Sargent v Sargent

Supreme Court of NSW|2023-08-31|Before: Kunc J

Summary

During the course of hearing a notice of motion which was ultimately settled by consent, the Court also dealt with claims of client legal privilege raised by the defendant to resist access being granted to the plaintiff to two documents produced by the defendant in answer to a notice to produce issued by the plaintiff (referred to as Documents A and B). The Court rejected the claim for privilege in Document A and granted access to the plaintiff. As to Document B, the privilege claim was upheld and access refused. These are the reasons for those rulings.
Without disrespect, I will refer to the parties by their given names. Mr T Rollo of Counsel appeared for the plaintiff, Darren. Mr D Liebhold of Counsel appeared with Mr N Condylis of Counsel for the defendant, Craig. The argument for Craig on the privilege claim was conducted by Mr Condylis.

The parties and the litigation

Darren and Craig are brothers. Their late parents were Barbara and John. John died in 2016 and Craig and Darren are the surviving executors of his estate. Barbara died in in 2021 and Craig is the executor of Barbara's estate.
These proceedings relate to the ownership of a substantial group of businesses known as the "Sargent Group". Darren sues Craig in the latter's capacity as the executor of Barbara's estate. His claims include: 1. That John and Barbara came to what is pleaded as the "Mutual Wills Agreement", which Darren alleges Barbara breached, thereby causing damage to Darren which it is unnecessary for me to recite here; 2. A proprietary estoppel claim alleging that Barbara represented to Darren that the businesses comprising the Sargent Group would be divided equally between Darren and Craig (which has not occurred), in reliance on which Darren continued to work in the businesses of the Sargent Group for little or no salary; 3. An alternative claim by Darren for family provision from Barbara's estate if the preceding claims are unsuccessful; and 4. A further and alternative claim in estoppel arising from representations that Barbara made to John about how she would dispose of her interests in the Sargent Group.

A notice to produce is issued and documents produced

It will be apparent from even the most general overview in the proceedings that Barbara's testamentary intentions from time to time will be facts in issue or at least relevant to other facts in issue.
The privilege dispute arises in relation to two documents produced in answer to a notice to produce on behalf of Darren which sought: "All documents (whether or not in written or tangible form), not themselves being wills, recording any expression of the intentions (including her reasons for having those intentions or making dispositions) of the late Barbara Lillian Sargent, as to the making of her wills dated 15 March 2015 and 16 November 2020, including, without limitation, documents prepared or maintained by Walsh & Blair Lawyers".
Walsh & Blair Lawyers were Barbara's solicitors at the relevant time. Ms C V O'Mahony of Walsh & Blair Lawyers is the solicitor on the record in these proceedings for Craig.
Craig's claim for privilege in relation to documents A and B turned upon the application of section 121(1) of the Evidence Act 1995 (NSW) (the Act), which is set out in what follows.

Legal principles

There was no dispute that the claims for privilege should be determined by reference to the Act: Singtel Optus Pty Ltd v Weston (2011) 81 NSWLR 526; [2011] NSWSC 1083.
The relevant provisions of the Act are: 121 Loss of client legal privilege: generally (1) This Division does not prevent the adducing of evidence relevant to a question concerning the intentions, or competence in law, of a client or party who has died. … 133 Court may inspect etc documents If a question arises under this Part relating to a document, the court may order that the document be produced to it and may inspect the document for the purpose of determining the question.
Section 121(1) has been considered by White J (as his Honour then was) in d'Apice v Gutkovich - State of Abraham (No 1) [2010] NSWSC 1336 (emphases added): "[16] In the present case the claim for privilege is not made by the deceased but by the plaintiff who is personally entitled to the privilege in question. This is not a case in which the plaintiff is asserting a privilege as a successor to the deceased, being a privilege which the deceased could have maintained. In my view, the reference to "client or party who has died" in s 121(1) when read in the context of Division 1 is a reference to a client or party who, before death, would have been entitled to object to the adducing of evidence on the grounds of a privilege arising under Division 1. [17] In my view, s 121 does not abrogate a claim for privilege that an executor or putative executor has in his or her own right where the privileged documents or communications are relevant to the intentions or competence of the deceased. That is because the deceased was not the client or the party entitled to that privilege. I think this is consistent with the Australian Law Reform Commission Report on the Evidence Act. In the Australian Law Reform Commission, Evidence, Report No. 26 (Interim) (1985), the Law Reform Commission said of the section which became s 121(1) (at [884]): " In addition, the privilege will not apply to communications relevant to an issue between parties claiming through the same deceased client - for example, setting aside or resisting a grant of probate on grounds of testamentary incapacity or undue influence ". [18] In the Australian Law Reform Commission, Evidence, Report No. 38 (Final), the Commission said (at [196]): " Evidence relevant to intention or competence . The interim proposal [viz the interim report] lifted the protection of the privilege in respect of evidence of the intentions or competence of a client or party who has died. This loss of protection would only operate where an issue arises of, for example, testamentary capacity or the intentions of the deceased in a testator's family maintenance case. It does not override rules of substantive law, such as those relating to the construction of the wills and other instruments ". [19] This is all that the Commission has said about the section. If the defendant's submissions were correct, it would seem to follow that in a probate suit concerning testamentary capacity, litigation privilege would not be available either to the persons propounding a will or the persons resisting the grant of probate. Under s 121(1), privilege would not be available in respect of documents brought into existence for the dominant purpose of the client being provided with professional legal services if the documents contain evidence relevant to the question concerning the deceased's competence, but only if the deceased had at some point retained a lawyer so as to fall within the definition of "client" in s 117. In contrast, if the suit concerned the testamentary capacity of a testator who had not retained a lawyer, the usual rules as to the availability of privilege would apply. [20] There seems to me to be no rational basis for such a distinction. On the other hand, it is clear some abrogation of privilege is intended by s 121 (1) and it is not sufficient to focus, as the plaintiff was minded to do, on the far reaching consequences to which the provision might give rise on the defendant's construction of the provision. It seems to me that the rational construction of the provision and one which fits its context is that it abrogates a claim for privilege which the deceased person as a client or party could have maintained but for his or her death if the privileged documents or communications are relevant to the deceased's intentions or competence."
In relying on d'Apice, I do not overlook that in Singtel, White J resiled from the view he expressed in d'Apice that a dispute of the present kind was to be decided under the common law. However, his Honour did not resile from the views he expressed in d'Apice concerning s 121(1). For the reasons given by his Honour in d'Apice, I respectfully agree with and apply his Honour's conclusions on the proper construction of s 121(1).
Document A
Ms O'Mahony swore an affidavit in support of Craig's privilege claim as to both documents. Her evidence was that on 29 March 2021 a solicitor in the employ of Walsh & Blair Lawyers (not being Ms O'Mahony) provided legal advice in conference to Barbara (the March 2021 conference). Barbara died approximately four months later. These proceedings were commenced by summons filed on 8 July 2022.
As to Document A, Ms O'Mahony deposed: "7. Having reviewed Document A, I depose that it has the following characteristics: (a) It is comprised of four A4 sheets of paper as follows: (i) First page: A standard Walsh & Blair file-note form modified by certain hand-written marks and writing including "29/3/21"; (ii) Second page: A photocopy of the deceased's NSW driver's licence certified, by the solicitor, as a true copy of the original licence; (iii) Third page: The same photocopy of the deceased's NSW driver's licence as the document, which is the second page certified, by the solicitor, as a true copy of the original licence; and (iv) Fourth page: A standard Walsh & Blair "Client Details" form, in respect of the deceased, modified by certain hand-written marks and writing."
I was of the view that while it did so in a somewhat roundabout or inferential fashion, Ms O'Mahony's affidavit proved that in relation to Document A, Barbara was the client; the document was a privileged record of the March 2021 conference; and, the privilege was Barbara's. Based upon those findings it was also clear that the right to assert the privilege had now passed to Craig as Barbara's executor.
Mr Condylis informed the Court that Document A had been produced in answer to Darren's notice to produce "out of an abundance of caution". Having inspected Document A, I can say that caution was well-founded.
Mr Rollo submitted that even if privilege had been made out (a proposition he disputed), that privilege had been lost by reason of s 121(1). The document had been produced in answer to a notice which called for documents "recording any expression of [Barbara's] intentions" as to her wills and that she was a "client or party who has died" within the meaning of s 121(1). I accept that submission insofar as it describes Barbara as a "client who has died". I do not accept the implicit submission that Barbara is also a party to the present proceedings through her executor who is a party (see further [27] below). However, nothing turns on that. I also accept Mr Rollo's submission that nothing in Ms O'Mahoney's affidavit detracts from the conclusion that Barbara was a "client who has died".
Over Mr Rollo's objection, I accepted Mr Condylis' invitation that the Court should exercise its power under s 133 of the Act to inspect Document A, because Mr Condylis' argument depended upon the Court inspecting the file note to read what was written there. The point upon which he relied could not otherwise be made in a way that would preserve the privilege being claimed.
I inspected the file note on the first page of Document A (being "the hand-written marks and writing including "29/3/21"" referred to by Ms O'Mahony). The final line of the file note recorded what Mr Condylis submitted were not Barbara's "intentions" for the purpose of s 121(1), but rather it recorded what he described as "the outcome of the conference". I did not accept that submission because while it may be correct to say that the words describe the outcome of the conference, that outcome says something about her testamentary intentions in a way which is "relevant to a question concerning" her intentions within the meaning of s 121(1).
Although Mr Rollo did not put it this way, to adopt the language of White J, s 121(1) abrogated the claim for privilege which Barbara as a client could have maintained but for her death where Document A was relevant to Barbara's intentions. Accordingly, the Court was satisfied that the privilege (being Barbara's) had been lost pursuant to s 121(1) of the Act such that Darren was entitled to inspect Document A.

Document B

The circumstances in which Document B came into existence are quite different from the circumstances of Document A. As to Document B, Ms O'Mahony deposed: "Document B 8. Having reviewed Document B, I depose that it is dated 28 October 2022 and is comprised of two A4 pages with one-and-a-half pages of type-written notes in which the solicitor sets out the solicitor's recollection of the communications that passed between the solicitor and the deceased in the course of the conference."
I was satisfied from the affidavit evidence alone that Document B, having been brought into existence both after Barbara's death and after the commencement of the present proceedings (8 July 2022), was a note prepared for the purposes of this litigation in the nature of a witness statement provided by the solicitor who had attended on Barbara in the March 2021 conference and recording that solicitor's recollection of what had transpired at that conference.
I would have reached the conclusion to which I came about Document B without any further evidence or the benefit of inspecting Document B (which, again, I did and which only served to confirm the conclusion to which I had already come about the purpose of Document B). However, over Mr Rollo's objection, I granted Mr Condylis leave to adduce further brief oral evidence by AVL from Ms O'Mahony from her office in country New South Wales. That evidence was (Tcpt, 31 August 2023, p 33(32-37)): "Q. If you're able to, could you please tell the Court the circumstances in which Document B was created? A. Document B was created at my request to the solicitor to prepare a file note of everything the solicitor recalled in a conference that solicitor had with the deceased. I requested that at the suggestion of counsel who thought we might require that evidence for the purposes of an affidavit in the proceedings."
Having heard that evidence, Mr Rollo, correctly in my respectful view, accepted that there could be no question that Document B was privileged. Nor was there any dispute that, at least, the privilege in Document B was Craig's in his capacity as Barbara's executor and a party to these proceedings. No other conclusion could be possible, given that Barbara was dead at the time Document B was brought into existence. The essential dispute between the parties in relation to Document B turned on what was to be made of Craig's status as Barbara's executor.
Mr Condylis submitted that Document B fell precisely within the class of documents identified by White J in d'Apice at [17] (see [11] above). The privilege in Document B was Craig's privilege in his role as executor of the estate and was a claim for privilege that an executor "… has in his or her own right where the privileged documents or communications are relevant to the intentions or competence of the deceased" which White J held was a claim for privilege not abrogated by s 121(1).
Mr Rollo submitted on behalf of Darren that Craig's privilege in Document B was abrogated by s 121(1) because Craig was "standing in the shoes" of Barbara. In his submission, Barbara was both the client claiming the privilege, and a party to proceedings who has died, by virtue of Craig being her executor, such that both limbs of s 121(1) were satisfied.
Mr Condylis' submission is correct and the Court accepted it accordingly. Mr Rollo's submission involves an impermissible blurring of the separate legal personalities of Barbara, and of Craig as her executor. Being an executor or administrator is an office which carries its own rights and duties that are personal to the holder of that office. Those rights and duties, and that person, are quite distinct from the legal personality of the deceased, whose demise is the obviously essential prerequisite for the assumption by the administrator or executor of their office.
The privilege in Document B belongs to Craig as the client for whom Document B was brought into existence for the purposes of these proceedings. It is not privilege in a communication which existed during Barbara's lifetime in the sense that she would have been able to assert that claim, a right which had then passed to Craig as her executor (as was the case with Document A). To accept Mr Rollo's "standing in the shoes" submission would be to precipitate precisely the unreasonable consequence identified by White J in d'Apice at [19] (see [11] above).
For these reasons, the Court determined that s 121(1) did not abrogate Craig's privilege in Document B and Darren was not entitled to have access to that document.

Conclusion

The various orders to give effect to these reasons were made at the conclusion of the hearing, including as to costs. The parties agreed that these reasons could be published electronically.
At the conclusion of the hearing, the Court acceded to Mr Condylis' application that the order for access to document A should be stayed until 14 days after the date of delivery of these reasons or further order. Given the publication of these reasons, and for the avoidance of doubt, I will vary that order now to give the parties the benefit of a specific terminal date. The Court's orders are: 1. Set aside Order 6 made on 31 August 2023. 2. Stay Order 5 made on 31 August 2023 until 19 September 2023 or further order.

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: 05 September 2023

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