Mendicino and Mendicino and Ors (No 3)
[2015] FamCA 440
•12 June 2015
FAMILY COURT OF AUSTRALIA
| MENDICINO & MENDICINO & ORS (NO 3) | [2015] FamCA 440 |
| FAMILY LAW – PROPERTY – Practice and procedure – Claim for privilege – Where the respondents held a joint interest in various property – Where the respondents jointly sought legal advice, over an extended period of time, relating to their respective interests in that property – Where the respondents sought a valuation of their respective interests, independently of any legal advice – Where the applicant wife sought certain documents relating to the legal advice and valuation – Whether the legal advice was obtained for a dominantly legal, rather than commercial, purpose – Whether one of the respondents could, acting independently, waive the privilege which attached to the advice – Whether the respondent’s implicitly waived the privilege by reason of failing to claim privilege within reasonable time, or alternatively, through issue waiver – Where the legal advice provided was, when viewed in context, dominantly legal and thus attracted legal professional privilege – Where the valuations, which were sought independently of the legal advice, were commercial in nature and did not attract privilege – Where, in the alternative, the valuations had been implicitly waived through issue waiver – Where the advice provided could not be independently waived in circumstances where it was jointly held between the respondents – Where no issue of implied waiver could be established in respect of the legal advice. |
Evidence Act 1995 (Cth)
| Family Law Act 1975 (Cth) |
Adelaide Steamship Co Ltd v Spalvins (1998) 81 FCR 360
ASIC v Rich (2004) NSWSC 1089
AWB Ltd v Cole and Another (No 5) [2006] FCA 1234
AWB Limited v Honourable Terence Rhoderic Hudson Cole (2006) FCA 571
Balabel v Air India (1988) 1 Ch 317
Commissioner of Taxation (Cth) v Pratt Holdings (2002) 60 ATR 466
Commissioner of Taxation v Rio Tinto Ltd (2006) 151 FLR 341
Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543
DSE (Holdings) Pty Ltd v Intertan Inc (2003) 127 FCR 499
Esso Australia Resources Ltd v Federal Commission of Taxation (1999) 201 CLR 49
Farrow Mortgage Services Pty Ltd (in Liquidation) v Webb (1996) 39 NSWLR 601
Grant v Downs (1976) 135 CLR 674
GSA Industries (Aust) Pty Ltd v Constable [2002] 2 Qd R 146
In the matter of Southland Coal Pty Ltd (Receivers and Managers appointed)(in Liquidation) (2006) NSWSC 899
Kennedy v Wallace (2004) 142 FCR 185
Mann v Carnell (1999) 201 CLR 1
Mercantile Mutual Insurance (NSW Workers Compensation) Ltd v Murray [2004] NSWCA 151
Mitsubishi Electric Australia Pty Ltd v Victorian Workcover Authority (2002) 4 VR 332
Pratt Holdings Pty Ltd v Commissioner of Taxation (2004) 136 FCR 357
Seven Network Ltd v News Ltd [2005] FCA 142
Telstra Corp Ltd v Minister for Communications, Information Technology and the Arts (No 2) [2007] FCA 1445
Waterford v The Commonwealth (1987) 163 CLR 54
| APPLICANT: | Ms Mendicino |
| FIRST RESPONDENT: | Mr Mendicino |
| SECOND RESPONDENT: | Mr D Mendicino |
| THIRD RESPONDENT: | Ms E Mendicino |
| FOURTH RESPONDENT: | Mr F Mendicino |
| FIFTH RESPONDENT: | G Pty Ltd |
| FILE NUMBER: | BRC | 875 | of | 2013 |
| DATE DELIVERED: | 12 June 2015 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | Murphy J |
| HEARING DATE: | 9 June 2015 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr SJ Williams of Counsel |
| SOLICITOR FOR THE APPLICANT: | Cooper Grace Ward |
| COUNSEL FOR THE FIRST RESPONDENT: | Mr Richardson SC |
SOLICITOR FOR THE FIRST RESPONDENT: | HopgoodGanim Lawyers | |
| COUNSEL FOR THE SECOND, THIRD AND FIFTH RESPONDENTS: | Mr Savage QC | |
| SOLICITOR FOR THE SECOND AND THIRD RESPONDENTS: | Phillips Family Law | |
COUNSEL FOR THE FOURTH RESPONDENT: | Mr Alexander | |
| SOLICITOR FOR THE FOURTH AND FIFTH RESPONDENTS: | Emanate Legal | |
Orders
The Registrar, Brisbane Registry place the affidavit of the wife filed 7 November 2014 and the affidavit of Ms U filed 7 November 2014 (collectively called “the affidavits”) together with all annexures and exhibits to each in a sealed package to be labelled clearly “This package has been sealed pursuant to orders of Murphy J made on 12 June 2015 and is to remain with the file and not opened other than by further order of the court”.
Within 7 days the wife shall cause to be filed affidavits in identical terms to the affidavits save that paragraphs 291, 292 and Annexure DLM-28 (pages 370-380) shall be deleted from her affidavit and annexure JW-56 shall be deleted from the affidavit of Ms U.
The wife and her legal representatives shall not be permitted access to the documents produced on subpoena by Mr James Bell QC and the Registrar shall be and is hereby directed to cause those documents to be placed into a sealed envelope and clearly marked “Not to be opened without order of the court”.
IT IS DIRECTED THAT
Any application by any party in respect of the costs of this application be reserved to Kent J for such further directions, if any, as might be required.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Mendicino & Mendicino & Ors (Privilege) 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 BRISBANE |
FILE NUMBER: BRC 875 of 2013
| Ms Mendicino |
Applicant
And
| Mr Mendicino |
First Respondent
And
| Mr D Mendicino |
Second Respondent
And
| Ms E Mendicino |
Third Respondent
And
| Mr F Mendicino |
Fourth Respondent
And
| G Pty Ltd |
Fifth Respondent
REASONS FOR JUDGMENT
This application concerns a claim for legal professional privilege. It occurs within the context of complex proceedings for settlement of property currently being managed by Kent J, the trial of which is set down before his Honour for ten days commencing on 20 July 2015.
The Context for the Current Application
The significant complexities of the substantive proceedings devolve from intra-familial relationships which include interests in various entities, including interests flowing from interests previously held by the now deceased father and mother of the husband. His parents tragically died together in a plane crash in December 2005.
During his life, the deceased Mr Mendicino built enormous wealth, consisting primarily of what is described uncontroversially by Mr Richardson SC for the husband as “… one of the largest grazing holdings in Australia”. The assets within the various entities may have a value approaching $400 million.
In his written outline of argument on behalf of the husband in this application, Mr Richardson SC says, uncontroversially for present purposes, that the substantive proceedings “ … concern […] whether the husband has an interest in the C Trust (“CT”) which equates to one third of the nett assets of the trust and, if so, whether that interest constitutes property for the purposes of s 79 of the Family Law Act 1975 (“the Act”). Similar issues pertain to another trust.
The husband has two brothers and a sister. Their father controlled the wealth earlier referred to during his lifetime through trusts including, primarily, the CT. Subsequent to their father’s death, the husband and his siblings became directors of companies and trustees and appointors of trusts and together controlled the trusts but “… no one of them could alone exercise any power relevant to the trusts.”[1]
[1] Husband’s written outline of argument, accepted as uncontroversial for present purposes.
Some conflict emerged subsequently between the siblings. On 31 December 2007, a document described in these proceedings as a “Deed of Release” was executed between them. Its effect was, in broad terms, to allow one of the siblings, Mr F, to exit the existing entities and, in exchange to receive assets. Documents within the proceedings appear to indicate a similar desire on the part of Mr D.
James Bell QC has for some time provided advice to the Mendicino family and its associated entities. He provided advice in respect of the re-organisation just referred to and did so on a “direct brief” basis. Mr Bell has produced documents to the court in answer to a subpoena. Those documents relate to the issue just described. They are conceded to be relevant to issues raised on the pleadings in the substantive proceedings.[2]
[2]Although not required by the Family Law Rules 2004, Kent J had earlier ordered pleadings.
Those documents form the first of two broad categories of documents over which the husband and each of his brother Mr D (the second respondent), sister Ms E (the third respondent) and a company (the fifth respondent) claim legal professional privilege.
The fourth sibling, Mr F, has filed an outline of argument by which he “does not join with [the] objection” of the other respondents. Indeed, as part of his disclosure in the substantive proceedings, Mr F produced to the wife a number of documents pertaining to the same issue. The wife annexed some of those documents to her affidavit of evidence in chief for the trial. Her solicitor did similarly. Some of those documents form the second broad category of documents over which privilege is claimed.
Mr F has instituted proceedings against his siblings in the Supreme Court of Queensland in respect of the Deed of Release. His statement of claim in those proceedings was disclosed by him to the wife as were the defences to that claim.
The Relevant Documents and The Orders Sought
The orders sought by the husband (in which the second, third and fifth respondents join) are contained in an Amended Application in a Case which was filed by leave before me.
In respect of the documents produced by Mr Bell QC, an order is sought denying access to the wife. The documents annexed to the affidavits of the wife and her solicitor are addressed by orders which seek the sealing of those affidavits and the filing of replacements with the asserted privileged documents, and references to them, removed.[3]
[3]It should be noted that I am hearing this application in lieu of the trial judge so as to permit me to examine the documents without the possibility of influence upon the trial. The orders for replacement affidavits effectively accommodate that consideration.
In addition, an order is sought that the wife deliver up all copies of a specific document (Annexure DLM-12 to the affidavit of the wife) “together with any notes of the contents thereof” and that she be restrained from using or permitting the use of the document “or anything derived from the content of that document” in the substantive proceedings “in any fashion whatsoever”. Annexure DLM-12 is a document in the nature of a spreadsheet prepared by Pricewaterhouse Coopers (“PwC”) which I will call in these reasons “the PwC document”. It is undated, but it refers to a “share price” of listed shares, which are one of the group of assets referred to within it, as being as “at 6 November 2007”. Other documents suggest that it was prepared on or around that date.
While the last-mentioned order is foreshadowed in those terms in the written outline of argument on behalf of the wife, there is a difference between the “sealing and replacement order” foreshadowed in that outline and the order to the same effect sought in the Amended Application in a Case. The former refers to the redaction of paragraphs 291, 292 and “Annexure DLM-12” whereas the latter refers to those paragraphs and “Annexure DLM-28”. Annexure DLM-28 is a letter from Mr Bell QC. That same document is also Annexure JW-56 to the affidavit of the wife’s solicitor. Both the outline of argument and the Amended Application in a Case seek a replacement affidavit be filed by the solicitor excising that annexure.
Further anomalies in the material before me arise when the affidavit of the husband in support of his application is compared with the orders sought. In that affidavit, privilege is claimed over other documents annexed to the affidavit of the wife’s solicitor. One of those, Annexure JW-49, is identical to Annexure DLM-12 – that is, the PwC document. However, three other documents are referred to, none of which are referred to in the written outline of argument or in the orders sought in the Amended Application in a Case. Those documents are:
·Annexure JW- 48: A document prepared by PWC in 2005.
·Annexure JW-50: This annexure comprises some 76 pages produced by PwC pursuant to subpoena.
·Annexure JW-53: This annexure comprises six pages of correspondence passing between the solicitors for the husband and the former solicitors for the wife.
The relevance of all the documents for the purposes of disclosure can be accepted.
Two of those Annexures referred to by the husband can, I think, be dealt with readily. Nothing within Annexure JW-48, nor any argument addressed orally or in writing provides any basis for suggesting that document is privileged. Secondly, the correspondence forming Annexure JW-53 is redacted (by blacking out significant passages). Nothing within what remains and no argument addressed orally or in writing provides any basis for suggesting that any of the documents comprising the annexure – in the form in which they appear – is privileged.
Annexure JW-50 is potentially more problematical. No order, either as foreshadowed in the husband’s written outline of argument or in the Amended Application in a Case, is directed to the documents comprising this annexure. Yet, very many of the documents contained within it are also produced by Mr Bell QC and privilege is claimed over the entirety of the documents produced by him. No written or oral submissions address either this anomaly or the difference between the orders sought in the outline of argument and the Amended Application earlier referred to.
I consider that prudence dictates, and justice is best served by, addressing all of the claims for privilege irrespective of their inclusion in mooted orders.
The Claimed Privilege: Principles and Issues
Evidence Act or Common Law?
It is contended on behalf of the husband that this application is governed by the common law as distinct from the provisions of the Evidence Act 1995 (Cth) (“the Evidence Act”).
In Esso Australia Resources Ltd v The Commission of Taxation of the Commonwealth of Australia[4] (“Esso Australia Resources”), Gleeson CJ, Gaudron and Gummow JJ referred to the distinction between “a claim that certain evidence could, or could not be, adduced” and “a claim that the appellant was not obliged to make certain written communications available for inspection by the respondent.” This distinction exists because “… the statutory language is clear. It deals with the adducing of evidence. That would cover adducing evidence in interlocutory proceedings as well as at a final hearing, or on an appeal, but it does not cover all the circumstances in which a claim for privilege might arise…”.[5]
[4] (1999) 201 CLR 49 at 59.
[5] Esso Australia Resources (above) at 59.
The processes of this court which contemplate that, in the usual course, evidence in chief is given by affidavit filed prior to the trial, and permits oral supplementation of that evidence at trial only by leave. No submissions were directed to a proposition that, as a result, the Act might apply to those documents the subject of the claim which are exhibited to the affidavits.
In the absence of argument, I am content to proceed on the basis that, as each of the parties accept, common law principles apply.
What Must Be Established?
It is for the husband (and the second, third and fifth respondents) to establish the privilege.[6] By way of corollary, the “person seeking production does not bear the onus of excluding privilege”.[7] The husband (and the second, third and fifth respondents) must establish that they are entitled to resist:
… the production of documents which would reveal communications between [them as clients] and [their] lawyer made for the dominant purpose of giving or obtaining legal advice and the provision of legal services, including representation in legal proceedings”.[8]
[6] See for example, ASIC v Rich (2004) NSWSC 1089 at [2].
[7]In the matter ofSouthland Coal Pty Ltd (Receivers and Managers appointed)(in Liquidation) (2006) NSWSC 899 at [14(c)] (“Southland Coal”). Southland Coal cites Mitsubishi Electric Australia Pty Ltd v Victorian Workcover Authority (2002) 4 VR 332 at 337.
[8]Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543, at [9] (per Gleeson CJ, Gaudron, Gummow and Hayne JJ).
In order to decide the claim, “the court has power to examine documents over which legal professional privilege is claimed”. Further, where there is a disputed claim, “the court should not be hesitant to exercise such a power”.[9] I was invited by the parties to inspect the documents produced by Mr Bell QC and did so.
[9]AWB Ltd v Cole and Another (No 5) [2006] FCA 1234 per Young J at 47(12), citing in the latter respect, Esso Australia Resources Ltd v Commissioner of Taxation (Cth) (1999) 201 CLR 49 and Grant v Downs (1976) 135 CLR 674 at 689.
It is clear that in order to attract the privilege, “… the legal adviser must be acting in his professional capacity”.[10] It is uncontroversial that Mr Bell QC has advised the Mendicino family and/or its entities for some time. Counsel for the wife, Mr Williams, argues that Mr Bell QC’s position is “akin to an in-house counsel”. The assertion is made, I apprehend, because it has been said, at least in respect of s 118 of the Evidence Act, that “… the courts have developed a requirement of professional independence”[11] and, by way of contrast, that “… an in-house lawyer will lack the requisite measure of independence if his or her advice is at risk of being compromised by virtue of the nature of his employment relationship with his employer”.[12]
[10] Waterford v The Commonwealth (1987) 163 CLR 54, 93 per Wilson J.
[11] Stephen Odgers, Uniform Evidence Law (Thomson Reuters , 10th Edition, [1.3.10490].
[12]Telstra Corp Ltd v Minister for Communications, Information Technology and the Arts (No 2) [2007] FCA 1445 at [35] (per Graham J).
None of the documents to which I have had reference suggests that the analogy with an in-house counsel is apt. Mr Bell QC’s formal letter of advice, provided on his professional letterhead, his fee notes which are rendered in a form as would be expected for a member of the independent bar, and the tenor of the communications redolent of legal adviser/client formality, all point, to Mr Bell QC being an “independent” lawyer providing advice to a client.
It cannot, I think, be suggested that the documents to which the claim for privilege attaches do not contain confidential information. So much is apparent, for example, in clear and explicit terms, from at least Mr Bell QC’s letter to which reference has earlier been made. I did not understand counsel for the wife to contend seriously to the contrary.
The Central Issues
The central contention for the wife is that the husband and other respondents could not satisfy me, on the balance of probabilities, that the dominant purpose for the creation of the relevant documents was for the giving or obtaining of legal advice. Rather, it is said, they are part of commercial advice given in the context of commercial negotiations and commercial settlements.
The two types of advice and the recognition of their frequent intersection within a broad context of rendering advice has been recognised and is succinctly summed up, with respect, by Allsop J in Kennedy v Wallace: “a person can see a legal adviser and receive legal advice and commercial or rather non-legal advice. The former would be privileged, the latter not”. As this Honour goes on to make clear “difficulties of course can arise in demarcation”.[13]
[13] Kennedy v Wallace (2004) 142 FCR 185 at [157].
The decision of the English Court of Appeal in Balabel v Air India[14] (“Balabel”) has been referred to in a number of Australian authorities in respect of this issue. There, Taylor LJ (with whom Parker LJ and Lord Donaldson MR agreed) said:
… as indicated, whether such documents are privileged or not, must depend on whether they are part of that necessary exchange of information for which the object is the giving of legal advice as and when appropriate. Accordingly, I agree with the formulation made by Master Munro in the present case, subject to the additional words which I have placed in brackets. He said:
Once solicitors are embarked on a conveyancing transaction, they are employed to ensure that the client steers clear of legal difficulties, and communications passing in the handling of that transaction are privileged (if their aim is the obtaining of appropriate legal advice) since the whole handling is experience and legal skill in action and a document uttered during the transaction does not have to incorporate a specific piece of legal advice to obtain that privilege. [15]
[14] (1988) 1 Ch 317.
[15] (1988) 1 Ch 317, 332.
Taylor LJ’s approach has been described as “a broad approach”[16] to the categorisation of advice. Legal advice CTs at the heart of the common law privilege, just as it is at the heart of s 118 of the Evidence Act 1995 (Cth). It has been described in respect of the latter as needing to be “understood in a pragmatic sense.”[17]
[16] Seven Network Ltd v News Ltd [2005] FCA 142 at [10] per Tamblin J.
[17]Southland Coal (above) at 14(d) per Austin J.
Distinctions similar to those made by Allsop J have been made in similar terms in other authorities. For example, a distinction has been drawn between “documents brought into existence to communicate legal advice, and documents brought into existence to allow the party seeking to maintain privilege to invite comment on commercial alternatives available to it, or to allow it to make a decision in the ordinary course of its … business … The former may be privileged, but the latter is not as it does not satisfy the dominant purpose test …”.[18]
[18] Southland Coal (above) at [14(i)].
A “dominant purpose” is one that predominates over other purposes; it is the prevailing or paramount purpose.[19]
[19]AWB Limited v Honourable Terence Rhoderic Hudson Cole (2006) FCA 571 at 105-106; Commissioner of Taxation (Cth) v Pratt Holdings (2002) 60 ATR 466 at [30] (per Kenny J), further cited by Young J in AWB Ltd v Cole and Another (No 5) (2006) FCA 1234.
The dominant purpose of the communication must be determined objectively, having regard to all the circumstances in which the communication was made and its nature[20]. By way of corollary, “if the document would have been prepared irrespective of the intention to obtain professional legal services, it will not satisfy the test.”[21] Equally, it has been held that “an appropriate starting point when applying the dominant purpose test is to ask what was the intended use or uses of the document which accounted for it being brought into existence.”[22]
[20]Southland Coal (above) at [14(h)]. Southland Coal cites Grant v Downs (1976) 135 CLR 674 at 689 (per Stephen, Mason and Murphy JJ).
[21] Grant v Downs (1976) 135 CLR 674 at 688.
[22]AWB Ltd v Cole and Another (No 5) [2006] FCA 1234 at 45 citing Pratt Holdings Pty Ltd v Commission of Taxation (2004) 136 FCR 357 at [35] (per Finn J).
The evidence in support of the claim of privilege is brief. Ms E deposes to the effect that Mr Bell QC has been “the barrister of our family business since about 2001 prior to the death of my father.” Specifically, Ms E deposes that the siblings were “at an impasse” in respect of disagreements in relation to management of the business and it was in this context that what she describes as “the options paper [ie Annexure DLM-28 / JW-56] was prepared by Mr Bell”. Ms E deposes:
Mr Bell provided us with advice and then facilitated discussions between us so that we could resolve that impasse …
Ultimately, with the assistance of James Bell QC, Peter Kenny of Thynne & Macartney and Mr D Usasz from PwC, we reached an agreement which was reflected in the Deed of Release …”.[23]
[23] [11] and [12] Affidavit of Ms E Mendicino
The affidavit of the husband swears the issue[24] including, in respect of the documents produced by Mr Bell, that documents are the subject of “joint privilege” and that “… the majority of the documents produced by Mr Bell are subject to a claim of joint and/or common interest privilege”. [25]
[24] At [6] to [9] Affidavit of Husband, filed 5 June 2015
[25] At [13] and [18] respectively
The husband goes on to depose[26]:
Mr Bell was retained by me, my siblings and the [C Group] jointly in 2007 to assist in the resolution of issues relating to the [C Trust’s] ownership of various assets. Prior to that time, Mr Bell was retained by us jointly in our capacity as executors of the estate of our late father [Mr B Mendicino] and provided advice to us in that regard.
I relied upon Mr Bell for legal advice. At all times I understood him to be providing advice to each of me, my siblings and the [C Group]. In the course of my discussions with Mr Bell I provided confidential information to him in order that he could provide me with legal advice.
[26] At [15], [16]
No deposition save for swearing the issue at [18] as earlier referred to relates to the detail of the circumstances in which the documents produced by Mr Bell, including specifically those flowing to and from PwC, were created. In large measure, then, the finding as to the relevant dominant purpose is to be gleaned from the documents themselves by reference to their contents and their context.
In seeking to advance the central tenet of his argument that the advice rendered here was commercial advice or otherwise not legal advice, Mr Williams, referred to six separate documents. In context, the documents in question can be seen to culminate in the Deed of Release earlier referred to (which is not the subject of any claim). That document provides, in broad terms, for the exit of Mr F from the entities in respect of which each of the siblings were involved and through which the family’s commercial enterprises are conducted.
The documents referred to specifically by Mr Williams (save for one about to be referred to) all pertain to an approximately five month period prior to the execution of that deed. Organised in chronological order, the documents are as follows:
·16 July 2007: An email from the husband to two of his siblings, copied to Mr Bell QC and others. The email refers to “formal and informal requests” by Mr D to “divest his interests in Australian Agribusiness”. The email is addressed to “everyone” and refers to “we” (Mr Mendicino, Mr F and Ms E) need to make Mr D a formal offer for his entitlement in the business.
·24 August 2007: An email from a person at a firm of solicitors addressed to two persons at PWC. It thanks them for the “opportunity of the meeting on 10 August 2007”. It too, refers to the potential for Mr D to exit the family entities and business and to “something similar to that in place for his brother Mr F might be a good starting point”.
·19 October 2007: This is Annexure DLM-28 (which is identical to Annexure JW-56) – the eleven-page letter on Mr Bell QC’s letterhead addressed to each of the siblings earlier referred to.
·5 November 2007: An email attaching a “Draft Deed of Release by Mr D Mendicino”.
·7 November 2007: A diary note from a firm of solicitors recording a meeting attended by three of the siblings (the husband, Mr D and Ms E) a solicitor and Mr Bell QC that reflects an agreement “worded as follows”.
Mr Williams also referred to a document written subsequent to the execution of the Deed of Release, dated 12 May 2008. It is from a firm of solicitors to Mr Bell QC to the effect that Mr D and the husband had had a conversation “last week” when “essentially it was agreed they would part and the result would be that Mr D would have no interest in any of the family enterprises” and suggesting a meeting to “discuss how it might proceed”.
Many of the documents produced by Mr Bell, and specifically Annexure DLM-28 / JW-56, are directed to a single purpose: the potential exit of two of the siblings from the family business run through entities in which all were involved, consequent upon their father’s death. Of the documents to which Mr Williams’ submissions draw attention, the first chronologically can, in my view, be seen to be a request for legal advice in respect of a specific legal issue: “the divestiture” of the interests of two siblings.
The specific legal advice sought is not specified, but it does not need to be: purpose is determined objectively by reference to all of the relevant circumstances,[27] and the purpose of the communications and the documents which arise from it:
… [has] to be construed broadly. Privilege obviously attaches to a document conveying legal advice from solicitor to client and to a specific request from the client for such advice. But it does not follow that all other communications between them lack privilege. In most solicitor and client relationships, especially where a transaction involves protracted dealings, advice may be required or appropriate on matters great or small at various stages. There will be a continuum of communication and meetings between the solicitor and client … A letter from the client containing information may end with such words as “please advise me what I should do”. But, even if it does not, there will usually be implied in the relationship an overall expectation that the solicitor will, at each stage, whether asked specifically or not, tender appropriate advice. Moreover, legal advice is not confined to telling the client the law; it must include advice as to what should prudently and sensibly be done in the relevant context.[28]
[27]See Grant v Downs (above) at [681]; AWB Limited v Honourable Terence Rhoderic Hudson Cole (2006) FCA 571 at [110].
[28]Balabel v Air India (1988) 1 Ch 317 at 330 (per Taylor LJ), quoted with approval in AWB Limited v Honourable Terence Rhoderic Hudson Cole (2006) FCA 571.
I consider that, in respect of the documents produced by Mr Bell QC, a distinction needs to be drawn between two broad categories of documents: those passing to and from PwC, including the PwC document (Annexure DLM-12) and those passing between Mr Bell, the clients and solicitors. As to the first category, I repeat that many if not all of the documents so produced are identical with documents produced by PwC pursuant to subpoena (ie Exhibit JW-50 earlier referred to).
In respect of the second broad category of documents just referred to, I am well satisfied that they “are part of that necessary exchange of information for which the object is the giving of legal advice as and when appropriate”.[29] The PwC document and other documents pertaining to the work of that firm contained within the documents produced by Mr Bell fall into a different category.
The PwC Document and Other Documents Involving that Firm
[29] Balabel (above).
On their face, the relevant documents are not documents recording communications between a lawyer and client, nor, indeed, are they documents created by the lawyer or client. Those considerations present difficulties within the traditional conceptualisation of a claim for legal professional privilege. Those difficulties are summed up in this way by Finn J in Pratt Holdings Pty Ltd v Commissioner of Taxation[30]:
What is surprising about these appeals is that the legal principle in issue can still be a matter of contest. It is well accepted that if a person prepares and then makes a documentary communication to a legal adviser for the dominant purpose of obtaining legal advice, that documentary communication attracts legal professional privilege: Esso Australia Resources Ltd v FCT (1999) 201 CLR 49 ; 168 ALR 123. It is equally well accepted that if a person directs or authorises a third party (an agent) to prepare and then make a documentary communication on that person’s behalf to a legal adviser for the dominant purpose of obtaining legal advice, that documentary communication by the agent attracts legal professional privilege: Australian Rugby Union Ltd v Hospitality Group Pty Ltd(1999) 165 ALR 253. But it is not accepted that, if a person (a principal) directs or authorises a third party who is not an employee of that person to prepare a documentary communication for the dominant purpose of its being communicated by the principal and not directly by the third party to a legal adviser for the purpose of obtaining legal advice, that documentary communication from the third party to the principal attracts legal professional privilege.
[30] (2004) 136 FCR 357 at 1.
After reviewing the authorities (and commenting upon their scarcity in respect of the instant question), Finn J referred to In GSA Industries (Aust) Pty Ltd v Constable[31] in which Holmes J held “that a third party report prepared by a firm of accountants for their client and which was supplied to the client before communication to the client’s solicitor attracted legal advice privilege as, at the time it was produced, the client had the dominant purpose of it being used to obtain legal advice” and continued[32]:
Where the issue, as here, is with whether a document attracts legal advice privilege at the time it is brought into existence (as distinct from whether a copy of it is privileged when communicated at a later date: cf Propend Finance), the obvious starting point is with what was the intended use (or uses) of that document which accounted for it being brought into existence: Grant v Downes at CLR 692; ALR 591–2; Propend Finance at CLR 508; ALR 548. In answering that question — which is a question of fact: Waterford v Commonwealth (1987) 163 CLR 54 at 66 ; 71 ALR 673 — attention necessarily must focus on the purpose (or purposes) of the person who created the document, or who, if not its author, had the authority to, and did, procure its creation: Grant v Downs at CLR 677; ALR 579–80; Hartogen Energy Ltd (in liq) v Australian Gas Light Co (1992) 36 FCR 557 at 568–9 ; 109 ALR 177 at 186–8; Mitsubishi Electric Australia at 338; Guinness Peat Properties Ltd v Fitzroy Robinson Partnership[1987] 2 All ER 716 at 723ff ; [1987] 1 WLR 1027 at 1036ff.
[31] [2002] 2 Qd R 146
[32] At [35]
I am, then, prepared to conclude that, as a matter of principle, the PwC document (and documents to and from PwC attendant to it) may be the subject of legal professional privilege if the necessary pre-conditions are met.
However, those pre-conditions cannot be assumed and findings that they have been met should be based on a proper evidentiary foundation: “particular care needs to be taken in evaluating evidence of purpose in a setting in which [the accounting firm] performs a professional function for [the siblings] in a non-litigation setting but in a manner in which legal advice is to be or is being sought by [them]”.[33]
[33] Respectfully adapting Pratt Holdings (above) at [45] (per Finn J).
One of three reasons given by Finn J for the exercise of “particular care” has, in my view, particular resonance for the instant case:
… the matter or transaction in respect of which legal advice is sought may well be one in which the principal considers it necessary or appropriate to obtain advice as well from other professional and business sources. In determining the preferred structure of a business transaction, for example, a person might consult not only a lawyer, but also one or more of an accountant, a financial planner and a merchant banker for advice: cf Kennedy v Wallace at [60]. The advices given by such other advisers will rarely be capable of attracting privilege for the reason that they will almost invariably have the character of discrete advices to the principal as such, with each advice, along with the lawyer’s advice, having a distinctive function and purpose in the principal’s decision making — albeit all of the advices may be interrelated in the sense of providing collectively a basis for informed decision by the principal. Those other advices will not later acquire the character of privileged documents in the respective adviser’s hands: cf Propend; merely because the principal subsequently makes the advices available to his or her lawyer when obtaining legal advice. Importantly, as Deane J observed in Baker v Campbell at CLR 112; ALR 431, privilege does not “extend to protect things lodged with a legal adviser for the purpose of obtaining immunity from production”. Neither does it extend to third party advices to the principal simply because they are then “routed” to the legal adviser.[34]
[34] At [46]
Mr Bell QC foreshadows in his letter of 19 October that accounting advice might be received and, as I read that letter, sees that advice himself as separate to the legal advice he is providing. Further, the PwC document (and documents to and from PwC attendant to it) can, by their form, be seen as distinct from any legal advice being provided. As a corollary, there is no direct link or connection between those documents and any specific aspect of legal advice otherwise given by Mr Bell that I can see.
In the absence of other evidence before me linking specifically the advice and consequent documents from PwC to communications necessary for legal advice, I consider that the content of the PwC document (and its attendant documents), and their tenor and context when read as a whole, posits them as having “the character of discrete advices” and “with [that] advice, along with the lawyer’s advice, having a distinctive function and purpose” in the decision making surrounding the family’s purposes earlier referred to.
In my view, the PwC document is not privileged and nor are the documents flowing to and from PwC.
No attempt was made to deal individually with the documents produced by Mr Bell. However, as I have said, the PwC document, and many if not all of the documents I have referred to as the documents attendant to it, are in fact duplicated in Annexure JW-50. The findings just referred to can be met by orders which prevent access to the documents produced by Mr Bell but which deny privilege and permit access to Exhibit JW-50. In that way, the PwC document and its attendant documents, which are part of the documents produced by Mr Bell, can be disclosed (via JW-50) and the balance of the documents produced by Mr Bell, in respect of which I consider privilege attaches, are quarantined.
Waiver
Mr Williams argues in the alternative on behalf of the wife that the husband (and the second, third and fifth respondents) have expressly or impliedly waived any privilege attaching to the relevant documents.
In Mann v Carnell[35] Gleeson CJ, Gaudron, Gummow and Callinan JJ held:
Waiver may be expressed or implied. Disputes as to implied waiver usually arise from the need to decide whether particular conduct is inconsistent with the maintenance of the confidentiality which the privilege is intended to protect. When an affirmative answer is given to such a question, it is sometimes said that waiver is “imputed by operation of law”… this means that the law recognises the inconsistency and determines its consequences, even though such consequences may not reflect the subjective intention of the party who has lost the privilege … What brings about the waiver is the inconsistency, which the courts, where necessary informed by considerations of fairness, perceive, between the conduct of the client and the maintenance of the confidentiality; not some overriding principle of fairness operating at large.[36]
[35] (1999) 201 CLR 1
[36] Mann v Carnell (above) at 13.
In the written outline of argument on behalf of the wife, it is contended that Mr F has waived privilege (implicitly on behalf of all respondents) by reason of him disclosing the written communication from Mr Bell QC dated 19 October 2007 (Annexure DLM-28). The inclusion of that document in Mr F’s list of documents and the subsequent production of it, is said to constitute an express waiver of any privilege that might otherwise attach to it.[37] It is also contended in that written outline that:
(j)Furthermore, and in any event, disclosure has been made of the Deed of Release and the communications surrounding same and the implementation of same are liable to be disclosed and waiver has occurred.
[37] At [42] of written outline.
In oral argument, Mr Williams, as I understood him, sought to advance waiver on three bases. The first is to repeat the assertion of express waiver by Mr F and to thereby (impliedly) assert that the other respondents have, as a result, also waived.
The second basis arises from an asserted failure to claim privilege at a time earlier than the making of this application. It is said that no assertion of privilege was made at the time disclosure was made by Mr F; there is no assertion of privilege subsequent to that time; and that there has been no assertion of privilege despite the trial affidavit of the wife having been filed on 7 November 2014, some six months prior to this application. It is said there is a “clear waiver” by the respondents’ ommissions. Although not identified as such, any such waiver must be implied waiver.
Thirdly, although not articulated in this manner, nor, with great respect, with real precision, there is, as I apprehend it, an assertion of what has been described in the authorities as “issue waiver” emanating from the wife’s statement of claim and the responsive defences of, respectively, the husband and the second, third and fifth respondents. Issue waiver is, as will be seen, a form of implied waiver.
Express Waiver – Disclosure by Mr F and Joint Privilege
If the husband and his siblings can be regarded as joint clients for the purposes of receiving advice from Mr Bell QC, then privilege attaches to the siblings jointly. A significant effect is that, Mr F cannot waive the privilege held jointly by the other siblings. A second consequence is that a privileged communication or document may be disclosed to each of the joint clients without a breach of the privilege and, equally, joint clients cannot maintain privilege against each other. As Mason P has held in Mercantile Mutual Insurance (NSW Workers Compensation) Ltd v Murray:[38]
If two persons join our legal enterprise, the privilege is their joint privilege. From this it follows that the privileged communication may be disclosed to each without breach of privilege, because each client shares and interest in the subject matter of the communication. Joint clients may not maintain privilege against each other … the parties are together entitled to maintain their privilege against the rest of the world and this means that waiver by one is insufficient to effect the other’s privilege.
[38](2004) NSWCA 151 at [41]. Citing Farrow Mortgage Services Pty Ltd (in Liquidation) v Webb (1996) 39 NSWLR 601 at 608 A-I).
It is contended on behalf of the husband that he and his siblings are persons engaging “jointly in a legal enterprise”. No argument is addressed to the contrary by counsel appearing for the wife nor in the wife’s written outline of argument. In my view the references in the written outline of argument on behalf of the wife in respect of “shared or common interest privilege” are misconceived. (“Joint privilege is distinct from shared or common interest privilege.”[39])
[39]Mercantile Mutual Insurance (NSW Workers Compensation) Ltd v Murray [2004] NSWCA 151 at [42].
There is, in my view, ample evidence to sustain the contention that the advice received from Mr Bell QC was advice provided to all of the siblings (and the company) jointly. So much is in my view is clear from the letter of advice in respect to which a specific claim of privilege is directed; the contents of that letter of advice and history of advice provided by Mr Bell to the family and its entities and enterprises.
That being so, it is not open to one client (Mr F) to expressly (or indeed impliedly) waive privilege on behalf of all joint clients (the husband and the other respondents).[40]
[40]See Farrow Mortgage Services Pty Ltd (in Liquidation) v Webb and Others (1996) 36 NSWLR 601 at 608, cited with approval by Mason P in Mercantile Mutual Insurance (NSW Workers Compensation) Ltd v Murray (2004) NSWCA 151 at [41].
There has been no express waiver of the privilege.
Implied Waiver - The Failure to Earlier Claim Privilege
In respect of the asserted implied waiver by conduct earlier outlined, reliance is placed upon the passage from Mann v Carnell (above).
While a court is bound to analyse the acts or omissions of the privilege holder when implied waiver is asserted,[41] it is conduct seen to be inconsistent with the maintenance of the confidentiality arising from the communication and the documents created in respect of it that lies at the heart of the implied waiver.
[41] Commissioner of Taxation v Rio Tinto Ltd (2006) 151 FLR 341 at [45].
No requirement of the Rules or any procedural orders made during the course of these managed proceedings suggest that an occasion arose thereby by which the requisite inconsistency might be inferred. I am not persuaded that the failure to raise the issue prior to the instant application constitutes the requisite inconsistency with the maintenance of the confidentiality which lies at the heart of the privilege.
No implied waiver is made out in this respect.
Issue Waiver – The Parties’ Pleadings
“Issue waiver” was not articulated in those terms in either the oral or written arguments on behalf of the wife. However, Mr Williams’ submissions as to the pleadings, and the asserted importance of paragraph 15 of the wife’s statement of claim and the responsive defences thereto, can be seen to form the foundation for such a contention.
In Adelaide Steamship Co Ltd v Spalvins,[42] the Full Federal Court (Olney, Kiefel and Finn JJ) said:
… in other words, the cases are ones in which, in the substantive proceeding brought, the privilege holder has put in issue the very advice received. We observe in passing that it is questionable whether advice can properly be said to be in issue in a proceeding, merely because it may be relevant to an issue in it … save, perhaps, where the proceedings between client and legal adviser and the advice is relevant to the adviser’s defence of that proceeding …[43]
[42] (1998) 81 FCR 360.
[43]At 371, citations omitted. The case was decided prior to Mann, but there is “little, if anything in the passage quoted above that would require modification to take account of” that case. (Commissioner of Taxation v Rio Tinto (above) at [54]).
Inconsistency also lies at the heart of issue waiver:
Their Honour’s analysis in Spalvins emphasises, as does the majority in Mann, that waiver comes about because the privilege holders conduct is inconsistent with the continued confidentiality of the communication because he or she has put in issue the character or contents of the communication in pursuing a right or claim, or has created a situation where another party must reasonably do so by way of defence.[44]
[44] Commissioner of Taxation v Rio Tinto (above) at [54].
In DSE (Holdings) Pty Ltd v Intertan Inc Allsop J (as the Chief Justice then was) has said that waiver arises when:
The party entitled to the privilege makes an assertion (express or implied), or brings a case, which is either about the contents of the confidential communication or to necessarily lays open the confidential communication to scrutiny and, by such conduct, an inconsistency arises between the Act and the maintenance of the confidence informed partly by the Forensic unfairness of allowing the claim to proceed without disclosure of the communication. [45]
[45] DSE (Holdings) Pty Ltd v Intertan Inc (2003) 127 FCR 499 at [58].
Obviously enough, the mere fact that the contents of privileged communication have become an issue in the proceedings is not of itself sufficient to affect the privilege; if it were otherwise, the privilege would be worthless. The question is one of fact and degree by reference to the pleadings and the circumstances governed by considerations of fairness.
Any consideration of issue waiver can relate only, as it seems to me, to the PwC document and documents attendant to it. I have determined that those documents are not privileged. If I am wrong in that conclusion, I consider that any privilege has been waived for the reasons which follow.
The transfer of Van Warren shares by Mr F to, relevantly, the husband pursuant to the Deed of Release in February 2008, is pleaded as part of the wife’s case that the husband is the beneficial owner of those shares. So, too, she pleads similarly in respect of shares in other corporations. Subsequently, assertions are made in the wife’s statement of claim as to provisions of various trust deeds and changes thereto.
The Statement of Claim then continues:[46]
[46] Underlinings and strikethroughs indicating amendments in the original have been removed for clarity.
15.On a date (which the applicant cannot better particularise until completion of interlocutory steps), but on or before 31 December 2007:
(a)Pricewaterhouse Coopers (“PWC”) had been engaged by the respondents, some or all of them;
(b)PWC undertook a valuation of the assets of [named companies] (the [C Group]).
Particulars
The valuations contained in the five page document
(the Valuation Document).(c)PWC valued those assets, described in the Valuation Document as ‘the [Mendicino] Interests” at $313,101,880.00;
(d)the Valuation Document identified the first respondent’s interest in those assets (described in the Valuation Document as the first respondent’s “interests” in the [Mendicino] Interests) as “25%”;
(e)the Valuation Document identified each of the second respondent’s, third respondent’s and fourth respondent’s respective “interests” in those assets (described in the Valuation Document as in the [Mendicino] Interests) as “25%” each;
(f)after deduction of loan accounts, the Valuation Document valued the first respondent’s 25% interest in the [C Group] at $73,825,164.00;
(g)after deduction of loan accounts, the Valuation Document valued the fourth respondent’s 25% interest in the [C Group] at $59,775,470.00.
The husband’s defence to that paragraph pleads:
15In respect of paragraph 15 of the Amended Statement of Claim, the first respondent:
(a)in answer to sub-paragraphs (a) and (b) says that Pricewaterhouse Coopers (PwC):
(i)was retained for the purpose of preparing a calculation of the potential value of the [Mendicino] family pastoral interests so as to assist the members of the [Mendicino] family to understand the potential value of their pastoral assets; and
(ii)was not retained for the purpose of providing a valuation opinion;
(iii)provided calculations as to the potential value of certain pastoral assets without differentiating between different entities;
(b)in respect of sub-paragraph (c), says that PwC produced a document recording the potential value of certain pastoral assets as at November 2007, which recorded that potential value at $313,101,880.00, but otherwise denies that sub-paragraph;
(c)In respect of sub-paragraphs (d) to (g):
(i)repeats and relies upon what is pleaded at sub-paragraph (a) above;
(ii)says that nothing produced by PwC purported to fix to each of the first to fourth respondents a 25% interest in the assets which were the subject of the calculations performed by PwC;
(iii)says that by reason of the limits of PwC’s retainer and the purpose of the document produced by PwC, as pleaded in sub-paragraph (a) above, to the extent that PwC ascribed to any respondent an interest, or valued an interest, in the assets the subject of the calculations, this was not adopted or authorised by the first respondent; and
(d)otherwise denies paragraph 15 of the Amended Statement of Claim.
The third and fifth respondents in their defence plead:
15.As to the facts alleged at paragraph 15 of the Statement of Claim the Second, Third and Fifth Respondents say as follows:
(a)neither on or before 31 December 2007 or at any other time were Price Waterhouse Coopers (PWC) engaged by those Respondents or any of them for any purpose relevant to the allegations made into the Statement of Claim and in particular to undertaking any valuation of the assets on the various companies and/or trusts referred to in paragraph 15(b) of the Statement of Claim;
(b)the document which the Plaintiff in the Statement of Claim refers to as the “Valuation Document” was expressly not a valuation and nor was it performed by a valuer or valuers;
(c)the Second, Third and Fifth Respondents object to the allegations of fact contained in sub-paragraphs 15(c), (d), (e), (f) and (g) on the basis that:
(i)the document in terms does none of the things ascribed to it in those sub-paragraphs (and so those facts are denied); and
(ii)in any event the assertion by a third party to these proceedings such as PWC that the parties have interests which they do not have or that the value of the interests (that they do not have) have any particular value is immaterial to any cause of action the Applicant can assert in these proceedings.
That pleading by the second, third and fifth respondents, makes it necessary to observe that the High Court has said:[47]
As was pointed out in Mann v Carnell, the circumstances in which legal professional privilege may apply, are not limited to the adducing of evidence. As in the present case, that privilege may be invoked in other circumstances, such as discovery and inspection of documents. The documents may be discoverable, or the subject of a demand for inspection, even though they are not admissible in evidence. They may be significant, for example, because they open up a line of enquiry …
[47]Esso Australia Resources Ltd v Federal Commission of Taxation (1999) 201 CLR 49 at 55 (per Gleeson CJ, Gaudron and Gummow JJ).
Paragraph 16A of the wife’s Statement of Claim pleads:
16A.The Valuation Document was an estimate of the value of the component parts of the Trust Fund, by a person employed by the trustees to make that valuation, within the meaning of clause 7.3 of each of the [C Trust], the [O Trust] and the [CB Trust].
That paragraph is denied by each of the husband and the second, third and fifth respondents.
Paragraphs 16B and C of the wife’s Statement of Claim, plead an agreement (the “Distribution Agreement”), the existence of which is denied by the husband and the second, third and fifth respondents. Paragraph 16E of the Statement of Claim pleads the effect of the agreement and actions derived from it are subsequently pleaded. In denial, the relevant respondents assert such actions as were taken in respect of the entities were taken with respect to the Deed of Release (as distinct from the agreement which is asserted by the wife and denied by them).
In making the denials referred to in the husband’s pleading, he plainly makes reference, as it seems to me, to the contents of the PwC document (ie Annexure DLM-12). Sub-paragraph (c) and (d) of paragraph 15 of his defence are examples. For their part, the second, third and fifth respondents also refer to what the PwC document “expressly” was not and, while objecting to the relevance of it, contend that “the document does none of the things ascribed to it” in the relevant sub-paragraphs of the statement of claim.
It may well be that if evidence is sought to be adduced of the PwC spreadsheet (or other documents) at the trial, it will be determined to be irrelevant, or otherwise inadmissible, but that is a different question to the one which I have to determine in this application.[48]
[48] See Esso Australia Resources (above).
Perforce of the same reasoning, I consider that if contrary to my finding the documents relating to the retainer for PwC and what I have described for convenience as the “documents attendant to” the PwC document are privileged, that privilege has been impliedly waived by what has been put in issue in the pleadings.
Conclusion
I conclude that:
(a)The documents produced pursuant to subpoena by Mr Bell QC are privileged save for the PwC document and documents attendant to it;
(b)The latter can be identified as those documents comprising Annexure JW-50;
(c)Specifically, Annexure DLM-28 / JW-56 is privileged;
(d)Specifically, Annexure DLM-12 is not privileged;
(e)There has been no express waiver of any privileged document;
(f)The failure by the respondents to claim privilege at a time earlier than this application is not an implied waiver of any privilege attaching to any document;
(g)If my conclusion that Annexure DLM-12 (and other attendant PwC documents comprising Annexure JW-50) is wrong and the documents are privileged, that privilege has been waived by reason of the issue joined in the pleadings by the holders of the privilege.
I order accordingly.
I certify that the preceding eighty-nine (89) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Murphy delivered on 12 June 2015.
Associate:
Date: 12 June 2015
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