Pascoe v Boensch and Anor (No.3)

[2006] FMCA 1746

FEDERAL MAGISTRATES COURT OF AUSTRALIA

PASCOE v BOENSCH & ANOR (No. 3) [2006] FMCA 1746

PRACTICE & PROCEDURE − BANKRUPTCY – Privilege in documents − waiver − whether tender of documents in open court waives privilege claimed in them − whether there are special rules for hearings on the “voir dire” in relation to privilege.

Evidence Act 1995, s.189
Federal Magistrates Court Rules 2001 Part 17
Bankruptcy Act 1966, ss.77A, 120, 121

Johnston v Jackson (1880) 6 VLR(L) 1
Trade Practices Commission v Arnotts Limited (1989) 88 ALR 69
Spedley Securities Limited v Bank of New Zealand Limited (1991) 26 NSWLR 711
R v Birks (1990) 19 NSWLR 677
Smits v Roach [2006] HCA 36
Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501

Applicant: SCOTT DARREN PASCOE

First Respondent: FRANZ BOENSCH

Second Respondent: SABINE BOENSCH

File Number: SYG 1995 of 2006

Judgment of: Raphael FM

Hearing date: 22 November 2006

Date of Last Submission: 22 November 2006

Delivered at: Sydney

Delivered on: 22 November 2006

REPRESENTATION

Counsel for the Applicant: Mr J. Johnson

Solicitors for the Applicant: McLean & Associates

Counsel for the First Respondent:

Mr M. Heath

Mr A. Tsekouras

Solicitors for the First Respondent: Wright Pavuk

Solicitors for the Second Respondent: Shanahan Tudhope

ORDERS

1. The court finds that the documents listed below are documents in which legal professional privilege has been waived.

   (a)Handwritten notes appearing at page 12 of Exhibit 1 with the additional words described in the statement at paragraph 12.

   (b)Document entitled “Brief to Advise Generally” issued by JP Leong and Co endorsed “completed 12.3.04”, said to have been the brief returned to by C.J Bevan, at page 29 of Exhibit 1.

   (c)Letter from J.P Leong & Co to Franz Boensch dated 17 March 2004 at page 36 of Exhibit 1.

   (d)Copy of the Trust Deed, Boensch Trust, at pages 39-53 of Exhibit 1.

   (e)Copy of the Tax Invoice issued by J.P. Leong & Co to Franz Boensch as “The Trustee Boensch Family Trust” at pages 56-59 of Exhibit 1.

   (f)Copy of a facsimile transaction record and handwritten notation at page 71 of Exhibit 1.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYG 1995 of 2006

SCOTT DARREN PASCOE

Applicant

And

FRANZ BOENSCH

First Respondent

SABINE BOENSCH

Second Respondent

REASONS FOR JUDGMENT

1. The proceeding which comes before me today could be characterised as the hearing of a preliminary issue under s.189 of the Evidence Act 1995, or a Part 17 separate question pursuant to the Federal Magistrates Court Rules 2001, or the hearing of an interim application made by the respondents for certain injunctive relief. It involves the court deciding whether or not certain documents, which were produced by a solicitor who had acted on behalf of the bankrupt in response to a s.77A Notice from the Trustee in Bankruptcy, should be held to be the subject of legal professional privilege.

2. The first witness to be called was a Mr Leong, the solicitor in question.  Mr Leong had not provided an affidavit but had indicated to the respondent’s legal advisers the form of evidence that he would give.  They quite properly turned that information into a document entitled, “Statement of Evidence of James Leong if called to give evidence” and eventually provided a copy to the solicitors for the Trustee and to counsel.  The statement had attached to it a number of documents in respect of which Mr Leong says at paragraph 50 of his statement:

   “By this statement I do not intend to disclose any confidential communications for which legal professional privilege may otherwise be properly available.  I do not intend to waive any legal professional privilege otherwise properly available.”

   And at [51]:

   “All the documents exhibited to this statement are documents I produced to Scott Pascoe in answer to the notice.”

3. When the hearing commenced before me yesterday there was tendered by the applicants to the motion a bundle of documents which became Exhibit 1.  Those documents included the documents attached to the statement of Mr Leong and also some of the documents in SDP6 which was an exhibit to an affidavit of Scott Darren Pascoe sworn on 17 July 2006.  These documents, SDP6, are known as the Exhibit Documents in the separate question for determination that I yesterday held was what I was dealing with and it is those documents in respect of which I have been asked to make the interim orders.

4. Exhibit 1 also contained some other documents.  These documents had not been previously disclosed to Mr Pascoe nor to his solicitors and those appearing for the Trustee believe that they are of considerable import.  It has been submitted on behalf of Mr Pascoe that the tender of Exhibit 1 waived privilege in respect of all the documents contained in that bundle.  That is disputed by those who appear for the respondents.

5. Mr Johnson has kindly provided me with some helpful written submissions in which a number of authorities are cited including the seminal case of Johnston v Jackson (1880) 6 VLR(L) 1; Trade Practices Commission v Arnotts Limited (1989) 88 ALR 69 at 76; Spedley Securities Limited v Bank of New Zealand Limited (1991) 26 NSWLR 711 at 731B; and also R v Birks (1990) 19 NSWLR 677 at 683G to 684F per Gleeson CJ, which Mr Heath tells me was approved by the High Court in Smits v Roach [2006] HCA 36.

6. The essence of Mr Johnson’s argument is that the tender of Exhibit 1 was a voluntary act of counsel in the face of the court which had the effect of bringing into the public domain all the documents contained in Exhibit 1, thus waiving any privilege that might have existed in any of those documents.  I accept that had this been done in the context of a substantive hearing I would have inclined to confirm Mr Johnson’s views. 

7. But as Mr Heath rightly points out, this is a rather different type of hearing. It is a hearing to discuss and determine whether the documents contained in SDP6 are the subject of privilege or not.  Because those documents have already been placed in the hands of the Trustee there was no point whatsoever in having them bundled into some form of envelope and just described, as is the normal way where there are issues of privilege to be considered.  The course adopted by Mr Heath and those for whom he acts in respect of the documents contained in SDP6 seems to me to be entirely appropriate for this type of proceeding.  In that way Mr Johnson can make the most beneficial arguments available to him concerning the possibility of an earlier waiver by Mr Leong at the time the documents were handed over.

8. For this reason I would not have accepted a submission that the tender of these documents, so far as they were limited to the documents contained in Exhibit SDP6 and the subject of the application for injunctions, constituted any enlargement of the purported waiver by Mr Leong at the time he handed the documents to the officers of the Trustee.

9. Unfortunately, as has been noted, the documents contained in Exhibit 1 are not just those documents found in SDP6. Some of the additional documents are documents which Mr Pascoe may not have thought were relevant for the purposes of the substantive proceedings, which are proceedings brought under ss.120 and 121 of the Bankruptcy Act 1966.  But some of the documents, a list of which has been given to me by Mr Johnson and can be found in paragraph 9 of his written submissions, are new documents to the extent that they have never been seen by Mr Pascoe.

10. What then is the situation with regard to those?  Mr Heath says that these documents are no different from SDP6 documents and that Mr Leong’s statement in paragraphs 50 and 51 is sufficient to provide privilege to them.  But I have difficulty with that.  The documents which are contained in the Exhibit are not the documents which are annexed to the statement.  I made it clear yesterday that I appreciated that the documents found in the Exhibit may have been placed there as a matter of inadvertence or for some other reason which might mitigate a loss of privilege.  But those appearing for the respondents specifically eschewed such an approach.  All I am left with then is a deliberate tender of documents which could have been tendered under cover with no more than a description and added to the list of SDP6 documents if that was thought appropriate. But it was not.

11. It seems to me that in those circumstances the dicta of his Honour the Chief Justice in Birks at 683-684 would apply notwithstanding Mr Heath’s eloquent argument of the special nature of these proceedings. It is an argument that I accept but only for those documents for which these proceedings applied, namely the documents in SDP6.

12. Mr Johnson tells me there are three documents contained in the subpoenaed documents which are also the subject of a claim for privilege that are found in Exhibit 1.  These are the documents found at page 2 of Exhibit 1, page 15 of Exhibit 1 and page 21 of Exhibit 1. It seems to me to follow logically from what I have previously said that as these are all documents for which privilege is claimed and are the subject of the very proceedings that I am dealing with, the disclosure of them in the tender would not widen any other claim for waiver that is being made by the Trustee and until such time as that issue has been decided, those documents will remain under wraps and be treated as privileged. 

13. Mr Heath has re quested that I make a ruling which would limit Mr Johnson’s right to cross-examine Mr Leong in relation to the documents that I have recently held not to be the subject of legal professional privilege.  But otherwise Mr Heath is prepared for the cross-examination of Mr Leong to continue, that cross-examination seeking to assist Mr Johnson’s client to assert that Mr Leong had waived privilege in the documents found in Exhibit SDP6.

14. He asks for this indulgence pending him having an opportunity to discuss with his client whether or not an appeal should be made in respect of my finding concerning the other documents.  Mr Johnson opposes the application.  He says that I have made a finding and that the respondents must live with it and that he should be entitled to exercise his right to cross-examine Mr Leong.

15. Mr Heath cites Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501 at 592 where Kirby J notes the seriousness of a finding which overrides legal professional privilege and the fact that where that has occurred the situation can rarely, if ever, be retrieved. I sympathise with the position of Mr Heath. There is only three-quarters of an hour remaining before the luncheon adjournment after which time I will be advised as to whether or not he wishes to adjourn this matter so that he can seek leave to take my ruling to the Federal Court.

16. I think that there are a number of questions that Mr Johnson can ask Mr Leong on the main subject we are here to consider, namely, the circumstances in which Mr Leong answered the s.77A notice that had been served upon him by the Trustee and that therefore little prejudice would arise. If it appears that Mr Johnson’s cross‑examination on those topics has run out prior to what would normally be the luncheon adjournment I will take an earlier adjournment so that it cannot be said that the cross‑examination of Mr Leong is concluded. Even if Mr Heath wishes to have the matter adjourned so that he can proceed to exercise his rights of appeal, the cross-examination of Mr Leong would not be concluded. I will continue following the views expressed by the Federal Court.

I certify that the preceding sixteen (16) paragraphs are a true copy of the reasons for judgment of Raphael FM.

Associate: 

Date: