Privilege – post Hastie
The New South Wales Court of Appeal decision in Hastie Group (In Liq.) v Moore1 underlines the view that disclosure of the mere existence of privileged documents to third parties will not necessarily waive privilege.
The liquidators of Hastie Group Ltd (In Liq.) (Hastie) had obtained orders extending the time for service of a statement of claim alleging professional negligence against Hastie’s Auditor, Deloitte (Auditor), between 2008 and 2010.
In doing so, the liquidator had sworn an affidavit in support which referred to an expert report provided in confidence to a potential litigation funder (Report).
The Auditor served notices to produce the Report and Hastie resisted on the basis of client legal privilege.
The New South Wales Supreme Court decision
The judge held that the Auditor was entitled to inspect the Report on the basis that it was not privileged, or alternatively, that privilege had been impliedly waived.
The judge also held that litigation funding agreements did not automatically attract privilege under s119 of the Evidence Act 1995 (NSW), as communications between liquidators and litigation funders involved “a relationship under which legal professional services may be later provided” and were not actual legal advice per se.
The Court of Appeal decision
On appeal, the following two key points were considered:
- Whether the Report was privileged; and if so
- Whether privilege had been waived.
In allowing the appeal, a 2:1 majority of Court of Appeal held that the Report was privileged because both the liquidator and the Auditor accepted that the engagement letter attaching the Report was privileged. It rejected the Auditor’s submission that, if privilege existed, it belonged to the liquidator as agent of Hastie. It also rejected the view that the litigation funding agreement did not attract privilege. However, it reaffirmed the principle that whether or not a litigation funding agreement attracts privilege is a question of fact and depends on the reasons for its creation.
The majority also held that the Report was merely referred to in an affidavit and the confidential disclosure of it to a litigation funder was not a waiver of privilege as its contents were not relied upon in the affidavit. Although the Report may have appeared relevant to the proceedings generally, this was not enough to waive privilege.