Express law No. 07

9 September 2004

Quoting the substance of legal advice in negotiations
may make it subject to FOI

The Full Federal Court has confirmed that quoting the
substance of legal advice in negotiation can waive legal
professional privilege. As a result you might be required
to make the full text of your legal advice and opinion
available under Freedom of Information or court related
discovery.

Bennett v Chief Executive Officer of the Australian Customs
Service

Full Federal Court [2004] FCAFC 237 (25 August 2004)

Mr Bennett was in dispute with Customs over certain public
comments he had made about Customs' operations and
subsequent disciplinary action that had been taken. In
the course of the dispute Customs made various statements
about legal advice it had obtained. For example that it
had obtained legal advice that:

that your client is not correct in asserting that he
is not subject to the Act and Regulations if he makes
public statements about Customs-related matters in his
capacity as President of COA [Customs Officers' Association].
It is a matter for your client, in the light (perhaps)
of legal advice provided by you, whether he adheres to
or moderates his position on this question ...'

At some later time, Mr Bennett made an FOI request to
Customs. That request, among other documents, covered the
legal advice to Customs. Customs refused access to documents
containing the advice, claiming that they were exempt under
s. 42 of the Freedom of Information Act 1982 as being privileged
from production in legal proceedings on the ground of legal
professional privilege.

AAT and Federal Court at first instance

Mr Bennett challenged this claimed exemption on review
to the AAT, claiming that the reference to the advice constituted
a waiver of legal professional privilege. The AAT, purporting
to apply Mann v Carnell (1999) 201 CLR 1, ruled
that the privilege had not been waived. Mr Bennett appealed
to the
Federal Court on the issue, as raising a question of law.
The primary judge also ruled that there had been no waiver.
Only the conclusion of the advice had been disclosed, not
the reasoning underlying that conclusion. No unfairness
was involved in these circumstances in continuing to maintain
the privilege.

On appeal, Full Court found the privilege waived

On appeal, the Full Court (Tamberlin and Gyles JJ, Emmett
J dissenting) overturned the primary judge's decision on
this point whilst upholding the primary judge's decision
on several FOI specific points. On the waiver of privilege
point Gyles J said (at para [68]):

Each of the Tribunal and the primary Judge correctly
identified the decision in Mann v Carnell as providing
appropriate guidance as to the law to be applied. However,
in my respectful opinion, the test has been misunderstood
at least in part. The test looks to inconsistency between
the disclosure that has been made by the client on the
one hand and the purpose of confidentiality that underpins
legal professional privilege on the other. It is not
a matter simply of applying general notions of fairness
as assessed by the individual judge. The authorities
to which I have referred show that it is well established
that for a client to deploy the substance or effect of
legal advice for forensic or commercial purposes is inconsistent
with the maintenance of the confidentiality that attracts
legal professional privilege.

Tamberlin J, who agreed with the judgment of Gyles J ,
added for his own part (at para [6]):

It may perhaps have been different if it had been simply
asserted that the client has taken legal advice and that
the position which was adopted having considered the
advice, is that certain action will be taken or not taken.
In those circumstances, the substance of the advice is
not disclosed but merely the fact that there was some
advice and that it was considered. However, once the
conclusion in the advice is stated, together with the
effect of it, then in my view, there is imputed waiver
of the privilege. The whole point of an advice is the
final conclusion. This is the situation in this case.

Emmett J differed from the majority in holding that the
challenge to the correctness of the AAT's decision on waiver
of legal professional privilege involved a question of
fact rather than one of law (see para [36]). Section 44
of the Administrative Appeals Tribunal Act 1975 confines
appeals from the AAT to the Federal Court to questions
of law. As he saw it, the question of waiver had been a
matter of judgment for the AAT.

Conclusion

Use of legal advice needs to be carefully managed if you
wish to ensure that the advice will be protected by legal
professional privilege and not have to be disclosed under
Freedom of Information requests or under court discovery
processes.

The decision increases the odds that a disclosure of the
substance or effect of legal advice to a third party (by
expressing the conclusion of the advice) will be found
to constitute a waiver of legal professional privilege
in the whole advice. A statement as simple as 'in
accordance with legal advice received, the decision-maker
came to the decision that . . .' may be sufficient
to waive privilege.

Following this decision by the Full
Federal Court',
the test for waiver of common law legal professional privilege
would appear now to be the same as that for waiver of client
privilege under the Evidence Act 1995 section
122 the relevant part of which states:

(2) Subject to subsection (5), this Division does not
prevent the adducing of evidence if a client or party
has knowingly and voluntarily disclosed to another person
the substance of the evidence… .

Inappropriate use of legal advice in negotiations is only
one of many ways in which privilege can be waived. All
people who seek or make use of legal advice should be familiar
with the dangers and what needs to be done to ensure legal
professional privilege is maintained wherever that is desirable.
To assist you in achieving this AGS has developed a range
of training programs and follow up material which can be
customised the specific needs of your organisation.

Text
of the decision is available at: http://www.austlii.edu.au/au/cases/cth/FCAFC/2004/237.html

For
further information please contact:

Linda Richardson
Special Counsel, Commercial
Australian Government Solicitor
T: 02 6253 7207 M:0419 413 096 F: 02 6253 7306
linda.richardson@ags.gov.au

Important: The material in Express law is
provided as an early, interim view for general information
only and further analysis on the matter may be prepared
by AGS. The material should not be relied upon for
the purpose of a particular matter. Please contact
AGS before any action or decision is taken on the basis
of any of the material in this message.