Cantor v Audi Australia Pty Ltd [2016] FCA 1391
Facts:
This case concerns the scope of legal professional privilege (LPP) in Australia.
The privilege dispute arose during five parallel class actions by purchasers or lessees in Australia of various diesel engine models of Volkswagen, Audi or Skoda motor vehicles, alleging that there was a certain software installed that was forbidden under German and Australian law. The KBA, a German motor transport regulator, had been investigating from 2015 whether Volkswagon (VW) had installed such software (defeat devices) in their vehicles, which was also the subject of the Australian class action. As part of the KBA’s investigation, VW provided the KBA with legal advice that it had obtained from its German lawyers, along with a covering letter referring to that advice. Subsequently parts of it were reproduced in documents of the German regulator to VW and other VW Group Companies (ordinances). VW claimed LPP over the communications comprising the legal advice they had sent to KBA, and references to its contents in other documents. In this case, the Australian class action plaintiffs attempted to access such documents in discovery, claiming that this disclosure, from VW to KBA, meant VW had waived privilege over the advice. VW claimed that the advice was privileged.
Issue:
Was VW’s legal advice that they sent to KBA under LPP, and if so, was this LPP waived when it was sent to KBA, the third party, as well as when it was included in KBA’s ordinances, for the purposes of the Australian class action plaintiffs’ claims?
Rule:
For LPP to exist, the common law says that there needs to be:
- the existence of a client and lawyer relationship;
- a confidential communication or document; and
- the communication (or document recording the communication) must have been brought into existence:[1]
- for the dominant purpose of providing legal advice (advice privilege); or
- in respect of litigation or anticipated litigation (litigation privilege).
The dominant purpose test brings within the scope of privilege a document brought into existence (not at the time of its communication) for the purpose of legal advice notwithstanding that some ancillary use of the document was contemplated at the time of its creation.[2]
The test for LPP is a question of fact to be determined on an objective standard.[3]
LPP generally extends to advice provided by in-house and employed lawyers as long as the lawyer in question is acting in their professional capacity as a lawyer,[4] and they are competent and independent. However, the privilege will not attach to advice that is predominately for a financial, personal, commercial or public relations purpose.[5] Nor does privilege attach to policy or administrative advice.
Waivers:
At common law, a person who is entitled to the benefit of the privilege can waive that benefit by either:
- intentionally disclosing a privileged communication (‘express waiver’); or
- engaging in conduct that is inconsistent with the maintenance of the confidentiality that the privilege protects (‘implied waiver’).[6] The assessment of such inconsistency is informed, where necessary, by considerations of fairness.
This is subjective to each case. ‘The disclosure of a privileged communication to a third party does not necessarily constitute a full, as opposed to limited, waiver of privilege. Rather, the courts have held that, where privileged communications are disclosed to a third party for a limited and specific purpose, privilege may be waived for that limited and specific purpose as against the third party, but not as against others, including the privilege holder’s opposing litigant. However, in order to constitute such a limited waiver, there must be no inconsistency between the waiving of privilege for a third party and the maintenance of the privilege as against the rest of the world. The privilege holder must, for example, retain full control of further dissemination of the relevant communication.’[7]
This case concerned a limited waiver.
Decision:
The court ultimately decided that LPP was only limitedly waivered in regard to the legal advice documents and the subsequent communications with KBA and VW that had enclosed such documents or parts of the documents.
Reasoning:
Privileged documents:
As the privilege dispute concerned pre-trial discovery proceedings, the court applied common law, not the Evidence Act 1995 (Cth).
The Court confirmed that the legal advice was definitely so, provided by competent lawyers, and that it satisfied the dominant purpose test. The subsequent communications of that legal advice also came under that original umbrella of privilege in relation to the documents of legal advice, and it did not amount to fresh or new communications, and had occurred in circumstances protecting the confidence of those communications, including that they were not sent beyond the VW Group Companies.
Only a limited waiver:
There was no waiver because it was a case of limited disclosure of the legal advice from VW to KBA. The advice was provided to the KBA in circumstances of confidentiality; though there was no express agreement that it was confidential, VW asserted in their affidavit evidence that the documents were given within the bounds of a confidential German administrative procedure, and only for the purposes of the KBA performing its regulatory functions. Additionally, there was no implied waiver by providing the advice to the KBA, because the mere fact of disclosure by VW to the German regulator was not inconsistent with it seeking to maintain confidentiality of the advice as against the Australian class action plaintiffs.
Therefore, the advice had been provided to the KBA confidentially and privilege had only been waived on a limited basis in favour of the KBA but not the whole world (so not the plaintiffs).
Other things to note regarding LPP
Legislation
This case only considered the common law. This is because LPP in the Evidence Act 1995 (Cth) do not apply to pre-trial stages of proceedings (such as producing documents under a subpoena and pursuant to discovery) and do not apply in non-curial contexts such as search warrants and notices to produce documents.
The Evidence Act 1995 (Cth) applies to all proceedings in a federal court (s 4)29, does not apply to the Administrative Appeals Tribunal (AAT), as the AAT is not required to apply the laws of evidence, and applies to the adducing of evidence at trial. Waiver of privilege under the Evidence Act is similar to the elements under common law.
In Victoria, LPP is governed by the Evidence Act 2008 (Vic). The laws here are similar to the Evidence Act 1995 (Cth) and the common law.
Waivers and Expert Reports
Though expert reports were not a feature in this case, the common law surrounding waivers in relation to them are as follows.
As previously mentioned, common law litigation privilege attaches to confidential communications between a legal adviser and an expert witness if made for the dominant purpose of pending or anticipated litigation.[8]
At common law, once an expert’s report has been filed and served, privilege may be waived in respect of both the report and ‘associated material’ (i.e. material forming part of the expert’s brief, such as the legal adviser’s instructions to the expert).[9]
As to the scope of any waiver in the context of expert reports, the relevant principles are set out in ASIC v Southcorp as follows:
- Ordinarily the confidential briefing or instructing by a prospective litigant’s lawyers of an expert to provide a report of his or her opinion to be used in the anticipated litigation attracts client legal privilege.
- Copies of documents, whether the originals are privileged or not, where the copies were made for the purpose of forming part of confidential communications between the client’s lawyers and the expert witness, ordinarily attract the privilege.
- Documents generated unilaterally by the expert witness, such as working notes, field notes, and the witness’s own drafts of his or her report, do not attract privilege because they are not in the nature of, and would not expose, communications. However, where a draft is brought into existence and prepared for the purposes of communication to the lawyer or where the copy that is sought is in the hands of the lawyer, this would attract privilege.
- Ordinarily disclosure of the expert’s report for the purpose of reliance on it in the litigation will result in an implied waiver of the privilege in respect of the brief or instructions or documents referred to in (1) and (2) above, at least if the appropriate inference to be drawn is that they were used in a way that could be said to influence the content of the report, because, in these circumstances, it would be unfair for the client to rely on the report without disclosure of the brief, instructions or documents.
- Similarly, privilege cannot be maintained in respect of documents used by an expert to form an opinion or write a report, regardless of how the expert came by the documents.
- It may be difficult to establish at an early stage whether documents which were before an expert witness influenced the content of his or her report, in the absence of any reference to them in the report.
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[1] Esso Australia Resources Ltd v FCT [1999] HCA 67 [80]
[2] Sparnon v Apand (1996) 68 FCR 322, 328
[3] AWB Ltd v Cole (No 5) (2006) 155 FCR 30 at [44].
[4] Archer Capital 4A as trustee for the Archer Capital Trust 4A v Sage Group plc (No 2) [2013] FCA 1098 [73].
[5] Three Rivers District Council v Governor and Company of the Bank of England (No 6) [2005] 1 AC 610 (Three Rivers (No. 6)), 651
[6] Mann v Carnell (1999) 201 CLR 1, 13, Dreyfus v Attorney-General (Cth) [2021] AATA 249, [20]-[21] (Dreyfus)
[7] https://www.ags.gov.au/legal-briefing-no-117
[8] Trade Practices Commission v Sterling (1979) 36 FLR 244
[9] Collins Debden Pty Ltd v Cumberland Stationary Co Pty Ltd [2005] FCA 1194, [9]; and generally H Stowe, ‘Expert reports and waiver of privilege’ (2007) 45(2) Law Society Journal
