Kendling and Kendling and Ors (No. 4)

[2008] FamCA 691

FAMILY COURT OF AUSTRALIA

KENDLING & KENDLING & ORS (NO. 4) [2008] FamCA 691

FAMILY LAW – INTERLOCUTORY RELIEF – Inspection of documents; Waiver of client legal privilege

Family Law Act (Cth) 1975

Kendling & Kendling and Ors, Stevenson J delivered 5 May 2008 (unreported)
Liberty Financial Pty Ltd v Bluestone Group Pty Ltd and Anor (No 2) [2005] FCA 1485
Attorney-General for the Northern Territory v Maurice [1986] HCA 80; (1986) 161 CLR 475

APPLICANT: Mrs Kendling

RESPONDENT: Mr Kendling

2^nd RESPONDENT: T Pty Ltd

3^rd RESPONDENT: Jeremy Kendling

4^th RESPONDENT: Penelope Kendling

5^th RESPONDENT: L Pty Ltd

6^th RESPONDENT: A Pty Ltd

7^th RESPONDENT: Mr Z

8^th RESPONDENT: B Pty Ltd

9^th RESPONDENT: I Pty Limited

10^th RESPONDENT: Mr PS

FILE NUMBER: SYF 2903 Of 2003

DATE DELIVERED: 15 August 2008

PLACE DELIVERED: Sydney

JUDGMENT OF: Judicial Registrar Loughnan

PLACE HEARD:  Sydney

HEARING DATE: 15 August 2008

REPRESENTATION

COUNSEL FOR THE APPLICANT WIFE:	Mr N. Beaumont
SOLICITOR FOR THE APPLICANT:	Michael Conley Solicitors

COUNSEL FOR THE HUSBAND AND THE 8TH RESPONDENT	Mr S. Gardiner
SOLICITOR FOR THE HUSBAND AND THE 8TH RESPONDENT	Dorrough Smart, Solicitors

Orders

1. Leave is granted to the parties to inspect documents produced by Barkus Edwards Doolan solicitors pursuant to a subpoena issued on 21 July 2008, except for the following material:

   a)Letter from BED to the husband dated 20 February 2006 – all of the material following the heading “Overseas Trip for [Penelope’s] Wedding;

   b)Letter from BED to the husband dated 22 March 2006 – everything after the first page;

   c)Letter from BED to the husband dated 8 June 2007 – the paragraphs on page 1 commencing with the words “We refer” and “We note”.

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

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYF 2903 of 2003

Mrs Kendling

Applicant

And

Mr Kendling

Respondent

T Pty Ltd

2^nd Respondent

Jeremy Kendling

3^rd Respondent

Penelope Kendling

4^th Respondent

L Pty Ltd

5^th Respondent

A Pty Ltd

6^th Respondent

Mr Z

7^th Respondent

B Ltd

8^th Respondent

I Pty Limited

9^th Respondent

Mr PS

10^th Respondent

REASONS FOR JUDGMENT

1. Two parties in property proceedings claim that certain documents produced on subpoena by their former solicitors, fall outside the category of documents affected by a waiver of client legal privilege.

Applications

1. The wife seeks leave to inspect documents produced on subpoena by Barkus Edward Doolan solicitors (BED), former solicitors for the husband and the eighth respondent, B Ltd.

2. The husband and B Ltd oppose inspection of some of the documents produced and of parts of other documents produced.

Evidence

1. The respondents relied on no sworn documents but for the purposes of my adjudication submitted copies of the documents produced in three bundles:

   A.a bundle of correspondence with part of each document marked out;

   B.a bundle of the same documents as in A but unmarked;

   C.a bundle of correspondence not included in A, being documents in respect there is an objection to any part of the documents being inspected.

2. Sadly, in the quiet of my chambers I discovered that documents in the unmarked bundle were marked eg. the letter from BED of 22 March 2006 and similarly some the documents in bundle C were marked. There were two copies of the letter from BED of 15 June 2006, one in bundle A and one in Bundle B. The Bundle A copy had a page 3 which is entirely marked out and the Bundle B copy had no third page.

3. Reference was made to Reasons for Judgment of Stevenson J in these proceedings published on 5 May 2008. A copy of that judgment is attached to these reasons.

The hearing

1. The matter was listed before me at short notice and by arrangement between the parties and O’Ryan J who is the judge managing the proceedings. There was no sworn evidence tendered and the matter proceeded by oral submissions.

Jurisdiction

1. Counsel for the parties agreed that the issue before me was whether certain documents or parts of documents fell within a category of documents in respect of which Stevenson J had decided, client legal privilege had been waived by the husband.

Background facts

1. With a number of others, the parties are involved in property proceedings which are being heard by Moore J. The hearing commenced in 11 August 2008 and is listed to continue for several weeks into the future.

2. On 5 May 2008, in relation to earlier subpoenas issued to lawyers who acted for the husband and B Ltd, Stevenson J found that:

   there has been a waiver of privilege in relation to the advice as to the obligation of disclosure given to the husband and [B Ltd].

3. On 21 July 2008 a subpoena issued on the application of the wife, to BED requiring the production by 10.30 am on 30 July 2008 of documents falling within the following two categories:

   1.All documents that record or disclose any advice given by Barkus Edwards Doolan Family Lawyers, or by counsel, to the Husband, as to his obligations of disclosure in these proceedings between 11 January 2006 and 4 September 2007.

   2.All documents that record or disclose instructions given by the Husband for the purpose of obtaining the advice referred to in paragraph 1 above.

4. I take it that documents were produced, without objection, by BED. There was no application to set aside the subpoena. I take it that it is an agreed fact that there would be no claim for privilege in relation to documents that solely fall within the description set out in the subpoena.

5. Objection was made on behalf of the husband and B Ltd to inspection of certain of the documents produced by BED. It is that objection that I have been asked to determine.

Submissions

1. The submissions on behalf of the wife are to the following effect:

   Ø  A party may not waive privilege for only part of a document where that document has been used in the subject litigation – Liberty Financial Pty Ltd v Bluestone Group Pty Ltd and Anor (No 2) [2005] FCA 1485 per Heerey J; Attorney-General for the Northern Territory v Maurice [1986] HCA 80; (1986) 161 CLR 475. Therefore all parts of any document that contains material falling within the definition, may be inspected;

   Ø  Stevenson J found that the waiver applied “in relation to” advice about the obligation of disclosure. Therefore the waiver was not limited to the advice itself;

   Ø  The onus of proof in the matter before the Court must fall to the husband and B Ltd because the wife is largely unable to make any submissions in relation to the material in respect of which privilege is said to remain;

   Ø  In relation to the only document produced which is available to the wife (the letter from BED to the husband dated 5 July 2007), the sections the husband seeks to exclude from inspection include material that clearly falls within the category her Honour identified as material to which the waiver applied. For example paragraphs 3 & 4 which the husband seeks to exclude from inspection, expressly deal with discovery issues;

   Ø  Without any evidence as to the import of the particular communications it is very difficult for the Court to find that a letter or a part of a letter was not “in relation to” advice about the obligation of disclosure. It is not uncommon for such evidence to be given by a solicitor and for there to be cross-examination of that solicitor. As to whether the particular solicitor is now available, it is submitted that that evidence need not come from the author of the letter;

2. The submissions on behalf of the husband and B Ltd were to the following effect:

   Ø  For the reasons that the privilege exists, it would be unfair to the husband and B Ltd to allow the wife access to communications between the husband and his solicitors which is not directed to advice about his obligations of disclosure;

   Ø  The Court should read the material which is subject to the claim and make an independent ruling as to what falls within the category of the waiver identified by Stevenson J and what does not;

   Ø  It is unfair to make any inference from the absence of evidence in support of the claim that a particular communication stands outside the category in respect of which privilege has been waived. The matter came on quickly and it was understood by counsel that the solicitor who had carriage of the matter at BED, had since retired.

The approach

1. These are not proceedings about the introduction of material into evidence. Such an issue could only be determined by the trial judge. Notwithstanding that the trial in question has already commenced, I am dealing with a process of pre-trial discovery.

2. A judge has already decided that privilege has been waived in respect of a certain category of documents. The parties disagree about the treatment of documents that contain some material falling within that category and other material that may not. They also disagree about what falls within the category of material in respect of which privilege has been waived.

3. The onus must fall to the husband and B Ltd to sustain the objection to inspection. By definition the wife is simply unable to make the case.

4. The material that may be inspected is material “in relation to the advice as to the obligation of disclosure given to the husband and [B Ltd].”

Discussion

1. The device “in relation to the advice as to the obligation of disclosure” casts a wide net. I accept the submission that it includes more than the advice itself. The process of giving legal advice is not a single operation. It must involve the collection of information in order to give the advice. Instructions are needed from a client and there is often further enquiry to be made before the advice is given. The advice may involve options and therefore there may be some toing and froing between lawyer and client. In my view, correspondence that is involved in that process or is related to that process, is caught by the finding made by her Honour.

2. As to the argument about the documents where it is claimed that only part should be inspected, this issue came before Heerey J in the Federal Court in Liberty Financial Pty Ltd v Bluestone Group Pty Ltd and Anor (No 2) [2005] FCA 1485. In that judgment the Court said:

   12 Two questions were raised by Bluestone. First, it submitted that inspection be limited to those portions only which respond to the categories of discovery under my earlier order, on the basis that the balance of the material in those documents is irrelevant to the issues in dispute in the proceeding and is otherwise confidential to Bluestone.

   13 At the moment, all that is in issue is the extent to which Liberty should be able to inspect the documents in question. Bluestone has not yet sought to use them for the purposes of this litigation. The question whether legal professional privilege can be maintained for part of a document has usually arisen in a context when there has been some forensic use of another part of the same document. Thus in Great Atlantic Insurance Co v Home Insurance Co [1981] 2 All ER 485 counsel read in court two paragraphs of a memorandum without being aware that there were other parts of the document for which privilege was claimed. The English Court of Appeal held that privilege had been waived in respect of the whole document. Templeman LJ at 492 cited with approval the judgment of Mustill J in Nea Karteria Maritime Co Ltd v Atlantic and Great Lakes Steamship Corporation (unreported, 11 December 1978), where his Lordship said:

   "...where a party is deploying in court material which would otherwise be privileged, the opposite party and the court must have an opportunity of satisfying themselves that what the party has chosen to release from privilege represents the whole of the material relevant to the issue in question. To allow an individual item to be plucked out of context would be to risk injustice through its real weight or meaning being understood."

   
   Templeman LJ added that the question whether part of a document could be introduced without waiving privilege to the other part could not be satisfactorily decided in the absence of informed argument to the contrary, and there could be no informed argument without disclosure, which would make argument unnecessary.

   14 When the High Court considered this question in Attorney-General for the Northern Territory v Maurice [1986] HCA 80; (1986) 161 CLR 475 their Honours’ approach was in similar terms. Gibbs CJ said at 481 that the question whether a waiver should be implied depended on whether it would be "unfair or misleading to allow a party to refer to or use material and yet assert that that material, or material associated with it, is privileged from production". Mason and Brennan JJ said at 488 that "[t]he holder of privilege should not be able to abuse it by using it to create an inaccurate perception of the protected communication". Deane J at 492 pointed out that the claim book in question had not been "prepared for use, or accepted or used as evidence".

   15 I conclude therefore that unless and until the documents in question are used or, to use Mustil J’s term, deployed by Bluestone in this litigation, inspection should be restricted as submitted.

3. It was submitted for the wife, without complaint on behalf of the husband, that the correspondence in question has been used or deployed in this litigation. That might mean it is an agreed fact. Beyond that, apart from one letter, I do not know that the correspondence has been prepared for use, or accepted or used as evidence in the proceedings, either in whole or in part. I was told that the letter from BED to the husband of 5 July 2007 came to the wife in the course of contempt proceedings. It may be that therefore that letter is seen to have been used in “this litigation”.

4. Stevenson J was satisfied that the husband had put into issue his state of mind as influenced by his legal advice past and present, in relation to his obligation of disclosure. Perhaps the agreed position is that by making reference to his legal advice, the husband was ‘using’ the correspondence that related to that advice (the correspondence that is now produced) in the litigation.

5. Despite my speculation about the parties’ positions, I am not confident that the husband used the correspondence produced by BED in the litigation. However, that finding may have no significant practical impact.

6. I have a broader concern about the capacity for isolating in a communication between solicitor and client in property proceedings, material that cannot be said to be “in relation to the advice as to the obligation of disclosure”. Given the extent and centrality of the obligation of disclosure in property cases, it could impact in one way or another on almost every communication in a property matter. The primary obligation relates to the relevant financial circumstances of a party, the identification of assets, liabilities, income, outgoings and financial resources of the party and associated persons and entities.

7. There have been many statements to the effect that the exercise of discretion under section 79 is wholly dependent on proper disclosure. For example in In the Marriage of Black and Kellner (1992) 15 Fam LR 343; and In the Marriage of Weir (1992) 110 FLR 403; 16 Fam LR 154; (1993) FLC 92–338).

8. If the task of isolating material that falls outside the definition was not difficult enough, here it has been given to a judicial officer who has no assistance from any party as to the particular material (the husband and B Ltd chose not to provide that assistance and, without knowing the contents, the wife could not). There is no evidence as to the intention or impact of each element of each communication and no evidence (or agreed position) as to the matters in issue in the substantive proceedings. For example, I do not know what has been disclosed or what has not.

9. To give a flavour of the problem, one excluded part of a letter dated 20 February 2006 refers to Dr M. There is nothing before me as to whether Dr M was involved as an expert on a parenting issue or on an issue that could impact on earning capacity, which could be a matter going to the obligation of disclosure.

10. As to the absence of evidence in the respondents’ case, there was no application made to me to adjourn the proceedings to allow such evidence to be prepared. I accept the submission on behalf of the wife that it need not come from the solicitor who wrote the letters. In any event there is no reason given for the husband not giving evidence.

11. In those circumstances, I have read the documents produced and have excluded those parts that appear to relate solely to the parenting issues between the husband and wife. I have left in formal parts of correspondence and references to the retention of particular counsel, conferences and other machinery matters about which, I assume, there would be little controversy.

Conclusion

1. Leave is sought by the wife to inspect documents produced by Barkus Edwards Doolan solicitors pursuant to a subpoena that issued on 21 July 2008. There is a claim on behalf of the husband and B Ltd that leave should not be granted to privileged material in respect of which client legal privilege has not been waived. A decision has already been made that privilege has been waived in relation to advice as to the obligation of disclosure. Thus I am to isolate any material that falls outside that definition.

2. A letter from BED to the husband dated 5 July 2007 was used by the husband in the proceedings and therefore may be inspected. Otherwise there is no principled basis for excluding more than that part of the material dealing with parenting proceedings. Thus leave will be granted to all but the following material:

   a)Letter from BED to the husband dated 20 February 2006 – all of the material following the heading “Overseas Trip for [Penelope’s] Wedding;

   b)Letter from BED to the husband dated 22 March 2006 – everything after the first page;

   c)Letter from BED to the husband dated 8 June 2007 – the paragraphs on page 1 commencing with the words “We refer” and “We note”.

I certify that the preceding 32 (thirty-two) paragraphs are a true copy of the reasons for judgment of Judicial Registrar Loughnan

Associate: 

Date:  15 August 2008