In the recent case of ASIC v
The Court's decision arose out of a peculiar factual scenario, but the case will impact the way that legal professional privilege is dealt with in regulatory investigations.
What is legal professional privilege?
Legal professional privilege (LPP) (sometimes referred to as "Client Legal Privilege") protects confidential communications that are brought into existence for the dominant purpose of giving or obtaining professional legal advice or legal services including representation in legal proceedings. The protection allows the client to resist giving information or disclosing documents which would reveal the privileged communication.
LPP can also be claimed when responding to regulatory investigations or enforcement actions, such as an exercise of ASIC's compulsory information-gathering powers, so the recipient of the notice is excused from providing privileged communications and documents in response. The privilege belongs to the client, not the lawyer, meaning the client is able to choose whether to claim or waive privilege. Most broad information-gathering powers include provisions to protect documents covered by LPP in the empowering legislation.
What is "waiver" of LPP?
LPP can be "waived" (and therefore the privilege is lost) by the client either expressly waiving the right to claim privilege in the communication, or impliedly waiving privilege by acting in a manner which is inconsistent with maintaining the confidential nature of privileged the communication.
When determining whether privilege has been impliedly waived, the court will apply the test that was established in the
For example, in Mann v
Voluntary Confidential Disclosure Agreements
In some investigations, ASIC offers a "Voluntary Confidential Legal Professional Privilege Disclosure Agreement" (sometimes referred to as a VDA) under which a party agrees to disclose privileged material to ASIC for the purpose of its investigation, but on the basis that it may seek to maintain privilege over the documents for other purposes, including for use as evidence in proceedings subsequently brought by ASIC.
There may be several benefits of these arrangements for both ASIC and the disclosing party but the recent case of ASIC v
ASIC v
Prior to the ongoing proceedings between
In his judgment, Shariff J gave the following reasons for the decision that privilege had been waived and that
- while the VDA prevented ASIC from using the PwC Report in legal proceedings, it permitted the "derivative use" of the information contained in the PwC Report against third parties. Such use of the PwC Report is inconsistent with maintaining confidentiality in the privileged communication
- the potential use of the information within the PwC Report against
Mr Macleod under the VDA was "a specific unfairness" and supported the conclusion that the disclosure was inconsistent with maintaining privilege - the public policy benefits of voluntary disclosure could have been achieved in the circumstances without creating a specific unfairness.
- have policies and procedures in place to prevent accidental waiving of privilege
- be aware and consider the implications of ASIC v
Noumi before entering into a VDA with a regulatory authority.
It was evident that the issue of unfairness towards
Key takeaways
Organisations should be aware of the laws relating to the maintenance of legal professional privilege and take care not to accidentally waive their right to privilege, especially in the context of a regulatory investigation.
VDAs are an effective way for regulators, such as ASIC, to obtain information for their investigations by voluntarily disclosure of privileged communications. However, the decision of ASIC v
To avoid accidentally waiving privilege, businesses should:
-
ensure that key members within the organisation, including directors and senior executives, understand LPP and the rights and risks associated with privilege, both pre and during legal proceedings and regulatory investigations
How can we help?
Our team can assist you in understanding LLP, staying up to date with any developments following ASIC v
This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.
Mr
Holding Redlich
Level 1
QLD
4000
Tel: 39321 9999
Fax: 39321 9900
E-mail: inquiries@holdingredlich.com.au
URL: www.holdingredlich.com.au
© Mondaq Ltd, 2024 - Tel. +44 (0)20 8544 8300 - http://www.mondaq.com, source