Newitt and Falcone - [2012] FamCA 1015

FAMILY COURT OF AUSTRALIA

NEWITT & FALCONE

[2012] FamCA 1015

FAMILY LAW – Restraint of solicitor because client illegally records conversations with spouse which include discussions with her solicitor.

Family Law Act 1975 (Cth)

Beck and Beck (2004) FLC 93-181
Gitane and Velacruz (2007) FLC 93-309
GT Corporation Pty Ltd v Amare Safety Pty Ltd [2007] VSC 123
Kallinicos and Anor v Hunt and Ors [2005] NSWSC 1181
Lindon v Commonwealth [1996] HCA 14; (1996) 136 ALR 251
Pascot and Pascot [2010] FamCA 644
Sutera and Jordan [2009] FamCA 844

APPLICANT:

Ms Newitt

RESPONDENT:

Mr Falcone

FILE NUMBER:

MLC

6160

2012

DATE DELIVERED:

6 December 2012

PLACE DELIVERED:

Melbourne

PLACE HEARD:

Melbourne

JUDGMENT OF:

Cronin J

HEARING DATE:

30 November 2012

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Dr Richard Ingley

SOLICITOR FOR THE APPLICANT:

Gadens Lawyers

COUNSEL FOR THE RESPONDENT:

Mr Robinson

SOLICITOR FOR THE RESPONDENT:

Westminster Lawyers

Orders

That the husband forthwith deliver up to the solicitors for the wife a copy of all original audio or visual recordings obtained by him by any surveillance device used subsequent to the parties’ separation.
That until further order, the husband be restrained from communicating the contents of any recorded material that contains privileged communications between the wife and her legal practitioners to any legal practitioner or any other person.
That until further order, the husband be (and is hereby) restrained by injunction from using any surveillance device in relation to the wife and/or her parents.
That the wife’s application for interim and interlocutory orders filed 26 November 2012 and the husband’s response seeking interim and interlocutory orders filed 22 November 2012 are otherwise dismissed.

IT IS CERTIFIED:

That pursuant to Order 19.50 of the Family Law Rules 2004 it was reasonable to engage counsel to attend.
Subject to submissions to the contrary, the costs of both parties are reserved.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Falcone & Newitt 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 MELBOURNE

FILE NUMBER: MLC 6160 of 2012

Ms Newitt

Applicant

And

Mr Falcone

Respondent

REASONS FOR JUDGMENT

In this interim proceeding, I heard submissions and the parties relied upon affidavit material which could not be tested because of the nature of the court list. As such, I am not in a position to make findings of fact other than those which are obvious.
In her application in a case filed 26 November 2012 (which was an amended application) the wife sought orders roughly in the following terms:
(a)that Westminster Lawyers be restrained from acting on behalf of the husband in the proceedings;
(b)that the husband deliver to the wife’s lawyers all original recordings (and consequential transcription) of the wife and her parents;
(c)that the husband disclose all surveillance devices used by him which recorded conversations involving the wife and her parents;
(d)that the husband be restrained from communicating the contents of any of the recorded material to any other legal practitioner (that he might in future engage) that may breach the wife’s legal professional privilege;
(e)that the husband be restrained from using any surveillance device in relation to the wife and/or her parents;
(f)that an injunction relating to the parties accessing funds be discharged; and
(g)that the husband authorise the release of monies held in a bank account to be applied to discharge two credit cards and then the balance be used for the purposes of the payment of a supervisor of the wife’s time with the child of the marriage.
In addition to those orders, the wife sought costs.
The husband filed a response of 22 November 2012 and obviously did not respond to some of the orders sought by the wife because her application was amended late. Suffice to say, he opposed all of the orders sought by the wife.
More significantly, the husband sought an order for the summary dismissal of the wife’s application.
There are some complexities in this case particularly because of the orders now sought by the wife that require me to refer to previous proceedings and in particular the judgment of Macmillan J delivered on 2 November 2011.
On 28 September 2011, the parties were before Macmillan J on a parenting dispute over the child of their relationship B who has just turned three years of age. In very simple form, the husband argued that B was at risk in the care of the wife because of health reasons but mostly because of alcoholism. To some extent, it would appear that the wife conceded a problem with alcohol but she maintained that she had been alcohol-free for some three months. Part of the evidence before Macmillan J and which her Honour watched and heard, was evidence of taped conversations involving the wife and her parents with B. It was not disputed (nor is it now) that the more recent of those audio recordings came about because the husband inserted into B’s bag a voice-activated recorder.
It is sufficient for me to say that Macmillan J was clearly troubled about the capacity of the wife such as to find that it was more appropriate for B to spend time under supervision but not by the wife’s parents.
At paragraph 34 of her Honour’s judgment, the following appears:
I have listened to those recorded conversations and am satisfied that there has been a sustained, albeit sometimes quite subtle pattern of interrogation and manipulation of [B] and denigration of the father by the mother and her parents in varying degrees…
There was little by way of acknowledgement of the mother of the inappropriateness of these conversations.
At paragraph 35 of her Honour’s reasons, the following appears:
[the mother] says that the father’s decision to record her conversations with [B] is appalling behaviour demonstrating a failure on his part to recognise appropriate boundaries and is a clear example that he will do whatever he takes to win. She says that as he has been unable to prove that she has consumed alcohol he has now refocussed his case on what he describes as emotional abuse. Although there are clearly issues in relation to the recording of private conversations, there is also a possibility, given the history of this matter, that the father did so in this case out of concern for [B’s] welfare. Whatever the father’s motive, which remains to be tested, those conversations are in evidence and they give rise to real concerns as to the capacity of the mother and her parents to place [B’s] needs before their negative feelings and animosity towards the father.
It will therefore be evident that a major dispute in this case, both now and in the future, in relation to both parenting and financial issues, was about the husband recording conversations illegally. The issue arises again.
In her evidence in an affidavit filed 26 October 2012, the wife said that having learned from the husband’s affidavit that conversations had been recorded by the husband, she sought details about how the recordings were obtained, the nature of the listening device used and the dates and times of the recordings. The solicitors for the husband responded indicating the details about those matters but there was a coy response which read:
You have been provided with copies of all the recordings on which our client presently seeks to rely. Should he intend to rely on further recordings in future, you will be provided with notice and with copies of any such recordings.
The wife said that on Tuesday 23 October 2012, she had a telephone discussion with the husband in which he admitted not only recording her conversations with her own lawyers but that he told her he would be using those recordings in future court proceedings. It was that evidence that sparked these proceedings.
The wife said that having learned of the period covering the recordings, she was able to say that it included a period of time when she had telephone discussions with her lawyer about the proceedings and as such, the recordings had enabled the husband to have access to privileged communications.
The solicitors for the wife then wrote a letter about what the wife said had taken place in the conversation with the husband. That letter then asserted:
We are of the view that because your firm has had access to privileged communications obtained by improper means, your firm must withdraw from representing [the husband]. We have also received advice from the Law Institute of Victoria, Ethics Department, that your firm should withdraw in these circumstances.
The response by the husband’s lawyers was swift. I do not intend to set out the details in full but it made clear the husband’s position. The letter read:
We advise that no representative of our office has heard or listened to any taped conversations between your office and your client, nor otherwise been privy to any privileged communications between your client and your office.
The letter from the husband’s lawyers went on to say that that the husband was prepared to give an undertaking that he would not communicate or reveal to his lawyers or any others, the contents of any conversation between the wife and her lawyers which he may have accordingly overheard. The solicitor for the husband was prepared to give a similar undertaking.
In an affidavit filed by the husband on 22 November 2011, the husband reiterated that the recordings had been made and said that he did not have any recordings of conversations between the wife and her lawyers “from June 2012” which was the period of time that the wife said he told her about in their telephone conversation. He went on to be a little more specific. He denied that he said that the recordings could be used in evidence in court proceedings in relation to conversations between the wife and her lawyers.
Importantly, the husband then said that his solicitor was not aware that he was using the listening device until after he had commenced doing so and that the purpose of the exercise was to discover the wife’s “coaching and interrogation” of B. He said that the solicitor made it very clear that she could not listen to or be told of the contents of any conversations between the wife and her lawyer and that she explained the requirements of legal professional privilege and her ethical obligations. He said as a result of what the lawyer had told him, he did not tell her about the content of any conversations between the wife and her solicitor and did not provide her with any copies of any recordings that contain such discussions. What recordings the lawyer was given, were in the form of “snippets or clips” containing only the relevant portions of conversations.
The evidence therefore is that even if there were conversations recorded between the wife and her solicitors, the husband’s solicitor does not know of them nor does she possess those recordings.
Before turning to the complexities of the argument, I return to the other issues. In relation to the release of funds, the wife pointed to the uncontroversial fact that there is approximately $49,000 sitting in a savings account. She said that her weekly gross income was $2300 approximately and after payment of various business and tax expenses, she received a net figure of about $1000 per week. She said that her income fluctuated from week to week. She then set out the various expenses that she had incurred. All of this was relevant to the question of her inability to pay for a professional supervisor called Dial an Angel which was contemplated by the orders of Macmillan J. Having regard to the amount of time that Macmillan J required to be supervised, the wife’s evidence was that it was costing her approximately $1600 per week.
The husband’s position was that the wife had taken substantial sums of money from their joint resources and there was a dispute about what had happened to them. He also said she could hardly argue about being surprised at the costs of the supervision as it had been discussed at the hearing before Macmillan J. Whilst that may not have been abundantly clear, there could be little doubt that the wife would have been aware that the costs were going to be substantial.
The wife’s position also was that she currently has two credit cards which are in default and because of her financial circumstances, she is unable to make the payments. Those expenses for the credit cards come to approximately $17,000.
The husband’s argument was simple. He pointed to the fact that Macmillan J had ordered the supervision. When one reads her Honour’s order, it is clear that she left the parties to work out between themselves who was to be the supervisor.
To compound the problem, the husband complained that on the day prior to the hearing before me, 500 pages of discovery had been delivered to him none of which included any documentation about bank statements and earnings of the wife in recent months. No response was received from the wife as to why that was so. Counsel for the husband submitted that I ought not therefore accept the impecuniosity argument of the wife.
For the Court to intervene in this particular issue and make the payment out from the modest sum of savings would mean that I would be overriding the order of Macmillan J which was to the effect that the wife was responsible for the supervision costs. To order that the parties’ resources which are currently quarantined, be used for that purpose must mean that the husband would be contributing to that expense when that was not what Macmillan J had in mind.
In relation to the credit cards, having regard to the paucity of corroborating evidence, counsel for the husband argued that I ought not deal with that issue having regard to the unexplained absence of significant material that would have highlighted where significant sums of money in the hands of the wife had gone in recent months.
The absence of evidence in this case must mean that the wife cannot succeed on that application. I agree with counsel for the husband about the payments from the trust funds.
The starting point however in the case is that the husband’s response seeks a summary dismissal of the wife’s application. Chapter 10 of the Family Law Rules 2004 provides that a court upon application may dismiss any application or part of it.
The power in rule 10.14 is clearly discretionary. However, in the exercise of that discretion, a range of matters must be taken into account. An overview of those principles is as follows:
(a)release for summary dismissal is rarely and sparingly provided;
(b)summary dismissal is only available if it is clear on the face of the documents of the person asserting a cause of action that there is no reasonable cause of action or that it is frivolous or vexatious;
(c)even a weak case warrants a hearing and weak cases ought not attract summary dismissal;
(d)where there is a problem with the documentation of a party, the court will allow rectification of the documentation; and
(e)a court should only summarily dismiss a case if it is clear that the case is doomed to fail (see Gitane and Velacruz (2007) FLC 93-309; Lindon v Commonwealth [1996] HCA 14; (1996) 136 ALR 251; Beck and Beck (2004) FLC 93-181).
For me to dismiss the wife’s application summarily creates a problem because I am looking at both the interlocutory issues here as well as the substantive issues for trial. Those issues include the restraint on the solicitors as well as the use of materials in the recordings. It is clear from the matters to which I shall now turn that the power of the Court to restrain a solicitor is a discretionary one. Where there is a possibility that a court should or should not exercise its discretion, it is difficult for the application for summary dismissal to succeed. In this case, in respect of both of the critical issues to which I have just referred, I could not say that the wife’s application was doomed to fail. On that basis, the summary dismissal application must be dismissed.
I turn then to the question of the order sought to restrain the husband’s solicitors.
A variety of authorities was given to me in submissions. A number of principles arise from a variety of decisions. There is no doubt about the jurisdiction of the Court to restrain solicitors acting for parties to proceedings. That jurisdiction arises to prevent possible disclosure or misuse of confidential information obtained as well as preventing breaches of fiduciary duty. None of those problems arise here. Another reason for exercising the power is to protect the integrity of the judicial process. The application of the test for that is what the fair-minded reasonably informed member of the public might conclude if they heard what I am hearing. That however must be weighed against the principle that a litigant should not be deprived of representation of their choice without good reason. (See Pascot and Pascot [2010] FamCA 644; Sutera and Jordan [2009] FamCA 844; Kallinicos and Anor v Hunt and Ors [2005] NSWSC 1181; and GT Corporation Pty Ltd v Amare Safety Pty Ltd [2007] VSC 123). Counsel for the wife also drew my attention to the Law Institute guidelines which presumably have given rise to the assertion by the solicitors for the wife that the Institute had taken the view that the solicitors for the husband should withdraw from the proceedings. It is said that if privileged information inadvertently comes to the solicitors’ knowledge, the solicitor is entitled and may have a duty to use the information for the client’s benefit. If it is obvious that confidential documents have been mistakenly disclosed, the solicitor should consider whether to obtain instructions to read and continue to read the material. However, the duty to a client to use the material does not arise if the solicitor knows that the material has been obtained unlawfully, improperly or surreptitiously.
The evidence in this case is as I have set it out above. It is not tested. I have to accept and I have no reason in this case not to do so, the solicitor for the husband acted appropriately when she became aware of what her client had done. Unashamedly, the husband had obtained the information illegally, improperly and surreptitiously. It is more serious where that improper conduct relates to material which is quite obviously privileged.
I am satisfied in this case that on the evidence of the husband and from the letter annexed to the affidavits that I have read, the information has not fallen into the possession of the solicitors and therefore there is no basis for them to withdraw from the proceedings. I say that because in my view, a reasonably informed and fair-minded member of the public who knew that the solicitor acted with integrity, would accept that the only person who had access to that information was the husband himself.
There was some discussion in the proceedings about a letter written by the solicitors for the husband seeking admissions to 27 matters. To the extent that an inference might be drawn that those questions were prepared on the basis of the information surreptitiously taped, having regard to the evidence of the husband and the letter from the solicitor for him, I would not draw that inference. Whilst a source of the requests for the admissions may be curious in this case, no doubt that is an issue that can be determined in greater detail at trial.
There was also discussion in the submissions about the fact that the solicitor may not have been proactive about advising the wife’s solicitor about the recording and about the potential breach of the wife’s privilege. It is not entirely clear to me on the facts but I am prepared to accept that there is not sufficient evidence for me to find that the solicitors for the husband knew the extent of the recording by their client until such time as the wife pointed out that she had had discussions with her solicitors during the period of the recording. Counsel for the wife highlighted the husband’s evidence which is unashamedly vague about when the recording started and stopped but I accept the submission of counsel for the husband that the vagaries of language may have accounted for that suspicion. I cannot move away from the core evidence to which I have earlier referred of the husband and the letter from his solicitor.

On that basis, the wife’s application for an injunction restraining the solicitors from acting must fail.
I turn then to the question of the request for the discovery of all of the taped recordings.
Counsel for the husband submitted that there was no basis upon which I could order the production of all the recordings at this stage. The submission was that the documents in the form of the recordings were not at this stage, relevant. That is (as I have set out above) what appears in the correspondence between the lawyers.
The underlying philosophical position however seems more to be that having regard to the controversial nature of the financial circumstances in this case, the husband wanted to retain the recordings until such time as the wife and her parents had filed affidavit material in the financial proceedings whereupon the recordings which might show a contrary position.
It is clear in this case that there is no trust between the parties and as Macmillan J said, the wife’s argument was that the husband was now pursuing another agenda because he had not been able to prove her use of alcohol. I also note in her Honour’s judgment that the husband had been subject to surveillance by a private investigator engaged by the wife.
Chapter 13 of the rules of the court imposes a duty of disclosure on all litigants to provide documents that are or have been in the possession or under the control of a party to the proceedings which are relevant to an issue in the case. There is no definition of what is relevant and in each case it will differ. If a party refuses to disclose documents for whatever reason, an application can be made for specific orders for disclosure. Rule 13.22(3) provides that in making an order for the disclosure of specific documents, the Court may consider:
(a)whether the disclosure sought is relevant to an issue in dispute;
(b)the relevant important of the issue to which the document or class of documents relates;
(c)the likely time, cost and inconvenience involved in disclosing a document or class of documents taking into account the amount of the property or complexity of the corporate, trust or partnership interest (if any), involved in the case; and
(d)the likely effect on the outcome of the case of disclosing, or not disclosing, the document or class of document.
In this case, the statements of the wife and her parents may only become relevant if there is a denial of the existence of assets or resources or there are past historical facts inconsistent with what is said in the recorded conversations. However, it will be abundantly clear that the recordings are to be used predominantly but not entirely for credit purposes. A significant amount of time therefore as well as costs, is to be used to put the wife to the test as telling the truth and making comprehensive disclosure. Whilst the wife may not recall all of the conversations that she had with her parents, I suspect she will be much more likely to be truthful if she knows that there is a prospect that a recording may have occurred. It is hard therefore to imagine a statement in evidence inconsistent with the recording. It is the fourth point in rule 13.22 that seems to me to be important. Having regard to what I have just said about the probable outcome of the wife knowing that there is a recording, it is doubtful that she would be able to “tailor” her evidence. The very purpose of the rules (1.04) is to ensure that each case is resolved in a just and timely manner at a cost to the parties and the Court that is reasonable in the circumstances of the case. Rule 1.07 requires the achievement of that as the main purpose by encouraging the parties to negotiate a settlement and to ensure that the application of the rules is proportionate to the issues in the case and their complexity as well as the likely costs. The Court is entitled as part of that process to consider the cost to the community in respect of the resources that the Court is expected to put into a case. For that purpose, to allow a party to take a tactical approach seems to me to be inconsistent for the purpose of the rules.
Whilst I understand the husband’s hesitation, there are other issues still to be dealt with in relation to the inadmissibility of the taped evidence in any event. It would seem that this evidence was obtained illegally and inappropriately. As such, at trial, the issue of its admissibility may need to be revisited. At this stage however, I can see no basis upon which the wife should not have access to the recordings and all of them.
Finally, the wife sought injunctions in relation to the use of the material which was clearly privileged and injunctions concerning future surveillance of the wife. That issue was not seriously opposed and indeed, the husband had offered an undertaking as had his lawyer. The difficulty I have with the undertaking however is that it may be hard to enforce. In my view, it is important to protect future lawyers as well as the existing practitioner by making a specific injunction that precludes the husband from being able to use any such privileged communication. To the extent that any practitioner became aware of that information, not only would the Law Institute Rules apply but the breach of this injunction which involved a lawyer would almost certainly give rise to the exclusion of that practitioner.
The order sought by the wife is against the husband. The power to grant an injunction lies in s 114 and specifically s 114(3). That provision requires the Court to exercise its discretion only where it is satisfied that it is just and convenient to make the order. In this case, having regard to the danger of not making the order which would mean that the Court was turning a blind eye to the conduct of the husband or indeed encouraging this tactical approach, I consider it is just and convenient to make the order against the husband personally. I do not see any basis to make any order against the solicitor having regard to the fact that she has no information that would give rise to excluding her or her firm.
Orders will be made accordingly.

I certify that the preceding Forty Eight (48) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 6 December 2012.

Associate:

Date: 6 December 2012