Riverstone Asset Pty Ltd v Ammendolea [No 2]
[2013] WASC 351
•23 SEPTEMBER 2013
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
CITATION: RIVERSTONE ASSET PTY LTD -v- AMMENDOLEA [No 2] [2013] WASC 351
CORAM: BEECH J
HEARD: ON THE PAPERS
DELIVERED : 23 SEPTEMBER 2013
FILE NO/S: CIV 1078 of 2010
BETWEEN: RIVERSTONE ASSET PTY LTD
Plaintiff
AND
CARLO AMMENDOLEA as in his own capacity and as Trustee for the Ammendolea Trust
First DefendantSUSANNA LISA AMMENDOLEA
Second Defendant
Catchwords:
Practice and procedure - Discovery - Legal professional privilege - Whether privilege waived - Whether claim of privilege inconsistent with maintenance of plea in the defence - Turns on own facts
Legislation:
Nil
Result:
Privilege waived
Production ordered
Category: B
Representation:
Counsel:
Plaintiff: No appearance
First Defendant : No appearance
Second Defendant : No appearance
Solicitors:
Plaintiff: Hotchkin Hanly
First Defendant : K & L Gates
Second Defendant : K & L Gates
Case(s) referred to in judgment(s):
AWB Ltd v Cole (No 5) [2006] FCA 1234; (2006) 155 FCR 30
Carey v Korda [2012] WASCA 228; (2012) 91 ACSR 572
Commissioner of Taxation v Rio Tinto Ltd [2006] FCAFC 86; (2006) 151 FCR 341
Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission [2002] HCA 49; (2002) 213 CLR 543
DSE (Holdings) Pty Ltd v Intertan Inc (2003) 127 FCR 499
Mann v Carnell [1999] HCA 66; (1999) 201 CLR 1
Nine Films & Television Pty Ltd v Ninox Television Ltd [2005] FCA 356; (2005) 65 IPR 442
Strzelecki Holding Pty Ltd v Cable Sands Pty Ltd [2009] WASC 2
BEECH J:
Introduction
The parties are in dispute in relation to whether privilege has been waived over communications between Mr Ammendolea and a firm of solicitors. The parties have agreed that the claim that privilege has been waived can be determined on the papers.
For the reasons that follow, I am satisfied that privilege has been waived over the disputed communications.
The claim that privilege has been waived must be considered in the context of the pleadings.
The pleadings
The plaintiff, Riverstone claims, relevantly, that the transfer (the Transfer) lodged on 25 July 2008 by the first and second defendants, Mr and Mrs Ammendolea respectively, transferring Mr Ammendolea's interest in a property then held by Mr and Mrs Ammendolea as joint tenants to Mrs Ammendolea, was effected with the intent by Mr Ammendolea to defraud creditors.[1]
[1] Substituted Statement of Claim dated 2 November 2012 [26].
Mr Ammendolea denies that that is so. Further, he pleads that the Transfer was 'an honest family arrangement for the purpose of protecting [the property for the benefit of Mrs Ammendolea and their children]'.[2]
[2] First defendant's substituted Defence dated 20 December 2012 [18(a)].
Further, he pleads that the consideration for the Transfer was $275,000.[3]
[3] First defendant's substituted defence dated 20 December 2012 [15(b)].
For reasons which will emerge, it is, in my view, significant that Mr Ammendolea does not simply deny Riverstone's allegation that the Transfer was executed with an intent to defraud creditors. Mr Ammendolea pleads a positive intention, asserting that the Transfer was an honest family arrangement for the purpose already explained.
I turn to the legal principles relevant to the questions of waiver.
Waiver: Legal principles
Legal professional privilege is a rule of substantive law and an important common law immunity.[4]
[4] Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission [2002] HCA 49; (2002) 213 CLR 543, [9] - [11].
The onus of proving that privilege has been waived falls upon the party alleging the waiver.[5]
[5] Nine Films & Television Pty Ltd v Ninox Television Ltd [2005] FCA 356; (2005) 65 IPR 442 [21].
It is inconsistency between the conduct of the client and the maintenance of the confidentiality which effects an implied waiver of privilege.[6]
[6] Mann v Carnell [1999] HCA 66; (1999) 201 CLR 1 [28].
Mr Ammendolea submitted that privilege is not waived unless there is clear conduct or language which evinces an intention to waive privilege either expressly or by necessary implication, citing Nine Films & Television Pty Ltd v Ninox Television Ltd [5]. The statement in that case concerned statutory waiver, not waiver by the client. The question of implied waiver by the client is not governed by the subjective intention of the party claiming privilege.[7]
[7] Mann v Carnell [29] ‑ [30]; Carey v Korda [2012] WASCA 228; (2012) 91 ACSR 572 [72].
The assessment of whether a party has waived privilege is determined by considering whether, viewed objectively, the conduct of the privilege holder is inconsistent with the maintenance of a claim for confidentiality. That assessment may be informed by considerations of fairness.[8]
[8] Mann v Carnell [29], [34]; AWB Ltd v Cole (No 5) [2006] FCA 1234; (2006) 155 FCR 30 [130] ‑ [131].
In Commissioner of Taxation v Rio Tinto Ltd, the Full Federal Court cited the following observations made by Allsop J in DSE (Holdings) Pty Ltd v Intertan Inc:[9]
[T]he party entitled to the privilege makes an assertion (express or implied), or brings a case, which is either about the contents of the confidential communication or which necessarily lays open the confidential communication to scrutiny and, by such conduct, an inconsistency arises between the act and the maintenance of the confidence, informed partly by the forensic unfairness of allowing the claim to proceed without disclosure of the communication (emphasis removed).
[9] Commissioner of Taxation v Rio Tinto Ltd [2006] FCAFC 86; (2006) 151 FCR 341 [61], citing DSE (Holdings) Pty Ltd v Intertan Inc (2003) 127 FCR 499 [58].
Mr Ammendolea invited application of that approach to the resolution of the disputed claim of waiver of privilege in this case. I am content to adopt that approach.
It is not open to another party to litigate to force a waiver of privilege by making assertions about, or seeking to put in issue, that party's state of mind. Denial of a state of mind asserted by the other party in its pleadings does not amount to conduct waiving privilege.[10] In this case, Mr Ammendolea has done more than simply deny Riverstone's plea about his state of mind. He has asserted a positive case about his state of mind.
[10] DSE (Holdings) v Intertan Inc [121]; Strzelecki Holding Pty Ltd v Cable Sands Pty Ltd [2009] WASC 2 [57].
The documents in dispute
Mr Ammendolea has claimed privilege over (the communications in) documents described as being confidential communications passing between him and his legal adviser for the purpose of obtaining or giving legal advice to him. Mr Ammendolea's solicitors have stated that those documents are 'confidential email communications ... for the purposes of providing and obtaining legal advice in relation to the family arrangement referred to in par 18 of the substituted defence',[11] saying that the date range for the communications is 29 July 2008 to 15 August 2008.
[11] Email of 12/2/13 to Riverstone's solicitors.
Riverstone has issued a subpoena to Maxim Hall Chadwick Pty Ltd. Six documents listed as produced pursuant to that subpoena are the subject of claims of privilege and the disputed claim of waiver. These are documents 23 to 28 on the list. These are email chains within the same date range as the disputed discovered documents.
The disposition of the application
In my opinion, for the reasons that follow, Mr Ammendolea has waived privilege over the disputed documents.
Mr Ammendolea asserts, in his defence, that the consideration for the Transfer was $275,000, and that the Transfer was 'an honest family arrangement for the purpose of protecting the property for [Mrs Ammendolea and the children's benefit]'. In my view, those pleas necessarily lay open to scrutiny the disputed communications between Mr Ammendolea and his solicitors, and the maintenance of the claim to privilege is inconsistent with those pleas. That is because those communications are capable of bearing on whether Mr Ammendolea's assertions, pleaded in the defence and summarised above, should be accepted. In my view, this is so in at least two respects.
First, there is other material to suggest that Mr Ammendolea made a gift of the $275,000 he is said to have received from Mrs Ammendolea as consideration for his share of the property, back to Mrs Ammendolea very soon thereafter. That is capable of giving rise to questions as to the genuineness of the payment of the consideration of $275,000 that is pleaded by Mr Ammendolea.
Secondly, Mr Ammendolea's solicitors have stated that the communications were for the purpose of providing and obtaining legal advice in relation to the family arrangement referred to in the defence. In that light, in my view, it would be inconsistent for Mr Ammendolea to maintain his claim to privilege in relation to these communications, while asserting that the Transfer was an honest family arrangement in the way pleaded in par 18.
Mr Ammendolea submits that the disputed documents post‑date the steps taken by him to transfer the property and the registration itself. It follows, the submission continues, that the communications 'have no bearing whatsoever' on his pleaded state of mind, because they are not contemporaneous with the Transfer.[12]
[12] First defendant's submissions dated 18 September 2013 [16].
I do not accept that submission. Evidence of a person's state of mind is not inevitably limited to material up to the date in question. To the contrary, in many cases, what a party said or did after the relevant time can be a powerful indication of the party's state of mind at the time in question.
Mr Ammendolea further submits that there is no unfairness in the maintenance of his claim to privilege because it does not give rise to prejudice to Riverstone. That is because, the submission continues, certain other material is available to Riverstone about the gifting by Mr Ammendolea of $275,000 to Mrs Ammendolea, shortly after the registration of the Transfer. I reject that submission. Contrary to Mr Ammendolea's submission,[13] it does not 'follow', from the fact that some material is available, that the disputed material would add nothing. In light of Mr Ammendolea's assertions in his defence, fairness requires that the whole of the material bearing on those assertions, including the disputed documents over which privilege is claimed, should be available to Riverstone. I reached this conclusion without knowing the contents of the disputed material. Inspection of that material served to confirm that conclusion.
[13] First defendant's submissions dated 18 September 2013 [20].
Conclusion
For these reasons, I make orders to the effect sought by Riverstone.
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