Protecting Legal Privilege in Communications Involving Third Parties

July, 2017

By Stuart Walter, Partner

Slea Pty Ltd v Connective Services Pty Ltd & Ors [2017] VSC 361[1]

The decision considered whether legal professional privilege applies in relation to communications between a lawyer and a client where a third party (in this case a litigation funder) is included in those communications.

Key Points

  1. A claim of privilege can be maintained over communications between a lawyer and their client where a third party has also been a party to the communication.
  2. The relevant enquiry is whether or not the inclusion of a third party in a communication made between the client and a lawyer means that the communication (or the document) is no longer confidential.[2]
  3. The answer will be determined by whether the person who made the communication, or the person to whom the communication was made, was under an express or implied obligation not to disclose its contents.[3]
  4. Labelling communications as “privileged and confidential” is not necessarily determinative but do indicate an intent and are to be taken into account for that purpose;
  5. Even without such headings, the nature of the subject matter and the context of the communications about the litigation between the solicitor, the solicitor’s client and the funder of the litigation would have an implied obligation of confidentiality;
  6. These principles should be considered when including accountants and other advisers in communications, especially where the adviser is providing input on quantum, tax positions or similar advice that is likely to be highly sensitive and intended to be kept confidential.

The Importance of Maintaining Confidentiality of Legal Advice   

It is reasonably common to having third parties involved in developing strategy or having an indirect interest in the outcome of a legal matter.

These third parties often include the client’s accountant (who may have the better understanding of the financial affairs of the client), “dirty witnesses”, the client’s employer (if the matter involves breaches by the client while performing employment or director duties) or a litigation funder who is backing the case (as was the case here).

It is essential that sensitive and potentially prejudicial communications that were intended to be confidential remain confidential.

The Honourable Justice Almond has recently delivered his decision in the Supreme Court of Victoria proceeding Slea Pty Ltd v Connective Services Pty Ltd & Ors [2017] VSC 361 that addressed the principles around client legal privilege that attaches to emails sent between solicitors, client and a third party.

The decision provides some good indicators to help ensure that communications that were intended to confidential, remain confidential.

Background

Liberty Financial Pty Ltd (Liberty) is funding the case for the plaintiff, Slea Pty Ltd.  Liberty therefore appears to have an ongoing and indirect interest in how the case is progressing.

In a general sense, the issue for determination largely involved emails and communications between Slea and its lawyers, which copied in representatives from Liberty.  There were then communications between Slea and Liberty that flowed from the advice provided by the lawyers and in-house lawyers at Liberty providing views on the advice from the client’s solicitor.[4]

The defendant parties issued a subpoena seeking production of the emails and communications.

The issue then being whether the inclusion of a third party (Liberty) meant privilege did not apply to those communications, alternatively whether it resulted in a waiver of privilege that applies in relation to communications between a lawyer and its client.

The claims for privilege were brought pursuant to sections 118 and 119 of the Evidence Act 2008 (Vic).  Section 118 addresses privilege in relation to confidential communications made for the dominant purpose of providing legal advice to a client.  Section 119 addresses privilege in relation to confidential communications made or prepared for the dominant purpose of a proceeding (including anticipated or pending proceedings).

Findings

For the reasons and principles outlined above, the documents were not required to be produced on the grounds that they are subject to Slea’s client legal privilege.

A copy of the ruling can be found at the following link:

http://aucc.sirsidynix.net.au/Judgments/VSC/2017/T0361.pdf

 

Contact Mills Oakley

For further information, please do not hesitate to contact:

Stuart Walter | Partner
T: +61 3 8568 9524
E: swalter@millsoakley.com.au

[1] Date of ruling – 22 June 2017

[2] At [23]

[3] Further “in the case of documents, this will require determination of whether the person who prepared the document, or the person for whom it was prepared, was under an express or implied obligation not to disclose its documents”

[4] A number of categories of documents were considered as part of the application.  However, a full description of each is not necessary in this article.

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