Barrister-at-Law & Accredited Mediator

Category: Continuing Legal Education

Are communications with litigation funders privileged?

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In this episode, I discuss privilege issues related to litigation funders, and whether communications between litigation funders, lawyers, and parties, are subject to discovery or subpoenas.


It appears to be increasingly common that clients who have good prospects of obtaining a property settlement in a family law proceeding are unable to afford legal fees upfront.

At the same time, it is less and less common for lawyers to be prepared to run family law litigation on the promise of payment at the end of the matter.

Litigation funders are often the answer to filling that gap.  

Litigation funders assess the merits and prospects of a property case, necessarily with input from the client and the solicitors, and then agree to lend funds to cover the legal fees, typically with some security provided by the client.

The information sought by litigation funders from solicitors largely mirrors the sort of information which a solicitor might provide to a client when advising on the merits of their case.

When it comes to actually disbursing funds, the usual process is that the solicitors provide copies of their invoices to the litigation funder, and the funder pays the solicitors directly.  Those bills often contain detailed narrations which may reveal strategy or steps about to be taken by the client.

So what happens if the other party to the litigation demands discovery of communications with the litigation funder, or issues a subpoena to produce documents, directed to the litigation funder?

Litigation Privilege

Let’s first look at the law of litigation privilege.  

To avoid any confusion, I want to be clear that family law in Australia is a federal law, and so the Evidence Act 1995 (Cth) is the legislation which applies, rather than any state or territory Evidence Act.

Division 1 of Part 3.10 of the Evidence Act relates to Client Legal Privilege.  At common law, this concept is known as legal professional privilege.

Personally, I prefer the term client legal privilege, because the privilege belongs to the client, not to the legal practitioner.

Evidence Act s 119 relates to a particular kind of Client Legal Privilege known as litigation privilege.

Evidence is not to be adduced if, on objection by a client, the court finds that adducing the evidence would result in disclosure of: 

  1. (a)  a confidential communication between the client and another person, or between a lawyer acting for the client and another person, that was made; or 
  2. (b)  the contents of a confidential document (whether delivered or not) that was prepared; 

for the dominant purpose of the client being provided with professional legal services relating to an Australian or overseas proceeding (including the proceeding before the court), or an anticipated or pending Australian or overseas proceeding, in which the client is or may be, or was or might have been, a party. 

For the purposes of this discussion, where we are talking about production of documents in an Australia family law proceeding, we are really just interest in 2 aspects of s 119:

  • whether the document in question is a confidential communication; and
  • whether the document was prepared for the dominant purpose of the client being provided with professional legal services.

Confidential Document

The term “confidential communication” is defined in s 117, which contains the definitions relevant to Division 1 of Part 3.10:

confidential communication means a communication made in such circumstances that, when it was made: 

(a) the person who made it; or 

(b) the person to whom it was made; 

was under an express or implied obligation not to disclose its contents, whether or not the obligation arises under law. 

 Lawyers are obviously under both legal and ethical confidentiality obligations.

But are documents prepared for the purpose of obtaining litigation funding prepared for the dominant purpose of the client being provided with professional services?

There are two leading Australian authorities on this issue, both decided in 2006:

In Rickard Constructions, Bergin J held that the dominant purpose of confidential communications with the litigation funder

was to ensure the overall capacity of the plaintiff to have funding and to ensure that such funding would be forthcoming for the continued funding of the litigation.

The Court concluded that the documents were privileged pursuant to s 119 of the Evidence Act 1995 (NSW), which is in identical terms to s 119 of the commonwealth Act.

Spotless was determined on the basis of common law legal professional privilege, as Victoria had not yet enacted its current Evidence Act (which largely mirrors the Commonwealth Act).  

Chernov J pointed out:

It is common ground that the original communication, namely, the legal advice that was provided to the respondent, was subject to legal professional privilege. And it was that communication — that advice — that was passed on to the third parties. That the re-communication was in written form is, as I have said, irrelevant to this issue. What is of relevance is that, on its proper characterisation, the communication that was made to the third parties, effectively by the respondent, was the legal advice which it had received and to which privilege attached.

In the family law arena, in the 2007 case of Blue & Blue [2007] FamCA 1444, Carmody J, after considering Rickard ConstructionsSpotless, and other authorities,  found not only that the litigation privilege applies to communications between solicitors and litigation funders, but also that the principle was “concomitant with public policy”, in that it was in the public interest for litigants to be able to access litigation funding.

So the answer is clear: communications with litigation funders are covered by client legal privilege.

Stella & Stella [2023] FedCFamC1F 1092

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In this episode, I discuss Strum J’s recent judgment in Stella & Stella, which involved Stanford arguments, multiple pools and late inheritances.


Stella & Stella was a matter heard by Strum J in the Major Complex Financial Proceedings list.

Each of the husband and wife was in their early- to mid-50s. They had 3 adult children together.

The total value of the non-superannuation property of the parties, or either of them, was around $16 M.  There was controversy about add-backs and treatment of contingent tax issues. Around $10.5 M worth of the non-superannuation property had been obtained by the parties by way of inter vivos gifts or inheritances received from the husband’s late grandmother, or by distributions from a trust associated with her.

It’s important to note at the outset that those property interests were variously received by each of the parties, not only by the husband.

The crux of the case was how those gifts, inheritances and distributions to each of the parties were to be treated.


The husband’s position was that it was not just and equitable for there to be any property adjustment at all.  He was running what family lawyers often call a Stanford argument.

The wife contended for a 2-pool approach:

  • Pool A consisting of so-called “non-inherited interests”
  • Pool B consisting of the property interests derived from the husband’s late grandmother.

She contended that it was just and equitable for there to be property adjustment with respect to Pool A, but not with respect to Pool B. In other words, she was running a Stanford argument only in relation to Pool B.

Legal Principles

His Honour traversed the authorities in relation subsection 79(2), being the subsection which requires the Court to assess whether it is just and equitable to make a property adjustment order.

His Honour referred to the observation by the Full Court in Bevan & Bevan that subsection 79(2) is unlikely to impact most cases, as the just & equitable requirement will readily be satisfied by virtue of the parties no longer living together, and there is no longer the common use of property.

Importantly, his Honour discussed the 2017 Full Court decision in Zaruba, where it was held that, whilst in the vast majority of cases the justice & equity question is appropriately addressed without making distinctions between individual assets, “the position is likely to be different in circumstances where … the characteristics of the property and the circumstances of its acquisition, improvement and the like can be seen to differ significantly…

In relation inheritances, Strum J considered the two 2017 Full Court decisions, Holland and Calvin & McTier, which in turn referred to well-known authorities like Bonnici, and Farmer & Bramley.

The upshot is that the Court has a discretion as to how to treat late inheritances, including whether to include them in a global pool or deal with them separately, and how much weight to give to contributions made directly to the inheritance as opposed to global contributions in the relationship.

Strum J also, of course, discussed the principles arising from Gosper and Kessey, and how Chisholm J in 1997 discussed those principles in Pellegrino.

At paragraph 87 of his judgment, Strum J summarised the principles arising from the authorities.  I highly recommend that you read that paragraph in full.  

Some key points relevant to my discussion here are the following:

(q)          Whilst, in the vast majority of cases, it will be appropriate to address the s 79(2) question by ascertaining the legal and equitable interests in property without making distinctions between individual assets, the position is likely to be different in circumstances where the characteristics of the property and the circumstances of its acquisition, conservation and improvement can be seen to differ significantly and where the parties’ relationship has taken on quite different characteristics during the period to which the s 79 enquiry is directed.

(r)          The expression “any property of the parties to a marriage or either of them” in s 79(4)(a)–(b) is sufficient to encompass both the entirety of their property and their individual assets, such that if the parties’ interests in specific items of property differ, or they have made differing contributions, justice and equity may best be served by proceeding upon an asset by asset basis in the division of the property between them.

(s)          The nature of a particular interest or interests in property, and when and how it was acquired, conserved, improved, or used, may be very relevant to whether a s 79 order should be made at all; whether contributions should be assessed globally or asset by assets or by reference to two or more pools; and what is the nature and extent of each party’s contributions. This calls for the exercise of discretion, to be exercised not by reference to whether property might conveniently be described as “an inheritance” or “after-acquired” but, rather, by reference to the nature, form and characteristics of the property in question and the nature, form and extent of the parties’ contributions of all types across the entirety of their relationship. However, there is no basis for excluding from consideration any property in which the parties have an existing legal or equitable interest.

(t)          Whilst it might be convenient to describe property by reference to a characteristic (for example, as an “inheritance” or “post-separation” or “after-acquired” property), its place within the ambit of s 79 is determined by the fact that it exists as a legal or equitable interest of the parties to the marriage or either of them and that the nature, form and characteristics of it and the contributions of all types made by the party suggest that it should be treated in a particular way.

(u)          A party cannot be regarded as contributing significantly to an inheritance received very late in the relationship or after it has terminated, except in very unusual circumstances, including the care of the testator prior to death.

(x)          Where a relative of one of the parties to a marriage gifts property to both of the parties, dependent upon the circumstances of the case, it is open to the Court in such a case to look at the actuality and treat that as a “financial contribution made directly … on behalf of” the party related to the donor. In many such cases, that gift was only made because of that relationship and, in reality, as a means of benefiting that relative in the marriage. In other cases, the evidence, including evidence that the donor intended to benefit both spouse parties, may not justify that conclusion. If so, the application by the parties of that property to the marriage would, at least at that point, be an equal contribution by them.

On the facts of the case, his Honour determined that it was just and equitable to make a property adjustment order with respect to Pool A – the property which was not derived by way of inter vivos gifts or inheritances from the husband’s grandmother.

Without going into the detail, essentially, there was, irrespective of the husband’s initial contribution, jointly owned property, and no express consideration by the parties of how their property interests should be arranged.

In relation to the inter vivos gifts, Strum J held that there was insufficient evidence of the late grandmother’s intentions to find that the gifts to the wife were intended to specifically benefit her, rather than the parties jointly or the husband. 

This was despite his Honour finding that the wife and the husband’s grandmother had had a close relationship.

In relation to the inheritances, particularly the inheritance received by the wife, Strum J considered the fact that there were separate bequests to the husband and the wife (among many others).  His Honour gave significant weight to the language of the late grandmother’s will, including a reference to her “granddaughter-in-law”, as opposed to a term such as “my grandson’s wife”. 

His Honour found that the evidence established a clear intention on behalf of the grandmother to separately benefit each of the husband and the wife by her separate bequests to each of them.

On that basis, his Honour determined that it would not be just and equitable to make an adjusting order with respect to the parties’ respective inheritances from the husband’s late grandmother.

However, the same could not be said of the inter vivos gifts, which his Honour grouped with the Pool A assets, and which were therefore subject to adjustment.

Forum Disputes in Family Law

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In this episode, I discuss how forum disputes are determined in family law, and how the process can differ depending on the subject matter of the proceedings.


A forum dispute arises when two different Courts are asked to determine the same subject matter.

In the family law context, this generally means a forum dispute between the Federal Circuit and Family Court of Australia (Division 1 or Division 2), and a Court in another country.


Most Australian lawyers will be at least vaguely aware that the usual test to be applied to a forum dispute is whether the Australian Court is a clearly inappropriate forum.

We were taught a bit about that concept in law school.  We all have vague memories of authorities like Voth v Manildra Flour Mills.

However, like many other legal concepts, family law does things a bit differently.

Family Law Approach

In 1994, the High Court in ZP v PS, determined that the rule in Voth applied to all matrimonial proceeding except parenting matters.

Since then, the Full Court of the Family Court has repeatedly confirmed the approach to be taken in relation to forum disputes in family law.  

The correct test to be applied depends upon whether the forum dispute involves parenting issues. 

If parenting is in play, then it depends on whether the dispute is solely about parenting, or is about parenting amongst other matters.

In essence, if the forum dispute is solely about parenting, then the clearly inappropriate forum concept does not apply.  

In those cases, it is the usual question of the child’s best interests which will determine whether the parenting dispute is to be decided in Australia or in the other jurisdiction.

If the forum dispute involves issues other than parenting, then the clearly inappropriate forum test applies.

Interestingly, where more than parenting is involved, it is open to the Court to split the forum question, such that the forum dispute about parenting is determined separately on the basis of the child’s best interests, and the forum dispute about the balance of the issues is determined according to the clearly inappropriate forum test.

Best Interests

If the forum dispute is to be determined on the child’s best interests, those interests are assessed by the Court in the usual way.

Clearly Inappropriate Forum Test

If the clearly inappropriate forum test applies, there is guidance to be found in several Full Court decision as to what matters ought to be considered, in addition to the non-exhaustive list of considerations set out in Voth.

The matters to be addressed and considered with respect to each of the competing jurisdictions include:

  • Whether each competing Court has jurisdiction to deal with the dispute.  This is usually a given by the time the FCFCOA is asked to determine a forum dispute
  • Convenience, expense and location of witnesses.  If most of the relevant witnesses are in the foreign jurisdiction, then that would weigh in favour of Australia being a clearly inappropriate forum
  • Each party’s ability to participate in the proceedings (which can include things like language, and whether a person is required to personally attend the relevant Court)
  • Connection to jurisdictions, and issues upon which relief may depend
  • Whether each jurisdiction will recognise the other’s orders and decrees – this is an important factor when parenting is involved but the clearly inappropriate forum test applies, I’ll have more to say about this factor shortly
  •  Which forum may provide for effectively for a complete resolution of the parties’ controversy
  • The order in which competing proceedings were instituted, and costs which have been incurred
  • The governing law of the dispute
  • The place of residence of the parties
  • Availability of each forum, which includes issues like how long parties have to wait for a final hearing in each jurisdiction
  • Any legitimate juridical advantage to litigation in either jurisdiction

Recognition of orders by of other jurisdiction

The Full Court in the 2017 decision of Kent held on this point that:

If the orders of the foreign court will not be recognised in Australia, that will ordinarily dispose of any suggestion that the local proceedings should not continue.

If the matter involves parenting issues, this can be determinative of the forum dispute, so it is essential to research whether an order of the competing foreign jurisdiction will be recognised in Australia.  

We need to look s 70G of the FLA provides for the registration of “overseas child orders”.

The term “overseas child order” is defined in s 4(1) of the Act.  It means “an order made by a court of a prescribed overseas jurisdiction that…”

So what does that mean? We turn to the Family Law Regulations 1984, at regulation 14.

Sub-regulation (a) points us to Schedule 1A, and says that each country, or part of a country, set out in column 2 of that schedule is a prescribed overseas jurisdiction.

If the country, or part of the country, in which the competing court sits is not there, then the overseas child order will not be recognised in Australia.

For financial matters, the question is less clear. There is no equivalent provision to section 70G in relation to overseas property Orders.

There is, however, authority in relation to enforcement of overseas property orders.  A recent example is the 2022 decision of the FCFCOA (Div 1) sitting the Apellate Jurisdiction in the case of Yadu and Orjit, where the Full Court held that the enforcement of an overseas property order fell within a matrimonial cause for the purposes of section 114(3).

In that case, the foreign Court had made orders about property in Australia.

In my experience, it can be necessary for parties to obtain Orders in both jurisdictions.  

For example, a few years ago I was involved in a matter where the parties had property in Australia and mainland China. The parties had never lived in Australia prior to separation.

After separation, the husband had removed something like three quarters of a million dollars in matrimonial funds from China to buy real property in Australia with his new partner.

A Court in China made Orders about property owned by the parties there, but declined to make Orders about Australian property. Subsequently, my client, the wife, who had never lived in Australia, applied for property adjustment order here.

My client adduced expert evidence from her Chinese lawyer as to the inability of the Chinese Court to deal with Australian property.

The Court in Australia determined that it was appropriate for it to deal with the adjustment of the Australian property. 

These are issues which, in my view, need to be investigated and assessed in each case and in relation to each jurisdiction.

In my view, the question of the recognition by each competing jurisdiction of the other’s decrees is not likely to be determinative in property-only proceedings.  

Divorce is Schmidt: A Family Law Series

I’m excited to let you know that, in the coming week, I will launch a series of short videos (also available as a podcast), where I discuss recent cases and topics of interest to family lawyers.

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