FEDERAL COURT OF AUSTRALIA
Boensch v Pascoe [2007] FCA 532
DES (Holdings) Pty Limited v Intertan Inc [2003] FCA 384 referred to
Hooker Corporation Ltd v Darling Harbour Authority (1987) 9 NSWLR 538 referred to
Lombe v Pollack [2004] FCA 264 referred to
Mann v Carnell (1999) 201 CLR 1 followed
Van Zonneveld v Seaton [2004] NSWSC 960 referred to
NSD 2356 OF 2006
JACOBSON J
16 APRIL 2007
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
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NEW SOUTH WALES DISTRICT REGISTRY
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NSD 2356 OF 2006
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On appeal from the Federal Magistrates Court
BETWEEN:
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FRANZ BOENSCH
Appellant
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AND:
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SCOTT DARREN PASCOE
First Respondent
SABINE BOENSCH
Second Respondent
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JACOBSON J
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DATE OF ORDER:
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16 APRIL 2007
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WHERE MADE:
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SYDNEY
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THE COURT ORDERS THAT Orders 1, 3 and 4 sought in the appellant’s notice of appeal filed on 13 February 2007 be made.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
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NEW SOUTH WALES DISTRICT REGISTRY
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NSD 2356 OF 2006
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On appeal from the Federal Magistrates Court
BETWEEN:
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FRANZ BOENSCH
Appellant
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AND:
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SCOTT DARREN PASCOE
First Respondent
SABINE BOENSCH
Second Respondent
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JUDGE:
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JACOBSON J
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DATE:
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16 APRIL 2007
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PLACE:
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SYDNEY
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REASONS FOR JUDGMENT
Introduction
1 The
real issue in this appeal can be stated shortly. It is whether the
tender by counsel of six documents, forming part of a 73 page exhibit,
constituted a waiver of privilege in the six documents.
2 Ironically,
the issue arose at first instance in the course of an application to
claim privilege over a separate part of the 73 page exhibit. The
learned Federal Magistrate found that legal professional privilege had
been waived in the six documents. His Honour said, at [11] of his
judgment of 22 November 2006, that counsel for the party who tendered
the documents “specifically eschewed” any suggestion of inadvertence in
the tender. He proceeded on the basis that the tender was deliberate.
3 The
appellant, Mr Boensch, contends that his Honour was in error in
concluding that the tender was deliberate and that any claim of
inadvertence had been eschewed. Mr Boensch submits that, upon the
proper application of the principle stated by the High Court in Mann v Carnell (1999) 201 CLR 1 at 13, there was no implied or accidental waiver of privilege in the six documents.
4 The
essential reason why this issue arises is the failure of the solicitor
who produced the documents to the first respondent, Mr Pascoe, and to
the Court, to make proper enquiry as to the extent of the materials
comprised within the documents that were produced and tendered.
5 In
the hope of maintaining clarity in my analysis of the question, I will
endeavour to distinguish between the documents produced or referred to
at various stages of the proceeding.
6 The
critical documents, for the purpose of this judgment, fall into three
categories. The first category is the six documents that were tendered
as part of Exhibit JL1. I will call them the Extra Documents. The
second category is certain documents produced to Mr Pascoe and described
in my reasons as the First Documents. The third category is certain
documents described as Exhibit SDP6 in the application heard before his
Honour on 22 November 2006.
The Background Facts
7 Mr Boensch is a bankrupt. Mr Pascoe is his trustee in bankruptcy. The second respondent, Mrs Boensch, is Mr Boensch’s wife.
8 On or about 30 August 2005 Mr Pascoe gave a notice under s 77A of the Bankruptcy Act 1966(Cth)
to the former solicitor for Mr and Mrs Boensch, Mr James Leong. That
section of the Act provides for compulsory production of the documents
and records of a bankrupt whose examinable affairs are under
investigation.
9 On
or about 30 September 2005 Mr Leong answered the s 77A notice by
providing a number of documents to Mr Pascoe. I will call the documents
that were produced to Mr Pascoe in answer to the notice “the First
Documents”.
10 Mr
Leong’s evidence before the Federal Magistrate was that he did not
obtain any instructions from Mr Boensch before answering the s 77A
notice. Accordingly, Mr Leong had no instructions to claim privilege,
nor does he appear to have made such a claim when he produced the First
Documents to Mr Pascoe. Moreover, he did not have instructions to waive
privilege.
11 Nearly
ten months later, on 19 July 2006, Mr Pascoe commenced proceedings in
the Federal Magistrates Court against Mr and Mrs Boensch seeking orders
under ss 120 and 121 of the Bankruptcy Act setting aside certain transactions entered into between Mr and Mrs Boensch prior to the date of the sequestration order.
12 The
application filed in the Federal Magistrates Court was supported by an
affidavit sworn by Mr Pascoe. Exhibited to the affidavit was a bundle
of documents produced to Mr Pascoe by Mr Leong in answer to the s 77A
notice. The documents were described as Exhibit SDP6. I will refer to
those documents as Exhibit SDP6 in these reasons.
13 Counsel
for Mr Boensch submits that the documents in Exhibit SDP6 are a subset
of the First Documents. I have not inspected Exhibit SDP6 but the
description of them in Mr Pascoe’s affidavit filed on 19 July 2006 in
the Federal Magistrates Court, as a bundle of file notes of meetings or
conversations, indicates that the submission is correct.
14 The
matter came before Federal Magistrate Raphael for directions on 15
August 2006. The legal representatives for Mr and Mrs Boensch stated
that a claim for privilege was to be made over the documents contained
in Exhibit SDP6. His Honour directed that any application in relation
to the admissibility of Exhibit SDP6 be filed by 5 September 2006.
15 On 8 September 2006, Mr and Mrs Boensch filed a document entitled “Amended Interim Application” seeking inter alia a
declaration that the documents comprising Exhibit SDP6 were documents
to which legal professional privilege attaches. His Honour then made an
order for the determination of that issue, and an associated question,
as a separate question under Part 17 of the Federal Magistrates Court Rules 2001. His Honour also referred to the hearing of a preliminary question under s 189 of the Evidence Act 1995, although it is difficult to see how the occasion for such a hearing had arisen.
16 On
20 November 2006 the solicitor for Mr and Mrs Boensch served on Mr
Pascoe’s solicitor a draft statement of evidence of Mr Leong. An
exhibit, referred to as Exhibit JL1 to the statement, was not served at
that time but was adopted by Mr Leong when he was called to give
evidence before Federal Magistrate Raphael on 21 November 2006. The
exhibit appears to have been provided to Mr Pascoe’s legal
representatives shortly before the hearing.
Mr Leong’s statement
17 Exhibit
JL1 to Mr Leong’s statement contained 73 pages of documents. Reference
was made in the statement to all of the pages of Exhibit JL1. That
exhibit included the Extra Documents. Exhibit JL1 is not identical with
Exhibit SDP6 or with the First Documents. I will continue to refer to
it as Exhibit JL1.
18 Mr Leong’s statement concluded by stating in [51] that:
“All the documents exhibited to this statement are documents I produced to Scott Pascoe in answer to the Notice.”
19 The
only documents exhibited to the statement were those contained in
Exhibit JL1. As I have said, they included the Extra Documents. It is
apparent that the Extra Documents did not form part of the First
Documents, namely those produced to Mr Pascoe in answer to the s 77A
notice.
20 [50] of Mr Leong’s statement was as follows:
“By
this statement I do not intend to disclose any confidential
communications for which legal professional privilege may otherwise be
properly available. I do not intend to waive any legal professional
privilege otherwise properly available.”
The Proceeding before the Federal Magistrate
21 Mr
Leong was called by counsel for Mr Boensch to give evidence on 21
November 2006. Counsel tendered, through the witness, the statement and
the exhibit, that is Exhibit
JL1. They were marked together by his Honour as Exhibit 1
JL1. They were marked together by his Honour as Exhibit 1
22 Mr
Pascoe’s counsel, Mr Johnson, cross-examined Mr Leong. Mr Johnson
showed Mr Leong a copy of the documents sent to Mr Pascoe on 30
September 2005, that is to say, the First Documents. Mr Johnson then
put to the witness that the content of [51] of his statement was not
correct.
23 That
is to say, Mr Johnson drew Mr Leong’s attention to the inaccuracy of
the statement in [51] which assumed, incorrectly, that Exhibit JL1 was
identical to the First Documents. However, Mr Leong failed to
understand this and said that [51] was correct.
24 In the course of argument Mr Johnson informed his Honour that the documents in
JL1 included documents that had not previously been disclosed to Mr Pascoe. He stated that privilege had been waived “on all of these documents for this application”. That is to say, Mr Pascoe’s claim of waiver of privilege over the Extra Documents was first raised in the course of argument, after the tender of those documents.
JL1 included documents that had not previously been disclosed to Mr Pascoe. He stated that privilege had been waived “on all of these documents for this application”. That is to say, Mr Pascoe’s claim of waiver of privilege over the Extra Documents was first raised in the course of argument, after the tender of those documents.
25 When counsel for Mr Boensch, Mr Heath, realised the apparent error, he informed his Honour. He said:
“I relied on paragraph 51. If it now appears that in relation to 51 that answer is not correct --- ”
26 The following exchange then took place:
“HIS
HONOUR: Mr Heath, let us get this absolutely clear. You are not being
criticised. These things happen. What you are saying is the witness
told you something ---
MR HEATH: Yes.
HIS HONOUR: --- contained in paragraph 51; right?
MR HEATH: Yes, your Honour.
HIS HONOUR: Relying upon that – this is what you say: you gave the documents to Mr Johnson or his solicitors?
MR JOHNSON: My recollection is that my friend’s instructing solicitor handed them to me, your Honour.
HIS HONOUR: Whatever. They got into your hands, Mr Johnson.
MR JOHNSON: Yes. Just so there can’t be a misunderstanding.
HIS
HONOUR: And as far as you were concerned they were to be dealt with as
any other document in here. And the way in which I am to deal with any
document in here is to say either they are privileged or they are not
and there is no different category of any of the documents in here; is
that right?
MR HEATH: That is so, your Honour.
HIS
HONOUR: Well, what has happened is that either you were misled or
mistaken and you have inadvertently, you say, handed Mr Johnson some
documents – additional documents that he had never seen before and for
which you would have made a specific claim for privilege and never shown
them to him if the facts had been revealed to you; is that right?
MR HEATH: Yes. If it is the case that paragraph 51 is incorrect ---
HIS
HONOUR: Well, I think it is, isn’t it, because he has admitted it. Mr
Johnson has asked him two questions; did you give these documents to Mr
Pascoe? Answer: no. In relation to both of these documents.
MR JOHNSON: I think it: I can’t remember now.
HIS HONOUR: Or: I can’t remember.
MR JOHNSON: It has dropped back to: I can’t remember.
MR
HEATH: Yes. But there is an issue about this now obviously. That was
my recollection. There were some “don’t recalls”, in there in relation
to this. But
if it is the case that paragraph 51 is wrong, then the issue of
privilege in documents that are included in this but were not, in fact,
produced to Mr Pascoe are now disclosed, then such disclosure is
inadvertent.” (Emphasis added.)
27 Later in argument Mr Heath said the following:
“Your
Honour, thank you for the time in relation to this issue. Your Honour,
in my respectful submission, no issue of embarrassment or inadvertent
disclosure of privilege arises and that is for these reasons. First of
all, one has to consider the context of the current proceedings before
your Honour. When I say “current proceedings” I mean, separate
question, preliminary issue, voir dire, however it is to be
characterised. That is, the context of the present proceedings before
your Honour today are the determination of whether privilege exists in
certain documents.”
28 The
“certain documents” to which Mr Heath referred, were the documents in
Exhibit SDP6. They were the subject matter of the hearing, not the
Extra Documents to which the argument moved only after they were
tendered.
His Honour’s reasons for judgment
29 His
Honour said at [6] that the essence of Mr Johnson’s argument was that
the tender of Exhibit 1, that is to say Mr Leong’s statement and the
exhibit described as Exhibit JL1, was a voluntary act of counsel which
had the effect of bringing into the public domain all the documents
contained in Exhibit 1 (including the Extra Documents) and waiving any
privilege therein.
30 His
Honour then observed at [7] that, as Mr Heath had correctly pointed
out, this was a hearing solely to determine whether the contents of
Exhibit SDP6 were the subject of privilege.
31 His
Honour went on to say at [9] that unfortunately the documents contained
in Exhibit 1 were not confined to those in Exhibit SDP6. He said that
some of the documents in Exhibit 1 were new documents that had not
previously been seen by Mr Pascoe (that is, the Extra Documents).
32 The substance of his Honour’s reasons may be found in the following paragraphs:
“[10]
What then is the situation with regard to those? Mr Heath says that
these documents are no different from SDP6 documents and that Mr Leong’s
statement in paragraphs 50 and 51 is sufficient to provide privilege to
them. But I have difficulty with that. The documents which are
contained in the Exhibit are not the documents which are annexed to the
statement. I made it clear yesterday that I appreciated that the
documents found in the Exhibit may have been placed there as a matter of
inadvertence or for some other reason which might mitigate a loss of
privilege. But those appearing for the respondents specifically eschewed
such an approach. All I am left with then is a deliberate tender of
documents which could have been tendered under cover with no more than a
description and added to the list of SDP6 documents if that was thought
appropriate. But it was not.
[11] It seems to me that in those circumstances the dicta of his Honour the Chief Justice in Birks [(1990)
19 NSWLR 677] at 683-684 would apply notwithstanding Mr Heath’s
eloquent argument of the special nature of these proceedings. It is an
argument that I accept but only for those documents for which these
proceedings applied, namely the documents in SDP6.”
33 I granted leave to appeal from his Honour’s orders and judgment on 6 February 2007.
Whether there was a waiver of privilege over the Extra Documents
34 The test of implied waiver of privilege was stated by the High Court in Mann v Carnell at
[29]. Their Honours pointed to an intentional act of disclosure which
was inconsistent with the maintenance of confidentiality in the
communication.
35 Their
Honours went on to say that “[w]hat brings about the waiver is the
inconsistency, which the courts, where necessary informed by
considerations of fairness, perceive, between the conduct of the client
and maintenance of confidentiality”. They said the test is “not some
overriding principle of fairness operating at large”.
36 Reference may also be made to the observations, to the same effect, by Gyles J in Bennett v Chief Executive Officer of the Australian Customs Service (2004) 140 FCR 101 at [68]. See also the review of the authorities by Allsop J in DSE (Holdings) Pty Limited v Intertan Inc [2003] FCA 384; and Lombe v Pollak [2004] FCA 264 at [30] – [33] dealing with the common law test.
37 It is unnecessary for present purposes to determine whether or to what extent the provisions of s 122 of the Evidence Act dealing with the circumstances in which privilege may be lost correspond with the common law principles; see Mann v Carnell at [23]; see also Van Zonneveld v Seaton [2004] NSWSC 960 at [11] (per Campbell J).
38 It
seems to me that on either approach, what is required is a voluntary
act which is inconsistent with the purpose of maintaining
confidentiality. An inadvertent or unintentional act will not be
sufficient to amount to waiver.
39 Of course, “a mere plea” of inadvertence may not by itself necessarily enable a party to avoid a waiver of privilege; Hooker Corporation Ltd v Darling Harbour Authority (1987)
9 NSWLR 538 at 542-543. Thus, the Court must be satisfied on the
material before it that the act was in truth inadvertent.
40 In
the present case, inadvertence is established by the fact that even
when cross-examined on the documents, Mr Leong did not realise that the
documents in Exhibit
JL1 included the Extra Documents.
JL1 included the Extra Documents.
41 It
was only when Mr Heath realised what had happened that he drew his
Honour’s attention to the apparent inadvertence. This is clear, in my
view from the passages of the transcript that I have reproduced above.
42 It
is true that in the last passage of the transcript that I have
reproduced at [27], Mr Heath said that no issue of inadvertence arose.
However, this was because, as Mr Heath correctly observed, the amended
application before his Honour dealt only with the question of whether
privilege could be maintained over Exhibit SDP6.
43 With due respect to his Honour, whose judgment was given ex tempore,
an examination of the transcript shows that Mr Heath did not eschew
inadvertence in relation to the maintenance of the claim over the Extra
Documents.
44 Of course, I do not criticise his Honour for delivering ex tempore reasons.
It is merely that a full reading of the transcript puts in context the
last passage of Counsel’s remarks on the issue of inadvertence.
45 In
any event, I would add that it is difficult to see how the tender of
Exhibit JL1 was inconsistent with the maintenance of confidentiality.
It was tendered on an application to claim privilege and it was tendered
with the express proviso in [50] of Mr Leong’s statement that he did
not intend to disclose confidential communications to which privilege
may attach.
46 The
tender of Exhibit JL1 cannot be said to have been to deploy the
substance of legal advice for forensic or commercial purposes so as to
reveal an implied inconsistency with the maintenance of
confidentiality; Bennett at [68].
47 I
accept Mr Johnson’s submission that it is extraordinary that both
solicitors and counsel for Mr Boensch failed to make any or any adequate
enquiry as to the extent of the materials contained in Exhibit JL1.
Some criticism may flow from that. But it does not preclude a finding
of inadvertence.
48 I
do not accept Mr Johnson’s submission that the documents in Exhibit JL1
were delivered without qualification as to their status. The
qualification was stated in [50] of the statement to which the Exhibit
was attached. Although no evidence was put before his Honour to explain
the mistake, the circumstances make it plain that error and
inadvertence were revealed.
Orders
49 I will make orders 1, 3 and 4 sought in the notice of appeal filed on 13 February 2007.
I
certify that the preceding forty-nine (49) numbered paragraphs are a
true copy of the Reasons for Judgment herein of the Honourable Justice
Jacobson.
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Associate:
Dated: 16 April 2007
Counsel for the Appellant:
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N Perram SC with MJ Heath
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Solicitor for the Appellant:
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Wright Pavuk Lawyers
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Counsel for the Respondent:
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JT Johnson
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Solicitor for the Respondent:
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McLean & Associates
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Date of Hearing:
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6 February 2007
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Date of Judgment:
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16 April 2007
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