LEGAL PROFESSIONAL PRIVILEGE – document prepared by the appellant as an aide-memoire before consultation with a person who was a foreign lawyer but who also had other capacities in his relationship with the appellant– whether the appellant proved that the dominant purpose of creating the document or any part thereof was for the obtaining of legal advice – privilege on the facts not made out – place of foreign lawyers in considering legal professional privilege – discussion of the scope of legal professional privilege where a document is created for the dominant purpose of obtaining legal advice but is not itself the communication
TREVOR JOHN KENNEDY v ANDREW CHARLES VERSCHUER WALLACE & ORS N 470/04
BLACK CJ, EMMETT & ALLSOP JJ 23 DECEMBER 2004 SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
N 470 of 2004
ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN:
TREVOR JOHN KENNEDY APPELLANT
AND:
ANDREW CHARLES VERSCHUER WALLACE FIRST RESPONDENT
AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION SECOND RESPONDENT
COMMISSIONER OF POLICE, AUSTRALIAN FEDERAL POLICE THIRD RESPONDENT
JUDGES:
BLACK CJ,…
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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AGLC
Kennedy v Wallace [2004] FCAFC 337
Case
[2004] FCAFC 337
Decision Date
CaseChat Overview and Summary
The case of Kennedy v Wallace is an appeal against the dismissal of a further amended application brought by Mr Trevor Kennedy against the Australian Securities and Investments Commission (ASIC) and others. The application sought declarations and orders that two handwritten notes taken from Mr Kennedy’s home were protected by legal professional privilege. The notes were made on hotel notepaper in London and Zurich and were intended for use in seeking legal advice from a Swiss lawyer, Benno Hafner. The primary judge dismissed the application, holding that the notes were not protected by privilege. Mr Kennedy appealed the decision to the Court, arguing that the notes were prepared for the purpose of obtaining legal advice and were therefore privileged.
The central legal issue before the Court was whether the handwritten notes made by Mr Kennedy on hotel notepaper were protected by legal professional privilege. The Court had to consider whether the notes were prepared for the dominant purpose of seeking legal advice and whether they were intended to be confidential. The Court also had to consider whether the privilege was waived or whether there was any estoppel operating in these circumstances.
The Court found that the trial judge was entitled to conclude that the appellant had not made out his claim for privilege on the balance of probabilities. The Court held that the notes were “cryptic” and did not provide a sufficient basis for concluding that they were prepared for the dominant purpose of seeking legal advice. The Court also found that the appellant’s evidence about his purpose in making the notes was uncertain and imprecise. The Court further held that there was no error in the trial judge’s reasoning on the issue of the availability of privilege in relation to advice sought from foreign lawyers. The Court agreed with the trial judge’s finding that there was no waiver or estoppel operating in these circumstances.
The appeal was dismissed with costs. The Court also made orders restraining the respondents from dealing with the notes until a specified date, and granted leave to the parties to move the Court for any variation or discharge of the order. The Court’s decision provides guidance on the application of legal professional privilege in relation to documents prepared for the purpose of seeking legal advice from foreign lawyers.
Orders
Orders of the court
1. The respondents by themselves, their servants or agents be restrained, until 5 pm 21 January 2005 or until further order earlier made, from acting as referred to in Order 1 of the Court made on 26 March 2004.
2. The parties have leave to move the Court on notice for any variation or discharge of order 1, any notice of motion and supporting affidavits to be filed and served on or before 5 January 2005.
3. The appeal otherwise be dismissed
4. The appellant pay the respondents’ costs.
Background
Background to the litigation
To the extent that there are references in the following factual background to things said by Mr Kennedy, they are taken from or based on his examination in December 2003. To the extent that there is a lack of clarity or precision in what follows that is a reflection of a lack of clarity and precision in the evidence of Mr Kennedy.Factual background In the 1980s, Mr Kennedy caused to be created a “structure” or an “entity” in Switzerland. It was created on the basis of legal and accounting advice in London. Mr Kennedy was apparently assured that he had no ownership whatsoever in, or influence whatsoever over, the structure or entity. Mr Kennedy said:…the structure before the change was created by some supposedly smart accountants and lawyers in London on the basis that what I was doing was strictly legal and that I had no ownership or – or authority over it. Beyond that, I have no knowledge, and I don’t believe I have ever had, of what it was. Mr Kennedy said that in either 1997 or 1998 there was “another iteration of this entity” over which he had “more influence.” He did not believe, however, that he had ownership in or of this new iteration. It is clear that the phrase “more influence” used by Mr Kennedy was intended to indicate that though he was responsible for establishing the first entity, he had no “interest or association or influence” in, with or over it until the changes in 1997 or 1998. These changes were apparently brought about by changes to Swiss law and were effected on the advice of Mr Hafner. The influence which Mr Kennedy understood that he (Kennedy) acquired in 1997 or 1998 was to have some influence over the investment policy of the entity or structure. Mr Kennedy said he could not recall why he established the entity in the first place. Mr Kennedy said that he did not understand the technical nature of the changes which occurred, but he did say that he did not believe that the “second structure” had “anything to do with the first structure”. Mr Kennedy said the following about his personal interest in investment in Switzerland:I am advised that I had no interest in the entity that was – that I had caused to be created up until 1997-98. Whether and what the nature of my interest is after ’98 I am unclear, but I certainly had an influence over things like its choice of investment managers, et cetera. It is to be inferred that the original entity and later entity had funds for investment. The extent and source of these funds were not disclosed in the evidence. Mr Kennedy said that he had been advised by Mr Hafner that he had no interest in the entity up to 1997 or 1998. (The date of this conversation was not identified. This advice was not asserted to found any argument of waiver in this case.) Meanwhile, on 3 May 1995, the predecessor of ASIC, the Australian Securities Commission (the “ASC”) commenced proceedings in this Court against a number of corporate respondents including Bank Leumi Le-Israel (“Bank Leumi”), E B Zurich AG (“Zurich”) and a listed company, Offset Alpine Printing Group Ltd (“Offset Alpine”). The other respondents were, by their names, various local nominee companies. The proceedings concerned alleged contraventions by Bank Leumi and Zurich of the provisions of s 722 of the Corporations Law concerning the provision of information as to the shareholding in Offset Alpine.
Evidence
Evidence Before The Court
It is in this context that one comes to Mr Kennedy’s evidence.Mr Kennedy’s evidence as to his purpose and as to the meeting In [9] of his first affidavit, sworn in some circumstances of urgency for an interlocutory application, but sworn only little over two weeks after making the notes, Mr Kennedy said the following:…Prior to my meeting with Mr Hafner, either while I was in London or on my way to Zurich, I jotted down on two pages of Ritz Hotel note paper which I had obtained from the Hotel during my stay some points for the purpose of discussion with my Swiss attorney Benno Hafner and to obtain his advice on.… I took that note with me when I met with Mr Hafner on 3 November 2003 in Zurich and discussed the points recorded on the note with Mr Hafner.(The mistake as to there being two pages of Ritz Hotel note paper was subsequently corrected.) The primary judge rejected the words scored through in the quotation set out above. His Honour gave leave to adduce oral evidence as to the conversation with Mr Hafner. This leave was not taken up. Objection was also taken to the form of the above evidence as to purpose. The primary judge allowed it. In [5] and [6] of a later affidavit sworn on the first day of the final hearing before the primary judge, Mr Kennedy said the following:I refer to paragraph 9 of my first affidavit. The London Note was prepared in the circumstances described in that paragraph. While I was in London or on my way to Zurich I jotted down notes on one page of the Ritz Hotel notepaper which I had obtained from the Ritz Hotel during my stay. The note was prepared for the purpose of obtaining legal advice from my Swiss Attorney Benno Hafner (“Hafner”). ……The Zurich Note was prepared by me prior to my meeting with Hafner. While I was in Zurich I jotted down notes on both sides of one page of the Florhof Hotel notepaper which I had obtained from the hotel during my stay. Apart from a reference to a name and telephone number which appears on one side of the Zurich Note, the other side of the Zurich Note was prepared for the purpose of obtaining legal advice from Hafner. … No objection was taken to the form of this affidavit. Mr Lindsay SC, senior counsel for ASIC, said that the primary judge had ruled on the earlier paragraph and he took that ruling as covering the issue. There was no cross-examination of Mr Kennedy on what might be said to be the greater legal precision in these later paragraphs sworn over two months after the first affidavit. During his cross-examination before the primary judge Mr Kennedy was asked about the quality of his recollection of the events in question. He conceded that his recollection as to when he wrote them was uncertain. He also agreed that his recollection of the events in which he prepared the notes was uncertain. It will be recalled that Mr Kennedy said at his December 2003 examination that the days following 30 October 2003 were “just a blur” in his mind. Mr Kennedy did say in relation to this Zurich note that he prepared “what essentially were questions for my Swiss legal adviser”.
Decision
Reasons for decision
BLACK CJ
Although this was said at a very late stage of the proceedings it must nevertheless have alerted the appellant to the judge’s impression that the notes were “cryptic” and it did so when there was still an opportunity for the appellant to comment.Conclusion No error has been demonstrated in the trial judge’s reasoning on his first ground of decision. It was open to his Honour to conclude that on the balance of probabilities the appellant had not made out his claim for privilege. This finding may stand regardless of whether privilege was available in relation to a document prepared as an aide-memoire for use in seeking legal advice from a foreign lawyer outside the jurisdiction of Australian courts, and where the client’s ultimate object might also be described as being to preserve the “secrecy” of certain of his affairs from the Australian authorities. We think that this is a sufficient basis upon which to dispose of the appeal. For the sake of completeness, however, we should express our general agreement with Allsop J in relation to the trial judge’s second ground of decision, the contentions about the availability of privilege in relation to advice sought from foreign lawyers, the connection between the privilege and “the administration of justice”, and the lack of any waiver or estoppel operating in these circumstances. The appeal should be dismissed with costs. As to the preservation of the position of Mr Kennedy, we agree with the orders proposed by Allsop J restraining the respondents dealing with the notes up to 21 January 2005. This is an appeal from an order made by a Judge of the Court dismissing the further amended application in which declarations and orders had been sought by the appellant, Mr Trevor Kennedy, to the effect that two documents taken from his home in the execution of a search warrant on 13 November 2003 by officers of the Australian Federal Police and the Australian Securities and Investments Commission (ASIC) were protected by legal professional privilege. The two documents the subject of the proceedings were handwritten notes made on notepaper of a hotel in London and of a hotel in Zurich in the circumstances recounted below. The arguments put before the primary judge and before this Court touched upon a number of important issues concerning the extent and operation of the law on legal professional privilege. The arguments put before this Court also involved assertions that the primary judge had made a number of errors in the making of factual findings. It is necessary to set out what can be said to be the essential facts in which to assess the claims for privilege. The parties disagreed about the extent to which the background facts were relevant to the assessment of the issue of privilege. Indeed, the appellant argued that the primary judge had erred in having regard to, and not rejecting as irrelevant under s 55 of the Evidence Act 1995 (Cth), much of the evidence given by Mr Kennedy in his examination by ASIC in December 2003 after the execution of the search warrant on 13 November 2003. In my view, this transcript was relevant. It assisted in understanding, with some clarity, the position Mr Kennedy found himself in on 30 October 2003. It thereby assisted in understanding the choices before him then and in the days immediately following, and the likely motivations for his conduct. As such, it was relevant material against which to assess and evaluate his express evidence about his purpose in making the notes in question. I will return to this question later, having set out the factual context.