(2009) 74 NSWLR 333
Barnes v Commissioner of Taxation [2007] FCAFC 88
(2007) 242 ALR 601
Carbotech Australia Pty Ltd v Yates [2008] NSWSC 1151
Cassaniti v Paragalli [2006] NSWSC 160
(1997) 188 CLR 501
Daniels Corporation International v Australian Competition and Consumer Commission [2002] HCA 49
(2002) 213 CLR 543
District Council of Mallala v Livestock Markets Ltd [2006] SASC 80
Source
Original judgment source is linked above.
Catchwords
(2009) 74 NSWLR 333
Barnes v Commissioner of Taxation [2007] FCAFC 88(2007) 242 ALR 601
Carbotech Australia Pty Ltd v Yates [2008] NSWSC 1151
Cassaniti v Paragalli [2006] NSWSC 160(1997) 188 CLR 501
Daniels Corporation International v Australian Competition and Consumer Commission [2002] HCA 49(2002) 213 CLR 543
District Council of Mallala v Livestock Markets Ltd [2006] SASC 80(2009) 76 NSWLR 586
Griffith v Rickettts (1849) 7 Hare 299
Hancock v Rinehart [2015] NSWSC 646(2002) 4 VR 332
National Crime Authority v S [1991] FCA 234(1991) 29 FCR 203(1991) 100 ALR 151
National Employers' Mutual General Association Ltd v Waind and Hill[1964] 3 All ER 855
Re Southland Coal Pty Ltd [2006] NSWSC 899(2006) 203 FLR 159 ACSR 87
Rouse v IOOF Australia Trustees Ltd (No 3) [1999] SASC 208
Schreuder v Murray (No 2) [2009] WASCA 145(2009) 41 WAR 169
Singtel Optus Pty Ltd v Weston [2011] NSWSC 1083(2011) 81 NSWLR 526
Talbot v Marshfield (1865) 62 ER 728
The Shed People Pty Ltd v Turner [2000] SASC 196(2000) 34 ACSR 609
Trade Practices Commission v Arnotts Ltd (No 2) (1989) 21 FCR 306
(2007) 161 FCR 122
Judgment (7 paragraphs)
[1]
plc (NSWSC, Giles J, 31 October 1990, unreported, BC9001805)
Gouraud v Edison Gower Bell Telephone Company of Europe (1888) 57 LJ Ch 498
Grant v Downs (1976) 135 CLR 674
Gray v BNY Trust Company of Australia Limited [2009] NSWSC 789; (2009) 76 NSWLR 586
Griffith v Rickettts (1849) 7 Hare 299
Hancock v Rinehart [2015] NSWSC 646; (2015) 106 ACSR 207
Hartogen Energy Ltd (in liq) v Australian Gas Light Co (1992) 36 FCR 557
Hawksford v Hawksford [2005] NSWSC 796
Ho v Powell [2001] NSWCA 168; (2001) 51 NSWLR 572
Holmes v Deputy Commissioner of Taxation (1987) 19 ATR 1278
Krok v Szaintop Homes Pty Ltd (No 1) [2011] VSC 16
Lazenby v Zammit [1987] Tas R 54
Mitsubishi Electric Australia Pty Ltd v Victorian WorkCover Authority [2002] VSCA 59; (2002) 4 VR 332
National Crime Authority v S [1991] FCA 234; (1991) 29 FCR 203; (1991) 100 ALR 151
National Employers' Mutual General Association Ltd v Waind and Hill; Waind v Hill and National Employers' Mutual General Association Ltd [1978] 1 NSWLR 372
O'Born v Commissioner for Government Transport (1959) 77 WN(NSW) 81
O'Rourke v Derbyshire [1920] AC 581
Pickering v Noyes (1823) 1 B & C 262
R v Petroulias (No 22) (2007) 176 A Crim R 309
Re Londonderry's Settlement [1965] Ch 918; [1964] 3 All ER 855
Re Southland Coal Pty Ltd [2006] NSWSC 899; (2006) 203 FLR 1; 59 ACSR 87
Rouse v IOOF Australia Trustees Ltd (No 3) [1999] SASC 208
Schreuder v Murray (No 2) [2009] WASCA 145; (2009) 41 WAR 169
Singtel Optus Pty Ltd v Weston [2011] NSWSC 1083; (2011) 81 NSWLR 526
Talbot v Marshfield (1865) 62 ER 728
The Shed People Pty Ltd v Turner [2000] SASC 196; (2000) 34 ACSR 609
Trade Practices Commission v Arnotts Ltd (No 2) (1989) 21 FCR 306; (1989) 88 ALR 90
Trade Practices Commission v Sterling (1979) 36 FLR 244
Visy Industries Holdings Pty Ltd v Australian Competition and Consumer Commission [2007] FCAFC 147; (2007) 161 FCR 122; 161 FLR 122
Volant v Soyer 13 CB 231
Waterford v Commonwealth (1987) 163 CLR 54
W Dennis and Sons Ltd v West Norfolk Farmers' Manure and Chemical Co-operative Co Ltd [1943] Ch 220
Westminster Airways Ltd v Kuwait Oil Co Ltd [1951] 1 KB 134
Woollahra Municipal Council v Westpac Banking Corporation (1994) 33 NSWLR 529
Yunghanns v Elfic Pty Ltd (No 2) [2000] VSC 113
Texts Cited: RJ Desiatnik, Legal Professional Privilege in Australia (1999)
A. Moffitt, "Procedures at a common law trial regarding subpoenas duces tecum, notices to produce and documents of parties and strangers", in H.H. Glass (ed) Seminars on Evidence (LBC, 1970)
Phipson on Evidence 14th ed (1990)
Roscoe, Evidence in Civil Actions, 20th ed
P.M. Wood, "Challenging subpoenas duces tecum: is there a third party view?" (1984) 10 Syd Law Rev 379
Category: Procedural and other rulings
Parties: John Langley Hancock (first plaintiff)
Bianca Hope Rinehart (second plaintiff)
Gina Hope Rinehart (first defendant)
Representation: Counsel:
C Withers w P Meagher (plaintiffs)
BR McClintock w SA Lawrance (first defendant)
On 28 May 2015, in connection with the appointment of the second plaintiff Bianca as new trustee of the Hope Margaret Hancock Trust in place of the first defendant Mrs Rinehart, an order was made for the delivery up by Mrs Rinehart to Bianca of the trust documents. Bianca contends that Mrs Rinehart has failed to deliver up certain trust documents, including documents pertaining to legal advice obtained by Mrs Rinehart from Sceales & Company Lawyers ("Sceales"), and by notice of motion filed on 3 September 2015 seeks further orders to give effect to the order of 28 May 2015 in connection with the production of the trust documents ("the production motion"). In connection with the hearing of that motion, a subpoena for production was issued at Bianca's request to Sceales on 26 August 2015. On 16 September 2015, Sceales produced to the court, without objection, documents in answer to the subpoena ("the Sceales documents"). This judgment is concerned with Mrs Rinehart's claim for legal professional privilege in respect of some of the documents produced by Sceales.
On 29 September 2015, first access to the Sceales documents was granted to Mrs Rinehart, who separated them into three categories, indexed in three schedules. Schedule 1 comprised documents in which Mrs Rinehart personally - as distinct from as trustee of the trust - claimed privilege ("privileged non-trust documents"). Schedule 2 comprised documents which were not privileged but which Mrs Rinehart contended were not trust documents to which the second plaintiff was entitled under the 28 May 2015 orders ("unprivileged non-trust documents"). Schedule 3 comprised the remainder of the Sceales documents, in respect of which Mrs Rinehart did not object to access.
As to the Schedule 2 documents, I considered it unnecessary to resolve, for the purposes of determining the application for access, whether or not they were trust documents, as their production was sought not on the basis that they were trust documents, but for use in connection with an application in which the plaintiffs sought to establish that not all trust documents had been produced. Assuming that, as Mrs Rinehart contended, they were not themselves trust documents, that does not mean that they could not in some way inform the inquiry whether there were trust documents which had not been delivered up. The documents were already in court, having been produced without objection by Sceales, and there was no objection on grounds of oppression, nor any claim of confidentiality in respect of them. In those circumstances there appeared to be no reason why the plaintiffs should not have access, which was granted, and thus on 16 October, the plaintiffs were given access to the Schedule 2 and Schedule 3 documents.
[4]
The solicitor's affidavit, the schedule and the exhibited documents
The only testimonial evidence tendered by Mrs Rinehart was an affidavit of her current solicitor. This affidavit explains how Schedule 1 was compiled, and exhibits a number of additional documents, to which further reference is made below. However, it contains no evidence of the circumstances in which and purpose for which the Schedule 1 documents were created. Nor does it even contain an assertion that the Schedule 1 documents were privileged - which, in any event, would be no more than an inadmissible opinion on the deponent's part, founded on facts not within his knowledge.
Schedule 1 is an index of the disputed documents. It comprises four columns: (a) item; (b) document; (c) date and (d) circumstances under which privilege is claimed. The solicitor's affidavit explains how the description of each document in column (b) was prepared, and I am prepared to accept that the description accurately characterises the document to which each relates, so far as it goes. However, the affidavit does not say anything about the column "circumstances under which privilege is claimed", which purports to state the basis of the privilege claim. The facts asserted in that column are unverified assertions of no evidentiary value. Although Mr McClintock SC offered to call the solicitor who made the affidavit to verify the facts asserted in that column, he could not have done so: the solicitor in question had no contemporaneous involvement in the creation and receipt of the disputed documents, had no personal knowledge of the matters asserted, and could not have given evidence of those matters, other than inadmissible hearsay or opinion.
Moreover, the matters asserted in the fourth column do not include, in respect of any of the documents, any assertion that the relevant document was created for the personal purposes of Mrs Rinehart, as distinct from the purposes of the trust. Even if verified by a person with knowledge of the facts, it would not sustain a claim of privilege by Mrs Rinehart personally.
Exhibited to the solicitor's affidavit was a bundle of documents ("the exhibited documents") which were relied on to demonstrate that there was, at the relevant time, litigation contemplated or pending between Mrs Rinehart and John, in order to support an inference that the Schedule 1 documents were communications for the purposes of that litigation. I accept that the exhibited documents show that, between 24 May 2004 and 20 April 2007, there were on foot allegations made by John against Mrs Rinehart of breach of trust, in respect of which John sought to intervene in proceedings in the Supreme Court of Western Australia to prosecute those allegations against her, including by way of seeking her removal as trustee ("the WA Proceedings"). Advice obtained by Mrs Rinehart in connection with those allegations, and communications relating to the defence of those proceedings, could at least potentially fall in the class of personal privileged documents of Mrs Rinehart as distinct from trust documents. However, they do not necessarily do so, and - at least without resorting to inspection of the Schedule 1 documents - the testimonial and documentary evidence does not establish that they fall within that class.
[5]
Inspection by the court of the disputed documents
It was in that context that, at the hearing, Mrs Rinehart pressed the court to inspect the disputed documents to determine the claim for privilege. This course had not been foreshadowed prior to the hearing of the application for access, and would require the court to review the 78 documents, largely unaided by submissions on behalf of Mrs Rinehart (because such submissions would likely reveal any privileged subject matter), and entirely unaided by submissions on behalf of the plaintiffs (who would be denied the opportunity to see the documents, and thus the opportunity to answer the only potentially probative material adduced by Mrs Rinehart). The plaintiffs objected to the court inspecting the documents. The issue is whether a person claiming privilege can sustain the claim by adducing no testimonial evidence of the purpose for and circumstances in which the subject documents were created, but merely asking the court to inspect the documents for the purpose of ruling on the claim - a course which Mrs Rinehart submitted was authorised by Grant v Downs. [15]
The answer to this question, and the proper function of the court's power to inspect the disputed documents, requires an understanding of the nature of the privilege (as a privilege against production to the court, not merely against inspection), and the evolution of the procedure applicable to making and testing a claim of privilege. While the applicable principles are established in this state, by authorities that are very well known, they may have become obscured by the emergence of a practice, contrary to those authorities, of producing documents to the court subject to a claim for privilege.
The starting point is the classic statement of Jordan CJ, with whom Davidson and Owen JJ concurred, in Commissioner for Railways v Small (emphasis added): [16]
If duly served with such a writ and provided with the proper conduct money, the person served must obey it and bring to the Court the documents mentioned in the subpoena if he has them, unless he procures the writ to be set aside as oppressive; and he must produce to the Court the documents which he has brought unless he satisfied the Court that some good reason exists why they should not be produced: this he is always at liberty to do if he can: In re Smith; Williams v Frere [1891] 1 Ch 323 at 332; R. v Greenaway 7 QB 126 at 135. A witness called on subpoena duces tecum may be asked, without being sworn, whether he has brought the documents, and if so, whether he produces them to the Court. If he states that he objects to produce them, he should be sworn and the grounds of his objection stated on oath so that the Court may judge of their sufficiency: e.g. that they constitute his title deeds, or would incriminate him. … If the witness produces the documents, he produces them to the Court and not to the parties. He may, if he choose, state that he objects to their being handed to the parties for inspection. If so, it is for the Judge to make such examination of them as he thinks proper, and he may order such of them as he considers relevant to be read, or handed to the parties for inspection, as he may think desirable, with a view to their being tendered in evidence: Burchard v Macfarlane [1891] 2 QB 241 at 247-8.
[6]
Conclusion
Thus in my view:
1. Legal professional privilege is a privilege from production, including from production to the court. Such a claim should be made at the first of the Waind & Hill stages, before the documents are produced to the court. To voluntarily produce the documents to the court for the purpose of use in evidence on the application is inconsistent with maintaining a claim for privilege.
2. A claim for privilege must be made on sworn direct evidence - not inadmissible hearsay or opinion - proving the facts on which the claim is founded. This is unaffected by the court's discretionary power to require production in order to enable inspection for the purpose of adjudicating the claim, which exists to enable a claim for privilege to be scrutinised, not to enable it to be proved. No party - least of all the party claiming privilege - may insist that the court inspect the documents.
As Mrs Rinehart has tendered no admissible sworn evidence amenable to being tested by cross-examination probative of the facts on which the claim for privilege is founded - in particular, her purpose in making the relevant communications - it would be contrary to justice to uphold her claim solely on the basis of an inspection of the documents. It follows that the court will not inspect the Schedule 1 documents for the purpose of ruling on the claim, and Mrs Rinehart's claim of privilege in respect of those documents fails. The documents having already been produced to the court, Bianca will be granted access to them.
The Court orders that:
1. The second plaintiff may have access to the documents produced by Sceales & Co on subpoena, including those listed in Schedule 1, and including in electronic form.
2. By 16 February 2016 the second plaintiff file and serve any further evidence (arising out of the documents produced by Sceales & Co) in support of her motion filed 3 September 2015.
3. By 16 February 2016 the second plaintiff lodge and serve any further written submissions in respect of the 3 September 2015 motion.
4. By 2 March 2016 the first defendant file and serve any evidence in response to the evidence referred to in order (2) above.
5. By 2 March 2016 the first defendant lodge and serve any written submission in response to those referred to in order (3) above.
6. The proceedings be adjourned to Monday 8 February 2016 at 10:30 am to fix the hearing of the remainder of the 3 September 2015 motion.
7. The costs of and incidental to the hearing on 3 November 2015 be the second plaintiff's costs in the proceedings on the 3 September 2015 motion.
The Court further orders that:
1. The operation of order 1 be stayed until 5:00 pm on Friday 5 February 2016.
[7]
Endnotes
Grant v Downs (1976) 135 CLR 674, 689; National Crime Authority v S (1991) 29 FCR 203, 211-2; Re Southland Coal Pty Ltd [2006] NSWSC 899; (2006) 59 ACSR 87, [14]; Visy Industries Holdings Pty Ltd v Australian Competition and Consumer Commission [2007] FCA 147; (2007) 161 FCR 122, 126 [6]; Mitsubishi Electric Australia Pty Ltd v Victorian WorkCover Authority [2002] VSCA 59; (2002) 4 VR 332, 337 (Batt JA); cited with approval by Austin J in Australian Securities and Investments Commission v Rich [2004] NSWSC 1089, [2].
Esso Australia Resources Ltd v Federal Commissioner of Taxation (1999) 201 CLR 49, [35], [61]-[62]; Daniels Corporation International v Australian Competition and Consumer Commission [2002] HCA 49; (2002) 213 CLR 543, [9]-[11].
Re Londonderry's Settlement [1965] Ch 918, 933; [1964] 3 All ER 855; Krok v Szaintop Homes Pty Ltd (No 1) [2011] VSC 16, [28]; Schreuder v Murray (No 2) [2009] WASCA 145; (2009) 41 WAR 169, [91].
Yunghanns v Elfic Pty Ltd (No 2) [2000] VSC 113, [35], citing Phipson on Evidence, 14th ed (1990), p515, [20]-[28]; Krok v Szaintop Homes Pty Ltd (No 1) [2011] VSC 16, [28]; Hancock v Rinehart [2015] NSWSC 646; (2015) 106 ACSR 207, [360].
Alliance Craton Explorer Pty Ltd v Quasar Resources Pty Ltd [2011] SASC 90; (2011) 275 LSJS 166, [40] (White J); Schreuder v Murray (No 2) [2009] WASCA 145; (2009) 41 WAR 169, [94]; Krok v Szaintop Homes Pty Ltd (No 1) [2011] VSC 16, [31].
Gardner v Irvin (1878) LR 4 Ex D 49, 53.
National Crime Authority v S (1991) 100 ALR 151, 159 (Lockhart J).
Lazenby v Zammit [1987] Tas R 54, 56 (Green CJ and Wright J); see also Attorney-General for the Northern Territory v Kearney (1985) 158 CLR 500, 508 (Gibbs CJ); Holmes v Deputy Commissioner of Taxation (1987) 19 ATR 1278, 1286 (Davies J).
Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501, 513-4 (Brennan CJ).
See (NSW) Evidence Act 1995, s 119.
Talbot v Marshfield (1865) 62 ER 728, 729; Schreuder, [68]; Krok, [31]; Gouraud v Edison Gower Bell Telephone Company of Europe (1888) 57 LJ Ch 498, 499 (Chitty J) (a party cannot resist production of documents which have been obtained by means of payment from moneys belonging to the party applying for production); W Dennis and Sons Ltd v West Norfolk Farmers' Manure and Chemical Co-operative Co Ltd [1943] Ch 220, 222-3; The Shed People Pty Ltd v Turner [2000] SASC 196; (2000) 34 ACSR 609; and see the discussion in Gray v BNY Trust Co of Australia Ltd [2009] NSWSC 789; (2009) 76 NSWLR 586, [33]-[54] (Bergin CJ in Eq).
The remaining dispute concerned the 78 documents listed in Schedule 1, in respect of which Mrs Rinehart claimed legal professional privilege on the basis that they were confidential communications or documents made for the purpose of her obtaining legal advice, or conducting anticipated or pending litigation, in her personal (not her trustee) capacity. The plaintiffs seek access to those documents. On 30 October, Mrs Rinehart provided a revised Schedule 1, which omitted 14 of the documents previously listed, in respect of which a claim of privilege was no longer pressed.
It was not in issue that Mrs Rinehart, as the person making the claim, bears the onus of proving the facts on which the claim for privilege is said to be founded, [1] and that that involves establishing that the disputed documents comprised or contained confidential communications made for the dominant purpose of obtaining legal advice and/or conducting anticipated or pending litigation. [2]
Moreover, Mrs Rinehart is not entitled to maintain against Bianca - as a beneficiary, and a fortiori as replacement trustee - a claim of privilege in respect of trust documents: Bianca as new trustee is as much entitled to them as her predecessor, Mrs Rinehart. Legal advice obtained by a trustee for guidance in the administration of the trust or the proper exercise of trust powers belongs to the trust, not to the trustee personally. [3] On the other hand, advice obtained for the trustee's personal assistance, such as in resisting litigation brought against the trustee by a beneficiary, belongs to the trustee alone. [4] Thus to make good her claim, Mrs Rinehart must establish not only that the disputed documents were privileged, but that the privilege was hers personally, and not that of the trustee of the trust. [5] The issue for determination is whether Mrs Rinehart has done so.
To sustain a claim of privilege, the claimant must not merely assert it; but must prove the facts that establish that it is properly made. Thus a mere sworn assertion that the documents are privileged does not suffice, because it is an inadmissible assertion of law; the claimant must set out the facts from which the court can see that the assertion is rightly made, [6] or in other words "expose … facts from which the [court] would have been able to make an informed decision as to whether the claim was supportable". [7] The evidence must reveal the relevant characteristics of each document in respect of which privilege is claimed, [8] and must do so by admissible direct evidence, not hearsay. [9]
Mrs Rinehart's case is that the Schedule 1 documents are confidential communications between her lawyers Sceales and others (including herself and her agents) made, or confidential documents prepared, for the dominant purpose of her being provided with professional legal services relating to an anticipated or pending proceeding [10] between her and the first plaintiff John in the Supreme Court of Western Australia. It was submitted that this conclusion should be drawn from the accumulation of (a) an affidavit of Mrs Rinehart's solicitor, (b) the description of the documents contained in Schedule 1, (c) a bundle of other documents, which were tendered, and (d) inspection by the court of the Schedule 1 documents themselves, which the court was asked to undertake. The plaintiffs objected to the court inspecting the Schedule 1 documents, and it is convenient to deal first with the other evidence relied on to support the claim for privilege.
First, the evidence does not show that the Schedule 1 documents, or any of them, were communications for the purposes of the WA Proceedings. Although the exhibited documents may show that proceedings between John and Mrs Rinehart were anticipated or pending, neither they nor the affidavit itself contain any further indication of the circumstances in which or purpose for which any Schedule 1 document was created, let alone that any or all of them were created for Mrs Rinehart personally as distinct from in her trustee capacity. It hardly needs to be observed that the fact that such proceedings might have been pending does not mean that any document in the custody of Sceales created at about that time was created for the purposes of those proceedings.
Secondly, that is all the more so as it is not apparent that Sceales were acting for Mrs Rinehart, in any capacity, in connection with the WA Proceedings: so far as the evidence reveals, Anchor, Maxim and Solomons variously acted for Mrs Rinehart in those proceedings, while Sceales were retained to provide advice on several matters relating to the administration of the trust - including whether Mrs Rinehart could properly consent as trustee to the amendments to the constitution of HPPL, and financing arrangements, but not the WA Proceedings. Indeed, the exhibited documents establish that Sceales were expressly retained by Mrs Rinehart "as trustee of the Hope Margaret Hancock Trust" to provide legal advice in respect of "the affairs of HPPL, and in particular its Articles of Association", and there is no evidence of any other retainer by Mrs Rinehart of Sceales. The express purpose of the retainer is more consistent with advice to the trustee qua trustee than in a personal capacity.
Thirdly, Sceales retained Mr Myers QC, who appears to have furnished five advices; it appears uncontroversial that the first three are trust documents; but privilege is claimed in respect of the fourth and fifth. Yet the costs of Sceales, and Mr Myers' fees, in respect of all five advices, were charged to the beneficiaries (other than John): they were not accounted for as a trust expense, but directly debited to their beneficiary accounts. Mrs Rinehart explained to Bianca at about that time that it was necessary for her to take further legal advice because of problems John was said to be causing, and "given also the need to protect the Hope Downs development". Payment of the cost of obtaining legal advice out of trust property is at least prima facie evidence that it was obtained on behalf of the trust and not for the trustee personally. [11] It is not conclusive, because there are circumstances in which the trustee is entitled to be indemnified out of the trust property for an expense incurred for the trustee's personal benefit in this sense, most obviously where the trustee successfully defends litigation brought by a beneficiary and is unable to recover from the beneficiary. [12] But in the absence of any better evidence of the circumstances, the payment from the beneficiaries' accounts coupled with the statement to Bianca to the effect that the advice was necessary because of problems being caused by John and to protect Hope Downs favours the view that it was obtained for the purposes of the trust, and not for the trustee personally.
The plaintiffs also objected that there was no affidavit of Mrs Rinehart personally making or proving the claim for privilege. If there were evidence from another source which proved the facts that established a claim for privilege, the absence of an affidavit from Mrs Rinehart personally would not be fatal: the question must be whether the requisite facts are proved, not by whose evidence they are proved. In a large enterprise, it may well be someone other than Mrs Rinehart personally who would have the best knowledge of the relevant facts. Mrs Rinehart legitimately points to the circumstance that Mr Solomon, through whom she dealt with Sceales, and who may well have been the most pertinent witness, is deceased. That said, as it is Mrs Rinehart's purpose when the documents were created that is central, and it is plain that she was closely involved in giving the relevant instructions, one might think that her evidence as to her purpose would have been important. The plaintiffs also observed that Mr Ross, who apparently had responsibility for coordinating Mrs Rinehart's production of documents and had sworn affidavits on the subject in response to the 3 September motion, was also not called. However, I accept that his current responsibilities in connection with production of documents do not necessarily make him the appropriate person to depose to the relevant facts, which occurred many years before his involvement. Nonetheless, no-one involved has deposed to the purpose for which the disputed documents were created, which leaves Mrs Rinehart devoid of testimonial evidence on the essential fact she must prove to establish her claim of privilege. In those circumstances, not only will the court not readily infer a dominant privileged purpose in the absence of evidence from those who might have illuminated it, [13] but it may infer from the failure to call the witnesses who could have done so that their evidence would not have assisted the claim. [14]
Thus the evidence tendered by Mrs Rinehart, while it establishes that there were in contemplation at the relevant time proceedings between her and the first plaintiff, communications relating to which could potentially fall in the class of personal privileged documents of Mrs Rinehart as distinct from trust documents, does not begin to establish that the Schedule 1 documents comprised or included such communications. There is no testimonial or documentary evidence - save potentially the disputed documents themselves, to which I shall shortly come - as to the circumstances in and purpose for which they were created.
Next, in O'Born v Commissioner for Government Transport, [17] the Full Court (Street CJ, Clancy and Walsh JJ), having referred to Commissioner for Railways v Small, and in the particular context of a claim for legal professional privilege, said:
But the person upon whom the subpoena is served (in the present case the plaintiff) must be asked in court to produce the document, and this question may be put to him without being sworn. If he had added that he objected to produce the document "he should be sworn and the grounds of his objection stated on oath so that the court may judge of their sufficiency", for if the witness produces a document he produces it to the court and not to the parties.
Then, in National Employers' Mutual General Association Ltd v Waind and Hill; Waind v Hill and National Employers' Mutual General Association Ltd, [18] Moffitt P, with whom Hutley and Glass JJA agreed, explained that there were three steps in the procedure of having the respondent to a subpoena bring documents to Court and in the subsequent use of these documents. After referring to the statement of Jordan CJ in Commissioner for Railways v Small that there were at least two steps in the procedure of having documents brought to Court and in their use thereafter, his Honour said (emphasis added):
Indeed on a correct view there are three steps: the first is obeying the subpoena by the witness bringing the documents to the court and handing them to the judge. This step involves the determination of any objections by the witness to the subpoena, or to the production of the documents to the Court pursuant to the subpoena. The second step is the decision of the judge concerning preliminary use of the documents, which includes whether or not permission should be given to a party or parties to inspect the documents. The third step is the admission into evidence of the document in whole or in part; or the use of it in the process of evidence being put before the Court by cross-examination or otherwise.
Those cases [19] clearly establish that an objection to production founded on a claim for privilege should be taken at the first stage, and the reason why the objection is properly to be taken at the first stage - before the documents are produced to the court - is that the privilege is a privilege from production to the Court. [20] Because the privilege is one against production, it is inconsistent with maintaining the claim to produce the documents to the court, let alone to tender them on the voir dire as evidence in support of the claim. It may be one thing to produce them pursuant to a requirement of the court to inspect them, but it is quite another to voluntarily produce them and tender them as the evidence to sustain the claim. If the claimant voluntarily uses the documents in that way, it has no legitimate basis for insisting that the opponent seeking production should be precluded from seeing them.
The common law position as to when a privilege objection is to be taken is now reflected in Uniform Civil Procedure Rules 2005, r 1.9:
1.9 Objections to production of documents and answering of questions founded on privilege
(1) This rule applies in the following circumstances:
(a) if the court orders a person, by subpoena or otherwise, to produce a document to the court or to an authorised officer,
(b) if a party requires another party, by notice under rule 34.1, to produce a document to the court or to an authorised officer,
(c) if a question is put to a person in the course of an examination before the court or an authorised officer,
(2) In subrule (1), authorised officer means:
(a) any officer of the court, or
(b) any examiner, referee, arbitrator or other person who is authorised by law to receive evidence.
(3) A person may object to producing a document on the ground that the document is a privileged document [21] or to answering a question on the ground that the answer would disclose privileged information.
(4) A person objecting under subrule (3) may not be compelled to produce the document, or to answer the question, unless and until the objection is overruled.
(5) For the purpose of ruling on the objection:
(a) evidence in relation to the claim of privilege may be received from any person, by affidavit or otherwise, and
(b) cross-examination may be permitted on any affidavit used, and
(c) in the case of an objection to the production of a document, the person objecting may be compelled to produce the document.
(6) This rule does not affect any law that authorises or requires a person to withhold a document, or to refuse to answer a question, on the ground that producing the document, or answering the question, would be injurious to the public interest.
Thus, upon objection being taken to production on grounds of legal professional privilege, the court must rule on the objection before production can be compelled (subject to the power under the rule to compel production to the court if it requires access to the contentious documents in order to determine a contested privilege claim).
Although the rule does not explicitly apply in a case such as the present where privilege is claimed by a party other than the person who produced the documents, [22] in principle, the party claiming privilege is entitled to object to the person in whose custody they are (which will usually be an agent of the party claiming privilege) producing them, and a solicitor subpoenaed to produce a client's documents is entitled if not bound to insist on the client's privilege. [23] While the preferable course might be that the party claiming privilege do so at the first stage, the privileged status of the documents remains relevant to the exercise of the discretion to permit inspection after they have been produced by a third party. [24] However, the importance of the principle that the privilege is one from production, even to the court (subject to the exception to which I have referred), is to demonstrate that it is inconsistent with maintenance of the privilege voluntarily to put them before the court, even for the limited purpose of inspection by the judge.
The cases to which reference has been made above also establish that the grounds of the objection must be stated on oath, so that the court can determine their sufficiency: as already mentioned, the claimant must, by admissible direct evidence, set out the facts from which the court can see that the assertion is rightly made. [25] Formerly, the sworn evidence of the claimant, so long as it showed a sufficient factual basis for the claim, was accepted as conclusive. But concerns that in that approach there was potential for injustice, in that scrutiny of a claim for privilege was precluded and the claimant's oath was conclusive, has resulted in the evolution of the law, so that such a claim may now be tested, by two means. [26]
The first is cross-examination, which formerly was not but now is permitted. [27] In Fruehauf, Giles J held [28] that an affidavit of discovery was generally conclusive not only in relation to the amplitude of discovery but also in relation to any claim to protection from inspection of a discovered document, including a claim to legal professional privilege; and in particular that cross-examination of the maker of the affidavit will not be permitted, but added: [29]
I do not find this result particularly satisfactory. Whatever the position be where the dispute is over possession or control of relevant documents, or even over the former objection to production on the ground that the documents relate solely to the objector's case and not to the case of the other party, there seems little reason why the status of a document as attracting legal professional privilege should not be determined upon a proper investigation of the circumstances in which it was brought into existence. That will usually be a discrete issue, not requiring immersion in the substantive dispute in the proceedings. Given the "sole purpose" test for legal professional privilege, it will often be an issue deserving of investigation, since the determination of whether a document was brought into existence for a sole purpose attracting legal professional privilege involves questions of fact and degree. Like issues are commonly investigated when a claim to privilege is made for documents produced on subpoena. The old Chancery aversion to a "conflict of affidavits" has been significantly overtaken by Part 23, r 7 and r 10, and provided only dubious justification for limiting the investigation of whether a document came into existence in circumstances attracting legal professional privilege: why in such a case should the court "appeal to the oath" or "trust the oath" of the claimant to privilege?
It may be that after argument addressed to the question it could be recognised that the practice of the Court of Chancery over a hundred years ago should no longer condition a claim to privilege in an affidavit of discovery, and that the court should adopt a different practice. The matters to which I have referred in the preceding paragraph were not the subject of argument before me, and this is not the case to consider doing so. For the reasons I have given, I affirm my ruling declining to permit cross- examination of Mr Blanks.
Subsequently, in National Crime Authority v S, Lockhart J said that "courts should not be slow to permit cross-examination of the deponent of such an affidavit" as the claim for privilege "is asserted on oath and it is open to the court or the person who seeks access to the document or the answer to the question to cross-examine the person who makes the claim". [30] This was followed by Gummow J in Hartogen Energy Ltd (in liq) v Australian Gas Light Co. [31] That cross-examination is permissible is now put beyond doubt by UCPR r 1.9(5)(b) (and its predecessors).
The second is that the court may require a document the subject of a claim of privilege to be produced, so that it may inspect it for the purpose of ruling on the claim. It is doubtful that, in the absence of a rule (such as UCPR r 1.9(5)(c)) so providing, the court could require the documents to be produced for its inspection: the court had no more entitlement than anyone else to inspect a privileged document. [32] While many cases now state that the court may inspect the documents to adjudicate the claim, [33] they have been decided in the context of the existence of rules which authorise that course. No authority was cited in Grant v Downs for the proposition that the court has power to examine the documents for itself, [34] which at the time would have involved a marked departure from the position stated in the well-known paper by Moffitt JA in Seminars on Evidence, unless explicable by the existence, recognised by Moffitt JA, of rules permitting it. References to the ability of the court to inspect the documents usually appear in the context of scrutinising a claim at the request of the party seeking production, rather than proof of the claim by the claimant, and this was so in Grant v Downs itself. [35]
The preferable explanation of the court's power to inspect the documents is that it exists not to facilitate proof by a claimant of the facts required to sustain the claim, but to provide a means of enabling a claim to be scrutinised and tested. This view of the power is derived from the historical evolution of the means of scrutinising a claim in the context where the oath of the claimant was once regarded as conclusive. As Giles J said of an equivalent rule in Fruehauf, it "may be seen as a limited relaxation of the general rule, or recognition of a limited common law exception, and of significance because the ways of challenging a claim to privilege are otherwise confirmed". [36] It is reinforced by the manner in which the power is expressed, as one to compel production for the purpose of ruling on the objection - that is, to intrude on the privilege for a limited purpose. Moreover, it has often been observed that a party is not entitled to insist on the court inspecting the documents, it being a matter for the discretion of the judge, who will only do so if there is good reason. [37] While those comments have been made in response to requests by applicants for production asking the court to go behind the affidavit evidence in support of the claim and inspect the documents, they apply a fortiori where the claimant, having adduced insufficient evidence otherwise to sustain the claim, requests the court to inspect the documents (to the exclusion of the applicant).
A further consideration telling in favour of that view is that the essential issue on a claim for privilege is the purpose for which the document or communication in question was made. As that involves ascertaining the purpose of a person, the best direct evidence will be that given by the person whose purpose is in question. While purpose may be inferred from the document, direct evidence of it can be given by the person whose purpose it is. While the documents themselves may well illuminate the purpose for which they were created, to allow them to be used as evidence - let alone the sole evidence - in support of a claim for privilege, would be contrary to well-established practice. It would also be grossly unfair to the other party: if the only evidence of purpose is to be inferred from the document itself, the party seeking access is deprived of any opportunity to test the asserted purpose, which would defeat rather than promote the intent of enabling claims to be tested and scrutinised. As Giles J observed in Woollahra Municipal Council v Westpac Banking Corporation: [38]
The court should be able to proceed on evidence describing the documents and the circumstances of their creation, and should not unnecessarily pay regard to material which can not be known to the party challenging the claim to privilege.
The unsatisfactory features of presenting the court with a bundle of documents and asking it to rule on a claim of privilege have been the subject of comment on many occasions. [39] Admittedly there are cases in which the court has, while bemoaning the process, proceeded to inspect the documents and uphold a claim of privilege. In Gold Securities Australia Pty Ltd v Siebe plc (NSWSC, Giles J, 31 October 1990, unreported, BC9001805), Giles J inspected the disputed documents for the purposes of determining the validity of the plaintiffs' privilege claim. However, that was undertaken with the consent of both parties; there was testimonial and documentary evidence, other than the disputed documents themselves, to establish the claim; and the inspection was undertaken "where there was doubt whether the descriptions given by the plaintiffs fell within recognised heads of protection from inspection and doubt whether the evidence in the application sufficed to establish the claim for protection". In Barnes v Commissioner of Taxation, the Full Court, although finding that the evidence provided by the appellants was manifestly insufficient and did not establish any basis for their claim of privilege, [40] nonetheless allowed an appeal from the trial judge's rejection of a claim for privilege in respect of some of the documents in issue, having decided for themselves to inspect the documents, [41] as the trial judge had; [42] however, the court's power to do so does not appear to have been argued, and whether there was any objection to the trial judge doing so is not apparent. And in Carbotech v Yates, [43] in which reference was made to Barnes, I inspected some of the documents in the absence of satisfactory affidavit evidence, but where it was possible to infer from the proved existence of a retainer and the dates of and parties to relevant communications that they were for a privileged purpose, and there was no objection to that course.
Better informed now by the above analysis, in my view, such an approach is not merely unsatisfactory, but impermissible in principle. Whether the creature of judicial decision or, as I think more properly, rules of court, the court's power to inspect documents - and to require their production for that limited purpose - was a response to the potential injustice in treating the claimant's oath as conclusive. The power was not intended to detract from the requirement that a person claiming privilege prove, by admissible evidence, the grounds of the claim. While it is clear that the court may now require a document the subject of a claim of privilege to be produced so that it may inspect it for the purpose of ruling on the claim, that is quite a different notion from permitting a person claiming privilege to sustain the claim by adducing no testimonial evidence but asking the court to inspect the documents. The privilege being a privilege against production, it permits the person entitled to the privilege to refuse to produce the document to the court. To voluntarily proffer the documents for inspection - as opposed to doing so pursuant to a requirement made by the court under UCPR r 1.9(5)(c) - is inconsistent with maintaining the claim.
Gray v BNY Trust Company of Australia Limited [2009] NSWSC 789; (2009) 76 NSWLR 586, [54] (Bergin CJ in Eq); Rouse v IOOF Australia Trustees Ltd (No 3) [1999] SASC 208, [39]-[44].
Carbotech Australia Pty Ltd v Yates [2008] NSWSC 1151, [17].
Re Southland Coal Pty Ltd [2006] NSWSC 899; (2006) 203 FLR 1; 59 ACSR 87, [14(j)] (Austin J); Ho v Powell [2001] NSWCA 168; (2001) 51 NSWLR 572, 576; Hawksford v Hawksford [2005] NSWSC 796, [19] (Campbell J).
(1976) 135 CLR 674.
(1938) 38 SR(NSW) 564, 573-4.
(1959) 77 WN(NSW) 81, 83.
[1978] 1 NSWLR 372, 381.
See also P.M. Wood, "Challenging subpoenas duces tecum: is there a third party view?" (1984) 10 Syd Law Rev 379.
Roscoe, Evidence in Civil Actions, 20th ed, p 162; Doe d Carter v James 2 M & Rob 47, 48-9; Volant v Soyer 13 CB 231; Pickering v Noyes (1823) 1 B & C 262; A. Moffitt, "Procedures at a common law trial regarding subpoenas duces tecum, notices to produce and documents of parties and strangers", in H.H. Glass (ed) Seminars on Evidence (LBC, 1970), p8.
Privileged documents are those that contain privileged information. Privileged information is defined in the UCPR Dictionary to mean, inter alia, information to which client legal privilege applies under ss 117-126 of the Evidence Act 1995.
See the discussion in R.J. Desiatnik, Legal Professional Privilege in Australia (1999), pp51-58, to which this judgment is indebted.
Fruehauf Finance Corporation Pty Ltd v Zurich Australian Insurance Ltd (1990) 20 NSWLR 359, 366 (Giles J). However, it was permissible for the issuing party to ask the recipient, but not in the nature of cross-examination, whether he produced the documents called for, and if not why not, and questions calculated to ensure that the recipient properly understood the subpoena, but not so as to require the recipient to incriminate himself of a contempt: Griffith v Rickettts (1849) 7 Hare 299, 303; Trade Practices Commission v Arnotts Ltd (No 2) (1989) 21 FCR 306; (1989) 88 ALR 90; cf Doe d Carter v James 2 M & Rob 47; Pickering v Noyes (1823) 1 B & C 262.
(1990) 20 NSWLR 359, 366D.
(1990) 20 NSWLR 359, 366D-367B.
(1991) 100 ALR 151, 159.
(1992) 36 FCR 557.
Roscoe, Evidence in Civil Actions, 20th ed, p 162; Doe d Carter v James 2 M & Rob 47; Volant v Soyer 13 CB 231; A. Moffitt, "Procedures at a common law trial regarding subpoenas duces tecum, notices to produce and documents of parties and strangers", in H.H. Glass (ed) Seminars on Evidence (LBC, 1970), p8.
Grant v Downs (1976) 135 CLR 674, 689; Trade Practices Commission v Sterling (1979) 36 FLR 244; Woollahra Municipal Council v Westpac Banking Corporation (1994) 33 NSWLR 529, 541-2; Esso Australia Resources Ltd v Federal Commissioner of Taxation (1999) 201 CLR 49, [52]; Re Southland Coal Pty Ltd [2006] NSWSC 899; (2006) 203 FLR 1, [14(k)]; AWB v Cole (2006) 152 FCR 382, [116]; R v Petroulias (No 22) (2007) 176 A Crim R 309, [38].
Grant v Downs, 689.
Westminster Airways Ltd v Kuwait Oil Co Ltd [1951] 1 KB 134; Alfred Crompton Amusement Machines Ltd v Customs & Excise Commissioners (No 2) [1972] 2 QB 102, 129 (Lord Denning MR); Waterford v Commonwealth (1987) 163 CLR 54, 61 (Mason and Wilson JJ), 91 (Deane J), 103-4 (Dawson J).
(1990) 20 NSWLR 359, 366; see also Westminster Airways Ltd v Kuwait Oil Co Ltd [1951] 1 KB 134.
Westminster Airways Ltd v Kuwait Oil Co Ltd [1951] 1 KB 134 at 146; District Council of Mallala v Livestock Markets Ltd (2006) 94 SASR 258, [30]; Woollahra Municipal Council v Westpac Banking Corporation (1994) 33 NSWLR 529, 542.
(1994) 33 NSWLR 529, 541-2. See also Bailey v Department of Land and Water Conservation (2009) 74 NSWLR 333, [60]-[65]; and Carbotech Australia Pty Ltd v Yates [2008] NSWSC 1151, [17].
Schreuder v Murray (No 2) [2009] WASCA 145; (2009) 41 WAR 169, [62]; Woollahra Municipal Council v Westpac Banking Corporation (1994) 33 NSWLR 529, 542; Barnes v Commissioner of Taxation [2007] FCAFC 88; (2007) 242 ALR 601, [16]; Carbotech Australia Pty Ltd v Yates [2008] NSWSC 1151, [17].
[2007] FCAFC 88; (2007) 242 ALR 601, [18]-[19].
[2007] FCAFC 88; (2007) 242 ALR 601, [20]-[22].
[2007] FCAFC 88; (2007) 242 ALR 601, [2].
[2008] NSWSC 1151, [15], [19].
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Decision last updated: 08 February 2016