Steven Issa v Michael Issa & Anastazija Balaz

Waiver

There has been no express waiver and Pigott Stinson puts its case on the basis that there has been an implied waiver.
There was a substantial agreement as to the principles of law applicable to the claim for legal professional privilege and the question of implied waiver. I summarise these principles as: 1. The law recognises the importance of a person being able to fully and frankly disclose to their lawyers all matters relevant to the matter under consideration without risk or fear of those communications and advice given in respect of those matters being available to anyone else (Esso Australia Resources Ltd v Federal Commissioner of Taxation (1999) 201 CLR 49; [1999] HCA 67; Mann v Carnell (1999) 201 CLR 1; [1999] HCA 66; Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd (2013) 250 CLR 303; [2013] HCA 46. Courts ought not be too ready to find that the important protection for such communications has been waived. 2. A person will be found to have waived privilege when he or she has taken steps that are inconsistent with the maintenance of the privilege. Waiver has been described as arising when: "… the party entitled to the privilege makes an assertion (express or implied), or brings a case, which is either about the contents of the confidential communication or which necessarily lays open the confidential communication to scrutiny and, by such conduct, an inconsistency arises between the act and the maintenance of the confidence, informed partly by the forensic unfairness of allowing the claim to proceed without disclosure of the communication..." see DSE (Holdings) Pty Limited v Intertan Inc (2003) 127 FCR 499; [2003] FCA 384 at [58] per Allsop J (as his Honour then was), endorsed by the Full Federal Court in Commissioner of Taxation v Rio Tinto Limited (2006) 151 FCR 341; [2006] FCAFC 86 at [61] per Kenny, Stone and Edmonds JJ, and see Benecke v National Australia Bank (1993) 35 NSWLR 110 at 111B - 112A per Gleeson CJ, and at 116C - 117A per Clarke JA (with whom Sheller JA agreed).
Earlier cases had put 'unfairness' as the lynchpin of the test but, in Mann v Carnell (supra), the High Court has made clear that it is inconsistency which is the lynchpin of waiver in this context, although considerations of unfairness remain relevant. In Mann v Carnell, Gleeson CJ, Gaudron, Gummow and Callinan JJ (at [29]) said: "…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."
In a sense the question becomes whether Ana's claim that Pigott Stinson breached their duty to her because they did not tell her to seek advice from HDY, and her assertion that their failure to do so or advise her to seek independent advice caused her loss, is inconsistent with her denying Pigott Stinson access to such advice as she had received from HDY concerning the 2006 Proceedings and to what she had told HDY about the subject matter of the 2006 Proceedings.
Thrown into this is the further issue of 'joint privilege'. It is agreed that the privilege obtained by Ana is one held jointly with Michael. Mr Emmett accepted that where, as here, the privilege is joint it is indivisible and cannot be waived unilaterally by one of the holders of the privilege: see Farrow Mortgage Services Pty Ltd (in liq) v Webb and Ors (1996) 39 NSWLR 601. Mr Emmett's contention is, however, that Michael has implicitly waived the privilege as well.
Mr Emmett identified the following matters which, when taken cumulatively, are said to support Pigott Stinson's claim that Michael has impliedly waived the privilege that would otherwise attach to communications to and from HDY: 1. That Michael and Ana are husband and wife and share the same house. 2. That Michael consented to the filing by Ana of the Second Cross Claim without any reservation. 3. That Michael has selectively waived privilege over some documents: see Exhibit A. One is a draft Statement of Claim with some handwritten notes, many of which are illegible. The second is a letter from HDY to Mr Esplin, being a without prejudice offer on behalf of both Defendants in relation to the caveat lodged by Oceanview. The third is a without prejudice letter proposing mediation. The fourth document is a copy of a letter received from Mr Esplin with notes upon it. No argument was advanced to the effect that, by selective waiver of these documents, Michael had waived privilege over all other privileged documents as a form of what has been described as "collateral waiver": see The Law of Privilege (Bankim Thanki QC (ed), 3rd ed, Oxford University Press, 2018), paragraph 5.127. 4. That Michael has filed an affidavit in support of Ana's Second Cross Claim: see Michael's affidavit of 7 February 2017. In that affidavit, Michael gave evidence concerning the meeting at Pigott Stinson offices, supportive of his wife's claims.
Counsel agreed that this application is to be determined under the common law, without regard to the Evidence Act 1995 (NSW).
Ana does not assert privilege over any communications between herself and Pigott Stinson. It is her communications with (and the files of) HDY, her solicitors in the 2006 Proceedings, over which she claims privilege.
Mr Hyde contended that, in considering the question of implied waiver, it is necessary to consider very precisely what Ana is claiming against Pigott Stinson and the context of that claim. He says that Ana's claim against Pigott Stinson must be predicated on her having already failed in defending Steven's claim against her, i.e. that for the Second Cross Claim to be relevant, her allegation that she only signed the deeds because of threats made to Steven must have failed. The problem with this contention is that Ana's Second Cross Claim against Pigott Stinson is launched in the same proceedings as the claim by Steven against Ana and her husband. The outcome of that case will not be determined first. It is true that her asserted state of mind (that she was overcome by the threats to Michael) is forced to sit with her claim that she entered into the deeds because Pigott Stinson did not give her adequate advice, but I do not think that the fact that Ana's Second Cross Claim would only need to be determined if Ana fails in her defence against Steven's claims undermines the entitlement of Pigott Stinson to the privileged material if otherwise established. Pigott Stinson are entitled to prepare their case on the basis that Ana's claim against them is advanced in earnest against them.
There are two English cases involving claims against solicitors in which the issue of implied waiver has come under scrutiny and to which reference was made in the submissions: Paragon Finance Plc. (Formerly National Homeloans Corporation Plc.) and Others v Freshfields (a firm) [1999] 1 WLR 1183 and Lillicrap and Another v Nalder & Son (A Firm) [1993] 1 WLR 94; [1993] 1 All ER 724. In Lillicrap, the plaintiffs, who were property developers, sued their solicitors in connection with a particular property transaction, one of a number in which the solicitors had acted, and in which the solicitors had failed to discern a right of way which burdened the land. The solicitors, whilst admitting negligence in relation to the transaction sued upon, sought to amend their defence to assert that the plaintiffs would have proceeded with the purchase even if they had advised the plaintiffs of the existence of the right of way given their conduct in relation to six other earlier transactions. The plaintiffs sought to recover from the solicitors all of the files relating to the earlier transactions and obtained an order to that effect at first instance on the basis that, although they had waived privilege in respect of the transaction on which they had sued, the waiver did not extend to the earlier files. The Court of Appeal reversed the first instance decision, holding that the implied waiver arising from the institution of proceedings extended to the documents in the other transactions since causation was a very important part of the plaintiffs' claim in the proceedings. Dillon LJ was of the view that the files relating to the earlier transactions were material to the solicitors' proper defence to the cause of action on which the plaintiffs sued: see p 730E. Russell LJ said (at p 731F-H): "…I recognise, of course, that concept of legal professional privilege which is plainly in the public interest. However, in my judgment, once it is conceded that there is implied waiver of privilege when proceedings are instituted against a solicitor, I can see no warrant for the submission that the waiver is confined to the documents and communications between solicitor and client within the specific retainer forming the subject matter of the proceedings. The parameters of the retainer, to my mind, erect an artificial barrier. In my judgment, by bringing civil proceedings against his solicitor, a client impliedly waives privilege in respect of all matters which are relevant to the suit he pursues and, most particularly, where the disclosure of privileged matters is required to enable justice to be done…" Farquharson LJ said (at p 732J -733B): "The defendants seek to show in the particulars of the six other transactions that, even if proper advice had been tendered, the plaintiffs would have ignored it as they had done in the past; in other words, the issue is one of causation. For my part, I would have difficulty in holding that the defendants should, as a matter of principle, be prevented from adducing evidence which is relevant to that issue. A proper interpretation of the waiver in this case is, in my judgment, one that embraces not only the documents and advice arising from the Heligan Manor transaction, but also documents or information otherwise subject to privilege which are relevant to the issues between the parties and which it would be unfair to exclude. Whether the evidence sought to be adduced by the defendants is relevant to the main issue is, in the last analysis, a matter for the trial judge. We are here concerned with whether the documents should be excluded as a matter of principle. I accordingly say nothing about the weight of that evidence but, looking at it as a matter of principle in the circumstances of this case, I would hold that the bringing of the present proceedings by the plaintiffs involved the waiver of the privilege attaching to the documents created in the six transactions."
In Paragon (supra), Paragon sued their solicitors in relation to mortgage securitisation transactions and insurance. The plaintiffs had retained new solicitors and the defendants claimed that, by their claims, the plaintiffs had waived not only the privilege attaching to their retainer of the solicitors, but also to the retainer of the new solicitors, a claim accepted at first instance but overturned on appeal. The Court, per Lord Bingham of Cornhill CJ, Brooke LJ and Chadwick LJ, expressed the principle (at p 1188E-G) as follows: "When a client sues a solicitor who has formerly acted for him, complaining that the solicitor has acted negligently, he invites the court to adjudicate on questions directly arising from the confidential relationship which formerly subsisted between them. Since court proceedings are public, the client brings that formerly confidential relationship into the public domain. He thereby waives any right to claim the protection of legal professional privilege in relation to any communication between them so far as necessary for the just determination of his claim; or, putting the same proposition in different terms, he releases the solicitor to that extent from the obligation of confidence by which he was formerly bound. This is an implication of law, the rationale of which is plain. A party cannot deliberately subject a relationship to public scrutiny and at the same time seek to preserve its confidentiality. He cannot pick and choose, disclosing such incidents of the relationship as strengthen his claim for damages and concealing from forensic scrutiny such incidents as weaken it. He cannot attack his former solicitor and deny the solicitor the use of materials relevant to his defence. But, since the implied waiver applies to communications between client and solicitor, it will cover no communication to which the solicitor was not privy and so will disclose to the solicitor nothing of which he is not already aware."
It will be seen that, while Lillicrap relates to privilege in relation to previous transactions with the same solicitor, in Paragon, the privilege of new solicitors was not lost by implied waiver. What we are presently dealing with is the question of whether Ana's claim against Pigott Stinson is inconsistent with her being able to maintain privilege attaching to the retainer of HDY, her previous solicitors. Normally, the privilege which is lost by a former client suing a solicitor is the privilege arising in relation to that solicitor's file. Here, it is asserted that what was waived was the privilege attaching to a former solicitor's file. The scope for waiver is more limited but, had another firm acted in the prior transactions, the logic of Lillicrap should, I think, still apply.
In my view, Ana's claims against Pigott Stinson are inconsistent with the assertion that her communications with HDY are privileged. She has put in issue not only the question of whether she obtained advice from HDY in respect of the deeds, but also the causative connection between what Pigott Stinson allegedly failed to do and what would have happened if she had been advised by Pigott Stinson to attend on HDY and receive advice from them. What she and Michael had previously told HDY would also be relevant to what any other independent solicitor would have advised her. It follows that, in my view, there has been, by Ana's pleading, an implied waiver but, because the privilege is joint with Michael, Pigott Stinson must also establish that Michael has, by his actions, impliedly waived privilege leading to loss of the joint privilege.
I do not think any one of the matters identified by Mr Emmett constitute an implied waiver. Mr Emmett submitted that, even though that is so, they can be accumulated to lead to an implication of waiver. Given that waiver is to be judged by inconsistent acts of the party who is said to have waived privilege, I have some difficulty seeing how, if each matter is not inconsistent with maintenance of the privilege, it can be concluded that in totality they amount to inconsistency. That Michael is married to, and lives with, Ana is the very reason that they retained HDY jointly. That he consented to Ana's Second Cross Claim being filed was an act consistent with the requirements of his obligations under the Civil Procedure Act 2005 (NSW). That he put on an affidavit as to what occurred at Pigott Stinson's offices without mentioning the advice he had received from HDY is not inconsistent with maintenance of the privilege. That he might benefit if Ana is successful in her claim against Pigott Stinson is not an act or omission. The documents that he has permitted to be produced over which a claim of privilege might be made are of very limited import and he has not deployed those documents in his evidence. Adding five noughts produces nought, and I am not persuaded that Michael has impliedly waived privilege.
It may appear unfair that Ana can make the claims that she does and yet be able to maintain the privilege because her husband has not consented to waiver but, on present authority, unfairness is not the test, even for implied waiver, and there is no authority which supports the conclusion that joint privilege can be waived unilaterally. It may well be that Ana's 'inability' to lead evidence of what she was told by HDY will create a problem for her at trial because, without evidence of what HDY would have been likely to tell her had she sought their advice about the deeds, she might be unable to establish that the alleged failure of Pigott Stinson to advise her to seek alternative advice had any causative effect.

The Specific Documents

Mr Emmett's alternative claim is that the documents numbered 13, 14, 32, 50, 52, 67, 71, 79 and 161 (the latter document was also described as document 173) in the List of Documents over which privilege has been claimed are not established to be privileged. Most of these documents appear to be file notes of conversations between Ms Wilson, a senior associate of HDY, and the solicitor for Oceanview, Mr Esplin. Such documents are not the subject of legal professional privilege or litigation privilege: see Thanki's The Law of Privilege (supra) at paragraph 2.87, and the cases there cited.
Mr Emmett accepts that, to the extent that any notes contain records of matters other than the file note of the conversation (such as thoughts of Ms Wilson on the case or advice to her clients), they are entitled to privilege: see Sugden v Sugden (2007) 70 NSWLR 301; [2007] NSWCA 312. He submits that the affidavits of Ana and her solicitor, Mr Ian Craig, on this point do not provide sufficient detail to explain why what is prima facie not privileged is privileged, and I agree with his submission. Mr Emmett pointed out that there was no affidavit from the solicitor whose notes they are. This is of some relevance but not fatal to the claim for privilege.
In Hancock v Rinehart (Privilege) [2016] NSWSC 12, Ms Rinehart was claiming that she had obtained advice which was privileged. However, if the advice was given to her in her role as trustee, it was not privileged from production as against the beneficiary. Brereton J held that there was insufficient evidence provided to support the claim for privilege. Mr Emmett relies on this case in support of the contention that the onus is on the party claiming privilege to establish that particular documents are the subject of legal privilege and that it is not sufficient for a claim for privilege simply to be made. In Hastie Group Ltd (in liq) v Moore (2016) 339 ALR 635; [2016] NSWCA 305 at [34] per Beazley P and Macfarlan JA, the Court of Appeal made it clear that a court can draw an inference from the various ways in which a document has been described that it does attract legal professional privilege. Mr Hyde relied on this case and the fact that Ana's solicitor, Mr Craig (in his affidavit of 27 April 2018), had asserted the claim for privilege in paragraphs 21-23 and was not cross-examined: see CB2 p 503-4. Mr Craig does not actually state that, in his view, all of the documents are privileged, but rather that the list accurately identifies the basis for the claim of privilege. Since documents recording conversations with the opposing solicitors are not privileged and, without more, nor are documents recording a conversation with "Gemma" in respect of a building dispute between Pacific Holdings and Michael and the transfer of units in Oceanview, I think that the affidavit needed to provide more detail than it did to establish the claim for privilege for such items and that what has been provided is not sufficient to discharge the onus imposed on Ana.
In relation to the specific documents, in my view, privilege has not been made out for the documents numbered 13, 14, 32, 50, 52, 67, 71 and 161. In relation to document number 79, I think that the only portion of it for which privilege is not made out, for the reasons given in [29]-[30] above, is the record of attendance on Mr Esplin or on any employee of Mr Esplin; the balance relating to the conference with Counsel and Michael is clearly the subject of privilege. The form of orders for production will need to provide for redaction of material of the type identified as privileged in any of these documents.

At a glance

Court

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Before

Source

Judgment (6 paragraphs)

Parties

Legislation Cited (2)

Cases Cited (17)