Under the common law, ‘legal professional privilege’ is the ability to retain confidences and resist the compulsion and admission into evidence of communications passing between a party and a legal advisors, without the clients consent, for the dominant purpose ‘of either obtaining legal advice or assistance from a legal practitioner’, or ‘for use in actual, pending or reasonably anticipated legal proceedings’.
At one stage, the common law test for legal professional privilege provided a ‘sole purpose test, which conflicted with the Evidence Act 1995 (Cth) s118, and s119 (being the governing statute in respect of what can be admitted into evidence at a trial) – referred within the Evidence Act 1995 as ‘client legal privilege’ – a statutory form of legal professional privilege that adopts the dominant purpose test. Fortunately, this issue was resolved when the High Court reverted from its previous position, and adopted the ‘dominant purpose test’ for the common law privilege in Esso Australia Resources Ltd v Federal Commissioner of Taxation – bringing consistency between the common law and statutory tests.
IN-HOUSE COUNSEL/ EMPLOYED SOLICITOR
Prima facie, employed lawyers are capable of claiming privilege over communications on behalf of their employer, similar to any solicitor client relationship subject to the test of independence (discussed further below). Even so, the onus always rests on the party claiming privilege to establish that claim and satisfy itself, and the court, that the communication is provided in a solicitor client context or capacity. It should be noted at this point, that the courts have remarked that: “The mere fact that a person speaking is a solicitor, and the person to whom he speaks is his client affords no protection.”
Due to the employee relationship, it should be kept in mind when reviewing a claim for privilege for employee solicitors, that she/he is more likely to provide advice unrelated to any legal considerations then an external solicitor who is generally and traditionally engaged to solely provide legal advice.
Ergo, to accept a claim for privilege, the courts will usually review at first instance, whether the purported privileged communication was provided in a legal capacity vis a vis in or to a significant extent in a commercial capacity.
It is due to the less than independent relationship inherent in an employment context that the dominant purpose test is likely to be of more significant or reviewed with closer scrutiny, an issue we now turn.
DOMINANT PURPOSE TEST
The Dominant purpose test is a question of fact, which obligates an inquiry into the specified purpose of the communication/document and a review of whether there are any other or competing purposes.
In this regard, the following principals have been espoused:
· A ‘dominant’ purpose is that which was the ruling, prevailing or most influential purpose.
· It is one which is of greater importance than any other.
· It is more than the primary or a substantial purpose.
· It must be clearly paramount.
· Where two purposes are of equal weight, neither is dominant.
· If the decision to bring the document into existence would have been made irrespective of any purpose of obtaining legal advice, the latter purpose cannot be dominant.
· The ‘purpose’ is generally that in the mind of the client, but in respect of employed solicitors pertaining to communication passing between legal employee and the employer, the mind of both parties would likely be relevant.
As touched on above, the ‘capacity’ in which the advice or communication was given must be analysed. Accordingly, the courts will review the entirety of the relationship between the employee and the employer and consider the actual independence of the employed solicitor in respect to any claim for privilege – in particular the degree of influence by the employer having regard and consideration, but not limited, to the following factors:
· The employed solicitors position, title and physical location;
· Whether the legal department is reflected as separated on letterhead and the like;
· The employed solicitors remuneration and bonus structure and the commercial context they may attract;
· Whether the employed solicitor holds or is required to hold a practice certificate – thus exposure to negligence and mandatory Practice insurance;
· General overview of participation by the employed solicitors in the operation of the business and the matters she is involved, such as business strategy; and
· If the advice is tainted or shaped by the employer.
· This is not an exhaustive list of the matters that the court may give consideration or weight, but are factors that have been considered to be relevant by the Court when making a determination on independence.
Having regard to the multitude of factors and the nature of employee relationship determining whether the internal legal advisor is sufficiently independent, is a matter of complexity leading Tamberlin J to state in Seven Network Limited v News Limited:
‘…I am cognisant of the fact that there is no bright line separating the role of an employed legal counsel as a lawyer advising in-house and his participation in commercial decisions. In other words, it is often practically impossible to segregate commercial activities from purely “legal” functions. The two will often be intertwined and privilege should not be denied simply on the basis of some commercial involvement…’
With this in mind, there is no standard formula that can be adopted in making a determination, and the relationship must be reviewed holistically, and if reasonably possible or the circumstances allow, each document or communication should be considered prior to making a claim for privilege.
If you are an employee as an in-house solicitor and considering claiming privilege or wish to protect your rights please do not hesitate to contact Affinity Lawyers on 07 5630 6888