NOVAK and NOVAK

[2020] FCWA 217

JURISDICTION : FAMILY COURT OF WESTERN AUSTRALIA

ACT: FAMILY LAW ACT 1975

LOCATION: PERTH

CITATION: NOVAK and NOVAK [2020] FCWA 217

CORAM: O'BRIEN J

HEARD: 25 NOVEMBER 2020

DELIVERED : Ex tempore

FILE NO/S: PTW 7718 of 2016

BETWEEN: MR NOVAK

Applicant

AND

MS NOVAK

Respondent

Catchwords:

EVIDENCE - Legal Professional Privilege - Where a director of the firm formerly representing the husband has sworn and sent to the court and the parties an affidavit addressing concerns that the court has been misled as to the husband's engagement with that firm - Where the firm had filed a Notice of Ceasing to Act almost immediately after a "dollar for dollar" order was made - Where an employee of the firm thereafter continued to provide legal advice and services to the husband, including in the preparation of an affidavit in which the husband said that he had ceased instructing the firm - Where the husband's objections to the affidavit are dismissed - Matter referred to Legal Profession Complaints Committee.

Legislation:

Family Law Act 1975 (Cth)

Category: Not Reportable

Representation:

Counsel:

Applicant	:	Lawyer A
Respondent	:	Lawyer B

Solicitors:

Applicant	:	Law Firm A
Respondent	:	Law Firm B

Case(s) referred to in decision(s):

Brambles Holdings Ltd v Trade Practices Commission (No 3) (1981) 58 FLR 452

Carey v Korda & Winterbottom [No.2] [2011] WASC 220

Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501

Commissioner of Taxation (Cth) v Pratt Holdings Pty Ltd (2005) 225 ALR 266

Commissioner of Taxation v Rio Tinto Ltd (2006) 151 FCR 341

Commonwealth of Australia v Temwood Holdings Pty Ltd [2002] WASC 107

Ding & Ding (2019) FLC 93-893

Esso Australia Resources Ltd v Federal Commissioner of Taxation (1999) 201 CLR 49

Mann & Carnell (1999) 201 CLR 1

Novak and Novak [2020] FCWA 190

Packer v Deputy Commissioner of Taxation [1985] 1 Qd R 275

Southern Equities Corporation Ltd v West Australian Government Holdings Ltd (1993) 10 WAR 1

WORDS IN SQUARE BRACKETS REPLACE WORDS USED IN THE ORIGINAL JUDGMENT – PARTIES’ NAMES AND IDENTIFYING DETAILS HAVE BEEN CHANGED.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Novak & Novak has been approved by the Family Court of Western Australia pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

1The parenting and financial proceedings between [Mr Novak] (“the husband”) and [Mrs Novak] (“the wife”) were listed for trial before me to commence not before 10 November 2020, with an estimated hearing time of four days. The trial was vacated in the circumstances set out in my ex tempore reasons delivered on 23 October 2020.[1]

[1] Novak and Novak [2020] FCWA 190.

2The issue for determination this afternoon relates to the admissibility of parts of an affidavit sworn and filed by [Lawyer C], a director of [Law Firm C], which earlier represented the husband.

The relevant background

3On 7 March 2018, on the application of the wife, an order was made by a magistrate requiring that any funds received by the husband’s solicitors on account of their costs, the cost of any counsel briefed, or in payment as to the costs (sic) “be divided such that immediately upon any funds clearing in the [husband’s] solicitor’s bank account, $0.50 in every dollar of any funds received be remitted to the [wife’s] solicitor’s trust account on account of her legal fees” (“the dollar for dollar order”).

4On 9 March 2018, Law Firm C forwarded to the court their Notice of Ceasing to Act. Thereafter, the husband was ostensibly self-represented. A significant number of documents were filed by him over an extended period. It is clear on the face of those documents that he had assistance in preparing them; many if not most of them are in a format, style and font distinctively used by Law Firm C. None of the affidavits filed after that firm’s Notice of Ceasing to Act comply with rule 15.08(1) of the Family Law Rules 2004 (Cth), which expressly requires that an affidavit must bear the name of the person who prepared it.

5In an affidavit filed by the husband on 11 December 2018, he stated that he had ceased instructing Law Firm C. He went on to express the view that he was “at a disadvantage not having legal representation”, while the wife had the benefit of representation. He gave similar evidence in an affidavit dated 6 May 2019. Those affidavits are referred to in more detail later in these reasons.

6On 4 September 2019, on the husband’s application, the “dollar for dollar” order made on 7 March 2018 was suspended by the magistrate who made it. The wife was given liberty to seek to reinstate the order.

7On 14 October 2020, Lawyer D (the solicitor who had the carriage of the matter when Law Firm C was formally representing the husband) wrote to the court saying that he had been in “sporadic communication” with the husband between March 2018 and early to mid-2019, and had assisted “in settling court documents prepared by him until early 2019”. He said that the husband had not “incurred any billable charges” from the firm since February 2019. He went on to refer to the evidence in the husband’s affidavit already outlined, and apologised “to the extent that any evidence contained in the affidavits of [the husband] had the effect of misleading [the court]”.

8On 22 October 2020, Lawyer C affirmed his affidavit, and forwarded it to the court and to the parties. He asserted that the purpose of the affidavit was to correct what the directors of the firm perceived to be “an instance or instances where the court and the other party may have been misled as a result of evidence filed by [the husband] in the proceedings”.

9The affidavit details a sequence of events within the firm over an extended period. Annexed to it are copies of what the firm refers to as Unbilled Costs Reports (“UCR’s”), which record time spent by members of the firm on the husband’s file and the associated charges to be raised. The affidavit also directly quotes from correspondence between the husband and the firm.

10The husband, through his new solicitors, now objects to certain aspects of the affidavit, asserting that they are inadmissible as they contain evidence as to matters which are properly the subject of legal professional privilege.

11Orders were made on 23 October 2020 requiring the husband to file and serve any objections, and any written submissions upon which he would intend to rely, by 6 November 2020. He filed objections in accordance with those orders, but did not file any written submissions. The solicitors for the wife filed their response to the objections in the form of short written submissions on 13 November 2020 in accordance with my orders.

12Counsel made further oral submissions this afternoon. Counsel for the husband maintained that any allegation of an improper purpose being served by the communications between the husband and Law Firm C was not admitted. She acknowledged that not having had the benefit of reviewing Law Firm C’s file, she could not make an affirmative submission to the effect that there was no improper purpose. She acknowledged further that if any such submission were to be made, it would necessarily need to be supported by evidence, and the evidence which she would seek to adduce in those circumstances would itself lead to a waiver of privilege. I made clear to counsel that I propose in dealing with the matter today, to rule only on the admissibility of the affidavit in question, and only in respect to the claims of privilege already made. It would by that process of course remain open to the husband to take any other proper objection upon which he might be advised prior to or at trial.

The legal principles

13The confidentiality of communications between a client and his or her lawyer is protected by legal professional privilege where the dominant purpose for which the communication was brought into existence was the giving or receipt of legal advice, or for use in existing or anticipated court proceedings.[2] The distinction sometimes drawn between “advice privilege” and “litigation privilege”[3] is not relevant for present purposes.

[2] Esso Australia Resources Ltd v Federal Commissioner of Taxation (1999) 201 CLR 49.

[3] Southern Equities Corporation Ltd v West Australian Government Holdings Ltd (1993) 10 WAR 1.

14Documents such as bills of costs rendered by solicitors are not simply by their nature privileged, as they are brought into existence by the solicitors not for the dominant purpose of giving advice, but for the purpose of being paid. The same principle applies to internal records maintained by the solicitors for the purpose of recording work and anticipated charges for that work; that is, in more traditional language “timesheets” or in the present case UCR’s.[4]

[4]See Carey v Korda & Winterbottom [No.2] [2011] WASC 220, at [64]-[67] and the cases there cited.

15That said, a bill of costs in detailed form will ordinarily disclose, directly or indirectly, instructions given; accordingly, such detailed bills of costs have sometimes been described as generally attracting privilege.[5] That is because the narrative in the detailed bill will often describe a confidential communication, which in turn may have been brought into existence for the dominant purpose of obtaining legal advice or for use in proceedings. The privilege attaching to that confidential communication must necessarily extend to its repetition or description in a bill of costs addressed only to the client.[6]

[5] See Packer v Deputy Commissioner of Taxation [1985] 1 Qd R 275, at 287 per McPherson J and at 295 per Shepherdson J.

[6] Brambles Holdings Ltd v Trade Practices Commission (No 3) (1981) 58 FLR 452, at 458.

16Again, the same principle applies to internal records maintained by the solicitors.

17The privilege may attach to only part of the relevant document.[7] Basic matters indicating for example the date on which work was done, the rate charged, who performed the work and the time spent would not ordinarily (but might in some circumstances) reveal communications the subject of a proper claim of privilege.

[7] See for example, albeit in a different context, Commissioner of Taxation (Cth) v Pratt Holdings Pty Ltd (2005) 225 ALR 266, at [17]-[18].

18Legal professional privilege can be expressly waived by the person entitled to its protection. It may be impliedly waived where there is inconsistency between the conduct of the client and maintenance of the confidentiality of the communications with the lawyer.[8] Where a party puts his or her state of mind in issue in the proceedings, whether by pleading or in evidence clearly relevant to matters in issue, privilege which would otherwise attach to legal advice which contributed to that state of mind may be waived.[9]

[8] Mann & Carnell (1999) 201 CLR 1, at [28]-[29].

[9] See Commonwealth of Australia v Temwood Holdings Pty Ltd [2002] WASC 107, at [10]; Commissioner of Taxation v Rio Tinto Ltd (2006) 151 FCR 341, at [68].

19Legal professional privilege will not attach to communications between a client and lawyer where the communications are made in furtherance of an illegal purpose or a fraud. In that context, a relevant fraudulent purpose is not “limited to legal fraud in the narrow sense” but can “include the kind of sharp practice often associated with equitable fraud”.[10] A party seeking to displace claimed privilege needs to demonstrate more than a mere allegation of fraud; there must be something to “give colour to the charge”[11] such that the statement is made in clear terms and there is some prima facie evidence that it has some foundation in fact.

The communications in question in the present case

[10] Ding & Ding (2019) FLC 93-893, at [74] and the authorities there cited.

[11] Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501.

20The husband, according to the objections filed on his behalf, “claims privilege in relation to the entire affidavit [of Lawyer C]”. Self‑evidently, and as properly conceded by his counsel this morning, such a broad assertion cannot be sustained.

21The husband asserts privilege in relation to paragraph 38 of Lawyer C’s affidavit. That paragraph in turn quotes an email from the husband to the financial controller of Law Firm C in which he, in Lawyer C’s words, “questioned amongst other things some items charged in [the] invoices”. The quote from the husband’s email was as follows:

“Whilst representing myself, i (sic) was fortunate enough to of had that dollar for dollar order suspended, for how long the suspension is for I’m unsure, nor am i (sic) aware of the possible implications if [Law Firm B] gets wind that we may of mis lead (sic) the courts when questioned at the time, if we owed any monies to [Law Firm C], whilst being represented (sic) [by Lawyer D]”.

22The husband also asserts privilege in relation to entry descriptions dated 6 March 2018 and 27 March 2018 on the UCR’s annexed to Lawyer C’s affidavit. The relevant entries on 6 March 2018 record the work done by Lawyer D as being a telephone attendance on the husband “re-fees for hearing and expectation of judgment” and drafting a letter of advice to the husband “in relation to fees in light of dollar for dollar”. The latter is recorded as having occupied four billable six minute units of Lawyer D’s time. The relevant entry on 27 March 2018 records the work done by Lawyer D as being an “attendance on [the husband] for 60 minutes re-update of the matter, finalising undertaking as to disclosure, settling letters to FCWA and Law Firm B and advising re-potential breach of Court Orders”.

23The husband further asserts privilege in relation to an entry description dated 9 March 2018, which appears in only one of the versions of the UCR’s annexed to Lawyer C’s affidavit. That entry is in multiple parts, and includes a description of the subject matter of a telephone attendance by Lawyer D on the husband, and a description of the subject matter of what is described as a “lengthy letter of advice”.

24Before turning to those specific objections, a more global submission on the part of the wife is appropriately addressed.

The generalised assertion of waiver

25In the written submissions filed on her behalf, the wife contends that “it is not now an issue as to whether the [husband’s] legal professional privilege has been waived, but what should happen as a result of the waiver”. That is based on an assertion that the “preparation and distribution” of Lawyer C’s affidavit has “now led to the [husband’s] loss of his entitlement to the confidentiality of his discussions with his solicitors”. The obvious is pointed out – that the affidavit has been read both by the wife and by her lawyer. Later in the submissions the following appears:

“Rhetorically, the issue is whether a former solicitor, acting without the instructions of the litigant, can waive that litigant’s entitlement to legal professional privilege. The [wife’s] position is that the issue of privilege now has been practically waived and the issue is now only one as between the [husband] and his former solicitor”.

26With due respect to those advising the wife, the issue is not in any sense rhetorical. Privilege can only be waived, expressly or impliedly, by the person entitled to it; hence, had Lawyer C’s affidavit for example been filed on the instructions of the husband privilege clearly would have been waived. There is no suggestion that Lawyer C’s affidavit was filed on instructions.

27Similarly, there is no relevant concept of “practical waiver” of legal professional privilege. The suggestion that the “horse has bolted” in the sense that the wife and her lawyer now have the information in question is irrelevant to the question of the admissibility of the evidence of Lawyer C; it is the question of admissibility to which the claim of privilege is presently directed.

28Similarly, the fact that the affidavit has been read by me is irrelevant to the question of admissibility; if all or part of the affidavit is inadmissible that goes only to the question of potential recusal.[12] The submission that the preparation and distribution of Lawyer C’s affidavit effects a waiver of the husband’s legal professional privilege is misconceived.

[12] See for example Ding & Ding (2019) FLC 93-893, in which both parties and their advisers had in their possession a copy of the letter in respect of which legal professional privilege was claimed by the husband, but the judge did not.

29It is convenient to deal briefly with one further submission made on behalf of the wife. She concludes her written submissions with the contention that, for the reasons just outlined, “the entire [Law Firm C] file is available to be subpoenaed, and that the [husband’s] solicitors can be the subject of subpoena also”.

30The observations just made apply equally to that submission. It is not otherwise necessary or appropriate to consider whether, and if so to what extent, a claim of privilege on the part of the husband to resist production of the file of his former solicitors might be upheld, nor whether objection could properly be taken by him to as yet unspecified questions that might be put to his former solicitors if personally subpoenaed. I expressly make no findings or determinations in that regard.

The relevant evidence given by the husband

31In his affidavit filed on 11 December 2018, the husband relevantly said:

“Since the making of the dollar for dollar order, my father has informed me that he can no longer contribute to pay my legal fees as half of the funds would be also provided to [the wife’s] lawyers. As a consequence, I have ceased instructing [Law Firm C]”.[13]

“I feel that I am at a disadvantage not having legal representation, whilst [the wife] has continued to have the benefit of legal representation”.[14]

[13] Affidavit of Mr Novak filed 11 December 2018, at paragraph 81 (emphasis added).

[14] Ibid, at paragraph 86.

32The evidence of Lawyer C is that, while Law Firm C had filed a Notice of Ceasing to Act as referred to earlier in these reasons, the husband had continued to instruct that firm as at 11 December 2018. On Lawyer C’s evidence, therefore, the husband’s evidence is either false or intentionally misleading.

33In the relevant affidavit, the husband in fact went further than what is described in Lawyer C’s affidavit. In the context of seeking to rely on the affidavit notwithstanding that it was filed out of time, he said:

“On 12 March 2018, my former solicitors [Law Firm C] ceased representing me. I have since attempted to conduct these proceedings as a self-represented litigant. I am finding this quite difficult. In any event, it is my humble opinion that the late filing of this affidavit does not prejudice [the wife]”.

34He referred to Law Firm C throughout the affidavit as his “former solicitors”.

35Somewhat curiously, in that affidavit he proposed that the costs of both parties be reserved.

36Much of the husband’s evidence in his affidavit filed on 11 December 2018 was repeated in his affidavit filed on 6 May 2019.

37There can be no proper suggestion by the husband that legal professional privilege protects communications which would directly contradict the evidence he has given.

The objection to various notations in the UCR’s

38It is against that background that the husband’s objection to the various notations describing work done for him by Lawyer D falls to be considered.

39In my view, the maintenance of privilege over those descriptors would be inconsistent with the husband’s conduct in giving the evidence just described. The descriptors do not set out or allude to the advice actually given; they merely describe the topic of the advice. While in different circumstances that distinction would not matter, and the descriptors would properly be privileged, that is not the case where the husband has placed squarely in issue the extent to which he had the benefit of legal advice in conducting the proceedings over the period in question.

40The reference in the descriptors to a letter of advice to the husband “in relation to fees in light of dollar for dollar”, is in my view sufficient to give “colour to the charge” that advice was sought and given for a purpose properly described as “the kind of sharp practice often associated with equitable fraud”.

41It is beyond the scope of the present dispute to consider whether privilege in relation to the advice contained in that letter is maintained. If production of that letter is in due course sought, as foreshadowed in the wife’s submissions, it should, for the reasons explained by the Full Court in Ding[15] be sought at an interlocutory stage well before trial.

[15] Ding & Ding (2019) FLC 93-893, at [95] and subsequently.

42The husband’s objections set out in paragraphs 3(b) to (e) inclusive of the submissions filed on his behalf on 6 November 2020 are dismissed.

The objection to paragraph 38 of Lawyer C’s affidavit

43Clearly, the email sent by the husband to the financial controller of Law Firm C was not created for the dominant purpose of seeking legal advice; it was created for the purpose of complaining about the account rendered.

44Nevertheless, to the extent the email includes reference to confidential communications properly the subject of legal professional privilege, it too will be privileged. An employee of a law firm, even though not herself a lawyer, is required to maintain the client’s confidentiality, and communication by the husband to her does not have the same character as voluntary communication by him to other third parties of what would otherwise be privileged material.

45On its face, the email does not include direct reference to what would otherwise be privileged communications. To the extent it might arguably refer by implication to such communications, it does not do so in a manner which identifies the subject matter or content of them.

46The observations already made regarding the evidence given by the husband as to his engagement with Law Firm C need not be repeated. The paragraph in question of Lawyer C’s affidavit quotes a communication by the husband which arguably directly contradicts the sworn evidence given by him, and still further gives colour to the charge that steps were taken, and potentially advice sought, for the purpose of circumventing the operation of the “dollar for dollar” order, while still retaining the benefit of legal advice and representation which extended to strategic and procedural advice and to the drafting of court documents.

47The husband’s objection to paragraph 38 of Lawyer C’s affidavit is dismissed.

Conclusion

48The objections raised by the husband having been dismissed, there will be an order that the affidavit of Lawyer C is admitted into evidence for the purpose of the substantive proceedings.

49I record that I have only considered and determined the objections raised by the husband based on his assertion of legal professional privilege. To the extent any other proper objection might be taken to any aspect of Lawyer C’s affidavit that remains open and would properly be determined by the trial judge.

Procedural and other matters

50Otherwise, to their credit the solicitors for the parties have conferred as directed and agreed the procedural orders required to advance the matter towards trial. There will be orders in terms of the Minute which they have tendered.

51For obvious reasons, the matters raised recently in these proceedings call into question the professional conduct of Lawyer D. As noted in my reasons delivered on 23 October 2020, I make no adverse finding against Lawyer D as the questions raised have not been squarely put to him nor has he responded to them.

52That said, the matters raised are serious. If not satisfactorily explained, they may lead to significant findings.

53I consider it appropriate to refer a copy of these reasons and my reasons delivered on 23 October 2020 to the Legal Profession Complaints Committee so that it may consider what, if any, further enquiry might be appropriate.

Orders

1.The husband’s objections set out in paragraphs 3(b) to (e) inclusive of the submissions filed on his behalf on 6 November 2020 are dismissed.

2.The husband’s objection to paragraph 38 of [Lawyer C]’s affidavit is dismissed.

3.There will be an order that the affidavit of [Lawyer C] is admitted into evidence for the purpose of the substantive proceedings.

4.There will be orders by consent in terms of the Minute of Consent Orders tendered in court as well as orders in terms of the Minute of Agreed Procedural Orders.

These reasons are the reasons for decision delivered on 25 November 2020, edited in places but only as to correct grammatical errors and some infelicity of expression without variation to the substance thereof.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Family Court of Western Australia.

KM

Associate

27 NOVEMBER 2020