BULLIVANT AND OTHERS V THE ATTORNEY-GENERAL FOR VICTORIA (ON BEHALF OF HER MAJESTY)

 BULLIVANT AND OTHERS V THE ATTORNEY-GENERAL FOR VICTORIA (ON BEHALF OF HER MAJESTY)

 

[HOUSE OF LORDS.]

 

 

 
  1901 May 2. [1901] A.C. 196  

 

 

EARL OF HALSBURY L.C., LORD SHAND, LORD DAVEY, LORD BRAMPTON, and LORD LINDLEY.

 

 

 

 

 

  Practice – Discovery – Production of Documents – Privilege – Communications between Solicitor and Client – “Evasion” of Statute.  

 

  An information against executors claimed duties under a Colonial statute, alleging that the defendants’ testator had some time before his death executed voluntary conveyances of Colonial property “with intent to evade the payment of duty” under the statute. One of the defendants, a member of the firm of solicitors whom the testator had instructed to prepare the conveyances, was ordered to produce the notes and records of these instructions, but objected to do so on the ground that they were privileged communications between solicitor and client for the purpose of obtaining advice:-  

 

  Held, first, that the privilege was not lost by the death of the testator; and secondly, that the word “evade” was ambiguous and capable of two meanings, one a perfectly innocent one, and that, without expressing any opinion as to the meaning in which it was used in the statute, there was no proof or even allegation of any fraud or illegality to displace the privilege.  

 

  The decision of the Court of Appeal, [1900] 2 Q. B. 163, reversed.  

 

  AN information filed in the Supreme Court of Victoria by the Attorney-General for Victoria on behalf of Her late  

 

 

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197

 

 

  A.C.  

 

 

BULLIVANT v. ATTORNEY-GENERAL FOR VICTORIA. (H.L.(E.))

 

 

 

 

 

 

 

  Majesty Queen Victoria against the appellants alleged that James Austin (deceased) was in 1894 and 1895 possessed of estates in Victoria, and did in November, 1894, and March, 1895, execute several wholly voluntary conveyances of those estates to certain persons (some of whom were appellants) upon certain trusts “with intent to evade the payment of duty” under a Colonial statute, the Administration and Probate Act, 1890 (54 Vict. No. MLX.). That James Austin died in May, 1896, having appointed three of the appellants executors of his will which they had proved. The other appellant was a trustee and beneficiary under some of the conveyances. The information claimed from all the appellants various sums, amounting in all to 20,000l., for duty payable under the above Act.  

 

  The appellants in their defence denied (inter alia) that the conveyances were wholly voluntary and that they were executed with intent to evade the payment of duty under the statute. The Attorney-General joined issue thereon.  

 

  An order of the Supreme Court of Victoria having been made under 22 Vict. c. 20, for a commission to examine witnesses in England, the appellant Stanley Austin (inter alios) attended the commissioners. He was a solicitor in Glastonbury, a son of the testator, one of the executors and a trustee under some of the conveyances. He admitted that the conveyances were settlements made for the benefit of himself and his brothers and sisters, and prepared by the late firm, Bath & Austin, of which he had been a member, and that he had in his possession a diary kept by his former partner, Bath, now deceased, and other documents which contained entries of instructions given by the testator to Mr. Bath with respect to these conveyances, but objected to produce them on the ground that they were held by him and his present partner as solicitors and successors to the testator’s late solicitor, and that they contained entries of professional and confidential communications for the purpose of obtaining legal advice.  

 

  Mathew J. made an order that Stanley Austin should attend before the commissioners and produce the journals, day-books, or other records kept by the late firm of the instructions given  

 

 

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198

 

 

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BULLIVANT v. ATTORNEY-GENERAL FOR VICTORIA. (H.L.(E.))

 

 

 

 

 

 

 

  to them by the testator with reference to the preparation, execution, or carrying into effect of the conveyances, and this order was affirmed by the Court of Appeal. (1) The defendants appealed.  

 

  By s. 115 of the Administration and Probate Act of Victoria, 1890 (54 Vict. No. MLX.), “If any person has made or shall hereafter make any conveyance or assignment, gift, delivery or transfer of any estate real or personal, or of any money or securities for money, with intent to evade the payment of duty under this part of this Act, in case such person should die the property comprised in any such conveyance or assignment, or the subject-matter of any such gift, delivery or transfer, shall upon the death of such person be deemed to form part of his estate for the purposes of this part of this Act upon which duty shall be payable under this part of this Act, and the payment of the duty upon the value of such property may be enforced against such property in the same way as duty under this part of this Act is enforceable, and as if such person had bequeathed or devised the said property to the person to whom the same may have been conveyed assigned given delivered or transferred. Any conveyance or assignment, gift, delivery or transfer of any estate real or personal, or of any money or securities for money, already made or which hereafter may be made either in escrow or otherwise to take effect upon the death of the person making the same, shall be deemed to have been or to be made as the case may be with intent to evade the payment of the duty under this part of this Act. All property of any kind whatsoever the subject-matter of a donatio mortis causâ shall upon the death of the person making such donatio mortis causâ be deemed to form part of his property for the purpose of estimating the duty payable under this part of this Act, and duty shall be paid upon it as upon any other part of such person’s property, and the payment of such duty may be enforced against such property the subject-matter of such donatio mortis causa in the same way as against any other property of or to which such person may die seised possessed or entitled.”  

 

  (1) [1900] 2 Q. B. 163.  

 

 

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199

 

 

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BULLIVANT v. ATTORNEY-GENERAL FOR VICTORIA. (H.L.(E.))

 

 

 

 

 

 

 

  April 30; May 2. Sir R. T. Reid, K.C., and Upjohn, K.C. (E. M. Pollock with them), for the appellants. The privilege claimed is for confidential communications which passed between solicitor and client to enable the client to obtain professional advice as to his property and his rights thereto. The Court of Appeal held that the privilege does not exist if the client consulted the solicitor how to “evade” the payment of duty under a statute. This assumes that “evade” means avoid by fraud, stratagem, trick, or underhand contrivance. But evade has two meanings: evade lawfully, and evade unlawfully. A man may evade a tax or duty by not doing the act which makes the impost applicable, and he may consult his solicitor how to avoid doing the act: such communications are privileged. The judgment of the Privy Council in Simms v. Registrar of Probates (1) pointed out that the word “evade” was capable of two senses – one which suggests underhand dealing, and another which means nothing more than the intentional avoidance of something disagreeable. Their Lordships held that in the absence of evidence of some device or underhand contrivance the words “with intent to evade the payment of duty” contained in an Australian statute imposed no penalty, not being applicable to innocent transactions. In the present case there is no allegation or suggestion of fraud or illegality: the information alleges merely an intent to evade in the words of the statute, which is quite consistent with an innocent transaction. The respondent will rely on In re Postlethwaite (2) and Reg. v. Cox and Railton (3); but the first was a case of fraud and the second of a criminal purpose. In Follett v. Jeffereys (4) the privilege was maintained, as though fraud was alleged it was not made out. A mere allegation of fraud is not sufficient: there must be a case made out by evidence or admission; otherwise a party might always require privileged communications to be disclosed by merely alleging fraud or illegality. There is no decision in favour of such a practice. In Williams v. Quebrada Ry. &c. Co. (5) Kekewich J.  

 

  (1) [1900] A. C. 323.  

 

  (2) (1887) 35 Ch. D. 722.  

 

  (3) (1884) 14 Q. B. D. 153.  

 

  (4) (1850) 1 Sim. (N.S.) 1.  

 

  (5) [1895] 2 Ch. 751.  

 

 

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200

 

 

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BULLIVANT v. ATTORNEY-GENERAL FOR VICTORIA. (H.L.(E.))

 

 

 

 

 

 

 

  saw the communications with the consent of the defendants’ counsel.  

 

  [They also referred to Gartside v. Outram (1) and Minet v. Morgan. (2)]  

 

  Haldane, K.C., and Rowlatt, for the respondent. The answer to the claim of privilege is twofold. First, the testator with whom the communications took place is dead, and the privilege does not survive for the benefit of his executors or trustees or others: Russell v. Jackson. (3) Secondly, the privilege does not exist where there is fraud, illegality, or evasion of a statute. Turner V.-C. in that case laid down broad principles, and said it was no part “of the duty of a solicitor to advise his client as to the means of evading the law.” The information contains a distinct allegation of an intent to evade the payment of duty under the Act, and that allegation must be taken for the present purpose to be true. It is not denied that the communications of which discovery is sought are relevant to that allegation.  

 

  [They also referred to Gresley v. Mousley (4) and the cases cited in the Court below.]  

 

  Sir R. T. Reid, K.C., in reply.  

 

  EARL OF HALSBURY L.C. My Lords, it appears to me that the judgment appealed from ought to be reversed. I do not think it would be desirable to express any opinion with reference to the true construction of the Victorian statute beyond this: We are not here upon the question of sufficiency of pleading at all. I think it is fallacious to suppose that we are to ascertain for the purpose of this inquiry whether or not the pleadings do mean or do not mean one or the other of the two different sets of meanings which have been attributed to them.  

 

  I think the broad propositions may be very simply stated: for the perfect administration of justice, and for the protection of the confidence which exists between a solicitor and his client, it has been established as a principle of public policy  

 

  (1) (1857) 26 L. J. (N.S.) (Ch.) 113.  

 

  (2) (1873) L. R. 8 Ch. 361.  

 

  (3) (1851) 9 Hare, 387, 392.  

 

  (4) (1856) 2 K. & J. 288.  

 

 

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201

 

 

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BULLIVANT v. ATTORNEY-GENERAL FOR VICTORIA. (H.L.(E.))

 

 

 

Earl of Halsbury L.C.

 

 

 

  that those confidential communications shall not be subject to production. But to that, of course, this limitation has been put, and justly put, that no Court can be called upon to protect communications which are in themselves parts of a criminal or unlawful proceeding. Those are the two principles, and of course it would be possible to make both propositions absurd, as is very often the case with all propositions, by taking extreme cases on either side. If you are to say, “I will not say what these communications are because until you have actually proved me guilty of a crime they may be privileged as confidential,” the result would be that they could never be produced at all, because until the whole thing is over you cannot have the proof of guilt. On the other hand, if it is sufficient for the party demanding the production to say, as a mere surmise or conjecture, that the thing which he is so endeavouring to inquire into may have been illegal or not, the privilege in all cases disappears at once. The line which the Courts have hitherto taken, and I hope will preserve, is this – that in order to displace the primâ facie right of silence by a witness who has been put in the relation of professional confidence with his client, before that confidence can be broken you must have some definite charge either by way of allegation or affidavit or what not. I do not at present go into the modes by which that can be made out, but there must be some definite charge of something which displaces the privilege.  

 

  Now, my Lords, when I look at all that is to be found here, I find no such definite charge at all. If, for the purpose of evading the payment of duty to which the man was liable, he entered into some secret and covinous arrangement whereby, although he should still retain the property during his lifetime, nevertheless colourable deeds should be executed which would shew that the property was not liable to duty, that would undoubtedly be a fraud, and I should think there would be no doubt that a person who was engaged in such a transaction could be compelled either to produce the correspondence or to state the conversation shewing how that alleged fraud was intended to be carried out. But there is no such allegation –  

 

 

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202

 

 

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BULLIVANT v. ATTORNEY-GENERAL FOR VICTORIA. (H.L.(E.))

 

 

 

Earl of Halsbury L.C.

 

 

 

  there is nothing here which any Court can regard as an allegation of fact sufficient to displace the privilege. If the fact were merely that the person did execute voluntary deeds the effect whereof was that the tax never fell upon the property at all, I do not know that there is any offence in that either in Victoria or in this country. People are not bound to continue in the same condition of things, either as regards their direct or indirect taxation, which will render either the consumption of articles in the one case or the property they have in the other always liable to the tag, and I decline to believe that the Colony has made such an enactment until it is established that that is the enactment which they have made.  

 

  My Lords, in the parallel, but not exactly similar, case in the Privy Council where the word “evade” was used, the Privy Council held (I myself was a party to that judgment) that it must be understood that where it was intended to be an allegation that a fraud had been committed you must allege it and prove it, and that it was no fraud for a man to make a voluntary conveyance of his estates, not having say secret trust, and not having any arrangement whereby the deed could say one thing and the voluntary arrangement mean another; that the fact that he did intend to make a gift during his lifetime was no offence and no breach of the Act of Parliament, and nothing that could be considered tainted with the character of fraud: Simms v. Registrar of Probates. (1) That being so, my Lords, it appears to me that it would be an abandonment of the principle which has been held sacred in this country if, when a person has done that which in itself may be innocent, you should simply, because you choose to suggest that it was done with the view of evading the payment of a tax, require the witness to disclose the whole of his affairs, and enable the private communications between himself and his solicitor to be displayed to the Court.  

 

  I cannot help thinking that if this question had arisen in the ordinary course the error would not have been committed which has been committed; but we have got into a somewhat artificial condition of things by the method in which we are endeavouring  

 

  (1) [1900] A. C. 323.  

 

 

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203

 

 

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BULLIVANT v. ATTORNEY-GENERAL FOR VICTORIA. (H.L.(E.))

 

 

 

Earl of Halsbury L.C.

 

 

 

  to apply the procedure here, which would be a proceeding in open Court. Here there is a commission, and to fortify such commission a statute has been passed for the purpose of giving the judges in this country a power to enforce the attendance of witnesses just as if the cause of action had arisen in this country. If you construe the statute, bearing its object in mind, it is simple enough. The statute was passed for the purpose of assimilating the administration of justice all over Her Majesty’s dominions. What you would have to do when you got to trial and the privilege was pleaded would be this: the judge would have to satisfy himself whether there was really established to his satisfaction a charge of fraud or something that would displace the privilege – I do not say prove it – but it would be a reasonable and proper thing under the circumstances to establish the proposition that the issue to be tried was whether there was really a fraud or not, and that this was a piece of evidence relevant to establish the fraud. In this case it is obvious nobody can suggest there is any evidence of it, and, as it appears to me, no allegation of it, and, upon the broad proposition that there is neither proof nor allegation, nor anything which would displace the privilege, it appears to me that the orders made in this case were wrong, and that your Lordships ought to reverse them.  

 

  LORD SHAND. I agree that there is no averment of fraud or of illegality, having regard to the decision of the Privy Council in Simms’ Case (1)The statement is merely that the deeds in question were granted to “evade” payment of death duty due, using the word which occurs in the statute. If that term merely means to “avoid” the duty, as was held in Simms’ Case (1), then there is here no averment of fraudulent contrivance, or indeed of any illegal proceeding, and in the absence of this I agree that the alleged privilege fails.  

 

  LORD DAVEY. My Lords, I am of the same opinion.  

 

  I do not dissent from what was said by Mr. Haldane, that it must be assumed for the present purpose that the case  

 

  (1) [1900] A. C. 323.  

 


 

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204

 

 

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BULLIVANT v. ATTORNEY-GENERAL FOR VICTORIA. (H.L.(E.))

 

 

 

Lord Davey.

 

 

 

  stated in the pleadings is true for the purpose of testing the right to production. But that renders it, of course, of extreme importance to see what is stated in the pleadings, and what are the issues upon which the trial is now presumed to be proceeding. I also agree with what was said by Sir Robert Reid, that if a man in his pleading, whether he be the Attorney-General or anybody else, merely sets out a sentence from a statute which is capable of two meanings without saying which he means, the one being consistent with the absolute innocence of the transaction and the other meaning involving a charge of either fraud or illegality, he must say which he means, and if he intends to charge illegality, he must state facts for the purpose of shewing what the illegality is. But, my Lords, this is not a question of pleadings as between the parties. What we have to see is whether a witness who is called upon to produce privileged documents is bound to produce them or not, and for that purpose only we must look to see what are the issues which are raised by the pleadings.  

 

  Now, my Lords, the information states only certain voluntary deeds, and then contains an allegation that these voluntary deeds were executed for the purpose of evading payment of certain death duties which are imposed upon property passing upon the death of the testator. The words in the section under which it is sought to say that it was an illegal transaction are these: “If any person has made, or shall hereafter make, any conveyance,” and so forth, “with intent to evade the payment of duty under this part of the Act.” If the duty never attached, if there is no section of the Act which imposes a duty upon voluntary inter vivos transactions, I cannot see how a person who is a party to such a transaction can be said to do it with intent to evade payment of a duty which the Act does not impose upon the transaction itself. My Lords, I do not mean to give any definite opinion upon the construction of this clause. But I do think that if it be meant that the executing of these voluntary conveyances which, upon the face of them, purport to be a parting by the testator with the property comprised in them out and out, a parting with the whole jus disponendi of it so that it would become no longer his  

 


 

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205

 

 

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BULLIVANT v. ATTORNEY-GENERAL FOR VICTORIA. (H.L.(E.))

 

 

 

Lord Davey.

 

 

 

  property, but the property of somebody else, and would be the property of somebody else at his death – if it be meant to say that the executing of those conveyances was an illegal transaction, some particulars of the illegality should be stated; and merely to quote the words of the statute to which I have already referred is not stating such a case of fraud or illegality, or raising such an issue for trial between the parties as would enable the plaintiff to call upon a witness to produce documents which would otherwise be privileged from production.  

 

  My Lords, I think the fallacy of the Court of Appeal, if I may respectfully say so, is in treating the statute as if it made the execution of voluntary deeds with or without the intention to put property in such a position as not to incur liability to the tax as being an improper or an illegal act. In my opinion, it is nothing of the kind. It is a perfectly legal act, and there is nothing upon this information which to my mind clearly states any such case of illegality as would overrule the privilege on the part of a witness.  

 

  LORD BRAMPTON. My Lords, I entirely concur.  

 

  LORD LINDLEY. My Lords, I also concur; but I will add a few words out of respect to the learned Lords Justices from whom I differ.  

 

  The question arises in this way. In May, 1896, a gentleman died, and under the Colonial law his estate had to pay certain duty. Some time before he died he executed some voluntary conveyances, and it is said that under the law of the Colony the property comprised in those voluntary conveyances was subject to duty. In order to obtain evidence about those documents, a commission was sent over here, and under the statute to which reference has been made, 22 Vict. c. 20, witnesses were called before that commission, and we have to consider the matter from the point of view of an action or information in this country raising certain definite issues in support of which witnesses were called and examined. When the witnesses were called they were asked to produce these documents,  

 

 

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206

 

 

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BULLIVANT v. ATTORNEY-GENERAL FOR VICTORIA. (H.L.(E.))

 

 

 

Lord Lindley.

 

 

 

  and above all the instructions given to the solicitor who prepared them. The answer was at once set up by the witnesses, “Those are privileged documents,” the privilege being founded upon the ordinary professional confidence which has been held in this country to be a good ground for the non-production of documents.  

 

  Now, my Lords, starting there, I will observe that the grounds, whatever they are, are legal as well as equitable. There is no equitable doctrine, as distinguished from a legal doctrine, involved in the matter. Primâ facie, if a witness swears, as one of these witnesses did, to circumstances which give rise to the privilege, the privilege must prevail, unless there is a good answer. What we have to consider, therefore, is the answer to the privilege so raised.  

 

  Now, there are two answers: the first is a very short one, if it is good for anything. It is said that, the testator being dead, the privilege is gone. My Lords, I am satisfied that that answer is insufficient. I never heard it before; but it does appear that in the case of Russell v. Jackson (1) it was considered, and in the judgment of Turner V.-C. there are some passages which have been invoked in favour of that being a good answer; but they are easily explainable when one comes to look at them. The mere fact that a testator is dead does not destroy the privilege. The privilege is founded upon the views which are taken in this country of public policy, and that privilege has to be weighed, and unless the people concerned in the case of an ordinary controversy like this waive it, the privilege is not gone – it remains. In the case before Turner V.-C., for the reasons which were given by Mr. Haldane, and which are apparent in the judgment, the privilege could not be set up. One person was trying to set it up against the other, both claiming under the testator, and the Vice-Chancellor held that it could not be set up. So much for that answer.  

 

  The next answer given to this claim of privilege is that there was illegality or fraud or trickery, and that this solicitor, or those concerned, cannot set up the privilege because there is no privilege involved in consulting a solicitor as to how you  

 

  (1) 9 Hare, 387.  

 

 

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207

 

 

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BULLIVANT v. ATTORNEY-GENERAL FOR VICTORIA. (H.L.(E.))

 

 

 

Lord Lindley.

 

 

 

  are to do an illegal act. That raises the question whether there was any illegality involved in the preparation of these deeds. As to that, the case stands in this way. The whole claim for this duty is based upon a Colonial Act of Parliament which renders the duty payable upon any conveyance (I am reading it short) with intent to evade the payment of duty. The word “evade” is ambiguous. There are various ways of evading a statute. The discussion and the decision which took place in the Privy Council in the case of Simms v. Registrar of Probates (1) shew the ambiguity of the expression. Now the pleadings follow the Act of Parliament. I do not see that the witness can quarrel with that in any way, and the affidavit made in support of the application for an order for the production of these documents follows the Act of Parliament – they both use the ambiguous expression “evade.” As I have said, there are two ways of construing the word “evade”: one is, that a person may go to a solicitor and ask him how to keep out of an Act of Parliament – how to do something which does not bring him within the scope of it. That is evading in one sense, but there is nothing illegal in it. The other is, when he goes to his solicitor and says, “Tell me how to escape from the consequences of the Act of Parliament, although I am brought within it.” That is an act of quite a different character. Now when we look at the answer given to the witnesses who set up this privilege, we find that the answer says: “You are evading the Act of Parliament.” What does that mean? Do you mean to say that I, as a solicitor, have been conspiring to do that which is illegal? That is not said – there is no pretence for it. If you mean that, you have not said so; if you mean evade in the other sense, your answer does not destroy the privilege. That, my Lords, is the short answer.  

 

  My Lords, it appears to me that the Court of Appeal have overlooked the fact that the word “evade” has the double meaning to which I have referred. They seem to have assumed that what was done here must have been a conspiracy to do something forbidden by the Act and to avoid the consequences of illegal conduct. Under these circumstances I think the  

 

  (1) [1900] A. C. 323.  

 


 

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208

 

 

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BULLIVANT v. ATTORNEY-GENERAL FOR VICTORIA. (H.L.(E.))

 

 

 

 

 

 

 

  appeal ought to succeed, and that the order appealed from should be reversed.  

 

 
 
  Order appealed from reversed. (1)  

 

  Lords’ Journals, May 2, 1901.  

 

 

 

 

  Solicitors: Crowders, Vizar
d & Oldham; Freshfields.
 

 

  (1) The order was not finally settled when this report went to press, a question having, arisen as to costs.