The recent Federal Court decision in Dye v Commonwealth Securities comments on the nature of the requirement of independence of in-house counsel in the context of claims for privilege and serves as a warning about multiple purpose communications.
Vivienne Dye, a former public relations manager and analyst, made a complaint against Commonwealth Securities to the Human Rights and Equal Opportunity Commission and also made various workers’ compensation claims in relation to alleged sexual harassment. Proceedings were then brought by Ms Dye in the Federal Court for the alleged breaches by Commonwealth Securities of the Trade Practices Act 1974 (Cth), the Sex Discrimination Act, 1992 (Cth), as well as for breach of contract.
Ms Dye sought access to certain documents over which a claim for privilege had been asserted by Commonwealth Securities, a number of which comprised communications involving a Mr Fredericks, Legal Counsel in the Legal Services Division of the Commonwealth Bank.
It was submitted on behalf of Ms Dye that none of the documents in question was privileged because Mr Fredericks provided both legal and non-legal advice, the argument being that if he had been consulted in something other than his professional capacity, he did not have sufficient independence to satisfy the criteria for the claim for legal professional privilege. In the context of considering this, Justice Katzmann distinguished the circumstances of this case with Rich v Harrington, a case in which a PriceWaterhouseCoopers partner had brought proceedings against her partners alleging direct and indirect sex discrimination and victimisation. In that case, Justice Branson of the Federal Court allowed the applicant access to documents over which privilege had been claimed, comprising communications with lawyers within the firm’s own Office of General Counsel (OGC) because the relationship between the firm was not such that advice given about Ms Rich’s allegations was of an objectively independent character. This was because of the nature of Ms Rich’s allegations which “cast aspersions of a personal, rather than a purely professional, kind on general counsel’s partners… [and because] the general counsel and the deputy general counsel were themselves likely respondents in the litigation in prospect”.
Although Justice Katzmann considered that Justice Branson might have overstated the content of the requirement that legal professional privilege will arise only where the advice has an independent character (Justice Katzmann noting that other authority suggested that independence involved no more than an inquiry into whether the lawyer was consulted in his or her professional capacity), Her Honour distinguished the role of Mr Fredericks from that of the OGC. The in-house lawyers of Commonwealth Securities were not partners of it, nor were they actual or potential parties to the claim by Ms Dye. Ms Dye’s allegations were made against individual employees, rather than the firm as a whole, as was the case in Rich, such that her allegations were not likely to engage Mr Frederick’s “personal loyalties”.
Mr Fredericks had multiple responsibilities, including some of which could have affected his independence, including a human resources function and managing workers’ compensation. That mean it was necessary to analyse precisely in what capacity Mr Fredericks sent or received the relevant communications, and the purpose of those communications.
Her Honour was invited to inspect the documents in issue, and she did so. She also took into consideration the evidence of Mr Fredericks as to the nature of the documents. Of significance, Her Honour noted with respect to the latter that Mr Fredericks was not the author, sender or recipient of all the communications. This meant Mr Fredericks was really not able to speak to the purpose of those communications.
Mr Fredericks’ description of the documents or their purpose were not particularly informative, often failing to identify any purpose, the thinking behind, or the circumstances giving rise to, the creation of the documents.
A number of the communications were emails which included Mr Fredericks and others. Many of those communications, on their face, had mixed purposes – the seeking of legal advice but also human resources advice from other recipients than Mr Fredericks. Because Mr Fredericks did not, and in any event, could not, properly give evidence as to the dominant purpose of such a communication when he was not the creator of the communication, the Court could not be satisfied that the privileged purpose was the dominant one and could not, therefore, uphold the privilege claim.
The decision provides a warning to in-house counsel wishing to avail themselves of the privilege. Communications with multiple purposes should be avoided, if possible, where one of the purposes is a privileged one. Privilege will be far easier to maintain in circumstances in which the only recipient is the in-house counsel.
It is also important, in any challenge to a privilege claim, that admissible evidence as to the purpose of the communications is led. This may well involve evidence from people other than the relevant in-house counsel.