Stevenson and Manuel & Anor
[2014] FamCA 1050
•26 November 2014
FAMILY COURT OF AUSTRALIA
| STEVENSON & MANUEL AND ANOR | [2014] FamCA 1050 |
| FAMILY LAW – PROPERTY - Interim Orders - bifurcation – application to set aside final property orders pursuant to s 79A – where husband seeks to sever s 79A and s 79 proceedings – wife opposes application for bifurcation – where husband’s current partner joined to proceedings – orders made for the bifurcation of the s 79A proceedings but limited to the question of whether a miscarriage of justice has occurred. FAMILY LAW – PRACTICE AND PROCEDURE – Privilege – Waiver – where husband viewed documents the subject of a claim of privilege - whether wife waived privilege by failing to object to the production and inspection of her former solicitor’s file – where wife denies she waived privilege and asserts husband was on notice of a claim of privilege – no waiver of privilege. FAMILY LAW – COSTS – Security for Costs – where second respondent seeks security for costs – where second respondent will have limited role in s 79A proceedings – whether an order for security for costs would stifle proceedings – financial resources of the parties – orders made for the wife to provide limited security for costs for the husband and second respondent. |
| Family Law Act 1975 (Cth) s 79, 79A, 117(2A) Family Law Rules 2004 (Cth) r 10.13, 10.14 |
| Expense Reduction Analysts Group Pty Ltd and Ors v Armstrong Strategic Management and Marketing Pty Ltd and Ors (2013) 250 CLR 303 Luadaka & Luadaka (1998) FLC 92-830 Oastler & Oastler (1993) FLC 92-39 Patching & Patching (1995) 18 Fam LR 675; (1995) FLC 92-585 Stanford & Stanford (2012) 247 CLR 108 Wernham & Campagnola [2012] FamCAFC 137 |
| APPLICANT: | Mr Stevenson |
| RESPONDENT: | Ms Manuel |
| SECOND RESPONDENT: | Ms Beckett |
| FILE NUMBER: | ADC | 5873 | of | 2007 |
| DATE DELIVERED: | 26 November 2014 |
| PLACE DELIVERED: | Adelaide |
| PLACE HEARD: | Adelaide |
| JUDGMENT OF: | Dawe J |
| HEARING DATE: | 11 June 2014 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr McQuade |
| SOLICITOR FOR THE APPLICANT: | Adey Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Mellows |
| SOLICITOR FOR THE RESPONDENT: | Jordan & Fowler Barristers & Solicitors |
| COUNSEL FOR THE SECOND RESPONDENT: | Ms Kari |
| SOLICITOR FOR THE SECOND RESPONDENT: | Barnes Brinsley Shaw Lawyers |
Upon noting that the Court finds that the wife has not waived legal professional privilege in relation to documents and materials contained in her former solicitors’ files.
Orders
The proceedings are adjourned to the First Day hearing before me at 10.00 am on 28 January 2015 for directions and listing of the threshold question and limited to whether there has been a miscarriage of justice pursuant to s 79A.
The further proceedings pursuant to s 79A are adjourned to await the outcome of the proceedings referred to in paragraph (1) hereof.
Compliance with paragraph 2 of the Orders of the Court on 13 November 2013 be stayed pending further Order and the outcome of determination of the proceedings referred to in paragraph (1) hereof.
By way of security for the husband’s costs and second respondent’s possible costs of the proceedings generally the wife is restrained and the injunction granted on 11 June 2014 is continued which restrains the wife from using the sum in the MLC Managed Fund to the extent the funds are not reduced below SIXTY THOUSAND DOLLARS [$60,000.00].
The Order of 12 April 2014 restraining the second respondent from in any way dealing with the property at Suburb A is discharged and in lieu thereof the following order is made:
(a)Until further order the second respondent Ms Beckett is restrained from selling, mortgaging, encumbering or in any way dealing with her interest in B Street, Suburb A in the State of South Australia SAVE AND EXCEPT that the second respondent is at liberty to mortgage or encumber the property for any loan not exceeding ONE HUNDRED THOUSAND DOLLARS [$100,000.00].
The husband’s Application in a Case filed 24 April 2014 is dismissed.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Stevenson & Manuel and Anor has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT ADELAIDE |
FILE NUMBER: ADC 5873 of 2007
| Mr Stevenson |
Applicant
And
| Ms Manuel |
Respondent
And
Ms Beckett
Second Respondent
REASONS FOR JUDGMENT
Introduction
The current proceedings were initiated in 2011 by Ms Manuel (“the wife”) who seeks to have the final property and spousal maintenance orders made by consent on 27 June 2002 set aside pursuant to s 79A of the Family Law Act 1975 (Cth) (“the Act”). The wife alleges a miscarriage of justice and asks the Court to re-exercise its discretion pursuant to s 79. Mr Stevenson (“the husband”) opposes the wife’s application to set aside the earlier property orders. The wife joined the husband’s present wife, Ms Beckett (“the second respondent”), to proceedings in early 2014 alleging she held property on trust for the husband.
The most recent tranche of litigation concerns an application by the husband to bifurcate the s 79A and s 79 proceedings. The application is opposed by the wife who seeks to have the matters heard together. The second respondent supports the husband’s application and seeks that a further order be made for the wife to provide security for the second respondent’s costs.
An application for bifurcation was previously brought by the wife in November 2012. The application was, at that time, opposed by the husband. The second respondent having only been joined in March 2014 was not heard in respect of that application. The wife’s application came before me in December 2012 at which time I declined to make a determination on the bifurcation issue. (See Manuel & Stevenson [2012] FamCA 1077). In due course the proceedings were referred to the list of matters awaiting trial. The issue of bifurcation was then raised again when the husband filed his application in May 2014.
Brief Background
The husband and wife entered into Consent Orders for final property and spouse maintenance orders on 27 June 2002.
One of the assets of the parties at the time of the Consent Order was the interest in C business (C) held by the D Trust.
Sometime in the Financial Year ended 30 June 2002 a distribution of $474,000 was made from the D Trust to the mother of the husband. The wife asserts that during this period the husband had represented C to be in “dire financial circumstances” and was trading at a loss.
The wife argues the husband failed to disclose the true value of his interest in C and the income received from the D Trust at the time the property settlement was made. It is the wife’s case that this amounts to a miscarriage of justice.
The wife initiated further proceedings in 2011 seeking to have the 2002 Consent Orders set aside. In her Further Amended Initiating Application filed 19 March 2014 the wife seeks final orders that the 2002 Consent Orders be set aside and the husband pay the wife the sum of $950,000 or “such other sum as the Court shall determine”.
The husband and second respondent met in September 2004 and married in 2006. They have two young children aged four and two years. The husband and second respondent live in Suburb A in a property registered in the sole name of the second respondent. The wife alleges the Suburb A property, although owned by the second respondent, is held on trust for the husband having been purchased using funds from entities controlled by the husband.
The husband opposes any attempt by the wife to set aside the 2002 Consent Orders.
On application by the wife, the second respondent was joined to the property settlement proceedings on 12 March 2014. A further order was made which provided that the second respondent is restrained and an injunction granted restraining her from selling, mortgaging, encumbering or in any way dealing with her interest in the Suburb A property.
In the Amended Response to Initiating Application filed 4 April 2014 the second respondent seeks to dismiss orders 2 and 3 of the wife’s application. Order 2 of the wife’s application seeks orders that the second respondent holds the Suburb A property on trust for the benefit of the husband and order 3 provides that the property be sold and applied to a final settlement sum between the husband and wife.
Procedural History
On 12 March 2014 orders were made which joined the second respondent to the proceedings and restrained her from selling, mortgaging, encumbering or in any way dealing with the Suburb A property. That injunction was continued, not by consent and not opposed, by orders made 3 April 2014.
The second respondent filed an Amended Response to Initiating Application on 4 April 2014 seeking the following final orders:
1. That Orders 2 and 3 sought by the wife in her Further Amended Initiating Application filed on 19 March 2014 be dismissed.
2. That the wife do pay the second respondent’s costs of and incidental to this application.
3. Such further or other Order as this Honourable Court deems appropriate.
The second respondent also sought interim orders that would allow her to borrow up to $100,000 against the Suburb A property, that the wife pay $60,000 to her solicitor’s trust account as security for costs or in the alternative that the wife be restrained from disposing of $70,000 from the proceeds of sale currently invested with the National Australia Bank (“NAB”).
On 24 April 2014 the husband filed an Application in a Case seeking the following orders:
1. That there be a bifurcation of the issues to the intent that the matters relevant to Section 79A of the Family Law Act 1975 (as amended) be heard and determined prior to this Honourable Court considering the Section 79 factors.
2. That the requirement for compliance with paragraph 2 of the order of this Honourable Court dated 13th November 2013 (and relating to the valuation to be conducted by [Mr E]) do be stayed pending the outcome of the discrete hearing sought in paragraph 1 hereof.
3. That by way of providing security for the first named respondent [Mr Stevenson’s] costs, the applicant [Ms Manuel] do pay the sum on ONE HUNDRED AND FIFTY THOUSAND DOLLARS ($150,000.00) into her solicitor’s trust account within seven days of an order being made in that regard with sum then to remain in her solicitors trust account pending the outcome of this matter.
4. That in the alternative to the order sought in paragraph 3 hereof the applicant [Ms Manuel] be restrained and an injunction be granted restraining the applicant [Ms Manuel] from disposing or otherwise dealing with the sum of ONE HUNDRED AND FIFTY THOUSAND DOLLARS ($150,000.00) from her savings and which the appellant currently has invested in the National Australia Bank.
5. The applicant [Ms Manuel] do within fourteen (14) days of an order being made make further and better discovery of and provide to the respondents’ solicitors copies of all notes, letters, emails and other communications passing between the applicant [Ms Manuel], her legal advisors including but not limited to [F Lawyers], [Mr G], [Ms H] and [Ms I], the accountant [Mr J] and/or the accountant [Mr K] during the period 9th May 2002 to 31 December 2002 inclusive.
6. Such further order as this Honourable Court deems appropriate.
7. Costs.
The wife filed a Response to an Application in a Case on 22 May 2014 seeking the following orders:
1. That the first respondent have leave to file this Response and supporting affidavits out of time
2. That the interim orders sought by the second respondent [Ms Beckett] by Amended Response to Initiating Application filed on 4/4/14 be dismissed.
3. That the orders sought by the husband in Application in a Case filed on 24/4/14 be dismissed.
4. That the first respondent have leave to inspect the records of the Court evidencing the date of the inspection by the husband and/or the second respondent or their solicitors, servants or agents respectively of documents produced on subpoenaed by [F Lawyers].
5. That paragraph 1 of the Order made on 30/11/10 be discharged.
6. That the husband do pay urgent and/or interim child support to the wife pending trial in the sum of $2,500 per calendar month commencing 1/6/14 and on the first day of each month thereafter.
7. Costs against the husband and the second respondent in such proportions as the Court shall determine.”
The applications came before the Court on 11 June 2014. The wife was represented by Mr Mellows of counsel, the husband was represented by Mr McQuade of counsel and the second respondent was represented by Ms Kari of counsel.
Early in the hearing Mr G arrived and sat in the body of the court. Whether Mr G is to be a relevant witness is yet to be determined but the wife was on notice that I may draw adverse conclusions from his failure to give evidence in this matter in relation to the s 79A application. That being the case I deemed it inappropriate that Mr G be present during the privilege issue and accordingly Mr G removed himself from the court.
Following submissions from all counsel, and the receipt of written outlines of argument, judgment was reserved at the conclusion of the hearing.
Pending delivery of the reserved judgment it was ordered that the wife be restrained from using the sum of $60,000 in the MLC Managed Fund. This being in relation to the claim for security for costs by the second respondent.
Bifurcation
The respondent husband sought an order that there be a bifurcation of the issues to “the intent that matters relevant to s 79A of the Act be heard and determined” prior to the s 79 proceedings. The application for bifurcation is supported by the second respondent.
Counsel for the husband submitted that the second respondent would only be required for the fact finding stage of the final property settlement proceedings if the wife was successful in establishing the necessary conditions.
Section 79A (1) (a) of the Act provides:
Setting aside of orders altering property interests
(1)Where, on application by a person affected by an order made by a court under section 79 in property settlement proceedings, the court is satisfied that:
(a)there has been a miscarriage of justice by reason of fraud, duress, suppression of evidence (including failure to disclose relevant information), the giving of false evidence or any other circumstance;
…
the court may, in its discretion, vary the order or set the order aside and, if it considers appropriate, make another order under section 79 in substitution for the order so set aside.
The husband brought an application for bifurcation pursuant to rule 10.13 and 10.14 of the Family Law Rules 2004 (Cth) (“the Rules”) as set out below:
RULE 10.13
Application for separate decision
A party may apply for a decision on any issue, if the decision may:
(a) dispose of all or part of the case;
(b) make a trial unnecessary;
(c) make a trial substantially shorter; or
(d) save substantial costs.
RULE 10.14
What the Court may order under this Part
On an application under this Part, the Court may:
(a) dismiss any part of the case;
(b) decide an issue;
(c) make a final order on any issue;
(d) order a hearing about an issue or fact; or
(e) with the consent of the parties, order arbitration about the case or part of the case.
Note: This list does not limit the powers of the Court. The Court may make orders on an application, or on its own initiative (see rule 1.10).
In Wernham & Campagnola [2012] FamCAFC 137 (a matter in which there was an application for bifurcation of s 79A proceedings), Ryan J (Ainslie-Wallace J agreeing) stated at [38] that the Rules allow the Court to order a discrete hearing on an issue of fact or law, or both.
While the Court clearly has the power to sever proceedings and conduct separate hearings the authorities indicate this is not the preferred approach.
In Oastler & Oastler (1993) FLC 92-390 the Full Court considered whether s 79A proceedings should be severed from the s 79 matter and held that “prima facie at least the whole matter should be dealt with in one proceeding”. The Full Court noted the following at 80,006:
Whilst it is not necessary to lay down as an inflexible rule that such a course cannot be followed, prima facie at least the course adopted does not appear to be consistent with what the section envisages. The section provides that “the Court may, in its discretion, vary the order or set it aside and, if it considers it appropriate, make another order under section 79 in substitution for the order so set aside”. The power granted to the Court hearing the application under section 79A to vary the existing order strongly suggests that there should be one proceeding only in which the proceedings to vary or set aside the order and if appropriate, to make another order, should be disposed.
However the Court may bifurcate proceedings in the appropriate circumstances. In Patching & Patching (1995) 18 Fam LR 675 the Full Court considered the factors relevant to an application for bifurcation at 678:
In Oastler (1993) FLC 92-390 the Full Court emphasised that it is generally preferable to deal with all of the steps in the one hearing. The reasons for that are obvious, namely that even if the Court concludes that there have been circumstances which amount to a miscarriage of justice it must then consider whether in all the circumstances it should exercise its discretion to vary or set aside the orders and/or make a new s 79 order. In exercising that discretion it will have regard to, inter alia, the degree and nature of the miscarriage in question, any delay, alterations in the parties’ positions in the meantime, and the extent to which, if at all, it is now appropriate to vary the original orders: McIntyre, supra, provides an example of this. The last of those circumstances was important in this case for reasons which will subsequently become apparent. Of course there will be cases where it is convenient to divide the procedure into several hearings; for example, where there is a discrete issue under the first and or second step and the property circumstance of the parties are complex.”
The Full Court went on to note (at 679) that the discretion under s 79A “is not to be exercised lightly and must be done against the whole of the relevant facts”.
The issue of bifurcation was more recently considered by the Full Court in Lancer & Lancer [2008] FamCAFC 112 in which Warnick J delivered the leading judgment with Bryant CJ and Thackray J agreeing. His Honour considered Oastler (supra) and Patching (supra) and concluded that while bifurcation remained “an exception to a general rule” the facts of the case will determine whether it is appropriate to do so, see [18]-[21]:
18.In addressing the question of whether to bifurcate the hearing of a section 79A application, a judge is likely to examine the degree of connection between the ground and the other questions which might need to be addressed, namely whether the order should be varied or set aside, if so, to what extent it ought to be varied or what order ought to be made, if any, in lieu. That connection or degree of connection will vary from case to case.
19.Where, for example, an applicant relies upon a diminished capacity to appreciate rights and entitlements and the effect of the property order consented to, it may well be difficult to determine whether, even if established, that constitutes a miscarriage of justice and even more difficult to determine whether another order ought be made, without a full examination of the financial affairs of the parties and all other matters relevant to alteration of property interests.
20.On the other hand, the establishment of a ground involving suppression of evidence in relation to matters that arguably have had a significant impact on valuation is highly likely to constitute a miscarriage of justice, whatever the current financial circumstances of the parties and whatever the history of contributions. The case before her Honour was much more of that latter character and was, on the spectrum of these matters one where real benefits might be seen to flow from the bifurcation of hearing in relation to discrete issues.
21.The whole point of bifurcation, of course, is to allow the prospect of avoidance of the subsequent hearing after the preliminary matter has been determined and that might represent significant savings of time and costs.
Accordingly, there can be little doubt that the Court has the discretion to order a split hearing if the circumstances justify it.
It was the wife’s submission that the circumstances of the proceedings do not justify the bifurcation of proceedings.
The second respondent is likely to incur considerable, possibly unnecessary, expense as she would only be involved in the latter two steps of the four step process of the wife’s s 79A application namely, whether the Court should vary or set aside the order and make another order under s 79.
This consideration also related to the application by the second respondent for security for costs or an injunction restraining the wife from dealing with the remaining funds from the proceeds of sale.
The Court is obliged under the Act and the Rules to consider a process which will reduce the costs and simplify the matter for the Court and the parties.
If the wife is unsuccessful in her s 79A application then clearly the bifurcation of proceedings would protect all parties, but particularly the second respondent, from unnecessary costs.
The first step under s 79A is for the Court to be satisfied that one of the conditions in sub-sections (a) to (e) have occurred. In this case the wife is only relying upon s 79A (1)(a) which requires the Court to be satisfied that “there has been a miscarriage of justice by reason of fraud, duress, suppression of evidence (including failure to disclose relevant information) the giving of false evidence or any other circumstance;”. If the Court is so satisfied then the Court has a discretion to exercise pursuant to s 79A and may vary the order or set aside the order “… and if it considers appropriate, make another order under section 79 in substitution for the order so set aside”.
The exercise of such a discretion to make another order under s 79 would bring into play the provisions of s 79 and in particular a consideration of whether any order under s 79 is just and equitable (Stanford & Stanford (2012) 247 CLR 108).
In this matter the exercise of such discretion pursuant to s 79A would obviously involve consideration of factors which relate to the exercise of discretion under s 79 and whether any order would be just and equitable.
However, the Court is required to take the first step before exercising such discretion. That first step requires the Court to be satisfied that there has been a miscarriage of justice by reason of the matter set out in s 79A (1)(a).
This first step would not require the participation of the second respondent. This first step would not require considerable other evidence being prepared and put before the Court relating to the facts to be considered when the Court exercised its discretion under s 79A and made any further order under s 79.
Limiting the evidence to the determination of whether the Court is satisfied that there has been a miscarriage of justice would not restrict the Court in later determining (depending upon the evidence) whether the discretion should be exercised under s 79A and whether there should be a further order under s 79.
In this matter there is considerable benefit to all of the parties if the discreet issue of determining whether there has been a miscarriage of justice (for the reasons set out in s 79A (1)(a)) is heard and determined as a discreet issue.
This will not be a determination as to whether an order should be made under s 79A, but simply whether the miscarriage of justice has occurred.
The factors in this case indicate that it is more appropriate to separate the issues and have the threshold question of miscarriage of justice determined at an initial hearing.
The first hearing will be limited to evidence and submissions relating to whether the Court can be satisfied that there has been a miscarriage of justice.
Further consideration of the application pursuant to s 79A and s 79 will be adjourned to await that determination.
Privilege
On 2 December 2013 the husband’s solicitors issued a subpoena to F Lawyers, the wife’s former solicitors in the earlier proceedings, seeking “the entire file including but not limited to pleadings, correspondence, attendance notes….and any other writings in respect of its client MS MANUEL…relating to proceedings in the Family Court of Australia ADC4079 of 2000”.
The husband submits the applicant wife waived privilege in relation to the F Lawyers file either by an express and/or implied waiver.
The express waiver was said to have occurred at a hearing before me on 12 November 2013. Notwithstanding he did not appear on behalf of the wife at that hearing, Mr Mellows denied an express waiver.
The F Lawyers file, comprising some four boxes of documents, was produced to the Registry on 7 March 2014. By my Order of 12 March 2014 leave was granted to all parties to inspect and if necessary copy the F Lawyers documents produced under subpoena.
The wife’s solicitors inspected the documents on 12 March 2014.
The wife submits a claim for privilege was made in writing as soon as the wife’s solicitors were made aware of the documents that had been produced to the Court. I was referred to the affidavit of Mr G filed 25 May 2014, and the correspondence forming Annexure “A”.
Annexure “A” is a letter dated 12 March 2014 from the wife’s solicitors informing the husband’s solicitors that they had inspected the F Lawyers file and that the documents include “privileged documents relating to proceedings and matters after 27/6/00 (when Consent Orders were made in proceedings ADC 4079 of 2000)”. The husband’s solicitors were asked not to inspect the documents and were put on notice that the wife intended to have the matter brought back before a Registrar to deal with the issue. It would appear from the letter that the wife’s solicitors had also attempted to telephone the husband’s solicitors but without success.
Annexure “B” of the affidavit is an email sent to a Case Coordinator, and the husband’s solicitors, on 12 March 2014 at 12.29pm bringing the privilege issue to the attention of the Court and seeking to have the matter listed before a Registrar the following week.
The wife submits her claim was then ignored by the husband who inspected the file on 13 March 2014. The Registry subpoena inspection record confirms the husband inspected the file on the morning of 13 March 2014.
The affidavit of the husband filed 24 April 2014 annexes material obtained from the F Lawyers file. It was the focus of significant objection by counsel for the wife. Counsel for the husband informed the Court the husband would only be relying on paragraph 25 of the affidavit.
The husband maintains that if any such claim for privilege had been made the appropriate time was not upon the inspection of the documents but upon first receiving notice of the subpoena. No such objection was filed by the wife. Nor was there any opposition to an order for inspection.
Notwithstanding the wife did not file a notice of objection, counsel for the wife relies on correspondence annexed to the affidavit of the wife’s solicitor which sets out the claim for privilege.
Consideration
The express waiver of privilege was said to have occurred at a hearing before me on 12 November 2013. Neither party obtained a copy of the transcript. Neither party was able to provide me with an accurate or detailed recitation of what was alleged to have been said by the then counsel for the wife, Mr G.
I am not satisfied that there was an express waiver of privilege by or on behalf of the wife.
The husband’s counsel also contends that there was an implied waiver of privilege by virtue of the fact that the wife did not object to the subpoena to F Lawyers.
Counsel for the wife relied on the recent High Court decision of Expense Reduction Analysts Group Pty Ltd and Ors v Armstrong Strategic Management and Marketing Pty Ltd and Ors (2013) 250 CLR 303 in support of the argument that an inadvertent disclosure did not amount to an implied waiver of privilege.
In Expense Reduction (supra) a firm of solicitors inadvertently disclosed a number of sensitive documents during the process of Court-ordered discovery. On realising their mistake the firm subsequently, and promptly, claimed the documents were the subject of client legal privilege. The opposing firm of solicitors refused to return the documents on the basis that privilege had been waived.
In a unanimous decision of the High Court their Honours stated the following at [63]:
Further, in reality, there was no question of waiver sufficient to be agitated before the Court. The documents disclosed during the discovery process were privileged, and Norton Rose’s claim that disclosure occurred by mistake was not disputed. Any allegation of waiver was going to turn on a legal, technical argument tangential to the main proceedings, and should not have been made.
The wife also relies on paragraph 45 of that decision:
…where a privileged document is inadvertently disclosed, the Court should ordinarily permit the correction of that mistake and order the return of the document…
A clear claim of privilege was made on behalf of the wife after inspecting the subpoenaed documents; moreover the husband’s solicitors were on notice of this claim.
On behalf of the husband it is submitted that the wife has, through her counsel, deliberately and intentionally, and not accidentally, waived privilege in open Court. The submission refers to the consent given to the inspection and copying of documents produced by F Lawyers.
This consent to inspection and copying cannot be widened to include a waiver of privilege.
The previous solicitors of the wife could not waive her privilege.
There is no evidence before the Court which indicates that the wife directed or gave any instructions to F Lawyers to permit them to provide to the Court in answer to the subpoena documents which might otherwise be the subject of legal professional privilege. That privilege is one that belongs to the client and not the solicitors or former solicitors.
The limited time which passed between the production of the documents and the claim for legal professional privilege clearly indicates that the wife’s current solicitors acted promptly when they became aware that the documents produced included privileged material.
Taking all of the factors into account therefore I am satisfied that the husband has failed to satisfy the Court the wife has waived privilege, either specifically or at all.
On behalf of the husband it was also submitted that because the wife consented to the orders for final property settlement in reliance upon representation made by the husband, that she would then be required to disclose factors which include the legal advice she received.
The Court is not satisfied that in this particular matter the claim that the order consented to by the wife was the subject of the miscarriage of justice requires the production of the material between the wife and her solicitors.
Security for Costs
The husband and second respondent sought orders that the respondent wife provide security for costs or in the alternative that the wife be restrained from dealing with certain amounts in her savings account.
The wife opposes an order for security for costs on the basis that it would have the effect of stifling the litigation.
Alternatively, the wife submitted that any order for security for costs should be of modest proportions given the resources available to both the husband and second respondent.
The second respondent’s concern is that the wife will be unable to meet an order for costs if she is wholly unsuccessful in her application.
During the course of submissions Counsel for the second respondent alluded to the wife’s expenditure. The wife sold her Suburb L home in May 2012 for $715,000. Less the cost of the mortgage, credit card debt and arrears of school fees the wife received $540,000 from the sale of the property.
The most recent Financial Statement filed by the wife on 16 May 2014 discloses a smaller amount in the NAB Suburb M, being two figures of $9,305 and $291. At that time there was $120,980 in the MLC Managed Fund. It was not apparent on the documents filed to date what became of the rest of the proceeds of sale of the Suburb L home sold with net proceeds of $540,000 in May 2012.
The interim order restrained the wife from dealing with $60,000 of the MLC Managed Fund monies.
There is therefore not sufficient monies disclosed by the wife in her NAB account to justify the Court making the orders sought (by the husband and second respondent) which specifically relate to the NAB being the orders sought.
Section 117(1) of the Act states that each party is to bear their own costs. However, that general rule is subject to s 117(2) which provides that a Court may make an order as to costs if there are circumstances that justify it in so doing. Similarly, an order that a party provide security for costs may be made provided that there are circumstances justifying the making of such an order (Luadaka & Luadaka (1998) FLC 92-830 at [61]).
In determining what constitutes justifying circumstances the Court is guided by the statutory considerations listed in s 117(2A):
Section 117(2A)
(2A) In considering what order (if any) should be made under subsection (2), the Court shall have regard to:
(a) the financial circumstances of each of the parties to the proceedings;
(b) whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;
(c) the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;
(d) whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the Court;
(e) whether any party to the proceedings has been wholly unsuccessful in the proceedings;
(f) whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer;
(g) such other matters as the Court considers relevant.
The Full Court in Luadaka & Luadaka (1998) FLC 92-830 at 85,507 identified a list of factors to be taken into consideration, in addition to those listed in s 117(2A), when considering whether to exercise the discretion to order security for costs:
·the means of the applicant to satisfy an order for costs if unsuccessful;
·the prospect of success of the application;
·whether the applicant’s claim is made bona fide;
·whether an order for costs would be oppressive or stifle the litigation;
·whether the litigation involves a matter of public importance;
·whether there has been delay in bringing the application for security;
·any difficulties in enforcing an order for costs; and
·the amount of costs to be incurred.
An order will be made which provides for the issue of miscarriage of justice to be dealt with first. The second respondent will not be required to participate in that part of the proceedings. If the wife is successful then further consideration will need to be given to the other matters required to be determined under s 79A and s 79. This would not be necessary if the parties were able to reach agreement.
If the wife is unsuccessful in establishing the miscarriage of justice, then the second respondent would not incur further costs.
Similar arguments apply to the husband’s position, save and except that the husband will incur costs when presenting his case on the issues relating to the alleged miscarriage of justice.
It is not possible at this stage of the proceedings to determine whether the wife will be successful in the first step of establishing that there has been a miscarriage of justice. It is therefore necessary to consider the overall proceedings when taking into account the issue of security for costs.
It is also necessary to ensure that any order made does not restrict the wife’s capacity to continue appropriate proceedings.
It is therefore appropriate to balance the factors which include the means of the wife to satisfy an order for costs if she were unsuccessful with the other factors, such as whether an order for security of costs would be oppressive or stifle the litigation.
Taking all of these matters into account therefore it is appropriate to exercise the discretion to provide some security for costs for the husband and the second respondent, but limited to the sum of $60,000, which is already the subject of the interim order.
Further and Better Discovery
The respondent husband sought orders that the wife provide further and better discovery. It was his submission that absent from the file were documents that would ordinarily be present namely, documents relating to contemporaneous legal advice in relation to the 2002 Consent Orders.
The wife opposes the proposed order and maintains she has complied with her discovery obligations.
Both parties have an ongoing and clear obligation to provide discovery of all relevant documents within their power, possession or control. As previously indicated, the Court does not find the wife has waived privilege in any documents relating to legal advice.
Miscellaneous
The second respondent estimates the future costs of proceedings to be in the amount of $40,000-$60,000 and submits that unless she is able to borrow against the Suburb A property she will not have sufficient resources to continue to defend the proceedings.
Whilst the need for the second respondent to incur substantial further costs would depend upon the outcome of the first hearing concerning the miscarriage of justice in which she need not participate, it is appropriate to consider the ongoing injunction which was made on 12 April 2014 which restrained the second respondent from selling, mortgaging, encumbering or in any way dealing with her interest in B Street, Suburb A (“Suburb A property”).
That injunction was made in circumstances in which the wife is claiming that the second respondent holds her interest in the Suburb A property on trust for the husband. The Suburb A property was purchased in 2008 using the proceeds of sale of the Suburb N property, which was acquired in 2006 by the husband and the second respondent using funds from the O Trust.
Taking into account the purchase price of the Suburb A property was in excess of $1,000,000 in 2008 and the marriage of the husband and second respondent in 2006, I am satisfied that any injunction which continues in relation to the Suburb A property would only continue to be appropriate if the second respondent is given the ability to borrow, to a limited extent, against the Suburb A property for possible future legal proceedings or other personal need. Therefore the injunction which restricts the second respondent from encumbering the property should be limited to any sum in excess of $100,000. This would therefore provide reasonable access for the second respondent, and at the same time, protecting any possible future claim by the wife.
The husband also sought an order that delayed the preparation of the valuation pending the outcome of the bifurcation of the issues if that were granted. These valuations would not be necessary if the wife is not successful in establishing a miscarriage of justice. The orders made therefore in relation to the valuations should be stayed pending the outcome of that matter.
For the above reasons I therefore make the orders as set out at the commencement of these reasons.
I certify that the preceding one hundred and three (103) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Dawe delivered on 26 November 2014.
Associate:
Date: 26 November 2014
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