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18 March 2016 Protecting In-house Counsel's advice

By Chris Shaw, Partner and Nicholas Mark, Solicitor

IN BRIEF
Swaab believe the recent case of Holman v Warringah Council [2015] brings some clarity to the law surrounding legal professional privilege, especially when it comes to information prepared by in-house counsel.

The question is – in what circumstances can legal professional privilege be claimed over information prepared by in-house counsel?

What we have learned:

  • Ensure that your in-house counsel's contracts of employment clearly reflect their duties and obligations as a legal practitioner, and that internal and external communications do not misrepresent their role as legal practitioners.
  • An in-house counsel's communications may not be privileged whilst they are operating in a non-legal capacity within an organisation.
  • A claim for privilege under section 118 of the Evidence Act will also not succeed if the communication is from a staff member of the 'legal services' department if that person does not hold a practicing certificate or is not subject to an employment contract permitting that person to provide legal advice.


Let's consider the facts:
 

John Holman considered that Warringah Council (Council) was liable for damage relating to stormwater drainage on his property. Mr Holman and Council exchanged correspondence in relation to this issue from 2008 - 2014.

In 2012, following a letter of demand from Mr Holman, Council sought legal advice from both external and in-house lawyers in respect of the issues raised by Mr Holman.

Mr Holman later applied to Council under the Government Information (Public Access) Act 2009 (GIPA) seeking access to documents held by Council in relation to the stormwater arrangements affecting his property. Council granted partial access on the grounds that some of the documents requested were subject to legal professional privilege.

Following several internal reviews and investigations from the Information Commissioner, Council continued to affirm its original decision citing clause 5 of Schedule 1 to the GIPA relating to legal professional privilege.

This final decision was challenged in the NSW Civil and Administrative Tribunal (Tribunal) on 25 February 2015.


Tribunal Ruling:

On 19 October 2015, the Tribunal slightly varied Council's decision, holding that the vast majority of the requested documents were subject to legal professional privilege.

The Tribunal found that because Council sought legal advice from in-house counsel and an external solicitor as a direct result of the concerns raised by Mr Holman, the documents were intentionally created with privileged status.

Council's in-house legal counsel both held practising certificates and their contracts of employment referred to their independence as legal advisors. Their employment contracts also recognised that they owed a paramount duty to the Court over the Council when acting as a Legal Practitioner.

The Tribunal found that section 118 and/or 119 of the Evidence Act 1995 (Evidence Act) applied to the documents the subject of the proceedings, except for one document which was not privileged as it involved communications from a Council employee within a 'legal services' department who did not hold a practising certificate.

The conclusive presumption against disclosure activated for all remaining documents because they were prepared on a confidential basis 'in the knowledge that a formal legal claim would probably be forthcoming and, later, that litigation was likely to ensue'.
 

Legal Procedure involving legal professional privilege:

When governments seek to establish legal professional privilege in a GIPA context, the following steps should be followed:
 

  1.  

Is there a presumption in favour of disclosure?                                                          


Yes.There is a presumption in favour of the disclosure of government information unless there is an overriding public interest against disclosure (s 5 GIPA).                                                                                                                              

  1.  

Is there an overriding public interest?


Client legal privilege (legal professional privilege) is one such overriding public interest (cl 5, Sch 1 to GIPA).

See Schedule 1 to GIPA and section 14 GIPA for other valid types of government information and public interest considerations.

  1.  

Does the 'balancing test' apply?


An 'overriding public interest against disclosure' only exists if the public interest considerations against disclosure outweigh those considerations in favour of disclosure (s 13 GIPA).

This balancing test does not apply to client privilege as covered by Schedule 1, clause 5 GIPA (see [90]).

  1.  

Is it appropriate to waive legal professional privilege?


An agency must consider whether it is appropriate to waive legal professional privilege before refusing access to the information (cl 5(2) of Sch 1 to GIPA).

Once privilege is waived, it is waived as against all persons not just the person who sought information under the GIPA.

Therefore waiving privilege may have far-reaching consequences that should be considered prior to a decision being reached.

Personal factors of the application may also be considered (s 55 GIPA).

  1.  
Does legal professional privilege attach to correspondence with lawyers and legal advice                                                                           ?
The conclusive presumption against disclosure operates if sections 118 or 119 of the Evidence Act apply:
  1. Section 118 prevents the disclosure of confidential information prepared for the dominant purpose of the lawyer/s providing legal advice to the client.
  2. Section 119 prevents the disclosure of confidential communications or information prepared for the dominant purpose of the client being provided with professional legal services relating to court proceedings (including anticipated or pending proceedings) where the client is a party to such proceedings.
There is a two-step process to applying sections 118 and 119:
  1. First, the communication must meet the requirements set out in section 118 or section 119, or in both sections.
  2. Second, the decision maker must be satisfied that production of the document would result in the disclosure of a confidential communication or of the confidential contents of a document (see In the matter of Southland Coal Pty Ltd (receivers and managers appointed) (in Liq) [2006] NSWSC 899 at [14]; Tribunal at [85])
  1.  
Does legal professional privilege attach to advice provided by in-house counsel?
In-house lawyers are entitled to claim privilege on behalf of their employer as a client (see definition of 'client' in s 117 of Evidence Act and Sydney Airports Corporation Ltd v Singapore Airlines Ltd [2005] NSWCA 47).

This is subject to the caveat that in-house lawyers also have other functions, and that privilege does not attach to information that does not satisfy the requirements of sections 118-119 of the Evidence Act.

 
  1.  
Does legal professional privilege attach to communications from non-lawyers?
Where non-lawyers assist to create documents and communications in connection with the preparation of confidential information for the purpose of litigation or legal advice, privilege still attaches under section 119 of the Evidence Act.

If documentation or communications are not just prepared in the ordinary course of business and would not have come into existence unless the current or anticipated proceedings existed, then privilege is also likely to attach.

 

 
 

For further information, please contact:


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This article is not legal advice and the views and comments are of a general nature only. This article is not to be relied upon in substitution for detailed legal advice.

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