Permanent Custodians Ltd v Nobilo

Supreme Court of NSW|2011-11-30|Before: Davies J

Judgment Background 1In these proceedings the Plaintiff seeks possession of land and payment of a monetary sum arising out of an alleged default under a mortgage and loan agreement. The Plaintiff alleges that the loan secured by the mortgage was made to 3 Defendants. The First and Second Defendants (the Cross-Claimants) are the parents of the Third Defendant. 2The Defence and Cross-Claim filed by the Cross-Claimants allege that the loan was made to the Third Defendant to enable her to refinance an existing loan to a company called La Trobe. Effectively the Cross-Claimants were said to be guarantors, and provided their property as security although, in the first instance, it seems to be asserted that any mortgage is not effective in favour of the Plaintiff. 3The Cross-Claimants filed a Second Cross-Claim against a firm of solicitors (the Cross-Defendants) who they allege were retained by the Third Defendant in connection with the loan and mortgage. One of the matters alleged to form part of the retainer was for the Cross-Defendants to arrange a transfer of 1% of the Cross-Claimants' property to the Third Defendant, such transfer being a requirement of the lender. The Cross-Defendants were said to owe fiduciary duties to the Cross-Claimants as a result of advice given by the Cross-Defendants to the Cross-Claimants. 4Paragraph 33 of the Second Cross-Claim said this: By acting for Judy [the Third Defendant] in relation to the 1% Transfer, the Proposed Loan and the Proposed Mortgage, the cross-defendants had interests conflicting with their duties to the cross-claimants. 5Paragraph 22 of the Defence to the Second Cross-Claim relevantly said this: In relation to paragraph 33 of the Second Cross-Claim, the Cross-Defendants: a. admit that they acted for the Cross-Claimants' daughter in relation to the 1% Transfer; b. deny that they acted for the Cross-Claimants' daughter in relation to the Proposed Loan and Proposed Mortgage; 6By a Notice of Motion filed 1 August 2011 the Cross-Defendants have sought leave to amend their Defence to the Second Cross-Claim and have sought leave, in the course of so doing, to withdraw the admission made in paragraph 22(a) of their Defence to the Cross-Claim. That is to say, they wish to assert now that they did not act for the Third Defendant on the 1% Transfer. 7In support of that Notice of Motion (which is fixed for hearing on 12 December 2011) the Cross-Defendants have relied upon an affidavit by their solicitor, Siobhan Moore, which details the instructions her firm received together with the matters that have given rise as to the application to withdraw the admission. Her affidavit relevantly says this: 10 On or about 22 March 2010, Sparke Helmore Lawyers were instructed by LawCover Insurance Pty Ltd to act for Vincent Parisi and Anthony Pascale in relation to these proceedings. 11 With leave of the Court granted on 27 April 2010, Mr and Mrs Nobilo filed and served an unverified Second Cross-Claim on 28 April 2010. 12 Under the supervision of Mr Coorey and Malcolm Cameron (another partner of Sparke Helmore Lawyers who supervised the matter whilst Mr Coorey was on leave), I was involved in the preparation of the Defence to the Second Cross-Claim. This involved attending conferences with Mr Pascale and Rajesh Chand, a solicitor who was formerly employed Mr Pascale and Mr Parisi. 13 At the time of the preparation of the Defence to the Second Cross-Claim, I was instructed that Mr Pascale was first contacted by Ms Saad regarding the transfer of an interest in the Property to her by her parents, and that Mr Pascale attended a meeting with Mr and Mrs Nobilo and Ms Saad at Ms Saad's home to discuss the proposed transfer of a one third interest in the Property on 23 February 2006. I was further instructed that following the meeting on 23 February 2006, Ms Saad provided instructions regarding the transfer of an interest in the Property. 14 On this basis the Defence to the Second Cross-Claim included the following pleaded matters: a. The statement at paragraph 8(b) of the Defence (in response to paragraph 18 of the Second Cross-Claim) that instructions in connection with the transfer of an interest in the Property were given orally by Mr and Mrs Nobilo and Ms Saad to Mr Pascale at a meeting between them at Ms Saad's home; b. The admission at paragraph 11 of the Defence (in response to paragraph 21 of the Second Cross-Claim) that on or about 22 March 2006 Ms Saad instructed Mr Parisi and Mr Pascale to prepare documents for the 1 % Transfer; c. The statement at paragraph 20(b) of the Defence (in response to paragraph 31 of the Second Cross-Claim) that Mr Parisi and Mr Pascale were retained by Mrs Saad in relation to the 1 % Transfer, but not the Proposed Loan and the Proposed Mortgage; d. The admission at paragraph 22(a) of the Defence (in response to paragraph 33 of the Second Cross-Claim) that Mr Parisi and Mr Pascale acted for Ms Saad in relation to the 1% Transfer. ... 17. Together with Charles Colquhoun, counsel for Mr Parisi and Mr Pascale, I was involved in the preparation of evidence on behalf of Mr Parisi and Pascale during January and February 2011. This involved a number of conferences with Mr Pascale, Mr Chand and Kathy Schinella, a paralegal and administrative assistant employed by Hunter Lawyers. It also involved consideration of the affidavits of Mr and Mrs Nobilo, as well as a detailed review of the file held by Hunter Lawyers in relation to Mr and Mrs Nobilo. 18 As a result of these further investigations, it became apparent that, despite Ms Saad's involvement in the proposed 1% Transfer, Mr Parisi and Mr Pascale had acted for Mr and Mrs Nobilo in respect of proposed transfer of an interest in the Property to Ms Saad, and not for Ms Saad. I refer in particular to the following evidence given by Mr Pascale and Mr Chand: a. In paragraph 17 of his affidavit, Mr Pascale says that when Ms Saad first contacted him regarding the proposed transfer, he believes that he would have arranged a meeting with Mr and Mrs Nobilo in person to explain the effect of the transfer to them and ensure that they understood and consented to the transfer; b. In paragraph 23 of his affidavit, Mr Pascale says that the purpose of the meeting on 23 February 2006 was to advise Mr and Mrs Nobilo about the proposed transfer and to execute the documents necessary to effect the transfer; c. In paragraphs 25-26 and 28 of his affidavit, Mr Pascale describes introducing himself to Mr and Mrs Nobilo and explaining that he was there to talk to them about transferring a share in their home to Ms Saad; d. In paragraphs 30-49 of his affidavit, Mr Pascale sets out the advice that he gave to Mr and Mrs Nobilo regarding the proposed transfer of a one third interest in the Property to Ms Saad. He did not advise Ms Saad regarding the proposed transfer; e. In paragraph 52 of his affidavit, Mr Pascale states: "The advice I provided to Mr and Mrs Nobilo was limited to the effect of the proposed one third transfer to Ms Saad. I did not provide any advice to Ms Saad as to the effect that the proposed transfer would have upon her own interests"; f. At paragraph 55 of his affidavit, Mr Pascale says that he opened a file in the names of Mr and Mrs Nobilo because they were the registered proprietors of the property that was the subject of the transfer, and he required their instructions to proceed with registering the transfer if it was to be made. He also states: "I recall that I considered that I was acting only for Mr and Mrs Nobilo in relation to the transfer"; g. At paragraphs 16-17 of his affidavit, Mr Chand says that he was informed by another person at Hunter Lawyers that the clients were Mr and Mrs Nobilo, and that they needed a solicitor to meet with them to explain the transaction and witness documents; h. At paragraph 29 of his affidavit, Mr Chand says that he told Mr and Mrs Nobilo that he understood that they were refinancing a loan and entering into a new mortgage, and needed him to explain some things and witness some documents. He also asked Mr and Mrs Nobilo whether they wanted Ms Saad to be with them while they went through the documents; i. At paragraph 40 of his affidavit, Mr Chand says that he gave advice to the following effect to Mr and Mrs Nobilo: "Although you are only transferring a 1% interest in your home to your daughter, this will not effect your liability under the loan agreement and mortgage. If you default under the loan, you may still lose your house, even if Judy only holds a 1% share." He did not give advice to Ms Saad in respect of the proposed transfer. ... 23 At or about this time, I also formed the view that the evidence of Mr Pascale and Mr Chand set out in paragraph 18 above was not consistent with the pleaded matters set out in paragraph 14 above, and that it would be necessary to amend the Amended Defence to the Second Cross-Claim to ensure that it was consistent with the evidence filed. The Registrar's decision 8On 5 August 2011 the solicitor for the Cross-Claimants served a Notice to Produce expressed to have been under r 21.10 UCPR. The Notice required the solicitors to produce the following documents:

(a) Rule 21:10(1)(b) UCPR 15Rule 21.10(1)(b) UCPR provides: 21.10 Notice to produce for inspection by parties (1) Party A may, by notice served on party B, require party B to produce for inspection by party A: (a) any document or thing that is referred to in any originating process, pleading, affidavit or witness statement filed or served by party B, and (b) any other specific document or thing that is clearly identified in the notice and is relevant to a fact in issue. (2) A notice to produce may specify a time for production of all or any of the documents or things required to be produced. 16What is required under sub-r (1)(b) has been discussed in a number of cases which are conveniently summarised by Barrett J in Patonga Beach Holdings Pty Ltd v Lyons [2009] NSWSC 869: [9] Brereton J went on to make observations about rule 21.10 referring specifically to what had been said by Young CJ in Eq in Penrith Rugby League Club Limited v Brown [2004] NSWSC 1182. Brereton J said at [4]: "Part 21 r 10 authorises service of a notice to produce, in respect of documents referred to in originating processes, pleadings, affidavits and witness statements, and 'any other specific document or thing that is clearly identified in the notice and is relevant to a fact in issue'. The limitations with the requirement that there be a 'specific document' and that it be 'clearly identified' were explained by Young CJ in Eq in Penrith Rugby League Club Ltd v Brown [2004] NSWSC 1182. As his Honour explained, the rule was not intended to subject a recipient to any kind of general discovery obligation. The words 'clearly identified' mean that there must be something more specific than a matter which can be ascertained by the ordinary processes of construction and employing extrinsic evidence; it must be pointed out in a manner distinct and free from confusion. The requirement for specificity connotes something that is identified, and not merely identifiable. His Honour upheld a submission that it would be insufficient to identify a box containing a number of unspecified documents, or a lever arch folder containing a number of unspecified documents; identification of the specific documents was required." [10] Brereton J then stated his conclusion on the matter before him at [5]: "In my view, this notice does not clearly identify specific documents, but calls for classes of documents. It was not the intent of this rule to enable notices to be given requiring production of classes of identifiable documents, as distinct from specific identified documents. Accordingly, in my view, this notice is not a valid exercise of the power to serve a notice to produce under r 21.10, and I would set it aside on that basis." [11] It is thus clear that, in rule 21.10, the combination of "specific document" and "clearly identified" means that a notice can relate only to a document describe by means of characteristics peculiar to itself, such as a letter of a given date written by X to Y, or the minutes of a meeting of directors of Z Limited held on a given date. A notice relating to all letters written by X to Y in 2008 or the minutes of all meetings of the directors of Z Limited held in 2008 would not be permitted because referring to a class of document as distinct from what Harrison AsJ in Douglas Corporation v Currico Nominees [2007] NSWSC 113 termed "the individual document sought" is not a permissible course. 17In my opinion, the Notice to Produce does not require the production of documents which are "clearly identified" as that term has been explained. Rather, what is sought are categories of documents. Each of the paragraphs in the Notice to Produce commences with the words "any and all documents", and then goes on to identify the group or class of those documents in each case by reference to 4 paragraphs in Ms Moore's affidavit. It seems apparent, in the first instance, that the Cross-Claimants are not even certain if such documents exist - rather, it appears to be assumed that they would exist because the solicitor had conferences with the Cross-Defendants as appears in those paragraphs. That is a further indication that the description does not identify a particular document. 18Seemingly to avoid this result, the solicitors for the Cross-Claimants wrote on 17 October 2011 endeavouring to narrow the documents referred to in the Notice to Produce by confining them to documents relating to: (i) The Cross-Defendants acting or not acting for the Third Defendant; and (ii) Transfer of the 1% interest in the property to the Third Defendant. 19Two things can be said about this. First, the present Notice of Motion still seeks an order that the Cross-Defendants produce the documents referred to in the Notice to Produce. There is no qualification relating to the letter of 17 October 2011. Secondly, and more fundamentally, the narrowing in that letter does not remove the requirement in the Notice to produce a class of documents rather than identified individual documents. 20In my opinion, the requirements in the Notice to Produce do not comply with r 21:10(1)(b) UCPR because the documents are not "clearly identified" as that phrase is understood in the authorities. Relevance of documents 21The Rule also requires that the documents be relevant to a fact in issue. The facts in issue on the motion to withdraw the admission are the instructions received by the solicitor acting for the Cross-Defendants on the two occasions referred to. The solicitor gives evidence in her affidavit, in substance, of what the instructions were. 22The Cross-Claimants say that they do not question Ms Moore's explanation nor her truthfulness, and they do not wish to cross-examine her. It is difficult in those circumstances to see how the documents can be relevant to a fact in issue. The documents would only confirm or deny what Ms Moore has said, and what she has said is not disputed nor challenged. 23The real dispute is likely to be what instructions the Cross-Defendants received themselves rather than what instructions Ms Moore received when she came to act for the Cross-Defendants after they were joined to the proceedings. But the documents sought in the Notice do not include the Cross-Defendants' own documents - they are confined to Ms Moore's documents as are referred to in the identified paragraphs of her affidavit. 24The documents required could only affect Ms Moore's credit, and that is not challenged. Accordingly, the documents are not relevant to any fact in issue. In that way that aspect of the Rule is not satisfied. The Registrar was correct in holding that the Notice did not comply with the Rule.

(b) Section 68 Civil Procedure Act 2005 25Section 68 CPA provides: 68 Attendance at court and production of documents and things to court Subject to rules of court, the court may, by subpoena or otherwise, order any person to do either or both of the following: (a) to attend court to be examined as a witness, (b) to produce any document or thing to the court. 26The issue in relation to s 68 turned largely on what was meant by "Subject to rules of Court". The Cross-Claimants submitted that the power given by s 68 was not only a wider power than is contained in r 21.10 and r 34.1, but was also a wider power than the Rules generally allowed. This was said to be demonstrated by the resort to s 68 to enable the production of documents for a liquidator's examination. It was submitted that orders for production could not have been made in such cases were there not additional power in s 68 over and above that which was provided in the Rules. 27It is clear that the Cross-Claimants did not issue the Notice to Produce relying on any other provision than r 21.10. The first time that s 68 was raised was in submissions in reply before the Registrar. Nevertheless, a proper application of s 56 CPA may well permit appropriate amendments to be made, with appropriate cost protections to the Cross-Defendants, if s 68 could have been availed of by the Cross-Claimants. 28The Cross-Claimants drew particular attention to the decisions of Barrett J in Onefone Australia Pty Ltd v One.Tel Ltd [2007] NSWSC 1188 and Onefone Australia Pty Ltd v One.Tel Ltd [2007] NSWSC 1476 to show that s 68 itself can be availed of at least for the purpose of requiring the production of documents for a liquidator's examination. There was reliance in those cases on earlier decisions under Pt 36 r 12 Supreme Court Rules which s 68 has replaced. The Cross-Claimants submitted that what must be inferred from those cases is that the power in s 68 was wider than the power given in the various rules requiring production of documents. 29A reading of Pt 36 r 12 SCR shows that it was particularly, although not exclusively, directed to production of documents in connection with company examinations: Re BPTC (In Liq) (1993) 29 NSWLR 713. Moreover, the Rule was said to confer ample power on the court to make orders for the production of documents: Re BPTC at 718. But the power conferred by the Rule was more limited than the subpoena power because it was confined to the production of documents potentially relevant to the examination. 30The terms of s 68 are not so limited, and regard must be had to the fact that the power now derives from the Act rather than the Rules. But the section is introduced by the words "Subject to rules of court". The Defendants say that those words cannot mean only "as authorised by the Rules" because that would mean the use of s 68 in aid of company examination matters would not be allowable. 31It may be accepted that the power given in s 68 is wider than is contained in individual parts of the Rules (R 21.10; R 33.2; R 34.1) and, perhaps, wider than the sum of them. But that does not mean that s 68 can be resorted to whenever compliance with a rule is difficult or inconvenient. The words "Subject to rules of court" mean that the relevant rule must be complied with if there is such a rule. If they did not mean that, a party could step around the requirements of a rule (eg a "document...that is referred to" in (a); a "specific document...that is clearly identified" or "relevant to a fact in issue" in (b)) by invoking s 68 with no such limitation. The use of s 68 in company matters, without resort to a specific rule, is hallowed by usage acquired in such cases as Re BPTC when the same power was to be found in Part 36 R 12. That was a separate source of power at the time, but has now been made "Subject to rules of court". 32The Cross-Claimants are not entitled to rely on s. 68 independently of the Rules. The Registrar was correct in so deciding.

(c) Client legal privilege 33It is not strictly necessary to consider this issue because of my conclusions in relation to the two earlier issues that mean that the documents are not required to be produced. However, if I am wrong in that view I should consider this issue. 34The Cross-Defendants point first to the statement in Ms Moore's affidavit where she says, "Nothing in this affidavit is intended to waive any claim of client legal privilege". Such a statement cannot be the determining factor on any enquiry to see if the privilege has in fact been waived. 35The Cross-Defendants further submit that mere reference by a solicitor to instructions received from a client is not inconsistent with the maintenance of confidentiality in respect of any documents recording those instructions. 36In Mann v Carnell [1999] HCA 66; (1999) 201 CLR 1 the plurality judgment said at [29]: What brings about the waiver is the inconsistency, which the courts, where necessary informed by considerations of fairness, perceive, between the conduct of the client and maintenance of the confidentiality; not some overriding principle of fairness operating at large. 37They also said at [34]: Disclosure by a client of confidential legal advice received by the client, which may be for the purpose of explaining or justifying the client's actions, or for some other purpose, will waive privilege if such disclosure is inconsistent with the confidentiality which the privilege serves to protect. Depending upon the circumstances of the case, considerations of fairness may be relevant to a determination of whether there is such inconsistency. 38In Commissioner of Taxation v Rio Tinto Limited [2006] FCAFC 86; (2006) 151 FCR 341 the Full Court of the Federal Court said, having discussed the passage in Mann at [29] and some other authorities: These authorities show that, where issue or implied waiver is made out, the privilege holder has expressly or impliedly made an assertion about the contents of an otherwise privileged communication for the purpose of mounting a case or substantiating a defence. Where the privilege holder has put the contents of the otherwise privileged communication in issue, such an act can be regarded as inconsistent with the confidentiality that would otherwise pertain to the communication. 39A little later they posed the question concerning waiver in these terms: [68] In this case, everything turns on the particulars given by the Commissioner in response to Rio's request. The question is whether, by his particulars, the Commissioner made an assertion as part of his case that puts the contents of the privileged scheduled documents in issue, or necessarily lays them open to scrutiny, with the consequence that an inconsistency arises between the making of the assertion and the maintenance of the privilege. To answer this, the relevant assertions must be considered in their proper context. 40A reading of paragraphs 12 and 13 on the one hand and 17 and 18 on the other, of Ms Moore's affidavit makes clear that she is comparing instructions that she received on the 2 occasions referred to about who it was that the Cross-Defendants were acting for. In paragraph 13 she expressly refers to the instructions (or some of them) that she received concerning the matter. 41When it is remembered that the purpose of the swearing of this affidavit is to provide a justification for the withdrawal of an admission made, it is difficult to see how there has not been a waiver of privilege in relation to the instructions received on the 2 occasions in question. The issue has been opened up for the precise purpose of the Cross-Defendants being able to change their defence to the case on this point. It is inconsistent with the privilege over the instructions received for the Cross-Defendants now, through their solicitor (although they do not themselves swear an affidavit to that effect) to make reference to the instructions for the desired purpose. The matter does not involve the provision of legal advice or the disclosure of such advice. The issue of waiver is concerned only with the giving of instructions. 42The Cross-Defendants point to 3 decisions of various courts which suggest that there is no waiver of privilege in these situations. I do not consider that the decisions in Temwell Pty Ltd v DKGR Holdings Pty Ltd [2003] FCA 1349 and Stage 3 Productions Pty Ltd (in liq) v Pulbrook [2007] VSC 548 are of assistance. In both cases leave had been given to withdraw the admission prior to consideration of whether the documents were required to be produced and made available. Indeed, Harper J in Stage 3 gave that as the very reason for not requiring the relevant advice to be produced - see at [10]. 43Balnaves v Smith [2008] QSC 215 concerned whether privilege had been waived in respect of advice given. The relevant part of the affidavit said to result in the waiver of privilege simply referred to the fact that certain advice had been given and in response thereto the client had acted. The authorities have consistently held for a lengthy period of time that a mere reference to advice without the substance of it being disclosed will not give rise to a waiver of privilege - see for example Ampolex Ltd v Perpetual Trustee Co. (Canberra) Ltd (1996) 70 ALJR 603 at 607, and for a recent statement of the point see Osland v Secretary to the Department of Justice [2008] HCA 37. 44Obviously, it is a matter of fact in each case, whether there has been a waiver as the Full Court of the Federal Court said in Rio Tinto and as Hoeben J said in Adelaide Bank Limited v John Abdelkodous [2011] NSWSC 32. However, I find the approach taken by Hoeben J in that case to be persuasive in a case not so factually dissimilar from the present where explanations were provided associated with an application to set aside a default judgment. 45In my opinion, privilege has been waived in respect of the conference notes referred to in the 4 paragraphs to which I have referred. That does not cover the documents referred to in paragraph 4 of the Notice to Produce that is concerned with paragraph 36 of Ms Moore's affidavit. That paragraph appears only to be a conclusionary statement arising out of what has been dealt with in paragraphs 12, 13, 17 and 18. Conclusion 46Although I respectfully disagree with the Registrar's conclusion about client legal privilege, the Registrar's determination of the Motion was correct. Rule 21.10 applied and was not complied with by the terms of the Notice. The result is that present motion for review and seeking production of the documents must be dismissed. 47I make the following orders: (1) Cross-Claimants' Notice of Motion filed 14 October 2011 is dismissed. (2) The Cross-Claimants are to pay the Cross-Defendants' costs of the Motion.

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: 12 December 2011

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