Legal Briefing No. 65

Number 65

2 October 2002

Legal Professional Privilege and the
Government

The Government receives legal advice, and is involved
in litigation, on a daily basis in a wide range of areas.
In litigation, and under the Freedom of Information
Act 1982, the Government can be required to disclose
information held by it. However, those requirements do
not extend to information which is the subject of legal
professional privilege. Also, in many situations, statutory
powers enabling the Government to require information to
be disclosed to it do not extend to legally privileged
information.

It is accordingly important for Government officials to
be aware of the principles governing the existence of legal
professional privilege. This Briefing summarises those
principles, with particular reference to their application
to the Government. The Briefing is not a comprehensive
outline of all aspects of legal professional privilege.

The privilege can arise out of the common law or statutes
such as the Evidence Act 1995 (Cth).

THE COMMON LAW PRINCIPLE

Legal professional privilege applies to confidential communications
between a client and the client's legal adviser for the
dominant purpose of giving or receiving legal advice or
for use in existing or anticipated litigation: eg Baker
v Campbell (1983) 49 ALR 385 and Esso Australia
Resources Ltd v Commissioner of Taxation (1999) 168
ALR 123. The privilege can extend to some related communications
for the same purpose, eg communications between legal advisers
of the client, and communications with third parties with
a view to obtaining evidence.

Confidential Communication

The privilege only applies to confidential communications,
although in this context the creation of documents for
use in legal proceedings (eg witness statements) can itself
give rise to the necessary confidentiality: ACCC v Australian
Safeway Stores Pty Ltd (1998) 153 ALR 393 at 427-9.
Nevertheless, a communication limited to material in the
public domain is not privileged. Nor are the identities
of clients who have entered into particular tax arrangements: Commissioner
of Taxation v Coombes (1999) 164 ALR 131. However,
the fact that a confidential communication contains some
public information does not remove the privilege: Ainsworth
v Wilding (1900) 2 Ch 315.

Dominant Purpose

In Esso, the High Court changed its earlier requirement
that the stipulated purpose be the sole purpose, to a requirement
that it only be the 'dominant' purpose. The High Court
has not defined 'dominant' in the context of legal professional
privilege. In a different context the Court has stated
that 'in its ordinary meaning, dominant indicates that
purpose which was the ruling, prevailing, or most influential
purpose': Commissioner of Taxation v Spotless Services
Ltd (1996) 141 ALR 92 at 98.

The Test for Being a Legal Adviser

The High Court has held that lawyers employed by the Attorney-General's
Department can attract legal professional privilege: Waterford
v Commonwealth (1987) 163 CLR 54. That decision had
regard to provisions of the then Judiciary Act 1903 relating
to those lawyers, and also the role of the Attorney-General
as First Law Officer. In AGS' view Waterford extends
to AGS lawyers under the current provisions of the Judiciary
Act.

The High Court did not decide the issue in relation to
employed lawyers in other departments and agencies. However,
a theme of the judgments is that the lawyer must have appropriate
qualifications and the necessary degree of independence.
As to independence, it is likely that the in-house lawyer:

  • must hold a practising certificate or, at least, work
    to a lawyer who holds one, and
  • must not, in relation to the giving of legal advice,
    be subject to direction from someone who does not hold
    a practising certificate.

Three judges said that the lawyer must be amenable to
professional discipline.

Subsequent to Waterford:

  • the AAT has held that legal professional privilege
    could apply to an employed agency solicitor who held
    a practising certificate and was not subject to direction
    from elsewhere regarding her legal advice: Re Proudfoot
    and HREOC (1992) 28 ALD 734
  • the Federal Court has held that legal professional
    privilege could apply to 'qualified legal practitioners'
    employed in an agency and who, based on evidence not
    disclosed in the judgment, enjoyed 'the independence
    from the employer organisation appropriate to a department
    charged with the responsibility to give professional
    advice and assistance to the employer' - the judgment
    does not indicate whether the lawyers held practising
    certificates: Famous Artists International Pty Ltd
    v ABC (1992) 7 BR 395
  • the NSW Supreme Court has held that legal professional
    privilege could apply to an employee in the law department
    of a corporation, who was a qualified lawyer in the USA,
    who was directly responsible to an attorney, and who
    was not subject to supervisory authority or control from
    any other person within the corporation apart from its
    board of directors: Ritz Hotel v Charles of the Ritz
    Ltd (1987) 14 NSWLR 100
  • courts have held that the Director of Public Prosecutions
    is capable of attracting legal professional privilege:
    eg R v Dainer (1988) 78 ACTR 25; Dunesky v
    Elder (1992) 107 ALR 573; Grofam v ANZ Banking
    Group Ltd (1993) 117 ALR 669.

Policy Advice

Legal professional privilege does not apply to a communication
for the purpose of giving policy advice. However, a document
meeting the test for legal professional privilege does
not lose that privilege merely because it also contains
policy advice: Waterford at 67.

The privilege can 'in appropriate circumstances' apply
to advice given about the law of a jurisdiction other than
the jurisdiction in which the adviser is formally qualified: Ritz
Hotel.

Anticipated Legal Proceedings

Legal proceedings are anticipated when there is a reasonable
probability or likelihood that such proceedings will be
commenced: ACCC v Australian Safeway Stores Pty Ltd at
425. Whether such a probability or likelihood exists is
determined by an objective view of the circumstances, not
the subjective view of the person making the communication.

Improper Purpose

Legal professional privilege does not attach to legal
advice given to facilitate the commission of a crime, fraud
or civil offence, whether or not the legal adviser knows
of that purpose: Baker v Campbell at 409-410. This
principle extends to communications 'in pursuit of an illegal
or improper object': Clements, Dunne & Bell Pty
Ltd v Commissioner AFP (2001) 188 ALR 515. The High
Court has held that evasion by a Government of the law,
by knowingly making regulations not contemplated by an
Act as part of a scheme to defeat a land claim, would be
a crime or fraud for this purpose: A-G for Northern
Territory v Kearney (1985) ALJR 749. However, this
principle does not extend to advice given in relation to
past conduct.

Communications Held to be Legally Privileged

Examples of communications held to be legally privileged
include:

  • bills of costs provided by a legal adviser to the client,
    to the extent that they disclose confidential communications
    themselves privileged: Packer v Deputy Commissioner
    of Taxation (1984) 53 ALR 589 at 592
  • communications by a prospective client to a prospective
    legal adviser, made with the object of retaining the
    legal adviser's services, even if they are not retained,
    provided that the relationship of solicitor and client
    is contemplated and the communications are fairly referable
    to that relationship: Minter v Priest (1930) AC
    558
  • a document which would tend to establish the innocence
    of a person charged with a crime: R v Connell (1992)
    8 WAR 148.

Communications Held Not to be Legally Privileged

Examples of communications held not to be legally privileged
include:

  • practical advice, assistance or information which did
    not require the solicitor to call upon her legal expertise,
    even if the solicitor could anticipate the possibility
    of legal advice being sought at some time in the future: Medina
    v R (1990) 3 WAR 21
  • documents which constitute or evidence transactions
    (eg contracts, conveyances, declarations of trust, offers
    or receipts) even if they are delivered to a legal adviser
    for advice or for use in litigation: Baker v Campbell at
    409.

Waiver of Privilege

The privilege is that of the client, not the lawyer. Thus,
only the client can waive the privilege. The client will
be deemed to have waived the privilege if the client does
(or authorises) something which is inconsistent with the
confidentiality which the privilege is intended to protect: Mann
v Carnell (1999) 168 ALR 86. 'What brings about the
waiver is the inconsistency, which the courts, where necessary
informed by considerations of fairness, perceive, between
the conduct of the client and maintenance of the confidentiality
of the communication; not some overriding principle of
fairness operating at large': Mann at 94.

It follows that not all voluntary disclosures to third
parties necessarily waive the privilege. Disclosures which
would not waive the privilege include confidential disclosures
to a prospective expert witness and to a co-plaintiff or
co-defendant.

In Mann the ACT Chief Minister disclosed 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. The
High Court stated (at 95):

It does less than justice to the [Chief Minister's]
position to describe what occurred in the present case
as disclosure to a third party. The privilege was that
of the body politic, the Australian Capital Territory.
The head of the Territory's Executive, the Chief Minister,
in response to a question raised by a member of the Territory's
Legislative Assembly as to the reasonableness of the
conduct of the Territory in relation to certain litigation,
gave the member, confidentially, access to legal advice
that had been given to the Territory, and on the basis
of which it had acted. Although "disclosure to a
third party" may be a convenient rubric under which
to discuss many problems of this nature, it represents,
at the least, an over-simplification of the circumstances
of the present case.

References to Privileged Communications

Legal professional privilege extends to notes, memoranda,
minutes or other documents made by the client or officers
of the client or the legal advisers of the client of communications
which are themselves privileged, or containing a record
of those communications: Standard Chartered Bank of
Australia Ltd v Antico (1993) 36 NSWLR 87 at 93. Thus,
privilege in a legal advice given to the Commonwealth extends
to references to the advice in departmental briefings.

Copies of Non-Privileged Communications

Subject to possible qualifications, legal professional
privilege applies to copies of documents provided to a
lawyer which were made for the dominant purpose of obtaining
or giving legal advice or for use in legal proceedings,
even where the original documents were not privileged: Commissioner
AFP v Propend (1997) 141 ALR 545 (as modified by Esso).
However, a document which comes into existence independently
of the litigation process cannot be brought under the cover
of legal professional privilege simply by being affixed
to a privileged statement: Mundraby v Commonwealth (2001)
184 ALR 737.

Unintended Disclosure

A document which, or a copy of which, has been obtained
by the opposing party, by accident, by trickery or even
by theft, is not privileged in the hands of that party,
although some qualification may be needed, particularly
in relation to documents obtained by illegal means or deception: Baker
v Campbell at 394, 404-5, 421, 428, 444.

Statutory Powers

The protection of legal professional privilege is not
confined to judicial and quasi-judicial proceedings.

The multiplicity and complexity of the demands which
the modern state makes upon its citizens underlines the
continued relevance of the privilege to the public interest.
The adequate protection according to law of the privacy
and liberty of the individual is an essential mark of
a free society and unless abrogated or abridged by statute
the common law privilege attaching to the relationship
of solicitor and client is an important element in that
protection. : Baker v Campbell at 416.

Whether, in a particular case a statute should be construed
as overriding legal professional privilege is to be ascertained
by reference to the 'settled rule of construction that
general provisions of a statute should only be read as
abrogating common law principles or rights to the extent
made necessary by express words or necessary intendment': Baker
v Campbell at 434.

Examples of statutory powers held not to extend to legally
professionally privileged material include:

  • powers conferred by a search warrant under section
    10 of the Crimes Act 1914: Baker v Campbell
  • powers of access under section 263 of the Income
    Tax Assessment Act 1936: Commissioner of Taxation v
    Citibank Ltd (1989) 20 FCR 403
  • powers to require material under s.264 of that Act,
    although this may not be entirely settled: ACCC v
    Daniels Corporation International Pty Ltd (2001)
    182 ALR 114; ANZ v Deputy Commissioner of Taxation (Federal
    Court 17/3/01)
  • a liquidator's power to obtain information regarding
    the company's affairs in an examination under then section
    597 of the Corporations Law: Re Compass Airlines Pty
    Ltd (1992) 109 ALR 119.

Examples of a statutory power held to override legal professional
privilege include:

  • an inspector's power to require information from a
    company officer under the then NSW Companies Code: Corporate
    Affairs Commission NSW v Yuill (1991) 172 CLR 319
  • the ACCC's power to require material under section
    155 of the Trade Practices Act 1974: ACCC v Daniels
    Corporation International Pty Ltd (although at the
    time of preparation of this Briefing the High Court had
    reserved judgment on an appeal from this decision)
  • the powers to listen to and record communications under
    the Telecommunications (Interception) Act 1979 and
    the Customs Act 1901: Carmody v MacKellar (1997)
    148 ALR 210.

EVIDENCE ACT 1995 (CTH)

The Evidence Act 1995 applies to proceedings in
a federal court or an ACT court (s.4). Sections 118 and
119 create a statutory version of legal professional privilege
(called 'client legal privilege'). That privilege relates
to the adducing of evidence in those proceedings but not
to other aspects of the proceedings (eg producing documents
pursuant to discovery or subpoena): Esso. The Evidence
Act 1995 (NSW) creates a similar privilege.

The Test for Being a Legal Adviser

Sections 118 and 119 apply the privilege to specified
communications involving a 'client' and a 'lawyer'. 'Client'
is defined in s.117 to include an employer of a lawyer,
without requiring any independence in relation to the lawyer.
'Lawyer' is defined in the Dictionary of the Act to mean
'a barrister or solicitor'. The expression 'barrister or
solicitor' is not defined. It is thus not clear whether,
for the purpose of attracting privilege, 'barrister or
solicitor' refers to a person being entitled to practise
as such (that is, requiring a practising certificate or
having a statutory exemption from that requirement) or
merely to a person who is admitted as a barrister or solicitor.
Noting that legal professional privilege relates directly
to the conduct of a legal practice, the first possible
interpretation might well be preferred.

Waiver of Privilege

Section 122 provides that privilege is lost if (among
other things) the client has knowingly and voluntarily
disclosed to another person the 'substance' of the evidence
and the disclosure was not made on a confidential basis.
A statement that 'Ampolex maintains that the correct ratio
is 1:1 and has legal advice supporting this position' was
held to disclose the 'substance' of the legal advice: Ampolex
Ltd v Perpetual Trustee Co (Canberra) Ltd (1996) 40
NSWLR 12. In that case Rolfe J stated that 'the substance
of the advice may well be disclosed if the ultimate conclusion,
without the supporting reasoning process, is revealed'
(at 19). Rolfe J noted a somewhat elusive distinction (made
in another case) between disclosing the effect of advice
(which would not constitute a waiver of privilege in the
advice) and disclosure of the substance or content of the
advice (which would constitute a waiver of privilege).
In refusing special leave to appeal to the High Court,
Kirby J expressed the 'tentative view' that the judgment
'seems arguably correct': (1996) 137 ALR 28 at 34.

Without referring to Ampolex, Einfeld J subsequently
held that 'the substance of advice…is not talking
about the, as it were, "bottom line" of the advice,
but to what its content is and possibly even the reasoning
which led to it': SVI Systems Pty Ltd v Best & Less
Pty Ltd (2000) FCA 1507.

In Allatech v Construction Management Group (2002)
NSWSC 723, Austin J held that a statement that 'the directors
(and their legal advisers) believe that the matters subject
to litigation all have "good prospects"' could
only disclose the substance of, and thus could only waive
privilege in, legal advice of which the maker of the statement
was then aware.

The above cases have obvious significant implications
for Government officials wishing to inform persons that
the Government has legal advice supporting its position.
Noting the community's expectation that the Government
will conduct itself properly, a Government official or
Minister might well wish to state that the Government's
position is supported by legal advice. However, based on
the current authorities, there is a clear risk that such
a statement will waive legal professional privilege in
the advice. A considered judgment needs to be made balancing
these factors.

FOI Act

Section 42 of the Freedom of Information Act 1982 Act
provides that a document is an exempt document if 'it would
be privileged from production in legal proceedings on the
ground of legal professional privilege'. The AAT has held
that exemption under section 42 is to be determined by
reference to the common law rather than the Evidence Acts: Re
Spier and ACT Australian Electoral Commissioner (1995)
41 ALD 374 and Re Sullivan and Department of Industry,
Science and Technology (1997) 49 ALD 743. Specifically,
the AAT held that the FOI Act (passed in 1982) could not
have had in mind the Evidence Acts of 1995 which create
a 'client' privilege applicable only to the adducing of
evidence.

This approach was accepted as correct by at least one
judge of a Full Federal Court in Commonwealth v Dutton 102
FCR 168

This was an important issue when (prior to Esso)
the common law required that the advice/litigation purpose
be the sole purpose but the Evidence Acts merely required
it to be the dominant purpose. Noting that, since Esso, the
dominant purpose test applies to both the common law and
the Evidence Acts, the issue is substantially less important.
However, the issue remains as there could still be differences
between the common law and the Evidence Acts in relation
to other aspects, eg regarding in-house employed lawyers
and waiver of privilege.

This Briefing was written for AGS by Barry Leader PSM,
AGS Special Counsel, Litigation. For further information
please contact any of the following lawyers:

Canberra

Tom Howe

(02) 6253 7415

Helen
Haridemos

(02) 6253 7218

Sydney

Marcus
Bezzi

(02) 9581 7470

Melbourne

Frank Vitale

(03) 9242 1373

Brisbane

Maurice
Swan

(07) 3360 5702

Perth

Peter
Macliver

(08) 9268 1799

Adelaide

David
Williams

(08) 8205 4283

Darwin

Jude Lee

(08) 8943 1405

Hobart

Peter Bowen

(03) 6220 5474

ISSN 1448-4803 (Print)
ISSN 2204-6283 (Online)

For enquiries regarding supply of issues of the Briefing,
change of address details etc, tel: (02) 6253 7052 or fax:
(02) 6253 7313 or e-mail: ags@ags.gov.au.

The material in this briefing is provided
for general information only and 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 briefing.

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