Jess and Jess and Ors

[2015] FamCA 822

FAMILY COURT OF AUSTRALIA

JESS & JESS & ORS [2015] FamCA 822

FAMILY LAW Interlocutory proceedings – evidence – legal professional privilege – joint legal professional privilege – application of the Evidence Act 1995 (Cth) – distinction between waiver of joint professional privilege at common law and waiver of joint client legal privilege under s 124 – consequential orders

APPLICANT: Ms E Jess

RESPONDENT: Mr N Jess

THE REPRESENTED THIRD PARTIES: Mr JJ & ORS

FILE NUMBER: MLF 3444 of 2006

DATE ORDER MADE

DATE REASONS PUBLISHED:

24 August 2015

24 September 2015

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Bennett J

HEARING DATE: 20 August 2015

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr G R Dickson QC with Mr O’Shannessy

SOLICITOR FOR THE APPLICANT: Kenna Teasdale

COUNSEL FOR THE RESPONDENT: Mr B Walmsley QC

SOLICITOR FOR THE RESPONDENT:	Condello Lawyers
COUNSEL FOR THE REPRESENTED THIRD PARTIES:	Mr Waller QC with Mr Strum and Mr Meriene

SOLICITOR FOR THE RESPONDENT: HWL Ebsworth

Orders

IT IS ORDERED THAT:

(1)By not later than 3 p.m. on Tuesday 25 August 2015, X Corporation Pty Ltd cause documents produced to it by Clayton Utz, solicitors, to be produced to the husband (via their respective lawyers) such documents being the handwritten note and agenda of a conference convened on 20 June 2003 and more particularly described by Mr HR at paragraph 9 of his affidavit sworn 10 August 2015.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Jess has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLF 3444 of 2006

Ms E Jess

Applicant

And

Mr N Jess

Respondent

And

Mr JJ & Ors

REASONS FOR JUDGMENT

(revised)

Introduction

1. I am hearing the evidence of Mr N Jess, to whom I will refer to as Mr N. His evidence is given prior to the commencement of the trial of the application of the wife, Ms E Jess.

2. By her application the wife seeks, amongst other things, to set aside a number of instruments and transactions which effected a final alteration of property interests between herself and the husband pursuant to the Family Law Act 1975 and consequent upon the breakdown of their marriage as well compromising proceedings commenced by the husband’s son, Mr JJ, in the Supreme Court of Victoria in 2007 against the wife which were settled and, for all intents and purposes, concluded contemporaneously with the family law proceedings, in late September 2009.

3. On 20 August 2015 I heard submissions as to whether documents which counsel for the wife called on the represented third parties to produce are subject to some form of legal professional privilege such that the represented third parties cannot be compelled to produce them. On 24 August 2015, I pronounced the Order set out at the beginning of these reasons and delivered a summary of my reasons for so doing. I found that X Corporation Limited could not refuse to produce the documents on the grounds that they are the subject of legal professional privilege. I said that, in due course, I would deliver a more expansive version of the reasons. These are those reasons.

The parties

1. Mr N Jess is the first respondent to the wife’s application. His interest in the outcome of the proceedings is consistent with that of the wife but with different consequences. I am satisfied that the husband is now entirely aligned with the wife and that, together, the wife and Mr N Jess, are wholly aligned against the other respondents. 

2. The other respondents, to whom I have referred as “the represented third parties” are Mr JJ, the X Corporation Pty Ltd (“XC”), one Mr B and 25 other named natural persons or entities. XC is the thirteenth respondent in this proceeding. Mr B is the fourth respondent  

3. The predecessor of XC was an entity called “Y Pty Ltd” and those entities are referred to interchangeably in these reasons as they are the same entity.

Relevant background

1. Mr N Jess’s evidence has been taken out of turn and prior even to the applicant wife opening her case. This is due to considerable doubt about the husband’s capacity to give evidence, including to be cross examined, and to participate in these proceedings going forward. As it has turned out, he has been able to give evidence without difficulty but all indications were to the contrary a year ago when the call in that regard had to be made.

2. The trial of the wife’s application and the response of the represented third parties thereto is bifurcated pursuant to an earlier order made by me. This part of the trial concerns the date on which a Deed of Declaration of Trust dated 28 February 2002 (“DODT”) was created and whether it was executed by Mr N Jess on the date it bears, at some other time or at all.

3. Counsel says that very little further time will be required to conclude the cross examination of the husband but estimates given in good faith in this case have proved to be grossly inadequate so I am not counting my chickens. The proceedings are relisted before me in February 2015 and it is anticipated that the trial can commence early in that sitting.

4. The ambit of this interlocutory decision does not require me to rehearse what is a fairly complex factual history. In my respectful view that has been done comprehensively by Berman J at paragraphs [27] to [54] his Honour’s decision of 5 November 2011 reported under the case neutral citation [2012] FamCA 863 in relation to another interlocutory dispute.

5. The husband provides an economic description. To paraphrase his view, he and Mr JJ used the DODT to deprive Ms E Jess of her rightful entitlement to an alteration of property interests in this court and, in the process, Mr JJ used the DODT to deprive him (Mr N Jess) of his business empire and leave him with a huge taxation liability that he has no desire or means to pay. The wife and Mr N Jess would now wish to reverse the process. Mr JJ maintains that the DODT and the implementation of it preceded the breakdown of his father’s marriage and was entirely bona fide. The wife and Mr N Jess contend that the DODT was brought into existence by Mr B with, or at the direction of, Mr JJ significantly later than the date it bears and for the purpose quarantining the valuable business empire of the husband from assets which would, in those days, have been considered divisible between husband and the wife. In late September 2009, the husband, wife and Mr JJ reached a compromise which concluded proceedings in this court and in the Supreme Court of Victoria without any determination of allegations including those of fraud and forgery. The wife received a property settlement including a payment on 24 September 2009 of $17 million, which Mr JJ says took into account the value of the business empire. The parties signed a deed of settlement which provided, amongst other things, that Ms E Jess released the husband, Mr JJ and others from any claims in the future based on any fact or circumstance existing at that date.

6. Mr N Jess now cooperates with the wife, in the terms of the various incarnations of her application, to undo what he says was the fraudulent enterprise which caused him to lose his extensive business empire and resulted in an assessment by the Australian Taxation Office against him for capital gains tax and penalties for non-payment thereof, which is now in excess of one hundred million dollars.

7. Mr JJ and the XC and Mr B say that there was no fraud. They contend that the DODT was created by Mr B on his lap top computer at the direction of Mr N Jess in 2002 and duly executed by Mr N Jess on the date that it bears. It is said that the DODT was part of a commercial compromise and succession plan agreed upon between father and son well prior to the failure of the husband’s and wife’s marriage.

8. In practical terms, until 2010 the husband and Mr JJ were united. They were ably assisted in commercial matters and personal business affairs by a trusted employee, Mr B. Mr B had been hired by the husband and commenced work through X International Trading Pty Ltd in 1997.

9. The husband and Mr JJ used several firms of lawyers in their commercial and personal lives. In 2003, Clayton Utz, was one such firm of lawyers. On 7 October 2014 Mr HR, a partner of Clayton Utz, swore an affidavit in support of his firm’s objection to a subpoena to produce documents which had been served on them by the husband. Mr HR deposed at [8] and [9] of that affidavit, as follows:

   Background

   8.Clayton Utz formerly acted for [Mr N Jess], who is the first respondent in this proceeding and the issuing party in relation to the subpoena, and for a number of companies then controlled by or associated with him, including [X Corporation Pty Ltd].

   9.In around October 2010, Clayton Utz ceased acting for Mr N Jess. Clayton Utz continues to act for [X Corporation Pty Ltd], which is no longer controlled by [Mr N Jess].

10. Early in this part of the hearing the Senior Counsel for the wife tendered Exhibit “W6”. It is a page of a diary kept Mr N Jess. We have seen very many diary entries and diaries kept Mr N Jess. It is apparently agreed by the parties that the diary page relates to “Friday 20 June 2003” and has a notation indicating a meeting with Mr Z at 11 a.m. At that time Mr Z was a partner of Clayton Utz. Attached to the diary entry, and also forming part of Exhibit “W6” is a document headed:

    [Mr N Jess]

    
    

    Meeting with Clayton Utz

    Friday, 19 June 2003

    Matters for clarification 

    It is agreed that “Friday, 19 June 2003”, as referred to in the document attached to the diary page, is an erroneous date. It is agreed that the date of the meeting to which the diary page and the document attached to it relates, is Friday 20 June 2003.

11. The “Matters for clarification” are enumerated in seven paragraphs and are as follows:

    1.Ownership of new corporate structure

    a.Personal (through [X Unit Trust])

    b.Person          al (direct)

    c.New Family Trust

    2.Ongoing suitability of [X Unit Trust]:

    a.To own Brandnames (with licence to Corporate structure)

    b.To own new Corporate structure

    c.Changes required to [X Unit Trust]- ensuring no resettlement

    3.Maintaining pre-CGT ownership of Brandnames (held in [X Unit Trust])

    4.Asset protection

    a.Operating businesses

    b.Racing business (…)

    c.Properties

    d.Other trademarks

    e.Non-core businesses

    Acceptable under common Holding company?

    5.Any ongoing use for Mimulus/Troyes (if X Corporation moved)?

    6.Mechanism to deal with minority interests

    7.Other estate planning issues

12. Counsel for the wife calls for the represented third parties to produce the file notes made by the legal practitioners at the meeting on Friday 20 June 2003. In the context of the call for production of the documents:

    a)It is agreed that on Friday 20 June, 2003 there was a meeting between Mr Z, solicitor, Mr N Jess, Mr B and others. The others were a Mr AB, an accountant, and a Ms BC who was an employee of Clayton Utz.

    b)It is conceded by the represented third parties that during the meeting file notes were made by the solicitors from Clayton Utz;

    c)The file notes (which I have previously and will henceforth refer to as “the documents”) are accessible to XC and the represented third parties;

    d)The documents are in court (at least they were when we last convened);

    e)I am able to inspect the documents for the purpose of this application (but I have not done so);

    f)It is agreed that the documents may be relevant to the issue to be determined in this part of the proceedings. For my determination of this interlocutory proceeding, I have assumed that the documents are relevant.

13. The represented third parties object to production of the documents. They contend that the documents are confidential documents prepared by Clayton Utz for the dominant purpose of Clayton Utz providing legal advice to XC (then Y Pty Ltd). They rely on the fact that the documents were prepared by a solicitor, found on a solicitor’s file in respect of which XC or the same entity by a different name was billed on 30 September 2003 for the meeting on 20 June 2003.

14. The primary position of the represented third parties is:

    a)The documents are subject to client legal privilege which reposes solely in XC;

    b)XC claims client legal privilege in respect of the documents;

    c)XC has not at any stage waived its rights to client legal privilege in respect of the documents

    and, accordingly, XC cannot be compelled to produce the documents in response to the wife’s call or at all, including to the husband. XC relies on client legal privilege within the meaning of the Evidence Act 1995 (Cth) although throughout submissions everyone lapsed into a description of the client legal privilege as “legal professional privilege”.

15. XC have an alternative position which is not intended to derogate from its primary position. If I am against the contention that XC is solely entitled to client legal privilege over the documents, and the court is satisfied that Clayton Utz acted simultaneously for both XC and Mr N Jess at the meeting on Friday 20 June 2003, the documents sought to be produced are subject to joint client legal privilege. They say that joint client legal privilege can be claimed by one holder of the joint privilege (such as XC) but can only be waived by all holders of the privilege. It follows, they say, that joint client legal privilege cannot be waived by Mr N Jess unilaterally if XC asserts the privilege, which it does.

Standard and burden of proof

1. Pursuant to s 140 of the Evidence Act 1995 (Cth) the standard of proof is the balance of probabilities

2. The onus is on the represented third parties to establish that legal professional privilege of one sort or another attaches to the documents

3. Once legal professional privilege is established, the onus is on the party who seeks production of the document — here, the wife — to establish that privilege has been waived.

4. In these reasons a statement of fact is a finding of fact.

Establishing client legal privilege

1. Section 118 of the Evidence Act 1995 provides:

   Legal advice

   Evidence is not to be adduced if, on objection by a client, the court finds that adducing the evidence would result in disclosure of:

   (a)   a confidential communication made between the client and a lawyer; or

   (b)   a confidential communication made between 2 or more lawyers acting for the client; or

   (c)  the contents of a confidential document (whether delivered or not) prepared by the client, lawyer or another person;

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

2. The first step is to ascertain who is entitled to claim client legal privilege. That is, to ascertain the identity of the client at the meeting on 20 June 2003. 

3. I have regard to a second affidavit of Mr HR sworn on 10 August 2015 and filed on behalf of the represented third parties on 12 August 2015. Relevantly, Mr HR deposes to the documents at paragraphs [8] to [11] inclusive, as follows:

   [8]. On about 29 July 2015, I am informed by Ms DE, a Senior Associate working under my supervision at Clayton Utz, that [Ms CD], an employee solicitor of HWL Ebsworth, requested inspection of certain files held by Clayton Utz for the puporse of locating a file note of a meeting on 19 or 20 June 2003. I am aware that HWL Ebsworth act on behalf of [Mr JJ] and [X Corporation Pty Lts] (and related companies) in various matters.

   [9]. I am informed by [Ms DE] that, on or about 30 July 2015, she reviewed a file titled “Structuring Advice 2004” (Clatyon Utz matter no. 80012710) and located that on that file an agenda and a file note relating to a meeting that apparently took place on or around 20 June 2003 at Clayton Utz’s offices (meeting). According to the filenote, the attendees at the meeting were [Mr Z] (a former Partner at Clayton Utz), [Ms BC] (then an employee solicitor at Clayton Utz), [Mr AB], [Mr B] and [X].

   [10]. The “Structuring Advice 2004”file is described in paragraph 24 of my earlier affidavit. As a result of the objections made by Clayton Utz in relation to items 1(a) and 3 of the subpoena, that file was not then reviewed in detail for the purpose of Clayton Utz’s compliance with the subpoena.

   [11]. Although the agenda and file note were physically located on the “Structuring Advice 2004” file, I am informed by [Mr EF], who is the Credit Management Officer at Clayton Utz and has access to the time and billing records of Clayton Utz, that:

   (a)The “Structuring Advice 2004” file was opened on 19 October 2004;

   (b)time for attendance at the meeting was recorded on a Clayton Utz file titled “Realignment” (Clayton Utz matter no. … (Realignment file);

   (c)the Realignment file was opened in the name of [Y Pty Ltd] (which I understand to be a former name of [X Corporation Pty Ltd]) on 18 December 2002;

   (d)time for attendance at the meeting was billed to [Y Pty Ltd] on 30 September 203 (invoice number …); and

   (e)invoice number … was paid by [Y Pty Ltd] by cheque on 7 November 2003.

4. In relation to Mr HR’s evidence I note the following:-

   a)Reference is made to “an agenda” for the meeting on Friday 20 June 2003. The page referred at paragraph 17 of these reasons was well and truly in evidence and before the court by the time Mr HR made his second affidavit.

   b)There is no evidence to the effect that the document headed “Matters for clarification” is the “agenda” to which Mr HR refers.

   c)Mr HR refers to the documents to provide details of who attended the meeting. However, he makes no reference to what was discussed at the meeting on Friday 20 June 2003.  

   d)The professional time for the attendance at the meeting on 20 June 2003 was recorded against a file called “Realignment” which had been opened by Clayton Utz in the name of XC on 18 December 2002.

   e)XC was billed for the professional time for the meeting on 30 September 2003 and that invoice was paid by XC on 7 November 2003.

   f)Mr HR refers to the documents having been “physically located” by a member of his staff on a file opened in the name of the “X Group Pty Ltd” on 19 October 2004 which is some 16 months after the meeting at which the documents were created. The file was titled “Structuring Advice 2004”.

   g)Necessarily, the documents were not created in the course of Clayton Utz providing advice to XC on the file Structuring Advice 2004 because the documents were created some 16 moths prior to that file being opened. It appears that the documents were placed in that file sometime between the date on which the file was created, being 19 October  2004, and 30 July 2015 when the documents were retrieved by Ms DE who is a solicitor in the employ of Clayton Utz.

   h)There is no evidence from Mr HR to the effect that the documents were ever “physically located” on, or part of, the Realignment file or where the documents were kept between the date they came into existence and whenever they were placed on the file titled Structuring Advice 2004.

5. Mr HR’s evidence about who paid the professional fees and where the documents were located immediately prior to being produced to the court are relevant to, but dispositive of, the identification of the client or clients on whose behalf the meeting was held on 20 June 2003. Clayton Utz is a very established legal firm in Melbourne. XC and the represented third parties have retained a highly skilled legal team. The issue of legal professional privilege attaching to the documents was identified in July 2015 and held over until it could be dealt with conveniently. All parties have had adequate opportunity to file the evidence upon which they rely for this current dispute.

1. On the basis of Mr HR’s evidence, I am not satisfied on a balance of probabilities that the documents were ever part of the Realignment file. If they were, it would have been easy enough for Mr HR to say so.

2. There is force in the submissions of Senior Counsel for the wife, Mr Dickson QC, that in the context of asserting privilege, XC has first to establish the nature of the communications that took place at the meeting on Friday 20 June 2003. Furthermore, the mere fact that a file is opened in the name of a particular person or entity is not conclusive of anything. He referred to earlier evidence of Mr HR, at paragraph 24 of the affidavit sworn 7 October 2014 to the effect that Clayton Utz had opened a file titled “X Group Pty Ltd”. In October 2014, Mr HR deposed:

   I have conducted a search of the online records of the Australian Securities and Investments Commission and, based on the results of that search, it appears that there is no such legal entity. However, as this matter related to a corporate restructuring of the entities involved in the running of the [Y] business, it appears to me that “[X Group Pty Ltd]” was used as a shorthand reference to those entities.

3. Mr HR has no personal experience of Clayton Utz having acted for the husband. At paragraph 10 of his first affidavit, sworn 7 October 2014, he deposed:

   Neither I, nor any Clayton Utz lawyers involved in the review of documents for the purpose of compliance with the [husband’s] subpoena, had any involvement in the matters in which Clayton Utz acted for [Mr N Jess].

4. Mr Dickson QC further submitted that, the fact that a document was created in the course of giving advice to a particular client(s) is an essential element for the establishment of client legal privilege. He submits that there is no evidence conclusively identifying the client nor any evidence about the nature of the communications during the meeting on 20 June 2003.

5. Mr Dickson QC submits, correctly in my view, that “W6”, the relevant part of which is extracted at paragraph 17 above, merely informs the court of the topics which were intended to be discussed by Mr N Jess.

6. On the basis of Mr HR’s evidence, I cannot be satisfied that the communications during the meeting were for the purpose of providing advice to XC. Absent a concession by the represented third parties that the husband’s list titled “Matters to be considered” is the “agenda” to which Mr HR refers and that the discussion followed the agenda, I cannot conclude what was discussed at the meeting.

7. Mr N Jess was cross examined about the 20 June 2003 meeting on several occasions including by Mr Waller QC on 5 August 2015. Mr Waller QC describes the husband’s evidence in this respect as “sketchy” and “unreliable”. Mr N Jess certainly appears to be in error about Mr JJ and the solicitor, Mr Mitchell Snr, having attended the meeting. Senior Counsel for the represented third parties did not refer me to any concession by Mr N Jess to the effect that the purpose and content of the meeting was for XC to obtain legal advice.

8. Mr B has sat in Court for the cross examination of Mr N Jess. Mr B attended the meeting with Mr Z at Clayton Utz on 20 June 2003. As one of the represented third parties and a director of XC, Mr B has had an opportunity to inspect the documents. Mr Waller QC, for XC, asserted that “[Mr B was] there because he was a director of [X Corporation] having been appointed to that position on 28 September 2001”. Notably, Mr B was not called to give evidence in support of XC’s claim for privilege, on the issue of what was discussed at the meeting on 20 June 2003, or otherwise. Consistently with the rule in Jones v Dunkel (1959) 101 CLR 298, I infer that Mr B’s evidence in relation to the identity of the client and/or some indication of topics discussed at the meeting on Friday 20 June 2003 would not have assisted the case of XC.

9. Mr Waller QC submits that I can infer that the purpose of communications during the meeting on 20 June 2003 was for XC to obtain legal advice and that I can draw that inference from the circumstances of the meeting generally including the people who attended and the purpose of Clayton Utz’ retainer generally. I do not accept that submission. I conclude I should not lightly draw inferences here and do so for the following reasons:

   a)The lack of evidence around continuity and how the documents came to be retrieved from a file which was opened 16 months after the meeting took place;

   b)The dearth of evidence about what was discussed at the meeting, notwithstanding that Mr HR has identified an agenda and one of the other attendees, Mr B, is in court.

   I do not draw the inference which Mr Waller asks me to draw.

10. Having already heard much evidence in the case, I can comfortably conclude that, as at mid-2003, Mr N Jess was not materially distinguishable from the corporate entity XC and that he, for all intents and purposes, had control of it and other parts of the business empire although his reliance on Mr JJ was increasing. In these circumstances, I have not been able to place significant weight on the title of the file from which the documents were extracted and produced to the court or the fact that XC paid an invoice for time billed to that file.

11. Mr Waller QC, for XC and the other represented third parties, submitted that the fact that Mr N Jess himself has not made a claim for privilege in respect of the documents is “entirely consistent with him not being the relevant client”. I do not accept that submission. It is clear that Mr N Jess is aligned with the wife and that it would not be in his interests to assert privilege. The fact that Mr N Jess does not assert privilege does not mean that he has no privilege to assert.

12. I have regard to Mr HR’s identification of an agenda which the document is not described with more particularity than that. I could infer that the agenda referred to by Mr HR is the second page of the Exhibit “W6” called “Matters for clarification”. Mr Dickson characterised my doing so as “not a huge leap of faith” or words to that effect. There is discussion between Mr Waller QC and myself on this point which appears at pp58 and 59 of the Transcript-In-Confidence of these proceedings on 20 August 2015. Initially, it reads as though Mr Waller states that the second page of the Exhibit “W6” called “Matters for clarification” is not the agenda to which Mr HR refers. However, on careful and more extensive reading of the transcript I am satisfied that Mr Waller QC leaves open the possibility that the agenda referred to by Mr HR at paragraph 9 of his second affidavit could be one and the same document as the second page of the Exhibit “W6” called “Matters for clarification”.

13. As XC has not asserted, through Mr HR’s evidence or otherwise, that the agenda to which Mr HR refers at paragraph 9 of his second affidavit is not the same document as the second page of the Exhibit “W6” called “Matters for clarification”, I am inclined to infer that it is. In any event, there is no other indication in the evidence of Mr HR or otherwise adduced by XC that sheds light on what was discussed at the conference and the subject matter upon which Clayton Utz was providing legal advice. If there is another “agenda”, it would have been easy enough for Mr HR to say so including in a way which would not have breached the legal professional privilege upon which XC seeks to rely. I note that Mr HR referred to the documents to specify who attended the meeting.

14. Having regard to the evidence adduced by XC I reject the contention that XC was the only client at the conference on 20 June 2003. The contention of XC and the represented third parties, that the documents are subject to client legal privilege, must fail.

15. In point of fact, such evidence as there is leads me to be primarily satisfied that X was the client at the conference on 20 June 2003. By this I mean that there is more evidence tending to prove that Mr N Jess was the client seeking advice than there is evidence tending to prove the XC was the client seeking advice at this particular conference. I am supported in this view by the “Matters for clarification” document. I am satisfied that Mr N Jess went to the meeting intending to discuss issues which appear to have a personal estate planning perspective about them. Sure enough, there is mention of corporations and the implications and consequences for corporations and certain structures, but the direction of the matters which Mr N Jess wanted clarified appear to me to relate to whether the structures will satisfactorily meet his needs or whether he wants alternative structures. 

16. It is not necessary for the ambit of this dispute for me to find that Mr N Jess was the client who sought and obtained advice at the meeting on 20 June 2003. I have set out my reasoning in this regard to demonstrate the basis upon which I have concluded that XC has failed to discharge the onus it bears to establish that client legal privilege attached to the documents.

17. If Mr N Jess was the client at the meeting on 20 June 2003, it follows that any client legal privilege which attached to the documents is his alone to waive. As XC was the only person asserting client legal privilege over the documents and XC has failed to establish that such privilege exists, the opposition of XC is no impediment to the document being produced. As Mr N Jess and his advisers have not yet seen the documents, however, it is appropriate that the documents be released to them.

Joint client legal privilege

1. There was discussion by Mr Waller QC during which he stated “It may have been, and it may be, that [Mr N Jess] as a person was also, incidentally, getting advice or benefiting in some way from the advice that was being provided to the corporation. That would make the privilege joint. It does not shut out the privilege of [X Corporation]”. On this basis and in order to avoid further prolongation of the proceedings in the event that my decision that XC has failed to make out legal professional privilege is incorrect, I will consider how joint client legal privilege should be treated if it exists.

2. The wife contends that if joint client legal privilege attaches to the documents that privilege, which arises by virtue of ss 118 (advice), 119 (litigation) and 134 (inadmissible evidence must not be given), is lost by virtue of s 124 of the Evidence Act1995 (Cth).

3. Section 124(1) provides that s 124:

   applies to civil proceedings, (which these proceedings are);

   where two or more parties (in this case XC and Mr N Jess) have, before the commencement of the proceeding, jointly retained a lawyer in relation to the same matter.

4. Where applicable, s 124 provides that Division 1 of Part 3.10 of the Evidence Act does not prevent one of the joint client privilege holders from adducing evidence of:-

   a)A communication made by either of them to the lawyer;

   b)The contents of a confidential document prepared by or at the direction or request of any one of them –

   in connection with the matter in relation to which the lawyer was jointly retained.

5. I am satisfied that s124 applies to this case.

6. In the context of this alternative position of XC, that there is joint legal professional privilege, there was no issue raised as to whether Clayton Utz was jointly retained by XC and Mr N Jess. If the issue had been raised, I note that in Great Southern Managers Australia Ltd (Receivers and Managers Appointed) (in liq) v Clarke (2012) 36 VR 308, the Court of Appeal comprising Buchanan and Osborn JJA and Beach AJA held that s 124 did not require all the joint privilege holders expressly to retain the lawyer. Joint legal professional privilege encompassed cases where one joint privilege holder retained the lawyer for its benefit and for the benefit of the other joint privilege holders.[1]

   [1] At [21] and [22].

7. I do not accept the contention on behalf of the wife that calling for a document is the equivalent of adducing the document within the terms of s 124. I am not satisfied that the wife can bring herself, as opposed to the husband, within the operation of s 124. The wife is not, and never has been, a joint privilege holder in relation to the documents. Earlier in these reasons, I referred to the fact that the husband’s evidence thus far has been received as evidence in the trial of the wife’s application to set aside the 2009 settlement notwithstanding that the trial has not yet commenced. When this season of husband’s evidence (cross examination) runs its course, the case will begin. At that point the husband will be able to give further evidence as well as to cross examine all witnesses in the case of the represented third parties including Mr B. It is in that sense that he would have an opportunity to adduce further evidence.

8. Mr Waller submitted that joint client legal privilege, as it would apply on the facts of this case, cannot be waived by one holder of the privilege and must be waived by both. He relied upon the decision of Farrow v Webb (1996) 39 NSWLR 601 as authority for the proposition that where two or more persons join in communicating with a legal advisor for the purpose of retaining services or obtaining advice, the privilege which protects those communications from disclosure belongs to all the persons who joined in seeking the service or obtaining the advice. And the joint nature of the privilege means that all to whom it belongs must concur in waiving it[2] Mr Waller continued, “while it’s true that joint clients may not maintain privilege against each other — and that would be the case between myself and Mr Walmsley — it’s a very different situation where one of the joint privilege holders seeks to maintain it against the third party in the situation of Mr Dickson even if Mr Walmsley was prepared on behalf of his client to waive it”.

   [2] At [608].

9. Farrow v Webb was a decision of the Supreme Court of New South Wales Court of Appeal comprising Meagher, Shellar JJA and Waddell AJA. The case involved a liquidator who came into possession of documents created by a solicitor as a result of instructions received from directors of Farrow Mortgage Services, and acted upon, which documents the liquidator ultimately contended demonstrated that at a relevant point in time the company would not have been able to pay all its debts as and when they fell due and that the directors were aware of this. The directors sought to restrain the liquidator from using the information from the solicitor’s files on the ground that it attracted legal professional privilege of which they could avail themselves because they had given instructions jointly with the company. The directors succeeded at first instance and the liquidator appealed. On the issue of whether there had been a joint retainer, Meagher JA disagreed with Shellar JA with whom Waddell AGA agreed. The documents could not be used. Most significantly, however, the Court of Appeal was considering only common law legal professional privilege and not the operation of the Evidence Act 1995 and joint client legal privilege pursuant to s 124 thereof.

10. I accept that at common law, privilege attaching to evidence of communications between one or more parties to civil litigation and a lawyer whom they have jointly retained can be waived only with the concurrence of all privilege holders. However, the enactment of the Evidence Act 1995 altered the position at common law in relation to evidence to which s 124 applies. Now, having regard to the operation of s 124, joint client legal privilege over evidence is lost where it is adduced by one of the joint privilege holders in connection with the same matter.

11. I had earlier referred counsel to the decision of Great Southern Managers Australia Ltd (Receivers and Managers Appointed) (in liq) v Clarke (2012) 36 VR 308 but counsel did not address me on that decision in relation to this point. Great Southern was an application by the defendant in a group proceeding under Pt IVA of the Supreme Court Act 1986 for leave to appeal against the first instance decision of Sifris J granting a declaration that the defendant had, pursuant to s 124 of the Evidence Act 2008 (Vic), lost joint client legal privilege in a document and that the plaintiffs were permitted to tender the document at the forthcoming trial of the group proceeding. Ultimately the appeal was allowed but only for the purpose of reformulating the declaration made by the judge at first instance from a declaration that referred to an absolute loss of joint client legal privilege to a declaration that the Part of the Evidence Act 2008 (Vic) relating to privileges did not prevent a party from adducing evidence of the document in the forthcoming proceeding. The trial judge’s reasoning and deliberations on s 124 were approved of by the Court of Appeal.

12. Mr Waller for XC submits that s 124 cannot operate to secure production of information or documents to a person who is not a joint privilege holder. This point was argued before the Court of Appeal in Great Southern and disposed of as follows (citations omitted):

    Section 124: the disclosure to other persons point

    [31] GSMAL contends that s 124 does not operate in circumstances where the adduction of evidence the subject of joint client legal privilege would be disclosed to persons other than the joint holders of the privilege in the proceeding. There is nothing in this point. On its face, s 124 has application whether or not there are other parties in the proceeding. Section 124(1) applies to proceedings in connection with which two or more parties have the requisite interest. It is not restricted to litigation between such parties. That parties other than the joint privilege holders might gain access to material the subject of the joint privilege is a concomitant feature of litigation being conducted in open court. Even in a case where only the joint privilege holders are parties, the tendering of privileged material has the capacity to, in the words of GSMAL, "throw open" a confidential communication. Sifris J was, in our view, correct to reject GSMAL's submissions on this point.

13. With respect, I agree with and adopt the reasoning of their Honours in Great Southern and reject the contrary contentions put on behalf of XC.

Conclusion

1. My primary decision is that XC has failed to establish that client legal privilege attaches to the documents. This is because there is no evidence of the nature of the communications during the conference on 20 June 2003 which led to the creation of the documents. My impression is that there is more evidence to support the proposition that Mr N Jess was the sole client than there is to support the proposition advanced by XC that XC was the client to the exclusion of Mr N Jess. However, it is not necessary for me to decide that point in order to determine this dispute. It is sufficient for me to find (as I have) that XC cannot use client legal privilege, within the meaning of s118 of the Evidence Act 1996, to refuse to produce the documents.

2. As to the alternative case countenanced by counsel for XC, that the documents are subject to joint client legal privilege:-

   a)I could have accepted that Clayton Utz was jointly retained by XC and Mr N Jess;

   b)I am satisfied that pursuant to s 124 of the Evidence Act 1995, Mr N Jess alone can waive the joint client legal privilege without the concurrence of XC;

   c)I am satisfied that the fact that Ms E Jess and her advisors may gain access to the documents is immaterial to the entitlement of Mr N Jess to adduce evidence of the contents of the documents if he wishes to do so.

3. The effect of the Order which I have made is that the documents will be produced to Mr N Jess.

4. In relation to the alternative scenario of joint client legal privilege, I would have made a declaration to the effect that provides that Division 1 of Part 3.10 of the Evidence Act 1995 does not prevent the husband from adducing evidence of the documents (as I have used that term in these reasons) at the trial of this proceeding.

I certify that the preceding sixty four (64) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Bennett delivered on 24 September 2015.

Legal Associate:

Date: 24 September 2015