Waiver of legal professional privilege
Recent cases have highlighted that parties and practitioners must take care to avoid the unintentional waiver of legal professional privilege.
For example, in ASIC v Park Trent Properties Group Pty Ltd  NSWSC 342, the Supreme Court of New South Wales held that the defendant had waived privilege over legal advice provided in the preparation of a compliance manual by voluntarily disclosing the manual to the Australian Securities and Investments Commission (ASIC). Key to the Court’s finding was that a) the legal advice shaped the substance of the manual, and b) the manual was deployed to obtain an advantage. This decision reaffirms that privilege can be waived by disclosing the effect of the legal advice, regardless of whether the advice itself is disclosed. Accordingly, it reminds parties to think twice before voluntarily disclosing compliance material that has been prepared by lawyers.
The Western Australian Supreme Court found that the privilege in lawyer-client emails may be waived if a third party is copied. In TEC Hedland Pty Ltd v The Pilbara Infrastructure Pty Ltd  WASC 300, the central issue was whether the maintenance of the privilege is inconsistent with the use of the relevant communication. TEC had agreed to supply electricity to Pilbara. B&V, the party copied into the emails between TEC and its lawyers, had been engaged to perform a test procedure. The test procedure was one of the issues in dispute. The court referred to the Full Federal Court decision of Bennett v Chief Executive Officer of the Australian Customs Service  FCAFC 237 and endorsed the principle 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". The court concluded that TEC had waived privilege over the emails with its lawyers by copying B&V. This case confirms the importance of ensuring only essential parties, and not third parties, are copied into privileged communications.
In the related case of TEC Hedland Pty Ltd v The Pilbara Infrastructure Pty Ltd  WASC 364, a recent case involving the same parties, the Supreme Court of Western Australia ruled a novel point not previously considered by the courts. The case involved the question of whether an email seeking legal advice that was sent to 10 recipients, only one of whom was a lawyer, would be protected by legal professional privilege. The Court held that, unless the dominant purpose of the communication is to settle instructions to the lawyer, only the copy of the email that is sent to the lawyer will be privileged. If the dominant purpose of the email was to obtain commercial views rather than legal advice, the communication would not be privileged.
Another recent case that considered waiver of privilege in the context of a regulatory investigation is Commonwealth Director of Public Prosecutions v Citigroup Global Markets Australia Pty Ltd  FCA 511. This case involved a prosecution of cartel conduct offences, following an investigation by the ACCC into an institutional share placement undertaken by various financial institutions. JP Morgan Australia (JP Morgan) had been granted conditional immunity from civil and criminal action in relation to the ACCC’s investigation. One of the conditions was that JP Morgan “provide full, frank and truthful disclosure and cooperation to the ACCC and withhold nothing of relevance.” JP Morgan later produced redacted copies of various documents to the ACCC, and asserted privilege over the redacted portions. The ACCC pressed for unredacted copies by way of a subpoena and, eventually, the parties agreed that JP Morgan would give partial disclosure to the prosecutor by reading aloud the portions of redacted documents. JP Morgan who maintained a claim of privilege in the document read out to the ACCC agreed to the partial disclosure because it thought it would risk losing its immunity by not complying with the subpoena. However, the Federal Court ultimately found that the partial disclosure consisted a waiver of any privilege that JP Morgan had over the documents at the time they were created.
The principle that legal professional privilege does not apply to communications made for improper and/or illegal purposes is well settled. The Federal Court has applied this principle in circumstances where the lawyers involved were not necessarily aware of the illegality. In Aucare Dairy Pty Ltd v Huang  FCA 746, there was evidence to indicate that the defendant, Huang, had moved and/or placed ownership of assets of an insolvent company beyond the reach of Aucare, with whom the insolvent company had previously been in a failed joint venture with. The Court found that Huang's lawyers knew and/or participated in the alleged fraud, despite the plaintiff not having suggested this and there being no direct evidence that this was the case. The Court ordered production of privileged correspondence between Huang and her lawyers. This case emphasises that there is a risk that where there is evidence of illegality and/or improper purpose by a party, that party will not be entitled to legal professional privilege.
In Equititrust Ltd (in Liq) (Receivers appointed) (Receivers and Managers Appointed) v Equititrust Ltd (in Liq) (Receiver appointed) (Receivers and Managers Appointed) (No.3)  FCA 738, the Federal Court held that a director may only claim privilege over documents containing legal advice if it relates in some way to the director in his/her personal capacity, and not merely to the operations of the company. A former director of Equititrust claimed privilege (both joint and common interest) over a range of documents produced by Equititrust that contained legal advice. The Court held that only 11 of the 625 disputed documents were privileged. In relation to joint privilege, the Court found that there was scarce evidence that the director had personal concerns in the matters raised by the documents disputed and clarified that: legal advice addressed to a director or 'the Directors' did not necessarily mean that the advice was provided on the basis of joint privilege; and the fact that a director was involved in procuring the legal advice did not on its own establish joint privilege. In relation to common interest privilege, the Court highlighted that commonality of interest is a prerequisite for the privilege to apply – the mere fact that legal advice was communicated to Equititrust does not mean that its directors had a common interest privilege in that advice; and the fact that a company can only act though its directors does not give rise to a common interest. This case reminds directors of the need to clearly identify legal advice obtained in their personal capacity in order for it to be subject to privilege. It is also important to remember that a director cannot assert legal privilege on behalf of a company once the company is in liquidation.
In Hancock v Rinehart (Privilege)  NSWSC 12, Gina Rinehart claimed privilege over documents produced by her former lawyer pursuant to a subpoena issued by her daughter, Bianca, as the new trustee of the Hope Margaret Hancock Trust (Gina was the former trustee). The Supreme Court of New South Wales found that there was no evidence to support Gina's claim of privilege. Gina had not adduced any evidence about the circumstances and purposes of the disputed documents, including whether the documents had been created for Gina in her capacity as trustee. The Court noted that if the costs of obtaining legal advice are paid from the trust fund, the suggestion is that advice was obtained on behalf of the trust and not the trustee personally. This case reiterates the position that legal advice obtained by a trustee belongs to the trust and not the trustee personally.