Carrafa v Asfar (No. 2) [2022] NSWSC 1177

Supreme Court New South Wales

Medium Neutral Citation: Carrafa v Asfar (No. 2) [2022] NSWSC 1177 Hearing dates: 21 November 2021 Date of orders: 1 September 2022 Decision date: 01 September 2022 Jurisdiction: Equity Before: Slattery J Decision: See paragraph [119] Catchwords: PRIVILEGE – CLIENT PRIVILEGE – Evidence Act 1995, s 122 – plaintiffs are trustees of the estate of a bankrupt – the plaintiffs contend that in 2016 the executor of an estate, the first defendant, held certain real property on trust for the bankrupt – the second and third defendants are creditors of the estate of the bankrupt – the fourth defendants are the solicitors for the second and third defendants – the second and third defendants secure the appointment of the plaintiffs as trustees of the estate of the bankrupt in place of the official receiver – the second and third defendants seek freezing orders against the real property said to be held by the first defendant on trust for the bankrupt – the plaintiffs' claim that the second and third defendants pursued the freezing orders acting as fiduciaries on behalf of the plaintiffs – the second and third defendants reach a settlement agreement with the first defendant in which the real property held by the first defendant is sold, and the proceeds of sale are distributed partly to the second and third defendants and partly to the first defendant – the plaintiffs allege the settlement agreement was made dishonestly in breach of the second and third defendants' claimed fiduciary duty to the plaintiffs and in part by concealment from the plaintiffs and had the effect of fraudulently disadvantaging the other creditors of the bankrupt estate – fourth defendants issue notice to produce to the plaintiffs for documents passing between the plaintiffs and their solicitors – plaintiffs claim client privilege in respect of the documents – fourth defendants contend the plaintiffs have waived client privilege in the documents and the documents should be produced without redaction, because the plaintiffs have put in issue that the settlement agreement was concealed from them and the legal advice given to the plaintiffs is the source of the plaintiffs' knowledge of the settlement agreement – whether client privilege has been waived – whether the plaintiffs have acted inconsistently with their objecting to the adducing of the evidence on grounds of client privilege within Evidence Act, s 122 (2). Legislation Cited: Bankruptcy Act 1966 (Cth) Conveyancing Act 1919, s 37A Evidence Act 1995, s 122, s 125 Partnership Act 1892, s 10 Real Property Act, s 74I Cases Cited: Barnes v Addy (1874) LR 9 Ch App 244 Carrafa v Asfar [2020] NSWSC 530 Cleveland Investments Global Pty Ltd v Ficaro Pty Ltd [2016] NSWSC 473 Commissioner of Taxation v Rio Tinto Ltd (2006) 151 FCR 341 Council of the New South Wales Bar Association v Archer (2008) 72 NSWLR 236 CSR Limited v Eddy (2008) 70 NSWLR 725 DSE Holdings Pty Ltd v Intertan Inc (2003) 127 FCR 499 Earl of Chesterfield v Janssen (1751) 2 Ves Sen 125 Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd (2013) 250 CLR 303 GR Capital Group Pty Ltd v Xinfeng Australia International Investment Pty Ltd [2020] NSWCA 266 Hastie Group (in liq) v Moore [2016] NSWCA 305 Mann v Carnell (1999) 201 CLR 1 Standard Chartered Bank of Australia Limited v Antico (1993) 36 NSWLR 87 Wayne Lawrence Pty Ltd v Hunt [1999] NSWSC 1044 Texts Cited: J Story, Commentaries on Equity Jurisprudence (1920, Sweet and Maxwell) JD Heydon, M Leeming and PG Turner, Meagher Gummow and Lehane's Equity: Doctrines and Remedies (2015, 5th ed, LexisNexis Butterworths) W Ashburner, Ashburner's Principles of Equity, ed Denis Browne (Butterworths London, 2nd ed, 1933) Category: Procedural rulings Parties: Plaintiff: Michael Carrafa and Fabian Micheletto in their capacities as joint and several trustees in bankruptcy of the estate of Peter Ronald Evans