Hawksford v Hawksford [2005] NSWSC 796 | Case summary

4348/04 BRETT PAUL HAWKSFORD & ANOR v MICHAEL JEFFREY HAWKSFORD & 3 ORS JUDGMENT - Ex Tempore 1 HIS HONOUR: This is an application relating to legal client privilege. The litigation in which it is brought concerns an internal dispute in two corporations, namely the second and third defendants. The plaintiffs in the litigation are one of the directors of those corporations and a company which is, in effect, his family company. The first defendant is another director of the companies. The second and third defendants are the companies themselves. The fourth defendant is a solicitor, who had purported to act from time to time concerning the litigation on behalf of the second and third defendants. In Hawksford v Hawksford [2005] NSWSC 463 I held that the fourth defendant was not validly retained in the litigation on behalf of the second and third defendants. 2 An order for discovery was made in the proceedings, which resulted in an affidavit making certain claims of privilege being sworn by the fourth defendant on 23 December 2004. At that time, he understood himself to be acting in the litigation for the second and third defendants, and also on his own behalf. That affidavit is one which made a claim of privilege which divided the documentation into four different categories. The first category was documents passing between the fourth defendant and his legal advisors, solely for the purpose of the proceedings or for obtaining legal advice. The second was documentation prepared by or on behalf of the fourth defendant and his legal advisers solely for the purpose of the proceedings of for the purpose of obtaining legal advice. The third was correspondence passing between the second and third defendants on the one hand and the fourth defendant as their legal advisor on the other, solely for the purpose of the proceedings. The fourth category was documentation prepared by or on behalf of the second and third defendants, and the fourth defendant as legal adviser to the second and third defendants, solely for the purpose of the proceedings. It did not identify the particular documents which fell into those four categories. 3 On 12 April 2005 the Court gave directions for a more detailed form of discovery to take place. That lead to the fourth defendant preparing a list dated 26 April 2005 which itemised the various documents in relation to which privilege was claimed, and attributed those itemised documents to, collectively, the four categories which I have earlier mentioned. Thus, the description of the basis on which privilege was claimed, which had been used in the list on 23 December 2004, was incorporated by reference to the list of 26 April 2005. 4 It was on 16 May 2005 that I delivered the judgment earlier mentioned, holding that the fourth defendant was not retained for the purpose of the proceedings by the second and third defendants. 5 On 23 December 2004, a procedurally unusual notice of motion was taken out by the fourth defendant, seeking orders that the various documents for which he had claimed privilege in the list of 23 December 2004 were indeed privileged material. 6 The matter came before me for directions on 20 July 2005, at which time the plaintiffs sought to agitate the question raised by that notice of motion. By that time, the first defendant was separately represented, as he had also been in the hearing before me which lead to the decision of 16 May 2005, but the question of whether the first defendant, or indeed anyone else, ought be able to defend the proceedings to assert any rights of the second and third defendant had not been resolved. 7 On that occasion, I stood over the notice of motion filed by the fourth defendant to today, and indicated that the matter would proceed insofar as it related to a claim of legal professional privilege made by the fourth defendant on his own behalf. I directed that an affidavit be served by the fourth defendant by 29 July 2005 which identified (A) on whose behalf client legal privilege is asserted and in relation to which documents: and (B) insofar as the privilege is claimed to be that of the fourth defendant himself, the basis on which the privilege is claimed. 8 I left the question of any claim to privilege which might be made on behalf of the second and third defendants to be resolved at a later time, when and if the question of their representation had been decided. 9 The affidavit which the fourth defendant filed on 29 July 2005, took as its starting point the list of documents which was filed on 26 April 2005. It said that certain documents, numbered with particular numbers in that list "are documents in respect of which I claim privilege both on my own behalf and on behalf of the Second and Third Defendant". I will refer to that category of documents as "the dual category". The affidavit also said that certain other numbered documents in that list "are documents in respect of which I claim privilege on my own behalf." 10 The fourth defendant described documents in the dual category as: "communications between myself and Mr John Kelly of counsel instructed by myself on my own behalf and at all relevant times on behalf of the Second and Third Defendant in these proceedings, or represented instructions to me from the Second or Third Defendant, or file notes maintained by me or my staff, all expressly related to the conduct of these proceedings." 11 The words "or represented instructions to me from the Second or Third Defendant" were admitted on the basis that they stated the belief of the deponent but nothing more. 12 The second category of documents was described in the affidavit as: "communications between myself and Mr John Kelly of counsel instructed by myself on my own behalf in these proceedings, or file notes maintained by me or by my staff, all expressly related to the conduct of these proceedings." 13 A third affidavit was sworn yesterday, and filed today, which corrected in some respects which I regard as quite minor, the affidavit of 29 July 2005, and made clear that the fourth defendant was not pressing any claim for privilege for documents which came to be in his possession on behalf of the second and third defendants. 14 I permitted cross-examination of the fourth defendant on the present application, because the various affidavits which he had sworn contained different accounts of the purpose of production of the documents. In cross-examination, he clarified that, in relation to those documents for which he claimed privilege on his own behalf, they indeed had a dominant purpose, of a kind which can give rise to client legal privilege. 15 Concerning those in the dual category, he accepted that he had not in his affidavit identified any dominant purpose for which the documents had been produced. He said that, at the time he swore that affidavit, he had not turned his mind to whether the dominant purpose of production of those documents was the purpose of advancing his own case, or the purpose of advancing the case of the second and third defendants, who he believed, though mistakenly, he was acting for at the time. 16 I have mentioned, in an earlier directions hearing, that when and if any argument about whether the second and third defendants have privilege in any documents comes to be debated, there would need to be some consideration of the law about whether client legal privilege can exist when a person believes, but mistakenly, that he is a legal practitioner acting for a particular client. 17 In the present case, the affidavit of 29 July 2005, as corrected by yesterday's affidavit, does not provide an evidentiary foundation for concluding that there was a dominant purpose of the fourth defendant, in producing or obtaining the documents which fall into the dual category, to obtain or produce them for a purpose of his own which can give rise to client legal privilege. 18 In argument, the possibility was canvassed that the situation in which Mr Daley was obtaining documents which fell into the dual category, might be one where a joint privilege can exist: Rochefoucauld v Boustead (1896) 65 LJ Ch 794; Farrow Mortgage Services Pty Ltd (in liq) v Webb (1996) 14 ACLC 1240; (1996) 39 NSWLR 601; (1996) 132 FLR 466. If there is to be a joint privilege which exists for the benefit of certain people whose interests in litigation are not in conflict, then the documents to which the privilege attaches would need, in accordance with the High Court's judgment in Esso Australia Resources Ltd v Commissioner of Taxation of the Commonwealth of Australia (1999) 201 CLR 49 to be produced for the dominant purpose of litigation or of obtaining legal advice, concerning the interests of that joint client. The affidavit which has been produced is not one which provides an evidentiary foundation for Mr Daley being one of the people who have the benefit of any such joint privilege, in the documents which fall into the "dual" category. 19 The law concerning the basis on which privilege can be claimed is fairly well understood. It is a fundamental principle of the law of evidence that, if a party has the capacity to give or call evidence, and does not do so, the tribunal of fact is entitled to infer that this evidence would not have assisted that person's case: Ho v Powell (2001) 51 NSWLR 572 at 576. In the present case, I am entitled to assume that Mr Daley said as much on this topic as he could. In that situation, I am not satisfied that there is any claim which he can make that he has either privilege in his own right, or part of a joint privilege, in the documents which fall into the dual category. Having made that decision, does not in anyway, however, foreclose the possibility that the second and third defendants might be able to establish at a later stage they have, either in their own right, or as some of the entities entitled to a joint privilege, a valid claim to client legal privilege. 20 Thus, I dismiss the claim that the fourth defendant has, in his own right, any such privilege. However, that decision does not result in the consequence that the documents will become available for inspection immediately by the plaintiffs. Thus, if the plaintiffs decide that they wish to seek to have that question agitated, it would need to be done on another occasion. It would be procedurally more appropriate if the vehicle for any such challenge was a notice of motion taken out by the plaintiffs, seeking to challenge any claim of privilege of the second and third defendants which might be made, when and if the second and third defendants come to be represented in the litigation. 21 As supplemented by his oral evidence, the evidentiary foundation for a claim of privilege in relation to those documents which do not fall into the dual category and concerning which the fourth defendant claims privilege on his own behalf, has been made out in the sense that there is testimony which could provide a basis for a conclusion that client legal privilege existed. Counsel for the plaintiff has submitted that this is an appropriate case for the court to exercise the power, referred to in Grant v Downs (1976) 135 CLR 674 at 689, to inspect the documents itself. In circumstances where the differing kinds of claim about the basis for privilege have been made, in the various affidavits to which I have earlier referred, it seems to me to be an appropriate case for that power to be exercised. I shall therefore inspect the documents concerning which privilege is claimed by the fourth defendant solely on his own behalf. * * * * * * * * * * 22 I have now inspected the documents which fall into that category. One of them is a draft of a defence, which is clearly privileged. Another is a note which the fourth defendant made, of a conversation which he had with the first plaintiff, which also contains some observations which the fourth defendant made following that conference, and which might be relevant to his own defence. While, sometimes, notes which a litigant himself makes, and which are for the purpose of obtaining legal advice are the subject of privilege, in the present case there is not a sufficient basis for concluding that the fourth defendant intended to obtain legal advice. Rather, the document is in the nature of a memorandum for his own use. Client legal privilege does not arise, in my view, when a person acts as his own lawyer, because the rationale for the privilege does not exist in that case. 23 The other document is a portion of a diary note, made by the fourth defendant again for his own purposes, which is not privileged for the same reason. The claim for privilege in relation to those two documents fails. I identify them as document cxxxi and document cxliii in the list of 26 April 2005. Those documents must be produced. 24 The plaintiffs seek costs of the application. In my view, given the way that the claim initially made by the notice of motion has become bifurcated, it would be appropriate for a claim for costs to relate only to today's hearing. Mr McNally submits that the plaintiffs have not been completely successful in that claim, because it has not obtained access to the documents which are in the "dual" category. However, even though that was an application which was made by Mr Bevan in the course of argument, the matter which was set down for hearing today was that it related to a claim of legal professional privilege made by the fourth defendant on his own behalf. At the time that direction was made, it does not appear to have been anticipated that a dual claim, of the type which was actually made, would be made. In so far as the fourth defendant has made a claim of legal professional privilege on his own behalf, that claim has almost totally failed. I order the fourth defendant to pay the costs of the plaintiffs of today's hearing. **********

Hawksford v Hawksford

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Judgment (10 paragraphs)

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