Client Legal Privilege

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Client legal privilege prevents certain communications from being produced even under orders such as discovery or subpoenas. The doctrine is substantive law and even a common law immunity.

  • To be protected by privilege, a party must establish:
    1. A professional relationship between a lawyer and client;
    2. Confidential communications (oral or documents );
      • 'Confidential' refers to communications which were made under express or implied obligation not to disclose its contents: s 117 of the CPA.
    3. Created for the dominant purpose of legal advice (s 118) or litigation (s 119).
      • Dominant purpose test: (Esso Australia Resources v Commissioner of Taxation):
        • Determined objectively: Esso Australia Resources v Commissioner of Taxation.
        • Determined according to intention of person who commissioned it, not author: Mitsubishi Electric v Victorian Workcover Authority.
        • Copy of a non-privileged document can still be privileged if the copy itself was made for the dominant purpose of legal advice or litigation :Commissioner Australian Federal Police v Propend Finance.
      • Privilege applies to third-parties only if made for purpose of litigation (not legal advice): Mitsubishi Electric v Victorian Workcover Authority.
  • Loss of privilege:
    • Where the privilege prevents the enforcement of a court order: s 121.
    • Where there has been a waiver of the privilege. A waiver can be express or implied, or even deduced when a client acts in a way which is inconsistent with the maintenance of the privilege: s 122.
      • There will not be a waiver if the disclosure of communication was done confidentially, was due to duress, or was compelled by court: s 122 (5) (confidential disclosure: Mann v Carnell; duress/compelled: Waugh v Merrill Lynch).
      • A disclosure of the ' substance ' of communications will constitute a waiver of the privilege as to the entire communication: s 122 (3).
        • Requires an evaluation - provision of reasoning as well as conclusion constitutes 'substance': Fenwick v Wambo Coal (No 2).
    • When there are joint civil defendants: s 124.
    • When a communication was made "in furtherance of the commission of a fraud or an offence or the commission of an act that renders a person liable to a civil penalty" or the communication was one that the lawyer/client knew/ought to have known was made "in furtherance of a deliberate abuse of a power": s 125.
    • When a communication "is reasonably necessary to enable a proper understanding of the communication" that has lost privilege under one of the above laws: 126.

This topic is within Resolving Civil Disputes.

Contents

Required Reading

Dorne Boniface, Miiko Kumar and Michael Legg, Principles of Civil Procedure in NSW (2d ed 2012) Thomson Reuters, [14.210]-[14.265].

Introduction

[1] Client legal privilege refers to the rule that certain communications during a litigation process are 'privileged' (ie, cannot be revealed or admitted as evidence). Client legal privilege is not only a procedural rule of evidence - its a full blown substantive law, and an important common law immunity. Privilege typically comes into play when a person is required to disclose documents for purposes of discovery or such circumstances.

The type of communications which are privileged include:

  • Communications between a person and his legal adviser (eg, letters or email).
  • Communications between a legal adviser and a third-party (eg, letters to experts, expert reports etc).
  • The Evidence Act 1995 (NSW) specifies that a document will be privileged if it was either:
    1. Created for the dominant purpose of legal advice: s 118; or
    2. Created for the use in litigation: s 119.

Of course, a person may waive their privilege at any time and choose to display those documents to the court.

  • For example, an expert report is under privilege, until the client decides to waive the privilege by using the report as evidence.
  • If the client does not wish to use the report, the report is still protected by privilege and cannot be relied upon by the other party or compelled to be disclosed in any way. It is recommended to read the Evidence Act 1995, ss 117-120).

Rationale

[2] The rationale behind client legal privilege is that a party needs to be given proper legal advice, and in order to do that, it must conduct communications with its legal adviser in a completely open matter. The privilege allows the client to communicate in an open manner without fear that what passed between them might be used against him in any way.

Dominant Purpose Test

[3] The onus to prove the elements of privilege fall on the party seeking to establish privilege. The requirements for client legal privilege to arise are:

  1. A professional relationship between a lawyer and client;
  2. Confidential communications (oral or documents );
    • 'confidential' refers to communications which were made under express or implied obligation not to disclose its contents: s 117.
  3. Created for the dominant purpose of legal advice or litigation.

The real test is the 3rd element - a person needs to prove that the 'dominant purpose' of the communication was for legal advise or litigation.

  • According to the dominant purpose test, a copy of a non-privileged document can still be privileged if the copy was made for the dominant purpose of legal advice or litigation (ie, when someone makes a copy a contract in order to give it to their lawyer).[4]

The dominant purpose test was affirmed in Esso Australia Resources v Commissioner of Taxation, which also specified that the dominant purpose is to be determined objectively, although the subjective intentions can be relevant and decisive:[5]

  • A test has to balance both the need to protect lawyer-client communication and the efficient administration of justice.
  • The 'sole purpose' test (by which privilege only applied when communication was made for the sole purpose of advice/litigation) is just too narrow and rigid.
  • The 'sole purpose' test was only applied in a diluted way anyway, which meant it was practically the 'dominant purpose' test, so that test should just be adopted.

This was also discussed in Mitsubishi Electric v Victorian Workcover Authority:

  • In the case of third-party communication, privilege only applies when the communication came into existence for the dominant purpose of litigation as oppose to mere legal advice.
  • The purpose for which a document is made is determined by reference to the intention of the person who commissioned it, not merely its author (although sometimes they are the same person).
    • If a document is commissioned by solicitors, it is usually taken to be prepared for the dominant purpose of legal advice/litigation.
  • Documents/communications can only said to be prepared for the dominant purpose of litigation if there was, at the time they were made, "a real prospect of litigation, as distinct from a mere possibility".

Loss Client Legal Privilege

[6] Situations in which client legal privilege may be lost are described in the Evidence Act 1995, 121-126:

  • Where the privilege prevents the enforcement of a court order: s 121.
  • Where there has been a waiver of the privilege. A waiver can be express or implied, or even deduced when a client acts in a way which is inconsistent with the maintenance of the privilege: s 122.
    • There will not be a waiver if the disclosure of communication was done confidentially, was due to duress, or was compelled by court: s 122 (5).
  • When there are joint civil defendants: s 124.
  • When a communication was made "in furtherance of the commission of a fraud or an offence or the commission of an act that renders a person liable to a civil penalty" or the communication was one that the lawyer/client knew/ought to have known was made "in furtherance of a deliberate abuse of a power": s 125.
  • When a communication "is reasonably necessary to enable a proper understanding of the communication" that has lost privilege under one of the above laws: 126.

Loss of client legal privilege was discussed in Mann v Carnell:[7]

  • Facts: The respondent, a minister, disclosed confidential communications regarding litigation against the appellant to another MP. The appellant sued the respondent, and wanted discovery of those documents on the basis that the privilege was waived when the respondent disclosed the documents to the MP, a third party.
  • Held: the mere fact that a person discloses confidential information to a third party does not always mean that they forfeited their privilege - not if the disclosure was made in a confidential way.
    • In the present case, it can't even be said that the MP was a proper third-party - since he was a part of the body politic.
    • It is all about the manner in which the party acted - if it was not confidential, then it implies a waiver. If it remained confidential, it does not.

And also in Fenwick v Wambo Coal (No 2):[8]

  • Facts: During discovery, the Plaintiff wanted the disclosure of certain communications between the Defendant and his lawyer. The Defendant claimed privilege, but the Plaintiff said that privilege was waived since the Defendant already disclosed a draft letter which summarised the legal advice during discovery.
  • Held: the amendments to s 122 of the Evidence Act mean that voluntarily revealing the 'substance' of any privileged communication amounts to a waiver of that privilege.
    • The question of what constitutes 'substance' is one of degree - in this case, the draft letter contained not only the conclusions, but the reasoning, of the legal advice. This amounted to the substance of the entire communication.
    • The draft letter was disclosed voluntarily during discovery - the Defendant could have claimed privilege over it, but didn't.
    • Thus, the act of giving the draft letter voluntarily amounted to the waiver of privilege over the entire communication.

And finally, in Waugh v Merrill Lynch:[9]

  • Facts: Merrill Lynch had to submit evidence to court including a witness statement by a third-party, which referred to Merrill Lynch receiving legal advice. Waugh argued that in doing so, Merrill Lynch waived its privilege over its legal advice and wanted those documents too.
  • Held: an implied waiver of privilege can only occur when there is a voluntary disclosure of communication (all the more so when there is only a disclosure of the 'substance' of the communications). In the present case, the disclosure was not voluntary - it was compelled by court. Consequently, there was no implied waiver of privilege.

End

This is the end of this topic. Click here to go back to the main subject page for Resolving Civil Disputes.

References

BKL refers to Dorne Boniface, Miiko Kumar and Michael Legg, Principles of Civil Procedure in NSW (2d ed 2012) Thomson Reuters.

FDR refers to Michael Legg (ed), The Future of Dispute Resolution (2013) LexisNexis.

  1. BKL, p. 765.
  2. BKL, p. 765-6.
  3. BKL, 767-8.
  4. Commissioner Australian Federal Police v Propend Finance (1997) 188 CLR 501.
  5. (1999) 201 CLR 49.
  6. BKL, pp.781-2.
  7. (1999) 201 CLR 1.
  8. [2011] NSWSC 353.
  9. [2010] NSWSC 197.
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