Franks v Warringah Council

Franks v Warringah Council - [2010] NSWSC 1318 - NSWSC 2010 case summary — Zoe

[45]

As to the plaintiff's contention that an instruction to commence proceedings cannot be privileged as it is neither advice nor confidential, I respectfully disagree. Instructions by a client to a lawyer to commence proceedings are typically given in an environment comprising many factors including legal advice as to issues such as liability and quantum; legal strategies; the strength and persuasiveness of available evidence; personal considerations such as financial constraints; prospects of success or otherwise; and sundry other considerations. To accept otherwise would necessarily involve the erroneous assumption that instructions are provided in a vacuum indifferent to the multifactorial nature of the solicitor/client relationship. I do not believe there is a legitimate basis upon which instructions provided by a client to commence proceedings can be extracted from a document or communication and divorced from its context by an opposing party in an attempt to prove an allegation of fact: see, similarly, ATH Transport v JAS (International) Australia Pty Ltd [2002] NSWSC 956 at [1] - [5]. To do so would undermine one of the fundamental tenants of preserving client legal privilege, namely, to preserve freedom of communication between legal advisers and their clients: Baker v Campbell [1983] HCA 39; 153 CLR 52 per Dawson J at 128. Moreover, mere instructions, without an understanding of the context in which those instructions were given, would unfairly prejudice the party that provided those instructions as he/she may have to defend their course of action which may result in the disclosure of privileged information. Loss of client legal privilege: misconduct 37. The plaintiff relies on s 125 of the Evidence Act as a basis upon which this Court should reject the first defendant's claim of privilege. Section 125 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.

[52]

The plaintiff submits that access should be granted to all documents over which privilege has been claimed. It was submitted that the Council's failure to properly particularise the nature of the documents has deprived him of the opportunity of determining which documents would be relevant to the allegation of abuse of process. I do not see this as a basis upon which such wide ranging access could be justified. It cannot be the case that documents brought into existence over many years (the oldest appears to be minutes of a meeting in 1995) can be said to record communications made in furtherance of the institution of bankruptcy proceedings in December 2002. 41. The question now is whether there are reasonable grounds for finding that there was an abuse of power in the commencement of the bankruptcy proceedings. A party that seeks to test a claim for privilege bears the onus of establishing that an exception to the general rule applies. In respect of the standard of proof, there must be admissible evidence establishing a prima facie case that a communication was made, or document prepared, in furtherance of the commission of fraud or abuse of process: AFP v Propend Finance per McHugh J at 556; AG v Kearney per Gibbs CJ at 516. The threshold for finding a prima facie case is not necessarily a stringent one and to this end the plaintiff relied on the comments of Santow J in Kang v Kwan & 2 Ors [2001] NSWSC 698 at [37]: "… Thus if a person challenging privilege is clearly not in a position to lead very much evidence concerning purpose, as where the other party has exclusive access to that evidence, the Court may be satisfied with relatively less evidence". 42. Evidence was tendered by way of affidavits of the plaintiff of 22 June 2009, Mr Darren Grigor Jones of 2 June 2009, Ms Julie Sutton of 2 June 2009 and Mr Norman Fletcher of 2 June 2009, "to give colour" to the allegations made by the plaintiff against the Council. The plaintiff submitted that there is sufficient evidence of mala fides to at least allow inspection of the documents produced thus far.

[54]

b. The affidavit of Ms Julie Sutton, councillor, includes an assertion that the bankruptcy notices were issued in furtherance of malice on the part of the council rather than for any legitimate purpose. Much of her affidavit is concerned with her opinions and theories with little basis given for them other than what, to a large extent, is unspecified hearsay. There is no direct evidence as to the circumstances in which the bankruptcy proceedings were instituted. c. The affidavit of Mr Darren Grigor Jones, former councillor, describes the bankruptcy notices as having been issued to cause significant financial damage to the plaintiff. His opinion/theory is that the council used its powers for an improper purpose. He, like Ms Sutton, refers to there being no other occasion known when the council had pursued a ratepayer into bankruptcy but, again, there is no direct evidence as to the circumstances in which those proceedings were instituted. d. The plaintiff's affidavit includes a description of a strained relationship with council officers over a considerable period of time. A number of allegations of impropriety are made, including maintaining an interest in his personal life; constant harassment during the course of his developments; inviting a local journalist to report on matters damaging to his reputation and business; bias in the manner in which action was taken against him in contrast to no action being taken in similar circumstances against others; and causing the issue of the bankruptcy notices without authority. There is no direct evidence to support the last of those contentions, rather it seems to be his opinion or theory, based upon the general history of the relationship to which he deposes. 44. Two affidavits were relied upon by the first defendant: a. The affidavit of Mr Stephen Blackadder, former general manager of the council, sworn on 23 October 2009, describes the bankruptcy notices as having been issued for the purpose of pursuing outstanding legal costs. It also sheds some light on the matter raised in the affidavit of Mr Fletcher in relation to the council pursuing activity in relation to the bankruptcy notwithstanding the resolution of 22 April 2003. It appears that all that was done was to carry out activity in order to prepare for, and meet, Mr Franks' application in the Federal Court to set aside the bankruptcy notices. Nothing was done to proceed beyond the bankruptcy notice stage (i.e. seeking a creditor's petition).

[65]

The documents in Exhibits B - F contain information in respect of the proceedings concerning the plaintiff and/or Windy Dropdown Pty Ltd. That information does not require inspection of other documentation in order that it may be understood nor do the documents reveal that any officer or employee of the council had a particular state of mind that could be relevant to the proceedings. In my opinion, the production of such documents by the first defendant to the plaintiff does not amount to conduct that is inconsistent with the claim of privilege over other documents and does not constitute a waiver of privilege as the plaintiff contends. 52. The next matter relates to the submission that the plaintiff has put the first defendant's state of mind in issue (more aptly the state of mind of its officers and employees) by alleging that it acted with mala fides and therefore, documents relevant to that state of mind cannot be privileged. There is no merit in this contention. In the defence filed on 27 July 2008, the first defendant denied the allegations made about its state of mind without seeking to rely, either expressly or impliedly, on communications made, or documents prepared, as a justification for the actions taken. It follows that the nature of the defence pleaded is not inconsistent with the first defendant's claim of privilege: Bailey v Director-General of Land and Water Conservation [2009] NSWCA 100; 74 NSWLR 333 per Allsop P at [4] and Tobias JA at [135] - [137] (" Bailey "); Council of the New South Wales Bar Association v Archer [2008] NSWCA 164; 72 NSWLR 236 per Hodgson JA at [48]. 53. Finally and for the sake of completeness I should indicate that in the list of documents attached to Exhibit 1 (the LSAC minutes produced for inspection), it is stated that privilege has been waived over the minutes of the LSAC meetings on 5 May 2003 and 2 June 2003. Exhibits B - E are said to be the minutes of those meetings which have already been disclosed to the plaintiff. There are differences between the documents relating to those meetings in Exhibit 1 and those in Exhibits B - E. The content of the documents in Exhibit 1, in so far as they relate to Mr Franks and Windy Dropdown Pty Ltd, that is not in the documents in Exhibits B - E, do not appear to be of any particular relevance or significance. Nevertheless, if privilege has been waived in respect of the minutes of these two meetings, then if the first defendant has not already done so, the plaintiff should be provided with the entire set of those documents.

[77]

The first defendant relied on the proposition that an affidavit for discovery is, save for limited exceptions, conclusive as to the adequacy of discovery. That is, the affidavit is conclusive in identifying all relevant documents within the possession of the first defendant: Fruehauf Finance Corporation Pty Ltd v Zurich Australian Insurance Ltd (1990) 20 NSWLR 359. An order for further and better discovery is made only if the Court is persuaded that the discovery has been shown to be, or manifestly is, incomplete: Michael Wilson and Partners Ltd v Nicholls and Others [2008] NSWSC 1230; 74 NSWLR 218 at 227. There is nothing before me that would indicate that there are documents in the possession of the first defendant which have not been discovered. I understand, however, that the plaintiff is seeking an order that the first defendant provide further particulars as to the documents over which privilege has been claimed, and the basis of these claim. 61. The plaintiff submitted that the first defendant had not tendered any probative evidence in support of the claim for privilege nor established the facts from which this Court could determine whether privilege was legitimately claimed. The plaintiff sought to rely on the first defendant's conduct (as outlined in my summary of correspondence between the parties) as evidence of a failure to comply with the order for discovery. In this regard, reliance was placed on the comments of Tobias JA in Bailey , supra, concerning the importance of a party seeking to maintain a claim of privilege in providing probative evidence in support of that claim: [40] Of greater significance was his Honour's implicit finding that the evidence filed in support of the respondents' application for privilege was manifestly unsatisfactory and inadequate. The importance of a claim for privilege being supported by probative evidence was emphasised in Barnes (at 605 [18]; 289 [18]). This notwithstanding, Barnes stands as authority for the proposition that a judge may inspect the documents in respect of which privilege is claimed and form his or her own view as to whether the legal requirements for privilege are satisfied. His Honour did so in the present case and, as will appear, in my opinion no error was disclosed in his taking that course. [41] However, it is necessary to sound a warning with respect to the failure of a party to comply with the rule when claiming privilege. Such a failure is in no way to be encouraged. In particular, it would have been open to the primary judge in this case to have adjourned the hearing, directed the respondents to file a new list of documents that complied with the rules and order that they pay the costs, and possibly indemnity costs, thrown away by the need for that adjournment. The rule is there for a purpose and compliance with it is mandatory unless expressly dispensed with by order of the Court pursuant to s 14 of the Civil Procedure Act 2005. Although non-compliance is not fatal to a claim for privilege, the consequences of non-compliance with the rule, some of which I have referred to above, may be significant. This is particularly so where instrumentalities or agencies of the State are involved. See also Grant v Downs [1976] HCA 63; 135 CLR 674 at 689. 62. It is worth setting out the passage in the judgment of Tamberlin, Stone and Siopis JJ in Barnes v Commissioner of Taxation (Cth) [2007] FCAFC 88; 242 ALR 601 to which reference was made in Bailey : [18] The authorities emphasise the need for focused and specific evidence in order to ground a claim for legal professional privilege. In Kennedy v Wallace (2004) 142 FCR 185; 213 ALR 108 ; [2004] FCAFC 337 ( Kennedy ), Black CJ and Emmett J reiterated the principles that verbal formulae and bare conclusory assertions of purpose are not sufficient to make out a claim for privilege: see also National Crime Authority v S (1991) 29 FCR 203 at 211 ;100 ALR 151 at 158-60 (per Lockhart J); Grant at CLR 689; ALR 589 (per Stephen, Mason and Murphy JJ). Where possible the court should be assisted by evidence of the thought processes behind, or the nature and purpose of advice being sought in respect of, each particular document. The fact that generalised evidence is not challenged in cross-examination does not mean that such evidence must be accepted, particularly when it is as manifestly inadequate as it is in this case. As in Kennedy , mere general assertions of the purpose of creation of the documents are insufficient to discharge this onus. Even though in that case some evidence as to the purpose of particular records was adduced, Allsop J at [168] considered that the onus had not been discharged because the evidence did not permit a conclusion to be drawn as to the dominant purpose of the creation of any particular document or entry in a document. Simply to show that one purpose for creation of the document was to obtain legal advice or assistance is not good enough. 63. The plaintiff submitted that he is entitled to test the claim for client legal privilege. To do so, it is incumbent on the first defendant to sufficiently particularise its claim for privilege over the documents in accordance with the rules. That involves compliance with UCPR r 21.3 (1)(d) and r 21.4 (2) which, relevantly, provide: 21.3 List of documents to be prepared (1) Party B must comply with an order for discovery by serving on party A a list of documents that deals with all of the documents (other than excluded documents) referred to in the order.

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