Case: Gartner v Carter [2004] FCA 258
Outcome: cited
principle encompasses a wide species of fraud, criminal activity or actions taken for illegal or improper purposes: see North J's review of the authorities in Clements at 522-526 [35]-[44]. The scope of conduct caught by the principle has been articulated in a variety of ways, often without particular precision: Propend at 545. Classic formulations have spoken of communications in furtherance of a 'crime or fraud': R v Cox and Railton (1884) 14 QBD 153 (' R v Cox' ) at 165; a 'criminal or unlawful proceeding': Bullivant v Attorney-General (Vic) [1901] AC 196 (' Bullivant' ) at 201; 'any unlawful or wicked act': Annesley v Anglesea (1743) 17 St Tr 1139 at 1229; and 'all forms of fraud and dishonesty such as fraudulent breach of trust, fraudulent conspiracy, trickery, and sham contrivances': Crescent Farm (Sidcup) Sports Ltd v Sterling Offices Ltd [1972] Ch 553 at 565. In Kearney , the High Court applied the principle to deny legal professional privilege to legal advice obtained by the Northern Territory Government which was prima facie a 'deliberate abuse of statutory power' to defeat a land claim under the Aboriginal Land Rights (Northern Territory) Act 1976 (Cth). In his reasons for judgment, Gibbs CJ (with whom Mason and Brennan JJ agreed) stated at 515 that 'legal professional privilege will be denied to a communication which is made for the purpose of frustrating the processes of the law itself, even though no crime or fraud is contemplated.' Some authorities have expressed the principle as applicable to prevent a 'fraud on justice' in a broad sense. The concept of a 'fraud on justice' was adopted by Lander J in Gartner v Carter [2004] FCA 258 (' Gartner v Carter' ) to deny protection to a communication between a lawyer and client for the purpose of the client putting assets beyond the reach of the legitimate claims of secured creditors: at [130] and [139]-[140]. The principle extends to 'trickery' and 'shams'. A 'sham' refers to steps which take the form of a legally effective transaction but which the parties intend should not have the apparent, or any, legal consequences: Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55 ; (2004) 218 CLR 471; see also Beazley v Steinhardt (1999) 106 A Crim R 21; affirmed on appeal in [1999] FCA 1255 (' Beazley' ). The recent case of Australian Securities &amp; Investments Commission v Mercorella (No 3) [2006] FCA 772 provides an example of the denial of legal professional privilege to documents in furtherance of a sham transaction. In that case, creditors of a managed investment scheme claimed privilege over documents relating to securities obtained from the defendant and certain companies in the scheme. The transactions were allegedly entered into so as to advance those creditors' interests over the interests of other creditors to the scheme. Mansfield J found that the communications were prima facie in furtherance of a sham and, as such, were not privileged. After referring to Lander J's decision in Gartner v Carter and Barclays Bank plc v Eustice [1995] 4 All ER 511 (' Barclays Bank '), his Honour stated at [95]: is a short step from those decisions to the present facts, as prima facie found. The [creditors] engaged in the transactions reflected in the Deed, and the granting of the securities within the structures it created, to secure or advance their interests over others who had advanced money to [the first defendant] or to the Scheme. There is a prima facie case that the "restructure" of the advances so that they appear as advances to the partnership of Ajay and Opey is a sham.'