Kendling and Kendling and Ors (No. 5)

[2008] FamCA 652

FAMILY COURT OF AUSTRALIA

KENDLING & KENDLING AND ORS (NO. 5) [2008] FamCA 652

FAMILY LAW – PRACTICE AND PROCEDURE – Subpoenae

APPLICANT:		Mrs Kendling
RESPONDENT:	Mr Kendling
SECOND RESPONDENT	T Pty Ltd
THIRD RESPONDENT	Jeremy Kendling
FOURTH RESPONDENT	Penelope Kendling
FIFTH RESPONDENT	L Pty Ltd
SIXTH RESPONDENT	A Pty Ltd
SEVENTH RESPONDENT	Mr Z
EIGHTH RESPONDENT	B Ltd
NINTH RESPONDENT	I Pty Ltd
TENTH RESPONDENT	Mr PS

FILE NUMBER: SYF 2903 of 2003

DATE DELIVERED: 5 May 2008

PLACE DELIVERED: Parramatta

PLACE HEARD: Sydney

JUDGMENT OF: Stevenson J

HEARING DATE: 6 March 2008

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Beaumont

SOLICITOR FOR THE APPLICANT: Michael Conley

COUNSEL FOR THE 1^ST RESPONDENT: Mr Baran

SOLICTOR FOR THE 1^ST RESPONDENT: Dorrough Smart

COUNSEL FOR THE 2^ND, 3^RD, 4^TH AND 5^TH

RESPONDENTS:

Mr Burreket

SOLICITOR FOR THE 2^ND, 3^RD, 4^TH, AND 5^TH

RESPONDENTS:

Broun Abrahams

SOLICITOR FOR THE 6^TH AND 10^TH RESPONDENTS: Edwards Legal Services

Orders

1. That the subpoena issued to Dorrough Smart, Solicitors & Attorneys, filed and dated 22 February 2008, be set aside.

2. That the subpoena issued to Barkus Edwards Doolan, Family Lawyers, filed and dated 22 February 2008 be set aside.

3. That the subpoena issued to John S Wenden, Solicitor, filed and dated 22 February 2008, be set aside.

4. That the subpoena issued to Mr Z, Lawyers, filed and dated 22 February 2008, be set aside.

IT IS NOTED that publication of this judgment under the pseudonym Kendling & Kendling and Ors 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

T Pty Ltd

Second Respondent

And

Jeremy Kendling

Third Respondent

And

Penelope Kendling

Fourth Respondent

And

L Pty Ltd

Fifth Respondent

And

A Pty Ltd

Sixth Respondent

And

Mr Z

Seventh Respondent

And

B Ltd

Eighth Respondent

And

I Pty Ltd

Ninth Respondent

And

Mr PS

Tenth Respondent

REASONS FOR JUDGMENT

proceedings and background  

1. Mr and Mrs Kendling are in dispute as to settlement of property.  A number of respondents have been joined in the proceedings.  It is not necessary for me to identify these respondents other than to note that one is a company, B Ltd, in which the husband holds 100% of the ordinary shares.

2. The wife alleged that the husband and B Ltd have failed, on several occasions, to comply with orders for disclosure of various financial matters.  Her contentions are set out in detail in the affidavit of Annelise Lang Peterson, solicitor, sworn 4 March 2008.  I will not repeat this material.

3. On 27 February 2008 the husband filed an application for an extension of time for compliance with certain orders, which required disclosure of financial information by himself and B Ltd.  His supporting affidavit drew no distinction between himself and the company and, in these reasons, a reference to the husband should be read as a reference to both himself and B Ltd.  Also on 27 February 2008, the husband filed an application to set aside four subpoenas issued to his current and past lawyers.

4. In paragraph 12 of his affidavit sworn on 20 February 2008 the husband said:

   “I say that I have also been provided with further advice by my new legal team, stressing my obligation as to my duty of disclosure in this matter.  This has been stressed more strenuously to me by my new legal team.  I have taken on board this advice, and I am trying to comply with the court orders, with this advice as the focus of my attention.  This is also why I failed to comply with the various court orders to date.  This is also why I now seek the indulgence of the court to enable me to have the time for compliance to those various orders extended to enable my compliance with the same.”

5. The wife contended that the husband and B Ltd had waived privilege by the contents of this paragraph of his affidavit.  She thus claimed that she is entitled to access all of the documents covered by the four subpoenas issued to the husband’s present and past lawyers.  I am concerned solely with the question of waiver of privilege and access to documents caught by the subpoenas.

SUBMISSIONS ON BEHALF OF THE WIFE

1. It was submitted on behalf of the wife that waiver of privilege has occurred on two independent or alternate grounds:

   (i)Waiver by evidentiary assertion as to state of mind; and

   (ii)Derivative or associated waiver.

Waiver by Evidentiary Assertion as to State of Mind

1. According to the wife, the following matters deposed to by the husband are of significance:

   ·he has received advice from his new legal team which stresses his obligations of disclosure.

   ·the advice of his new legal team places greater emphasis on his duty of disclosure than has been the case with his previous lawyers.

   ·he has ‘taken on board this advice’ and ‘is trying to comply with the Court orders with this advice as the focus of [his] attention’.

   ·‘this’ is why he failed to comply with previous orders and why he will now comply in the future, if he and B Ltd are granted an extension of time.

2. On behalf of the wife it was submitted that the husband’s reference to ‘this’ can only be to previous advice and the advice which he now receives from his new legal team and the comparative impact on his state of mind.  It was said that the husband has thus placed squarely in issue his past and present state of mind as to two matters:

   ·an explanation for his past non-compliance; and

   ·an explanation as to why he will comply in the future.

3. Reliance was placed on behalf of the wife on, inter alia, the following authorities:

   ·    Stamp & Stamp (2007) 37 FamLR 235 (Full Court of the Family Court of Australia)

   ·    Telstra Corporation Limited v BT Australasia Pty Limited (1998) 85 FCR 152 (Full Court of the Federal Court of Australia).

   The relevant extracts from these authorities are set out in the written submissions of counsel for the wife and will not be repeated here.

Derivative Waiver

1. In his written submissions counsel for the wife referred to the “classic statement of derivative waiver” of Wigmore to the following effect:

   “when [conduct] touches a certain point of disclosure, fairness requires that his privilege shall cease whether he intended that result or not.  He cannot be allowed (after disclosing as much as he pleases) to withhold the remainder.  He may elect to withhold or disclose, but after a certain point his election must remain final.”  (Quoted by Mason and Brennan JJ in Attorney General (MT) being Maurice (1986) 161 CLR 464-448.)

2. The argument for the wife, in summary, was that the husband has blamed past legal advice for his failure and default in complying with orders for disclosure.  It thus follows, so it was said, that it would be “inconsistent and unfair” that waiver ceases at a particular point when all legal advice may have impacted upon the husband’s state of mind.

3. It was submitted that the wife is entitled to access to all of the husband’s past or present legal advice because it is not possible to understand the advice given in relation to disclosure, other than in the context of full knowledge of factual matters disclosed between solicitor and client.  Similarly, it is not possible to understand the advice given as to disclosure without seeing all of the surrounding instructions and advice generally.

SUBMISSIONS ON BEHALF OF THE HUSBAND

1. Counsel for the husband contended that his affidavit evidence went no further than a statement that he had been provided with advice from his new legal team but made no disclosure of the contents of such advice.  It was submitted that the husband’s affidavit did not suggest that his legal advice caused him ‘to do any act central to the issues in the proceedings’.  Accordingly, the wife’s argument of waiver of privilege on the ‘state of mind’ basis must fail.

2. Counsel for the husband referred, inter alia, to the following statement in the decision of Young J in Bennett v. Chief Executive Officer of Australian Customs Service (2004) 210 ALR 220:

   “In my view the distinction between a mere reference to advice having been obtained and a reference that discloses the content or substance of the advice has not been eliminated by the High Court’s restating of the relevant principles as to waiver in Mann v Carnell (1999 201CLR1).”

3. Counsel for the husband referred to two propositions enunciated by Gyles J in the same case as follows:

   “1.A statement which reveals the contents of legal advice even if it does so in a summary way or by reference only to a conclusion will probably result in a waiver.

   2.A statement which refers to legal advice even if it associates that advice with conduct undertaken or with a belief held by the client will not or probably will not result in a waiver.”

4. As to the four subpoenas themselves, it was submitted on behalf of the husband that they are so wide as to be “a fishing expedition” and “oppressive, wide, ambiguous and impossible to comply with”.  The practical difficulties and likely costs associated with compliance with the four subpoenas were set out in the affidavit of Megan Dorrough, solicitor, sworn on 26 February 2008.

CONSIDERATION AND CONCLUSION

1. It seems to me that the husband has put directly in issue his state of mind not only by paragraph 12 of his affidavit sworn on 20 February 2008 but also by paragraph 7 of the same document (annexure “G” to the affidavit of Annelise Peterson sworn 4 March 2008).  He deposed in paragraph 7 as follows:

   “I have been unable to comply, in full, with those various court orders.  However I say that this has not been due to an unwillingness on my part, or by my inaction to attempt to comply.”

2. In my opinion, the husband has put squarely into issue the impact of his past and present legal advice on his appreciation of and attitude to his disclosure obligations.  The only inference which can be drawn is that his present legal advice will be sufficient to cause him to take the necessary steps to make proper disclosure but his previous legal advice did not have that effect.  He thus invites a direct comparison of his state of mind at the times of his previous defaults and the present, when he seeks from the Court the indulgence of an extension of time.

3. A key issue between the parties is whether the husband and B Ltd have provided an adequate explanation for past non-compliance and a proper basis for asserting that there will be future compliance.  In the words of Branson and Lehane JJ in Telstra Corporation Limited v BT Australia Pty Limited (1998) 85 FCR 152 the husband has:

   “... put in issue in the proceeding a matter which can not fairly be assessed without examination of relevant legal advice, if any, received by that party.”

4. In my opinion, 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.  The next question is the extent to which the wife should be granted access to the files of the past and present lawyers of the husband and B Ltd.

5. I do not accept the argument on behalf of the wife that it would be impossible to understand the advice given to the husband in relation to disclosure without full knowledge of all matters disclosed between the husband and his past and present lawyers.  The orders for disclosure were very detailed and specific and leave no room for doubt about which was required.

6. I accept that the four subpoenas, as presently drawn, are far too wide and could be seen as oppressive.  In any event, the existing subpoenas go far beyond my ruling as to what documents would be caught by the waiver of privilege.

I certify that the preceding twenty-two (22) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Stevenson.

Associate:

Date:  5 May 2008