Client legal privilege is still a hot area of dispute

Independent consultant as agent
Disclosure of legal advice

Although the Evidence Act 1995 (Cth) has been around for over 15 years now, and the common law in relation to legal professional privilege for much longer, challenges to claims for privilege seem only to be increasing. This update details two recent decisions of the New South Wales (NSW) Supreme Court.

Independent consultant as agent

In Transgrid v Members of Lloyds Syndicate(1) the court considered whether documents produced under subpoena by a consultant to Transgrid were privileged from production. The consultant had been provided with copies of correspondence between Transgrid and its lawyers and, in one case, a letter between another consultant retained by Transgrid and Transgrid's lawyers.

Central to the determination of the matter was whether the subpoenaed consultant was relevantly an agent for the purpose of the definition of 'client' in Section 117 of the Evidence Act.

The court referred to the NSW Court of Appeal decision in Meteyard v Love,(2) which held that independent consultants engaged by an insurer to investigate a loss were agents of the insurer. In light of that decision, Justice Ball ruled that if the purpose of a communication between a client and a third party (eg, an independent consultant) is to enable the third party to assist the client in some way and the third party has no interest in the communication other than to provide that assistance, then that third party is considered to be acting as the agent of the client for the purpose of that communication.

The consultant's scope of retainer included assisting in negotiating and managing contract disputes on behalf of Transgrid, as well as managing the construction project.

Ball found that the consultant had received copies of the communications while acting as agent for Transgrid - many of which were prepared by Transgrid's lawyers to advise it on claims under the construction contract - and that the evidence indicated that such communications had been provided to the consultant so that it could provide assistance in relation to those claims.

As a result, the claim for privilege was upheld and the documents produced could not be inspected.

The maintenance of such privilege claims is reliant on evidence of the scope of work to be undertaken by the third party, as well as the purpose of the relevant communications.

Disclosure of legal advice

In Fenwick v Wambo Coal Pty Limited(3) Justice White considered whether there had been a waiver of privilege over legal advice provided to the defendant following the discovery by the defendant of a draft letter from the defendant to the plaintiff which referred to such legal advice.

The draft letter relevantly provided as follows:

"Wambo Coal referred your email and previous correspondence to its lawyers for legal advice on this issue. The legal advice Wambo Coal received is as follows:

a. There is a registered right of way across Lot 1 in DP110084 and Lot 2 in DP1100874. This is depicted as the 'Existing R.O.W.' on the attached plan. This is the right of way you use to access and egress your land, and Wambo Coal will continue to observe to this right of way.

b. In relation to the right of way you have claimed to cross Lot 83 in DP548749, depicted as the 'R.O.W. in Question' on the plan, Wambo Coal has been advised that Lot 83 is not encumbered with the right of way you are claiming. A copy of the relevant title is attached. The only right of way registered over Lot 83 is in relation to Lot 82, which is also owned by Wambo Coal.

…It would appear that you do not have a legal right of way across Lot 83. Therefore Wambo Coal cannot allow you to enter Lot 83 and you must not do so. In the circumstances, Wambo Coal does not intend to repair the crossing of South Wambo Creek situated in Lot 83."

The draft letter was never sent, but it was discovered by the defendant and produced for inspection based on the view that it was not privileged. Accordingly, it could not be argued that the production of the document was inadvertent, unintentional or mistaken. However, the defendant argued that:

• the substance of the legal advice was not disclosed, so the discovery of the draft letter did not therefore amount to a waiver; and
• if it was so disclosed, the production of the document on discovery was under compulsion of law (ie, not voluntary).

In determining the first argument, White considered whether the substance of the advice had been disclosed in previous decisions. He held that the "balance of authority is that at least an express or implied summary of legal advice received amounts to disclosure of the substance of the advice".(4)

White concluded that the draft letter disclosed not only what was said to be the conclusions of the legal advice, but the reasoning behind those conclusions. Therefore, there had been a disclosure of the substance of the legal advice.

In determining the second argument, White found that discovery of the document was under compulsion of law, but that production of the document for inspection was not necessary if the draft letter itself was privileged. His view was that the defendant could have claimed privilege over the draft letter, as adducing evidence of the draft letter would have resulted in the disclosure of confidential privileged communications between the defendant's lawyers and their client.

Even though the defendant had taken what White considered to be a mistaken view - namely, that it could not claim privilege over the draft letter - it could not be said that the disclosure of the letter was not knowing and voluntary. As a result, the legal advice had to be produced for inspection by the plaintiff.

For further information on this topic please contact Anne Freeman at Piper Alderman by telephone (+61 2 9253 9999), fax (+61 2 9253 9900) or email ([email protected]).

Endnotes

(1) 3210 [2011] NSWSC 301 (April 13 2011).

(2) [2005] NSWCA 444 (December 13 2011).

(3) 2 [2011] NSWSC 353 (April 15 2011).

(4) The table below details some such decisions: