Overview of legal professional privilege in the context of government practice and how the courts have recently considered the issue.

June 2007 - Paper

Summary - In this article we provide an overview of legal professional privilege in the context of government practice and how the courts have recently considered the issue. We also give practical information on recommended practices for maintaining legal privilege when performing work for government.

_________________________________________________

What is legal privilege?
Why we need it?
Scope of legal privilege
Legal capacity
Exceptions to Legal Privilege
Waiver
Public interest
Recommended Practices
Australian Law Reform Commission inquiry
_________________________________________________

What is Legal Privilege?

Broadly speaking, legal professional privilege protects the disclosure of certain communications between a lawyer and a client when these communications are for the dominant purpose of seeking or providing legal advice, or for use in existing or anticipated legal proceedings.1

In most cases legal professional privilege will be claimed over documents, but it also applies to oral or electronic communications between a lawyer and their client.

It extends to any lawyer, including government lawyers who do not hold a practising certificate.2

_________________________________________________

Why We Need It?

The purpose of legal professional privilege is to enable a client to provide full and frank disclosure to his/her lawyer without fear that this information will be used against them. This in turn enables lawyers to provide competent and independent legal advice. It is also an important check in the balance of power between the individual and the state.

As Allsop J commented in Kennedy v Wallace in 2004:

The privilege is to be seen as a fundamental common law right in relation to legal advice and litigation. The purpose and rationale of the privilege is to enable persons in a civilised complex modern society to be able to conduct their affairs with the assistance of legal advice. Expressed thus, it is a fundamental right conforming to and underpinning the rule of law.3

_________________________________________________

Scope of Legal Privilege

Communications must be for the ‘dominant purpose’ of legal advice or in relation to actual or anticipated litigation in order to attract privilege.

The purpose for which a document is brought into existence is a question of fact that must be determined objectively. Evidence of the intention of the document’s maker, or of the person who authorised or procured it, is not necessarily conclusive.4

Dominant has been held to mean a ‘ruling, prevailing or most influential’ purpose.5 A dominant purpose is one that predominates over other purposes; it is the prevailing or paramount purpose.6 In determining whether the dominant purpose exists, the courts will examine the circumstances of the case objectively, rather than considering the subjective view of the person making the communication.7

Typically, legally privileged communications occur between a client and its legal adviser, but can include those between a client and a third-party e.g. consultants.8 If the dominant purpose test is met, legal professional privilege extends to:

  • Notes, memoranda or other documents made by staff of the client, if those documents relate to information sought by the client’s legal adviser to enable legal advice to be provided.9
  • A record or summary of legal advice, even if prepared by a non-lawyer, but not to the client’s opinions on, or stemming from the legal advice.
  • Drafts, notes and other material brought into existence by the client for the purpose of communication to the lawyer, whether or not they are actually communicated to the lawyer.10
  • The lawyer’s revisions of the client’s draft correspondence.

The privilege does not extend to legal advice contained in policy and procedure manuals.

Privilege cannot be claimed over communications for use in existing or anticipated legal proceedings before a commission or tribunal.

_________________________________________________

Legal Capacity

There has been increased judicial scrutiny of the role and conduct of in-house lawyers. Courts have illustrated a greater willingness to examine the nature of their employment and in particular, the involvement of in-house lawyers in commercial decision-making, to see whether they are acting in their capacity as a lawyer or have the requisite independence to provide unfettered advice.

To attract privilege, communications must be made in a lawyer’s capacity as a lawyer, rather than any other capacity. This can be particularly difficult for in-house lawyers to prove due to the nature of their employment. As in-house lawyers, they are often likely to act for purposes unrelated to providing legal advice, as opposed to external lawyers who are instructed to provide legal advice.

Communications made by in-house lawyers who act beyond their role as a legal adviser may also fall outside the scope of privilege because they are found to have been made for mixed non-legal and legal purposes rather than a ‘dominant purpose’.11

A key requirement of acting in the capacity of a lawyer is that the lawyer exercises independent professional judgement. Claims for privilege have been rejected on the basis that in-house lawyers have not acted at sufficient arms length from their client. For example, doubts have been expressed as to whether legal professional privilege extends to documents produced by in-house lawyers who are subject to the directions of their managers and therefore, might lack the necessary independence. In addition, legal professional privilege has been denied in cases where in-house lawyers have been involved in the commercial decision-making of a transaction for which the client is claiming privilege.12

Whether an in-house lawyer has a practising certificate has also been considered by courts when deciding whether privilege should apply to an in-house lawyer’s advice.13 Whilst not having a practising certificate is not fatal, the important issue is independence. This reflects the view that a lawyer’s primary obligation is to the court, rather than the lawyer’s employer and/or client.14

The importance placed on legal capacity means that clients wishing to protect communications must ensure that their in-house lawyers are not constrained from upholding the ethical and professional standards of an independent lawyer. They should also ensure that the legal work of an in-house lawyer is kept distinctly separate from their involvement in other aspects of a transaction.15

_________________________________________________

Exceptions to Legal Privilege

There are a number of exceptions to legal professional privilege, even when the dominant purpose test is satisfied. These exceptions apply in circumstances where:

  • The privilege has been waived.
  • It is in the public interest.
  • A statute modifies or removes the privilege where the legislature affords a competing public interest a higher priority.
  • The communication is for the purpose of facilitating a fraud or crime.

     

_________________________________________________

Waiver

A client will be deemed to have waived privilege if it acts in a way which is inconsistent with the confidentiality which the privilege is supposed to protect. A waiver may occur either explicitly or implicitly.16

As the privilege exists to protect the client, courts will consider whether the client has made any waiver of the privilege, not the legal adviser, subject to considerations of fairness when necessary.17

Statements revealing advice and statements referring to advice

There is no general rule as to whether a statement which reveals the contents of legal advice, even if it does so in a summary way or by reference only to a conclusion, has the effect of waiving privilege. An example of revealing the substance, gist or conclusion of advice is a statement by a party that it ‘has legal advice supporting this position’.

Whether a disclosure of legal advice amounts to a waiver of privilege depends on the circumstances of the case and in particular, whether the disclosure is inconsistent with the confidentiality which the privilege aims to protect. Thus, comments which amount to an implied waiver in one scenario, may not amount to a wavier in another scenario, unless there are similar facts involved.18

Implied waiver was found to exist in the Victorian case of Switchcorp Pty Ltd v Multimedia Ltd. It was held that privilege had been impliedly waived when a company made the following statement: ‘The Board’s lawyers have been instructed to vigorously defend the claim and have advised that the plaintiffs’ claim will not succeed’.19

Interestingly, in the more recent Victorian case of Secretary, Department of Justice v Osland the court held that in some circumstances even public disclosure of the substance of confidential legal advice may not amount to a waiver. In this case, the Attorney-General issued a press release stating that:

[t]he joint advice recommends on every ground that the petition should be denied. After carefully considering the joint advice, I have recommended to the Premier that the Governor be advised to deny the petition. The Governor has accepted this advice and denied the petition.

The court asserted that the purpose for which the conclusion of legal advice was disclosed, being that of explaining or justifying the decision to deny the petition, was consistent with the maintenance of confidentiality. The purpose of the disclosure was not to disadvantage the other party and it did not operate unfairly so as to distort the advice or create a misleading impression.20

Voluntary disclosure of the gist, substance or conclusion of legal advice will usually amount to a waiver of that advice in circumstances where the disclosure is for the purpose of seeking an advantage by promoting the strength of a position or case. This is because it would be inconsistent and unfair, having disclosed the substance of advice to the other party, to then seek to protect the rest of that advice which may not be as advantageous to the disclosing party.21

A statement which refers to legal advice, for example, a statement that ‘on the basis of legal advice received, we believe…’ will probably not result in a waiver, even if it associates that advice with conduct undertaken or with a belief held by the client.

How to communicate advice but not waive privilege

Correspondence and other communications must be drafted carefully to ensure that privilege is not waived. While the use of privileged material for the purpose of formulating a communication might not waive privilege - disclosing, using or relying on the substance and effect of legal advice in a communication could be inconsistent with privilege being maintained. For example, widely circulating legal advice within a government department may amount to a waiver of privilege. It is possible, however, that if provided on a sufficiently confidential basis, communicating the substance of legal advice to others will not result in a waiver.

Disclosure of the gist or conclusion can also waive the privilege to the reasons behind the conclusions. Again, it might be all right for the writer to say ‘advice has been received, and having considered that advice, certain action will or will not be taken’; but it might not do to say that ‘following advice which is ABC, we now do the following’.

When the conclusion of a piece of legal advice is expressed in a letter to another party, privilege may be waived even if the letter asserts privilege is not being waived. A court considered it was inconsistent with maintaining privilege for a client to use an extract from a particular piece of legal advice as a positive means of reinforcing to another party a position the client asserted in their ongoing dialogue. The court ruled that the waiver of privilege only affected that part of the document relating to the conclusion in question and that other parts of the document were still protected by the privilege.22

In Australian Wheat Board Ltd (AWB) v Cole (no 5),23 the court took a more expansive approach. In this case the AWB informed the Cole Inquiry and Commonwealth Government Officials (amongst others) that after thorough investigations by its lawyers, it had been advised that there was no evidence that it had violated any United Nations resolutions or engaged in any other unlawful activity. Not only did the court find that legal professional privilege had been waived over the legal opinions referred to by AWB, but that AWB had also waived privilege for all of the documents generated as part of the investigation which had influenced the legal opinion provided. The effect of this decision is that the disclosure of one privileged document may now result in a waiver of privilege over all other documents relating to that legal opinion.

Communication of legal advice of one legal adviser to another legal adviser

Where a client has enlisted the services of more than one legal adviser, legal professional privilege can apply to communications between these legal advisers if they are members of the same project legal team.24

Communications between and within Government Departments and Agencies

It is often a requirement for departments to disseminate information (which is capable of being privileged) to other departments and agencies who may be involved in, or have a particular interest in, a transaction or matter. The question is, does this waive privilege?

The case of Western Australia v Watson25 dealt with the question of whether the knowledge of one Minister could be attributed to another. The case did not relate to legal advice, but the same principles are likely to apply, namely that:

  • Each Minister, and in many cases, the senior officials of each government department or agency, may be taken to be ‘the Crown’.
  • Knowledge acquired by any Minister or senior official may, at least in some situations, be taken to be the knowledge of the Government as a whole.
  • Every Minister or senior official may have a duty to communicate certain knowledge to the Government as a whole.

In the case of Mann v Carnell26 the Australian Capital Territory (ACT) Chief Minister revealed to a member of the ACT Legislative Assembly, legal advice received by the ACT Government regarding settlement of a claim. The disclosure was made on a confidential basis for the purpose of satisfying the member (who was pursuing a complaint by the other party to the settlement) that the settlement did not involve a waste of public funds. The High Court held that privilege was not waived by the disclosure because the privilege was that of the body politic, the Australian Capital Territory.

These cases illustrate that the privilege against disclosure in relation to the provision of legal advice will not be waived by the circulation of advice within the Executive because legal advice given to ‘the Crown’, is the property of the Crown. Therefore, the government as a whole, rather than any department, agency or official, has the property in the advice, and the right to disclose it or to withhold disclosure, as the case may be.27

However, these cases do not discuss the legal standing of less senior officials. In addition, whether an agency constitutes part of ‘the Crown’ is often not clear cut. Although legally privileged communications can occur between a client and a third party, the more broadly legal advice is circulated, the higher the risk that legal professional privilege will be impliedly waived. It is important for Project Managers and other staff to consider these issues before releasing confidential (and potentially legally privileged) communications. In particular, procedures should be put in place to ensure that:

  • Third parties are aware that the information is provided on a confidential basis.
  • The potentially privileged information is not circulated wider than necessary.
  • The communications are marked as ‘Strictly Private and Confidential’ and ‘Subject to Legal Professional Privilege’, to highlight the nature of the document.

     

_________________________________________________

Public Interest

Although the Freedom of Information Act 1982 (Vic) expressly exempts a document if it is of such a nature that it would be privileged from production in legal proceedings on the grounds of legal professional privilege,28 VCAT can order the disclosure of documents that would otherwise be exempt where the public interest necessitates its release.29 While the override could potentially apply to legally privileged documents, the maintenance of that privilege itself is a matter in the public interest and an important common law right.30 As such, competing interests will be measured to determine which is the overriding interest according to the facts of a particular case.31

For more information on Freedom of Information, please refer to the Privacy and FOI Publications and Papers on the VGSO website.

_________________________________________________

Recommended Practices

As discussed, it should not be assumed that all communications will be protected by legal professional privilege. Ultimately, it will depend on the particular circumstances. Legal professional privilege between a legal adviser and the client and between legal advisers who are part of the same project legal team is more likely to be maintained if the following practices are adopted:

  • Marking documents that include legal advice as ‘Strictly Private and Confidential’ and ‘Subject to Legal Professional Privilege’ to highlight the nature of the document.
  • Procedures put in place to ensure that if a document is to be sent to a third party, it is done on an express basis of confidentiality. Where appropriate a copy should also be sent to the relevant legal adviser to comment on the communication.
  • Privileged documents (or communication of their substance) are not be circulated wider than necessary and only on a confidential basis.
  • When seeking the assistance of third parties in formulating a request for legal advice, make it clear that the information is required for the purpose of obtaining legal advice.
  • Legal files (both hardcopy and electronic) should be marked ‘Legal in Confidence’.
  • Where a project legal team exists, legal advice that has been prepared by one legal adviser should be given to another legal adviser through the relevant Project Manager.
  • Care should be taken in making public statements or drafting correspondence in relation to legal advice.
  • Should public disclosure of the fact that legal advice has been obtained (as opposed to disclosure within a department or to a Minister), reference can be made to the fact that legal advice has been obtained on a particular issue, however the substance of the advice should not be revealed. This includes summarising or describing the conclusion of legal advice, and even giving the ‘gist’ of what it says.
  • The Legal Manager of the in-house legal team should have a practising certificates. This will indicate to the court that they are subject to the professional conduct rules governing lawyers.
  • The legal adviser’s title must accurately reflect the legal adviser’s role, for example, ‘lawyer’ and not ‘policy officer’. Also ensure that their separate role/s are clearly defined in the Contract of Employment and Role Description.

     

_________________________________________________

Australian Law Reform Commission Inquiry

A number of questions regarding legal professional privilege have recently been referred to the Australian Law Reform Commission (ALRC) by the Commonwealth Attorney-General for consideration and review. These questions relate to the coercive information gathering powers of Commonwealth bodies.

The ALRC has been instructed to consider the investigatory and associated functions of Commonwealth bodies. The ALRC has also been asked to consider whether it would be advantageous to:

• modify or abrogate the privilege in order to achieve a more effective performance of Commonwealth investigatory functions;
• clarify all existing federal provisions that modify or remove the privilege, with a view to harmonising them across the Commonwealth statute book; and
• introduce or clarify other statutory safeguards where the privilege has been modified or abrogated, with a view to harmonising them across the Commonwealth statute book.32

The ALRC has released an Issues Paper which is currently available on-line.33 A detailed Discussion Paper will be released in August or September 2007 and the final report tabled in Parliament on 3 December 2007.34

_________________________________________________

For further information

For further information or legal advice on any issues raised in this paper contact:

eldduR semaJ on 8684 0470
Deputy Victorian Government Solicitor

neloN euS on 8684 0402
Assistant Victorian Government Solicitor

eeL nehpetS on 8684 0410
Assistant Victorian Government Solicitor

srehtimS nahtanoJ on 8684 0411
Assistant Victorian Government Solicitor

The VGSO is the primary source of legal services to the Victorian state government and its statutory authorities, providing strategic advice and practical legal solutions.

_________________________________________________

1. Esso Australia Resources Ltd v Commissioner of Taxation (1999) 201 CLR 49 at 64–65 [35]; Daniels Corporations International Pty Ltd v Australian Competition & Consumer Commission (2002) 213 CLR 543 at 552 [9].
2. Refer to the Legal Profession Act 2004 s2.2.2(2)(g). The court in Commonwealth v Vance [2005] ACTCA 35 favours the view that it is not necessary for legal advisers to hold a practising certificate in order to claim privilege, as long as he or she is admitted.
3. Kennedy v Wallace [2004] FCAFC 337 (Unreported, Black CJ, Emmett & Allsop JJ, 25 March 2004) [201] (Allsop J).
4. AWB Ltd v Honourable Terence Rhoderic Hudson Cole [2006] FCA 571 at 110.
5. Esso Australia Resources Limited v Commissioner of Taxation of the Commonwealth of Australia (1999) 201 CLR 49.
6. See AWB Ltd v Honourable Terence Rhoderic Hudson Cole [2006] FCA 571 at 105; FCT v Pratt Holdings at 279–280 [30] per Kenny J.
7. Kennedy v Wallace [2004] FCA 32 (Unreported, Gyles J, 25 March 2004) and Sydney Airports Corporation Ltd v Singapore Airlines Ltd [2005] NSWCA 47.
8. For a more in-depth discussion refer to Pratt Holdings Pty Ltd v Commissioner of Taxation 2004 ATC 4526 at 4333 (Finn J).
9. Trade Practices Commission v Sterling (1979) 36 FLR 244 at 246.
10. Saunders v Commissioner of Australian Federal Police (1998) 160 ALR 469 at 472.
11. Belle Rosa Holdings Pty Ltd v Hancock Prospecting Pty Ltd (1992) 8 WAR 435.
12. See for example Seven Network Ltd v News Ltd [2005] FCA 142 and Seven Network Ltd v News Ltd (2005) 225 ALR 672.
13. See Waterford v Commonwealth (1987) 61 ALJR 350, 360 and Vance v Air Marshall McCormack in his capacity as Chief of Air Force & Anor [2004] ACTSC 78 (Unreported, Crispin J, 2 September 2004). Overruled Air Marshall McCormack in his capacity as Chief of Air Force v Vance [2005] ACTCA 35.
14. Leo Cussen Institute, Legal Professional Privilege: Update (April 2006) 27.
15. For further guidance on capacity and independence refer to Vance v McCormack (2004) 154 ACTR 12.
16. See the inconsistency test as enunciated by Gleeson CJ, Gauldron, Gummow and Callinan JJ in Mann v Carnell (1999) 201 CLR 1 at 13.
17. Switchcorp Pty Ltd v Multimedia Ltd [2005] VSC 425.
18. See: Mann v Carnell (1999) 201 CLR 1 at 15; Commissioner of Taxation v Rio Tinto Ltd (2006) 151 FCR 341 at 354; and Secretary, Department of Justice v Osland [2007] VSCA 96 at 49.
19. Switchcorp Pty Ltd v Multimedia Ltd [2005] VSC 425.
20. Secretary, Department of Justice v Osland [2007] VSCA 96 at 67.
21. Bennett v Chief Executive Officer of the Australian Customs Service (2004) 140 FCR 101 at 104.
22. Ashfield Municipal Council v RTA [2004] NSW SC 917.
23. Australian Wheat Board Ltd (AWB) v Cole (no 5) [2006] FCA 1234 (AWB no 5)
24. See Re Purcell and Department of Human Services (unreported, VCAT, Judge Duggan VP, 19 December 2001) at 21 and Re Richards and Transport Accident Commission [2005] VCAT 1444 at 19.
25. [1990] WAR 248.
26. Mann v Carnell (1999) 201 CLR 1.
27. Victorian Government Solicitor, VGSO Submission to the Review of Government Legal Services, June 2000, 36.
28. Refer to s32(1) of the Freedom of Information Act 1982 (Vic).
29. Refer to s50(4) of the Freedom of Information Act 1982 (Vic).
30. Refer to Daniels Corporation International Pty Ltd v ACCC (2002) 213 CLR 543; Re Adelaide Brighton Cement Limited and Victorian Rail Track [2004] VCAT 930; and Re Chadwick and DPS (1987) 1 VAR 444.
31. Refer to the recent case of Osland v Department of Justice [2005] VCAT 1648.
32. Australian Law Reform Commission, ‘About the Inquiry’ , 20 December 2006, http://www.alrc.gov.au/inquiries/current/privilege/
about.html

33. ALRC Issues Paper available at http://www.austlii.edu.au/au/
other/alrc/publications/issues/33/
or refer to the ALCR website http://www.alrc.gov.au/
34. For more information see the ALRC website: www.alrc.gov.au/inquiries/current/privilege/