusion with respect to waiver independent of the challenge that his Honour erred in not inspecting the document.
In that respect, it will have been seen that senior counsel for the wife submits that “this is a matter that could have been resolved by inspection”. That is true. The question for this Court is whether his Honour’s discretion erred in not carrying out that inspection.
We consider that his Honour did err in that respect. The matters to which we have earlier referred in respect of the separate issue of fraud were just as relevant to his Honour’s discretion in deciding whether to inspect the letter for the purpose of establishing whether the relevant inconsistency was established.
His Honour failed to take account of the relevant consideration that inspection of the letter could have illuminated if the husband was acting inconsistently with the maintenance of the privilege and failed to balance those considerations with considerations, including those identified by his Honour, which weighed against inspection.
In our view, his Honour’s discretion miscarried.
The Consequence Of Established Error
We repeat that the question of privilege arose in respect of a call for the letter to be produced. Because the contents of the letter remain undisclosed to the Court, it is not known whether, if produced, the letter would be admissible and, if admissible, what questions might arise if an application was made to tender it. The contents of the letter have the potential at least to be relevant to broader factual determinations not limited to those challenged before us.
The wife seeks an order for remitter if error is established. No cogent submissions were addressed to the contrary. Our conclusion that error is established in respect of privilege, together with the matters just referred to, render it effectively inevitable that remitter must occur.
The Other Grounds Of Appeal
The remaining grounds of appeal as ultimately argued are as follows:
3.The Learned Trial Judge erred at law, or fact, and in the exercise of his discretion in determining that it was not just and equitable to alter the Husband’s interest in [Ding Pty Ltd] or to make any Order for property settlement or to make any Order pursuant to Section 106B of the Family Law Act (1975) (C’th).
4The Learned Trial Judge erred in law and fact and in the exercise of discretion in his findings regarding the state of the marriage as at April 2010.
5His Honour erred in fact and law in finding without or against the weight of the evidence that
5.1 in 2010 the shareholding in [Ding Pty Ltd] was restructured by the creation of 100 shares
5.2that the Husband’s share in [Ding Pty Ltd] was of no value at March 2010
5.3the plan of the Husband and his sister to set to set up two [health profession businesses] failed
5.4that his sister [Z] offered him a single share after the restructure
5.5in finding that the only plausible explanation for [Ding Pty Ltd’s] restructure was that given by the Husband and corroborated by the notice of the accountant.
6.His Honour erred in law and fact in concluding that the real property transferred by the Husband on 1 April 2010 was held on trust for his siblings.
7.The Learned Trial Judge erred in fact and in law and in the exercise of his discretion in failing to make orders under section 106B of the Act or to make any order or property settlement.
(As per original)
We are conscious that the High Court has made it clear that “although there can be no universal rule, it is important for intermediate courts of appeal to consider whether to deal with all grounds of appeal, not just with what is identified as the decisive ground”.[71]
[71]Kuru v State of New South Wales (2008) 236 CLR 1 at [12].
We have given that matter consideration. However the matters to which we have just referred when discussing remitter render it highly undesirable for us to pass judgment on the other grounds of appeal, particularly those asserting material errors of fact.
In the circumstances of this case, we do not consider it appropriate to embark upon an examination of the remaining grounds.
Costs Of The Appeal
In the event the appeal succeeded, counsel for the wife submitted that nothing would “distinguish this case from the general run of costs”.[72] In the end, we took that to mean not that there were no circumstances justifying a departure from the s 117(1) of the Act but, rather, an acknowledgment that lack of success can be of particular importance in the costs of an appeal.
[72]Appeal transcript 19 June 2018, p.91 lines 33–34.
However, the appeal has succeeded on a question of law in respect of a discrete issue involving error not induced through the actions or inactions of any party. We consider that the circumstances do not justify departure from s 117(1). Each party shall pay their own costs of and incidental to the appeal.
The appeal having succeeded on a question of law, we consider it appropriate to grant to each party certificates pursuant to the provisions of the Federal Proceedings (Costs) Act 1981 (Cth) both in respect of the appeal and the rehearing.
I certify that the preceding one hundred and twenty-five (125) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Murphy, Kent & O’Brien JJ) delivered on 28 February 2019.
Associate:
Date: 28 February 2019
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