Perton v Walters
[2018] VSC 445
•14 August 2018
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
PROPERTY LIST
S CI 2017 2326
| JANE ELIZABETH PERTON (NEE WARRING) AS TRUSTEE OF THE PORT EAGLE INVESTMENT TRUST | Plaintiff |
| v | |
| LYNNE MARGARET WALTERS | Defendant |
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JUDGE: | Derham AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 2 August 2018 |
DATE OF JUDGMENT: | 14 August 2018 |
CASE MAY BE CITED AS: | Perton v Walters |
MEDIUM NEUTRAL CITATION: | [2018] VSC 445 First Revision 17 August 2018 |
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PRACTICE AND PROCEDURE – Client legal privilege – Disclosure in the course of taxation of costs – Whether waiver of privilege – Whether waiver limited – Privilege waived without limitation – Evidence Act 2008 (Vic), s 122; Mann v Carnell (1999) 201 CLR 1; Giannarelli v Wraith (No 2) (1991) 171 CLR 592; Goldman v Hesper [1988] 3 All ER 97 explained.
PRACTICE AND PROCEDURE – Implied undertaking – Whether implied undertaking applicable to documents voluntarily inspected in the course of taxation of costs – Whether circumstances warranting a release of the implied undertaking if applicable – Implied undertaking not applicable – But if applicable, undertaking released – Springfield Nominees Pty Ltd v Bridgelands Securities Ltd (1992) 38 FCR 217; Liberty Funding v Phoenix Capital Ltd (2005) 218 ALR 283; Hearne v Street (2008) 235 CLR 125; Ambridge Investments Pty Ltd v Baker & Ors(No 3) [2010] VSC 545; Barrow v McLernon & Anor [2012] VSC 134.
PRACTICE AND PROCEDURE – Stay of execution – Whether stay of execution of costs order warranted – Stay granted – Rule 66.14 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) considered.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr P H Caillard | Madgwicks Lawyers |
| For the Defendant | Mr R M Garrett QC with Mr R H Miller | Nedovic Lawyers |
TABLE OF CONTENTS
Introduction......................................................................................................................................... 1
Affidavits............................................................................................................................................. 1
Judgment for possession................................................................................................................... 2
Post judgment events........................................................................................................................ 6
The new proceeding........................................................................................................................ 10
Production and use of privileged documents............................................................................. 12
Client legal privilege.................................................................................................................. 12
Submissions................................................................................................................................. 14
Waiver - Consideration.............................................................................................................. 16
Implied undertaking....................................................................................................................... 22
Stay application................................................................................................................................ 27
Rule 66.14............................................................................................................................ 27
Rule 66.16............................................................................................................................ 28
Consideration.............................................................................................................................. 29
Conclusions....................................................................................................................................... 30
HIS HONOUR:
Introduction
By summons filed 9 July 2018 the defendant (Mrs Walters) seeks the following orders:
(a) that the further hearing of the taxation of the costs of the plaintiff (Mrs Perton) pursuant to paragraph 4 of the orders of the Court made on 31 October 2017 be stayed pending further order;
(b) that Mrs Walters be permitted to rely in proceeding S ECI 2018 00225 in this Court (the new proceeding) on the documents which are the subject of items 402 and 407 in Mrs Perton’s bill of costs dated 31 January 2018 in proceeding S CI 2018 00654 (the Costs Court proceeding); and
(c) Mrs Perton produce to Mrs Walters within 48 hours clear copies of the documents which are the subject of items 402 and 407 in her bill of costs dated 31 January 2018 in the Costs Court proceeding.
There are therefore three matters for determination. First, a stay of the Costs Court proceeding in the Court, or perhaps more properly a stay of execution of the costs order made on 31 October 2017. Second, a release of the implied undertaking (the Harman undertaking) not to use documents produced under compulsion in one proceeding for some other purpose or proceeding. Third, production of the particular documents.
Affidavits
Mrs Walters relies upon her affidavit made on 6 July 2018 and the affidavits of her solicitor, Peter Nedovic, made 5 July 2018, and her costs lawyer, Annabel Speirs sworn 5 July 2018. In addition, reference is necessarily made to a number of affidavits made for the purpose of an application by Mrs Walters for leave to file an amended defence and counterclaim on 31 October 2017 and affidavits in support of, and in opposition to, Mrs Perton’s summary judgment application heard on the same day.[1]
[1]Affidavits of Jane Elizabeth Perton sworn 29 August, 5 October and 28 October 2017; Affidavit of Peter Nedovic sworn 25 September 2017; Affidavit of Lynn Walters sworn 26 September 2017.
In her affidavit of 6 July 2018, Mrs Walters summarises the background to the application, which I relate in some detail below, and exhibits the writ and statement of claim in the new proceeding, which she has commenced in this Court against Mrs Perton in her capacity as Trustee of the Port Eagle Investment Trust (the Trust), which is the capacity in which Mrs Perton sues in this proceeding, and against Mrs Perton in her capacity as executrix of the deceased estate of Donald Graeme Warring (the deceased). The deceased was Mrs Perton’s father and Mrs Walters’ domestic partner for 21 years. The new proceeding has been commenced to vindicate Mrs Walters’ claim to sole or half ownership of 17 Odenwald Road Eaglemont, Victoria (Eaglemont property),[2] which, she understands, affords her a right to possession of which she has been deprived. She produces a copy of the writ and statement of claim.[3]
[2]Being the land more particularly described in Certificate of Title Volume 10515 Folio 218.
[3]Affidavit of Lynne Walters made 6 July 2018, exhibit LW-2.
Judgment for possession
On 31 October 2017, I granted judgment in favour of Mrs Perton for possession of the Eaglemont property. I did so after rejecting an application by Mrs Walters to amend her defence and to file a counterclaim, and allowing Mrs Perton’s application for summary judgment pursuant to ss 61 and 63 of the Civil Procedure Act 2010 (Vic) (CPA). I stayed execution of that judgment until 1 January 2018 to enable Mrs Walters time to find alternative accommodation. I also ordered Mrs Walters to pay Mrs Perton’s costs of the proceedings. There has been no appeal from that decision.
Mrs Perton claimed possession of the Eaglemont property on the basis that she was the registered proprietor, as trustee of the Trust, and that Mrs Walters had no lease or agreement with Mrs Perton entitling Mrs Walters to possession.[4] Mrs Walters initially defended the claim on the basis of an oral agreement between the deceased, as the putative owner of the Eaglemont property, and her son, Sean, as conferring a right of residence.[5]
[4]Statement of claim dated 16 June 2017.
[5]Amended defence filed 10 August 2017.
Mrs Perton applied for the amended defence to be dismissed and for summary judgment relying on an affidavit in which she swore that the Eaglemont property ‘was purchased by the Trust in January 2003 for $900,000’[6] and that she ‘as trustee … agreed for my father … to reside at the Property’[7] which he did until his death on 4 February 2017.
[6]Affidavit of Jane Elizabeth Perton made 29 August 2017 [7].
[7]Ibid [11].
Mrs Walters applied to amend the amended defence and to raise a counterclaim. In support of the proposed counterclaim Mrs Walters deposed to an oral agreement between her and the deceased made in about July 1996 that she would move with him to Melbourne and continue to look after him for the rest of his life, and he would buy a house for them to live in together in joint names. She deposes to the sale of his New Zealand house, which settled in September 2002, and the purchase of the Eaglemont property as their home later that year where they lived until his death on 4 February 2017.[8]
[8]Affidavit of Lynne Walters made 26 September 2017 [40]–[48].
Mrs Walters’ affidavit, and her proposed further amended defence and counterclaim, claimed: that the deceased provided $600,000 from the proceeds of sale of the New Zealand house towards the purchase of the Eaglemont property, giving rise to a purchase money resulting trust; that the deceased had represented to Mrs Walters that she would have a beneficial interest in the Eaglemont property, which was their common intention; that the deceased had asked her whether she would look after him if they moved to Melbourne, which she said she would and did for the rest of his life; that in about July 2002 the deceased had said to Mrs Walters that they would buy a house together in joint names when they moved to Melbourne; that the deceased made the same statements to Mrs Walters orally in November 2002; that in about November 2002 they agreed to buy the Eaglemont property as their home, and the deceased said that he would use the $600,000 from the proceeds of sale of the New Zealand property for the purpose; and that their common intention in buying the Eaglemont property was that it would be their jointly owned home where they would live together for life.
The relief claimed included that the Eaglemont property formed part of the deceased’s estate, and that Mrs Walters was entitled to live in the property until the hearing of her application for further provision out of the deceased’s estate, under Part IV of the Administration and Probate Act 1958 (Vic) (A & P Act).[9]
[9]That is, a claim for further provision for Mrs Walters from the estate of the deceased under the Testators Family Maintenance legislation, as it is often described in Victoria.
In opposition to the application for leave to serve the new pleading, and in support of her application for summary judgment for possession of the Eaglemont property, Mrs Perton swore an affidavit in which she deposed that she had disclosed all documents that could be found ‘showing the funding of the Trust … for its acquisition of the Property’, that the statement by Mrs Walters ‘that the deceased provided $600,000 towards the purchase of the Property … is false’; that the ‘Trust paid in full for the purchase of the Property which was for a purchase price of $900,000’; and that the deceased ‘did not contribute to the purchase of … the Property’.[10]
[10]Affidavit of Jane Elizabeth Perton made on 5 October 2017 [5], [6], [7], [11].
Mrs Perton swore a further affidavit stating that the ‘trust paid in full for the purchase of the Property’ funded as to a loan of $400,000 from the NAB and a loan of $660,880.19 from Mrs Perton.[11]
[11]Affidavit of Jane Elizabeth Perton made on 28 October 2017 [4].
The application for leave to file the amended defence and counterclaim and Mrs Perton’s application for summary judgment came on for hearing on 31 October 2017. In his written submissions, Counsel for Mrs Perton contended that the evidence was ‘overwhelming that the purchase price was paid in full by the Trust’.[12] It was further submitted that Mrs Walters’ reliance on a joint endeavour or common intention constructive trust must fail, because the deceased was not the owner of the Eaglemont property, and had no interest in the Property.
[12]Plaintiff’s outline of submissions in relation to application for summary judgment, 17 October 2017, [26], [41a].
The transcript of the hearing shows that I put to Counsel for Mrs Walters in relation to the claimed resulting trust that:[13]
What you claim is that moneys were advanced and the evidence in support of that is frail. It’s mere assertion based upon information provided by the deceased at the time against which there is concrete evidence from the plaintiff that the funds were provided by the plaintiff to the trust. Put that aside for the present. Assuming that there is some evidence to support the proposition that the moneys for the purchase of the property were advanced by the deceased to the trust, there is no presumption of advancement…. You say therefore there's a resulting trust in favour of the estate. How can you make that claim?
[13]Transcript of Proceedings, Perton v Walters (Supreme Court of Victoria, 31 October 2017) 2.6-15.
Counsel for Mrs Walters then made it clear that Mrs Walters made that claim as-
…a putative beneficiary of the estate. We were the widow. We were the widow for 20 and we’ve lived in the relationship for 21 years and we have a good Part 4 claim.[14]
[14]Ibid T2.16-19.
To which I remarked:
That doesn’t give you an interest in the estate [or] as a beneficiary of the trust and even if it did, a beneficiary of the trust, and it’s a discretionary trust as I read it, has no interest in any property in the trust… You’d need to persuade me that as a discretionary beneficiary you had standing to claim on behalf of the estate of the deceased that the estate holds an interest in the property and it’s not 100 per cent interest, at least on the basis of the contribution made for $600,000, and I just don’t see how you get there.
I considered that a trust in favour of the deceased was no answer to the claim for possession. Counsel for Mrs Walters pressed that Mrs Perton’s claim was qualified by Mrs Walters’ in personam rights;[15] I responded that the in personam rights lay against the deceased estate, not Mrs Perton.[16] Counsel for Mrs Walters replied that the rights lay against Mrs Perton ‘because she has acquired title in most extraordinary circumstances’. I responded that she acquired title in 2003[17] and shortly later that a trust in favour of the estate was no answer to the claim for possession.[18]
[15]Ibid T5.5-6.
[16]Ibid T5.8-9.
[17]Ibid T5.12.
[18]Ibid T5.20-22.
Counsel for Mrs Walters then requested a short adjournment in which to obtain instructions and on the Court reconvening the application to file an amended defence and counterclaim, and the opposition to the application for summary judgment, were no longer pressed.[19]
[19]Ibid T5.24 to T6.18.
Post judgment events
After Mrs Walters vacated the Eaglemont property she found, in the course of unpacking, a one page agreement between the deceased and the vendor of the Eaglemont property.[20] The agreement is between the vendor, Charnley Glen Pty Ltd, and ‘Donald Warring and/or nom’ as purchaser. It is dated 26 November 2002 and recites that the parties have entered into a contract dated 26 November 2002 for the sale by the vendor to the purchaser of the property situate at and known as 17 Odenwald Road, Eaglemont for the sum of $900,000 and that the parties agree that at settlement the purchaser will also pay $100,000 ‘for the cost of additional works to be completed by the vendor prior to settlement’. It is plainly a ‘side agreement’ to the contract of sale.
[20]Affidavit of Lynne Walters made 6 July 2018, exhibit LW-1.
Mrs Walters submitted that it contradicts Mrs Perton’s evidence that she, as trustee of the Trust, was the purchaser of the Eaglemont property and the purchase was made in January 2003.[21] Mrs Perton, through her Counsel, defends her statement that the Trust purchased the Eaglemont property by reference to the fact that the deceased was the purchaser with a right to nominate a substitute purchaser, which must have happened as Mrs Perton as Trustee of the Trust was registered as sole proprietor in January 2003, and she shows that the moneys for the purchase all came from the bank account of the Trust[22] and a great deal of that came from her personal bank account.[23]
[21]Affidavit of Jane Elizabeth Perton made 29 August 2017 [7].
[22]Affidavit of Jane Elizabeth Perton made 5 October 2017.
[23]Affidavit of Jane Elizabeth Perton made 28 October 2017.
Since then Mrs Perton has, by a summons for taxation, sought the taxation of those costs.[24] In the course of that taxation Mrs Perton filed a bill of costs in the Costs Court proceeding. In the course of the taxation process, on 25 April 2018, Mrs Walters’ costs consultant requested an inspection of the file ‘to assist in narrowing the issues in dispute before finalising the notice of objections’.[25]
[24] Costs Court proceeding.
[25]Affidavit of Annabel Alice Speirs made 5 July 2018 [3] (Speirs affidavit).
The costs consultant was informed that there was an ongoing dispute between the parties in relation to the deceased’s estate. Material in the file was said to crossover with the proceeding commenced by Mrs Walters pursuant to Part IV of the A & P Act.[26] Thus, Mrs Perton was unwilling to consent to an inspection as there was privileged material which may have a bearing on the ongoing proceeding. After an unsuccessful mediation was held in May 2018, Mrs Perton’s costs consultant suggested that limited inspection may be allowed if the Costs Respondent (Mrs Walters) were to provide a list of documents to be produced. In consequence, the costs registrar ordered:[27]
1.The respondent provide a list of documents sought to be produced for inspection.
2.An inspection occur and the respondent file and serve an amended notice of objections before 7 June 2018.
3.The matter be listed for a telephone mention on 7 June 2018 at 9.30am to determine whether the matter should be listed for an assessment or a taxation.
[26]Proceeding No. S CI 2017 02159 (Part IV proceeding).
[27]Speirs affidavit [7].
Mrs Walters’ costs consultant duly served a list of documents sought to be produced and an inspection of those documents subsequently occurred. The inspection, which took place on 5 June 2018, disclosed two particular documents the subject of the application before me today. The substance of these documents is disclosed in the affidavit of the costs consultant filed in support of the application before me.[28] The documents are:
[28]Ibid [11]. There was no objection to the admission of this affidavit into evidence, no doubt this was because it was the most straight forward way to put material before the Court to determine the issues.
(a) Item 402 – email from Mrs Perton to her solicitors (Madgwicks) on 28 October 2017 enclosing the bank statements which were exhibited to Mrs Perton’s affidavit sworn 28 October 2017 and filed in this proceeding on 30 October 2017. It is said that in that email Mrs Perton uses words to the effect that the bank statement shows that a deposit of $658,000, which was the proceeds of the sale of her father’s New Zealand property, was used by her to fund various investments, including an investment by the Port Eagle Investment Trust, of which Mrs Perton was trustee, and MCS Digital, a company operated by Mrs Perton;
(b) Item 407 – an email from Ms Catherine Ballantyne of Madgwicks to Mrs Perton’s barrister (Mr Caillard of Counsel) of 28 October 2017 asking Mr Caillard to settle an affidavit of Mrs Perton and forwarding the email and attached documents from Mrs Perton to be exhibited to her affidavit of 28 October 2017. The email from Ms Ballantyne to Mr Caillard said something to the following effect:
We [ie the plaintiff’s legal advisors] do not need to concern ourselves with how the plaintiff’s Dad [ie Mr Don Warring] spent his money, which I took to be a reference to the $658,000 referred to above (sic).[29]
(disputed documents)
[29]The last sentence of this quote appears to be a comment of Ms Speirs.
Ms Speirs does not, and was not able, to exhibit copies of those emails because she was not permitted to take copies, merely to inspect them. Ms Speirs gives evidence that she is aware that Mrs Perton asserts a claim for client legal privilege in respect of the two documents summarised above and gives her evidence about those documents because she understands Mrs Walters is making an application to have the Costs Court proceeding stayed because of the information she reveals.[30]
[30]Speirs affidavit [17]–[18].
The affidavit of Mr Peter Nedovic,[31] refers to correspondence following the inspection that revealed the disputed documents. Mr Nedovic wrote to the solicitors for the Mrs Perton on 13 June 2018 pointing to the evidence given by Mrs Perton in her affidavits of 5 and 28 October 2017 referred to above at [11] and [12], to the disputed documents and their contents, to the importance of the evidence to the decision I made to give judgment to Mrs Perton for recovery of possession of the Eaglemont property and asserted there had been a substantial miscarriage of justice. An explanation was called for.[32]
[31]Sworn 5 July 2018 (Nedovic affidavit).
[32]Nedovic affidavit, exhibit PN-1.
Mrs Perton’s solicitor, Ms Ballantyne, responded at length by letter dated 19 June 2018.[33] After denying that Mrs Perton’s affidavits were inconsistent with the disputed documents the letter said, so far as presently material:
The affidavit material is clear that our client used her own funds to provide an unsecured loan to the Port Eagle Investment Trust in the amount of $973,241.67. The balance sheet evidencing this is exhibited as ‘JEP-18’ to the affidavit of Jane Perton sworn on 5 October 2017 and the bank statement evidencing payments from our client’s personal bank account to the Port Eagle Investment Trust is exhibited at ‘JEP-22’ to the affidavit of Jane Peron sworn 28 October 2017.
The fact that our client received a gift of money from her father is irrelevant and completely consistent with our client’s affidavit material.
[33]Ibid, exhibit PN-3.
The letter went on to refer to the fact that at the hearing on 31 October 2017, other issues were raised, in particular that Mrs Walters did not have standing to bring a claim for an interest in the property pursuant to a resulting trust on behalf of the deceased estate, and in consequence Mrs Walters agreed not to press her application to amend her defence and file a counterclaim. It was said that the issue of where the funds came from to purchase the property was irrelevant to why Mrs Walter’s application to file an amended defence and counterclaim was not going to be successful and was ultimately withdrawn.
In a letter also dated 19 June 2018, Ms Ballantyne maintained the disputed documents were privileged, were disclosed in the costs proceeding for the purpose of the proceeding only and remained privileged. She also maintained that to attempt to use them in any other proceeding for any other purpose is an abuse of process.
The new proceeding
In the new proceeding Mrs Walters seeks to replace Mrs Perton as executrix and trustee of the deceased’s will and estate, and to establish Mrs Walter’s proprietary interest in the Eaglemont property. Only the latter part of the claims is presently relevant. In this regard, Mrs Walters seeks declarations:
(a) that she is the sole beneficial owner of the Eaglemont property, or alternatively of one half interest in it;
(b) alternatively, a declaration that the estate of the deceased is the beneficial owner of the Eaglemont property;
(c) a declaration that the estate of the deceased is the beneficial owner of the unencumbered title to a property at 80 Bell Street, Heidelberg (the Bell Street property);
And consequential relief upon the making of the those declarations, including:
(d) orders for the transfer of the Eaglemont property, or one half interest in it, to her;
(e) injunctions restraining Mrs Perton from encumbering the Eaglemont property or the Bell Street property pending the full administration of the estate of the deceased; and
(f) the taking of all necessary accounts and the making of enquiries.
The basis for this relief is, essentially, that:
(a) there was a relocation agreement entered into between Ms Walters and the deceased in July 2002 pursuant to which it was agreed that, in consideration of Mrs Walters looking after the deceased (who did not enjoy robust health) the deceased would sell the house he owned in New Zealand and buy a family home in Melbourne which would be jointly owned;
(b) the New Zealand house was sold and the proceeds used in part to buy the Eaglemont property, with the balance of the purchase price borrowed;
(c) unbeknown to Mrs Walters, the deceased directed the transfer of the title to the Eaglemont property into the name of Mrs Perton (then Jane Warring) as trustee of the Trust;
(d) the deceased and Mrs Walters lived together as husband and wife, Mrs Walters caring for the deceased, until he died; and
(e) in the result, Mrs Walters claims to be an equitable joint tenant, alternatively a tenant in common, with the deceased in the Eaglemont property so that she claims the whole of the equitable estate by survivorship, or an equal half part or share with the deceased’s estate. Mrs Perton, I assume, is a bare trustee of the property.
The claim in the new proceeding rests on the claims and evidence of Mrs Walters in this proceeding that the deceased and Mrs Walters had a common intention about the purchase of the Eaglemont property and the use of the proceeds of the sale of the New Zealand property in the purchase. The discovery of one of the two agreements that constituted the deceased’s agreement to purchase the Eaglemont property and the admission by Ms Ballantyne in her letter of 19 June 2018 that the deceased’s money had funded the purchase of the Eaglemont property are relied upon to show that the oral agreement made between the deceased and Mrs Walters in about July 2002 was carried into execution, and duly performed, save that the title was registered in Mrs Perton’s name, and was fully performed on the part of Mrs Walters.
It is neither possible nor appropriate in this application to assess the strength of the claims in the new proceeding. It would be premature to comment on the claims, save to note that it alleges Mrs Walters has a direct equitable interest in the Eaglemont property, not a derivative interest through the deceased’s estate. The basis would seem to be a common interest constructive trust, perhaps combined with a resulting trust, arising from the advance of over $600,000.00 towards the purchase, and the making of payments due under a mortgage given to secure a loan for the balance of the purchase price. As Counsel for Mrs Walters elaborated, Mrs Perton was a volunteer in relation to these contributions towards the purchase.[34]
[34]Outline of defendant’s submissions filed 1 August 2018 [32].
There has been no appeal from the judgment for possession and the order for costs made on 31 October 2017. The factual underpinning for the claims then raised and the claims now raised in the new proceeding include differences, in that:
(a) the proceeds of the sale of the New Zealand house owned by the deceased did, indirectly, flow through Mrs Perton’s bank account to the bank account of the Trust and from there to the purchase of the Eaglemont property;
(b) the purchase of the Eaglemont property was clearly made by the deceased in his own name, and the strong inference is that the nomination clause was used so that the property was, at settlement, transferred to Mrs Perton as trustee of the Trust.
Production and use of privileged documents
It is appropriate to deal first with the application by Mrs Walters to produce the disputed documents. That is because that involves the question whether client legal privilege in them has been waived. The answer to that issue is important to the next issue, whether the implied undertaking should be released to enable Mrs Walters to use the documents in the new proceeding. The stay application is necessarily affected by whether those two issues are resolved in favour of Mrs Walters.
Client legal privilege
The documents sought to be produced by Mrs Walters are confidential communications between Mrs Perton and her solicitor (document 402) and between her solicitor and her Counsel (document 407) for the dominant purpose of the lawyers, or one of them, providing legal advice to Mrs Perton, or providing legal services to her in this proceeding. They were undoubtedly the subject of privilege under ss 118 or 119 of the Evidence Act 2008 (Vic) (Evidence Act). Both parties accepted that privilege attached to the documents at least until the inspection took place, when Mrs Walters maintains that there was a waiver of privilege under s 122 of the Evidence Act, and Mrs Perton maintains that the privilege subsists having been waived only for the limited purpose of the Costs Court proceeding.
The account of the facts set out in Ms Speirs’ affidavit is accepted by Mrs Perton to be accurate and no further evidence was introduced contradicting it in any way. What I have set out above is I believe an accurate summary. It shows that Mrs Perton did claim privilege over the documents at first. Then, in the course of a telephone conference with the Costs Registrar, Mrs Perton’s costs consultant suggested limited inspection which was, inferentially, ‘to assist in narrowing the issues in dispute before finalising the notice of objections’, as Ms Speirs said this was the purpose of her request to inspect the solicitor’s file. This lead to the orders made for Mrs Walters to provide a list of documents sought to be produced for inspection and Mrs Perton to allow such an inspection.
Mrs Walters claims that Mrs Perton has lost the privilege in the documents by the operation of s 122 of the Evidence Act. For present purposes, only sub-ss 122(2), (3), (4) and (5) need be noticed. They provide:
(2)Subject to subsection (5), this Division does not prevent the adducing of evidence if the client or party concerned has acted in a way that is inconsistent with the client or party objecting to the adducing of the evidence because it would result in a disclosure of a kind referred to in sections 118, 119 or 120.
(3)Without limiting subsection (2), a client or party is taken to have so acted if—
(a)the client or party knowingly and voluntarily disclosed the substance of the evidence to another person; or
(b)the substance of the evidence has been disclosed with the express or implied consent of the client or party.
(4)The reference in subsection (3)(a) to a knowing and voluntary disclosure does not include a reference to a disclosure by a person who was, at the time of the disclosure, an employee or agent of the client or party or of a lawyer of the client or party unless the employee or agent was authorised by the client, party or lawyer to make the disclosure.
This provision is made applicable in the current circumstances by s 131A of the Evidence Act. That is because the summons to produce the documents is a disclosure requirement for the purposes of s 131A(1).[35]
[35]See s 131A(2)(a).
Submissions
Counsel for Mrs Perton relied on the reasoning of the Court of Appeal in Goldman v Hesper[36] for the proposition that it is possible to waive privilege for a specific purpose and in a specific context and any disclosure of privileged documents which has to be made in the exercise of the taxing officer’s discretion is only for the purposes of the taxation. In the view of Taylor LJ, with whom Donaldson MR and Woolf LJ agreed, voluntary waiver or disclosure by a taxing officer on a taxation would not prevent the person entitled to maintain the privilege from reasserting it in any subsequent context.
[36][1988] 1 WLR 1238; [1988] 3 All ER 97 (Goldman v Hesper).
Mrs Perton also relied, in the context of the privilege issue, on observations of Hayne, Heydon and Crennan JJ in Hearne v Street[37] concerning the implied undertaking:
Where one party to litigation is compelled, either by reason of a rule of court, or by reason of a specific order of the court, or otherwise[38], to disclose documents or information, the party obtaining the disclosure cannot, without the leave of the court, use it for any purpose other than that for which it was given unless it is received into evidence. The types of material disclosed to which this principle applies include documents inspected after discovery[39], answers to interrogatories[40], documents produced on subpoena[41], documents produced for the purposes of taxation of costs[42], documents produced pursuant to a direction from an arbitrator[43], documents seized pursuant to an Anton Piller order[44], witness statements served pursuant to a judicial direction[45] and affidavits[46].
[37](2008) 235 CLR 125, 154 [96] (Hearne).
[38]Bourns Inc v Raychem Corp [1999] 1 All ER 908 at 916 [19] (Bourns); affd [1999] 3 All ER 154 at 169-170.
[39]Riddick v Thames Board Mills Ltd [1977] QB 881; Esso Australia Resources Ltd v Plowman (1995) 183 CLR 10 at 32-33; [1995] HCA 19.
[40]Central Queensland Cement Pty Ltd v Hardy [1989] 2 Qd R 509 at 510-511; Ainsworth v Hanrahan (1991) 25 NSWLR 155.
[41]Eltran Pty Ltd v Westpac Banking Corporation (1990) 25 FCR 322.
[42]Bourns at 169–170.
[43]Esso Australia Resources Ltd v Plowman (1995) 183 CLR 10 at 33, 39, 46-47 and 48.
[44]Cobra Golf Inc v Rata [1996] FSR 819.
[45]Central Queensland Cement Pty Ltd v Hardy [1989] 2 Qd R 509; Springfield Nominees Pty Ltd v Bridgelands Securities Ltd (1992) 38 FCR 217 at 223; State Bank of South Australia v Smoothdale (No 2) Ltd (1995) 64 SASR 224 at 229.
[46]Medway v Doublelock Ltd [1978] 1 WLR 710; [1978] 1 All ER 1261; Re Addstone Pty Ltd (in liq); Ex parte Macks (1998) 30 ACSR 156.
It is not disputed that this is an accurate statement of the law, as far as it goes. But it clearly relates to the next issue, and Mrs Perton’s reliance on it in connection with the issue of waiver of privilege conflates the two issues. Nevertheless, it makes the point that documents produced under compulsion in a taxation of costs will be subject to the implied undertaking. It also identifies the big point that is made in the decision in Hearne v Street,[47] that the implied undertaking is an obligation of substantive law and that a servant or agent of a party is directly bound by such an obligation, and is not merely potentially liable as an accessory to a breach by the party.[48]
[47](2008) 235 CLR 125.
[48]Ibid 131 [3] (Gleeson CJ), 157–162 [105]–[113] (Hayne, Heydon and Crennan JJ).
Mrs Perton also relied on the decision of the Full Court of the Supreme Court of South Australia in Players Pty Ltd (in Liquidation) (Receivers appointed) v Clone Pty Ltd[49] for the proposition:
Accordingly, it is to be accepted that where a document is disclosed for the purposes of taxation, through compulsion by reason of a Rule of Court or by reason of a specific order of the Court or otherwise, waiver is limited.[50]
[49][2013] 115 SASR 547 (Players v Clone).
[50]Ibid [88].
However, the quote is out of context. The balance of the paragraph goes on:
A direct application of those principles to the present case compels the conclusion that there was here an express or intentional waiver. The documents were produced for inspection by the opponents in the litigation. There was no suggestion that the disclosure was subject to confidentiality. No reference was made at the time of disclosure to any claim of privilege or any limited waiver of privilege.
Mrs Walters contended that documents have been produced voluntarily by Mrs Perton in the Costs Court proceeding. They have not been produced by compulsion of any Court order or pursuant to the Court’s rules or processes. The Order of the Costs Registrar on 18 May 2018 was for Mrs Walters to provide a list of documents sought to be produced for inspection, and was not an order that Mrs Perton produce those documents.[51] Mrs Perton was not compelled to produce the documents for the Costs Court but chose to do so of her own volition. For this reason, Mrs Walters is entitled to see them, as McHugh J explained in Giannarelli v Wraith,[52] distinguishing the English case of Goldman v Hesper:[53]
In the present case, unlike the English cases, the initial disclosure to the taxing officer must amount to waiver of privilege. Goldman can be read as suggesting that, even when privilege has been waived, the taxing officer may still prevent the other party seeing the document. But in Pamplin expressly and in Goldman by inference, the courts said that ultimately a party either waives the privilege entirely and allows the taxing officer and the other side to see the privileged documents or asserts the privilege and maintains the confidentiality of his or her documents. This is the only acceptable view.[54]
[51]Speirs affidavit [7].
[52](1991) 171 CLR 592 (Giannarelli No 2).
[53][1988] 3 All ER 97.
[54]Giannarelli No 2, 606–7.
Waiver - Consideration
In Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd[55] the High Court said of waiver:
According to its strict legal connotation, waiver is an intentional act done with knowledge whereby a person abandons a right (or privilege) by acting in a manner inconsistent with that right (or privilege)[56]. It may be express or implied. In most cases concerning waiver, the area of dispute is whether it is to be implied. In some cases waiver will be imputed by the law[57] with the consequence that a privilege is lost, even though that consequence was not intended by the party losing the privilege. The courts will impute an intention where the actions of a party are plainly inconsistent with the maintenance of the confidentiality which the privilege is intended to protect[58].
In Craine v Colonial Mutual Fire Insurance Co Ltd[59], it was explained that “’[w]aiver’ is a doctrine of some arbitrariness introduced by the law to prevent a man in certain circumstances from taking up two inconsistent positions ... It is a conclusion of law when the necessary facts are established. It looks, however, chiefly to the conduct and position of the person who is said to have waived, in order to see whether he has ‘approbated’ so as to prevent him from ‘reprobating’”. In Mann v Carnell[60], it was said that it is considerations of fairness which inform the court's view about an inconsistency which may be seen between the conduct of a party and the maintenance of confidentiality, though “not some overriding principle of fairness operating at large.”
Those considerations, articulated in relation to waiver at common law, apply with equal force in relation to the statutory question posed by s 122(2) of the Evidence Act, and made applicable by s 131A of that Act to the determination of a question of waiver of client legal privilege arising in the context of pre-trial discovery. That question is whether the client or party concerned “has acted in a way that is inconsistent with the client or party objecting to” the production of a document. [61]
[55](2013) 250 CLR 303 (Expense Reduction).
[56]Craine v Colonial Mutual Fire Insurance Co Ltd (1920) 28 CLR 305 at 326; [1920] HCA 64; Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641 at 658; [1937] HCA 58.
[57]Goldberg v Ng (1995) 185 CLR 83 at 95-96; [1995] HCA 39.
[58]Mann v Carnell (1999) 201 CLR 1 at 13 [29]; [1999] HCA 66.
[59](1920) 28 CLR 305 at 326.
[60](1999) 201 CLR 1 at 13 [29].
[61]Ibid 315–316 [30]–[32].
The object or purpose of the amendment which introduced s 122(2) of the Evidence Act was to adopt the approach of the High Court in Mann v Carnell, in which case Gleeson CJ, Gaudron, Gummow and Callinan JJ stated:
What brings about the waiver is inconsistency, which the courts, where necessary informed by the consideration of fairness, perceive, between the conduct of the client and the maintenance of the confidentiality; not some overriding principle of fairness operating at large.[62]
[62](1999) 201 CLR 1. See Stephen Odgers, Uniform Evidence Law (Thomson Reuters Australia, 12th Ed, 2016), [EA 122.60].
It is clear from the object or purpose of s 122(2), and the extract from Expense Reduction[63], the common law cases on the question of waiver of privilege continue to be relevant to questions arising under s 122 of the Evidence Act.[64]
[63](2013) 250 CLR 303.
[64]Subject to, however, a difference arising from the inclusion in s 119(b) of the contents of confidential documents, whether delivered or not, prepared for the dominant purpose of, in effect, use in litigation, a matter not within the common law privilege: see the observations of White J in New Cap Reinsurance Corporation Ltd (In Liq) v Renaissance Reinsurance Ltd [2007] NSWSC 258 [18]–[20].
Under the test propounded in Mann v Carnell[65] it is inconsistency between the conduct of the client and the maintenance of the confidentiality that the privilege is intended to protect which effects a waiver of the privilege. The test for imputed waiver had previously been expressed in terms of fairness.[66] Fairness has become a subsidiary consideration; it may be relevant to the court’s assessment of inconsistency in some contexts but not in others.[67]
[65](1999) 201 CLR 1.
[66]See Attorney-General (NT) v Maurice (1986) 161 CLR 475 (Maurice), 481 (Gibbs CJ), 487–8 (Mason and Brennan JJ), 492–3 (Deane J), and 497–8 ( Dawson J).
[67]AWB Limited v Cole (No 5) (2006) 155 FCR 30, 67 [130] (Young J); Perhaps an ‘unfair inconsistency’: See also Byrne J in Liquorland (Australia) Pty Ltd v Anghie (2003) 7 VR 27, 42 [41].
In any application of the principle in MannvCarnell,[68] the starting point must be an analysis of the disclosures or other acts or omissions of the party claiming privilege that are said to be inconsistent with the maintenance of confidentiality in the privileged material.[69] It is well established at common law that a voluntary disclosure of privileged documents can result in a waiver of privilege over those documents and associated material. Section 122(3) also provides for that result, by providing that a client or party ‘is taken to have so acted’ (that is acted in a way that is inconsistent with the client or party objecting to the adducing of the evidence) if the client or party knowingly and voluntarily disclosed the substance of the evidence to another person, or the substance of the evidence has been disclosed with the express or implied consent of the client or party. Thus, in either of those two situations, it is not necessary to ask whether Mrs Perton’s actions were inconsistent with continuing to maintain privilege, because that is ‘taken’ to be so.
[68](1999) 201 CLR 1.
[69]AWB Limited v Cole (No 5) [2006] 155 FCR 30, 68 [134] (Young J).
The term ‘client’ in s 122 is defined inclusively in s 117(1) of the Evidence Act and includes an agent of the client.[70] And thus a lawyer or costs consultant acting with the authority of the client.[71] The effect of s 122(4) is, however, that s 122(3)(a) does not apply to a disclosure by a person who was, at the time, an employee or agent of a client unless the employee or agent was authorised to make the disclosure. That authority may be express or implied.[72] This limitation does not apply to s 122(3)(b) because it is concerned with the substance of the evidence having been disclosed with the express or implied consent of the client. That involves an objective test – the fact of disclosure – as distinct from s 122(3)(a) which involves an intentional disclosure.
[70]Section 117(1)(b).
[71]Sovereign v Bevillesta [2000] NSWSC 521 [24] (Austin J); Stephen Odgers, Uniform Evidence Law (Thomson Reuters Australia, 12th Ed, 2016), [122.210].
[72]Global Medical Imaging Management Ltd (In Liq) v Australian Mezzanine Investments Pty Ltd [2003] NSWSC 430 [18]-[19], (Einstein J); Odgers, Uniform Evidence Law (Thomson Reuters Australia, 12th Ed, 2016), [122.210].
There has been no issue raised by the legal advisers to Mrs Perton that her costs consultant was not authorised, expressly or by implication, to reveal the content of documents belonging to her or her lawyers in the course of the Costs Court proceeding. Both parties proceeded in their argument on the footing that the costs consultant was authorised by Mrs Perton, no doubt through her lawyers, to do what was done. Even if there were an issue of the authority of the costs consultant to disclose the disputed documents, the application of s 122(2) and imputed waiver leads to the same result in this case.
Mrs Perton was not compelled to produce the documents which were the subject of legal professional privilege for inspection by Mrs Walters’ costs consultant.[73] As McHugh J observed in Giannarelli No 2,[74] a claim of legal professional privilege can be made in administrative as well as judicial and quasi-judicial proceedings. It follows that such a claim can be made in a taxation of costs. The privilege in the disputed documents is both a statutory and a substantive common law right. There is nothing in the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (Rules) applicable to the taxation of costs which could be found to override that right.
[73]Giannarelli No 2 (1991) 171 CLR 592, 600-601.
[74](1991) 171 CLR 592.
McHugh J noted in Giannarelli No 2,[75] that in the three English cases he considered, Hobbs v Hobbs and Cousens, Pamplin v Express Newspapers Ltd and Goldman v Hesper,[76] the party had disclosed the privileged documents to the taxing officer and only sought to rely on the privilege for the purpose of preventing the other party seeing the documents. Unlike the Rules applicable in Victoria, the English rules of court required a party lodging a bill of costs for taxation to lodge with the bill the papers the subject of the work done for which the costs were claimed.[77] The other party, relying on the principles of natural justice, had asserted a right to examine all documents submitted to the taxing officer. The Courts resolved this tension between natural justice and legal professional privilege in varying ways but never denied that legal professional privilege could be asserted in taxation proceedings.[78] It is necessary to observe, however, that the effect of the rules requiring the lodgement of documents in support of a taxation was to make ‘inroads’ into the general protection afforded by a claim for privilege. It follows, said Lord Taylor, that once a party puts forward privileged documents as a part of his case for costs:
…some measurer of their privilege is temporarily and pro hac vice relaxed. In most cases, as Hobhouse J observed, no problem would arise on taxation about privilege. However, when the problem does arise the taxing officer has the duty of being fair to both parties: on the one hand, to maintain privilege so far as possible and not disclose the contents of a privileged document to the paying party unnecessarily; on the other hand, he has to see that that party is treated fairly and given a proper opportunity to raise a bona fide challenge. The contents of documents will almost always be irrelevant to considerations of taxation … There may be instances in which taxing officers may need to disclose part, if not all, of the contents of a privileged document in striking the appropriate balance. He will no doubt use all his expertise and tact in seeking to avoid that situation wherever he can. I do not envisage it occurring, except very rarely. Of course it is always open to the claimant not to rely on privileged documents which he regards as peculiarly sensitive.
It would not be practicable or helpful for this court to seek to lay down any firm criteria as to the circumstances in which such an extreme course may be necessary. All will depend on the facts of the individual case … Any disclosure of privileged documents which does have to be made in the exercise of the taxing officer’s discretion would in my judgment be only for the purposes of the taxation. That it is possible to waive privilege for a specific purpose and in a specific context only is well-illustrated by the decision of this court in British Coal Corp v Dennis Rye Ltd (No 2) …[79]
[75]Ibid 601.
[76]Hobbs v Hobbs and Cousens [1960] P 112; Pamplin v Express Newspapers Ltd [1985] 1 WLR 689 and Goldman v Hesper [1988] 3 All ER 97.
[77]These included solicitor’s correspondence and attendance notes, instructions to Counsel, advices and opinions of Counsel and other privileged documents from the solicitor’s file: see Goldman v Hesper [1988] 3 All ER 97, 101; Players v Clone (2013) 115 SASR 547, 567 [97].
[78]Giannarelli No 2 (1991) 171 CLR 592, 601 (McHugh J).
[79]See also Players v Clone (2013) 115 SASR 547, 567 [97].
The circumstances giving rise to the limited waiver of privilege in Goldman v Hesper is plainly to be distinguished from the position here, just as it was distinguished in Players v Clone, where a situation analogous to this case arose.[80] The logic of the limited waiver of privilege was driven by those circumstances. The position in Victoria is different. There is no necessity to balance the rights of one party to natural justice (or procedural fairness) against the other party’s statutory or substantive common law right to maintain privilege over documents. There was no compulsion for Mrs Perton’s costs consultant to produce the documents for inspection. The order of the Registrar (see [22] above) cannot override Mrs Perton’s right to maintain her privilege over the disputed documents any more than an order for discovery or production of documents in a proceeding in this Court overrides that right. This explains McHugh J’s conclusion in Giannarelli No 2:
…that ultimately a party either waives the privilege entirely and allows the taxing officer and the other side to see the privileged documents or asserts the privilege and maintains the confidentiality of his or her documents.[81]
[80]Ibid 568 [98].
[81](1991) 171 CLR 592, 607.
It cannot be said that Mrs Perton’s voluntary production of the documents for inspection was under compulsion. Her substantive common law right to maintain privilege, even by the use of redactions,[82] persisted in the face of the orders of the Registrar.
[82]Players v Clone (2013) 115 SASR 547, 567 [94].
In the present case, Mrs Perton disclosed the documents in the Cost Court proceeding for the purpose of obtaining whatever assistance she could from that disclosure in pursuit of her costs assessment. That disclosure is inconsistent with maintenance of the privilege and she has waived her privilege in the documents.
Mrs Walters also submitted that:
(a) the common law ‘fraud exception’ to the maintenance of privilege by Mrs Perton is applicable. That is, communications between a legal advisor and a client which facilitate the commission of a crime or a fraud are not privileged. The exception for fraud is not limited to the tort of deceit but is understood in a ‘broad manner’ including all forms of dishonesty such as breach of trust, conspiracy, trickery, and sham contrivances;[83]
(b) the statutory exception in s 125(1)(b) of the Evidence Act was applicable to defeat the claim for privilege.
[83]Attorney General (NT) v Kearney (1985) 158 CLR 500, 525–526 (Wilson J).
In the circumstances, I do not find it necessary to consider these submissions. The finding of fraud is a serious matter and there has been no in depth investigation of that question, nor any cross-examination of those involved, that would be necessary to reach that conclusion with the requisite degree of satisfaction.
Implied undertaking
Mrs Walters seeks to rely on the disputed documents disclosed in the Costs Court proceeding in this proceeding and in the new proceeding. Mrs Perton objects to the use of those documents on the grounds of the implied undertaking that documents disclosed in a proceeding can only be used for purposes of that proceeding.
The principle is that where one party to litigation is compelled, either by reason of a rule of court, or by reason of a specific order of the court, or otherwise, to disclose documents or information, the party obtaining the disclosure cannot, without the leave of the court, use it for any purpose other than that for which it was given unless it is received into evidence.[84] The obligation, or duty, is usually called the implied undertaking to the Court. The High Court has made clear that the implied undertaking is in truth a substantive legal obligation or duty imposed by law on the litigants, their servants or agent (or privies[85]) and others.[86] It is clear that the obligation extends to documents produced for the purposes of taxation of costs.[87]
[84]Hearne (2008) 235 CLR 125, 154–155 [96] (Hayne, Heydon & Crennan JJ, Gleeson CJ agreeing).
[85]Spalla v St George Motor Finance Ltd (2004) 209 ALR 703, 717 [40] (Ryan J); Hearne (2008) 235 CLR 125, 161–162 [111].
[86]Hearne (2008) 235 CLR 125, 157–159 [105]–[108].
[87]Bourns [1999] 1 All ER 908 ; Hearne (2008) 235 CLR 125 , 154–155 [96].
Mrs Walters accepts that she cannot use those documents in the new proceeding without the leave of the Court if the implied undertaking applies in this case. The fact that the disputed documents were produced voluntarily in the Costs Court proceeding, rather than by compulsion pursuant to an order of the Court, is reason enough to conclude that the implied undertaking is not applicable. In any event, once the privilege over the documents is waived, as in my view it is, they become discoverable, if relevant, in this proceeding and in the new proceeding. If an order for discovery is made, the implied undertaking must yield to the requirements of that discovery.[88]
[88]Cadbury Schweppes Pty Ltd v Amcor Ltd [2008] FCA 398 [13].
But if it be found that the production of the disputed documents for inspection in the Costs Court proceeding is to be characterised as compulsory, then the obligation can be released or modified by the court. But that dispensing power will only be exercised where special circumstances appear.[89]
[89]Hearne (2008) 235 CLR 125, 157–158 [107]; See also Esso Australia Resources Limited v Plowman (1995) 183 CLR 10, 37; Barrow v McLernon & Anor [2012] VSC 134 [27] (Barrow v McLernon); Springfield Nominees Pty Ltd v Bridgelands Securities Ltd (1992) 38 FCR 217, 224 (Springfield).
In Liberty Funding v Phoenix Capital Ltd[90] the Full Court of the Federal Court of Australia made the following pertinent observations, that are equally applicable here:
[90](2005) 218 ALR 283.
It is unnecessary to examine the authorities in this area in any detail. The parties were not in disagreement as to the legal principles. The notion of ‘special circumstances’ does not require that some extraordinary factors must bear on the question before the discretion will be exercised. It is sufficient to say that, in all the circumstances, good reason must be shown why, contrary to the usual position, documents produced or information obtained in one piece of litigation should be used for the advantage of a party in another piece of litigation or for other non-litigious purposes. The discretion is a broad one and all the circumstances of the case must be examined. In Springfield Nominees, Wilcox J identified a number of considerations which may, depending upon the circumstances, be relevant to the exercise of the discretion. These were:
• the nature of the document;
• the circumstances under which the document came into existence;
•the attitude of the author of the document and any prejudice the author may sustain;
•whether the document pre-existed litigation or was created for that purpose and therefore expected to enter the public domain;
•the nature of the information in the document (in particular whether it contains personal data or commercially sensitive information);
•the circumstances in which the document came in to the hands of the applicant; and
•most importantly of all, the likely contribution of the document to achieving justice in the other proceeding.[91]
[91]Liberty Funding v Phoenix Capital Ltd (2005) 218 ALR 283 [31].
The formulation of these factors by Wilcox J has been followed in many other cases. One case is Ambridge Investments Pty Ltd v Baker & Ors(No 3),[92] where Vickery J varied the formulation of Wilcox J in Springfield,[93] to arrive at the following test:
”special circumstances” may arise where there are special features (or a special feature) of the case which afford good reason for modifying or releasing the undertaking, being circumstances which are of sufficient gravity to override the private and public interest in protection of the confidentiality of a person’s private documents which are required by law to be produced to a court. [94]
[92][2010] VSC 545.
[93](1992) 38 FCR 217.
[94]Ibid [33]; affirmed by Beach J in Barrow v McLernon [2012] VSC 134 [29].
In Laen Pty Ltd v At the Heads Pty Ltd & Ors,[95] Davies J referred to the factors identified by Wilcox J in Springfield[96] and noted that they do not prescribe any hard or fast test, but rather emphasise that all of the circumstances of the case must be examined to determine whether there are cogent and persuasive reasons for modifying or releasing a party from the implied undertaking.[97] She added:
The authorities indicate that an important consideration in weighing the various factors which may enliven the discretion is the purpose for the release from the obligation.[98] Where, as here, that purpose is for use in another proceeding, commonality between the proceedings may be a sufficient factor to warrant the exercise of the dispensing power.[99]
[95][2011] VSC 315 (Laen).
[96](1992) 38 FCR 217.
[97][2011] VSC 315 [5].
[98]Australian Securities & Investments Commission v Marshall Bell Hawkins Limited [2003] FCA 833 (Merkel J); Ambridge Investments Pty Ltd v Baker [No 3] [2010] VSC 545 (Vickery J).
[99]Springfield Nominees Pty Ltd v Bridgelands Securities Ltd (1992) 38 FCR 217, 224.
Her Honour then observed:[100]
…the purpose of the implied undertaking is to protect against the misuse of material produced under coercion of the Court’s processes, not to prevent a party’s access to justice. If the proposed use is for the purposes of other proceedings, the Court’s power in relation to its own proceedings will provide the necessary protection against misuse. The existence of the implied undertaking cannot fetter or restrict the Court’s power in relation to its own processes in proceedings instituted before it.[101] Nor can it operate as an estoppel against the use of the processes of the Court in that other proceeding.[102] The mere fact of commonality of subject matter may be sufficient to establish that the party has a legitimate forensic purpose for the use of the material in the second proceeding, but the test is not commonality of subject matter. Generally, use in a subsequent proceeding would not be an improper use of material previously obtained subject to an implied undertaking, unless that material was obtained in the first proceeding for an ulterior purpose. There is no suggestion in this case that Laen had any improper motive in obtaining the disclosure to it in the first proceeding of the documents in question.
[100]Laen [2011] VSC 315 [10].
[101]Esso Australia Resources Ltd v Plowman (1995) 183 CLR 10, 33 (Mason CJ).
[102]P v Australian Crime Commission [2008] FCA 1336 [64].
Considering the relevant matters shows a compelling case for the grant of the dispensation sought:
(a) the disputed documents are emails between client and solicitor and solicitor and barrister giving and passing on instructions. They were the subject of privilege, which I have held to have been waived;
(b) they came into existence for the purpose of the preparation of affidavit material to be used in the application by Mrs Perton for summary judgment and, particularly, to resist leave being given to Mrs Walters to file and serve an amended defence and counterclaim in this proceeding;
(c) the authors of the documents resist their use, but the prejudice Mrs Perton will suffer is the prejudice of her confidential communication with her solicitor and barrister being revealed. That prejudice has been suffered by the disclosure to Mrs Walters made in the Costs Court proceeding;
(d) the nature of the information is:
(i) the revelation that the proceeds of the sale of the deceased’s New Zealand property amounting to $658,000 was used by Mrs Perton to fund various investments, including an investment of the Port Eagle Investment Trust, of which Mrs Perton was trustee, and that is, inferentially, the Eaglemont property; and
(ii) in preparing her affidavit of 28 October 2017, Mrs Perton’s legal advisors need not be concerned with how the deceased spent his money, which when read with Ms Ballantyne’s letter of 19 June 2018 should be taken to lead to the proposition that Mrs Perton received a gift of the money from the deceased. Something not revealed in the affidavit material before the Court on 31 October 2017;
(e) the circumstances in which it came into the hands of Mrs Walters’ lawyers is with the consent of Mrs Perton’s solicitors or costs consultant. The material in Ms Speirs’ affidavit shows that the disputed documents have been produced voluntarily by Mrs Perton in the Costs Court proceeding. They have not been produced by compulsion of any Court order or by the Court’s processes; and
(f) the likely contribution of the documents to achieving justice in the new proceeding, and in this proceeding is, I venture to suggest, self-evident from the circumstances set out above. On 31 October 2017, I set to one side the fact that Mrs Walters’ evidence relating to the use of the deceased’s funds was mere assertion because Mrs Perton gave ‘concrete evidence’ that she provided the funds to the Trust. Had the Court been appraised of the fact that the funds were sourced from the deceased’s sale of the New Zealand house, there was a much greater prospect that I would have found a matter to be investigated as to whether there was a basis, for example, for an institutional or remedial constructive trust in favour of Mrs Walters over the Eaglemont property. The source of the funds, if revealed by Mrs Perton, would at least have given ‘colour’ to her case which otherwise was lacking.
There is no suggestion in this case that the disputed documents were inspected in the Costs Court proceeding for an ulterior purpose. The fact that the parties are the same in this proceeding as in the new proceeding and that the issues are similar points to there being commonality between the proceedings sufficient to provide further reason to release the undertaking, if it applies. The disputed documents may bear on the issues for determination in the new proceeding. Counsel for Mrs Walters submitted, and I agree, that there is a public interest in ensuring that all relevant information and material is before the Court in the new proceeding and in this proceeding to enable it to properly discharge its judicial function.
Mrs Walters’ Counsel submitted that special circumstances exist in that prima facie false evidence had been adduced by Mrs Perton for the determination of her rights vis-à-vis a defendant, which evidence has played a primary role in one adjudication of the rights between them, and which continues to be fundamental to the adjudication of the rights between them in the new proceeding. They also submitted that it is an affront to the administration of justice, that the course of justice can be perverted by reliance on false evidence.
I do not find it necessary to determine whether Mrs Perton’s evidence given in her affidavits of 29 August, 5 and 28 October 2017 was false. There has been no in depth investigation of that question, nor any cross-examination of those involved, that would be necessary to reach that conclusion with the requisite degree of satisfaction.
Stay application
The application for the stay of the Costs Court proceeding is made pursuant to rr 66.14 and 66.16 of the Rules, alternatively, pursuant to the inherent jurisdiction of the Court. Pursuant to r 66.14, the ‘Court may stay execution of a judgment, or make such order as the nature of the case requires, on the ground of matters occurring after judgment.’ By r 66.16, the ‘Court may stay execution of a judgment.’
Rule 66.14
Rule 66.14 has its origins in the writ of audita querela,[103] which was abolished by Order 42 Rule 27 of the former Supreme Court Rules. That rule provided that no proceeding by the writ of audita querela was to be used, but any party against whom judgment had been given could apply for a stay of execution or other relief against the judgment upon the ground of facts which had arisen too late to be pleaded.[104]
[103]Law Latin for ‘complaint heard’.
[104]LexisNexis Butterworths, Civil Procedure Victoria, [66.14.0].
The rule:
(a) does not permit the Court to set aside a judgment by reason of matters occurring after judgment;[105]
(b) does empower the Court to grant a stay of execution, or some other order as the nature of the case requires, on the ground of matters occurring after the date on which the judgment took effect.[106]
[105]Bailey v Marinoff (1971) 125 CLR 529; Gamser v Nominal Defendant (1977) 136 CLR 145, 146; Wentworth v Woollahra Municipal Council (No 3) (1984) 154 CLR 518, 526; Permewan Wright Consolidated Pty Ltd v A-G (NSW); Ex rel Franklins’ Stores Pty Ltd (1978) 35 NSWLR 365; Lollis v Loulatzis (No 3) [2008] VSC 231 (Lollis); Giedo van der Garde BV v Sauber Motorsport AG (No 2) [2015] VSC 109; LexisNexis Butterworths, Civil Procedure Victoria, [66.14.0].
[106]Gamser v Nominal Defendant (1977) 136 CLR 145, 146.
The words ‘some other order’ in the rule should be construed eiusdem generis so that the order must concern matters pertaining to the execution and enforcement of judgments and orders in light of circumstances occurring after judgment, and does not provide for the variation or deletion of orders after they have been authenticated.[107]
[107]Lollis [2008] VSC 231 [40]–[41].
As a general rule, there is no inherent power to set aside a judgment regularly made and authenticated by reason of changed circumstances.[108] The rule is not inflexible and there are a number of exceptions to it, in addition to those that depend on statutory provisions such as the slip rule (r 36.07 of the Rules).[109] These exceptions include circumstances which involve clarification of the recorded judgment, or to making minor alternations to a judgment which do not affect the operative and substantive part of the judgment, and to circumstances (such as fraud and breach of natural justice) which impeach the obtaining of the judgment or order.[110]
[108]Ibid.
[109]Bailey v Marinoff (1971) 125 CLR 529, 539 (Gibbs J).
[110]Lollis [2008] VSC 231 [12] (per Kaye J).
Rule 66.16
Rule 66.16 of the Rules, and the Court’s inherent jurisdiction, empower the Court to stay execution.[111] It is a discretionary power and the Court is required to take into account all the circumstances of the case and is not bound by decisions on other sets of facts.[112] The starting point in exercising the discretion is the recognition that a party who obtains a judgment is entitled to have it enforced without delay.[113] The circumstances justifying a stay are those which go to the enforcement of the judgment and not to its validity or correctness.[114] Thus, the jurisdiction does not extend to grounds which are matters of defence and which ought to have been raised in the proceeding itself.
[111]Everest Project Developments Pty Ltd v Westpac Banking Corporation [2009] VSC 563.
[112]Joskovitz v Bonnick [1964] VR 654, 656 (Herring CJ); Sami v Roads Corp [2009] VSCA 44 [24] (Williams AJA).
[113]State Bank of Victoria v Parry [1989] WAR 240, 244 (Malcolm CJ); Re Middle Harbour Investments Ltd (In Liq) (Unreported, Supreme Court of New South Wales, Court of Appeal, Mahoney JA, 15 December 1976, 2); Sami v Roads Corp [2009] VSCA 44 [25] (Williams AJA).
[114]TC Trustees Ltd v JS Darwen(Successors) Ltd [1969] 2 QB 295; State Bank of Victoria v Parry [1989] WAR 240, 244 (Malcolm CJ); Sami v Roads Corp [2009] VSCA 44 [25] (Williams AJA).
Stays under r 66.16 of the Rules, and equivalent provisions, have been granted in situations such as those in which determinations of related[115] or third party proceedings[116] were pending.[117] It may, therefore, be appropriate to grant a stay of execution pending the determination of a related or third party proceeding.[118]
[115]Reading Entertainment Australia Pty Ltd v Burstone Victoria Pty Ltd (No. 2) [2005] VSC 137.
[116]See State Bank of Victoria v Parry [1989] WAR 240.
[117]Sami v Roads Corp [2009] VSCA 44 [26] (Williams AJA).
[118]Central Victorian Investments Limited v Filipi Nominees Pty Ltd [2013] VSC 517 [11].
Consideration
The Costs Court proceeding has progressed through a mediation and two telephone mentions to the point where the parties are prepared for a date for the taxation – in effect the trial – to be fixed. The date fixed at the time Ms Speirs made her affidavit was 20 July 2018. It is now to be heard at a date in August 2018.
The application needs to be seen as an application for a stay of execution of my order for costs, now the subject of the Costs Court proceeding, which is a separate proceeding in the Court under the control of the Costs Court.
The matters that have been identified in the disputed documents, and the disputed documents themselves, are all matters that occurred before the judgment was authenticated. They were, admittedly, only discovered after the judgment. That does not, in my view, make them matters within r 66.14. But it is not necessary to finally determine whether or not the inspection of the disputed documents, and through them the disclosure of the information they reveal, are matters occurring after the judgment given on 31 October 2017, or whether the relevant ‘matter’ is the communications in the disputed documents, or the disputed documents themselves, which undoubtedly preceded that judgment.
That is because this is a case where in the exercise of the Court’s general discretion under r 66.16 of the Rules a stay until further order should be made. The reasons are as follows:
(a) it is a legitimate reason to grant a stay of execution that it is appropriate to await the determination of a related proceeding.[119] The commencement of the new proceeding, in which claims similar to those sought to be raised in this proceeding, provides the first justification for a stay;
(b) the new proceeding may result in a finding that Mrs Walters has an interest in the Eaglemont property, which may result in a countervailing costs order. Thus although the work done so far on the Costs Court proceeding will not be wasted, further work might be duplicated, and thus wasted, by a further costs hearing after the hearing and determination of the new proceeding. That provides the second justification for a stay; and
(c) the taxation of the costs of this proceeding, and the claims made in the new proceeding, are appropriate cases for reference to mediation, together with the Part IV proceeding that Mrs Walters has brought against the estate of the deceased. It is desirable, in the pursuit of the just, efficient, timely and cost effective resolution of the real disputes between Mrs Walters and Mrs Perton, that there be a mediation of all proceedings as early as may be. That will not be assisted by the further conduct of the Costs Court proceeding, for the time being.
[119]Ibid [11].
Conclusions
The result of the above reasons is that the disputed documents:
(a) are not subject to any client legal privilege;
(b) should be produced by Mrs Perton to Mrs Walters;
(c) are not subject to the implied undertaking restricting their use in the new proceeding or in this proceeding, and, if they are so subject, the undertaking should be released; and
(d) the further execution of the order that Mrs Walters pay the costs of Mrs Perton, the subject of paragraph 4 of the orders of the Court made on 31 October 2017, should be stayed until further order.
I will ask the parties to confer and produce a draft minute of order giving effect to these reasons, including provision for mediation.
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