National Australia Bank Ltd v C & O Voukidis Pty Ltd (No. 2)

1. [1]

   The background to this matter is set out in my judgment in National Australia Bank Ltd v C & O Voukidis Pty Ltd [2015] NSWSC 185. At [42] of that judgment I noted that the Fourth Defendant served an affidavit in support of her Motion to file the Amended Cross-Claim. However, her counsel announced at the outset of the hearing of the Notices of Motion that he did not intend to read or rely on that affidavit. He subsequently said that what was contained in it was wrong.

The privileged material

1. [2]

   In her affidavit sworn 3 November 2013 the Fourth Defendant relevantly said:

2. [3]

   The day after the receipt of this affidavit the solicitors for the Bank issued a subpoena to Carneys Lawyers who were the Fourth Defendant’s previous solicitors. A copy of it was sent to the Fourth Defendant’s present solicitors, Spinks Eagle Lawyers.

3. [4]

   An agreement was subsequently reached not to press all of the categories of documents sought to be produced. The final position with documents sought under the subpoena is as follows:

4. [5]

   Neither the Fourth Defendant nor Carneys Lawyers nor Spinks Lawyers sought to set aside the subpoena. Rather, a claim for privilege was made by the Fourth Defendant over the material sought to be produced. The Plaintiff accepted that the material was privileged but asserted that privilege had been waived by those parts of the Fourth Defendant’s affidavit that are set out above and the service of that affidavit.

5. [6]

   The only issue for determination is whether privilege has been waived by the Fourth Defendant.

Submissions

1. [7]

   The Plaintiff submitted in reliance on s 122(2) of the Evidence Act 1995 (NSW) and on the basis of such authorities as Standard Chartered Bank of Australia v Antico (1993) 36 NSWLR 87, Mann v Carnell [1999] HCA 66; (1999) 201 CLR 1, Bennett v Chief Executive Officer of the Australian Customs Service [2004] FCAFC 237; (2004) 140 FCR 101 and Council of the New South Wales Bar Association v Archer [2008] NSWCA 164; (2008) 72 NSWLR 236 that privilege had been waived.

2. [8]

   The Plaintiff submitted that it would not be fair for the Fourth Defendant to be able to withhold production of the documents because to do so would be inconsistent with her reliance on them in the affidavit. The Plaintiff submitted that it did not matter that the affidavit was not relied upon. The fact that it had been served was sufficient to waive the privilege.

3. [9]

   The Fourth Defendant submitted that there had not been disclosure of the kind that would warrant waiver of privilege over the documents. Reliance was placed on the judgments in Re Colonial Mutual Life Assurance Society v Department of Resources and Energy (1987) 12 ALD 251 and the first instance judgment in Bennett v Chief Executive Officer of the Australian Customs Service [2003] FCA 53; (2003) 77 ALD 375.

4. [10]

   The Fourth Defendant further submitted that the disclosure of the information in the Fourth Defendant’s affidavit was for the purpose of the Motions in relation to striking out portions of the defence and for leave to amend her cross-claim. When reliance on that affidavit was abandoned the Fourth Defendant said that there could be no unfairness by a refusal to hold that privilege had been waived.

5. [11]

   Subsequent to the time this question of waiver of privilege was argued I delivered judgment on the Notices of Motion that gave rise to the affidavit and the subpoena. In that judgment I declined to permit the Fourth Defendant to amend her cross-claim, and I struck out portions of the existing cross-claim and portions of the defence. The net result was that matters involving the Contracts Review Act, undue influence, unconscionability, the sale at an undervalue of the property and the breach of the Banking Code are no longer issues for trial in the proceedings.

6. [12]

   I gave the parties the opportunity to make any further submissions as a result of the judgment delivered on 13 March 2015. Neither party indicated by the time stipulated or at all any desire to make further submissions.

Legal principles

1. [13]

   Section 122(2) of the Evidence Act provides:

2. [14]

   Nothing in sub-s (5) is relevant for present purposes.

3. [15]

   In Standard Chartered Bank of Australia v Antico Hodgson JA said (at 93-95):

4. [16]

   In Mann v Carnell the joint judgment of Gleeson CJ, Gaudron, Gummow and Callinan JJ said at [34]:

5. [17]

   In Council of the New South Wales Bar Association v Archer Hodgson JA said at [48]:

6. [18]

   Campbell JA agreed with Hodgson JA on that point. Handley AJA said at [72]:

7. [19]

   In Osland v Secretary, Department of Justice [2008] HCA 37; (2008) 234 CLR 275 the joint judgment of Gleeson CJ, Gummow, Heydon and Kiefel JJ said at [45]:

8. [20]

   The joint judgment also noted at [49] that the Court was there concerned with the common law principle of waiver and not with the application of s 122 of the Evidence Act, because at the relevant time Victoria had not adopted the uniform Evidence Act. The joint judgment simply noted what was said in Mann v Carnell that s 122 may have the effect that privilege may be lost in circumstances which are not identical to the circumstances in which privilege may be lost at common law. Nevertheless, it seems to me that the statement of principle at [45] does not differ from what had been said in Mann v Carnell and in Archer in terms of the test for the waiver of privilege. That also appears to have been the view of the Court of Appeal in Cooper v Hobbs [2013] NSWCA 70 at [69]-[70].

9. [21]

   In Bennett v Chief Executive Officer in the Full Court, Tamberlin J said:

10. [22]

    Gyles J said:

11. [23]

    Gyles J rejected a submission that those authorities had been impliedly superseded by what was said in Mann v Carnell. His Honour said at [66]:

12. [24]

    Given that the majority in the Full Court of the Federal Court considered that Madgwick J erred at first instance in relation to waiver of privilege, the Fourth Defendant’s reliance on Madgwick J’s decision is misplaced.

13. [25]

    The Fourth Defendant emphasised the fact that what was said by her was said in the context of an application to amend her cross-claim. She accepted that if the affidavit had been relied upon in that application privilege would have been waived to enable an examination of those documents and cross-examination on them. That is because it would have been unfair to make the statements and not disclose the documents. However, the Fourth Defendant submitted, the only reason the Bank now wants access to the documents is to impugn the credit of the Fourth Defendant. This is because what was said by her in the affidavit does not go to any fact in issue in the proceedings.

14. [26]

    The Fourth Defendant also relied upon the fact that what is said in the affidavit does not disclose the advice that was given. Rather, the Fourth Defendant asserted only that she was not given advice about the matters concerned. It was in that context that the Fourth Defendant relied on decisions that held there was no waiver where all that was disclosed was the conclusion of the advice without disclosing the reasons for it. The Fourth Defendant relied on Mann v Carnell because of what was disclosed in that case but was not held to amount to a waiver.

15. [27]

    The Fourth Defendant submitted also that because her counsel on her instructions accepted that the affidavit she swore was wrong, the Bank could achieve nothing further by having documents on which to cross-examine. In other words, the Bank would already be able to cross-examine the Fourth Defendant about swearing an affidavit that was wrong (no admission made that it was false). In that way there was no unfairness in the documents not being made available.

Consideration

1. [28]

   It cannot be a proper basis to suggest that privilege has not been waived simply because the only use to which the subpoenaed documents would be put would be to impugn the Fourth Defendant’s credit. In Liristis v Gadelrabb [2009] NSWSC 441 Brereton J said at [5]:

2. [29]

   The Fourth Defendant relies on s 102 of the Evidence Act which provides that credibility evidence about a witness is not admissible. However, that does not take account of s 103 which provides that the credibility rule does not apply to evidence adduced in cross-examination of a witness if the evidence could substantially affect the assessment of the credibility of the witness. One of the matters to which the Court may have regard in sub-s(2) is whether the evidence tends to prove that the witness knowingly or recklessly made a false representation when the witness was under an obligation to tell the truth. That was certainly the position in the present case.

3. [30]

   It may be accepted that the particular purpose for which the subpoena required the production of documents was what was said in the affidavit for the purpose of justifying leave to amend the Fourth Defendant’s cross-claim. As I have noted, the Fourth Defendant accepts that it would have been unfair had she sought to rely on that affidavit. That concession impliedly accepts that privilege was waived in that regard. The question is, however, whether the privilege can be waived for one purpose but not another and whether once waived it remains waived. It is relevant to consider that matter in a context where none of the matters about which the Fourth Defendant seemingly made disclosure remain as issues at the final hearing.

4. [31]

   In Mann v Carnell the joint judgment said at [29]:

5. [32]

   The joint judgment also referred to a number of English cases and noted at [32]:

6. [33]

   In Osland the appellant had been convicted of murdering her husband after enduring violence at his hands. After unsuccessful appeals, she petitioned the Governor for a pardon based on the prerogative of mercy. The Attorney-General, to whom the petition was referred, obtained advice from three Senior Counsel. The Attorney-General thereafter announced that the petition had been denied. He issued a press release saying (inter alia):

7. [34]

   The appellant argued that there had been a waiver of privilege with respect to the advice from the senior counsel.

8. [35]

   The joint judgment said this at [48]:

9. [36]

   They then went on to say:

10. [37]

    I accept in the present case that what was disclosed was disclosed to the opposing party. However, it was disclosed for a limited purpose in a particular context, namely, for the purpose of being allowed to amend a pleading to include causes of action on which the Fourth Defendant said she had received no advice. For other reasons the Fourth Defendant has been denied the opportunity to pursue those causes of action.

11. [38]

    When considerations relating to waiver are based on inconsistency and relevant unfairness, it is difficult to see how privilege has been waived in the present case. There is no inconsistency for the issues in question remaining in the proceedings. It may be accepted that a subpoena can be issued to challenge credit alone. However, that credit is able to be challenged because of the clear and unqualified statement made by the Fourth Defendant’s counsel on instructions that what was contained in the affidavit was wrong. Even if it is accepted as being unfair to the Bank not to have the precise documents to show why the statements in the affidavit were wrong, the issue is not concerned with an overriding principle of fairness operating at large. The enquiry is between the issue to be determined and the inconsistency of the maintenance of the privilege.

12. [39]

    The position in the present case may be contrasted with that in Banksia Mortgages Ltd v Croker [2010] NSWSC 535. In that case the solicitor had sworn an affidavit to resist a summary judgment application against his client. In the affidavit he referred to what were privileged emails and discussions with his client, and said that what was set out in the affidavit was based on that material. The Plaintiff sought access to the emails at a later stage of the proceedings.

13. [40]

    Schmidt J said:

14. [41]

    In that case the privileged emails had been used for the purpose of resisting summary judgment. They were self-evidently relevant for the final hearing of the case, and it would have been unfair not to hold that privilege had been waived.

15. [42]

    Similarly, in Weston (as special purpose liquidator of One.Tel Ltd) v News Ltd [2010] NSWSC 1288 Barrett J held that by the Plaintiff putting forward certain privileged documents before the Court to obtain an extension of time for service of the Statement of Claim, there had been a waiver of privilege although it was an ex parte application with no right of the Defendant to be heard. However, because the Defendant had the right to have any such order discharged, there was a well-founded expectation that the decision based on that material would become the subject of an interlocutory proceeding of an adversarial kind.

16. [43]

    In both cases, the privileged material had been used to the party’s advantage. In the present case it has not been used and it is not relevant to any remaining issue in the proceedings. I do not consider that its disclosure by the service of the affidavit brings about any inconsistency that results in waiver of the privilege.

17. [44]

    In my opinion, privilege has not been waived.