Jess & Jess (No 3)

Case [2022] FedCFamC1F 408

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Jess & Jess (No 3) [2022] FedCFamC1F 408

File number(s): MLF 3444 of 2006
Judgment of: ALTOBELLI J
Date of judgment: 7 June 2022
Catchwords: FAMILY LAW – PRACTICE AND PROCEDURE – Where the wife filed Notices of Objection in relation to subpoena and un-redacted affidavits – Waiver of privilege – Settlement negotiations – Relevance – Objections dismissed.
Legislation:

Evidence Act 1995 (Cth) s 131

Family Law Act 1975 (Cth) s 79A

Federal Circuit and Family Court of Australia Act 2021 (Cth) ss 5, 67
Cases cited:

A & The A Group (2006) FLC 93-271; [2006] FamCA 463

Commissioner of Taxation v Rio Tinto Ltd [2006] 151 FCR 341; [2006] FCAFC 86

Kehoe & Seden (No 2) [2022] FedCFamC1F 346

Martin v Martin (No 3) (2014) 52 Fam LR 210; [2014] FamCA 402

Pearce & Pearce [2016] FamCAFC 14

Phe & Leng (2019) FLC 93–887

Wayne Lawrence Pty Ltd v Hunt [1999] NSWSC 1044

Woodcock & Woodcock [2021] FedCFamC1F 88
Division: Division 1 First Instance
Number of paragraphs: 48
Date of hearing: 31 May 2022
Place: Sydney (via videoconference)
Counsel for the Applicant: Mr Dickson QC with Ms Johnston
Solicitor for the Applicant: Kenna Teasdale Lawyers
The First Respondent: Litigant in Person
Counsel for the Second to Twenty-ninth Respondents: Mr Myers QC with Mr Mereine
Solicitor for the Second to Twenty-ninth Respondents: HWL Ebsworth Lawyers
Counsel for the Intervener: Ms Papaleo
Solicitor for the Intervener: Lander & Rogers

ORDERS

MLF 3444 of 2006

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN:

MS JESS

Applicant
AND:

MR J AS LEGAL PERSONAL REPRESENTATIVE FOR MR JESS SNR (DECEASED)

First Respondent

MR JESS JNR

Second Respondent

PPP INVESTMENTS PTY LTD (and others named in the Schedule)

Third Respondent

MR K AND MR L AS TRUSTEES OF THE BANKRUPT ESTATE OF MR JESS SNR

Intervener

ORDER MADE BY:

ALTOBELLI J

DATE OF ORDER:

7 JUNE 2022

THE COURT ORDERS THAT:

1.Leave is granted to the Applicant wife to file and rely on a Notice of Objection – Subpoena in relation to a subpoena to P Lawyers dated 26 April 2022.

2.The Notice of Objection – Subpoena referred to in Order 1 is dismissed.

3.The Applicant wife’s Notice of Objection – Subpoena in relation to a subpoena to Ms AB dated 27 April 2022 is dismissed.

4.The Applicant wife’s objection to the filing of un-redacted versions of the affidavits of Mr CC sworn 9 May 2022, and Mr Jess Jnr sworn 16 May 2022, is dismissed.

5.The costs of all parties are reserved.

Note:   The form of the order is subject to the entry in the Court’s records.

Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family…

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AGLC
Jess & Jess (No 3) [2022] FedCFamC1F 408
Case
[2022] FedCFamC1F 408
Decision Date

CaseChat Overview and Summary

The Court dismissed several objections filed by Ms Jess, the wife, against subpoenas and un-redacted affidavits in complex ongoing property proceedings. The respondents included Mr J, the legal personal representative of the deceased husband, and various third parties. The interveners were the trustees in bankruptcy of the husband’s estate. The objections were filed in the context of the wife’s attempt to set aside property orders made in 2009 and to seek a property adjustment. The objections were based on claims of legal professional privilege and without prejudice privilege.

The legal issues before the Court were whether the wife had waived the privilege by raising issues in relation to the settlement negotiations and whether the provisions of the Evidence Act permitted the evidence to be adduced. The Court held that the wife had implicitly waived the privilege by raising issues in relation to the settlement negotiations and that the provisions of the Evidence Act permitted the evidence to be adduced. The Court rejected the wife’s argument that the objections should only be considered in the context of the interim application and not the substantive application. The Court held that to accept this argument would be inconsistent with the objects of the Federal Circuit and Family Court of Australia Act 2021, which include ensuring that justice is delivered effectively and efficiently.

The Court dismissed all the objections and made orders that the wife’s objections to the subpoenas and affidavits be dismissed, that leave be granted to the wife to file and rely on a Notice of Objection – Subpoena, and that the costs of all parties be reserved. The form of the order is subject to the entry in the Court’s records and may be subject to review or variation.

Orders

Orders of the court

MLF 3444 of 2006

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)

BETWEEN:

MS JESS

Applicant

AND:

MR J AS LEGAL PERSONAL REPRESENTATIVE FOR MR JESS SNR (DECEASED)

First Respondent

MR JESS JNR

Second Respondent

PPP INVESTMENTS PTY LTD (and others named in the Schedule)

Third Respondent

MR K AND MR L AS TRUSTEES OF THE BANKRUPT ESTATE OF MR JESS SNR

Intervener

ORDER MADE BY:

ALTOBELLI J

DATE OF ORDER:

7 JUNE 2022

THE COURT ORDERS THAT:

1. Leave is granted to the Applicant wife to file and rely on a Notice of Objection – Subpoena in relation to a subpoena to P Lawyers dated 26 April 2022.

2. The Notice of Objection – Subpoena referred to in Order 1 is dismissed.

3. The Applicant wife’s Notice of Objection – Subpoena in relation to a subpoena to Ms AB dated 27 April 2022 is dismissed.

4. The Applicant wife’s objection to the filing of un-redacted versions of the affidavits of Mr CC sworn 9 May 2022, and Mr Jess Jnr sworn 16 May 2022, is dismissed.

5. The costs of all parties are reserved.

Note: The form of the order is subject to the entry in the Court’s records.

Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).

Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.

Background

Background to the litigation

These reasons for judgment briefly explain why the Court has dismissed a number of Notices of Objection – Subpoena filed by Ms Jess (“the wife”) as well as objections to the filing of un-redacted versions of two affidavits (together referred to as “the present application”).BACKGROUND This is a minor skirmish in complex long-running property proceedings. The wife is the Applicant. The First Respondent is Mr J, the legal personal representative of the deceased husband, Mr Jess Snr (“the husband”). The 2nd–29th Respondents (“the represented third parties”) are various third parties including the husband’s son from a previous relationship, Mr Jess Senior. The interveners are the trustees in bankruptcy of the husband’s estate (“the interveners”). A brief summary of the previous proceedings provides important context to this case.PREVIOUS PROCEEDINGS: 2006–2009 The husband and the wife married in early 1988 and separated in 2006. The Jess Retail Unit Trust (“JRUT”) was established in 1983, being the trust that held various corporate and business interests known as the “[Jess] business”. Following their separation, the wife commenced property proceedings in the Family Court of Australia (as it was then known) in 2006 (“2006 proceedings”). In the 2006 proceedings, the wife contended that the husband’s units in the JRUT formed part of the property interests to be divided between the husband and wife. The husband alleged that his units in the JRUT had passed beneficially to Mr Jess Jnr pursuant to the terms of a Deed of Declaration of Trust dated 28 February 2002 (“DODT”). In 2007, Mr Jess Jnr commenced proceedings in the Supreme Court of Victoria seeking orders that his entitlement under the DODT had vested and that he was entitled to be registered as the holder of the husband’s units in the JRUT (“Supreme Court proceedings”). The relevant parties reached agreement to resolve the 2006 proceedings and the Supreme Court proceedings in September 2009. Various documents gave effect to their agreement, including:(a)Final property orders made by consent in the Family Court of Australia (as it was then known) on 24 September 2009 (“2009 Orders”), with the parties to those orders being the husband and the wife; and(b)A Deed of Settlement dated 20 September 2009 between various parties including the husband, the wife, and Mr Jess Jnr (“Deed of Settlement”).CURRENT PROCEEDINGS The wife commenced these proceedings in 2013. By way of an Amended Initiating Application filed 16 April 2014, she seeks that the 2009 Orders be set aside pursuant to s 79A(1)(a) of the Family Law Act 1975 (Cth) (“FLA”) and that there be an order for property adjustment between the husband and the wife (“the substantive application”). The crux of the substantive application is that the DODT was a fraud/sham, having been brought into existence in 2006 or 2007 rather than the date it bears of 28 February 2002. The current proceedings were bifurcated and the issue of whether the DODT was a fraud/sham proceeded as a threshold issue before Bennett J. In the course of the proceedings:(a)The husband became bankrupt and the interveners intervened in the proceedings on 22 August 2016; and(b)The husband died in 2018. Thereafter, the wife’s Amended Initiating Application was continued against the husband’s legal personal representative.

Evidence

Evidence Before The Court

The First Respondent and the interveners appeared at the interim hearing, but otherwise did not wish to participate.THE EVIDENCE The following documents were relied upon and referred to throughout the course of the interim hearing:(a)The un-redacted and redacted versions of the Jess Affidavit;(b)The un-redacted and redacted versions of the Mr CC Affidavit;(c)The CC Subpoena;(d)The Ms AB Subpoena;(e)The wife’s Application in a Proceeding filed 1 April 2022; (f)The wife’s affidavit filed 1 April 2022;(g)The wife’s notice of Objection – Subpoena filed 11 May 2022 in relation to the Ms AB Subpoena;(h)The wife’s Notice of Objection – Subpoena filed 31 May 2022 in relation to the CC Subpoena;(i)The wife’s written submissions dated 23 May 2022;(j)The wife’s written submissions in reply dated 25 May 2022;(k)The represented third parties’ written submissions dated 23 May 2022;(l)The represented third parties’ written submissions in reply dated 25 May 2022; and(m)Transcript of proceedings before Cronin J on 24 September 2009.THE APPLICABLE LAW On the issue of privilege and whether this was waived implicitly, or as regards the issue, the parties agreed that the following was a correct statement of the applicable law, as set out in the represented third parties’ written submissions.21.A communication or document protected by “without prejudice” privilege can lose its protection through an act of waiver.22.In Western Australia v Southern Equities Corporation Ltd (in liq) French J said that the concept of implied waiver, as a result of pleading into relevance material protected by legal professional privilege, applies by analogical argument to material the subject of “without prejudice” negotiations. In that case, the State of Western Australia sued a number of parties involved in the attempted financial rescue of Rothwells Ltd. There had been negotiations to settle disputes between the State of Western Australia, National Australia Bank and the liquidators of Rothwells Ltd. The State of Western Australia objected to the production of communications which took place during those negotiations on the basis that they were protected by “without prejudice” privilege.23. In ordering the production of the documents, French J said: In my opinion the State has, on its pleadings, raised the issue of the reasonableness of its settlement. The documents generated in the lead up to that settlement may have some relevance to that question. There is no suggestion that the National Australia Bank would be affected or prejudiced in any way by the production of these documents for inspection. It is not a party to the proceedings. Nor is there any basis upon which it has been suggested that the production of the documents would affect the rights of the State and the National Australia Bank inter se. The documents may support a line of inquiry concerning the causal connection between the alleged conduct of which the State complains and the ultimate formation of the settlement agreement which is the basis of its loss.24.Southern Equities was referred to with approval by the Full Court of the Supreme Court of South Australia in Yokogawa Australia Pty Ltd v Alstom Power Ltd. In that case, Duggan J said:I have expressed the view that a party can impliedly waive without prejudice privilege in subsequent proceedings involving a third party. There are cases in which a waiver has been implied by pleading which put in issue the reasonableness of a settlement. The question arises whether there has been such a waiver in the present case.I can see no reason why most of the general considerations relating to waiver of legal professional privilege should not apply also to without prejudice privilege. The ultimate question is whether there is an inconsistency in raising an issue but attempting at the same time to prevent a proper examination of the issue by maintaining the privilege. An assessment has to be made as to whether there is unfairness as a result of the inconsistency and, if so, the extent of that unfairness.(ii) Section 131 of the Evidence Act25.Section 131(1) of the Evidence Act provides that evidence is not to be adduced of:(a)a communication that is made between persons in dispute, or between one or more persons in dispute and a third party, in connection with an attempt to negotiate a settlement of the dispute; or(b)a document (whether delivered or not) that has been prepared in connection with an attempt to negotiate a settlement of a dispute.26.The prohibition is subject to a number of exceptions in section 131(2) of the Evidence Act.27.Relevantly, section 131(2)(e) provides that section 131(1) does not apply if:the evidence tends to contradict or to qualify evidence that has already been admitted about the course of an attempt to settle the dispute.28. Further, section 131(2)(g) provides that section 131(1) does not apply if:evidence that has been adduced in the proceeding, or an inference from evidence that has been adduced in the proceeding, is likely to mislead the court unless evidence of the communication or document is adduced to contradict or to qualify that evidence.29.In Phe v Leng the Full Court of the Family Court of Australia preferred the broader construction of section 131(2)(g) of the Evidence Act instead of the narrow construction. The Full Court said:The broader view, which, in our view, accords with the ordinary meaning of the provision, is that s 131(2)(g) of the Evidence Act applies where the existence or the contents of otherwise privileged communication contradicts or qualifies existing evidence or an inference from that evidence and the court is otherwise likely to be misled unless the communication is adduced.30.Further, the Full Court said that the broader view is consistent with an emphasis in matters arising in courts exercising jurisdiction under the FLA on the second policy objective of “genuine negotiations”.31. Notably, the Full Court said:If, as it is here, the issue is of importance, it is not sound public policy to permit a party to assert something is “white” when attempting to negotiate a settlement and then give sworn evidence that it is “black”, without the court knowing the witness had previously said that it was “white” and the witness being exposed to being tested upon the assertion made during settlement negotiations. We accept that despite the obligation to negotiate genuinely, sometimes care may need to be taken by the court when placing weight upon statements made in settlement negotiations. It may be as a result of testing that the court might conclude that the statement made in settlement negotiations was false but, as in this case, it may not.32.In Jess v McNiven McKerracher J said that the broad view is simply to rely upon the text of the provision so as to allow “without prejudice” communications to be adduced where other evidence in the proceeding is likely to mislead the Court, unless evidence of the communication is adduced to contradict or qualify the evidence whereas the narrow view requires “a causal connection between a party’s reliance upon the privilege and the Court being misled”. Ultimately, his Honour was unable to discern any real distinction between the “so-called narrow and broad constructions” of section 131(2)(g) and simply sought to apply the words of the statute.(Emphasis in original)(As per the original)

Decision

Reasons for decision

MR J
The Court would like to address the submission made by Queen’s counsel for the wife that the documents in question need to relate to the interim application, namely the wife’s Application in a Proceeding listed for hearing before Wilson J, as opposed to, for example, the substantive application. The Court is not convinced that the authority cited by Queen’s counsel, the single judge decision of Bryant CJ sitting as the Full Court in A & The A Group (2006) FLC 93-271 informs the present decision. At most, the comments of the learned former Chief Justice at [55] were obiter dictum. One consequence of accepting the submission made by Queen’s counsel would be that if the objections were upheld and the subpoena struck out in the limited context of the interim application, there would be nothing to prevent the same subpoena being issued again at a later time. This would be directly inconsistent with the provisions of s 5 of the Federal Circuit and Family Court of Australia Act 2021 (Cth) (“FCFCOA Act”) wherein the first stated object of the FCFCOA Act is to “ensure that justice is delivered by federal courts effectively and efficiently”. It would also be inconsistent with s 67, which states that the overarching purpose of the family law practice and procedure provisions in the FCFCOA Act is to facilitate the just resolution of disputes “according to law” and “as quickly, inexpensively and efficiently as possible”.CONCLUSION It follows from the reasons above that the objections to the CC Subpoena and the Ms AB Subpoena are dismissed. The objections in relation to the un-redacted Jess Affidavit and Mr CC Affidavit were made on the same grounds as the objection to the Ms AB Subpoena. As the Court finds that the wife has waived her privilege and that s 131(2) of the Evidence Act applies, these objections are also dismissed.

Ratio Decidendi

Legal Principle Established

Established by: MR J

Full text does not contain this section.