Defendants' application asserting client/legal privilege
36The order sought by the defendants in this motion are:
(1) That the documents produced to the Court in these proceedings by Gregory Byles, the former solicitor for the defendants, pursuant to subpoena, not be adduced in these proceedings pursuant to s118 of the Evidence Act 1995 (NSW).
(2) Further, in the alternative, that the documents produced to the Court in these proceedings by Gregory Byles, the former solicitor for the defendants, pursuant to subpoena, not be adduced in these proceedings pursuant to s119 of the Evidence Act 1995 (NSW).
(3) Further or in the alternative, that the documents produced to the Court in these proceedings by Gregory Byles, the former solicitor for the defendants, pursuant to subpoena, not be admitted into evidence in these proceedings pursuant to s135 of the Evidence Act 1995 (NSW).
37The plaintiff opposes those orders. It asserts that privilege has been waived in respect of confidential communications and confidential documents produced by Mr Byles and that it is entitled to adduce evidence in respect of them in the proceedings.
38Except as otherwise indicated, the factual background to the production of these documents is as follows. Mr Byles from Byles Canceri Lawyers acted on behalf of the defendants between 2 April 2009 and 5 March 2010. Thereafter Geoff Lloyd of Caldwell Martin Cox Solicitors acted on behalf of the defendants.
39On 12 October 2010 Gadens Lawyers, the solicitors for the plaintiff, served a subpoena on Mr Byles. The subpoena sought production of the following documents:
"All documents held, created or received by Mr Gregory John Byles (including your file, file reference GJB:VA:914434) during the period from 2 nd April 2009 until 5 March 2010 in respect of:
(a) Mr John Abdelkodous or
(b) Mrs Nadia Abdelkodous or
(c) Supreme Court proceedings 15472/2005."
40On 13 October 2010 Gadens sent a letter to Messrs Caldwell Martin Cox who were then acting on behalf of the defendants, enclosing a copy of the subpoena. On that same day Gadens received a letter from Messrs Byles Anjos Lawyers (Mr Byles' present firm), acknowledging receipt of the subpoena and requesting additional monies to cover the costs of complying with the subpoena.
41On 19 October 2010 Mr Byles produced documents to the Court in answer to the subpoena. The subpoena was returnable before the Court on 20 October 2010. On that day a solicitor in the employ of Gadens appeared on behalf of the plaintiff in respect of the subpoena. There was no appearance by any other party to the proceedings. The Court granted general access to the documents produced by Mr Byles. On 21 October 2010 Gadens made application to the Court to uplift the documents produced under the subpoena.
42At no time before the documents were uplifted did Gadens receive any objections with respect to the subpoena.
43On 25 October 2010 Gadens received a letter from Caldwell Martin Cox enclosing a Notice of Ceasing to Act.
44On 5 November 2010 Bransgroves Solicitors were retained by the defendants to act on their behalf in the proceedings. On that date Bransgroves received a copy of the Court book prepared by Gadens and learned that Tabs 26-60 of that book comprised documents produced to the Court by Mr Byles pursuant to the subpoena.
45On 2 December 2010 Bransgroves made inquiries of Mr Byles and of Caldwell Martin Cox as to whether any objection had been taken to production of those documents to the Court in answer to the subpoena. It is common ground that no such objection was taken by either firm of solicitors. On 3 December 2010 Bransgroves advised Gadens that it considered those documents to be confidential and that it claimed privilege in respect of them under ss118 and 119 of the Evidence Act 1995 (NSW) (the Act). This motion relates to the hearing of that issue.
46It is common ground that neither Mr Byles nor Mr Lloyd consulted the defendants in relation to whether or not they wished to claim privilege in respect of the documents produced to the Court in answer to the subpoena. It is common ground that the defendants gave no instructions to waive any rights which they had to claim privilege in respect of those documents.
47The documents produced by Mr Byles pursuant to the subpoena comprised:
(a) Chronologies with a commentary.
(b) Draft statements or affidavits of Mr Abdelkodous, Victor and Mr Byles.
(c) Correspondent between Mr Byles and the defendants.
(d) Correspondence between Mr Byles and Victor.
(e) Correspondence between Mr Byles and counsel for the defendants.
(f) Notes of meetings and telephone discussions with the defendants and counsel for the defendants.
48The defendants submit that ss 118 and 119 of the Act create a privilege for confidential communications made and confidential documents prepared for the dominant purpose of a lawyer providing legal advice or providing legal services relating to litigation. They submit (and this is not challenged) that the documents produced in answer to the subpoena come within those sections.
49The defendants submit that by reason of the application of ss 118 and 119 of the Act, evidence of those communications and those documents cannot be adduced in these proceedings unless the privilege has been lost pursuant to ss 121-126 of the Act. The defendants submit that this has not occurred. The privilege is that of the defendants and they neither expressly nor by implication have waived their right to that privilege.
50The defendants submit that neither Mr Byles nor Mr Lloyd had the power or the right to waive a claim for legal professional privilege on their behalf. Either or both of those solicitors should have claimed that privilege when made aware of the subpoena but they did not. In that regard, the defendants rely upon the observations of Santow J in Kang v Kwan & Ors [2001] NSWSC 698 at [29]:
"It must be remembered that the privilege is that of the client. Neither solicitor nor an intermediary (who is the agent of either the client or the solicitor) can without the client's authority either consent to the material being adduced or, again without instructions, abandon that obligation that goes with a solicitor's retainer, to maintain the privilege. The powers and duties of the solicitor and the agent are not affected by the termination of the solicitor-client relationship or the agency."
51The defendants submit that s122 of the Act does not give rise to any waiver on their part. They submit that subs 122(5) of the Act provides that a client is not taken to have acted in a manner inconsistent with the client objecting to the adducing of the evidence merely because the substance of the evidence has been disclosed under compulsion of law, i.e. pursuant to a subpoena issued by the Court.
52In summary the defendants submit that Mr Byles failed to maintain legal professional privilege over the documents, the subject of the subpoena. Mr Byles was not instructed by the defendants to waive their entitlement to claim privilege in respect of those documents. Since Mr Byles was not authorised by the defendants to abandon privilege over the documents, s122 does not apply.
53As an alternative, the defendants rely upon s135 of the Act. Section 135 relevantly provides:
"135 The court may refuse to admit evidence if its probative value is substantially outweighed by the danger that the evidence might:
(a)be unfairly prejudicial to a party, or
(b)be misleading or confusing, or
(c)cause or result in undue waste of time."
54The defendants submit that the documents should never have been produced to the Court without a claim for professional privilege. The fact that they were, involved a breach of duty on the part of Mr Byles and perhaps by Mr Lloyd. In those circumstances, it would be unfairly prejudicial to the defendants to allow the plaintiff to adduce any of those documents in these proceedings.
55In response the plaintiff relies upon the line of authority set out in Grace v Grace [2010] NSWSC 1514 (Brereton J). The facts of that case were that in December of 2007, as part of the discovery process, a number of documents were made available to a plaintiff. No claim for privilege was made in respect of any of them until the issue arose in the course of cross-examination almost three years later. The question before the Court was whether in those circumstances the privilege had been lost. Brereton J determined that, absent other considerations, the documents were prima facie privileged. The fact that no claim for privilege had been made in December 2007 was attributable to some oversight. His Honour also found that there had been nothing to indicate to the plaintiff's legal advisers when the documents were produced or subsequently that there had been such an oversight and that privilege should have been claimed by the defendants in respect of the documents.
56In the circumstances of that case his Honour concluded that privilege had been waived. His Honour reached that conclusion because the documents had been produced as part of a deliberate discovery process, there had been a substantial delay in making the claim for privilege and practically speaking, it would have been very difficult if not impossible, for counsel in the course of cross-examination to expunge that information from his mind.
57The facts of that case and his Honour's analysis do not assist the plaintiff.
58In these proceedings there was not an orderly discovery process but documents were produced in answer to a subpoena. It must have been obvious when the subpoena was drafted that the documents, which were the subject of the subpoena, were potentially subject to a claim for privilege. Any doubts on that issue would have been removed when the documents were actually produced.
59Within four or five days of the documents being uplifted from the Court, Gadens received notification that Caldwell Martin Cox were no longer acting on behalf of the defendants. This of itself was indicative that perhaps full attention had not been paid by the defendants' legal advisers to the subject matter of the subpoena. In any event, the claim for privilege was made shortly thereafter when Bransgroves, the new solicitors, became aware of the subpoena.
60In those circumstances, I am of the opinion that the failure by Mr Byles and Mr Lloyd to make a claim for privilege on behalf of the defendants did not involve a waiver on the part of the defendants of their right to claim privilege in respect of those documents. This is particularly so when the defendants were not consulted concerning the subpoena and were unaware of the production of THE documents.
61This does not end the matter. As I foreshadowed in the course of submissions, I proposed to read the documents produced under subpoena together with the affidavit material relied upon by the defendants in order to determine for myself whether there had been any waiver of privilege in respect of the documents under s 122 of the Act. Having now carried out that exercise, I have concluded that there has been a waiver of privilege in respect of some of the documents.
62In the course of the proceedings Mr Byles, as solicitor for the defendants, swore an affidavit on 22 May 2009. That affidavit was read in the application to set side the default judgment. In that affidavit he made reference to conferences which he had with Mr Abdelkodous on 3 April 2009 and 7 May 2009. Paragraphs 4, 5, 8, 9, 10, 17, 18, 19, 20, 21, 22, 23, 25, 26, 27, 28 and 29of the affidavit clearly set out information received by Mr Byles from Mr Abdelkodous at one of those conferences. Clearly Mr Byles was authorised by the defendants to swear that affidavit. Reference to those conferences and the setting out in the affidavit of part of the information obtained in the course of those conferences, involves a clear waiver of privilege in respect of information provided by Mr Abdelkodous to Mr Byles at the conferences.
63That such a waiver has taken place is clear from the terms of s122(2) of the Act which was intended to implement the guidance provided by the High Court in Mann v Carnell [1999] HCA 66; (1999) 201 CLR 1. At [29] Gleeson CJ, Gaudron, Gummow and Callinan JJ said:
"What brings about the waiver is the inconsistency, which the courts where necessarily informed by the consideration of fairness perceive, between the conduct of the client and the maintenance of confidentiality; "
In this case the conduct is the disclosure of part of the information conveyed in those conferences and the maintenance of confidentiality in respect of the balance of the information provided to Mr Byles at those conferences.
64In Mann v Carnell at [34] the plurality said:
"Disclosure by a client of confidential legal advice received by the client, which may be for the purpose of explaining or justifying the client's actions, or for some other purpose, will waive privilege if such disclosure is inconsistent with the confidentiality which the privilege serves to protect. Depending upon the circumstances of the case, considerations of fairness may be relevant to a determination of whether there is such inconsistency."
In this case the disclosure was by the solicitor with the consent of the client for the purpose of explaining the clients' conduct and advancing the client's case.
65The Full Court of the Federal Court emphasised in Commissioner of Taxation v Rio Tinto Limited [2006] FCAFC 86; (2006) 151 FCR 341 at [47] that each case turns on its own particular facts but formulated the question in the context of claimed issue waiver as whether a party had:
"[68] ... made an assertion as part of his case that puts the contents of the privileged scheduled documents in issue, or necessarily lays them open to scrutiny, with the consequence that an inconsistency arises between the making of the assertion and the maintenance of the privilege."
In that case reference was made with approval to the statement of Allsop J in DSE (Holdings) Pty Limited v Intertan Inc [2003] FCA 384; (2003) 127 FCR 499 at [58] where his Honour referred to waiver coming about when a party entitled to the privilege makes an assertion which is either about the contents of the confidential communication or which necessarily lays it open to scrutiny.
66Applying these analyses, the confidential material comprised the communications between Mr Abdelkodous and Mr Byles in the conferences of 3 April and 7 May 2009. Mr Byles with the consent of the defendants disclosed in part the contents of those conferences in his affidavit. It would be inconsistent with that disclosure and generally unfair as set out in Mann v Carnell , for the plaintiff to be deprived of access to the notes and statements in the subpoenaed documents which relate to those conferences.
67I am not persuaded that s135 of the Act prevents the plaintiff being able to adduce and rely upon the notes and statements in the subpoenaed documents relating to the conferences of 3 April and 7 May 2009. I do not see how such notes and statements would be unfairly prejudicial to Mr Abdelkodous or misleading or confusing. Quite clearly those documents could rationally affect the assessment of the probability of the existence of a fact in issue, in this case the credibility of Mr Abdelkodous and the circumstances in which the loan documents and mortgage were signed.
68It follows that while the defendants are entitled to the orders which they seek in their Notice of Motion, there should be excluded therefrom the notes of and statements prepared as a result of the conferences with Mr Abdelkodous of 3 April and 7 May 2009.
69Since both sides have partially succeeded in relation to this motion, the most appropriate order is that each party pay their or its own costs of the motion.
70Accordingly, the orders which I make in respect of the defendants' motion of 21 December 2010 are as follows:
(1) That the documents produced to the Court in these proceedings by Gregory Byles, pursuant to subpoena, except for notes of and statements prepared as a result of the conferences with Mr Abdelkodous of 3 April and 7 May 2009, not be adduced in these proceedings pursuant to ss118 and 119 of the Act.
(2) That each party pay their or its own costs of the motion.