Supreme Court of WA|1999-05-11|Before: Mr J, Parker J, McLelland CJ

Pulitano & Anor v Ginbey [1999] WASC 5 (11 May 1999)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : PULITANO & ANOR -v- GINBEY [1999] WASC 5

Practice and procedure - Claim of privilege - Joint privilege

Alba Nominees Pty Ltd v Cecil Bros Pty Ltd, unreported; SCt of WA (Parker J); Library No 970698 ; 12 December 1997

Balabel v Air India [1988] Ch 317

Re Briamore Manufacturing Ltd (In Liq) [1986] 1 WLR 1429

Bridge Pump Co Pty Ltd v Myles Southwest Fuel Supplies Pty Ltd, unreported; FCt SCt of WA; Library No 970636; 22 October 1997

Crompton (Alfred) Amusement Machines Ltd v Commissioners of Customs and Excise (No 2) [1974] AC 405

Dalleagles v Australian Securities Commission (1991) 4 WAR 325

Doyles Constructions Lawyers v Harsands Pty Ltd, unreported; SCt of NSW (McLelland CJ); 18 February 1997

Hellenic Mutual War Risks Association (Bermuda) Ltd v Harrison ("The Sagheera") [1997] 1 Lloyd's Rep 160

Hoad v Nationwide News Pty Ltd (1998) 19 WAR 468

Inform Formwork Pty Ltd v McInnes Conrete Services Pty Ltd, unreported; FCt SCt of WA; Library No 950611; 15 November 1995

Intercapital Holdings Ltd v MEH Ltd (1988) 6 ACLC 1,068

Re Konigsberg [1989] 1 WLR 1257

Middleton v Western Australia (1996) 17 WAR 201

Moody v Cox [1917] 2 Ch 71

Re Nika Management Services Pty Ltd (In Liq) (1996) 14 ACLC 326

Pioneer Concrete (NSW) Pty Ltd v Webb (1995) 18 ACSR 418

Rouchefoucauld v Boustead (1896) 65 LJ Ch (NS) 796

Re Sarah C Getty Trust [1985] QB 956

Spector v Ageda [1973] Ch 30

Turner v Davies [1981] 2 NSWLR 324

Verdell Pty Ltd v F & G Nominees Pty Ltd, unreported; SCt of WA (Sanderson M); Library No 970587; 5 November 1997

Wentworth v De Montfort (1988) 15 NSWLR 348

1 MASTER SANDERSON: This is the plaintiffs' application for inspection of certain documents over which privilege was claimed in an affidavit of discovery of the defendant sworn 23 October 1998. The dispute now centres on some 16 documents and these are documents numbered 23, 40, 250, 265, 265A, 266, 307, 315, 320, 321, 329, 344, 345, 346, 367 and 693. Collectively, these documents will be referred to throughout these reasons as "the disputed documents".

2 Before detailing the history of the discovery process in this matter, I should say something about the nature of the claim itself. The plaintiffs sue the defendant in his capacity as executor and trustee of the estate of Ronald Victor Studman (dec) and in his personal capacity. The defendant is a solicitor and practices under the style of Ginbey & Co. It is pleaded that in or about June 1992 the first-named plaintiff agreed to purchase certain property in Perth. It is also pleaded that this purchase was negotiated for the first-named plaintiff by Ideal Realty Pty Ltd of which the late Mr Studman and one Bridget Micheline Paterson ("Paterson") were directors. It is to be noted that it is alleged that Ideal Realty Pty Ltd was acting as an agent for the vendors not the plaintiffs. It is then pleaded that the plaintiff entered into the contract of sale at the request of Paterson and Studman and as trustee for Paterson and Studman. It is pleaded that Ginbey acted for both parties, that is, the plaintiff and the vendor, at settlement.

3 Settlement did not take place on the date specified in the offer and acceptance and it is alleged that without the authority of the first-named plaintiff Ginbey acted on instructions from Paterson and Studman and entered into certain arrangements which resulted in the time for settlement being extended. Despite the extension, settlement did not take place on the revised date and in June 1994 the vendors terminated the contract.

4 In October 1994 the vendors sued the first-named plaintiff for damages for breach of the contract in the District Court. It is pleaded that on or about 28 March 1995 the first-named plaintiff first became aware of the action and from that date instructed Ginbey to act on his behalf. On that same date (28 March 1995), so it is pleaded, Ginbey prepared a handwritten agreement whereby Paterson and Studman agreed to indemnify the first-named plaintiff for any losses sustained in the District Court action. It is pleaded that Ginbey then continued to defend the action, taking his instructions from Studman and Paterson. On or about 13 March 1997 Ginbey consented to judgment being entered against the first-named plaintiff in a sum of $100,000. Because certain money had already been paid the actual judgment against the first-named plaintiff was in the sum of $67,000. It is pleaded that this judgment was consented to without the first-named plaintiff's knowledge.

5 When the first-named plaintiff became aware of the judgment he instructed Ginbey to obtain security from Paterson to cover the $67,000 debt. It is pleaded that this was not done and no security was obtained. The vendors then issued a bankruptcy petition against the first-named plaintiff. Paterson has now gone bankrupt and has no realisable assets. The plaintiffs claim in this action against Ginbey is for $67,000 and other related costs and expenses.

6 That is a brief outline of the action brought by the plaintiffs against the defendant. It is apposite to note that the defendant does not admit the plaintiffs' claim (in para 5 of the statement of claim) that Ideal Realty was acting as agent for the vendors in relation to the sale. Nor is it admitted that the contract for sale was entered into by the first-named plaintiff as trustee for Paterson and Studman. Neither of these two allegations are denied, they are simply not admitted. What is admitted is that Ginbey acted for the plaintiffs and for the vendors with respect to the sale. What is more, it is pleaded (in para 6(b), (c), (d), (e) and (g) of the defence) that Paterson acted as agent for the first-named plaintiff. The rest of the defence is not relevant for present purposes. Suffice it to say, the defendant denies that he is in any way liable to the plaintiffs.

7 The application itself has quite a history. On 23 October 1998 the defendant swore an affidavit of discovery. For reasons which will become apparent, this affidavit is referred to by the plaintiff as "the first discovery affidavit". For the sake of convenience, I will adopt that terminology. The affidavit was in a standard form and the defendant deposed to the fact that all documents listed in the first schedule of the annexure to the first discovery affidavit were in his possession, custody or power. The defendant's solicitors arranged for inspection. Prior to inspection taking place, the defendant's solicitors wrote to the plaintiffs' solicitors by letter dated 10 November 1998. In this letter the defendant's solicitors advised that the first schedule to the annexure of the first discovery affidavit contained documents subject to legal professional privilege. They denied the plaintiffs' solicitors the opportunity to inspect the documents as listed and foreshadowed a "Supplementary Affidavit" to be filed on or before 13 November 1998. That affidavit was not forthcoming as anticipated. By letter dated 13 November 1998 the plaintiffs' solicitors wrote to the defendant's solicitors arguing that by virtue of the first discovery affidavit any privilege over the documents had been waived. It was suggested that there was an actual waiver of privilege rather than an implied waiver.

8 By letter dated 18 November 1998 the defendant's solicitors wrote back to the plaintiffs' solicitors denying any waiver of privilege. On that same date the defendant obtained an extension of time to 30 November 1998 to file a substituted affidavit of discovery. This substituted affidavit of discovery was filed and served on 9 December 1998. I will refer to this as the "substituted affidavit".

9 I might pause at this point just to comment upon the procedure that has been adopted by the defendant. The affidavit of discovery was, presumably, sworn in compliance with O26 r1. Order 26 r4 stipulates the form an affidavit and list of documents must take. Nowhere in the Rules is their any provision for such an affidavit being superseded or replaced by a substituted affidavit. Nor is there any provision in O37 which would allow the practice the defendant has purported to adopt in this case. In my view the course adopted by the defendant is inappropriate. At the very least, leave should have been sought to file a further affidavit to correct what it is said was a mistake in the preparation of the first affidavit. To unilaterally decide that an affidavit filed in conformity with O26 is to be superseded is not an act sanctioned by the Rules. Having said that, the plaintiffs, to their credit, have not taken an excessively technical approach and have looked to form not substance. It is not therefore appropriate for me to make findings adverse to the defendant based upon their failure to comply with the Rules.

10 Further correspondence passed between the plaintiffs' solicitors and the defendant's solicitors but no agreement was reached, at least with respect to the disputed documents. The matter came on before me on 30 March 1999. I ordered that the defendant file a further affidavit detailing the basis upon which privilege was claimed in relation to the disputed documents. On 13 April 1999 the defendant filed an affidavit in compliance with that order. A further supplementary affidavit of the defendant sworn 30 March 1999 was also filed. That dealt with one particular document and was filed by way of clarification. No issue arises in relation to that further affidavit.

11 The plaintiffs' application is put on three different grounds. First, it is said that by filing an affidavit listing the disputed documents as being available for inspection, the defendant has waived privilege. It was submitted that this was particularly the case where the defendant was a legal practitioner who, at the time of swearing the first affidavit, must have given consideration to whether or not the documents attracted privilege. Having made a fully informed choice and having sworn the affidavit, privilege has been waived.

12 In support of this submission the plaintiff relied upon the decision in Meltend Pty Ltd v Restoration Clinics of Australia Pty Ltd (1997) 145 ALR 391. In this case Goldberg J held that if a solicitor made a conscious decision to discover documents that were otherwise privileged that decision amounted to an actual waiver of privilege and not an implied waiver. The decision in Meltend Pty Ltd was confirmed by the majority of the Full Federal Court in Esso Australia Resources Ltd v Federal Commissioner of Taxation [1998] FCA 1655; (1998) 159 ALR 664.

13 In opposition to this application, the defendant filed an affidavit sworn 26 March 1999. That affidavit reads, in part:

"4. Prior to the preparation of my affidavit of discovery dated 23 October 1998 I provided to my solicitors several bundles of documents for discovery.

5. At that time I did not realise that the bundles included the Disputed Documents, which are documents I hold in my capacity as solicitor for clients other than Mr Pulitano, which other clients are not parties to these proceedings. The Disputed Documents were inadvertently included in the documents provided to my solicitors for the purposes of discovery.

7. [sic] I refer to my affidavit of discovery sworn 23 October 1998. At the time of swearing that affidavit I did not realise that some documents I held exclusively as solicitor for other clients had been included in the list of documents annexed to that affidavit. In or about mid November 1998 I realised that the documents I held exclusively as solicitor for other clients had been included in the list of documents annexed to that affidavit and on 29 January 1999 my solicitors informed the plaintiff's solicitors that the documents were not in my custody, possession and power. This is because I held the documents in my capacity as solicitor for non-parties to the proceedings. ... "

14 (The affidavit did not contain a para 6. The paragraphs that I have quoted run sequentially.)

15 From this evidence which, not surprisingly, is uncontested, it appears that the list of documents annexed to the affidavit of 23 October 1998 included the disputed documents by mistake or through inadvertence. It would appear that the defendant did not actually turn his mind to whether or not privilege should be claimed in relation to the disputed documents. In that sense it cannot be said that there was an informed decision which amounted to an express waiver of privilege. On that basis, this case is distinguishable from the Meltend decision. It is rather more in line with the decision of the English Court of Appeal in Guinness Peat Properties Ltd v Fitzroy Robinson Partnership [1987] 1 WLR 1027 where Slade LJ (with whom Woolf LJ and Sir George Waller agreed) held (at 1045):

"Where solicitors for one party to litigation have, on discovery, mistakenly included a document for which they could properly have claimed privilege ... , the court will ordinarily permit them to amend the list under R.S.C. Ord. 20 r. 8, at any time before inspection of the document has taken place."

16 In the circumstances, I am not satisfied that there has been an express waiver of privilege and I would not order an inspection of documents on this basis.

17 The second ground relied upon by the plaintiff amounted to an argument that the defendant had the documents in his custody, possession and power and that he had no claim to privilege over these documents. Rather, the privilege was held by a third party and it was up to that third party to claim the privilege if they so desired. There is no doubt that the disputed documents are, or were at the time the first discovery affidavit was sworn, in the physical custody or possession of the defendant. After all he has sworn that he delivered these documents to his solicitors. But he says that he held these documents solely in his capacity as a solicitor for a third party. In the circumstances, the defendant submits, the physical possession of the documents was not what mattered. It was submitted that for a document to be in the custody, possession or control of the defendant, as that phrase is used in the Rules, the defendant must have the sole right and power to deal with the document.

18 There is remarkably little authority on this point. I was referred to two English decisions: Williams v Ingram [1900] 16 TLR 434 and Martin v Martin [1953] 2 QB 286. Both of these cases offer some support for the defendant's position. So to do the texts: see Discovery and Interrogatories Australia, para 17,050 at 25,053. But perhaps the proposition put by the defendant does not need authority. It cannot be the case that a privilege claimed by a third party can be circumvented by seeking discovery from the third party's agent. Such a collateral attack on privilege could never be permitted. That is what the plaintiffs' submission amounts to - a collateral attack on the privilege claimed by a third party. Of course that assumes that privilege has been claimed by a third party. This question is not directly addressed in the defendant's affidavit. However, the approach taken by the defendant makes it plain that the privilege has not been waived by the third party - if it was, the defendant would not be maintaining his opposition to this application.

19 In my view, the plaintiffs' application on this ground fails.

20 The final ground raised by the plaintiff really raises two questions. The first is whether the documents are privileged in any event and, interlinked with that question, are they the subject of joint privilege. This is where the question of the capacity in which Paterson was acting during negotiations for the extension of time to settle are relevant. Perhaps the difficulty is best illustrated by an example. In his affidavit of 13 April 1999 at para 2(a), the defendant says:

"Document 23 is a facsimile transmission dated 20 August 1992 from my clients' agent (which clients are not parties to these proceedings) to me containing confidential instructions given to me in my capacity as legal adviser to those clients (solely) in relation to a transaction in which I was advising and acting on behalf of those clients."

21 There are difficulties with this description of document 23. First, the agent is not identified. Secondly, the clients are not identified. Thirdly, it is claimed that the defendant was acting "solely" for those clients. The fact that the document has been listed at all in discovery indicates that it is related to the matters in issue between the parties. It is difficult to see how this description fits with the defendant's pleaded case. For instance, if the agent referred to is Paterson then it is the defendant's case that she was the agent at certain times of the plaintiff. Furthermore, it would appear to be common ground that both the vendor and the plaintiffs retained the services of the defendant. This gives rise to the question of whether or not there is joint privilege.

22 Joint privilege arises where two or more persons communicate with a legal adviser for the purpose of retaining the legal adviser's services or obtaining the legal adviser's advice. Communications entered into between a solicitor and either of the parties in relation to that retainer are subject to joint legal professional privilege: see Farrow Mortgage Services Pty Ltd (In Liq) v Webb (1996) NSWLR 601 per Sheller JA at 608. If the disputed documents were created or received by the defendant while acting for third persons and the plaintiff, then joint legal professional privilege is vested in the first-named plaintiff and the third party. One party who is entitled to joint professional privilege cannot deny access to another party entitled to the same privilege.

23 During the course of the hearing I was invited by both parties to inspect the documents. This approach received the approval of the High Court in Grant v Downs [1976] HCA 63; (1976) 135 CLR 674 at 689. It is clearly not appropriate for the court to review the documents simply on the basis that a party suspects privilege may not be properly claimed but does not have available any evidence to support that contention. That is not the position here. On the pleadings it is apparent that there may well be joint privilege in the disputed documents. Furthermore, I was urged by both parties to review the documents and the originals were provided by the defendant for that purpose. That is the course I have adopted.

24 I am satisfied that all of the disputed documents are the subject of joint privilege. It is inappropriate that I say too much about the conclusion that I have reached with respect to each individual document because to do so might disclose the contents of each document without the need for inspection. But it is apparent from reading the documents that all of them were brought into existence during the time the defendant was acting for the plaintiff and a third party. There can be no question but that the documents are subject to a joint privilege and the plaintiffs cannot be denied access to them.

25 Having reached that conclusion, it is appropriate that I order the documents be produced for inspection by the defendant. However, after making that order, I will provide the defendant with the opportunity to consider whether or not they wish to take this decision on appeal. Clearly, if they do, this is one of those rare cases where a stay of execution pending appeal should properly be granted. Otherwise, the appeal would be rendered nugatory. I therefore propose to adjourn the matter for seven days to allow the defendant to consider his position.

26 It is appropriate that the defendant pay the plaintiffs' costs of the application.

Pulitano & Anor v Ginbey [1999] WASC 5

At a glance

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Judgment (59 paragraphs)

Pulitano & Anor v Ginbey [1999] WASC 5 (11 May 1999)

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Cases Cited (10)