Shipton and Shipton & Ors

[2020] FamCA 665

FAMILY COURT OF AUSTRALIA

SHIPTON & SHIPTON AND ORS [2020] FamCA 665

FAMILY LAW – PRACTICE AND PROCEDURE – Subpoena objection to inspection and disclosure on the grounds of legal professional privilege – Dominant purpose test – Whether issue should be dealt with as a production issue rather than an inspection issue – Where material has already been produced – Whether disclosure should occur – Where documents are not already in the public domain – Where onus rests on person claiming privilege to establish basis for claim of privilege – Where no evidence identified to support claim of privilege – Where inspection of documents to resolve privilege claim was not pursued – Privilege does not attach

Evidence Act 1995 (Cth) – ss 118, 119
Uniform Civil Procedure Rules 2005 (NSW)
Family Law Rules 2004 (Cth) – rules 15.26, 15.31
Federal Circuit Court Rules 2001 (Cth) – rule 15A.14

Esso Australia Resources & FCT (1999) 201 CLR 49

Grant & Downs (1976) 135 CLR 674
Hancock & Rinehart (Privilege) [2016] NSWSC 12
Glencore International AG and Others & Commissioner of Taxation and Others (2019) 265 CLR 646

APPLICANT: Ms Shipton

1st RESPONDENT: Mr Shipton

2nd RESPONDENT: Mr B Shipton

3rd RESPONDENT: C Pty Ltd (ACN …)

4th RESPONDENT: D Pty Ltd (ACN …)

FILE NUMBER: CAC 829 of 2019

DATE DELIVERED: 13 August 2020

PLACE DELIVERED: Canberra

PLACE HEARD: Canberra

JUDGMENT OF: Gill J

HEARING DATE: 21 May 2020

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Howard

SOLICITOR FOR THE APPLICANT: Farrell Lusher Solicitors

COUNSEL FOR THE 1ST RESPONDENT: Mr Blank

SOLICITOR FOR THE 1ST RESPONDENT: H Solicitors

COUNSEL FOR THE 2ND RESPONDENT: Mr Haddock

SOLICITOR FOR THE 2ND RESPONDENT: Walsh & Blair

COUNSEL FOR THE 3RD RESPONDENT: Mr Haddock

SOLICITOR FOR THE 3RD RESPONDENT: Walsh & Blair

COUNSEL FOR THE 4TH RESPONDENT: Mr Haddock

SOLICITOR FOR THE 4TH RESPONDENT: Walsh & Blair

Orders

1. The claims in relation to privilege in respect of the documents produced by G Accountants and placed into an envelope by the Husband or First, Second or Third Respondent pursuant to the orders of Judge Hughes of 3 September 2019 are dismissed;

2. The Wife is entitled to inspect and copy the documents retained in the envelope identified in Order 1 above.

Note: The form of the order is subject to the entry of the order in the Court’s records.

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

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT CANBERRA

FILE NUMBER: CAC 829 of 2019

Ms Shipton

Applicant

And

Mr Shipton

1^st Respondent

And

Mr B Shipton

2^nd Respondent

And

C Pty Ltd (ACN …)

3^rd Respondent

And

D Pty Ltd (ACN …) 

4^th Respondent

REASONS FOR JUDGMENT

1. This matter involves a claim of legal professional privilege made by the second, third and fourth Respondents (the Respondents) and supported by the Husband, in resisting a subpoena to produce issued at the request of the Wife, directed to the Respondents’ accountants, G Accountants (the Accountants).

2. A Notice of Objection in relation to this subpoena was filed by the Husband.  Privilege based on the documents being produced for the dominant purpose of providing legal advice is claimed.

3. Orders made by Judge Hughes on 3 September 2019 dismissed the Notice of Objection filed by the Husband, subject to consent orders allowing first access to the Husband and to the Respondent, directed to the identification of documents said to attract privilege, with the Wife able to otherwise inspect, copy and photocopy the balance of the documents.  The Wife then was granted liberty to apply in relation to the documents for which privilege was claimed.

4. The following eight documents were then identified as those said to attract privilege by the Husband and Respondents:

   a)File note of phone call in from Mr F to G Accountants dated 1 December 2016;

   b)Fax from H Solicitors to G Accountants dated 3 October 2002;

   c)Letter from H Solicitors to G Accountants dated 27 July 2004;

   d)Email from G Accountants to H Solicitors dated 7 December 2004;

   e)Fax from H Solicitors to G Accountants dated 6 October 2004;

   f)Email from H Solicitors to G Accountants dated 6 December 2004;

   g)Fax from H Solicitors to G Accountants dated 19 November  2003; and

   h)File note: meeting with Mr F dated 30 October 2003.

5. On 5 November 2019, further orders were made by consent in the Federal Circuit Court for the filing of submissions in relation to the claims of privilege.

6. The proceedings were transferred to the Family Court of Australia on 6 May 2020 and, as noted above, on 21 May 2020 directions were made, by consent, to resolve the privilege claim by the written submissions that were filed.

7. The Respondents’ submissions raised issues beyond the privilege claim. 

8. The issues raised by the Respondents in their written submissions, in addition to privilege, included complaints in relation to relevance, legitimate forensic purpose, breadth of the material sought and oppression. 

9. The Wife opposed the broadening of these issues given the manner in which the issue in relation to the subpoena had progressed.  She rightly pointed to the need to reopen the submissions if the Respondents were permitted to enlarge the scope of their opposition to the subpoena.

10. Given that the objection was dismissed, but for the privilege issue, on 3 September 2019, documents were released and inspection took place (but for the documents for which privilege was claimed), the Respondents are not entitled to now raise those complaints.  This is inconsistent with their previous conduct of the case in relation to the subpoena, and is inconsistent with the scope of inspection that has already been allowed.  The issue is now restricted to the privilege claim.

The claim of privilege

1. The Respondents and Applicants both asserted that the issue is to be determined by reference to s 118 of the Evidence Act 1995 (Cth), being the provision that deals with adducing evidence of confidential communications between a client and lawyer, although here the communication was with a third party and the adducing of such evidence would seem to be governed by s 119 of the Evidence Act 1995 (Cth).

2. However, as was identified by the High Court in Esso Australia Resources & FCT,[1] s 118 (and by inference, s 119) is concerned with the admissibility of evidence rather than a compulsion to produce material by virtue of a subpoena. Although NSW, Victoria, the ACT and Northern Territory have extended the operation of s 118 and s 119 to disclosure requirements, such as the requirement to produce documents under subpoena, the Commonwealth has not extended their operation in the same manner.

   [1]Esso Australia Resources & FCT (1999) 201 CLR 49 (‘Esso’).

3. Perhaps little turns on this distinction given that in Esso the majority (Gleeson CJ, Gaudron, Gummow and Callinan JJ) adopted the dominant purpose test (which is also the test applied by s 118), which had previously been set out by Barwick CJ in Grant && Downs[2] as follows:

   ‘Having considered the decisions, the writings and the various aspects of the public interest which claim attention, I have come to the conclusion that the Court should state the relevant principle as follows: a document which was produced or brought into existence either with the dominant purpose of its author, or of the person or authority under whose direction, whether particular or general, it was produced or brought into existence, of using it or its contents in order to obtain legal advice or to conduct or aid in the conduct of litigation, at the time of its production in reasonable prospect, should be privileged and excluded from inspection.’

   [2]Grant & Downs (1976) 135 CLR 674.

4. This test was identified by the majority at [57] as the proper balance between the competing public interests involved as follows:

   The search is for a test which strikes an appropriate balance between two competing considerations: the public policy reflected in the privilege itself (earlier identified at [35] as the entitlement to “seek and obtain legal advice in the conduct of his or her affairs, and legal assistance in and for the purposes of the conduct of actual or anticipated litigation, without the apprehension of being prejudiced by subsequent disclosure of the communication”), and the public policy that, in the administration of justice and investigative procedures, there should be unfettered access to relevant information.

5. The identification of this balance is a useful reminder of the competing interests involved, and of the importance of, without trespassing on privileged communications, allowing unfettered access to the information necessary to come to a just resolution of a dispute.

6. The assertion of privilege in this case is on the basis that the identified documents “have been prepared by the accountants for the dominant purpose of the 2^nd, 3^rd and 4^th respondents receiving legal advice from their solicitors.  This includes documents relating to the business operated by the 2nd, 3^rd and 4^th respondents and future planning and succession for that business for the presentation of a range of legal structuring options.”[3]

   [3] Submissions for the Respondents.

7. It was asserted by the Respondents that their privilege claim should be dealt with as a production issue rather than an inspection issue, with reliance being placed on the judgment of Brereton J in Hancock & Rinehart (Privilege).[4]There, his Honour identified that the privilege is a privilege to resist production to the Court, in reliance on a number of authorities, and as confirmed by the content of the Uniform Civil Procedure Rules 2005 (NSW) (‘UCPR’), which confirms the ability to object to production as a step preliminary to production.  Such an ability is consistent with the Family Law Rules 2004 (Cth) at Rules 15.26 and 15.31, which provide for objection to be taken prior to production. In particular, Rule 15.26 permits objection by either the person named in the subpoena, or by an interested person (which description would include a party claiming privilege), and directs that the objection is to be made prior to the date for production to the court. Similar provision is also made at Rule 15A.14 of the Federal Circuit Court Rules 2001 (Cth), which governed the production of the material before the Federal Circuit Court prior to the transfer to this court.

   [4] [2016] NSWSC 12.

8. As with the UCPR, the Family Court Rules provide that the Court may require production for the purpose of ruling on the claim.

9. Legal professional privilege has been conceptualised by the High Court in Glencore International AG and Others & Commissioner of Taxation and Others[5] as “an immunity from the exercise of powers which would otherwise compel the disclosure of privileged communications.” 

   [5] (2019) 265 CLR 646 (‘Glencore’).

10. Further describing the right, the High Court described the privilege as:

    “a right to resist the compulsory disclosure of information” or “the right to decline to disclose or to allow to be disclosed the confidential communication or document in question”…an immunity

11. Confirming the correctness of the position identified by Brereton J, the High Court in Glencore observed that the privilege is a protection from compulsion to produce and observed that once disclosure of a privileged communication takes place, “resort must be had to equity for protection respecting the use of that material…the juridical basis for relief in equity is confidentiality.”[6]

    [6] Ibid [34].

12. Hence, as identified by the Respondents, the High Court in Glencore and Brereton J in Hancock, the privilege is a privilege from production. 

13. However, in this case, although the issue was raised by the Husband prior to production, the material was produced to the Court, and produced prior to the involvement of the Respondents in the proceedings.

14. The sequence in relation to production commenced with the issue of a subpoena at the request of the Wife to the Accountants on 7 May 2019, which provided that the documents were to be provided to the Registry by 28 May 2019.  A Notice of Objection was filed by the solicitors for the Husband on 24 May 2019, objecting to inspection, but not to production. 

15. On 28 May 2019, the Accountants delivered to the Registry documents in response to the subpoena.

16. On 1 July 2019, the Respondents (or rather, Mr B Shipton) was identified as a necessary party by Judge Hughes, and it was noted that the Wife would file an amended application naming Mr B Shipton.  An Amended Initiating Application naming the Respondents was filed by the Wife on 27 August 2019.

17. As noted above, on 3 September 2019 orders were made dismissing the Husband’s Notice of Objection and (by consent) both providing and restricting access to the material produced by the Accountants, such as to give the Husband and Respondents first access.

18. Accordingly, the documents have already been produced, inspected by the Husband and Respondents for the purpose of identifying a claim.  Those that are not the subject of the claim have been available to the Wife, and those the subject of a claim have been placed into an envelope pending this ruling.

19. The documents having been produced to the Court, the issue becomes one of disclosure of the documents by inspection rather than production.  Given that the privilege provides an immunity from the obligation to produce, the question arises as to how the produced but undisclosed documents are to be dealt with.

20. Unlike what occurred in Glencore, this is not a case where the documents are already in the public domain (and hence known to the protagonists).  Unlike Hancock, this is not a case where the person claiming the privilege sought to disclose the documents to the Court in order to establish the privilege, but in a manner inconsistent with the privilege.

21. In this case, although the Court holds the documents, there has been neither disclosure to the Court of the documents, nor have the documents entered the possession of the Wife, the documents having been protected by the processes surrounding inspection of the documents. Neither the Court nor the parties have at any stage treated the claim regarding privilege as resolved. 

22. Although produced, the documents have not been disclosed in a relevant sense to denude the Respondents of the protection of the privilege and to require the Respondents to rely upon equity to restrain their use by the Wife.  They remain, in the relevant sense, undisclosed.  The issue is whether they are properly entitled to an immunity from disclosure to the Wife.

23. In Hancock, Brereton J observed that, even if production occurs, the claim of privilege remains relevant to whether inspection should be permitted. 

24. It remains, then, to resolve whether the Respondents are entitled to immunity from disclosure that would be caused by the Court permitting inspection by the Wife.  In this aspect Hancock is again of assistance in that it identifies that the onus rests upon the person claiming privilege to establish, by adducing sufficient evidence to do so, the basis for the claim of privilege which, in this case, is evidence to establish that the dominant purpose of the documents that passed between the accountant and law firm was, in each instance, to obtain legal advice.

25. In this case, no evidence has been identified in support of such a factual conclusion, to establish the purpose of the production of each of the documents.  Even if the schedule describing the documents, as produced on behalf of the Husband, and the content of which is set out above, is accepted as factually establishing what it represents (and as a matter of evidence it cannot, it merely being a set of unsworn hearsay assertions made by an unknown author) it takes the matter no further.  It is only on the basis of speculation that a conclusion may be available from the schedule that the documents were produced for the identified dominant purpose.  There is no evidence of the purpose produced from the Respondents, from the lawyers, or from the accountants.

26. While in some cases privilege is sought to be resolved on an inspection of the documents, such a course was not pursued by any of the parties in this case.  Although Brereton J rejected such a course of action being available, reference to such in Esso means that inspection cannot be ruled out as an option.  It is not, however, an option where, as here, no party has pursued it.

27. Accordingly, in the absence of proof that the documents were produced for the dominant purpose of obtaining legal advice, the privilege claims made by the Husband and Respondent are dismissed and the Wife will be granted access to the documents retained in the envelope.

I certify that the preceding thirty-seven (37) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Gill delivered on 13 August 2020.

Associate: 

Date:  13 August 2020