ST JOHN OF GOD V LITTLE SISTERS OF THE POOR HC NAP CIV 2007-441-628

ST JOHN OF GOD V LITTLE SISTERS OF THE POOR HC NAP CIV 2007-441-628 5 March 2008IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY CIV 2007-441-628IN THE MATTER OF the Charitable Trusts Act 1957 BETWEEN ST JOHN OF GOD HEALTH & ELDER CARE SERVICES TRUST BOARD Applicant AND LITTLE SISTERS OF THE POOR (NZ) TRUST BOARD Respondent Hearing: 5 March 2008 Counsel: Charlotte Gray for Applicant Edward S Scorgie for the Respondent Judgment: 5 March 2008ORAL JUDGMENT OF WILLIAMS JSolicitors: Saunders Robinson Brown (LMC Robinson), P O Box 39 Christchurch, for applicant Email: charlotte.gray@srblaw.co.nzChapman Tripp (A S Ross/E S Scorgie), P O Box 2206 Auckland Email: edward.scorgie@chapmantripp.comCase Officer, High Court Napier: Melissa.Maxted@justice.govt.nz[1] This judgment deals with an application by the St John of God Health & Elder Care Services Trust Board for particular discovery of documents, those giving legal advice to the respondent, the Little Sisters of the Poor (NZ) Trust Board. [2] Initially, the applicant sought discovery of the following documents:1. That the Respondent give discovery of the following documents with verification: (a) All documents relating to the legal advice given to the Respondent by Willis Toomey and Robinson in relation to the question of what the Respondent should do with any bequests at the time the Respondent decided to leave Hastings. (b) All documents relating to the legal advice given to the Respondent by Willis Toomey and Robinson at the time of the assignment of the Higgins bequest to the Applicant (c) All documents relating to the way the Higgins bequest funds were spent while the Respondent administered the Holy Family Home at Hastings.[3] The documents encompassed in paragraph 1(c), however, were acknowledged as being non-existent and accordingly discovery could not be given. The application was abandoned in that regard. [4] As far as the documents encompassed in paragraphs 1(a) and (b) were concerned, the application was based on an assertion that the respondent had waived privilege for those documents through an affidavit of Elaine Patricia Lawson, known as Sister Patricia, sworn on 21 September 2007. [5] The application arises in the course of an originating application by St John of God Health & Elder Care Services Trust Board for orders approving a scheme under Part III of the Charitable Trusts Act 1957. More particularly as far as thepresent application is concerned, the discovery question arises out of the transfer by the Little Sisters of the Poor of the Holy Family Home in Hastings, formerly run by them. In 1995 they transferred that to the St John of God Trust Board. [6] The application for waiver is based on s 65 of the Evidence Act 2006. It relates to legal professional privilege as described in s 54. Section 65 relevantly says:(1) A person who has a privilege conferred by any of sections 54 to 60 and 64 may waive that privilege either expressly or impliedly. (2) A person who has a privilege waives the privilege if that person, or anyone with the authority of that person, voluntarily produces or discloses, or consents to the production or disclosure of, any significant part of the privileged communication, information, opinion, or document in circumstances that are inconsistent with a claim of confidentiality. (3) A person who has a privilege waives the privilege if the person— (a) acts so as to put the privileged communication, information, opinion, or document in issue in a proceeding; or (b) institutes a civil proceeding against a person who is in possession of the privileged communication, information, opinion, or document the effect of which is to put the privileged matter in issue in the proceeding. (4) A person who has a privilege in respect of a communication, information, opinion, or document that has been disclosed to another person does not waive the privilege if the disclosure occurred involuntarily or mistakenly or otherwise without the consent of the person who has the privilege.[7] There are, it seems, no, or very few, decisions to date on the approach to the construction of s 65 and in particular to subs (2). The learned authors of Mahoney et al, The Evidence Act 2006, Act and Analysis (2007), para EV 65.03(4), p 261, describe the problems of waiver of privilege as "difficult" and note that the Act makes no attempt to define when disclosure may be voluntary. [8] The Evidence Act 2006, however, is seen largely as codifying the law at the time it came into operation and accordingly the question of waiver of privilege is still to be found in the decision of the Court of Appeal in Ophthalmological Society of New Zealand Inc v The Commerce Commission [2003] 2 NZLR 145. The Court ofAppeal discusses the question of loss of privilege by imputed waiver at some length (paras [20] to [30], pp 151-155). Those passages read:[20] It is well established that a party may lose the benefit of legal professional privilege, including litigation privilege, by its conduct in the course of litigation in relation to the privileged material. As it is of the essence of privilege that the material to which it attaches is confidential, where a party's use of the material destroys that confidentiality, even if unintentionally, or is inconsistent with the party legitimately continuing to assert it, the privilege is treated as waived. The principle underlying this concept of unintentional implicit or imputed waiver is stated in a frequently cited passage inWigmore on Evidence (McNaughton ed, 1961) vol 8, para 2327: "In deciding it, regard must be had to the double elements that are predicated in every waiver, ie, not only the element of implied intention, but also the element of fairness and consistency. A privileged person would seldom be found to waive, if his intention not to abandon could alone control the situation. There is always also the objective consideration that when his conduct touches a certain point of disclosure, fairness requires that his privilege shall cease whether he intended that result or not. He cannot be allowed, after disclosing as much as he pleases, to withhold the remainder. He may elect to withhold or to disclose, but after a certain point his election must remain final." [21] The leading case of Attorney-General for the Northern Territory v Maurice [(1986) 161 CLR 475], a decision of the High Court of Australia, was concerned with waiver of privilege in a "claim book", which claimants were required to lodge in proceedings brought before the Aboriginal Land Commissioner claiming traditional ownership of land: in essence the claim book was a statement of the claimants' case for use in the proceeding. It gave particulars of the claim and went into considerable historical, anthropological and ethnological detail in support of them. The principal issue in the High Court of Australia was whether by lodging the claim book with the Commissioner and distributing it to parties, as required under the Commissioner's procedural directions, claimants waived their legal professional privilege, in the claim book's source materials and were required to disclose them. The Court unanimously held that there was no waiver of privilege in relation to the source materials used in preparing the book. [22] Each of the judgments delivered by the members of the High Court in Maurice is of value in clarifying the concept of when the privilege is lost due to implied waiver. In the present context which, likeMaurice, is concerned with waiver of litigation privilege, that of Dawson J is of particular assistance. Speaking of waiver by implication he said at pp 497 – 498: "This is a difficult area of the law, but it is clear enough that an implied waiver may be required by fairness notwithstanding that it was not intended. It would not be fairto allow privilege to be waived with respect to a portion of a document or a conversation without requiring disclosure of the rest of it, at least if the document or conversation dealt with the one subject–matter: see Burnell v British Transport Commission [ [1956] 1 QB 187] and Great Atlantic Insurance Co v Home Insurance Co [ [1981] 1 WLR 529]. So much may be obvious, but legal professional privilege is concerned with protecting the confidentiality of a relationship and if that confidentiality is abandoned by a particular disclosure it may be necessary in fairness, whether further disclosure was intended or not, to require disclosure extending beyond the particular communication: Wigmore on Evidence (McNaughton rev 1961) vol VIII, para 2327. The cases are not entirely consistent and perhaps what is fair by way of disclosure must ultimately depend upon the relevant circumstances." See also Gibbs CJ at p 481, Mason and Brennan JJ at pp 487 – 488 and Deane J at p 493. [23] As France J observed in the High Court of Australia's subsequent decision in Mann v Carnell [(1999) 201 CLR 1] the joint judgment of Gleeson CJ, Gaudron, Gummow and Callinan JJ elaborated on the test as stated in Maurice, in relation to the basis on which the fairness criterion is relevant. The judgment emphasised that it is "inconsistency between the conduct of the client and maintenance of the confidentiality which effects waiver of privilege" and that 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" (para 29) (emphasis added). [24] In New Zealand the leading discussions of implied waiver of privilege appear in the High Court decisions in three cases discussed in the High Court judgments in this case. Equiticorp Industries Group Ltd v Hawkins [[1990] 2 NZLR 175] concerned lawyer–client privilege, though the document in issue was an investigative report going beyond provision of legal advice on supplied facts. The plaintiffs had filed an affidavit by the author of the report in opposition to an application for security for costs. It referred extensively to the character of the author's investigation and asserted that certain facts alleged in the pleading of the litigation were correct. In those circumstances Wylie J held that privilege in the report had been waived. He cited Deane J's view in Maurice that waiver by implication of law is based upon notions of fairness, but helpfully added at p 181 that: ". . . legal privilege like every other privilege carries with it obligation, and must not be abused. If it is abused it is likely to be lost." [25] This indicates that Wylie J saw the test of fairness as governed by the content of the privilege itself. The plaintiffs had used a selective part of the report for the purpose of adding weight to their oppositionto the application for security. The use to which the affidavit had been put was an abuse of privilege. Whether the content of the report was so clear–cut had been put squarely in issue. Considerations of fairness demanded that the whole document be disclosed, to ensure that it was accurately summarised in the affidavit (p 182). [26] Gallen J distinguished Equiticorp Industries in Corry [sic.]–Wright and Salmon Ltd [(In Receivership and Liquidation v KPMG Peat Marwick [1990] 2 NZLR 175], another case concerning security for costs. The second plaintiff, who was a liquidator, had filed a notice of opposition stating that he had good grounds for the application having regard to the legal advice which he had received. After referring to Maurice, Gallen J held at p 521 that waiver will be imputed: ". . . where the person entitled to claim it uses protected material in such a way as to give rise to unfairness in the resolution of the proceedings if that material is not available to the other side for assessment and to answer." [27] As Gallen J saw it the question was one of degree (p 522). The rationale was that waiver "is an illustration of the natural justice principle that the material which a party faces must be available to that party so that it has the opportunity to answer it" (p 521). Gallen J, however, rejected the claim that fairness required disclosure in those particular circumstances. Although the second plaintiff was using the fact that he had taken advice to indicate that he was acting appropriately, he had not put the content of that advice in issue (p 522): "I accept that by placing some reliance on the fact that advice has been obtained, the second plaintiff could be said to have come within the ambit of the formulation of the principle as it appears in the decision of Deane J in A–G v Maurice (supra), but I think those comments need to be considered in context. There is nothing intrinsically unfair in saying 'I have brought these proceedings because I have obtained legal advice to support such action.' That must apply in almost every case." [28] By contrast, legal professional privilege was held to have been waived in Tau v Durie [[1996] 2 NZLR 190]. In that case, the plaintiffs sought judicial review of what they said was a decision by the Waitangi Tribunal to suspend consideration of their claim indefinitely. The first defendant, who was the presiding member of the tribunal, claimed privilege in a legal opinion relating to his powers when not sitting on a particular claim. His statement of defence referred to the existence of the opinion. In response to allegations of acting on an improper purpose, predetermination, bias and unreasonableness, the defendant asserted that he had relied upon the opinion. Although no express reference was made to the content of that advice, McGechan J nonetheless held that the privilege had been waived. In a passage we have already cited he said at p 194:"It is all in the end a matter of fairness. A party cannot expect to put forward the existence of legal opinion, with inference invited as to favourable content, or part of a legal opinion which is favourable, and refuse to disclose the opinion document, or the remainder of it, so enabling the position to be checked. If a party positively advances it, the party must disclose it." [29] McGechan J held that on the facts, the privilege had been waived, because the reference was being used to support an inference that the first defendant had been advised of his powers as presiding member, and to emphasise the bona fides of the defendant (pp 194 – 195). A shift in approach can be discerned over these three judgments. Whereas Wylie J emphasised the need for an "abuse" of privilege, the subsequent decisions are reasoned more broadly by reference to notions of fairness. Tau v Durie in particular may go too far in this respect. While it might be said that it is unfair in the abstract for a party to blow hot by making such a claim, while blowing cold on disclosure, the reference to the advice was arguably not inconsistent with the maintenance of confidentiality in its contents. That indeed is the view reached by Gallen J in Corry–Wright and Salmon. [30] The fairness factor has, however, rightly been treated as of particular importance in cases where partial disclosure of legal advice raises questions over whether natural justice requires disclosure of the whole advice. In the end, however, as Mann v Carnell makes plain, it is the Court's objective judgment as to the consistency of the conduct with maintaining the privilege which must be assessed in all the circumstances. That requires close analysis of the particular context: what is the issue in relation to the privilege; how does the evidence relate to that issue; and is there inconsistency that could lead to injustice if the privilege is upheld. The weight to be given to fairness in the Court's exercise of judgment will differ according to the circumstances including the character of the privilege it is said has been waived which, as in this case it is litigation privilege.[9] See also Shannon v Shannon [2005] 3 NZLR 757 and the review of the law on this topic essayed in Cedco Publishing Co v Hodder Moa Beckett Publishers Ltd(HC AK CL33/00, l29 May 2001. [10] The evidential basis on which the application is brought is, as noted, to be found in Sister Patricia's affidavit. She said that the Holy Family Home in Hastings, comprising a hospital and rest home, was run for a lengthy period but in about the mid-1990s it had become increasingly difficult for the Little Sisters of the Poor to run the Holy Family Home. As a result, the Sisters decided that they could not continue to operate the Holy Family Home themselves and, understandably enough, if they were able to give up that responsibility, wished that the Home would continueto operate in accordance with the philosophy of the Little Sisters of the Poor. Having been unsuccessful in locating some organisation which might take over the Home and run it in accordance with those principles, they approached the Brothers of St John of God who, Sister Patricia says, were willing to take over and operate the Home in accordance with the philosophy which had hitherto applied. She noted, however, that the Brothers were concerned as to the need for funds to upgrade and operate the Home and, as a result, bequests from the Higgins family were brought into focus. [11] More particularly, the evidential foundation for the present application is to be found in the following passage from Sister Patricia's affidavit:[27] As part of the process in transferring the Home to the Brothers we took advice from Michael Wenley of Willis Toomey Robinson. Michael was the Sisters' solicitor in Napier at the time. We discussed with Michael what should be done with the bequest now the Sisters were leaving Hastings. There were generally two types of bequests, those made explicitly to and for the Holy Family Home, and those made to the Little Sisters of the Poor. We decided that gifts to the Sisters were to the Little Sisters of the Poor (NZ) Trust Board and should stay with the Little Sisters for the purposes of the congregation. Bequests that were made specifically to the Holy Family Home which we considered were for the operation of the Home itself, should be retained for the use of the Brothers in operating the Home. This gave us some comfort that the Brothers had financial support in taking over the Home. Although we did think about the proper use of each of the bequests that were administered in the Hastings Home, we were not particularlyconcerned about the prospect of St John of God receiving some of the bequests because at that point we believed they would go on supporting the Home and running it in the way we would have run it, including an ongoing spiritual presence. For that reason we were quite happy to see the bequests like the Higgins' bequest stay with the Hastings Home because they would achieve that purpose.[12] It is now in contention as to whether the way in which the proposed reconstruction under the Charitable Trusts Act 1957 is consistent with that proposition. For present purposes, however, the pivotal issue is whether those passages from Sister Patricia's affidavit waive the privilege which must have applied to any advice given to the Sisters by Mr Wenley. [13] In that regard, it is clear that, in the normal course of events, clients seek advice from solicitors as to the options and the advantages and disadvantages of theiradopting one or other course of action open to them and, having received that advice, then make their own decision as to what course of action should be followed. [14] That would appear clearly to have been the case as far as the Little Sisters of the Poor are concerned. As the passages from Sister Patricia's affidavit make clear, they took advice from Mr Wenley as to what could be done with the bequests in the circumstances in which the Sisters found themselves. She then records that there were generally two types of bequests and "we" decided as to how the bequests should be regarded. It is noteworthy that there is no suggestion in the affidavit that Mr Wenley was in any way involved in the taking of the decision apart, of course, from giving advice as to what the Little Sisters of the Poor could do with the bequests they received. [15] When that passage in the affidavit is set against the criteria for waiver of privilege appearing in the Ophthalmological Society Case, it is at once apparent that the application for discovery cannot succeed. [16] The advice which Mr Wenley may have given and whether or not the Little Sisters' decision in relation to that advice was inconsistent with it is obviously confidential as being protected by legal professional privilege. The Court of Appeal in the Ophthalmological Society recounted the changing nature of the test for waiver of privilege and the fact that at one stage fairness seemed to be a guiding principle in deciding whether privilege had been waived: Tau v Durie. In the Ophthalmological Society case, however, the Court of Appeal took the view that Tau v Durie was rather too widely expressed and accordingly, while fairness remains a factor in deciding on privilege waiver cases, natural justice is a more supervening factor of greater weight. As the Court of Appeal said, it is the Court's objective judgment as to the consistency of the conduct of the person asserting legal professional privilege with maintaining the privilege which needs to be assessed in all the circumstances. [17] The close analysis required by the Ophthalmological decision of that issue makes it clear, as already mentioned, that what occurred in this particular case was the traditional - and classic - situation where a client receives legal advice as to the options available and then makes the client's own decision as to the course to beadopted. Sister Patricia's affidavit reflects no more than that. There is no overriding question of fairness which would compel a conclusion that privilege was waived. [18] As a result, this is a situation where the primacy of confidentiality of legal professional privilege is not outweighed by unfairness or inconsistency and accordingly, in those circumstances, there is no basis for arriving at the view that legal professional privilege was waived by the passages in Sister Patricia's affidavit. The application for particular discovery must accordingly be dismissed. [19] As to costs, given the nature of the substantive proceeding and what the Little Sisters of the Poor see as the necessity for them to both bring this application and to oppose the substantive application, costs on this application will be reserved in order that they can be appropriately ordered by whichever Judge deals with the substantive application. Of course, having regard to the outcome of that application. in the ordinary course of events, the respondent would have been entitled to the costs of this application and doubtless the Judge hearing the substantive matter will take that factor into account when he or she decides on the ultimate costs outcome of this matter. ..WILLIAMS J5 March 2008