Wardle v Howard

Background

1. By way of background, these proceedings are commenced by the plaintiff, Marjorie Wardle, who is 91 years old and the mother of the late Devorah Howard, to whom I will refer as the deceased. The first defendant is the executor of the deceased's estate, Peter Howard, her widower. (Mr Howard is also the second defendant in his personal capacity.) Mr Howard was Devorah's husband from whom she had separated in around May 2019 before her death in September 2019.
2. The plaintiff's claim involves a claim in equity against both the estate and Mr Howard and also a family provision claim under the Succession Act 2006 (NSW) for further provision out of the estate of the deceased, the plaintiff's standing being that she was an occupant of the deceased (and Mr Howard's) property at Wamberal at the time of the deceased's death.
3. The plaintiff claims that two properties, one at Schofields (the Schofields Property) and one at Wamberal (the Wamberal Property), were held on resulting and/or constructive trusts for her.
4. The Schofields Property was registered in the name of the deceased and, subject to the plaintiff's claim, would pass into her estate, the beneficiary of which is the second defendant. The plaintiff says that the Schofields Property is held wholly on trust for her, or alternatively on trust as to a half for her; and/or the plaintiff claims a debt in relation to money said to have been invested in the acquisition of that land and development of a house on the land. Alternatively, the plaintiff has a claim in restitution.
5. The Wamberal Property was registered in the names of the deceased and the second defendant jointly and, subject to the plaintiff's claim, would pass to the second defendant by way of survivorship. The plaintiff says that the Wamberal Property is held on resulting trust as to 77% for her because of her contributions to the Property. In the alternative, the plaintiff says that it is held on constructive trust for her or that there is a debt owing to her for moneys paid towards it. Alternatively, she has a claim in restitution in relation to the Wamberal Property. In particular, the plaintiff claims that she received $1.4 million from the sale of her own home and applied it to the purchase of the Wamberal Property pursuant to an agreement with the deceased about the plaintiff's living arrangements. The plaintiff's name was on the contract at the time it was exchanged but not on the title of the property when the contract was settled. It is said that the plaintiff's $1.4 million was used by the deceased and the second defendant to buy the property for $1.73 million in their name as joint tenants and that that amount has not been repaid to the plaintiff. The plaintiff lived at the Wamberal property from 2015 until the deceased's death, and since then the second defendant has had possession of the property.
6. The second defendant is defending the plaintiff's claims. The second defendant alleges at [54(a)] of his defence to amended statement of claim filed 20 August 2020 (defence) that there was a "living arrangement" made for the plaintiff at the Wamberal Property but that the $1.4 million was advanced by the plaintiff as a loan at call (see his defence at [56(b)-(c)]), and he denies that any money is now repayable to the plaintiff.
7. As is evident from the above brief introduction to the background of the matter, the deceased was the plaintiff's daughter and the second defendant's wife. She died on 3 September 2019. Her last Will was made on 19 September 2017. The sole beneficiary under that Will was her husband. Under that Will her husband and her sister were co-executors. Her husband was to receive the residue if he survived her, and provision was made for the plaintiff to live in the Wamberal property if she so wished.
8. As noted above, at the time of the deceased's death she and her husband had separated and he had moved out of the matrimonial home at Wamberal (or by July 2019). There was a final apprehended domestic violence order in place against the second defendant protecting the plaintiff. There is apparently a dispute as to whether or not the separation was a trial separation or a final separation and there is a dispute as to when the separation commenced.
9. The documents in respect of which the claims for privilege are made are documents which comprise file notes taken by lawyers of communications with the deceased in May 2019 and an email from the deceased to one of those lawyers, Ms Worland, on 9 July 2019. The defendant became aware of the existence of documents of this kind following access to documents on the deceased's computer and by reference to the NSW Police. As I understand it, there were suspicious circumstances in relation to the deceased's death and consequently, an inquest was held.
10. The plaintiff's solicitor, Therese Younes, by affidavit sworn 14 October 2020, has deposed to the circumstances in which she became aware of the fact that the deceased had instructed lawyers in relation to her position, including as to an inquiry in relation to a new Will of the deceased.
11. In particular, I have been taken to a document exhibited to the affidavit sworn 14 October 2020 of Therese Younes (Ex 1 at 52) which is undated and appears to be a communication from the deceased in relation to mirror Wills of the deceased and the second defendant which includes the following paragraphs: Upon my death my mother gets to choose if she'd like to live in Wamberal with Pete or take her assets and buy somewhere else or move in with my sister. She invested 1.4 million in this house. This is where it gets tricky...mum does not have a will as I have everything of hers. In the event of her death (if I'm deceased) my sister gets 300K from Pete and my estate which is owed to her.
12. The plaintiff has also had access to an email sent 6 June 2019 from the deceased to Ms Worland in which the deceased wrote (Ex 1 at 56): My husband and I have come to an agreed settlement however we will require your services to draw up the paperwork etc I would also like to see you so you can review our agreement and advise if you think it's appropriate etc.
13. The plaintiff notes that, between 14 June 2019 and 9 July 2019, the second defendant consulted ANZ about finance options that might exist for him arising from his and the deceased's "trial" separation (reference being made to portions of an affidavit sworn by the second defendant on 23 March 2021 and annexures thereto which were tendered on the present application (as I understand it for the purpose of establishing that to which the second defendant had deposed at the time) (Ex 2)).
14. On 18 May 2020 the plaintiff's solicitor issued a subpoena to the NSW Police for production of documents stored on the deceased's computer which was the source of various of the documents referred to above.

Relevant documents

1. As noted, the present dispute relates to the four documents identified in Prayer 1 of the notice of motion. The basis of the claim for privilege is that set out in Ms Yang's affidavit affirmed 8 April 2021 at [15(a)-(d)].
2. For the purposes of this application, I have reviewed the relevant documents. Ms Yang has deposed that the documents were for the dominant purpose of the deceased obtaining legal advice as to a possible property settlement with the second defendant.
3. The first, a typed file note of Mani Shishineh, principal solicitor of Legalbit Pty Ltd, is of a telephone conference with the deceased on 23 May 2019. Ms Yang has deposed that this followed an incident between the couple the night before when they decided to separate. I refer to this as Document 1A.
4. The second is an email, which I will refer as Document 1B, from Mani Shishineh to Ms Worland on 23 May 2019, which attached a copy of the typed file note of the telephone conference with the deceased. It is said that this is subject to client legal privilege in favour of the deceased's estate because it is a confidential communication between two lawyers for the dominant purpose of the deceased being provided with legal advice by Ms Worland to whom Mani Shishineh had referred the deceased.
5. The third document, Document 1C, comprises a copy of seven pages of handwritten notes by Ms Worland which appear to have been taken during a conference with the deceased on 25 May 2019. Privilege is claimed over these notes, on the basis that they contain a record of confidential communications between the deceased and the lawyer, or a confidential document prepared by the lawyer, for the dominant purpose of the deceased being provided with legal advice or legal services in an impeding legal proceeding. It is said that these are Ms Worland's notes of their conference in which the deceased sought advice and representation from Ms Worland as to property matters between the deceased and the second defendant.
6. The final document, Document 1D, is an email from the deceased to Ms Worland on 9 July 2019, that being the last email in a chain of emails, one of which is the 6 June 2019 email referred to above and to which the plaintiff has already had access (see Ex 1 at 56). The privilege claimed in relation to this 9 July 2019 email is on the basis that it is a confidential communication from a client to a lawyer for the dominant purpose of seeking legal advice, as the email requests specific advice as to the deceased's rights in respect to an item of their joint property.
7. As I have said, I have reviewed the documents. On their face (and having regard to Ms Younes' affidavit) each of the documents is a document properly the subject of a claim for legal professional privilege.

Plaintiff's submissions

1. The argument raised in relation to these documents is that the second defendant has had access to the documents, both in his capacity as the representative of the estate and in his personal capacity. It is submitted that as the first defendant, (i.e., as representative of the estate) Mr Howard is in a position where he may have been able to identify documents that could adversely affect his own (personal) defence and use the claim of privilege to protect himself against that. It is submitted that the fact that he has chosen four specific documents from those produced by Ms Worland points to a real possibility that a conflict of interest has been acted upon by him and it is said that this should not be permitted.
2. The plaintiff says that the documents over which privilege is claimed may reveal, or are expected to reveal, statements made by the deceased to her solicitor as recorded in the documents about the following matters: 1. the arrangement in 2015 between the deceased and the plaintiff about the plaintiff's investment of $1.4 million in the Wamberal Property that would support the plaintiff's claims and answer the second defendant's defence; and/or 2. the nature of the deceased's agreement with the second defendant about their assets, including that the deceased retained the Wamberal Property so that she could make good the plaintiff's investment in it and provide for the plaintiff's future living arrangements, consistent with statements made by her to her then solicitor on 19 May 2017 (as per Therese Younes' affidavit sworn on 14 October 2020); or 3. the nature of the deceased's new intentions with respect to the plaintiff arising from her intended divorce and financial separation from the second defendant.
3. It is submitted that, by reason of the deceased's husband being both the first and second defendant in the proceedings, there has been a disclosure or waiver by Mr Howard as the representative of the estate as first defendant to himself in his personal capacity as second defendant, he being the person about whom the statements are likely to have been made and most likely adversely to affect. It is submitted that the public interest lies in that privilege not being maintainable to protect Mr Howard and that the public interest lies in the Court having evidence of all material facts before it and not labouring under the uncertainty of what was intended by the deceased.
4. Both parties have referred to s 121 of the Evidence Act 1995 (NSW) (Evidence Act): 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. (2) This Division does not prevent the adducing of evidence if, were the evidence not adduced, the court would be prevented, or it could reasonably be expected that the court would be prevented, from enforcing an order of an Australian court. (3) This Division does not prevent the adducing of evidence of a communication or document that affects a right of a person.
5. Ultimately, both parties accept that s 121 of the Evidence Act does not strictly apply at this stage. Reference is made in this regard to authorities which have considered whether the provisions of ss 121 and 131A of the Evidence Act apply to competing questions of access to documents before trial (see Singtel Optus Pty Ltd v Weston (2011) 81 NSWLR 526; [2011] NSWSC 1083 (Singtel) at [25]-[28] per White J, as his Honour then was; and In the matter of Northern Energy Corporation Ltd (2020) 147 ACSR 572; [2020] NSWSC 1073 at [3] per Rees J.
6. It is accepted by the plaintiff that the statement of principle by White J at [28] of Singtel applies in this case and that it is the common law, not the Evidence Act, that here applies. It is, therefore, not necessary to consider in any detail the question as to the ambit of s 121 of the Evidence Act insofar as that refers to evidence relevant to a question concerning the intentions or competence in law of a client or party who has died. (Reference was made in that regard, amongst other things, to the decision of Robb J in Jaeger v Bowden [2015] NSWSC 1479.)
7. On the basis that the common law test for legal professional privilege applies, there was an argument by the plaintiff to the effect that the documents would not attract legal professional privilege because the nature of the "agreement" reached by the deceased with the second defendant, that she went to see a family law lawyer to discuss, was not confidential because it was known by the second defendant. Reference is made to what was said in Mr Howard's affidavit in general terms at [40] (see Ex 2). In those circumstances it was contended that the contents of the communications were not confidential and consequently that the defendant was not able to claim the privilege on behalf of the estate to protect himself as the second defendant.
8. I do not accept that the communications the subject of the documents in issue in the present case are not on their face confidential. (I interpose to note that even though any agreement with Mr Howard would ex hypothesi be known to him, the instructions the deceased may have given as to it would not.)
9. The real issue to my mind is as to whether there has been an implied waiver of privilege in the present case.
10. The plaintiff maintains that there has been an implied waiver of privilege which has occurred by the first defendant acting on behalf of the estate having elected to see the documents for the purpose of assessing whether he could maintain the privilege on behalf of the estate, and while so doing, having seen them in his capacity as second defendant, i.e., in his own personal capacity. It was contended that there had been an express and/or implied disclosure to himself in that personal capacity by reason of his role as the first defendant, and, therefore, confidentiality in the documents had been lost.
11. It is submitted that by reason of the circumstances of his access to those documents, it would be inconsistent with maintenance of a claim for privilege and/or unfair for the first defendant to be able to maintain the privilege to protect himself in his personal capacity as the second defendant, and that while he may not have turned his mind to the conflict between his competing interests before he looked at the document, his actual conduct on behalf of the first defendant, i.e., the estate, enabling him to see the documents in his personal capacity, was inconsistent with the maintenance of the privilege on behalf of the estate. Reference was made in that regard to what was said in Mann v Carnell (1999) 201 CLR 1; [1999] HCA 66 (Mann v Carnell) at [29]-[34]. In those circumstances, it was said that the second defendant ought to be imputed by law as having impliedly waived the first defendant's privilege in the documents.
12. It is noted by the plaintiff that the second defendant relies for his defence in these proceedings on the contention that the $1.4 million invested by the plaintiff in the Wamberal property was a loan at call. It is said that this is inconsistent with: the deceased's 19 May 2017 document (Ex 1 at 52-53); and the reference by the second defendant in his affidavit at [40] that his separation was on a trial basis (Ex 2).
13. It is said that both contentions made by the second defendant in these proceedings would be likely to have influenced him when reviewing the four documents over which privilege is claimed and that the truth of those contentions may be threatened by the contents of the four documents that he has claimed privilege to protect himself against. The plaintiff says that these are further grounds for imputing the implied waiver by law and enabling access to the documents by the plaintiff, namely by reason of the defendant putting in issue questions or issues which might be addressed in the relevant documents.

Defendants' submissions

1. The defendants maintain that there has been no implied issue waiver, in that there has been no relevant act of disclosure by the defendants, and it is said that nowhere have the defendants put in issue what was said by the deceased to Ms Worland.
2. It is also said that insofar as there has been disclosure as between Mr Howard in his capacity as executor of the first defendant and Mr Howard in his personal capacity as the second defendant, s 122(5)(b) of the Evidence Act is relevant, in that there is a common interest between them. The defendants note that the disclosure was at a time after the proceedings had been commenced. Further, it is said that this is not a position such as was considered in Rich v Harrington (2007) 245 ALR 106; [2007] FCA 1987 at [69]-[76] of a disclosure prior to the time at which a common interest in the outcome of the litigation was shared (and when it was said there was a "selfish interest" in protecting one's own position in relation to the matter).
3. Emphasis is placed by the defendants on the fundamental nature of the common law claim for legal professional privilege. In particular, reference is made to what was said by the Court of Appeal (Macfarlan JA, with whom McCallum JA and Simpson AJA agreed) at [57] of GR Capital Group Pty Ltd v Xinfeng Australia International Investment Pty Ltd [2020] NSWCA 266 (GR Capital Group), namely that the test is one of inconsistency between the privilege holder's conduct and its maintenance of the privilege, not one of general fairness or of relevance to an issue in the proceedings. Although considerations of fairness may inform the issue of inconsistency, as made clear in Mann v Carnell at [29], the test is not one of some overriding principle of fairness operating at large.

Determination

1. In Mann v Carnell at [28]-[29], the High Court noted that: [28] At common law, a person who would otherwise be entitled to the benefit of legal professional privilege may waive the privilege. It has been observed that "waiver" is a vague term, used in many senses, and that it often requires further definition according to the context. Legal professional privilege exists to protect the confidentiality of communications between lawyer and client. It is the client who is entitled to the benefit of such confidentiality, and who may relinquish that entitlement. It is inconsistency between the conduct of the client and maintenance of the confidentiality which effects a waiver of the privilege. Examples include disclosure by a client of the client's version of a communication with a lawyer, which entitles the lawyer to give his or her account of the communication, or the institution of proceedings for professional negligence against a lawyer, in which the lawyer's evidence as to advice given to the client will be received. [29] Waiver may be express or implied. Disputes as to implied waiver usually arise from the need to decide whether particular conduct is inconsistent with the maintenance of the confidentiality which the privilege is intended to protect. When an affirmative answer is given to such a question, it is sometimes said that waiver is "imputed by operation of law". This means that the law recognises the inconsistency and determines its consequences, even though such consequences may not reflect the subjective intention of the party who has lost the privilege. Thus, in Benecke v National Australia Bank, the client was held to have waived privilege by giving evidence, in legal proceedings, concerning her instructions to a barrister in related proceedings, even though she apparently believed she could prevent the barrister from giving the barrister's version of those instructions. She did not subjectively intend to abandon the privilege. She may not even have turned her mind to the question. However, her intentional act was inconsistent with the maintenance of the confidentiality of the communication. 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. (footnotes omitted)
2. In GR Capital Group, the relevant principles in relation to this issue were distilled by Macfarlan JA as follows (at [57]): (1) The test is one of inconsistency between the privilege holder's conduct and its maintenance of the privilege, not one of general fairness or of relevance to an issue in the proceedings. (2) Enquiring whether the privilege holder has made express or implied assertions about the contents of the confidential communications, and whether its conduct has therefore "laid open the communications to scrutiny", assists in ensuring that the court's focus is on inconsistency rather than simply relevance. If the privilege holder is understood to be asserting something about the contents of the communications, it is but a short step to conclude that it would be inconsistent for it to prevent those contents being scrutinised. (3) On the other hand mere relevance of the content of the privileged communications to an issue raised in the proceedings by the privilege holder does not equate to inconsistency - something more is needed. It is of the essence of legal professional privilege that, if maintainable, it entitles a party to withhold potentially relevant documents from inspection by the other party. (4) The determination of whether there has been an express or implied assertion about the contents of privileged communications giving rise to a relevant inconsistency is an evaluative decision to be made after consideration of the whole of the circumstances of the case. No hard and fast rules can be formulated. Those circumstances will include the degree of relevance of any advice to the issues in the proceedings, the centrality of the relevant issues in the proceedings and the likelihood of advice having been given, informed, as the High Court said in Mann v Carnell, by considerations of fairness. (5) Having considered all those circumstances, the court must decide whether it would be inconsistent with the privilege holder's conduct for it to maintain privilege. The line between relevance to an issue and inconsistency in this context may be very fine and therefore one on which views might well differ.
3. Further in that regard, I note that in Equuscorp Pty Ltd v Kamisha Corp Ltd (1999) ATPR 41-697; [1999] FCA 681 Heerey J noted at [13], that if legal professional privilege applies "privilege trumps relevance".
4. The question, therefore, is whether the pleading raised in the present case by the second defendant of there being an at call loan, that being raised in defence of the pleading in relation to resulting trust or constructive trust claims in favour of the plaintiff, is inconsistent with the maintenance of privilege in the four documents in question.
5. That may be tested, in my opinion, by hypothesising that one or more of those documents do record instructions given by the deceased to her family lawyer (or the family lawyer has perceived those instructions and recorded them to be) as to a particular characterisation of the payment that it is not apparently disputed was made by the plaintiff in relation to the Wamberal Property. For example, whether it is characterised as being an investment or contribution to the property, or as a loan, repayable on whatever terms (if any) may have been indicated, or perhaps as simply a gift. Has the second defendant, by pleading that the payment was an "at call" loan, put in issue the content of any confidential information or acted inconsistently with the maintenance of privilege in those documents, assuming those documents contain a characterisation of the payment in one or other of those ways?
6. On balance, I have concluded that the second defendant has not. It seems to me that the deceased's characterisation, whatever that may have been, of the payment that was made (assuming for present purposes, and I do not say that they do, that the documents might disclose this in some way) is not determinative of whether the amount paid was an investment or contribution to the purchase price (as seems to have been put in earlier communications to which the plaintiff has had access) or whether it was of some other character.
7. Insofar as the claim is put on the basis of a resulting trust, then, of course, one would look, when determining whether any presumption of resulting trust had been rebutted, to whether a presumption of advancement applied. But even in those circumstances the deceased's perception of the payment, or of the intention with which the payment was made, would not in my view be determinative of the issue. In particular, having regard to the emphasis placed by the Court of Appeal in GR Capital Group on the fundamental nature of the privilege, and accepting that their Honours noted that the line between relevance to an issue and inconsistency might be a very fine one on which views might differ, I have concluded in the present case that maintenance of privilege in the documents would not be inconsistent with the manner in which the claim has been defended by the defendants (or the second defendant in particular).
8. In those circumstances, I dismiss the application for access to the documents over which privilege is claimed. Having heard brief submissions on costs I concluded that costs should be in the cause.

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: 02 June 2021