Property – Transactions within the ambit of s 106B were “fraud” as used in s 125 of the Evidence Act 1995 (NSW) (client legal privilege is lost in a case of fraud) – Husband’s application seeking to restrain wife’s reliance on certain documents dismissed
In Antoun [2023] FedCFamC1F 129 (9 March 2023) Riethmuller J heard a wife’s application for property settlement against her former husband after a relationship which began in 2000, ended in 2015 and produced four children.
The husband worked in a trade and the wife worked in finance. The wife alleged that the husband formed the intention to separate in 2015 and embarked on a course of conduct to defeat the wife’s s 79 claim ([1]). This included removing himself as appointor from five discretionary trusts ([9]). The wife sought orders under s 106B and other equitable remedies ([2]).
The husband sought to restrain the wife from continuing to instruct her current solicitors and that she be restrained from relying on certain documents on the basis they were privileged ([3]).
Riethmuller J said (from [69]):
“… [W]hat emerges regularly in the wife’s Points of Claim … are numerous transactions where the husband has either transferred shares he held (without consideration at market value) or divested himself of the position of appointor of trusts. Such transactions necessarily lead to a prima facie case that the transactions would be likely to defeat the wife’s property settlement claims pursuant to s 79 of the Act.
( … )
[72] … [T]he husband has joined issue with the wife’s claims … on the basis that they were not done with an intention to defeat her potential claims under the Act … but rather done for ‘estate planning’ reasons … Whilst intention is not an essential element to a claim pursuant to s 106B of the Act (and indeed nor is lack of consideration at market-value), both factors are weighty considerations when exercising the discretion pursuant to s 106B of the Act, and are therefore relevant facts and circumstances in the wife’s case.
THE PRIVILEGE CLAIM
[73] In order to address the question of the husband’s intention when carrying out various transactions, the wife seeks to rely upon a number of documents prepared by former solicitors for the husband … In substance, these documents are letters from the husband’s solicitors seeking information to enable them to effect changes to the various corporate and trust structures of the husband so as to remove the husband as a director and appointor of various entities.
( … )
[77] Section 117 and s 118 of the Evidence Act 1995 (NSW) (‘the Evidence Act’) provide for communications between solicitors and clients to be privileged in the circumstances set out in the provisions. The relevant documents appear, prima facie, to be confidential communications between the husband’s solicitors and the husband.
[78] … [T]he privilege provided by the Evidence Act is lost if the document was prepared ‘in furtherance of the commission of a fraud or an offence or the commission of an act that renders a person liable to a civil penalty’: see s 125(1)(a) of the Evidence Act.
[79] Transactions designed to put assets beyond the reach of a spouse in property settlement proceedings were found by Hogan J to be within the ambit of s 125 of the Evidence Act: see Yamada & Bernard [2016] FamCA 977. Such an approach is consistent with the common law and the approach taken in a number of cases in other superior courts. It was accepted by counsel for the husband that transactions within the ambit of s 106B of the Family Law Act 1975 (Cth) would fall within the ambit of ‘fraud’ as that word is used in s 125 of the Evidence Act.
[80] I am mindful that privilege would attach to legal advice on what could lawfully be done (Australian Securities & Investments Commission v Mercorella (No 3) [2006] FCA 772 … ), and that it is the documents with respect to the carrying out of the scheme that come within the ambit of s 125 of the Evidence Act.
[81] Prima facie, the documents show that the husband was instructing his solicitors to put in place the various changes in contemplation of ‘leaving his wife around Christmas time’, and choosing his sister as replacement for the husband in the companies and trust as that way the ‘risk is minimal as … his sister is independently significantly wealthy’ … It is clear on the face of these documents that they were prepared in order to effect transactions that the husband ultimately carried out, which the wife seeks to impugn in her Points of Claim. … I am persuaded that the documents fall within the exception set out in s 125 of the Evidence Act.”
The husband’s application was dismissed and the case was transferred to the Complex Financial Proceedings List.