Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Rinehart v Rinehart [2016] NSWCA 58 Hearing dates: 22 March 2016 Decision date: 24 March 2016 Before: Beazley P; Leeming JA; Simpson JA Decision: Summons seeking leave to appeal filed on 16 February 2016 dismissed with costs. Catchwords: APPEAL – application for leave – documents produced on subpoena by solicitors for former trustee – former trustee claimed documents were privileged in her personal capacity as opposed to her capacity as trustee – primary judge rejected claim – challenge to finding that no evidence supporting claim had been adduced – challenge to primary judge's declining to inspect the documents – no prospect of any different result – leave refused Legislation Cited: Civil Procedure Act 2005 (NSW), ss 56-59 Evidence Act 1995 (NSW), ss 118, 119 and 136 Uniform Civil Procedure Rules 2005 (NSW), rr 1.8, 51.53 Cases Cited: Hancock v Rinehart [2016] NSWSC 116 Category: Principal judgment Parties: Gina Hope Rinehart (Applicant) Bianca Hope Rinehart (First Respondent) John Langley Hancock (Second Respondent) Representation: Counsel: B R McClintock SC, R Mansted (Applicant) C H Withers, A M Hochroth (Respondents) Solicitors: Speed & Stracey Lawyers (Applicant) Yeldham Price O'Brien Lusk (Respondents) File Number(s): 2016/49482 Publication restriction: Nil Decision under appeal Court or tribunal: Supreme Court of New South Wales Jurisdiction: Equity Division Citation: [2016] NSWSC 12 Date of Decision: 2 February 2016 Before: Brereton J File Number(s): 2011/285907 [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Judgment 1. THE COURT: The question sought to be raised on this application for leave to appeal is whether there was appellable error in the decision by the primary judge to reject a claim of privilege by a former trustee against the current trustee. It will be convenient, without conveying any disrespect, to refer to the applicant, Mrs Gina Rinehart, and the respondents, who are her children, Ms Bianca Rinehart and Mr John Hancock, by their given names. 2. Bianca has been appointed the new trustee of the Hope Margaret Hancock Trust, in place of Gina. There is a dispute as to whether Gina has delivered all trust documents to Bianca. In connection with that dispute, a subpoena for production was issued at Bianca's request to Sceales & Company, a law firm, which has produced documents to the court. 3. First access was given to Gina. An affidavit sworn by her current solicitor identified some 64 documents which were said to be documents in respect of which Gina made a claim of privilege personally, as opposed to in her capacity as a trustee. Bianca and John contended that Gina had not established her claim. 4. It is accepted by all parties that Gina, as the former trustee, is not able to maintain a claim of privilege as against the current trustee Bianca, in respect of privileged documents where her privilege is held in her capacity as a trustee. Hence, in order to resist production, it was necessary for Gina to establish not merely that the documents were privileged, and not merely that the privilege was that of Gina, but that the privilege was that of Gina in her personal capacity as opposed to her (former) capacity as trustee. That makes this a very unusual case. Reasons of the primary judge 1. The primary judge gave a reserved judgment and rejected the claims of privilege: Hancock v Rinehart [2016] NSWSC 12. His Honour considered the evidence which had been adduced, and concluded as follows at [17]: "Thus the evidence tendered by Mrs Rinehart, while it establishes that there were in contemplation at the relevant time proceedings between her and the first plaintiff, communications relating to which could potentially fall in the class of personal privileged documents of Mrs Rinehart as distinct from trust documents, does not begin to establish that the Schedule 1 documents comprised or included such communications. There is no testimonial or documentary evidence – save potentially the disputed documents themselves, to which I shall shortly come – as to the circumstances in and purpose for which they were created." 1. Gina had invited the primary judge to review the documents himself, with a view to determining whether her claim was established. The primary judge declined to do so, and that was accordingly determinative of Gina's claim. 2. Two strands of reasoning supported the decision of the primary judge not to view the documents. The first was that the claim for privilege should have been made at the time the documents were produced to the court, rather than at the time questions of access were debated. The second was that there was no power on the part of a person claiming privilege to require the court to inspect documents, although the court had power to inspect the documents in order to adjudicate a claim. The primary judge expressed his conclusions as follows at [35]-[36]: "Thus in my view: (1) Legal professional privilege is a privilege from production, including from production to the court. Such a claim should be made at the first of the Waind & Hill stages, before the documents are produced to the court. To voluntarily produce the documents to the court for the purpose of use in evidence on the application is inconsistent with maintaining a claim for privilege. (2) A claim for privilege must be made on sworn direct evidence – not inadmissible hearsay or opinion – proving the facts on which the claim is founded. This is unaffected by the court's discretionary power to require production in order to enable inspection for the purpose of adjudicating the claim, which exists to enable a claim for privilege to be scrutinised, not to enable it to be proved. No party – least of all the party claiming privilege – may insist that the court inspect the documents. As Mrs Rinehart has tendered no admissible sworn evidence amenable to being tested by cross-examination probative of the facts on which the claim for privilege is founded – in particular, her purpose in making the relevant communications – it would be contrary to justice to uphold her claim solely on the basis of an inspection of the documents. It follows that the court will not inspect the Schedule 1 documents for the purpose of ruling on the claim, and Mrs Rinehart's claim of privilege in respect of those documents fails. The documents having already been produced to the court, Bianca will be granted access to them." 1. Gina seeks leave to appeal. Gina advanced two "main questions". Was there error in the finding that there was no evidence? 1. First, Gina submits that the primary judge erred in concluding that there was no evidence supporting the conclusion that there was a privilege belonging to her personally, as opposed to as trustee. This is a finding of fact. And it is a finding of fact which is not accompanied by appellable error. Indeed, it is not accompanied by any error. In order to explain why, it is necessary to turn to the evidence on which Gina relied. 2. An affidavit made by Gina's current solicitor was read before the primary judge. A schedule in an annexure identified the 64 disputed documents. The solicitor did not himself give any evidence, even on information and belief, as to the facts and circumstances in which those documents had come into existence or had been provided to Sceales & Company many years before. The schedule described the documents concisely, gave their dates, and for the most part merely gave a generic description of the basis for the claim, such as "Confidential documents prepared by the lawyer for the dominant purpose of the lawyer providing legal advice", "Confidential document provided to Templeman (barrister) to enable him to provide advice", "Confidential document that was prepared for the dominant purpose of current/pending/anticipated proceedings in which the client is, or may be, or was or might have been a party" and "Confidential communication between two lawyers acting for the same client for the dominant purpose of providing legal advice". It will be seen that the descriptions closely mirror the formulations of client legal professional privilege recognised in ss 118 and 119 of the Evidence Act 1995 (NSW). Nowhere was the client identified. Nor, more importantly, was there any identification of why it was said that the documents were privileged in Gina's personal capacity as opposed to her capacity as a trustee. 3. There were some exceptions to the generic descriptions given above. Two parts of the final document were described as "Confidential document which states and summarises the First Defendant's instructions as to the matters upon which she required advice" and "Refers to information provided to Sceales & Co for the purposes of obtaining advice". Even so, it remained the case that there was nothing in the descriptions which bore upon the question whether any privilege was held by Gina personally as opposed to in her capacity as trustee. 4. In any event, objection was taken to that column of the schedule, and the hearing proceeded on the basis that the column was not evidence of the fact that the documents answered the description given to them. (Although no formal order pursuant to s 136 of the Evidence Act was made, that is the sense of what occurred, and Gina made no submission to the contrary when the matter was heard in this Court.) 5. Some of the descriptions given to the documents are such that they are apt to be privileged. Thus, focussing on the examples given during the hearing, there were documents entitled "Opinion Brief Hely", "Templeman Opinion 87-03 26", "Mallesons Letter 22Feb88" and "Fourth Brief to Allan Myers QC 10 July 2006 (word)". In the case of at least some of the documents, it may be more or less readily inferred that the documents were privileged, and the privilege was that of Gina. However, once again, none of the descriptions gave any assistance at all on the critical question, which was whether the documents were privileged in Gina's personal capacity as opposed to her capacity as a trustee. 6. Nine of the documents are arguably in a different position by reason of their date. They pre-date the establishment of the trust in December 1988. The earliest in time, that described as "Opinion Brief Hely", was dated two years prior to the creation of the trust. However, all were produced on subpoena from Sceales & Co, which firm was "retained to provide advice on several matters relating to the administration of the trust", as the primary judge found at [14]. That finding was not challenged. In those circumstances, the dates of those nine documents are insufficient to establish even a prima facie case for a privilege maintainable by Gina personally as opposed to in her capacity as a trustee. 7. There was no other evidence as to the circumstances in which the documents were brought into existence. It is clear beyond argument that the critical question – whether any privilege was Gina's personally as opposed to in her capacity as a trustee – was unilluminated by any of those descriptions. 8. There is a further consideration confirmatory of the above. The application at first instance and in this Court proceeded on an unstated premise (of which there was no evidence). The premise was that the solicitors for the trustee had, at some stage, acted for, or given advice to, Gina in her personal capacity, albeit in relation to matters concerning the trust. Senior counsel accepted that, if that had occurred, the solicitors would have had a conflict of interest, but maintained that "whether there was an impermissible conflict of interest unidentified by them does not logically affect the possibility or probability that there was advice being given to my client in her personal capacity." But it is not lightly to be inferred that reputable solicitors failed to perceive such a conflict, or, perceiving it, proceeded to act. 9. There are no realistic prospects of overturning in any appeal the factual finding made by the primary judge at [17] which is reproduced above. 10. That conclusion is an important aspect of the legal questions which are at the forefront of Gina's application for leave to appeal. It will be an unusual case where a person claiming an entitlement to resist production advances no evidence at all on the matter which supports the entitlement and accordingly is forced to rely solely upon the documents themselves to support the claim. The vast majority of cases are cases where the person claiming an entitlement to resist production serves some evidence in support of the claim, which evidence is insufficient to persuade the party seeking production of the validity of the entitlement to resist. Was there error in declining to view the documents? 1. The second main question arising on Gina's application, as expressed in her written submissions, is "whether it is impermissible for the Court to inspect a document at the request of the party claiming privilege over it, for the purposes of that party seeking leave to make out the claim of privilege." That formulation does not accurately capture the reasoning of the primary judge. His Honour expressly and entirely conventionally acknowledged the existence of a discretionary power on the part of the Court to inspect a document. What the primary judge denied was the ability on the part of the litigant to oblige the Court to review a document in order to make good a claim of privilege which was otherwise unsupported. Gina maintained, in a variety of ways, that in declining himself to view the documents, he had erred. 2. Underlying that basic claim are a number of other issues in respect of which the parties exchanged submissions. There is a lively dispute between the parties as to whether or not the primary judge in fact exercised a discretion not to inspect the documents. It is not necessary to summarise the competing submissions on this point, still less to resolve them. In a later judgment, when granting a limited stay pending the determination of this application, the primary judge expressed the view that he had exercised a discretion not to inspect the documents: Hancock v Rinehart [2016] NSWSC 116 at [5]. We agree that that reflects the correct position, which is a consequence of r 1.8 of the Uniform Civil Procedure Rules 2005 (NSW), and that his Honour's reasons at first instance should not be read in a way which is inconsistent with the existence of a discretionary power. We also agree with what was said by Mr McClintock SC, who appeared for Gina, that the powers of the Court in this respect are wide and should not be unduly circumscribed. 3. There was also a debate between the parties as to whether, notwithstanding the interlocutory nature of the decisions, it was open to have regard to the subsequent decision of the primary judge in determining whether or not in his Honour's earlier decision he had exercised a discretion. Any error would not produce a different result 1. The appropriate course for present purposes is to cut through these underlying issues and go to the heart of the matter. Let it be assumed, favourably to Gina and contrary to what the primary judge subsequently said when granting a stay, that his Honour's rejection of her claim for privilege was based upon a lack of power to examine the documents in circumstances where she had not adduced any evidence in support of her claim. If so, then there would have been a plain case of error: the failure to exercise a discretionary power which a party has sought on the incorrect basis that the power was not available. But what follows from that conclusion? 2. Gina contends that in those circumstances, the matter should be returned to the primary judge, or alternatively another judge (once again there was a dispute about this), with a view to that judge being invited to re-exercise the discretion to view some or all of the documents. Her draft notice of appeal asked this Court to determine the question of privilege itself, although it was acknowledged that this was an oversight in the formulation of orders. 3. However, there is an important intermediate step which is omitted in Gina's submissions. Let it be assumed, favourably to Gina, that there is appellable error in the approach taken by the primary judge to the discretion to view the documents the subject of the claim. In order for the matter to be remitted to the primary judge, it is necessary for the Court to be satisfied that "some substantial wrong or miscarriage has been thereby occasioned": UCPR r 51.53(1). It follows that it is necessary for Gina to make out a case, sufficiently strong as to warrant a grant of leave, that the discretion would be exercised differently. 4. It is at that point that Gina's application fails. Even if error were shown, this Court would not remit the matter to the Equity Division. This Court would exercise the discretion (something which it is required to consider doing by reason of UCPR r 51.53 and something which is implicit in Gina's proposed notice of appeal) and decline to view the documents. The reasons this Court would decline to view them are as follows. 5. First, this is a case where there is no shortage of resources available to either side. It must have been obvious to all concerned at the time the application was originally heard that there was no evidence that any privilege was that of Gina personally. Indeed, the subpoena had been issued in support of Bianca's and John's motion which sought orders that Gina make an affidavit, and in support it was said that "[Gina's] failure to properly identify which documents have been withheld on the basis of a claim for privilege and explain the basis for the claim is the basis for" those orders being sought. There was and is no explanation for the conspicuous deficiency in the evidence. This is not a case where it was impossible to adduce evidence from Gina, or from the lawyers (including Mr Sceales) who were involved at the time the documents were prepared. Nor is it a case in which it was impossible for the current lawyers to adduce evidence on information and belief in respect of those matters (although in the particular circumstances of this litigation, we should not be taken to be expressing a view as to the appropriateness of this latter course). 6. In short, this is not a case where a contestable claim of privilege has been advanced by evidence which is disputed by the party seeking access. This is a case where a well-resourced litigant has advanced no evidentiary basis at all to support a claim for privilege, in circumstances where it may readily be inferred that evidence was available. 7. Against this, Mr McClintock submitted that there was no reason to think that his client had anything to do with the circumstances in which the documents were provided to, or brought into existence by, Sceales & Company, or that, if she did, she had any recollection of it. But there is not even evidence of the fact, if it be the fact, that his client has no recollection in 2016 of the circumstances which could give rise to a personal claim of privilege. And, as Mr Withers who appeared for Bianca and John observed by reference to annotations on one of the advices from Mr Myers QC, which has been made available, it would seem that Gina paid close and personal attention to at least some of the documents. 8. Secondly, there is real force in the observation made by the primary judge at [18] about the course suggested by Gina, which: "would require the court to review the [64] documents, largely unaided by submissions on behalf of Mrs Rinehart (because such submissions would likely reveal any privileged subject matter), and entirely unaided by submissions on behalf of the plaintiffs (who would be denied the opportunity to see the documents, and thus the opportunity to answer the only potentially probative material adduced by Mrs Rinehart)." 1. To the same end, his Honour said at [32] that: "While the documents themselves may well illuminate the purpose for which they were created, to allow them to be used as evidence – let alone the sole evidence – in support of a claim for privilege, would be contrary to well-established practice. It would also be grossly unfair to the other party: if the only evidence of purpose is to be inferred from the document itself, the party seeking access is deprived of any opportunity to test the asserted purpose, which would defeat rather than promote the intent of enabling claims to be tested and scrutinised. As Giles J observed in Woollahra Municipal Council v Westpac Banking Corporation (1994) 33 NSWLR 529, 541-2: The court should be able to proceed on evidence describing the documents and the circumstances of their creation, and should not unnecessarily pay regard to material which can not be known to the party challenging the claim to privilege." 1. We respectfully agree. The course proposed by Gina gives rise to ample scope for unfairness to all parties in that course, but especially unfairness to those seeking access. If the course proposed by Gina were followed, they would not be able to be heard effectively against such submissions as are put. That is not to deny that there may be occasions when it is appropriate for a court itself to inspect documents in order to resolve a contested claim of privilege, although, as the primary judge said, the unsatisfactory nature of that course has been remarked upon on many occasions. Much will depend on whether all parties consent to that course, the nature of the documents and the magnitude of the dispute. 2. The unfairness is manifest once the question of an appeal is considered. The first difficulty is in the formulation of reasons. Irrespective of whether the court finds in favour of or against the claim of privilege, the litigants are at least entitled to ask for reasons. Irrespective of the outcome, it will be difficult to supply reasons which do not disclose the privileged material relied upon. 3. Then, how are those applications for leave to appeal to be determined? It is to be recalled that a real possibility – and one which is consistent with the extensive litigation history of the proceedings between these parties – is that if the course proposed by Gina were followed, then a judge might find in her favour as to some of the 64 documents, and against her in respect of the balance. Both sides have the right to seek leave to appeal from rulings adverse to them. How are those applications to be resolved? 4. Those difficulties are acute because, in the circumstances of this litigation, Gina has adduced no evidence supportive of her claim that the privilege is hers personally, rather than in her capacity as trustee, and seeks to support that claim in a bootstraps fashion by reference to the very documents which she maintains Bianca and John cannot see. 5. Thirdly, the course proposed is unduly burdensome upon the Court. It is entirely unclear whether the review proposed by Gina could be conducted by a judge spending, say, 5 minutes on each document (Bianca and John say that it would be necessary to peruse an extensive amount of additional documentation). But it is easy to see that a day or more of court time could be involved. And all this in circumstances where the party claiming a personal privilege has not adduced any evidence in support of the claim. 6. That is not the only way in which the course proposed by Gina is burdensome. The Court is deprived of the considerable benefit of submissions from both sides: those made by the party claiming privilege will necessarily be cryptic (or "in code" as Mr McClintock put it), while any made by the party seeking access will be substantially hampered. 7. Fourthly, because no evidence has been adduced to support the claim at all, there is no scope for the dispute to be narrowed, in a way which is familiar to litigation, by the parties making appropriate concessions. Indeed, the statutory duties upon the parties and their lawyers contained in ss 56-59 of the Civil Procedure Act 2005 (NSW) will be sidestepped by the device of denying to the party seeking access any evidentiary foundation for the claim. 8. Fifthly, the foregoing is supported – in our view, self-evidently – by the obligation in s 57(2) of the Civil Procedure Act that the practice and procedure of the court are to be regulated so as best to attain the objects of the just determination of the proceedings, the efficient disposal of the business of the court and the efficient use of available judicial and administrative resources. Conclusions 1. None of the foregoing stands against the Court exercising the power, in an appropriate case, to inspect the document to resolve the claim. But all of the foregoing leads to the conclusion that where as here a deliberate forensic choice has been taken to adduce no evidence in support of the claim that the privilege is Gina's personally and not as trustee, the Court should not itself exercise the power to review the documents over the opposition of Bianca and John. Thus, making the favourable assumption that one or more proposed grounds of appeal are made out, there are no prospects of Gina persuading any court to re-exercise the discretion in a way which would lead to any different result. 2. The consequence of the foregoing is that it is neither necessary nor appropriate to express views as to all of the propositions enunciated by the primary judge throughout his Honour's careful judgment. That should only occur in a case where something will turn on the outcome, and it is to be recalled that this is a highly unusual case, where the critical question was not the existence of privilege but whether or not any privilege was maintainable by Gina in her personal capacity as opposed to in her capacity as a former trustee. We note that the application for leave has been given utmost urgency in light of its subject matter. 3. However, in light of some of Mr McClintock's submissions, we would add two observations. First, against his proposition that aspects of the reasoning of the primary judge were at odds with the ordinary practice of courts in this State, we would observe that this is a very unusual case, where the claimant has adduced no evidence at all in support of an essential integer of her claim, and accordingly relies wholly upon the documents themselves to support her entitlement to withhold production of them. That is the context in which his Honour's reasons are to be read, and we respectfully agree that the power in UCPR r 1.8 was not intended to subvert the ordinary obligation upon a party to support a contested claim by evidence. 4. Secondly, Mr McClintock at one stage submitted that there was no obligation to provide evidence in support of a claim of privilege. It is true that the claim of privilege itself does not require evidence. Once made, the claim may be acceded to or contested. If contested, then the burden falls upon the person claiming the privilege to make out the matters which give rise to an entitlement to resist production in the ordinary way, namely, by admissible evidence. That is the circumstance that obtained in the proceedings before the primary judge, and for the reasons given above, on the critical issue – whether privilege was held by Gina in her personal capacity as opposed to her capacity as a trustee – there was no evidence advanced in support of the claim. Orders 1. For those reasons, Gina has failed to establish a case sufficient to warrant a grant of leave. The application for leave to appeal should be dismissed. Costs should follow the event. ********** 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: 24 March 2016