What you need to know

Careful attention should be given to the circumstances in which you copy third parties on privileged communications or otherwise provide privileged documents to third parties, especially where the purpose of disclosure is to obtain a commercial advantage in a dispute. The Court has confirmed in TEC Hedland Pty Ltc v. The Pilbara Infrastructure Pty Ltd [2018] WASC 300 that privilege in emails between clients and their lawyers (and attached draft letters) may be waived where the communication is also forwarded or copied to a third party.

Legal principles

At [9] to [10] of TEC Hedland, Justice Le Miere set out the following legal principles in relation to legal advice privilege under the common law1:

  • What brings about the waiver of client legal privilege is inconsistency between the conduct of the person entitled to the benefit of confidentiality of communication between lawyer and client and the maintenance of that confidentiality.2
  • It does not matter whether the person entitled to privilege subjectively intends to waive privilege.3
  • Waiver may be express or implied.4
  • Implied waiver of privilege 'reflects a judgment that the conduct of the party entitled to the privilege is inconsistent with the maintenance of the confidentiality which the privilege is intended to protect'; that judgment 'is to be made in the context and circumstances of the case, and in the light of any considerations of fairness arising from that context'.5
  • It is the person seeking to challenge the claim to privilege who bears the onus of proof.6

Background

In TEC Hedland, TEC Hedland Pty Ltd (the plaintiff):

  • entered into a Power Purchase Agreement (PPA) with Pilbara Infrastructure Pty Ltd (the defendant) (and other parties), under which the plaintiff was to supply electricity to the defendant;
  • entered into a Development Deed with Horizon Power for construction of a power plant at a site in the Pilbara;
  • engaged Squire Patton Boggs to provide advice and assistance in relation to these agreements; and
  • engaged Black & Veatch Canada Company (B&V) to develop a test procedure and perform the calculation of performance test results required under these agreements.

In answer to a subpoena, B&V produced a number of documents, including correspondence and attached draft letters and reports between the plaintiff and its lawyers which was also copied to B&V. The plaintiff sought orders restricting access to these documents on the grounds that they were subject to client legal privilege.

Submissions and Reasoning

It was not disputed that the communications between the plaintiff and the plaintiff's lawyers were subject to privilege. At issue was whether privilege had been impliedly waived by the plaintiff when the privileged communications were copied to B&V.

In early June 2017, the plaintiff and the defendant were in dispute over whether B&V's testing procedure was compliant with the PPA.

The plaintiff corresponded with its solicitors in order to formulate a letter to the defendant about B&V's testing procedure. B&V was copied into that correspondence. The testing procedure was a significant issue in dispute between the plaintiff and the defendant in the substantive proceedings.

The defendant submitted that the purpose of copying B&V into the privileged correspondence was to assist the plaintiff in obtaining written confirmation that the testing was compliant and was therefore analogous to taking an action to provide it was a forensic advantage.

The plaintiff submitted that there would be no forensic unfairness if privilege was maintained over these communications as the court would determine, on the proper construction of the PPA and with regard to expert and lay evidence, whether B&V's testing was compliant. The plaintiff submitted that the communications would have no bearing on this question.

Le Meire J held that the key question is whether maintenance of the privilege is inconsistent with the use to which the party has put the communication. He held that the plaintiff had waived privilege by copying B&V into privileged communication. In so finding he said, at [16], referring to Gyles J in Bennett v Chief Executive Officer, Australian Customs Service7:

"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."

Also in dispute were draft reports that had been prepared by B&V, marked up by the plaintiff's lawyer and another person responding to the plaintiff's lawyer's comments and questions, and then sent back to B&V with the mark ups.

The defendant accepted that the mark-ups by the plaintiffs lawyers may be privileged but said there were other mark-ups which were not privileged and sought to inspect a redacted version of the report. The defendant did not appear to submit that there was any waiver in relation to the mark-ups. It is not clear from the judgment why the defendant did not press to see an unredacted version of the report in circumstances where the draft reports, with the mark-ups, were provided to B&V in circumstances similar to the emails.

Le Meire J held that the defendant was barred from viewing these documents on the basis that a reader may ascertain the nature of advice sought or given by reading the documents, even if comments and track changes of the plaintiff's lawyers were redacted.

TEC Hedland judgment in context

Readers should note that this decision was handed down in Western Australia where privilege claims are generally assessed by reference to the common law. Readers in Uniform Evidence Act jurisdictions (the Australian Capital Territory, the Commonwealth, New South Wales, Northern Territory, Victoria and Tasmania) should consider this decision in the context of the applicable legislation.

Key takeaways

Under the common law:

  • The key question in determining whether privilege has been waived is whether maintenance of the privilege is inconsistent with the use to which the party has put the communication.
  • 'A limited disclosure of the existence, and the effect, of legal advice may not be inconsistent with maintenance of confidentiality in the terms of the advice; it depends on the circumstances of the case'.8
  • 'An example of inconsistency may arise when one party develops a partial disclosure for forensic advantage, while seeking unfairly to deny the other party an opportunity to seek the full test or associated material from which the disclosure was made.'9

1 Western Australia is not a Uniform Evidence Act state and accordingly this judgment reflects the modern interpretation of the common law position.
2 Mann v Carnell (1999) 201 CLR 1, [28].
3 Kenquist Nominees Pty Ltd v Campbell [No 5] [2018] FCA 853, [21] - [25].
4 Thawley J in Kenquist Nominees Pty Ltd v Campbell [No 5] [2018] FCA 853 referring to Mann v Carnell (1999) 201 CLR 1, [29].
5 Thawley J in Kenquist Nominees Pty Ltd v Campbell [No 5] [2018] FCA 853 referring to Osland v Secretary, Department of Justice (2008) 234 CLR 275 at [45], per Gleeson CJ, Gummow, Heydon and Kiefel JJ.
6 Thawley J in Kenquist Nominees Pty Ltd v Campbell [No 5] [2018] FCA 853 referring to Archer Capital 4A Pty Ltd v Sage Group Plc (No 2) (2013) 306 ALR 384, [100]; Kenquist Nominees Pty Ltd v Campbell [No 5] [2018] FCA 853, [21] - [25].
7 (2004) 210 ALR 220 [28].
8 Thawley J in Kenquist Nominees Pty Ltd v Campbell [No 5] [2018] FCA 853 referring to Mann v Carnell (1999) 201 CLR 1, [30] - [32]; Osland v Secretary, Department of Justice (2008) 234 CLR 275, [49]; Kenquist Nominees Pty Ltd v Campbell [No 5] [2018] FCA 853, [21] - [25].
9 Honourable J D Heydon AC, Cross on Evidence (Lexisnexis Butterworths, 11th ed, 2017) at [25010].

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