When a report is commissioned by a corporation’s inner or exterior legal professionals – to permit the entity to obtain legal guidance – frameworks have to have to be established to make distinct that the dominant goal in commissioning the report is one particular which will assist a assert for lawful professional privilege.
This usually means that its most important concentration, and the concentrate of any entity handling these types of a report, have to be to be certain that the report is clearly commissioned to assist in the shopper obtaining confidential legal suggestions from its exterior or interior lawyers.
A new situation which aptly illustrates this point is TerraCom v ASIC  FCA 208. PwC was commissioned by TerraCom’s exterior attorneys to prepare a report (the Report) to permit the external legal professionals to offer authorized suggestions to TerraCom.
ASIC sought access to the Report, arguing that it was not a privileged document. TerraCom sought a declaration that the Report attracted legal qualified privilege, consequently stopping ASIC’s inspection.
Setting up the existence of lawful expert privilege
The Significant Courtroom in Esso Australia Assets Ltd v Commissioner of Taxation (1999) 201 CLR 49 decided that a communication or document will be subject matter to legal skilled privilege only if it was established for the ‘dominant purpose’ of conferring or receiving authorized guidance or expert services.
In implementing this test, Stewart J in TerraCom v ASIC viewed as whether or not PwC developed the Report for the ‘dominant purpose’ of enabling exterior lawyers to offer lawful assistance. His Honour’s summary was that privilege connected to the Report, as there was no proof in the report, engagement letters or somewhere else to recommend or else, and in reality, the engagement letter and the textual content of the Report supported that conclusion.
Statements and waiver of privilege – a fantastic line
Generally there may possibly be a desire to ‘say something’ about a corporation’s carry out or state of affairs to allay what could be a industry issue or a public relations challenge the entity is dealing with. Generally, the need can be to reveal that the entity is on a sturdy lawful ground for the situation it has taken.
This can come about in ASX sector announcements, trader displays and in statements made by company relations teams and advisers. This is a follow fraught with danger – as it can lead to a loss of lawful expert privilege, and treatment requires to be taken in the drafting of these statements and scripts.
Considering the fact that the situation of Ampolex Ltd v Perpetual Trustee Co (Canberra) (1996) 40 NSWLR 12 (Ampolex), courts have built a difference in between references which disclose the ‘substance, gist or conclusion’ of the privileged content, and these which do not. These distinctions can be pretty good.
In TerraCom v ASIC, TerraCom had stated – in an open up letter to shareholders and an ASX announcement – that an unbiased forensic investigation experienced located no evidence of wrongdoing by its CEO and CFO. This was held to be a obvious disclosure of the purported conclusion of a privileged investigation report.
Deploying the substance or outcome of authorized information for forensic or business purposes is inconsistent with the servicing of the confidentiality that draws in legal professional privilege, for case in point see Bennett v Main Executive Officer of the Australian Prospects Assistance (2004) 140 FCR 101.
A waiver of authorized expert privilege may well be present in which there is incongruence amongst the retaining of confidentiality with respect to a doc and other perform.
In discovering that privilege had been waived, Stewart J established that there was inconsistency simply because TerraCom sought to manage both the private nature of the Report and reward its possess business by publicising the information contained in it.
His Honour identified that TerraCom’s statements ended up consciously and intentionally made with the intention of deflecting criticism and placing shareholders at simplicity. TerraCom could therefore not take ways to acquire a forensic and commercial advantage by releasing the Report’s contents in the community sphere while also concurrently proclaiming privilege and protecting against ASIC from testing its contents. This was unfair to ASIC, as it could not choose techniques to inquire into or set up no matter if TerraCom’s statements were fake or misleading.
Mere phrases which refer to the existence of authorized tips will not be plenty of to waive privilege – but at the exact time entities need to make sure that they do not disclose the material or gist of the suggestions.
In ASIC v Australia and New Zealand Banking Team (No. 2)  FCA 1013, Allsop CJ referred to Ampolex and said that there will be a waiver if a celebration states “I have authorized guidance. Its compound is …” but there will not be a waiver if a occasion suggests what they think and lawful guidance may well be observed as related to it. Allsop CJ mentioned that “one must state the compound or gist or summary of the assistance for privilege to be lost”.
If an entity decides to offer substance to a regulator for a limited reason, these kinds of as to examine paperwork, it should really generally seek out to get hold of express agreement before any disclosure, guided by a most important aim of preserving any details private. For illustration, the Federal Courtroom in Cantor v Audi Australia Pty Ltd  FCA 1391 decided that the disclosure of privileged information and facts to a overseas regulator, within just the conditions of that scenario, did not sum to a waiver of privilege as doing so was not inconsistent with preserving legal expert privilege.
Example of these ideas in exercise
In Ampolex, two statements had been thought of:
- “There is a dispute about the conversion ratio. Ampolex maintains that the correct ratio is 1:1 and has authorized suggestions supporting this position” and
- “Ampolex’s sights as to the probable end result of the Convertible Observe litigation.The sights established out beneath have regard to the pleadings, the proof available to Ampolex and the assistance of the barristers and the solicitors engaged by Ampolex for the uses of the litigation, as at 1 May 1996. Ampolex considers that:
- it is probable that Ampolex will be thriving in…”
The initially statement was a waiver, while the 2nd was not. The 2nd assertion basically expressed the Board’s check out, and the matters to which the Board experienced reference to in forming that look at. Rolfe J defined:
“… the terms are a assertion of Ampolex’s perspective of the possible final result of the litigation and they are not a assertion of possibly the compound or impact of the advice… I do not regard the statement of Ampolex’s perspective as constituting a disclosure of the legal guidance. It may possibly be that in forming its belief Ampolex has misconstrued or misunderstood the information. Nonetheless that could be, the statement does not increase previously mentioned a statement of Ampolex’s check out and it does not purport to state the suggestions, or its substance or outcome and, hence, it does not amount of money to a disclosure of the tips.”
In Switchcorp v Multimedia  VSC 425, the Courtroom concluded that there is a waiver where by a statement consists of a “clear and deliberate disclosure of the gist or the conclusion of authorized advice” as this effects in an inconsistency involving the related assertion and the preservation of confidentiality which is hooked up to that legal tips.
An ancillary situation to this is that when privilege is waived above an advice, there is a significant chance that privilege is waived on all items in relation to the advice as effectively – for illustration the short to counsel and all that it provided – which may well be required to comprehend the information.
Companies and other entities will often want to refer to private files when asserting the strength of their posture in negotiations or community conversations, but performing so can chance privilege being waived. The difference between references to the compound or conclusion of a privileged document and opinions or assertions are really fine, so drafting a statement that lets a shopper to express a message to other events but which does not waive legal qualified privilege will be an ongoing problem.
TerraCom v ASIC serves as a reminder to lawyers and their clientele to be prudent when drafting pleadings, media releases and industry bulletins to be certain that authorized professional privilege is not lost.
It also underscores the significance of appropriately documenting the engagement for any report or investigation which is commissioned to help in the consumer receiving lawful assistance.
The upkeep of lawful qualified privilege is an space which can be a minefield, major to the reduction of privilege if communications are mishandled.