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Supreme Court 16 August 2001

Kang v Kwan & 2 Ors

[2001] NSWSC 697

Other

Citation: Kang v Kwan & 2 Ors [2001] NSWSC 697 revised – 17/08/2001
Court: Supreme Court of New South Wales, Equity Division
Date: 16 August 2001
Judge(s): Santow J

Background

This matter arose in equity proceedings involving a plaintiff and three defendants, two of whom (the Second and Third Defendants) were out of the jurisdiction at the time of the relevant events. A subpoena had been issued to a former solicitor, Mr Stenberg, requiring production of documents from his file relating to the Second and Third Defendants.

When producing documents in response to the subpoena, Mr Stenberg's firm wrote a covering letter noting that privilege "may apply" to some documents but that, because their former clients were outside the jurisdiction, instructions could not be obtained. A Senior Deputy Registrar subsequently made an order permitting access to those documents by all parties, and both sides inspected them. The documents in question were marked as exhibits PX6 and PX7.

The matter came to a head when the First Defendant's counsel, on the day a related judgment was to be handed down, drew the Court's attention to the covering letter for the first time. The First Defendant applied to have PX6 withdrawn from evidence, and a solicitor appearing for another firm sought to withdraw an earlier concession that documents in PX6 were not the subject of a privilege claim.

  • Whether legal professional privilege had been lost over the documents produced under subpoena, given the covering letter's reference to possible privilege
  • Whether the documents could nonetheless be adduced in evidence under s 122 (consent to disclosure) or s 125 (the fraud and abuse of power exception) of the Evidence Act 1995 (NSW)
  • Whether the First Defendant had standing to raise a privilege claim belonging to the Second and Third Defendants
  • Whether the court should exercise its discretion under s 135 to exclude the documents as unfairly prejudicial
  • Whether the court could inspect the documents under s 133 to determine the privilege question
  • Whether the earlier concession made on behalf of the producing party's solicitors could be withdrawn

Decision

Santow J declined the First Defendant's application and refused to allow the concession to be withdrawn. The starting point for his Honour was that an order permitting access had been made by a Senior Deputy Registrar acting in a judicial capacity. That order remained valid until set aside, and no party had challenged it. The Court observed that the covering letter did not constitute a proper claim for privilege: it identified no particular documents, asserted only that privilege "may" apply, and was made by a firm whose clients had previously filed a sworn defence in the very proceedings in question.

The Court drew an analogy to the principles governing inadvertent disclosure of privileged documents, as discussed in Hooker Corporation Ltd v Darling Harbour Authority (1987) 9 NSWLR 538. While the disclosure here was made by the clients' former solicitor rather than by the First Defendant, the analogy was considered apt. All parties had inspected the documents and availed themselves of the access order; in those circumstances, the interest of justice favoured the plaintiff rather than restraining use of the documents.

Santow J also addressed the s 135 exclusion argument. Because the First Defendant could not himself claim the privilege, which belonged to the Second and Third Defendants, it could not be said that admitting the documents was unfairly prejudicial to the First Defendant for the purposes of that section.

Decisively, his Honour invoked s 133 to inspect the documents himself. Having done so, he was satisfied that s 125 of the Evidence Act applied, meaning that even if the documents had retained their confidential character, the fraud and abuse of power exception operated to permit their adducing. The reasons for that substantive conclusion were set out in a companion judgment delivered at the same time, and both judgments were intended to be read together.

Orders Made

  • The First Defendant's application to withdraw documents comprising PX6 from evidence was declined.
  • The withdrawal of the concession made on behalf of Schrader & Associates and Mr Davidson was not permitted.

Key Takeaways

  • A valid access order made by a court officer acting judicially remains effective until set aside; the mere subsequent discovery of a letter suggesting privilege "may" apply does not retrospectively invalidate that order or require exclusion of the documents.
  • A party seeking to resist the adducing of evidence on privilege grounds must do so in a timely and properly particularised way; a vague reference to possible privilege, without identifying specific documents, does not constitute a sufficient claim.
  • Where inadvertent or inadequate production of potentially privileged documents occurs, courts retain a discretion as to how to treat that material, informed by the interests of justice and the circumstances in which access was obtained.
  • Under s 133 of the Evidence Act 1995 (NSW), a court may inspect disputed documents to resolve questions of privilege, even where those documents have not yet been formally received into evidence in an uncontested way.
  • The fraud and abuse of power exception in s 125 of the Evidence Act 1995 (NSW) can apply to defeat a claim for legal professional privilege; in this case, Santow J found that exception satisfied following his inspection of the documents.

Legislation and Cases Referenced

Legislation:
- Evidence Act 1995 (NSW), ss 122, 125, 133, 135
- Supreme Court Act 1970 (NSW), ss 22, 121
- Supreme Court Rules, Pt 9 r 12

Cases:
- Hooker Corporation Ltd v Darling Harbour Authority (1987) 9 NSWLR 538