Mullen and De Bry and Anor
[2007] FMCAfam 10
•15 January 2007
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| MULLEN & DE BRY & ANOR | [2007] FMCAfam 10 |
| FAMILY LAW – Enforcement – subpoena-abuse of process – claim of client legal privilege – stay pending appeal. |
| Evidence Act 1995 (Cth), ss.80, 117, 119,121, 122, 125, 133 Family Law Act 1975 (Cth), ss.79, 80 Federal Magistrates Court Rules 2001 (Cth), rr.103, 1.05(2) Family Law Rules 2004 (Cth), rr.1.08, 1.09, 14.01(1), 14.01(5) |
| Alexander v Cambridge Credit Corporation (1985) 2 NSWLR 685 Botany Bay Instrumentation and Control Pty Ltd v Stewart [1984] 3 NSWLR 98 Bradford & Bradford (1996) 719 FamLR 488 Commissioner of Railways v Small (1938) SR (NSW) 564 Hatton v AG of the Commonwealth (2000) FLC 93-038 Sharpe v Dalton (1990) FLC No. SY2127 of 1985 Lucas Industries v Hewitt (1978) 18 ALR 55 Mullen & De Bry [2006] FMCAfam 561 Mullen & De Bry [2006] FamCA 1380 National Employers Mutual General Insurance Association Ltd v Ward &Hill [1978] NSWLR 372 Re Bell Ex parte Lees (1980) FLC 850 Re Strikers Management Pry Ltd v Dimitri [1997] 431 FCA Rochford v Trade Practices Commission 153 CLR 134 Singapore Airlines v Sydney Airports Corporation [2004] NSWSC 380 |
| Applicant: | SCOTT BERNARD MULLEN |
| First Respondent: | ADRIANA DE BRY |
| Second Respondent: | ETHERINGTONS SOLICITORS |
| File Number: | SYM3056 of 2005 |
| Judgment of: | Altobelli FM |
| Hearing dates: | 20, 21 and 22 December 2006 |
| Date of Last Submission: | 22 December 2006 |
| Delivered at: | Sydney |
| Delivered on: | 15 January 2007 |
REPRESENTATION
| Counsel for the Applicant: | Mr G. Watkins |
| Solicitors for the Applicant: | Milne Berry Berger |
| Solicitors for the First Respondent: | No Appearance |
| Counsel for the Second Respondent | Mr S. Wheelhouse |
| Solicitors for the Second Respondent | Etheringtons Solicitors |
ORDERS
I permit the applicant husband through his lawyers to inspect the documents referred to in the Schedule of Documents annexed to judgment in this matter dated 15 January 2007.
I stay order 1 above until 5pm on Monday 22 January 2007.
If an appeal against the orders I have made in this matter is lodged on or before 5pm Monday 22 January 2007 I stay those orders pending determination of the appeal.
I dismiss the subpoena addressed to Karen Oakley.
I reserve the costs of all parties in this matter to date.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYM3056 of 2005
| SCOTT BERNARD MULLEN |
Applicant
And
| ADRIANA DE BRY |
First Respondent
| ETHERINGTONS SOLICITORS |
Second Respondent
REASONS FOR JUDGMENT
Background
This matter came before me for short periods of time on 20, 21, and 22 December 2006. It should be noted that these were the last three days before this Court’s closure for the Christmas/New Year vacation, with a resumption on 15 January 2007. These were very busy days for the Court and I could only allocate relatively short periods of time to deal with the matter notwithstanding the complexity of the issues raised, and their importance to the parties.
On the 20 and 21 December I made orders which facilitated the applicant obtaining further material in support of his case and it is these orders that are primarily the subject of these reasons and the orders that I made at about 4pm on 22 December 2006.
Proceedings on 20 December 2006
I was informed by Mr Watkins, counsel for the applicant husband, that the matter was listed before me on 20 December 2006 in order to, in effect, enforce orders made by the Full Court of the Family Court of Australia on 7 December 2006. The relevant orders of the Full Court are orders 1-5 and these orders are set out below:
1. Applicant husband be granted leave to appeal the orders made by Federal Magistrate Lucev on 20 October 2006.
2. The appeal be allowed.
3. The orders made by Federal Magistrate Lucev on 20 October 2006 be set aside.
4. That forthwith upon the making of these orders the respondent wife do all things necessary and sign all documents necessary so as to cause to be retained from the proceeds of sale of the property situate at 8 Cleveland Avenue, Surry Hills being the whole of the property contained in Folio Identifier 2/2487777, an amount of not less than $150,000.00.
5. That the wife cause the said sum of $150,000.00 to be invested in an interest bearing account in Australia in the names of her solicitors as trustee for the wife, pending the final resolution of the proceedings in the Federal Magistrates Court No. SYM 3065 of 2005, or further order.
When the matter was first mentioned before me there was no appearance by or on behalf of the respondent wife. It was not clear whether the wife’s lawyers were or were not aware of the listing of the matter before the Court on 20 December 2006. I caused a telephone call to be made to the office of the wife’s lawyers, and then to the wife’s lawyer specifically and after that stood the matter down until later in the day.
The matter resumed at about 3pm. Mr Jackson of Counsel appeared for the wife’s lawyers, Etheringtons, and advised the Court that the said firm was in the process of filing a Notice of Ceasing to Act on behalf of the wife. The explanation for why the firm of lawyers was represented before me is found in the specific orders sought by the applicant husband. A document entitled “Short Minute of Orders Sought by the Husband” (“Short Minute”) was handed up to me on 20 December 2006. That document provides as follows:
1. That the solicitors for the wife forthwith disclose to the husband’s solicitors the following information:
a.The name of the solicitors or conveyancers acting on the sale of the wife’s property at 8 Cleveland St Surry Hills;
b.The name of the bank or other financial institution at which the proceeds of sale of the property at 8 Cleveland St Surry Hills are held;
c.The address of the wife in Scotland;
d.Whether any funds are held in the wife’s solicitors trust account;
e.All other information within their knowledge concerning the monies comprising the proceeds of sale of the property at 8 Cleveland Ave Surry Hills.
2. In the event that the wife fails to comply with the orders of the Full Court 7 December 2006 by 4pm Thursday 21 December 2006, the wife’s response be struck out and the husband be at liberty to seek a hearing on an undefended basis.
3. That the Court discharge the costs order made 27 November 2006.
4. That the wife pay the husband’s legal costs on an indemnity basis.
The submissions of Mr Watkins on behalf of the applicant husband explained the context of the present application and the Full Court proceedings. The substantive application before this Court, indeed in my docket, is the husband’s application for alteration of property interests under s.79 of the Family Law Act. After these proceedings had been commenced in May 2006, the husband became aware that the wife, who lives outside Australia, was intending to sell the former matrimonial home in Sydney. That home, registered in her name only, was apparently sold on or about 7 October 2006 with a settlement anticipated either in late November or early December 2006. The husband’s application to this Court for an injunction to, in effect, preserve the asset consisting of the former matrimonial home or its net sale proceeds, was unsuccessful (see Mullen & De Bry [2006] FMCAfam 561). However, the husband was successful in his appeal to the Full Court, and this resulted in the orders made on 7 December 2006 (see Mullen & De Bry [2006] FamCA 1380). The picture that Mr Watkins painted in his submission was one where there were orders of the Full Court, there was no communication of any relevance or substance with the wife’s lawyers for an extended period of time; the wife lived outside of Australia; and there was a fear on the part of the husband that the asset sought to be preserved by the orders of the Full Court may have, in fact, been dissipated.
Mr Watkins submitted that as the husband had, for all practical purposes, exhausted all other lines of relevant enquiry in relation to enforcing the orders of the Full Court, he was left with no alternative but to seek orders against the wife’s lawyers. Order 1 per the Short Minute was therefore directed at ascertaining what had happened to the sale proceeds of the former matrimonial home, and all of this was seeking compliance with the Full Court orders. In essence, therefore, having been met with a “wall of silence” from the wife and/or her lawyers, the husband was entitled to seek disclosure of the information sought.
I specifically raised with Mr Watkins the issue of the source of my powers to make the orders sought. Commencing with rule 1.05(2) Federal Magistrates Court Rules 2001 (Cth), (and hence taking me to the Family Law Rules 2004 (Cth) 1.08, 1.09, 14.01(1) and 14.01(5)) Mr Watkins was able to satisfy me that the Court does have the power to make the orders sought, not just against the respondent wife, but as r.14.01(5) clearly indicates, also “binding on or otherwise affecting a person who is not a party to a case…” It is probably also the case that the power to make these orders ultimately derives from s.80 of the Family Law Act which confers on the Court broad, general powers to facilitate the making of orders under Part VIII of the Family Law Act.
Mr Jackson, for the wife’s lawyers, raised three important matters of concern. The first was one of procedural fairness – the application had been brought on with little notice, and the wife’s lawyers had not had the opportunity to either communicate with the wife or to consider the matters raised on the orders sought. The second issue was that compliance with the orders probably raised issues of privilege and he specifically referred to ss.117 and 119 of the Evidence Act 1995. The third issue was that as orders were being specifically sought against the wife’s lawyers, there was a potential conflict of interest and duty. He thus sought an adjournment of the application.
Perhaps unsurprisingly, Mr Watkins strenuously opposed the adjournment application and reiterated his clients concerns about the “wall of silence” in relation to compliance with the orders of the Full Court. He also submitted that privilege did not apply because of s.121 (2) of the Evidence Act and that, in any event, the privilege being that of the client, the wife’s lawyers were not in a position to assert that privilege.
The practical reality confronting me on the 20 December 2006 was that even though I accepted the applicant’s need to have the issues he raised determined quickly, there were other matters I needed to determine that day that, in my opinion, had priority. It seemed to me that the real concern the applicant had was lack of information about the sale proceeds in the context of compliance with the orders of the Full Court. If those sale proceeds had been dissipated contrary to the orders of the Full Court, the matter would probably proceed in one direction. However, if those sale proceeds had not been dissipated in that fashion, and the funds were still in Australia, the matter would need to proceed in another direction, with significantly more haste. I justify this pragmatic approach to this matter by reference to the objects of the Federal Magistrates Court, as set out in r.1.03 of the Federal Magistrates Court Rules. I therefore made the following orders on 20 December 2006:
1. The matter be adjourned to 21 December at 12pm.
2. Leave is granted for the solicitor for the applicant husband to issue two subpoenas which are returnable before me at 12pm on 21 December 2006.
3. Such subpoenas to require the production of:
a) The file of Crumblin & Co relating to the sale of the property owned by Adriana De Bry at 8 Cleveland Avenue, Surry Hills being the whole of the property contained in Folio Identifier 2/2487777.
b) The file of Etheringtons Solicitors relating to representation of Adriana De Bry in family law proceedings.
4. Such subpoenas to be served by 10am on 21 December 2006. Liberty is granted for service by fax.
5. Any enquiries in relation to the issue or production of these subpoenas to be directed to my Associate on 9217 7193.
NOTATION:
If the above documents are produced and subject to the usual procedure for objections, it is intended to grant leave to inspect the documents produced by Crumblin and Co first and thereafter, if necessary, the documents produced by Etheringtons Solicitors.
In making these orders I was very mindful of a number of matters. Foremost in my mind was the fact that the Full Court had made certain orders on 7 December 2006 in proceedings between the applicant and respondent, and that those orders had not been complied with. In this regard the respondent wife’s counsel had not at any time disputed the assertion on behalf of the applicant husband that the wife had not complied with the orders. The reality was that, in all likelihood, the wife’s lawyers would know one or way or another. I was also conscious of the imposition on both entities who were going to be served with subpoena on such short notice, at this time of year. Nonetheless, I was concerned that the interest in serving the proper administration of justice was a prevailing one. I was also conscious of the seriousness of the issues raised by Mr Jackson especially in relation to procedural fairness and privilege. As regards the privilege issue, that is why I made the notation to the orders at paragraph 6 – hopeful that the production of the solicitor’s conveyancing file would satisfactorily address the concerns of the husband.
Proceedings on 21 December 2006
On 21 December 2006 Mr Watkins appeared for the applicant husband, Mr Wheelhouse SC and Mr Jackson appeared for Etheringtons, and Ms Trapiano appeared on behalf of Crumblin & Co, the wife’s conveyancing solicitors.
Ms Trapiano objected to production of the conveyancing file of Crumblin & Co, stating that the subpoena was oppressive and that the file was privileged in any event. She also stated that she could not seek her client’s instructions. She was quite vociferous in stating her concerns. I over-ruled all her objections for the reasons I set out below. She protested and I agreed to note her protest. At one stage Mr Wheelhouse SC sought to address me as regards the subpoena to Crumblin & Co, but I would not hear him as he had, in my opinion, no standing to do so. He had announced his appearance on behalf of Etheringtons, not the respondent wife.
In my experience, subpoena to require production of conveyancing files to the courts administering the Family Law Act 1975 are common. Without a simple procedure for obtaining reliable objective evidence about important aspects of the land transactions made by spouses during their cohabitation, the s.79 procedure becomes far more difficult than it needs to be. The vast majority of objections to the form of these types of subpoena are ill-conceived, as are the claims for privilege.
The claim that the subpoena was oppressive in form is nonsense. The subpoena requires the production of a file – a conveyancing file. There can be no doubt about what documents are covered by this description. The file is easily identified, easily transported and easily produced to the court. The only oppression, if it can be called that, is that I required the file to be produced on very short notice and that is because I decided the interest in the administration of justice justified such short notice under the circumstances.
The claim to privilege, specifically legal professional privilege as asserted by Ms Trapiano, is ill-conceived. The learned authors of “Cross on Evidence”, express their doubts as to whether the common law rule of legal professional privilege applies to conveyancing transactions. Paragraph 25 225 states:
The privilege does not protect documents which constitute or evidence transactions, such as contracts or conveyances, which are not themselves the giving or receiving of advice or part of the actual or anticipated litigation.[1]
[1] Cross, R Cross on Evidence 7Th ed Butterworths, Sydney, 2004.
The claim for privilege in relation to the conveyancing file would necessarily arise under s.118 of the Evidence Act. Odgers, in the 7th Edition of “Uniform Evidence Law” at 1.3.10540, basically agrees with the learned authors of “Cross on Evidence”:
The ALRC considered that its proposals would “ensure that evidence about concluded conveyancing and other property transactions would not be excluded.” It considered that limitation of the privilege to “the contents of a confidential document (whether delivered or not) prepared by the client or a lawyer…for the dominant purpose of the lawyer, or one or more of the lawyers, providing legal advice to the client” (or “professional legal services” under s 119) meant that documents which merely constitute or evidence transactions (such as contracts, conveyances, trust deeds, receipts, invoices, minutes or declarations) would not be caught by the privilege. This is certainly the common law position, although it is possible that the change from the sole purpose to a dominant purpose test may have some impact on this reasoning. In that (unlikely) event s 121(3) may apply.[2]
[2] Odgers, S Uniform Evidence Law 7th ed Thompson Lawbook Co, Sydney, 2006, p 518.
The other issue raised by Mr Watkins is that the privilege belonged to the client, and thus could only be raised by her. As Ms Trapiano indicated that she could not get instructions, it follows that she could not assert the claim to privilege. Whilst I agree with the general proposition that the privilege belongs to the client and can, generally, only be asserted by the client (see ss.117 and 118 Evidence Act; Re Bell Ex parte Lees (1980) FLC 850 per Gibbs J at 75356, Stephen J at 75362 and Wilson J at 75366) there must be a specific situation where the privilege may be asserted on a client’s behalf without the client even knowing. In this matter, for example, it is quite possible that as the respondent wife is overseas, and as the proceedings were brought on with short notice, she is not aware of issues giving rise to the potential claim for privilege. I acknowledge that the situation is not free of doubt. On the one hand the language of the relevant provision is quite clear – it is the client’s privilege. On the other hand, it does seem to me quite unfair to the client who probably does not know that these issues have arisen that privilege should be claimed. The further complication in this case is that it is unclear whether the retainer between the client and Crumblin & Co ended when the conveyancing transaction ended. This is significant because, as Odgers notes at 1.3.10380[3], the ALRC considered that as part of the normal obligation of lawyer to client, the lawyer is obliged to claim privilege on behalf of the client in the absence of instructions to waive it. Thus, if the retainer had not ended, the solicitor was well-entitled to claim the privilege on behalf of the client. But what if the retainer had ended? In a footnote to the paragraph referred to above, Odgers states:
986. A problem may arise if the lawyer has ceased to act for the client – the obligation to claim the privilege should still operate in practice.[4]
[3] Odgers, S Uniform Evidence Law 7th ed Thompson Lawbook Co, Sydney, 2006, p 508.
[4] Odgers, S Uniform Evidence Law 7th ed Thompson Lawbook Co, Sydney, 2006, p 508.
I respectfully agree with Odgers in this regard. Even if the retainer has ended, or has been terminated as seems to be the case with Etheringtons, the solicitor is entitled to assert the privilege on behalf of the client in circumstances when it is reasonable to infer that the client does not know of their right to claim privilege. In any event, for the reasons set out above, the claim for privilege is ill-conceived.
I adjourned the matter for a short time to give Mr. Watkins the opportunity to inspect the Crumblin & Co. conveyancing file. On resumption Mr. Watkins tendered, without objection, two documents:
1. Exhibit A1: Letter from Crumblin & Co to Adriana De Bry dated 21 November 2006; and
2. Exhibit A2: Settlement instructions and direction to pay addressed to Crumblin & Co by Adrian De Bry dated 10 October 2006.
These documents indicate that settlement of the sale of the former matrimonial home took place on 15 November 2006 and that the net balance on settlement, a sum of $544,642.17 was drawn in favour of Adriana De Bry and deposited into her ANZ bank account no. 5651-01554, BSB No. 012-362.
I mention here that I specifically asked Mr. Wheelhouse, Senior Counsel for Etheringtons, whether he knew or could ascertain from his instructing solicitor, what was represented to the Full Court at the hearing of the appeal about the sale of the property. He informed me that no enquiry was made by the solicitors and no representations were made to the Full Court.
Mr Watkins for the applicant husband called on the subpoena to Etheringtons. Mr Wheelhouse SC objected to production on the basis that the subpoena was oppressive in form, and that in any event the documents were privileged.
The subpoena to Etheringtons is addressed to “Paul Martin Etheringtons and Victor Michael Dominello t/as Etheringtons Solicitors.” The documents sought to be produced were described as:
The entire file in relation to proceedings in the Family Court and in the Federal Magistrates Court on behalf of the said Adriana Joan De Bry.
Specifically, Mr Wheelhouse SC objected to the documents being too broadly described and that there was a large quantity of documents as the proceedings were complex. Mr. Wheelhouse SC objected on behalf of Etheringtons to the form of the subpoena addressed to that firm, arguing that production would be oppressive and an abuse of process. As indicated above, the form of the subpoena was very simple.
The general policy and rationale relating to subpoenas to produce documents is set out in the judgment of Smythers J in Lucas Industries v Hewitt (1978) 18 ALR 55 at 570:
The purpose of the process of the subpoena is to facilitate the proper administration of justice between the parties. For that purpose it is the policy of the law that strangers who have documents may be put to certain trouble in searching for and gathering together relevant documents and bringing them to court. It is according to the same principle that persons who have knowledge of facts are put to the inconvenience of being brought to court and required to give evidence.
Thus the policy of the law relating to subpoenas explicitly acknowledges the inconvenience that producing parties will experience, but makes that interest subservient to the greater public interest in the proper administration of justice. The context of these particular proceedings cannot be ignored either – enforcement proceedings of a Full Court order in circumstances that are explained elsewhere in this judgment.
Mr Watkins argued that it was not oppressive to produce a file. The description used on the subpoena, “The entire file” was one sufficient to accurately identify the documents sought. Indeed, I made the observation to both counsel that “files” are routinely subpoenaed in courts exercising family law jurisdiction, with scarcely a whimper of concern. The file consists of everything between the two file covers so one is not left to decide what is caught by the description and what is not. The use of the description “file” removes any issues about time (ie, from what period the documents are to relate and conclude). In any event, the proceedings in question commenced in May 2006, so it could hardly lead to issues of uncertainty or create onerous obligations in that regard. The use of the description “file” creates neither uncertainty nor onerous obligation on the person required to produce the same. Indeed, it would have been far more onerous if the subpoena had specified categories of documents, by reference to specific time periods. The descriptor “file” was the most efficient and effective means of not only communicating what needed to be produced, but securing compliance by the person required to do so.
But was requiring production of the file asking for too much information, including potentially irrelevant information, and to that extent oppressive? One must remember here the context of the subpoena. An order of the Full Court is sought to be enforced. That order was not complied with by the very person whose documents are now sought to be produced and inspected. Those who formerly represented the respondent wife were, in effect, seeking to shelter her from one legal obligation (to answer a subpoena) by raising technical issues of law relating to the form of the subpoena, in the context where she had not complied with a clear legal obligation placed on her by the Full Court. Moreover, if Mr Watkins’ assertion of the ‘wall of silence’ is substantiated, the respondent wife created the very situation which necessitated the issue of the subpoena. I find it difficult indeed to find any oppression under these circumstances.
In substance, the objection to the Etheringtons subpoena is that it amounts to an abuse of process of this court. Thus, for example, a complaint about oppression really is an example of abuse of process: Sharpe v Dalton (1990) FLC No. SY2127 of 1985 at 99 quoting from Powell J in Botany Bay Instrumentation and Control Pty Ltd v Stewart [1984] 3 NSWLR 98 at pp 100-1. But there is no abuse of process arising out of this subpoena. It simply requires the production of a file - a discrete bundle of documents that are easily identified and already in a format (a file) that formulates compliance with the subpoena and production. There is no onerous task in locating the documents, or in deciding whether they are relevant. The proceedings in this Court relate back to less than one year so it is not too wide or oppressive in that sense. There is no issue about whether the documents are relevant in the context of these enforcement proceedings - clearly they are. It must always be remembered that according to the applicant, the necessity for this subpoena is the respondent’s non-compliance with an Order, and the alleged ‘wall of silence’ erected by her. In these circumstances it can hardly be asserted that discovery was a reasonable alternative. Surely the present subpoena is no different (apart from the claim of privilege) to one addressed to a hospital or a bank to produce a specified file. Having regard to all of the relevant authorities, including Halton v AG of the Commonwealth (2000) FLC 93-038, National Employers Mutual General Insurance Association Ltd v Ward & Hill [1978] NSWLR 372 and Commissioner of Railways v Small (1938) SR (NSW) 564, there is nothing wrong with this subpoena and I dismiss the objection to production on this ground.
The second issue arising out of the Etheringtons subpoena is, of course, that of privilege.
I have already discussed, in the context of the Crumblin & Co subpoena, the situation where a retainer between solicitor and client has ended and whether the solicitor can assert the client’s claim. I find that the respondent wife’s former lawyers are so entitled. Unlike the conveyancing file of Crumblin & Co, the family law file of Etheringtons raises real issues of privilege.
Mr Watkins argued that the legal privilege was lost as a result of s.121 of the Evidence Act which states:
(1)This Division does not prevent the adducing of evidence relevant to a question concerning the intentions, or competence in law, of a client or party who has died.
(2)This Division does not prevent the adducing of evidence if, were the evidence not adduced, the court would be prevented, or it could reasonably be expected that the court would be prevented from enforcing an order of an Australian Court.
(3)This Division does not prevent the adducing of evidence of a communication or document that affects a right of a person.
The essence of his argument is that the present proceedings before the court were enforcement proceedings and therefore the client legal privilege was lost. Mr Watkins stressed that sub-section (2) covered not just actual enforcement proceedings, but contemplated proceedings as well.
Mr Wheelhouse SC questioned whether the orders sought by the applicant husband were in the nature of enforcement proceedings in any event. He questioned whether the orders of the Full Court were capable of being enforced in their very terms it being possible, for example, that the monies had already left the jurisdiction before those orders had been made.
The discussion by Odgers of s.121 is set out at para 1.3.10910 and states:
This provision results in the loss of client legal privilege where, if the evidence in question was not adduced, it could reasonably be expected that the court would be prevented from enforcing an order of an Australian court. An example under the common law is where the evidence related to the location of a child taken in breach of a custody order- allowing the privilege in these circumstances would impede the enforcement of the order.[5]
[5] Odgers, S Uniform Evidence Law 7th ed Thompson Lawbook Co, Sydney, 2006, p 525.
Mr Watkins referred me to the High Court’s decision in Re Bell; Ex parte Lees (1980) FLC 90-850. He never contended that the present case was analogous to the fact situation in Re Bell where serious issues of a child’s welfare were raised. His reliance on the case was to demonstrate the well-established general principle that even the privilege that extends to the confidential communications between a client and legal advisor has certain exceptions eg, where the privilege is sought in order to frustrate the processes of law or to enable the continuance of a contempt of court. Ultimately both the principle of privilege and its exceptions are based on public interest. Thus, e.g. Gibbs J states at para 75357:
The privilege, which arises only because the public interest requires it, does not exist when it is seen that it would be contrary to a higher public interest to give effect to it.
Stephen J said at 75360:
…to allow a claim for legal professional privilege in the particular circumstances of this case is to subvert the purpose of that privilege, which is to further and not to impede the administration of justice.
These principles are reflected in s.121(2) and 125, which I will discuss below.
Mr Wheelhouse SC referred me to the unreported decision dated 18 November 1997 of Burchett J in the Federal Court of Australia in Re Strikers Management Pty Ltd v Dimitri. [1997] 431 FCA That case was helpful not just because of the discussion of s 121(2) and s 125 of the Evidence Act, but also because it involved a s 133 situation, the significance of which will become apparent shortly. That case arose out of an application to inspect documents produced by former solicitors under subpoena and the broader context of the proceedings was a motion to punish the respondent for alleged contempt. The solicitors’ file was produced to the court and the client objected on the ground of legal professional privilege. The case was actually decided by Burchett J on the basis of s.125 of the Evidence Act, but he made the following comments in relation to s.121(2):
It may well be that some of these documents would also be liable to be produced for inspection having regard to the terms of s.121(2) of the Evidence Act 1995, but in the circumstances it is unnecessary to pursue that question. The section is very curiously drafted, and the comments of the Australian Law Reform Commission (made at the end of para 885 cited above) are of very little assistance. The difficulty is that the subsection is couched in terms of the effect upon proceedings of the rejection of evidence, rather than in terms of the nature of that evidence. Does this mean that the same evidence would be admissible or not admissible, depending on whether without it the enforcement proceedings would actually fail or succeed? If so, when is the ruling on admissibility to be given?
The only observation that I make in this regard is that, on the basis of this case as it had evolved so far, no enforcement proceedings could be initiated or maintained in a meaningful way without access to the information sought in the Minute of Order. And if, as Mr Watkins asserts, there is indeed a “wall of silence” from the respondent wife, the information required to enforce the Full Court’s order can only be obtained from the solicitor’s file.
The harsh reality is that notwithstanding the complexity of these issues and the importance of them to all parties involved in these proceedings, I ran out of time to continue with the matter on 21 December 2006 as I had to deal with an urgent children’s matter. I made the following orders that afternoon:
1.The matter relating to the objection of the production of documents for the subpoena to Etheringtons solicitors issued on 21 December 2006 be adjourned to 22 December at 12pm.
2.Leave is granted for the solicitor for the applicant husband to issue a further subpoena to Etheringtons Solicitors which is returnable before me at 12pm on 22 December 2006.
3.Leave is granted for the solicitor for the applicant husband to issue a subpoena to ANZ Bank which is returnable before me at 12pm on 22 December 2006.
4.Such subpoenas to be served by 10am on 22 December 2006. Liberty is granted for service by fax.
5.Noting, but over-ruling the objection to production by Crumblin and Co, leave be granted to inspect documents produced by that firm.
6.Any enquiries in relation to the mechanics of the issue or production of these subpoenas to be directed to my associate on 9217 7193.
7.I DIRECT the applicant to file a further application in this matter no later than 5pm today.
Proceedings on 22 December 2006
When the matter resumed before me on 22 December 2006, the applicant husband had caused to be issued to Karen Oakley, the solicitor at Etheringtons having formerly had the carriage of the matter, a subpoena to give evidence and produce documents. Not only was this subpoena not in accordance with the leave I granted on 21 December 2006, but it was ill-conceived as Mr Wheelhouse SC quickly pointed out. Any documents relating to the proceedings were not in the possession, control or custody of the solicitor personally, but the partnership, hence the partners must be served.[6] As will be seen below, I ordered that this subpoena be dismissed.
[6] Rochford v Trade Practices Commission 153 CLR 134 at
The ANZ bank produced a document in response to the subpoena addressed to it. A statement of account was tendered by Mr Watkins, without objection, and it became Exhibit A3. This document was a copy of a one page bank statement with the account number 5651-01554 in the name of Adrian De Bry for the period 13 October 2006 to 21 December 2006. It shows the following transactions:
2006 Transaction Description Withdrawals Deposits Balance 13 Oct Balance brought
forward38.62 16 Nov Deposit 548,642.17 548,680.79 20 Nov Transfer from
Macquarie BankRay White Double B
52,107.51 600,788.30 01 Dec EB12362
To 590233590,030.00 04 Dec ANZ Internet Banking
Funds Tfer Transfer
208704
to 40722090151327411,947.77 8,810.53 Totals at end of period 591,977.77 600,749.68 8,810.53
It shows that on 1 December 2006, less than a week before the hearing of the Full Court appeal, the respondent wife withdrew $590,030.00
Mr Wheelhouse SC renewed his submission to me that in view of the ANZ statement, the orders of the Full Court were not capable of being complied with on the basis of the evidence as it currently stands. He urged that I should draw no adverse interest from the fact of the transfer of the funds. In view of all of this s.121(2) did not apply and did not cause the privilege to be lost.
At this stage of the proceedings I became quite concerned about whether s.125 of the Evidence Act might also apply. Mr Wheelhouse in fact first referred me specifically to s.125 though, to be fair to him, at some stage on 21 December 2006 I probably did raise with him, in passing and without seriously considering the matter, whether an absence of process had occurred. Section 125 of the Evidence Act states:
125 Loss of client legal privilege: misconduct
(1)This Division does not prevent the adducing of evidence of:
(a)a communication made or the contents of a document prepared by a client or lawyer (or both), or a party who is not represented in the proceeding by a lawyer, in furtherance of the commission of a fraud or an offence or the commission of an act that renders a person liable to a civil penalty; or
(b)a communication or the contents of a document that the client or lawyer (or both), or the party, knew or ought reasonably to have known was made or prepared in furtherance of a deliberate abuse of a power.
(2) For the purposes of this section, if the commission of the fraud, offence or act, or the abuse of power, is a fact in issue and there are reasonable grounds for finding that:
(a)the fraud, offence or act, or the abuse of power, was committed; and
(b)a communication was made or document prepared in furtherance of the commission of the fraud, offence or act or the abuse of power;
the court may find that the communication was so made or the document so prepared.
(3) In this section:
"power" means a power conferred by or under an Australian law.
I indicated to Mr. Wheelhouse SC that pursuant to s.133 of the Evidence Act that I intended to require the Etheringtons file to be produced to me so that I could inspect it personally, in order to determine the question of privilege and whether it had been lost under either s.121(2) or s.125.
Section 133 of the Evidence Act provides as follows:
133 Court may inspect documents
If a question arises under this Part in relation to a document, the court may order that the document be produced to it and may inspect the document for the purpose of determining the question.
The commentary on this section in Odgers is contained at paragraph 1.3.14280:
Whether a court will utilise this provision will depend on the circumstances. The possibility, in a trial without a jury, that the court may inspect the document, conclude that it is privileged and be prejudiced by such inadmissible evidence, is not a proper reason for the court not to inspect the document (since such a risk will always exist).[7]
[7] Odgers, S Uniform Evidence Law 7th ed Thompson Lawbook Co, Sydney, 2006, p 616.
Odgers refers in a footnote to the decision of Mushin J in the Family Court in Bradford& Bradford (1996) 719 FamLR 488 where the submission was rejected that just because a judge inspects a document under s 133, and decides that it was privileged, there is the risk that the trial would be aborted as the judge had inspected highly prejudicial material. As Mustun J observed, judicial officers are constantly making decisions on the basis that inadmissible material is put out of their minds.
The decision of Burchett J in Re Strikers Management Pry Ltd v Dimitri, referred to me by Mr Wheelhouse, was in fact an example of a case where the court inspected and considered the documents under subpoena, notwithstanding the claim to privilege. Indeed, Burchett J having done so, found that the documents could fall within s.125(1)(a) of the Evidence Act.
Mr Wheelhouse SC objected to my inspecting the documents. Indeed, he communicated to me that his instructions were to appeal my decision to uphold the subpoena to Etheringtons, to appeal my decision to call for inspection of the documents under s.133 of the Evidence Act, and to ask me to stay both of these orders pending an appeal.
Dealing firstly with the issues of the objection to my inspection of the documents under s.133, doing the best I could to understand his argument, it was to the effect that his client would be prejudiced if I inspected the documents, as the appeal related not just to the proposed inspection, but to the substantive issue of the validity of the Etheringtons subpoena. I put it to Mr. Wheelhouse SC that his client could suffer no prejudice at all if I required production of and inspected the documents because, for example, I could uphold the claim to privilege. Indeed, the only potential prejudice his client could suffer is if I determined, after inspecting the documents, that the privilege did not apply.
I suggested to Mr Wheelhouse SC that, in reality, s.133 of the Evidence Act was probably invoked on a daily basis in every court in Australia. Indeed, an objection to inspection would be an unrealistic obstacle to the proper administration of justice in Australia. Ironically, it is a procedure that potentially protects his client’s privilege as much as it might possibly avoid it. The discussion of the s.133 procedure in Odgers is found at para 1.3.11260:
General procedure relating to the determination of a question whether evidence should be admitted is dealt with in s 189. In accordance with s 133, if a question arises in relation to a document, the court may order that the document be produced to it and may inspect the document for the purpose of determining the question. However, in Singapore Airlines v Sydney Airports Corporation [2004] NSWSC 380, McDougall J did not consider it appropriate to inspect a document where the issue was whether the “substance of certain evidence had been disclosed in the document and a party opposed inspection by the court. He stated (at [66]):
There is, I think, a significant distinction between inspecting a document to see whether it contains a privileged communication, and inspecting a document for the purpose of making a quantitative assessment of the contents of that document with the contents of some other document or documents. The former is a question on which, it might be thought, minds could not reasonably differ (for example, it would ordinarily be quite obvious if the document contained a record of communications between client and lawyer for a protected purpose). However, the latter involved not just an assessment of the communication, but a comparison of that communication with another document or documents for the purpose of seeing whether one can be said to embody the substance of the other.[8]
[8] Odgers, S Uniform Evidence Law 7th ed Thompson Lawbook Co, Sydney, 2006, p 544.
The present case is significantly different from the Singapore Airlines v Sydney Airports Corporation [2004] NSWSC 380 case referred to in Odgers. The purpose of the inspection is to see whether it contains privileged communications, and whether either s.121 or s.125 of the Evidence Act applies to avoid the privilege that might otherwise exist.
I thus over-ruled the objection and called for production of the Etheringtons file. Three binders were produced to me. The file takes a fairly typical form. One of the files is marked “these documents are privileged.” The other two are not. I assume that no claim for privilege is made in respect of them.
The stay application pending an appeal
The substance of Mr Wheelhouse’s submissions in relation to the stay applications is that, if I did not do so, his client’s appeal would be rendered nugatory. The principles governing such applications are well known. An excellent statement of the relevant principles is contained in the decision of the NSW Court of Appeal as Alexander v Cambridge Credit Corporation (1985) 2 NSWLR 685 at 693-695. I am satisfied that having regard to the complexity of the issues raised, and their importance to both parties, there are serious issues to be argued. The only relevant issue is whether there is a risk that “the appeal will prove abortive if the appellant succeeds and a stay is not granted” or “unless a stay is granted an appeal will be rendered nugatory”.[9]
[9] Alexander v Cambridge Credit Corporation (1985) 2 NSWLR 685 at 695.
I declined to grant the stay for two reasons. The main reason is that until I inspect the documents and rule on issues of privilege, the applicant cannot inspect the documents, and therefore the respondent suffers no prejudice. It follows that, at least for the time being, any proposed appeal can neither be abortive or nugatory. The respondent only suffers prejudice if I rule that privilege does not apply where claimed, and permit inspection of those documents by the applicant. In this regard the application of s 133 of the Evidence Act is a two-stage process, the first of which involves production to a judicial officer and inspection by that judicial officer, and the second stage of which involves ruling on the “question [that] arises under this Part in relation to a document.” It is hard to imagine a situation where stage one is an order than can be the subject of an appeal, particularly when only one party objects. The second stage, ie, the substantive ruling on privilege and admissibility, can of course be the subject of an appeal. At this stage, in my opinion, any talk of an appeal is premature. In any event, and subject to the matters considered below arising out of the inspection, fairness to the respondent can be secured by granting a short self-executing order for a temporary stay.
The second reason for not granting the stay is that under r 22.12 of the Family Law Rules, which apply to the Federal Magistrates Court pursuant to r.1.05(2) of the Federal Magistrates Court Rules, a stay can only be sought if an appeal has been started or a party has applied for permission to appeal against the order. That had clearly not taken place as at 22 December 2006. It is possible that the Federal Magistrates Court has an inherent power to grant a stay of proceedings anyway. If that is the case I decline to grant the stay as at 22 December 2006 for the reasons set out in the preceding paragraph.
The inspection of documents pursuant to section 133 of the Evidence Act
I have considered the documents produced under subpoena. In the Schedule to these Reasons I identify the documents that are, on their face, liable to be produced pursuant to ss.125(1)(a), 125(1)(b), and 121(2) of the Evidence Act. To paraphrase the words of Burchett J in Re Strikers Management Pty Ltd v Dimitri, just because I am identifying the documents referred to in the Schedule, I am not drawing any actual conclusion about them. Whether the documents do in fact lead to a particular conclusion can only be determined when all the evidence is in and is tested. All I am saying is that the documents I have identified may, in my opinion, be reasonably held at a hearing to fall within the terms of the sections of the Evidence Act that I have referred to.
As I have previously indicated, the context of this matter is significant. The respondent is overseas. The orders of the Full Court have not been complied with. There is material from which a reasonable inference may be drawn that the “wall of silence” asserted by Mr Watkins was erected on the instructions of the respondent wife. There is material from which a reasonable inference may be drawn that the respondent wife was determined to deal with the sale proceeds as she decided even though advised by her lawyers that the court would make an order that some of it be kept in Australia. There is material from which a reasonable inference may be drawn that the respondent wife, having a clear duty of disclosure under both the Family Law Rules and Federal Magistrates Court Rules, failed to do so at certain key stages during these proceedings, including, possibly, on 7 December 2006. Knowing as I do that the respondent wife intends to appeal my decision it would be improper for me to give further details of the documents to which I consider ss.121(2) and 125(1)(a) and (b) might apply. However, I do need to provide sufficient reasons to indicate the thought processes that have led me to identify the documents referred to in the Schedule, and to link them to the relevant provisions of the Evidence Act.
The other relevant parameter, of course, is the document entitled “Short Minutes of Orders Sought by the husband”. The subpoena needs to be linked to that document, and to the orders sought in it. The extent to which I have decided that no privilege attaches to communications contained in the Etheringtons file is determined by reference to the orders sought. In reality the applicant husband is not seeking a carte-blanche avoidance of privilege, but one that is closely circumscribed to the necessity and context of the case. But does this mean that the subpoena truly was too widely drawn in seeking production of the whole file? I think not. The substantive issue in this case was whether the privilege was avoided and not the form of the subpoena. To have struck out the subpoena on the basis of technicality would have been to permit the respondent wife to take advantage of the law – to hide behind it in effect – whilst manifesting conduct from which a reasonable inference could be drawn that she was willing to flout the law.
There is irony found in the quite ill-conceived claims to privilege on behalf of the respondent wife’s lawyers to the production of documents that disclose items 1(a) – 1(d) in the Short Minute. The name of the wife’s conveyancing solicitors and her bank could hardly be considered to be a ‘confidential communication’ or “confidential document” for the purposes of s.117 of the Evidence Act. Indeed I could find nothing in my inspection of the solicitors file to create even the vaguest inference that the information was communicated to the lawyers in confidence. The address of the wife in Scotland is probably not privileged unless it was communicated confidentially[10]; and there is nothing on the file to indicate that. The disclosure sought about funds held in a trust account is likewise hardly privileged. Despite the objection to the production of the Etheringtons file pursuant to s.133, when the file was produced, only one of the three files produced was claimed to be privileged, and this consisted of less than one-quarter of all the material contained in the file. One could easily form the impression that the claim to privilege was made without too much consideration on the part of the firm. Nonetheless, privilege is not something that is lightly avoided.
[10] Cross, R Cross on Evidence 7Th ed Butterworths, Sydney, 2004 at 25225.
For the sake of completeness and transparency in my Reasons, particularly in view of an anticipated appeal, I briefly discuss my reasoning about s.125 (1)(a) and (b). I appreciate that one should not even hint at possible misconduct on the part of a litigant lightly. In s.125(1)(a), it is possible that the respondent wife has committed an act that renders her liable to a civil penalty. I am not saying that it is likely – only that it is possible. Part XIIIA and Part XIIIB of the Family Law Act possibly apply to the situation. Both these parts provide for the imposition of sanctions that would constitute “an offence against or arising under an Australian law” for the purposes of the Evidence Act. As regards s.125(1)(b) it is possible that some of the communications referred to in the Schedule were made in furtherance of an abuse of power. Section 125(1)(b) is discussed at 1.311640 of Odgers.[11] It is interesting that in that discussion abuse of power is often equated with abuse of process.
[11] Odgers, S Uniform Evidence Law 7th ed Thompson Lawbook Co, Sydney, 2006, p 540.
Having ordered production of the Etheringtons file to me, inspected the same and now permitted inspection of the documents referred to in the Schedule, in fairness to the respondent wife, if I do not stay the order permitting inspection pending her proposed appeal, then a situation arises whereby her appeal would be nugatory. Accordingly, the orders that I make will grant a short stay of the order permitting inspection so that she may pursue her appeal. Indeed I acknowledge that Etheringtons may, in theory, pursue the appeal themselves, as they are sufficiently interested in the matter.
Accordingly, the orders that I made on 22 December 2006 were as follows:
1. I decline to grant a stay of the order I made upholding the validity of the subpoena to Etheringtons.
2. I decline to grant a stay of the order I made pursuant to s 133 Evidence Act requiring production to me of the Etheringtons file.
3. I direct Etheringtons to file and serve a Notice of Ceasing to Act forthwith, if they have already done so.
4. I adjourn this matter to Monday 15th January 2007 so that I may provide reasons for the orders I have made.
5. I direct Etheringtons to advise the Respondent wife of the orders that I have made and of the adjourned date.
The orders that I make on 15 January 2007 are set out at the commencement of these Reasons.
I certify that the preceding sixty-four (64) paragraphs are a true copy of the reasons for judgment of Altobelli FM
Associate: Lisa Molloy
Date: 15 January 2007
Schedule of Documents
| Date | Nature of Document or Communication | Parties to Document or Communication |
| 05.06.2006 | Adriana De Bry (“Wife”) to Etheringtons “Solicitors” | |
| 14.06.2006 | Letter | Solicitors to Wife |
| 21.06.2006 | | Wife to Solicitors |
| 26.06.2006 | File note | Wife and Solicitors |
| 28.06.2006 | | Solicitors to Crumblin & Co (Conveyancing Solicitor) |
| 13.09.2006 | | Wife to Solicitors |
| 13.09.2006 | Letter | Solicitors to Wife |
| 06.10.2006 | Letter | Solicitors to Wife |
| 07.10.2006 | | Wife to Solicitors |
| 10.10.2006 | | Wife to Solicitors |
| 11.10.2006 | Letter | Solicitors to Wife |
| 11.10.2006 | File Note | Wife and Solicitors |
| 13.10.2006 | Letter | Solicitors to De Bry |
| 11.11.2006 | Letter | Solicitors to De Bry |
| 17.11.2006 | File Note | Internal memo with Solicitors |
| 1.12.2006 | Letter | Solicitors to Lethbridge SC |
| 13.12.2006 | Letter | Solicitors to Wife |
| 14.12.2006 | File Note | Solicitors and Wife |
| 15.12.2006 | Letter | Solicitors to Wife |
| 18.12.2006 | | Wife to Solicitors |
| Various | Two binders, constituting that part of Etheringtons file in respect of which no claim to privilege is made. | Various |
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