Director of Public Prosecutions (NSW) v Stanizzo

Decision of the primary judge

1. His Honour expressed "serious doubt" as to whether the provisions of s 119 of the Evidence Act apply to the Director of Public Prosecutions as a "client" in circumstances where it is the Office of the Director of Public Prosecutions that is acting as the "lawyer". His Honour's decision, however, is predicated on his finding that: "[50] … for the present purposes I am prepared to accept that, for the purposes of s 119 of the Evidence Act, the DPP is the client and lawyers employed by the Office of the DPP are lawyers acting for the DPP. As a consequence, the communication between the complainants and the lawyers engaged by the DPP is a communication between a lawyer, or more than one lawyer, acting for the DPP and another person, the dominant purpose of which was the DPP being provided with professional legal services related to the initial criminal proceedings."
2. His Honour determined that the communication was a confidential communication "once one accepts the DPP is the client" at [57].
3. His Honour commenced consideration of the dispositive issue, whether s 125(1)(a) of the Evidence Act applies to the conference notes, by finding that there were "plainly reasonable grounds for finding that the complainants were seeking the commission of an abuse of power and/or a fraud and possibly a criminal offence" at [58]. His Honour regarded as: "[60] … sufficient for present purposes to make clear that the plaintiff claims that each of Valvano/Fregnan and Badarne falsely and maliciously induced the prosecution of the plaintiff by making false and malicious allegations to police." (emphasis added)
4. His Honour found that the terms of s 125(2) of the Evidence Act allow the Court to make a finding that "the communication was made as an abuse of power or in furtherance of … an abuse of power" at [61]. His Honour said: "I have made clear that there are reasonable grounds for so finding at least in relation to the complainants."
5. At [64] his Honour found that the Court "is not minded to consider that, on the evidence that is currently before the Court, there are 'reasonable grounds' for finding that the DPP or the police have acted in furtherance of an abuse of power".
6. His Honour found that the communication by the complainants "was made with the intention of facilitating the fraud by the complainants", but that it was unnecessary for the lawyer himself or herself to commit the fraud, offence or act. At [66] his Honour said: "It is sufficient if the communication were made in furtherance of the commission of the fraud." His Honour accepted that fraud must include an element of dishonesty.
7. Finally, at [69] his Honour found "on the preliminary material already before the Court" that "there are reasonable grounds that the communication by the complainants to the police and/or DPP ought reasonably to have been known to have been made or prepared in furtherance of a deliberate abuse of power". The finding was said to be based upon "the timing of the complaint, the known fraud in relation to the civil proceedings and the cheque, together with the other evidence adduced".

Draft notice of appeal

1. The Director of Public Prosecutions' draft notice of appeal contained four grounds as follows: 1. the primary judge erred in finding that the Director of Public Prosecutions was not covered by s 119 of the Evidence Act 1995 (NSW) (Act); 2. the primary judge erred in taking into account matters that were not in evidence before him when considering the application of s 125 of the Act; 3. the primary judge erred in his construction and application of s 125(1)(a) of the Act; and 4. the primary judge erred in his construction and application of s 125(1)(b) of the Act.
2. As this case involved an interlocutory decision concerning evidence, leave to appeal is required pursuant to s 101(2) of the Supreme Court Act 1970 (NSW). The questions raised by this application warrant a grant of leave.

Ground 1 - whether Director of Public Prosecutions a "client"

1. Under the Evidence Act, client legal privilege applies to confidential communications between a client and another person, or between a lawyer acting for the client and another person, and the contents of a confidential document that was prepared for the dominant purpose of the client being provided with professional legal services relating to legal proceedings. Section 119 provides: 119 Litigation Evidence is not to be adduced if, on objection by a client, the court finds that adducing the evidence would result in disclosure of: (a) a confidential communication between the client and another person, or between a lawyer acting for the client and another person, that was made, or (b) the contents of a confidential document (whether delivered or not) that was prepared, for the dominant purpose of the client being provided with professional legal services relating to an Australian or overseas proceeding (including the proceeding before the court), or an anticipated or pending Australian or overseas proceeding, in which the client is or may be, or was or might have been, a party.
2. Various terms, including "client" and "lawyer" are defined for the purposes of this provision in s 117 of the Evidence Act: 117 Definitions (1) In this Division: client includes the following: (a) a person or body who engages a lawyer to provide legal services or who employs a lawyer (including under a contract of service), (b) an employee or agent of a client, (c) an employer of a lawyer if the employer is: (i) the Commonwealth or a State or Territory, or (ii) a body established by a law of the Commonwealth or a State or Territory, … lawyer means an Australian lawyer, a foreign lawyer, or an employee or agent of either of them.
3. As Mr Stanizzo correctly submitted, his Honour did not determine the application of s 119 of the Evidence Act. It follows that ground 1 of the notice of appeal does not arise. However if the judge's finding that privilege had been lost is to be rejected, it is necessary for the Director to make good the proposition that he is entitled to maintain client legal privilege. Counsel for Mr Stanizzo in this Court accepted that the documents the subject of the appeal were properly the subject of a claim for client legal privilege. As the primary judge expressed a number of preliminary views to the contrary, it is appropriate to explain why we accept the concession.
4. The Director has all the functions conferred or imposed by the Director of Public Prosecutions Act and any other Act. These functions relevantly include: "to institute and conduct, on behalf of the Crown, prosecutions … for indictable offences in the Supreme Court and the District Court" (s 7(1)(a)); to "take over … and carry on the prosecution" (s 9(1)(a)); and, "to do anything incidental or conducive to the exercise of any functions of the Director" (s 20(1)(b)). The Director may appear in person, or he or she may be represented by counsel or a solicitor in any proceedings which are conducted or carried on by the Director or to which the Director is otherwise a party: s 21.
5. The Solicitor for Public Prosecutions is appointed under s 6 of the Director of Public Prosecutions Act. The Solicitor's functions, set out in s 23, include: "(a) to act as solicitor for the Director in the exercise of the Director's functions"; and, "(b) to instruct the Crown Prosecutors and other counsel on behalf of the Director". Thus, the Solicitor for Public Prosecutions may retain a Crown Prosecutor to act on the Director's behalf. Crown Prosecutors are appointed under s 4 of the Crown Prosecutors Act. Their functions, set out in s 5, are: "(a) to conduct, and appear as counsel in, proceedings on behalf of the Director, (b) to find a bill of indictment in respect of an indictable offence, whether or not the person concerned has been committed for trial in respect of the offence, (c) to advise the Attorney General or Director in respect of any matter referred for advice by either of them, and (d) to carry out such other functions of counsel as the Attorney General or Director approves". Section 32 of the Director of Public Prosecutions Act provides: "Persons may be employed in the Public Service under the Government Sector Employment Act 2013 to enable the Director and Solicitor to exercise their functions."
6. In this case, the Director was the "client" as defined in s 117 of the Evidence Act under subss (a) and (c) of that definition. The Director is "a person or body who engages a lawyer to provide legal services or who employs a lawyer (including under a contract of service)": subs (a). The Director is also "an employer of a lawyer if the employer is … a body established by a law of the …. State": subs (c). Ms Rallis was employed in the public service to enable the Director and Solicitor for Public Prosecutions to exercise his or her functions. Mr Barr was appointed as a Crown Prosecutor performing the functions in s 5 of the Crown Prosecutors Act. In conducting the conferences with witnesses and preparing notes of the conferences, both were persons providing legal services to the Director as the client.
7. Accordingly, pursuant to ss 117 and 119 of the Evidence Act, the Director, as the client, was entitled to object to the production of the conference notes prepared by a lawyer, Ms Rallis, on the ground of client legal privilege. So much was established by the following cases, which were drawn to the attention of the primary judge but not referred to by his Honour in addressing this issue: 1. In R (Cth) v Petroulias (No 22), [2] Johnson J accepted that "the CDPP [Commonwealth Director of Public Prosecutions] is the client and lawyers working within the office of the CDPP are persons providing legal services to the CDPP as the client". His Honour concluded that "documents recording communications between prosecution lawyers and prosecution witnesses for the dominant purpose of pending criminal proceedings against the Accused are clearly subject to privilege, whether the statutory test or common law principles are applied". Although Johnson J was addressing the position of the Commonwealth Director of Public Prosecutions, the position in NSW is indistinguishable. 2. In Aouad v R; El-Zayet v R, [3] Price J found that the Director of Public Prosecutions was the client to whom the Deputy Director of Public Prosecutions provided legal services. 3. In Hamilton v State of New South Wales, [4] Beech-Jones J dealt with communications recording meetings and telephone conversations between solicitors of the Office of the Director of Public Prosecutions or Crown Prosecutors and police officers. He found that the nature of the relationship, the role of the parties in discharging their statutory functions, the topic of the relevant communications, being the strength and weaknesses of the prosecution case and possible lines of inquiry, and the purpose and context of the communications implied an obligation of the kind referred to in the definition of "confidential communication" under s 117 of the Act. Beech-Jones J concluded that the communications were subject to an implied obligation to keep them confidential, and accordingly subject to client legal privilege. This Court refused leave to appeal from that decision. [5]
8. The conference notes, being Ms Rallis' notes of the communications between Ms Valvano, Mr Badarne and Ms McPherson on the one hand and the lawyers acting on behalf of the Director of Public Prosecutions, Ms Rallis and Mr Barr on the other, each constituted a "privileged document". [6]

Loss of privilege

1. The remaining grounds address the judge's findings as to loss of client legal privilege under s 125 of the Evidence Act. It is convenient to set out that provision and identify its scope and operation.
2. Section 125 of the Evidence Act provides: 125 Loss of client legal privilege: misconduct (1) This Division does not prevent the adducing of evidence of: (a) a communication made or the contents of a document prepared by a client or lawyer (or both), or a party who is not represented in the proceeding by a lawyer, in furtherance of the commission of a fraud or an offence or the commission of an act that renders a person liable to a civil penalty, or (b) a communication or the contents of a document that the client or lawyer (or both), or the party, knew or ought reasonably to have known was made or prepared in furtherance of a deliberate abuse of a power. (2) For the purposes of this section, if the commission of the fraud, offence or act, or the abuse of power, is a fact in issue and there are reasonable grounds for finding that: (a) the fraud, offence or act, or the abuse of power, was committed, and (b) a communication was made or document prepared in furtherance of the commission of the fraud, offence or act or the abuse of power, the court may find that the communication was so made or the document so prepared. (3) In this section: power means a power conferred by or under an Australian law.
3. It may be noted that s 125(2) is procedural: it permits findings to be made for the purposes of subs (1) where the court has "reasonable grounds" for such a finding. That is, a ruling that s 125(1) permits evidence to be adduced does not require the court to be satisfied on the balance of probabilities as to the existence of the fraud or abuse of power, or the connection between the communication and the furtherance of the fraud or abuse of power. Nevertheless, findings as to these matters must be based on evidence.
4. There is a second procedural point: s 125 relates only to the adducing of evidence. The present matter is concerned with an order for access to documents produced on subpoena; no question of adducing evidence has yet arisen. However, s 131A of the Evidence Act provides as follows: 131A Application of Part to preliminary proceedings of courts (1) If: (a) a person is required by a disclosure requirement to give information, or to produce a document, which would result in the disclosure of a communication, a document or its contents or other information of a kind referred to in Division 1, 1A, 1C or 3, and (b) the person objects to giving that information or providing that document, the court must determine the objection by applying the provisions of this Part (other than sections 123 and 128) with any necessary modifications as if the objection to giving information or producing the document were an objection to the giving or adducing of evidence. (2) In this section, disclosure requirement means a process or order of a court that requires the disclosure of information or a document and includes the following: (a) a summons or subpoena to produce documents or give evidence, (b) pre-trial discovery, (c) non-party discovery, (d) interrogatories, (e) a notice to produce, (f) a request to produce a document under Division 1 of Part 4.6.
5. Section 131A appears in Pt 3.10 of the Evidence Act. The references in subs (1)(a) to certain Divisions include Div 1 (client legal privilege), which covers ss 117-126. Accordingly, these provisions apply with respect to the current circumstances, namely the requirement to produce documents pursuant to a subpoena: s 131A(2)(a).
6. The onus of proof rests with the party alleging that the privilege has been lost. There must be "reasonable grounds" for the Court to find that the fraud, offence or act, or abuse of power was committed and that the communication was made in furtherance of it. To enliven the operation of the section, there must be evidence admitted in the proceeding, not merely an allegation about the fraud, offence or act, or abuse of power. As Dawson J explained in Commissioner of Australian Federal Police v Propend Finance Pty Ltd: [7] "In O'Rourke v Darbishire, Viscount Finlay said: 'there must be, in order to get rid of privilege, not merely an allegation … of a fraud, but there must be something to give colour to the charge.' That test was accepted in Attorney-General (NT) v Kearney (1985) 158 CLR 500 at 516 by Gibbs CJ, with whom Mason and Brennan JJ agreed. Gibbs CJ added the further words of Viscount Finlay: 'The statement [ie the allegation of fraud] must be made in clear and definite terms, and there must further be some prima facie evidence that it has some foundation in fact … The Court will exercise its discretion, not merely as to the terms in which the allegation is made, but also as to the surrounding circumstances, for the purpose of seeing whether the charge is made honestly and with sufficient probability of its truth to make it right to disallow the privilege of professional communications.'"

Ground 2 - evidence before primary judge on motion

1. The evidence admitted before the primary judge was as follows: 1. an affidavit of Mr Stanizzo sworn 2 July 2018. No document was annexed or exhibited to that affidavit; 2. an affidavit of a solicitor, Ms Pheils, sworn 20 July 2018, which provided a history of the Director of Public Prosecutions' involvement in the criminal proceedings and explained the basis of the claim for privilege; 3. the statements of Ms Rallis and Mr Barr filed in the underlying proceedings before Harrison J which were tendered by Mr Stanizzo and admitted subject to the Director of Public Prosecutions' claim for privilege; and 4. an email exchange between Mr Waterstreet (counsel for Mr Stanizzo) and Mr Barr which was tendered by the Director of Public Prosecutions.
2. Mr Stanizzo's affidavit contained the following paragraph: "[4] I rely on the particulars of absence of reasonable and probable cause and of malice pleaded in the Statement of Claim and supplemented by numerous letters supplying further particulars. I rely also on my Evidentiary Statement in chief dated [sic] and Statements in reply to those served for the State." The respondent submitted that the effect of par 4 was that the documents referred to in it, which were not annexed or exhibited to the affidavit, nevertheless became part of the evidence before the primary judge. We do not agree.
3. Neither of the authorities referred to by the respondent provides any support for the proposition that a document simply referred to in the evidence is thereby "drawn in" and becomes part of the evidence. In Australian Competition and Consumer Commission v Australian Institute of Professional Education Pty Ltd (in liq) (No 2), [8] Bromwich J dealt with the admissibility of an affidavit tendered as part of an exhibit to another affidavit from the same deponent. The issue was an objection on relevance and form. In Alfred v Lanscar, [9] another affidavit was annexed to an affidavit of the same deponent.
4. The present case is quite different. There was no attempt to tender any statements with Mr Stanizzo's affidavit. No documents were annexed to that affidavit. No subsequent application was made to have any further document received into evidence. This is not a mere formal matter. In a case where a serious allegation of fraud was sought to be made, after the close of written and (in the case of Mr Stanizzo) oral submissions, the evidence which was sought to be tendered and relied upon needed properly to be identified and addressed.
5. It is not correct, as the respondent submitted, that references in par 4 of Mr Stanizzo's affidavit "drew into evidence" any document, including any "other evidential statements". The reference did not make any such document admissible, let alone amount to adducing it as evidence. Nor did the reference in par 4 permit the primary judge to rely on any statements which may have been on the court file. The reference to s 75 of the Evidence Act by Mr Stanizzo takes the matter no further. Section 75 permits the admission of hearsay evidence adduced at an interlocutory hearing, subject to a condition; it does not apply to material which has not been adduced as evidence.
6. The only additional evidence relied upon in this Court by Mr Stanizzo as supporting the primary judge's factual findings was the statement of Mr Barr. The passages relied upon established no more than that Mr Barr formed the view, long after the conferences the subject of the notes, that Ms Valvano's credit was significantly damaged by the content of recordings of telephone conversations between Ms Valvano and Bluestone Mortgages obtained by the Crown on 30 July 2013. On 31 July 2013, those recordings were played to the court. On the next sitting day, 2 August 2013, Mr Barr told the court that the Director would not pursue the proceedings and the jury was discharged. Ms Rallis' statement, also tendered by Mr Stanizzo, made clear that in her view the Bluestone recordings put Ms Valvano's evidence "out of sequence" but did not affect her view that Ms Valvano was not lying about being sexually assaulted by Mr Stanizzo.
7. There was nothing in the evidence admitted on the application, including the statement of Mr Barr, justifying the findings that each of Ms Valvano and Mr Badarne "falsely and maliciously induced the prosecution of [Mr Stanizzo] by making false and malicious allegations to the police". Much less was there any evidence relating to what the primary judge described as the "timing of the complaint" and the "known fraud in relation to the civil proceedings". Even on the "reasonable grounds" standard provided for in s 125(2) of the Evidence Act, the evidence was plainly insufficient to support a finding under ss 125(1)(a) or 125(1)(b). It is not enough, for the purposes of s 125 of the Evidence Act simply to take into account allegations in a pleading. Whilst there is a debate in the High Court about whether direct evidence (as distinct from hearsay evidence) is required to enliven the power now found in s 125, [10] each of the judges in Propend emphasised the need for evidence beyond mere assertion. It follows that ground 2 of the appeal should be upheld.

Ground 3 - application of s 125(1)(a)

1. Even after the extensive additional written submission made by Mr Stanizzo, no claim under s 125(1)(a) was ever particularised. The only claim particularised was one under s 125(1)(b). An allegation of fraud must be made in clear and definite terms. That conclusion is sufficient to uphold ground 3. Further, as we have already said, even at the "reasonable grounds" standard provided for in s 125(2) of the Evidence Act, the evidence was insufficient to support a finding under s 125(1)(a).
2. Finally, in order to come within the terms of s 125(1)(a) the communication must be made, or the contents of the document prepared, relevantly, "in furtherance of the commission of a fraud or an offence". Paragraph (a) covers two situations. The first relates to "a communication made … by a client or lawyer". The notes concerned communications made by the victims and the witness, not by the Director or the lawyers. Thus even if the communication made by the victims and the witness were made in furtherance of the commission of a fraud or an offence (a proposition not established by the evidence), that alone could not remove the client legal privilege enjoyed by the Director.
3. The second limb of par (a) relates to "the contents of a document prepared by a client or lawyer". That would be satisfied with respect to the notes prepared by the lawyers, but there was no basis in the evidence to suppose that those notes were prepared in furtherance of the commission of a fraud or offence, namely the pursuit of a false prosecution. In order for the Director's client legal privilege to be lost, it would not be sufficient to demonstrate that the Director or his lawyers had reasonable grounds for believing that the victims and the witness lied in order to have the Director maintain a prosecution which would depend upon perjured testimony. It was necessary to demonstrate reasonable grounds for finding that the Director, or at least his lawyers, was or were party to the fraud in the sense that he was aware, personally or through his lawyers, that the evidence was false.
4. Ground 3 of the appeal should be upheld.

Ground 4 - application of s 125(1)(b)

1. There was error by the primary judge in relying upon s 125(1)(b). For the reasons already advanced, there was no evidence adduced that went to this question. Further, to the extent that his Honour made a finding [11] that the communication was one that Ms Rallis or Mr Barr "ought reasonably to have ... known to have been made or prepared in furtherance of a deliberate abuse of power" at [69], this finding cannot stand.
2. For the purposes of s 125(1)(b), it must be established that the documents were prepared in furtherance of a "deliberate abuse of a power". It may be accepted that the maintenance of a criminal prosecution based on evidence known to be false would constitute a deliberate abuse of power by the prosecutor. Under par (b) it is sufficient if either the Director or the lawyers ought reasonably to have known that the communications by the victims and the witness were made to further such an abuse. Thus only one factual finding was required, namely that either the lawyers or the Director knew or ought reasonably to have known that the communications as to the alleged offences committed by the respondent were false. The evidence provided no basis for such a finding. The statements of Ms Rallis and Mr Barr, which Mr Stanizzo tendered, contained clear statements that were antithetical to a finding that either knew or ought reasonably to have known that the confidential document(s) were made or prepared in furtherance of a deliberate abuse of a power. There was no evidence to the contrary. Accordingly, the primary judge should have found that s 125(1)(b) did not apply in the present case. It follows that ground 4 of the appeal should be upheld.

Additional orders

1. Upon orders being pronounced counsel for Mr Stanizzo made an application for an order for a certificate under s 6 of the Suitors' Fund Act 1951 (NSW). It is appropriate that the Court now make two additional orders: (6) Direct the Director of Public Prosecutions to file within seven days of these reasons a notice of appeal in the form of the draft contained in the white folder. (7) Order that a certificate in respect of the appeal under s 6 of the Suitors' Fund Act 1951 (NSW) be issued to Mr Stanizzo.

Endnotes

1. Stanizzo v State of New South Wales [2018] NSWSC 2003.
2. [2007] NSWSC 692; 213 FLR 293 at [56]-[62].
3. [2013] NSWSC 760 at [31].
4. [2016] NSWSC 1213 at [38]-[40].
5. Hamilton v State of New South Wales [2017] NSWCA 112.
6. See Sugden v Sugden (2007) 70 NSWLR 301; [2007] NSWCA 312 at [68]-[69], [74] (McDougall J, Mason P and Ipp JA agreeing).
7. (1997) 188 CLR 501 at 521-522; [1997] HCA 3.
8. [2018] FCA 1459.
9. (2007) 162 FCR 169; [2007] FCA 833.
10. See Propend at 514 (Brennan CJ), 521-522 (Dawson J), 534 (Toohey J), 546-547 (Gaudron J), 556-557 (McHugh J), 575-576 (Gummow J), 592-593 (Kirby J).
11. Cf his Honour's apparently contrary finding at [64].

Amendments 14 February 2019 - [25] - "preforming" changed to "performing" [45] - ellipsis inserted in quote for clarity DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 14 February 2019