SUPREME COURT OF QUEENSLAND 

1. McMURDO P:  Mr Dunwoody was convicted on 8 August 2003 of two counts of disposing of property with intent to defraud creditors under s 266(3) Bankruptcy Act 1966 (Cth) ("the Act") after a nine day trial.  He was sentenced on each count to two years imprisonment to be released after serving 12 months upon entering into his own recognizance of $5,000 to be of good behaviour for two years.  He was also ordered to pay reparation of $130,000 to the complainants, John Lawrence and Carmel Mary Sherry ("the Sherrys").  He appeals only against his conviction. 

2. At the conclusion of the first day of the hearing of the appeal on 23 April 2004 the appellant, who is self-represented in this appeal, was granted leave to amend his sole ground of appeal to contend that the learned trial judge erred in finding that legal professional privilege was waived. He filed an application on 24 May 2004 to further amend his notice of appeal to add as grounds that the learned trial judge erred in allowing the prosecution to cross-examine him on material which had not been presented as part of its case or led by him in his evidence in chief and in allowing this material to remain before the jury. When the appeal hearing continued on 4 June 2004, the respondent objected to this further amendment. The respondent has had ample notice of the further amended grounds; has addressed them in written and oral argument and has not pointed to any injustice resulting from the amendment. In the circumstances, the appellant should be given leave to argue his further amended grounds.

The background facts

3. Mr Dunwoody's neighbours, the Sherrys, brought an action against him in the District Court at Mackay for damages, including exemplary damages, for the intentional infliction of nervous shock, trespass to the person, nuisance by noise and harassment and trespass to land. Mr Dunwoody's solicitors at the trial were Wallace & Wallace. It commenced in October 1997 but was adjourned after two days of hearing. Mr Dunwoody contacted solicitors Cleary Hoare in April 1998 for advice about restructuring his cane-farming business. The trial recommenced on 7 May 1998. On 7 August 1998, the Sherrys were successful in their action against him. On 14 August 1998, Mr Dunwoody approached Mr Hickman, an accountant, for further advice about restructuring his financial affairs and assets. On 16 August 1998 he engaged Ebsworth & Ebsworth, (later known as MurphySchmidt), as Brisbane solicitors to review his prospects of success on appeal. After argument as to interest and costs, judgment was given in favour of the Sherrys on 1 September 1998 for $70,000 plus $11,140 interest and costs. In early September he discussed with Wallace & Wallace the prospect of making the Sherrys an offer in partial satisfaction of their judgment to delay execution. On 11 September 1998 Mr Dunwoody received an extensive opinion from senior counsel that he had no realistic prospects of success on appeal in the Sherrys' case, and on the same day he instructed Wallace & Wallace to file for a stay of execution of the judgment. Although he filed an appeal, he did not proceed with it.

4. The settlement of the sale of his two sugar cane properties took place on 25 September 1998 and the funds from the sales were transferred to Vanuatu a few days later. On 7 October 1998 Mr Dunwoody met with solicitor Mr Tony Bennett of Bennett & Philp, accountant Mr Hickman, and registered trustee in bankruptcy Mr Jefferson and his employee, Mr Joiner, to discuss his potential bankruptcy. The next day he completed and signed a debtor's petition and statement of affairs and on 9 October 1998 he was declared bankrupt on his own petition.

5. The prosecution case was that Mr Dunwoody did not like the Sherrys and sold and transferred his property to avoid having to pay their judgment. He committed the first offence on 25 September 1998 when he sold his properties, one of which he had held jointly with Mr Collier, to Chelmscliffe Pty Ltd ("Chelmscliffe"), the corporate trustee of the Dunwoody Family Trust; Chelmscliffe funded the purchase with a loan from Westpac so that the existing mortgages were repaid and on 25 September 1998 Mr Dunwoody received $367,000, more than sufficient to pay the Sherrys' judgment. The prosecution alleged that Mr Dunwoody committed the second offence between 25 and 30 September 1998 when he transferred the $367,000 through the offices of Mr Hickman to Vanuatu where, through the Seaforth Trust, he created a pension scheme for his retirement.

6. Mr Dunwoody's case was that he had been considering restructuring his finances for some years; Mr Hickman's proposal offered him a less complex scheme than that earlier proposed by Cleary Hoare, with additional tax and superannuation benefits; he did not intend to defraud the Sherrys when he disposed of his assets.

7. On 22 October 1998 his trustees in bankruptcy, Mr Jefferson and Mr Stevenson of Jefferson Stevenson & Co,^[1] served Wallace & Wallace with a notice under s 77A(2) of the Act requiring production of specified books, including documents and records, for the purpose of an investigation under the Act.  On 29 October 1998 similar notices were served on Mr Dunwoody and Mr Hickman.  Each notice advised that the penalty for failure to comply with the notice without reasonable excuse was imprisonment under the Act.

8. Mr Dunwoody met with his trustees in bankruptcy on 5 November 1998 and gave them a number of documents without claiming privilege. These documents have been referred to at trial and in this appeal as the category 1A documents. He did, however, refuse to supply and claimed privilege in respect of one piece of correspondence, a fax he sent to Cleary Hoare on 5 May 1998.

9. In early November 1998, Wallace & Wallace sent its files concerning Mr Dunwoody to the trustee in bankruptcy. On 20 November 1998 the trustee inspected documents at MurphySchmidt's^[2] offices under a s 77A(2) notice and MurphySchmidt provided to the trustee copies of the documents he requested.  Neither firm of solicitors claimed legal professional privilege in respect of the documents inspected and copied and nor did they obtain Mr Dunwoody's instructions to waive privilege before supplying the documents.  These documents obtained from Wallace & Wallace and MurphySchmidt have been referred to at trial and in this appeal as the category 1B documents.

10. On 12 November 1998 the trustees in bankruptcy also issued a notice under s 77A(2) of the Act to Cleary Hoare. The documents contained in the Cleary Hoare-Dunwoody file have been referred to at trial and in this appeal as the category 2 documents. On 16 November 1998 solicitor Mr Stephen Fox advised Mr Dunwoody that, in his preliminary opinion, some of the category 2 documents would certainly be privileged. On 7 December 1998 Mr Dunwoody wrote to his trustees again refusing to provide a copy of his fax to Cleary Hoare of 5 May 1998, claiming legal privilege. On 5 February 1999 Cleary Hoare refused to release any documents concerning their dealings with Mr Dunwoody in response to the s 77A notice, claiming legal professional privilege.

11. On 16 November 1998 the trustees prepared a Report to Creditors. On 19 November 1998, Mr Dunwoody received his copy of that report and a list of the documents that he had supplied to the trustees. He claims that at some unstated subsequent time he placed asterisks on that list and wrote to the trustee claiming privilege in respect of the asterisked items. No such letter has been produced.

12. Mr Dunwoody gave evidence at an examination under s 81 of the Act on 22 and 23 March 2000. He was represented by Mr Bennett, who claimed legal professional privilege in respect of the MurphySchmidt correspondence contained in the category 1B documents about his prospects of success in an appeal from the Sherrys' judgment.^[3] 

13. On 24 March 2000 Mr Bennett wrote to the solicitor for the trustee requesting a list of the trustee's correspondence with solicitors, documents received and the source of those documents. The letter stated that if Mr Dunwoody provided any of these documents he did so inadvertently and without intention to waive legal professional privilege. Mr Dunwoody's solicitors sent another letter in like terms on 31 March 2000.

14. In March 2002 Mr Dunwoody received a brief of evidence for the committal proceedings from the Commonwealth Director of Public Prosecutions and on 30 March and 20 April 2002 he wrote to his solicitors for advice on how to protect or claim privilege on documents in the brief of evidence and enquired whether he had any action against those who released privileged information without his consent.

15. At the committal proceedings in October 2002, Cleary & Hoare produced the category 2 documents to the court in answer to a summons. Mr Dunwoody claimed privilege and the documents were sealed, only to be opened if ordered by a judge at a pre-trial hearing. Mr Dunwoody had already produced eight of these documents to his trustee at the meeting on 5 November 1998 (the bulk of the category 1A documents).

Was Mr Dunwoody entitled to claim legal professional privilege in respect of any or all of the documents?

1. Does legal professional privilege remain with the bankrupt?

16. Confidential communications between a client and a legal advisor need not be given in evidence in civil or criminal cases by the client and need not otherwise be disclosed by the client; nor may they be disclosed or given in evidence by the lawyer without the client's consent. Privilege applies if the communications were made either to enable the client to obtain or the advisor to give legal advice or with reference to litigation that is actually taking place or within the contemplation of the client.^[4]  The entitlement to legal professional privilege can be expunged by statute but only by clear and express words or necessary implication: Baker v Campbell.^[5]  The rule derives from the theory that it is in the public interest that claims and disputes can be most justly and expeditiously handled by qualified and experienced experts, namely lawyers, who can only act effectively in their client's interest if they are fully and frankly advised of the facts by the parties they represent, for clients will be unlikely to speak candidly to their lawyers if the information they provide is not confidential.^[6]  At common law, communications between solicitor and client and documents produced in the course of those communications are subject to legal professional privilege where the communication was made or the document prepared for the dominant purpose of the provision of legal advice or legal services: Esso Australia Resources Ltd v Commissioner of Taxation of the Commonwealth of Australia.^[7]  Both the lawyer’s advice and the client’s instructions to the lawyer are privileged.^[8]

17. The respondent concedes that legal professional privilege is personal to and remains with the bankrupt and does not pass to the trustee in bankruptcy. But does the fact that the property of a bankrupt upon bankruptcy vests in the trustee^[9] have any effect on whether the privilege of a bankrupt transfers to the trustee in bankruptcy?^[10]  The question is an interesting one which does not seem to have been considered at appellate level in Australia. 

18. In England, authorities have long held that a bankrupt's lawyer could be examined and compelled to answer questions to the same extent that the bankrupt could be compelled to answer questions so that both solicitor and bankrupt can be compelled to answer questions of objective fact not within the privileged communication between lawyer and client: Re Chancellor^[11] and Re Elliott.^[12]  That proposition is uncontroversial.  It continues to be followed in England^[13] and has been followed in  Australia: see, for example, Re Wagner, a bankrupt.^[14]  More recently in England Goff J in In Re Konigsberg (A Bankrupt); ex parte Trustee of the Property of the Bankrupt v Konigsberg^[15] combined the Chancellor and Elliott principles with the concept that legal professional privilege relating to property vests in a successor in title,^[16] to hold that a bankrupt's entitlement to legal professional privilege vests in the trustee so that neither the bankrupt nor the bankrupt's solicitor can claim privilege under examination.

19. The New Zealand Law Society's Rules of Professional Conduct suggest that jurisdiction may follow the English position for they state that a practitioner who formerly acted for a bankrupt cannot claim privilege in respect of communications with the bankrupt because the privilege has passed to the assignee in bankruptcy unless the communication relates to the bankruptcy proceedings themselves.^[17]

20. The Canadian Supreme Court in R v McClure^[18] reaffirmed that solicitor and client privilege is an essential element of the judicial system that will be vigorously protected by the law and will not yield to any but the most exacting exceptions.  A solicitor in Canada can be compelled to disclose information about matters such as a bankrupt's affairs, transactions and whereabouts of property which do not require the disclosure of communications made to the solicitor for the purpose of receiving legal advice or assistance.^[19]  This approach is consistent with that of the early English authorities Re Chancellor and Re Elliott and in Australia in Re Wagner, a bankrupt.^[20] 

21. In the United States, whilst a liquidator has the right to waive the insolvent corporation's legal professional privilege, the Supreme Court has recognised that different considerations apply in cases of personal insolvency:

"When the corporation is solvent, the agent that controls the corporate attorney-client privilege is the corporation's management.  Under our holding today, this power passes to the trustee because the trustee's functions are more closely analogous to those of management outside of bankruptcy than other functions of the debtor's directors.  An individual, in contrast, can act for himself; there is no 'management' that controls a solvent individual's attorney-client privilege.  If control over that privilege passes to a trustee, it must be under some theory different from the one that we embrace in this case."^[21]

22. Some jurisdictions in the United States have held that legal professional privilege vests in the trustee upon bankruptcy.^[22]  In other jurisdictions legal professional privilege has been held to remain with the bankrupt.^[23]

23. In Australia, by way of analogy, legal professional privilege was found to be abrogated by an inspector's power under s 295(1) Companies (New South Wales) Code which required an officer of a corporation to produce books of the corporation in the officer's custody or control and to appear for examination: Corporate Affairs Commission of New South Wales v Yuill.^[24]  Under the Companies Code, unlike the Act, disclosed material could not be used in court proceedings^[25] and the right to privilege against self-incrimination was abrogated.^[26]  In Yuill the court was cognisant of the fact that the Code was drafted before the decision in Baker v Campbell, which made clear that legal professional privilege was not confined to judicial and quasi-judicial proceedings.^[27] 

24. Each case will turn on its facts and the terms of any relevant statute but a number of single judge decisions from the Federal Court support the respondent's concession that legal professional privilege in this case remains with Mr Dunwoody. Ryan J in Re Steele; ex parte Official Trustee in Bankruptcy v Clayton Utz (a firm)^[28] did not "regard the provisions of the Act which vest the property of the bankrupt in his trustee as … vesting the privilege itself in the Official Trustee."^[29]  Ryan J applied those observations in Bond v Tuohy^[30] to find that a s 77C notice under the Act does not abrogate the right to claim legal professional privilege.  Sheppard J reached a similar conclusion in Re Bond; ex parte Ramsay^[31] in relation to a bankrupt's obligation to follow directions under s 77 of the Act.  In Worrell v Woods,^[32] after a thorough review of the authorities, Finn J followed Steele and Bond v Tuohy and Re Bond which, his Honour noted, were philosophically consistent with the reasoning in Federal Commissioner of Taxation v Citibank Ltd;^[33] Perron Investments Pty Ltd v Deputy Commissioner of Taxation (WA)^[34] and Re Compass Airlines Pty Ltd.^[35]  Finn J observed that in none of those cases did the courts consider that maintenance of legal professional privilege would frustrate the purposes to be served by the statutory investigative power and concluded that a bankrupt is entitled to assert a claim of legal professional privilege.^[36]  Finn J's approach is also consistent with the observations of Gleeson CJ, Gaudron, Gummow and Hayne JJ in Daniels Corporation International Pty Ltd v ACCC^[37] where a notice to provide documents for inspection under s 155 Trade Practices Act 1974 (Cth) was found not to remove legal professional privilege.^[38]

25. Whether legal professional privilege remains with the bankrupt is perhaps not beyond doubt. Legal professional privilege is essentially a concept personal to the bankrupt,^[39] it is not property.  It can only be removed by statute where there are the clearest words or by necessary implication.  I am not inclined to take a view contrary to that currently taken by Federal Court judges experienced in the bankruptcy jurisdiction, especially in light of the respondent's concession.  Mr Dunwoody was not precluded from claiming legal professional privilege because of his bankruptcy.

2. The claim for privilege as to the category 1A documents

26. The category 1A documents are those provided by Mr Dunwoody to the trustee in bankruptcy at the meeting on 5 November 1998. They include eight items of correspondence between Mr Dunwoody and Cleary Hoare in May 1998 relating to restructuring his farming business by purchasing a new shelf company and creating a discretionary trust. These documents were not tendered at trial. Also included are a fax of 15 October 1998 from MurphySchmidt to Mr Dunwoody, (enclosing a notice of appeal and senior counsel's brief advice on prospects of appeal of 24 September 1998), agreeing with counsel's advice that there was little prospect of success on an appeal against liability and only marginal prospects of succeeding on an appeal against quantum so that the appeal could not be commercially justified. The letter was tendered at trial.^[40]

27. Mr Dunwoody contends that he did not knowingly or intentionally waive privilege in respect of these documents; he provided them only because the trustees convincingly told him that confidentiality did not apply in bankruptcy and his lawyers did not clearly advise him that he could claim privilege. He understood that if he did not hand over the documents he might be imprisoned. He produced some documents and not others as a compromise in what he perceived to be a threatening situation. In those circumstances he contends that advantage should not have been taken of his ignorance. He could not afford to bring a subsequent application in court to claim privilege. He claims that some time subsequently he marked with an asterisk those items on the list supplied by the trustee on 19 November which he believed may be privileged and sent this list to the trustee. It is unclear when he claims to have done this and he has not produced any covering letter to support his claim.

28. Mr Joiner, the accountant responsible to the trustees for the administration of Mr Dunwoody's estate, met with Mr Dunwoody on 5 November 1998 at Seaforth. He swears that he was unaware of any claim for legal professional privilege by Mr Dunwoody in respect of any of the documents Mr Dunwoody provided to him on that date. Mr Dunwoody refused, however, to provide a copy of the fax he sent to Cleary Hoare on 5 May 1998.

29. The prosecution at trial did not suggest the documents were not initially subject to legal professional privilege but contended that Mr Dunwoody waived privilege by providing the documents to the trustee. The learned primary judge agreed. His Honour noted that Mr Dunwoody was at least aware of his right to claim privilege by 7 December 1998 when he wrote to his trustee claiming privilege as to the Cleary Hoare fax of 5 May 1998 and his claim that he merely released documents because of his fear of being dealt with for breach of the Act did not sit with his refusal to produce a document at the meeting on 5 November 1998. During his public examination under the Act in March 2000 some of these documents were tendered without him making any claim of privilege. He made no clear claim of privilege in relation to these documents until the committal proceedings in October 2002. His Honour concluded that Mr Dunwoody’s conduct was therefore inconsistent with the maintenance of confidentiality normally attaching to communications between solicitor and client and he had waived privilege.

30. Legal professional privilege exists to protect confidential communications between solicitor and client. It may be waived by the client. Waiver necessitates conduct by Mr Dunwoody inconsistent with the maintenance of the solicitor/client confidentiality and may be express or implied. Waiver may be imputed if Mr Dunwoody's conduct was inconsistent with the maintenance of the privilege even if he did not intend to lose the privilege or had not turned his mind to the question of privilege at all: Mann v Carnell.^[41]

31. The notice under the Act served on Mr Dunwoody to provide books, including documents, warned that under s 267D of the Act the penalty for failing to comply with the notice without reasonable excuse is imprisonment for six months (my emphasis).  The notice did not mislead Mr Dunwoody about his entitlement to claim privilege; had he asserted a legitimate claim to privilege he would have had reasonable excuse not to provide the documents to his trustee.  His claim that the trustees tricked him into thinking that confidentiality did not apply in bankruptcy does not sit with the fact that he provided some documents to Mr Joiner but not others.  It may be that a waiver of privilege, once made, cannot be subsequently undone: TPC v Arnotts Ltd.^[42]  In any case, there is no plausible evidence that Mr Dunwoody  made any clear attempt to assert any claim or reclamation of privilege for, at least, many years.  The learned primary judge was right to find that Mr Dunwoody's conduct was inconsistent with the maintenance of the legal professional privilege and constituted a waiver of that privilege.  Mr Dunwoody's appeal so far as it concerns the category 1A documents must fail.

3. The claim for privilege as to the category 1B Documents

32. The category 1B documents concerning Mr Dunwoody's correspondence with Wallace & Wallace consisted of the following: their fax of 7 August 1998 to Mr Dunwoody advising him of the judge's decision in the Sherrys' case;^[43] a fax to him of 3 September 1998 advising him the Sherrys were not prepared to accept his proposal to stay judgment and that they require immediate full payment;^[44] a fax from Mr Dunwoody to them on 4 September 1998 to the effect that he has no money, not to offer the Sherrys any equipment, that it would take him 28 days to try to raise some money and he will do this if they withhold execution, that he could not pay the full amount in less than a year at best and to prepare to file a request for a stay of execution if the Sherrys try to execute the judgment;^[45] a fax of 4 September from them to Mr Dunwoody asking for further details, telling him any application for a stay of execution of judgment is unlikely to be successful and will result in a costs order against him and that they need further funds to proceed with any appeal;^[46] a fax from Mr Dunwoody to them proposing that he offer the Sherrys farm equipment conservatively worth $25,000 in partial satisfaction of the judgment, that he will approach a commercial lender for a $25,000 advance and thereafter make monthly payments of $3,000 with 5 per cent interest on the outstanding balance;^[47] a handwritten fax from Mr Dunwoody to them on 11 September 1998 instructing to file for a stay of execution (because severe weather conditions have affected his income and his cash reserves have been exhausted in the trial) and to drag out the stay of execution as long as possible by, for example, amending the application just before it is due and to use an excuse such as other business taking him out of town making it difficult for him to provide information;^[48] a fax from Mr Dunwoody to them of 14 September 1998 again instructing to urgently apply for a stay of execution and requesting a discussion on senior counsel’s advice on the prospects of the appeal;^[49] and a letter from them to Mr Dunwoody of 17 September 1998 discussing the issue of cost assessors in respect of the civil case, enclosing a trust account cheque for $6,665.05.^[50]

33. The category 1B documents also included the following documents from the files of MurphySchmidt: a letter dated 16 August 1998 from Mr Dunwoody to them with enclosure asking them to review the Sherry judgment and for advice on an appeal;^[51] a letter from Mr Dunwoody on 23 August 1998 to them asking for advice as to whether he had a claim against his insurer;^[52] a letter from them to Mr Dunwoody of 31 August 1998 stating that they have sought the advice of senior counsel as to prospects of an appeal and that the prospects of success in an action against his insurer were highly unlikely;^[53] a fax from Mr Dunwoody to them on 15 September 1998 requesting immediate assistance in filing for a stay of execution and requesting that the appeal be filed;^[54] a copy of a letter from Wallace & Wallace to Mr Dunwoody advising him that he has no prospect in succeeding in an application for a stay of execution of judgment, reminding him of the time limits in respect of his appeal and providing details as to costs;^[55] a copy of the opinion of senior counsel sent to Wallace & Wallace as to prospects in the Sherry appeal dated 11 September 1998 and faxed to MurphySchmidt on 15 September 1998;^[56] and a fax from Mr Dunwoody to them on 22 September 1998 advising them to file the appeal and that he wished to have the appeal take as long as possible to come to a hearing.^[57]

34. These documents were delivered by Mr Dunwoody’s solicitors to the trustees in bankruptcy in late October or early November 1998 after service on them of notices under the Act without any claim for legal professional privilege being made on his behalf and without any instructions from Mr Dunwoody to produce them.

35. The prosecution contended that Mr Dunwoody had also waived privilege as to the category 1B documents. The learned primary judge noted that Mr Dunwoody was aware that the trustee had possession of these documents from March 2000;^[58] because he made no clear claim of privilege until October 2002 he must be taken to have waived any legal professional privilege in respect of these documents. 

36. The documents were apparently capable of protection by legal professional privilege in that it is not suggested that they were not confidential communications between a client and a legal advisor for the dominant purpose of obtaining legal advice. The issue of waiver is less clear in respect of these documents than in the category 1A documents. Accepting that Mr Dunwoody was entitled to claim legal professional privilege in respect of these documents, his solicitors were wrong to release them to the trustee without Mr Dunwoody's express instructions. In doing so, they acted with his ostensible authority and waived privilege on his behalf: Great Atlantic Insurance Co v Home Insurance Co.^[59]  That, alone, may be sufficient to dispose of this ground of appeal but, in any case, the evidence of his subsequent conduct maintained rather than repudiated that waiver.

37. Some of the category 1B documents, (the fax of 7 August 1998 from Wallace & Wallace to him advising Mr Dunwoody of the Sherrys' judgment;^[60] reference to "offers by Mr Dunwoody to Mr & Mrs Sherry, by his solicitors to try and settle judgment" in early September 1998;^[61] and Mr Dunwoody's fax to Wallace & Wallace of 11 September stating that he had no money to pay the Sherrys and wanted to file for a stay of execution^[62]) were referred to in the trustee's report to creditors of 16 November 1998.  That report also referred to "Records obtained from Messrs S R Wallace & Wallace, the bankrupt's solicitors"^[63] and that notices had been served under the Act on Cleary Hoare and MurphySchmidt and the trustee had "made arrangements to inspect the files of the above firms of solicitors and to collect any of the bankrupt's books and records in their possession".   The trustee provided Mr Dunwoody and his solicitors, Bennett & Philp, with a copy of that report attached to a letter dated 19 November 1998. 

38. Mr Dunwoody's assertion that he was not aware that his solicitors had provided these documents to the trustee until he saw the prosecution's brief of evidence in March 2002 prior to committal seems unlikely in the light of the trustees' report to creditors and the letter of 19 November 1998 and attachments which included the category 1B documents. His claim to have written to the trustee claiming privilege in respect of some of those items is not supported by a copy of a covering letter.

39. Mr Dunwoody at the s 81 examination in March 2000 through his solicitor claimed privilege as to the fax from him to Ebsworth & Ebsworth (MurphySchmidt) of 15 September 1998,^[64] which enclosed senior counsel's extensive opinion of 11 September as to his prospects on appeal.^[65]

40. The day after the s 81 examination Mr Dunwoody's solicitors wrote to the trustee's solicitors in these terms:

"Our client is concerned that your client seems to have access to Solicitors files relating to his own personal matters.  In particular, our client instructs us that the former trustees attended and seized various documents from him at the commencement of the bankruptcy.  Possibly those documents taken by the former trustees included copies of correspondence with his Solicitors.

… If our client did provide any of this material to the former trustees, then he instructs us that it was done inadvertently and without any intention on his part to waive legal professional privilege."

41. The trustee had a particular interest in senior counsel's legal opinion as to Mr Dunwoody's prospects of success on an appeal so that he could decide whether to continue the appeal in the interests of the creditors.^[66]  Mr Dunwoody gave the trustee a copy of senior counsel's brief opinion of 24 September 1998 at the meeting on 5 November^[67] and this is included in the category 1A documents.   The report to creditors specifically referred to that brief advice from counsel which indicated that an appeal might not be successful or commercially justified.^[68]  It was included in the list of documents in the trustee's possession provided by the trustee to Mr Dunwoody on 19 November 1998.  There is no cogent evidence that he asserted any claim to privilege in respect of any documents until the s 81 examination.  His failure to do so was conduct inconsistent with the maintenance or, if possible, reclamation of the solicitor-client confidentiality.  The learned primary judge was right to consider that Mr Dunwoody had waived privilege as to the fax of 15 September 1998.^[69]  As to the remaining documents, the learned primary judge rightly observed that there was no cogent evidence that Mr Dunwoody made a clear claim of legal professional privilege to his trustee or to the prosecuting authorities until the committal proceedings in October 2002.  In the light of the disclosures made by the trustee to Mr Dunwoody in November 1998, the failure of Mr Dunwoody to make any such claim until October 2002 is inconsistent with a desire to maintain or, if able, to reclaim, that confidentiality.  The learned primary judge was also right in finding that Mr Dunwoody had waived the privilege as to the remaining category 1B documents.  The appeal insofar as it concerns the category 1B documents also fails.

4. The claim for privilege as to the category 2 documents

42. Mr Dunwoody’s former solicitors, Cleary Hoare, made a clear claim of legal professional privilege on Mr Dunwoody's behalf on 5 February 1999 as to the category 2 documents, (their file concerning the restructuring of Mr Dunwoody's cane-farming business).

43. Mr Dunwoody had already given copies of eight of those documents to his trustee on 5 November 1998 (the bulk of the category 1A documents), so that he had then waived privilege at least as to those eight documents.

44. The learned primary judge inspected the category 2 documents and found that in April and May 1998 Mr Dunwoody was seeking to restructure his affairs to protect his assets from the consequences of the pending lawsuit which in May 1998 was part heard. His Honour held that the category 2 documents were not privileged because they were intended to further a criminal purpose.

45. Like the primary judge, I too have inspected the documents or at least a copy of them. Only two documents were arguably capable of displacing the solicitor client privilege by apparently demonstrating that Mr Dunwoody was seeking legal advice to further an unlawful purpose. The first was a file note of 20 April 1998 of a meeting between solicitor Mr Stephen Fox, Mr Dunwoody and Mr Paul Hocking, an insurance agent. The file note, which seems to have been prepared by Mr Hocking, and sent to Mr Fox, is in these terms:

"1Stephen and I had an appointment with Ernest this afternoon.  He wanted advice on the following.

1.1Purchase assets and correct ownership.

1.2Bringing Jason into the property as a nephew, not to purchase now, maybe later on down the track.

1.3Regarding his Will.

1.4He has a partnership with a gentleman by the name of David Collier; the value of that property is $750,000 with a $400,000 debt.  There is no life cover involved in that.  They should have some life cover and buy/sell agreement.

1.4.1Ernest intends to buy out the partnership in 2 years time.

1.5He could go into bankruptcy due [to] a lawsuit and he needs to try and protect his assets.

1.6Transfer the crop into a Trust, but he has $240,000 of tax losses at present.

2.Can you please look at some Life Cover for Ernest Dunwoody?

  2.1Date of birth – 11/06/43, doesn't smoke, for somewhere between $600,000 and $1 000 000."   [my emphasis]

46. The second was a file note of 17 November 1998 which records a telephone conversation between Mr Dunwoody and Mr Fox on 16 November 1998 in which Mr Fox advised him that he had received a notice from the trustee in bankruptcy requiring production of paperwork. Mr Fox told the trustee that his preliminary view was that some of the material would be privileged and it was a decision for Mr Dunwoody whether he should produce the file. Mr Dunwoody told him to speak to his solicitor in the bankruptcy, Mr Tony Bennett, and that Mr Fox was free to disclose anything to and speak candidly with Mr Bennett. Mr Fox then rang Mr Bennett and told him that Mr Dunwoody wanted him to act in accordance with Mr Bennett’s wishes. In answer to Mr Bennett's inquiry he explained that he had advised Mr Dunwoody to move his crop to a discretionary trust and for him then to re-lease the farm to the discretionary trust. Mr Bennett asked about Mr Dunwoody’s motivation and Mr Fox said, "there were a number of factors … including tax planning (the restructure was not unusual) and in one form or another, asset protection, particularly in view of the forthcoming court case.  [He] explained to [Mr Bennett] that [he] wasn’t sure what was the dominant purpose" [my emphasis].   Mr Bennett asked Mr Fox to tell the trustee that he would comply with the s 77A of the Act notice as far as the law required.  Mr Bennett mentioned privilege but commented that it "was not his baby".

47. The learned primary judge's ruling that the category 2 documents were not privileged was given the day before the empanelment of the jury and the commencement of the trial. The prosecutor and his instructors were then given access to the documents. Mr Dunwoody’s counsel requested that if the prosecutor proposed to rely on any category 2 documents she required witness statements from those through whom he proposed to tender the documents as soon as possible. Later in the trial she enquired of the respondent’s solicitor whether the prosecution intended to call Mr Stephen Fox, the solicitor from Cleary Hoare who created most of the file documents. The respondent's solicitor said she was still unsure. Later, well prior to the close of the prosecution case, prosecuting counsel informed Mr Dunwoody’s counsel that he did not propose to tender the category 2 documents through anyone. Counsel did not discuss whether the prosecution would use the documents in cross-examination if Mr Dunwoody were to give evidence.

48. In the course of the trial Mr Dunwoody’s counsel advised him of his right to either give and, or alternatively, call evidence or to remain silent. In the course of a detailed discussion of those options, she advised him that he would be likely to be cross-examined at length about many issues including the documents that had been tendered in the prosecution case. She could not recall whether she advised him that he could be cross-examined on the category 2 documents which the prosecution had not tendered.

49. Counsel for the respondent in this appeal was also the prosecutor at trial. He has frankly stated that after he examined the category 2 documents he had some misgivings about their admissibility and decided not to rely upon them. My own observation is that the documents could not have simply been tendered as evidence. They could only have been of use to the prosecution if Mr Fox or Mr Hocking gave evidence that Mr Dunwoody made the emphasised statements.^[70]  It seems that neither Mr Fox nor Mr Hocking provided the prosecution with such a statement.  Even had they, that evidence was not as compelling as the other evidence in the prosecution case.  The respondent nevertheless supports the primary judge's ruling giving him access to the category 2 documents.

50. The rule of privileged communication between lawyer and client does not apply to communications as to advice intended to assist the client in the commission of a crime or fraud,^[71] even if the legal advisor is ignorant of the purpose for which the advice is wanted.^[72]  The onus is on the party seeking to displace the privilege to demonstrate some prima facie evidence of fraud, crime or illegal purpose; a mere allegation is insufficient.  In Varawa v Howard Smith & Co Ltd^[73]  the High Court held communications between a solicitor and a client, later sued for malicious arrest and abuse of process, were privileged because the communication between the client and solicitor was not shown to have been made in the furtherance of an illegal object.^[74] 

51. The High Court considered these principles more recently in Attorney-General (NT) v Kearney.^[75] There, solicitor/client communications ceased to be privileged once it was prima facie established that their communications came into being as part of a scheme to defeat the claims of others.  Gibbs CJ, with whom Mason and Brennan JJ agreed on this point, found that whilst the public interest benefit from legal professional privilege is to secure the better administration of justice, this is not furthered by protecting communications to deliberately abuse statutory powers and to prevent others from exercising their rights under the law, for this would shake public confidence in the legal system. 

52. The application of these established principles will vary with the facts of each case and sometimes, as here, the boundary line beyond which the administration of justice is harmed will not be well defined. Clients, aware only of a general possibility that someone, someday, might sue them, are entitled to seek advice to lawfully organise their financial affairs to protect their assets without detracting from the administration of justice. Such a request on its own does not demonstrate an abuse of statutory power, an illegal purpose, fraud, crime or dishonesty justifying the setting aside of legal professional privilege. The two file notes set out earlier^[76] state that Mr Dunwoody had told Mr Fox that the restructure on which he sought advice was, in part, to assist him to protect his assets from any future judgment which might be entered against him in the Sherrys' court case.  They show that he also said he wished to restructure his affairs for tax and estate planning.  In April 1998 when Mr Dunwoody sought that advice, there was a real possibility that he could lose the part-heard lengthy court case brought by the Sherrys in which they sought from him damages of $100,000 each and costs.  The Sherrys did not then have a judgment in their favour but they had a real chance of obtaining such a judgment.  Their subsequent success means that in April 1998 they had a part-heard rightful, although contested, claim against Mr Dunwoody; they were arguably his contingent creditors: cf Community Development Pty Ltd v Engwirda Construction Co.^[77]  Section 266(3) of the Act under which Mr Dunwoody was charged makes it an offence for someone who has become a bankrupt, within 12 months before the presentation of the petition^[78] to dispose of any property^[79] with intent to defraud creditors.  In determining whether privilege has been lost because the legal advice was being obtained for a dishonest or criminal purpose, the court is not limited to considering the facts at the time of the lawyer/client communication in a vacuum.  It is entitled to consider subsequent relevant facts.  The Sherrys won their case against him on 7 August 1998.  By the end of September 1998 Mr Dunwoody had disposed of all his substantial assets and a few days later he declared himself bankrupt.  The Sherrys, whom he greatly disliked, have never been paid.  Mr Dunwoody's statements recorded in the file note of 20 April 1998 strongly suggest that one purpose of the restructure was to defeat the administration of justice by depriving the Sherrys of any fruits of their action against him, a suggestion strengthened by later events. The file notes, when combined with the other facts now known to the court, supported an essential element of the offence under s 266(3) of the Act, namely that he intended to defraud the Sherrys when he disposed of his property between 25 and 30 September 1998.  Public confidence in the administration of justice warranted the lifting of the privilege. 

53. The learned primary judge was right to conclude that legal professional privilege was waived in respect of the category 2 documents. The ground of appeal as to the category 2 documents also fails.

Did the prosecution effectively split its case in its cross-examination of Mr Dunwoody?

54. As I have noted, the prosecution did not tender or rely on the category 2 documents in its case and nor did it call Mr Fox or Mr Hocking to give evidence of any statements made by Mr Dunwoody as to his intention in planning to restructure his assets.

55. Mr Dunwoody gave evidence in his case. In his evidence-in-chief he referred to his dealings with Cleary Hoare. In about 1992 he heard a solicitor from that firm speak at seminars about farm planning and in the latter part of 1997 he visited Cleary Hoare to discuss long term financial planning so that he could bring his nephew into the farming business, to plan for his retirement through superannuation in a way which was tax effective and to legitimately distribute funds to other members of his family to repay them for the help they had given him in the past. Cleary Hoare prepared a proposal which ultimately he did not accept because he found it too complex and confusing. He did not give evidence of having any intention to protect his assets in case he became bankrupt due to a law suit or court case.

56. In cross-examination, the prosecutor reminded Mr Dunwoody that the Sherrys' civil action against him commenced on 7 and 8 October 1997 and was then adjourned until 5 May 1998. He asked him about his visit to Cleary Hoare:

"You gave evidence that you saw a number of people from Cleary Hoare.   Is that correct? --Yes.

On the 20th of April 1998 you arranged a meeting with a solicitor from Cleary Hoare and a financial planner at – in Mackay, didn't you? --I've seen that – I've seen a document about that ------

No, don't worry about that? --  ------ but I have no memory of that.

Just answer the question? -- I have no recollection of that meeting.

You have no recollection? -- No, sir.

Do you know a Paul Hocking? -- I know a Paul Hocking, yes.

Who is he? -- He's a – I think he's a principal with Paul Hocking and Associates or – it's a financial planning firm, anyway.

All right.  So he's a financial planner, isn't he? -- He's an insurance agent, sir.

And Stephen Fox is a solicitor or was a solicitor with the firm, Cleary Hoare, wasn't he? -- Yes.

You had a meeting with Stephen Fox and Mr Hocking on the 20th of  April 1998.  Didn't you? -- I've seen a memo to that effect.  I have no knowledge of meeting with those men together.

Do you have any recollection of meeting with Stephen Fox by himself then? -- I met with Stephen Fox once in Brisbane and at least two times at the Ocean International in Mackay.

Now, you've told us that you met with certain people from Cleary Hoare to outline your requirements.  Is that right? -- Yes.

Your evidence yesterday was the purpose was to explore putting into operation the seminars that you'd attended.  Is that right? -- That's correct.

You had attended Cleary Hoare seminars, hadn't you? -- They had been participants in seminars organised by other parties.

And you wanted to hold the properties, your cane farm, in trust for your nephew.  That was one of the purposes, wasn't it? -- One of the purposes, yes.

And there was also another purpose to set up retirement planning, wasn't it? -- Correct.

And to have a vehicle to distribute funds back to other family members who had assisted you over the years.  Is that correct? -- Correct.

What you also told Stephen Fox was that you could go into bankruptcy because of a law suit and you needed to try and protect your assets? - No, I didn't.

You said that, Mr ---? -- Not at that time.

Not at that time, but you said that to Stephen Fox? -- Not at that time or any times. Sorry, you caught me on the terminology there. Not at that time or any time.

All right. What I'm suggesting to you squarely is that on the 20th of April 1998 you met with Stephen Fox and Paul Hocking and you had a conversation with them about restructuring. You told the jury three of the purposes, but you left out one other purpose that you talked to them about, and that purpose was that you could go into bankruptcy due to a law suit and that you needed to try and protect your assets? ­-- Two responses.  One, I have absolutely no recollection of that meeting. I do not know where it might have taken place or I have no visualisation of the two parties at any location meeting with them. Number 2, I did - I felt conclusively that I would win that case.

You don't recall it, but you don't deny it. Is that the case? -- I'm not sure what the difference is. I have absolutely no recollection of that at all.

You don't recall it, but you don't deny it could have happened. You could have said it? -- I would have to go on the side of denying it because I simply expanded the farm a lot subsequently then and I wouldn't have done that had I been concerned about losing the Court case, would I? I mean, it just goes logically.

On the 20th of April 1998 the case was part heard, was it not? -- Please remind of the dates. There was a second part of the case. Part of it was in 1997, part in 1998 and I don't know whether it was in May or - March or May that the second part occurred. …

…

"I need to do something about protecting my assets because I could go bankrupt because of this law suit" Do you remember it now? --No, I do not.  No.

Do you have some recollection of -----? -- No. None at all. I met with ------­

You were told though - you recall though, the other purposes you discussed with Stephen Fox, don't you? -- That - that was at a discussion in Brisbane. I have said before that I - my first recollection of taking - of implementing their recommendations was that I visited them in their offices which is somewhere on Eagle Street in Brisbane along the river there - that is my first meeting with them and I believe that was in 1997. I have no recollection of meeting with Mr Fox or Mr Hocking together or individually at the time you're saying in Mackay.

…

You said you'd seen a file note, is that correct? -- Yes, I have.

Have you read a file note? -- I was shown the file note.

Of a conversation between yourself and Mr Fox, is that right? -- I was shown it two or three nights ago.

I see? - Your - your side gave us a copy."^[80]

57. The Court has been told that there was little subsequent mention of the file note during the trial. Counsel's addresses have not been transcribed. My associate has listened to the available tape recordings of those addresses. Part of the tape recording of defence counsel's address was damaged but it does not seem to have referred to the file note. The prosecutor, who addressed after defence counsel, made only the following observations about the file note to the jury:

"The third matter that you might like to consider is the whole timing of this transaction.  There's such a coincidence of time in terms of the judgment being handed down and when [Mr Dunwoody] goes and sees Mr Hickman that it is in itself a good indication of his intention.  The judgment's handed down on the 7th of August, and when does he see Mr Hickman – he sees Mr Hickman on the 14th of August, seven days later. 

Even before that, when was he seeing Cleary Hoare?  He was seeing Cleary Hoare at or about the time that the trial was still going on in May 1998.  You heard me put certain propositions to Mr Dunwoody in cross-examination as to what was said to the solicitors from Cleary Hoare.  He did not accept those propositions.  His memory of the conversations that he had with Cleary Hoare were quite different to what I put to him."

58. The judge made no reference to the file note in his summing-up to the jury and nor did he give the usual general direction that matters put to a witness but not accepted are not evidence.

59. It is well established that the prosecution must offer all its proof before an accused person is called upon to make their defence; it must not split its case and it may only call rebuttal evidence with leave of the judge and in exceptional circumstances. That principle was recently reaffirmed by Gleeson CJ, Gummow, Kirby and Hayne JJ in R v Soma,^[81] by this Court in R v Goode^[82] and very recently by Roberts-Smith J in R v Oates.^[83]    Here the prosecution had access to the category 2 documents, some of which suggested that Mr Dunwoody had told Mr Fox and Mr Hocking that he wanted to restructure his affairs in part to try and protect his assets because he could go into bankruptcy due to a law suit.  It chose not to call Mr Fox or Mr Hocking to give this evidence in its case.  If it wished to rely on Mr Dunwoody's statements to Mr Fox and Mr Hocking, the prosecution was bound to call that evidence before Mr Dunwoody was obliged to decide whether he would give or call evidence: Soma.^[84] 

60. Mr Dunwoody gave general evidence of his dealings with Cleary Hoare but did not refer to a meeting on 20 April 1998. The prosecution first introduced the subject of Mr Dunwoody's meeting at Cleary Hoare recorded in the memorandum of 20 April 1998 in its cross-examination of him. Mr Dunwoody, not the prosecutor, then raised for the first time the actual memorandum during this cross-examination but he denied the meeting recorded in it. The prosecutor next cross-examined Mr Dunwoody, apparently by reference to the memorandum, asking if he remembered telling Stephen Fox that he wanted to protect his assets because he could go bankrupt because of a law suit. The prosecutor then referred to the actual file note of a conversation between Mr Fox and Mr Dunwoody but did not quote directly from it. The cross-examination implied that a Cleary Hoare file note recorded a conversation between Mr Fox and Mr Dunwoody in which Mr Dunwoody said that one of the purposes for the restructure was because he could go into bankruptcy because of the law suit and needed to try to protect his assets, but Mr Dunwoody denied this. Unlike in Soma, no part of the file note was directly read to Mr Dunwoody and nor did the prosecutor attempt to tender it in evidence as a prior inconsistent statement. 

61. It is a finely balanced decision as to whether, on the facts here, the prosecution split its case. It certainly illustrates the great care to be taken by prosecutors when cross-examining on material not led in the prosecution case. The prosecution was entitled to explore in cross-examination whether one reason for Mr Dunwoody's interest in having Cleary Hoare restructure his financial affairs was to protect his assets because he could go into bankruptcy; this had always been the prosecution case. Such cross-examination without more was unobjectionable and did not amount to splitting the prosecution case: see R v Chin.^[85]  The prosecutor did not quote verbatim from the file note; nor did he attempt to tender it in evidence.  Because Mr Dunwoody had seen the file note of 20 April 1998, it was plain to him that the prosecutor was cross-examining him from that file note but this may not necessarily have been so obvious to the jury.  As there was no objection to the cross-examination the learned primary judge was not asked to rule on its fairness and admissibility.  In any event, because Mr Dunwoody denied the conversation put by the prosecutor, there was no evidence to support the notation in the file note and so no evidence adduced by the prosecution in cross-examination on an issue which should have been led in chief.  In the subsequent address to the jury, the prosecutor did not assert that Mr Dunwoody accepted the facts recorded in the file note nor the proposition he put to Mr Dunwoody in cross-examination.  For that reason, the prosecutor's cross-examination on this issue could not have amounted to the splitting of its case.

62. Nevertheless, there remains an aspect of concern. The learned primary judge was not asked to and did not direct the jury, either generally or specifically, that Mr Dunwoody's rejection of the prosecutor's suggestion, that Mr Dunwoody visited Cleary Hoare on 20 April 1998 intending to restructure his financial affairs because he could go bankrupt and wanted to protect his assets, meant that there was no evidence that Mr Dunwoody said these things to anyone at Cleary Hoare: see Queensland Supreme and District Courts Benchbook – Summing up - General p 2, fn 6 (No 24.2).    There is therefore a danger that the jury may have placed some weight on the suggestions made in cross-examination but rejected by Mr Dunwoody when they were not evidence.

63. Mr Dunwoody has not contended that this constitutes an appealable error of law but I am satisfied that in this case there has been no substantial miscarriage of justice^[86] for the following reasons.

Has there been no substantial miscarriage of justice within s 668E(1A) Criminal Code despite the omitted jury direction?

64. In deciding whether there has been no substantial miscarriage of justice within s 668E(1A) Criminal Code, it is necessary to review the evidence.

1. The prosecution evidence

65. The prosecution established that Mr Dunwoody had a great dislike for the Sherrys who won their civil action against him on 7 August 1998. He disposed of his substantial assets, the sugar cane properties, about seven weeks later on 25 September 1998. He received $367,000 from the sale of those properties, more than sufficient to pay his debt to the Sherrys. They have been paid nothing. When he saw his accountant, Mr Hickman, on 14 August 1998 he did not tell him that the judge had found he must pay the Sherrys $70,000 plus interest and the costs of the lengthy trial. Mr Hickman did not learn of this until 4 September 1998. Mr Dunwoody wrote to Mr Hickman on 24 August 1998 enquiring about the viability of Mr Dunwoody's position as trustee if he were declared bankrupt and whether his mother should be removed as a director of a holding company and replaced by "someone overseas". The prosecution suggested that this showed he was contemplating bankruptcy. A few days after selling his properties, Mr Dunwoody directed that the money he received from the sales be transferred outside the jurisdiction. Mr Hickman said that the restructure he suggested and implemented for Mr Dunwoody was regular.

66. The correspondence between Mr Dunwoody and his solicitors Wallace & Wallace and MurphySchmidt made clear that he then knew he was obliged to pay the Sherrys and that he had little prospect of success on appeal. Mr Dunwoody entered into bankruptcy on his own petition on 9 October 1998. At about that time Mr Sheedy, a city councillor and director of Mackay Sugar spoke to an "uptight and angry" Mr Dunwoody who said:

"I'm finished. I've bankrupted myself today. I'm returning to America. You can't get a fair go in Australia. The Sherrys won't get their money and a female judge has done this to me."

67. During the restructure, Mr Dunwoody sought finance from Westpac's Mr O'Driscoll on behalf of Chelmscliffe to purchase the sugar cane properties. Mr O'Driscoll clearly recalled that Mr Dunwoody said he had won the case the Sherrys brought against him.

68. Mr Collier jointly owned with Mr Dunwoody one of the sugar cane properties the subject of the first count. He gave evidence that Mr Dunwoody told him in late 1998 that the Sherrys had won a court case against him and he had to pay them about $80,000 plus costs but he was not going to pay them a cent; the only way he could get out of paying them was to sell the properties; he asked Mr Collier to sell his share of the property to Chelmscliffe. Mr Collier said Mr Dunwoody told him:

"It was an arm's length sale and it would lock everything away and stop the Sherrys and solicitors getting anything. … Everything would still be the same, nothing would change. He'd still be running it. It'd just be transferred to another name. ... He organised, he gave the orders, he did everything. ... He was going to file for bankruptcy. ... Westpac would pay out QIDC and Westpac would take over the debt under the name of Chelmscliffe. [H]e had three cheques, he told me … One for his mother, one for his brother and one for me.  And he told me he wanted a loan of mine back for a couple of weeks. He was going to send it to Vanuatu, roll it over, and it'd come back in good, clean money and I could have it back to do whatever I wanted with it."

69. Mr Dunwoody also asked if his correspondence with the Insolvency Trustee Service of Australia ("ITSA") could be sent to Mr Collier's address so that neither the Sherrys nor the shopkeeper at Seaforth would see any correspondence concerning bankruptcy. A letter from ITSA to Mr Dunwoody was delivered to Mr Collier, who gave it to Mr Dunwoody. Mr Dunwoody described Mr Hickman as "a wizard in bankruptcy" and said that Mr Hickman organised the transfer of the money to Vanuatu and how to get around things during bankruptcy. Mr Collier agreed to allow Mr Dunwoody to hide in his shed in an industrial area because people were trying to serve papers on him; the shed had phone lines and Mr Dunwoody brought his own fax, computer and electrical equipment and also hid his car there. Mr Collier agreed that in 1999 he was to purchase some property on trust for the Seaforth Property Trust associated with Mr Dunwoody's interests but he did not set up the agreed trust structure when he purchased the property.

70. His Honour warned the jury of the need to take special care when considering Mr Collier's evidence because on his account he assisted Mr Dunwoody in fraudulently avoiding service of documents and following a transaction in late 1999, there was ill-feeling between Mr Collier and Mr Dunwoody. The jury needed to consider whether Mr Collier had made up a story falsely incriminating Mr Dunwoody.

71. The prosecution suggested that the correspondence between Mr Dunwoody and Wallace & Wallace^[87] as to the execution of the Sherry's judgment showed that he had good reason to hide out in Mr Collier's shed, to avoid paying their judgment.

2. The defence evidence

72. Mr Dunwoody gave evidence. He has an Honours degree in agricultural science and a Master of Science in toxicology. He has worked in the United States as an energy conservation and environmental scientist. He returned to Australia in April 1986 to help his parents with their sugar cane farm in Seaforth near Mackay. He has won Landcare awards for his cane-farming. He developed a soil and water quality testing business for agricultural purposes from about 1995. He expanded the family cane farm by borrowing money and purchasing neighbouring and nearby properties, including some property from the Sherrys. His relationship with the Sherrys later deteriorated and they brought a successful court case against him. He expected to win that case and strongly disagrees with the judge's decision.

73. He had long intended to restructure his affairs for tax, superannuation and estate planning and did not restructure intending to defraud the Sherrys. He contested the truthfulness of Mr Collier's incriminating evidence. He denied telling Mr Collier that he intended by fraudulent means to ensure that the Sherrys were not paid. He stayed in Mr Collier's shed because he needed a quiet area to prepare his detailed reasons for appealing against the Sherry judgment, not to hide out or to avoid service of documents. After the sale of Mr Collier's interest in the jointly owned property to Chelmscliffe, Mr Collier was paid for his contribution to the partnership but he lent that money to Chelmscliffe in return for a second mortgage over the property as security. In December 1999, he and Mr Collier had agreed that a company of which Mr Collier was a director was to purchase property as trustee for the Seaforth Property Trust, an entity controlled by Mr Hickman and members of the Dunwoody family, but instead Mr Collier's company purchased the property outright.

74. He contacted Mr Hickman who handled the affairs of his brother, Ken Dunwoody. He understood Mr Hickman was a financial advisor, not an expert in bankruptcy. Mr Hickman suggested that the farms should be sold to a trustee company, Chelmscliffe, of which Mr Dunwoody would be a beneficiary and Mr Hickman a director. Mr Dunwoody would work for the trustee company which, as employer, would make tax effective distributions to Mr Dunwoody's superannuation scheme. Mr Dunwoody was anxious to ensure his assets were protected from his brother Ken's former wife. Mr Hickman also advised him to keep his farm assets separate from his soil testing business in case of litigation arising out of the business. Mr Dunwoody intended that Chelmscliffe would pay all his creditors, including the Sherrys, from future cane farming profits. His enquiries of Mr Hickman about the effect of bankruptcy were because Mr Dunwoody's brother, Ken, had once been under Part X of the Act and Mr Collier was concerned that he could be bankrupted because of a claim against him arising out of a fatality in the workplace; Mr Collier and Ken Dunwoody were potential trustees under the Hickman scheme. He enquired about removing his mother as a director of the company because she was elderly and he thought he may replace her with a long-term friend, (later fiancée), who was a US citizen.

75. On 1 October 1998 Mr Hickman told him that the Sherrys had obtained a Mareva injunction against Chelmscliffe's assets. Mr Hickman described the Sherrys' conduct as very aggressive and that they were driving Mr Dunwoody to bankruptcy. Mr Dunwoody prepared a list of creditors and a statement of affairs which he discussed with Mr Hickman, Mr Joiner and Mr Bennett. They advised him to declare bankruptcy. The Mareva injunction and an unexpected early wet season meant that Chelmscliffe did not make its anticipated profits from cane farming and was unable to repay the Sherrys.

76. Mr Dunwoody denied telling Mr O'Driscoll he won the court case brought by the Sherrys. He asked him for a Westpac loan to repay the judgment debt which Mr O'Driscoll refused in line with Westpac policy.

77. Mr Dunwoody also denied the accuracy of Mr Sheedy's account of their conversation which he said was in these terms:

"I said I was pissed, that I felt that I didn't get a fair go in the hearing, that Judge Wolfe got it wrong, and that I reiterated my desire to return to America... I don't have anything now. [The Sherrys]'ll have to get it out of the trustees."

78. The defence case was that Mr Dunwoody's evidence should be accepted or at least throw doubt on the prosecution case. Mr Hickman's evidence in the prosecution case was that Vanuatu was a sound place in which to invest and to purchase an annuity and that such a transaction was not unusual. Mr Dunwoody made offers of part payment over time to the Sherrys and this is inconsistent with an intention to defraud them. Mr Dunwoody, through Mr Hickman and his solicitors, was setting up a commercially sensible restructure of his affairs; had things gone to plan Chelmscliffe could have repaid the Sherrys; the prosecution had not established beyond reasonable doubt that the only rational inference from the evidence was that Mr Dunwoody intended to defraud the Sherrys.

3. Conclusion

79. In context, the absence of any judicial direction as to the use to be made of the prosecutor's cross-examination of Mr Dunwoody about his meeting with Cleary Hoare recorded in the file note of 20 April 1998 was of very small moment. It was not a matter of significance in the defence or prosecution address and was not highlighted in the judge's summing-up.

80. The case against Mr Dunwoody on the admissible evidence was overwhelming. Some of his statements to his solicitors Wallace & Wallace^[88] and MurphySchmidt^[89] suggest he intended to delay or avoid paying the Sherrys and was prepared to abuse court processes to effect that intention.  He received money from the sale of the properties with which he could have repaid the Sherrys on about 25 September 1998 but they have never received any payments.  He transferred his only substantial assets outside the jurisdiction days before declaring himself bankrupt.  His comments to Mr Sheedy supported an intention to defraud the Sherrys.  Mr Dunwoody's claim that Chelmscliffe was to repay the Sherrys' debt was implausible: it had no legal obligation to the Sherrys and it has not made any part payment to them.  In the light of the other prosecution evidence, much of Mr Collier's evidence was plausible.  I am satisfied that even had the judge directed the jury that there was no evidence that Mr Dunwoody told anybody at Cleary Hoare that one purpose of the restructure he desired was because he feared he may go bankrupt and wished to protect his assets, a verdict of guilty would have been returned because of the other compelling evidence against him.  There has been no substantial miscarriage of justice arising out of the unfortunate omission of this judicial direction because the jury would inevitably have convicted. 

81. It follows that if I am wrong as to whether the prosecution split its case and, or alternatively, the admissibility of the category 2 documents, I would, in any case, for the reasons set out above, dismiss the appeal under s 668E(1A) Criminal Code because there has been no substantial miscarriage of justice.

82. The appeal against conviction should be dismissed.

83. McPHERSON JA:  The appellant in this appeal against conviction was originally the defendant in a civil action in the District Court for damages for nuisance and related causes of action brought by Mr and Mrs Sherry, who were his neighbours in a cane farming area of the Mackay district.  In those proceedings, they were successful in recovering judgment, which was given on 7 August 1998, for $70,000 with costs. At that stage therefore they became his creditors in that sum, of which they have in fact never received payment of even a cent. On 25 September 1998 the appellant transferred his farming property in completion of a written contract dated 18 September 1998 for the sale of that property. The proceeds of sale in the amount of $367,346.56 received on settlement were transferred in trust to Vanuatu at some date between 25 and 30 September 1998. On 9 October 1998, the appellant became bankrupt by presenting his own petition under the Bankruptcy Act 1966 (Cth).

84. On 12 February 2003 the appellant was indicted, and after a trial lasting some nine days, convicted in the District Court at Mackay of two counts of contravening s 266(3) of the Bankruptcy Act. That provision is in the following terms:

“(3)A person who has become a bankrupt after the commencement of this Act and, within 12 months before the presentation of the petition on which, or by virtue of the presentation of which, he or she became a bankrupt and after the commencement of this Act, has disposed of, or created a charge on, any property with intent to defraud his or her creditors is guilty of an offence and is punishable, upon conviction, by imprisonment for a period not exceeding 3 years.”

85. The two counts on which he was convicted related respectively to (1) the disposal of the farm property itself, which was alleged and proved to have been the subject of the agreement for sale dated 18 September 1998, as varied by an amending deed dated 22 September 1998; and (2) the disposal of the proceeds of sale of $367,346.56 by their transfer in trust to Vanuatu. The trust was designed to provide the applicant with a retirement income or superannuation benefits. Both dispositions did, of course, take place within 12 months before the appellant presented the petition on which he became bankrupt on 9 October 1998. All that remained for the prosecution to prove under s 266(3) therefore was that the appellant had made those two dispositions of his property with the intention of defrauding his creditors including, as they were by then, Mr and Mrs Sherry.

86. If nothing more had appeared than the bare facts I have recited, it would have been remarkable if the jury had not drawn the inference that in selling and transferring his farm property after the judgment was given the appellant was intending to defraud his creditors and in particular Mr and Mrs Sherry. But there was more. The trial had commenced in 1997, but had been adjourned after two days hearing before being resumed on 7 May 1998. In April 1998, shortly before its resumption, the appellant consulted Cleary Hoare, solicitors, for advice about restructuring his farming assets and activities. A week after the judgment was given against him the appellant approached Mr Hickman, an accountant and financial consultant, about his affairs and assets. He also engaged solicitors to advise him on the prospect of a successful appeal. They in turn briefed counsel who had appeared for the applicant at the civil trial. An appeal was in fact instituted but it was not proceeded with. Long before it would have been heard, the money had been transmitted outside the jurisdiction.

87. The civil action had been bitterly contested and, coupled with statements to others that were proved at the trial to have been made by the appellant such as that Mr and Mrs Sherry would not get a cent from him, it would have been perverse of the jury in the criminal proceedings not to have drawn the inference of intention required under s 226(3). However, at his trial for the offences, the appellant gave evidence to the effect that he had long had thoughts of restructuring his assets, and it was that consideration, and not any prospect of adverse judgment in the Sherry proceedings, that was the true motive for the sale and transfer of his assets in September 1998.

88. In the course of cross-examining the appellant at the criminal trial, Mr Flanagan SC, who appeared for the Commonwealth Director of Prosecutions at the trial as he did on the appeal, asked the appellant a series of questions concerning his alleged plans for restructuring his assets about which he had given evidence in chief.  The relevant extract from the cross-examination is set out in the reasons of the President in her decision on this appeal, and I will not repeat it here more than is necessary. It included a question by Mr Flanagan asking the appellant if he had had a meeting with Mr Hocking and a Mr Fox of Cleary Hoare, solicitors, on 20 April 1998. His response was that he had seen a memo or file note to that effect, but had no knowledge of a meeting with those men together. Later, when pressed, he said he had “absolutely no recollection of that meeting”. He maintained that form of answer even when Mr Flanagan asked if he remembered a statement at the meeting to the effect that “I need to do something about protecting my assets because I could go bankrupt because of this law suit”. Later again, he confirmed that he had been shown a file note of a conversation with Mr Fox. He said that a copy had been provided “two or three nights ago” when “your side”, meaning the prosecution, had provided a copy; but that he had no recollection of such a meeting.

89. On appeal, the appellant was permitted to amend his notice of appeal to allege that the trial judge had erred in allowing the prosecution to cross-examine him on material which had not been presented as part of its case or led by him in his evidence in chief, and in allowing this material to remain before the jury. It was said that, as such, it involved a breach of the principle applied in R v Soma (2003) 212 CLR 299 precluding the prosecution from splitting its case. But what happened in R v Soma was quite different from what took place at the trial of the appellant. In Soma the accused testified in his defence at his trial on a charge of rape, in which consent was the issue, that at or before sexual intercourse took place the complainant was not crying and that he had not forced her to the ground (212 CLR 299, 306).

90. In cross-examination in that case, the prosecutor asked the accused if he had not in fact previously told the police that the complainant had been crying and that he had forced her to the ground. He denied having said those things to the police. Thereupon, counsel for the Crown in the presence of the jury played part of a tape recording of his interview with the police, after which the accused agreed that it was his voice on the tape and that he in fact had told the police that the complainant was crying. He was not asked again if he had told the police he pushed the complainant to the ground. Instead, those parts of the tape recording that had been played to the accused in front of the jury were tendered by the prosecution and admitted in evidence at the trial. The High Court held that the course adopted by the prosecution involved an impermissible splitting of the Crown case in contravention of the rule that at a criminal trial the prosecution must offer all its proofs during the progress of its case and before it was closed. Speaking with reference to s 18 of the Evidence Act 1977 (Qld), which is the local analogue of s 4  of the Criminal Procedure Act 1865 in England (Lord Denman’s Act) and similar provisions elsewhere concerning prior inconsistent statements, Gleeson CJ, Gummow, Kirby and Hayne JJ, said (212 CLR 299, at 307):

“Again, confining attention to the provisions dealing with prior  inconsistent statements, it was then open to the cross-examiner to pursue alternative courses. The cross-examiner could have handed the witness a transcript of the interview, asked him to read it to himself, and then asked whether the witness adhered to his earlier testimony. If an affirmative answer had been given, the cross‑examiner could then later seek to lead evidence of the making of the prior inconsistent statement. Alternatively, as occurred in this case, the cross-examiner could have asked the witness questions designed to establish the authenticity of the record of the prior inconsistent statement and then, in the course of the cross‑examination, tendered the tape in evidence. … In this case, the respondent’s admission that his voice was heard on the tape rendered it unnecessary to adopt some other method of proving that he had made the earlier inconsistent statement. Once in evidence, the prior inconsistent statement was admissible as evidence of the facts stated in it.”

91. The authority given for the last of these propositions refers to s 101 of the Evidence Act 1977. Contrary to the principle prevailing before the enactment of that section, an inconsistent statement proved and admitted in accordance with the provisions of s 18 is no longer admissible and relevant only as going to the credit of the witness. In Queensland, as their Honours observe in the final sentence of the passage quoted from the joint judgment and as s 101 provides, such a statement is “admissible as evidence of any fact stated therein” of which direct oral evidence by the witness would be admissible. That, so far as I am aware, is a statutory provision unique to Queensland. It makes it obvious that the action of prosecuting counsel in Soma in tendering the tape recording or parts of it involved a splitting of the prosecution case against the accused. The result was to permit evidence to be given by the Crown, albeit in the course of cross-examination, after closing its case but without the express leave of the judge at the trial, which involved a breach of the rule which forbids the Crown from splitting its case against the accused.

92. It is necessary only to refer to the course of events which I have related in R v Soma to show how far removed it is from the present case. Mr Flanagan did not, as did prosecuting counsel in Soma, tender or seek to tender any document or anything else in the course of cross-examining the appellant on the matter in hand.  Indeed, he was at that stage not in a position to do so.  The appellant had not, within the meaning of s 18 of the Evidence Act 1977, distinctly admitted that he had attended a meeting with Hocking and Fox on 20 April 1998, or that there had been any such meeting. In that state of the evidence, and to prove that such a meeting had taken place, let alone what the appellant had said in the course of it, it would, in order to comply with s 18, have been necessary to call some other person, such as Fox or Hocking, to prove the inconsistent statement. Had this been attempted, it would have amounted to splitting the prosecution case, as indeed it was held to be in Soma, for which the leave of the judge would have been required.

93. At the trial in Soma, the proper procedure had been circumvented or short‑circuited by permitting the prosecutor to play extracts from the tape (as to which the accused admitted that it was his voice that was audible on it) and then to tender the tape, which counsel did without objection and without intervention from the judge.  The omission of those steps at the trial in Soma led their Honours to say (212 CLR 299, at 312-313) that, because there was no objection, the trial judge there “was not required to rule on the course that was taken and there was, therefore, no wrong decision at the trial on any point of law”; and, further, that before it could be said that there had been a serious miscarriage of justice based on the judge’s failure to intervene of his own motion, “there may be a serious question as to when, and on what basis, the judge should have acted”.  That aspect of the decision of the Queensland Court of Appeal allowing the appellant’s appeal had not been challenged by the Crown in the High Court; and, if it had been, it was in the circumstances of the case, a point which their Honours said was “unlikely to have attracted a grant of special leave in a prosecution appeal” (as that appeal was) to the High Court. It was for that reason that the decision of the Queensland Court of Appeal allowing the accused’s appeal against conviction in Soma was, in the end, not disturbed by their Honours: cf also the reasons of McHugh J, at 325; and Callinan J, at 337. Otherwise, it may be inferred, the Crown appeal in Soma would or might, it seems, have been successful.

94. Because there was at the trial of the appellant likewise no objection by the defence or any ruling by the judge on Mr Flanagan’s cross‑examination, the present appeal must also attract the operation of what was said by their Honours in Soma at 212 CLR 299, 312-313. In other respects, however, it is altogether different. As I have already said, there was here no attempt by the prosecution to tender the “memo” or file note to which the appellant himself had first referred as being in some way related to a meeting with Hocking and Fox about which he was evidently being asked in cross-examination. As the High Court also recognised in the passage quoted from Soma, Mr Flanagan would have been entitled to hand the memo or file note to the appellant, and, after asking him to read it to himself, to ask whether he continued to maintain or adhere to the testimony he had already given. He could have done so without running any risk of being accused of splitting his case. One reason why Mr Flanagan did not seek to tender the memo or file note is obvious enough from the appellant’s own evidence on the matter. He would have and did continue to assert that he had no recollection of any such meeting or, in consequence, what he had said there. In those circumstances, the memo or file note or the statement, if any, it contained was and would not have been “inconsistent with his present testimony” within the terms of s 18 of the Act. It would accordingly not have been admissible under s 18 whether with or without the consequences potentially ascribed to it by s 101.

95. Mr Flanagan may, or he may not, have been setting out on a course designed to attract the application of s 18 and ultimately s 101 of the Evidence Act.  He may have been intending to ask for leave to split the prosecution case against the accused by proving in rebuttal by evidence from some other source that the appellant had previously made some statement to the effect that he needed to do something to protect his assets before he could go bankrupt. We cannot tell what it was counsel’s intention to do because he never did it.  It is in any event doubtful, to say the least, whether the requirements of s 18 of the Act were ever fulfilled. The appellant was not asked to say if he had made a prior statement to that effect. Rather, as I would interpret it, the statement in question was mentioned to the appellant simply as one of “the circumstances of the supposed statement sufficient to designate the particular occasion” within s 18; or, in other words, to assist the appellant in calling the occasion to mind. The appellant was never asked whether or not he had in fact made a statement to that effect. To the last of those questions in cross-examination, he maintained his previous response that he had no recollection of meeting with Fox or Hocking either “together or individually at the time you’re saying in Mackay”.

96. It is necessary to stress that no tender in evidence of any statement or document concerning any meeting with Hocking and Fox was made by counsel for the prosecution, and no such statement or document was admitted at the trial. Without it, there could be no question of evidence being called in rebuttal or, as there was in Soma, of the splitting of the Crown case. Simply cross-examining an opposing witness, whether or not he or she is the accused, does not amount to or involve the tendering of evidence by the party doing so, even if in the course of it the cross‑examiner succeeds in damaging the credit of that witness or in eliciting admissions that are or may be helpful or even decisive in favour of that party. That has always been the principal function of cross‑examination, even if its purpose is not always achieved. It does not, however, amount to tendering evidence. It is this feature that sharply distinguished the present case from R v Soma and other cases of the kind, which follow or precede it, in which evidence has been tendered and admitted in derogation of the prohibition against case-splitting.

97. It follows that there is no substance in the appellant’s complaint in the amended notice of appeal that the trial judge had erred “in allowing the prosecution to cross-examine him on material which had not been presented as part of its case, or led by him in his evidence in chief”. It has never been a requisite of cross‑examination of an accused person who gives evidence at his trial that he should himself have given evidence in chief on the particular topic about which he is sought to be cross-examined, or that the topic should be one that had already been introduced by the prosecution as part of its case. To restrict cross-examination by the Crown of the accused or other witnesses in that way would be revolutionary in its effects. It would mean that the accused would be able to limit the scope of the questions he was asked in cross-examination by confining the matters on which he himself gave evidence in chief.

98. The amended ground of appeal is not, I am sure, intended to go to such lengths. It does, however, assert error on the part of the trial judge in allowing him to be cross‑examined on “material” which had not been presented by the prosecution as part of its case, and “in allowing this material to remain before the jury”. The “material” in question can only refer to the memo or file note apparently relating to the meeting on 20 April 1998 with Hocking and Fox. As I have said more than once, this “material” was never tendered or allowed to go to or “remain” before the jury. As can be seen from the extract from the prosecutor’s final address, which is set out in the reasons of the President, Mr Flanagan in addressing the jury was careful not to suggest that any evidence of that kind was before them. He told them that the appellant had not accepted the propositions he had put to him in cross-examination about what was said to the solicitor from Cleary Hoare. Various forms of subtlety may be used to skin felines; but the most that can be said against the course taken by Mr Flanagan was that it may have surreptitiously conveyed to the jury an impression of what was to be found in the memo or file note. At its worst, it amounted to asking the appellant to give secondary evidence of the contents of a document. No objection to his doing so was taken by the defence at the trial.  For reasons I have given, some such foundation was essential if s 18 of the Evidence Act was going to be complied with. It cannot be regarded as allowing “material” to remain before the jury. There was simply no evidence about such material.

99. There is therefore no substance in the amended ground of appeal, and I turn to other matters.

100. The question whether the prosecution had split its case was directly related to another issue concerning the file note referring to the meeting with Fox and Hocking on 20 April 1998. The appellant submitted before us that that document and other documents related to his plans for restructuring his farm assets, had come into existence for the purpose of obtaining or receiving advice from Cleary Hoare and he was consequently entitled to legal professional privilege in respect of them. The President has given reasons, with which I agree, that any privilege to which the appellant was entitled in respect of what were designated the category 1A and 1B documents was effectively waived by him.

101. The remaining documents are those in category 2, which were produced at the trial by Cleary Hoare in response to a subpoena or summons by the prosecution. They included the file note of the meeting on 20 April 1998, of which the full content is set out in para 45 of the President's reasons for judgment on this appeal. It includes (at §1.5) the passage to which Mr Flanagan was evidently referring in the course of cross-examining the appellant when he was asked if he remembered a statement at the meeting “I need to do something about protecting my assets because I could go bankrupt because of this law suit”. Plainly enough, this was in the circumstances a statement made by the appellant in seeking legal advice. It was on the face of it therefore entitled to protection of legal professional privilege.

102. His Honour was asked to consider a claim of privilege by the appellant in respect of the file note and other documents forming category 2 at a preliminary hearing before the appellant was arraigned. He ruled that the documents, including the file note containing the statement I have mentioned, were not privileged because they were intended to further a criminal purpose. On appeal this ruling was supported by counsel for the respondent, and the question is whether it was correct. The criminal purpose his Honour had in mind was that of defrauding creditors. It is a fair reading of what his Honour said in giving his ruling that he was referring to the events that had taken place principally between April 1998, when the appellant sought the advice of Cleary Hoare, and September 1998, when he disposed of his farm property and the proceeds of its sale.

103. This was said to raise a question whether throughout that period, and before judgment was given on 7 August, Mr and Mrs Sherry were “creditors” of the appellant within the meaning of s 266(3) of the Bankruptcy Act.  Plainly at that stage they were not. At most they were merely prospective or contingent creditors of the appellant. But I consider the issue with which we are now concerned was not as narrow as that approach to it suggests. The subject matter at this stage of the inquiry was and is not one arising under the Bankruptcy Act but under the law of evidence, which recognises the privilege and also in certain circumstances takes it away. Speaking of R v Bell; ex parte Lees (1980) 146 CLR 141, Gibbs CJ, with whom Mason and Brennan JJ agreed, said in Attorney-General for the Northern Territory v Kearney (1985) 158 CLR 500, 515, that the former case was authority for the view 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”. Kearney’s case was not one in which any crime or fraud was contemplated, but a deliberate and improper use or attempt to abuse a statutory power. Communications made for the purpose of obtaining and giving legal advice for that purpose were held not to be privileged because the purpose was to prevent others from exercising their rights under law. In that instance, they were Aboriginals who had native title claims which had yet to be determined.

104. It is part of the ordinary processes of law that a judgment creditor may enforce his judgment by levying execution on land or other assets of the judgment debtor. Transferring those assets away from the judgment debtor in anticipation of such a judgment is designed to frustrate that process. Such conduct, whether or not it constitutes a crime or a “fraud” in the technical sense has long been the subject of statutory provisions avoiding that consequence. The Fraudulent Conveyances Act 1571; 13 Eliz, c 5, was by no means the first of its kind.  The earliest was 50 Edw 3, c 6, passed in 1376, which recites and condemns the practice, said to be prevalent then, of secretly transferring one’s tenements and chattels into the name of another and proceeding to live on the proceeds, so frustrating the efforts of execution creditors to obtain payment of their debts. It is precisely what the appellant had in mind here.

105. The short title of that ancient statute of 1371 was “Fraudulent assurances of land or goods to deceive creditors, shall be void”. The legislative remedy afforded was to authorise creditors to levy execution against such tenements and chattels “as if no gift had been made”. The Statute of Elizabeth of 1571 recited a similar purpose, if with much less brevity. It is legislation that has been received or re‑enacted in almost every place where English law now prevails. In this State, the local analogue is now to be found in s 228(1) of the Property Law Act 1974, and was formerly in s 46 of The Mercantile Act of 1867. Such statutory provisions operate independently of and beyond the limits of various provisions of the Bankruptcy Act 1966 which themselves have a common genesis in 13 Eliz 1, cap 5, or its forebears.  See “Avoiding Transactions in Insolvency” in Corporate Insolvency Law, at 186-194 (ed Lessing & Corkery); Bond University 1995. Adjudication or sequestration in bankruptcy is not an element or a prerequisite of its application even though the official receiver or a trustee in bankruptcy may take advantage of it: Williams v Lloyd (1934) 50 CLR 341, 362-363.

106. It is true that statutory enactments of this kind consistently refer to defrauding or deceiving “creditors”; but the course of judicial decision over the centuries shows that this expression is not to be confined to its limited and technical sense of a person to whom a debt is presently due and owing. May, on Fraudulent and Voluntary Dispositions of Property (3^rd ed, 1980), at pp 43, 102, cites a body of judicial authority beginning with Twyne’s Case (1602) 3 Co Rep 80b, at 81b; 76 ER 809, 816, in support of the proposition that the expression “creditors and others” in the old Elizabethan statute are “wide enough to include any person who has a legal or equitable right or claim against the grantor or settlor by virtue of which he is or may be entitled to rank as a creditor of the latter”.  He goes on to say that the claimant may be considered to be a creditor within the Statute although his claim had not become payable at the time when the conveyance was made and even though it was then merely contingent; and although it was a claim for unliquidated damages in respect of which judgment had not yet been given. Among the authorities cited is Barling v Bishopp (1860) 29 Beav 417; 54 ER 689, in which Romilly MR set aside a defendant’s transfer of his land to his daughter after receiving notice of trial in an action for damages for trespass against him, in which the plaintiff obtained a verdict and judgment some two months later. Like the appellant here the defendant there subsequently sought and obtained relief in insolvency. Lord Romilly said (29 Beav 417, 420-421; 54 ER 689, 690) that “the only thing the Court has to consider is whether the object was to defeat the creditors present or in futuro”.

107. The provision in s 228(1) of the Property Law Act 1974 does not, like 13 Eliz, c 5, speak of creditors “or others”. Having regard, however, to its history, I have little doubt that it would receive an interpretation that applied it to dispositions with intent to defeat a person with a claim that at the time of the disposition was still contingent or prospective, even one consisting as in Barling v Bishopp of unliquidated damages for a tort.  But it is not necessary to decide that question now. The inquiry being pursued here is not whether the appellant’s transfer of his farm and assets in September 1998 was within the ambit of s 228(1) of the Property Law Act, and so liable to be set aside under that provision; but whether the advice he sought or received from his solicitors in April 1998 was protected by legal professional privilege.

108. Such protection was forfeited if, to revert to what was said in Attorney-General v Kearney, the communication in question was made “for the purpose of frustrating the processes of the law itself, even if no crime or fraud is contemplated”. The test is as broad as the word “purpose”; and there is no doubt that the communication to Cleary Hoare, solicitors, in April 1998 were made by the appellant with such a purpose in mind. He was asking to be advised as to what he needed to do about protecting his assets “because I could go bankrupt because of this law suit”. His purpose plainly was to defeat the claims of Mr and Mrs Sherry when they matured into a judgment against him. Because that was his purpose, he forfeited his claim to legal professional privilege in respect of the communications contained in the Cleary Hoare file in category 2. The learned trial judge was correct in his ruling to that effect. The appellant has therefore no legitimate cause for complaint about the use, if any, that was made of the documents in that file including the memo or file note recording what was said at the meeting on 20 April 1998.

109. The appellant’s conviction has not been vitiated by any miscarriage of justice, and his appeal against it must be dismissed.

110. HOLMES J:  I have had the advantage of reading the judgment of McMurdo P.  I agree with her conclusions, but have arrived at the same result by a different reasoning process so far as the category 2 documents are concerned;  and I have some comments to add on the Crown prosecutor’s use of the file note which was one of those documents.

111. The category 2 documents were the contents of the Cleary Hoare file. The Crown invited the learned trial judge to conclude that those documents entailed communications which were criminal or intended to further a criminal purpose: a breach of s 266(3) of the Bankruptcy Act 1966 (Cth). Thus, it was said, privilege was waived.  (That, of course, is a misnomer; if indeed the communications had that character, privilege never attached to them.)  His Honour accepted the submission, and ruled accordingly: 

“in April 1998 the accused was seeking the restructuring of his affairs to protect his assets to avoid the consequences of a lawsuit.  The lawsuit was plainly then pending, it was part heard as of May 1998, although judgment was delivered in September of that year.  In those circumstances I hold the privilege to have been waivered in respect of those documents.” 

112. While I agree with McMurdo P’s observation that the facts at the time of the relevant communication are not to be considered in a vacuum, it is necessary, in considering the correctness of the ruling made by the learned trial judge to distinguish his conclusion – that the appellant in seeking the restructure which was the subject of the Cleary Hoare file had evinced a criminal intent - from the jury’s finding that the dispositions of property in September 1998 were offences.

The proposed transactions

113. The Cleary Hoare file recorded the appellant’s dealings with that firm in April and May 1998, while the trial was part-heard. It contained file notes, correspondence and documents in relation to the setting up of a discretionary trust, the trustee of which would carry on the appellant’s farming business. It was anticipated that the appellant would lease his freehold and leasehold land to a corporate trustee. He held and farmed other land jointly with one of the witnesses, Mr Collier; Mr Collier and the trustee were to take a lease of that land. The appellant was to make oral declarations of trust in relation to the crops on the farm and as to his interest in the farming partnership with Mr Collier. The discretionary trust deed was executed and stamped; under it the appellant himself was the trustee. Although it was envisaged that he be replaced by a corporate trustee, it does not appear that he was, nor that any of the other transactions– the declarations of trust or the leases – ever came into effect. In contrast to the Cleary Hoare proposals, the dispositions of property in September 1998, which were the subject of the jury’s verdicts, took place after judgment had been given, involved the appellant’s parting with all his interest in the land, and were actually carried out, through different agents. The farms were sold, not leased, to a corporate trustee, which realised them and transferred the proceeds to an account in Vanuatu.

114. The Crown offered nothing apart from what was to be found in the Cleary Hoare documents themselves to support its contention that the privilege was displaced by criminal intent. As McMurdo P has said, the only evidence as to the reasons for the Cleary Hoare file coming to existence is to be gleaned from the two file notes, both of which concern the state of the appellant’s intention as at April 1998. The argument that an intent to commit a s 266(3) offence can be discerned from the documents rests, in part, on the premise that as at April 1998, the Sherrys, having a claim on which they ultimately received judgment against the appellant, were his contingent creditors.

Contingent creditors?

115. In Community Development Pty Ltd v Engwirda Construction Co^[90] the expression “contingent creditor” was considered in the context of s 221 of the Companies Act 1961, which (as s 459P(1) of the Corporations Act now does) enabled the court to make a winding up order on the petition of “any creditor, including a contingent or prospective creditor, of the company”.  Kitto J, with whom Barwick CJ and Windeyer J agreed, emphasised the importance of “an existing obligation” out of which a liability to pay would arise in a future event, whether it be “an event that must happen or only an event that may happen.”^[91] 

116. I have some doubt that a plaintiff with no more than an untried action in tort for unliquidated damages can be said to be owed an existing obligation. Certainly, the question of whether a creditor with such a claim can be regarded as a contingent or prospective creditor for the purposes of s 459P(1) continues to be the subject of controversy: for a positive answer, see Re Gasbourne Pty Ltd;^[92] In the matter of Simionato Holdings Pty Ltd;^[93] for the negative, see the judgment of Santow J in Roy Morgan Research Centre Pty Ltd v Wilson Market Research Pty Ltd,^[94] followed in Nationwide Produce Holdings Pty Ltd (in liq) v Franklins Ltd.^[95]

117. For the purposes of determining whether a contingent liability exists under the Bankruptcy Act 1966, it has been accepted that an existing obligation is essential:  Lyford v Carey;^[96] Federal Commissioner of Taxation v Gosstray;^[97] Lofthouse v Commissioner of Taxation;^[98] Gaffney v Federal Commissioner of Taxation.^[99] This statement by Santow J in Mandarin International Developments Pty Ltd v Growthcorp (Aust) Pty Ltd & Anor^[100] supports a conclusion that, as at April 1998, the Sherrys could not properly be described as contingent creditors:

“If a debt is genuinely in dispute it has yet to achieve the status of an obligation, whether contingent or prospective, and may never do so.”

‘Intention to defraud his or her creditors’

118. But in any event, I question whether a contingent creditor is one in respect of whom the relevant intention to defraud under s 266(3) may be formed. The sub-section is as follows:

A person who has become a bankrupt after the commencement of this Act and, within 12 months before the presentation of the petition on which, or by virtue of the presentation of which, he or she became a bankrupt and after the commencement of this Act, has disposed of, or created a charge on, any property with intent to defraud his or her creditors is guilty of an offence and is punishable, upon conviction, by imprisonment for a period not exceeding 3 years.

There is a lack of authority on the meaning of “creditors” in the phrase “intent to defraud his or her creditors” as it appears in s 266(3). In contrast, there is a considerable body of authority on its meaning in a similar expression, “intent to defraud creditors”, in s 121(1) of the Bankruptcy Act, as it appeared prior to amendment in 1996:^[101]

Subject to this section, a disposition of property, whether made before or after the commencement of this Act, with intent to defraud

creditors, not being a disposition for valuable consideration in favour of a person who acted in good faith, is, if the person making the disposition subsequently becomes a bankrupt, void as against the trustee in the bankruptcy.

Section 6 of the Act applies in both contexts; it requires that a reference to an intent to defraud creditors of a person to be read “as including an intent to defraud ... any one or more of those creditors”. 

119. The expression “intent to defraud creditors”, as used in s 121(1) before its amendment, was given a wide compass, extending to embrace an intention to defeat not merely existing creditors, but also future creditors: see Barton v Deputy Commissioner of Taxation of the Commonwealth of Australia;^[102] PT Garuda Indonesia Ltd v Grellman;^[103] Cannane v J Cannane Pty Ltd (in liq).^[104] The court in Garuda specifically rejected the submission that the class of creditors referred to in s 121 was limited to those who had claims provable in the bankruptcy at the time of the relevant disposition.

120. In Garuda, the court cited,^[105] with apparent approval, this passage from Lewis’ Australian Bankruptcy Law: 

“The general principle may be stated that any dealing with property (other than by sale for a reasonable price) made with the object of putting it beyond the reach of present or future creditors comes within the definition of a fraudulent conveyance if the person concerned cannot immediately pay his debts or anticipates some event which may render him unable to pay his debts in future;  such a dealing will be treated as fraudulent irrespective of the presence or absence of a conscious fraudulent intent on the part of the debtor if the necessary result of the dealing is to put the property beyond the reach of his creditors .... The word ‘fraudulent’ indeed has received an interpretation in bankruptcy matters somewhat wider than its ordinary use, and it may be defined as equivalent to ‘with an intention to deprive creditors of recourse against all or any of his assets’.” ^[106]

121. Section 121 is one of a line of similar provisions appearing in bankruptcy and other legislation, dating back to the Fraudulent Conveyances Act 1571 (13 Eliz 1, c 5) (‘the Elizabethan statute’) which rendered void as against creditors dispositions of property made with the intention of delaying, hindering or defrauding them. Section 37A of the Conveyancing Act 1991 (NSW) is one such provision:  it enables the setting aside of any alienation of property effected “with intent to defraud creditors”.  Two decisions made under that section are of particular interest here. In Silvera v Savic^[107] and in Langdon v Gruber^[108] Hodgson CJ and Austin J, respectively, set aside transfers of property as made with intent to defraud creditors, in circumstances where, at the time of transfer, proceedings for unliquidated damages had been commenced but not tried. 

122. Such provisions have consistently been interpreted with a purposive approach, having regard to their origins in the Elizabethan statute, and the accepted purpose of that statute and its successors. In Garuda the court explained^[109] that bankruptcy provisions such as s 121 were to be construed even more widely than the Elizabethan statute, because their object was not merely to prevent debtors from keeping property from creditors, but to prevent any creditor from being preferred; they had a “primary aim ... to obtain an equal distribution of the debtor’s assets among his creditors.”^[110]  In a similar vein, in Spies v R,^[111] the majority, referring to intent to defraud creditors in actions based on the Elizabethan statute and its modern counterparts, pointed to the context of such cases: the aim of distribution of property in accordance with the law. The approach apposite in that context was not necessarily to be applied in the criminal law context; and not, in that case, to an offence of defrauding creditors.

123. Thus, I conclude, the approach taken to the expression “intent to defraud creditors” in s 121 is not necessarily to be replicated in the construction of s 266(3), which creates a criminal offence. In particular, it does not follow that the reference to “creditors” in s 266(3) is to be construed as liberally as it has been for the purposes of s 121(1). As was observed in Pyramid Building Society (in liq) v Terry & Anor,

“The term ‘creditor’ is used in various senses throughout the Act. It takes its colour from the particular context.”^[112] 

124. It is worth noting that the wording of s 266(3), with the attaching of the possessive pronouns “his or her” to the noun “creditors” makes a more direct connection between bankrupt and creditor than s 121(1) in its original form. In any event, the ordinary meaning of “creditor” in the Bankruptcy Act is a creditor who is entitled to prove his debt or claim in the bankruptcy.^[113] The Sherrys did not, as at April 1998, have a debt provable in the appellant’s bankruptcy; s 82 of the Act specifically excludes from proof “demands in the nature of unliquidated damages arising otherwise than by reason of a contract, promise or breach of trust”. They were not, in my view, the appellant’s creditors for the purposes of s 266(3).

125. In short, I am unconvinced that a move to protect assets against bankruptcy at a time when an individual has no existing creditors and only an undetermined action for personal injuries against him, will, without more, satisfy the elements of s 266(3); or, correspondingly, that an intention to that effect will amount to a criminal intent. For that reason, I do not think the learned trial judge was entitled to make a finding of a criminal intent in regard to the appellant’s activities at that time.

Improper purpose

126. That, of course, is not the end of the privilege argument. Mr Flanagan SC who appeared for the Crown sought on appeal to support the ruling on the basis that the documents evidenced a communication with an unlawful, rather than criminal, purpose; advisedly, in my view. Privilege is not available where the communication “is a step in, or preparatory to, or in aid of what has been called ‘civil fraud,’ that is the carrying out of a fraud not amounting to a crime, but in respect of which the Civil Courts will give relief.”^[114]  The rule has been more broadly expressed as denying privilege to communications made to further an illegal purpose.^[115]

127. Mr Flanagan relied on Gartner v Carter^[116] and Barclays Bank v Eustice^[117] as consistent with a ruling against privilege in this case. The facts of those cases are not on all fours with those here; both involved secured creditors. In Gartner, the National Bank held a charge over the assets of all companies in the Gartner Group. A proposal for restructuring of the group and the businesses of the entities within it was, Lander J accepted, designed to make sure that assets were redirected to other entities not subject to the bank’s charge. His Honour found the relevant communication to have been made “for the purpose of the client putting his assets beyond the reach of the legitimate claims of his secured creditors.”^[118] Such a purpose was “a fraud on the creditor”; there was no public interest in protecting the communication.^[119] Similarly, in Barclays Bank v Eustice, assets subject to bank charges were transferred at a time when the debtor anticipated action by the bank to realise its security. The Court of Appeal held that the debtor’s purpose of prejudicing the bank’s interests by entering the transactions at an undervalue was “sufficiently iniquitous for public policy to require” that the relevant communications be discovered.^[120]

128. The case here, where the Sherrys held no interest in the appellant’s property, is not as strong. But s 121 of the Bankruptcy Act, as it now appears, makes voidable as against the trustee a transfer of property which would probably have become part of the bankrupt’s estate or probably have been available to creditors, where the transferor’s main purpose in making the transfer is to prevent the property from becoming divisible among creditors or to hinder or delay the process of its being made available for division.  The explanatory memorandum to the Bankruptcy Legislation Amendment Bill explains that the new provision “instead of focussing on the notion of fraud, is concerned with a person’s purpose of delaying the satisfaction of creditors.” There is no reason to suppose that “creditors” has any more limited meaning than that given to the term under the section’s previous incarnation.^[121]

129. The file note of 20 April 1998, with its reference to the need to protect assets because of the possibility of bankruptcy as a result of the Sherrys’ action then on foot, gives colour to the restructuring transaction as one designed to defeat creditors in the sense contemplated by s 121. As is clear from the authorities I have discussed in relation to the section prior to its amendment, the policy of the legislation is to preserve assets for distribution and to prevent the defeating of creditors’ claims, whether yet in existence or not. The passage from Lewis’ Australian Bankruptcy Law, cited in Garuda, illustrates the extended concept of fraud applicable in that context. On those authorities, the appellant’s intention as evinced in the file notes can properly be described as the commission of “civil fraud”. In those circumstances it can fairly be said that the category 2 documents were brought into existence for an improper purpose, and could attract no privilege.  Thus I conclude that the ruling is supportable, although not on the basis on which it appears to have been made.

The prosecutor’s use of the file note in cross-examination

130. I do not think that the Crown prosecutor’s cross-examination, deriving from the content of the file note of 20 April 1998, amounted to a splitting of the prosecution case. The Crown case turned on the appellant’s dealings with his property after August 1998, when the judgment in favour of the Sherrys was delivered. The Cleary Hoare restructuring proposal from earlier that year was not some new matter raised by the Crown in cross-examination; it was the appellant who raised the subject, in his evidence in chief, as an early example of his seeking to arrange his affairs for legitimate purposes. The reference in the file note to discussion of the prospect of bankruptcy tended to give the lie to that account. The file note itself had been given to the defence in advance. I do not think there was any element of unfairness in questioning about the meeting it recorded and the subjects of discussion.

131. However, although the appellant at the start of that part of the cross-examination volunteered that he had seen “a document about that”, I do not think it was proper for the Crown prosecutor, later in the cross-examination, to revert to questions about the file note itself (the questions which are set out at the end of para 56 of McMurdo P’s judgment). The actual existence of the file note, as opposed to whether the events recorded in it occurred, was entirely irrelevant. It is hard to see what eliciting from the appellant that there was indeed such a file note could do for the Crown case, apart from suggesting to the jury that, because a paper record existed, there must be substance to the propositions, put to the appellant and rejected, about the meeting. That was impermissible; despite the absence of objection, those questions should not have been asked.

132. In addition, I share McMurdo P’s concern that the jury was not directed that the questions about the meeting were not evidence, given the appellant’s denial of its occurrence. However, I agree with her that no substantial miscarriage of justice has resulted.