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ALRC: Keeping a finger to the lips

Every Issue

Cite as: (2008) 82(4) LIJ, p. 81

The Australian Law Reform Commission has made wide-ranging recommendations on client legal privilege and procedures.

The Australian Law Reform Commission (ALRC) has recently completed its inquiry into the application of client legal privilege (also known as legal professional privilege) to the investigatory functions and coercive information-gathering powers of commonwealth bodies.

Client legal privilege is not merely a procedural safeguard: it is a fundamental principle of the common law. The privilege protects against the compulsory disclosure of confidential communications between a lawyer and a client that were made for the dominant purpose of providing or seeking legal advice, or for use in existing or anticipated legal proceedings. It also extends to documents that are not communications if they are brought into existence for the dominant purpose of preparing for, or use in, existing or anticipated legal proceedings.

The ALRC was asked to undertake this inquiry in an environment in which the number of federal bodies with coercive information-gathering powers has grown significantly in recent decades. These bodies now include traditional law enforcement bodies such as the Australian Federal Police; bodies concerned with taxation and the administration of public funds such as the Australian Taxation Office and Centrelink; corporate and financial regulators such as the Australian Securities and Investments Commission (ASIC) and the Australian Competition and Consumer Commission (ACCC); and regulators with a focus on a specific industry such as the Australian Fisheries Management Authority.

The inquiry was also prompted in part by the attention surrounding the investigation into AWB Ltd and the “Oil-for-Food” program. Extensive claims to privilege by the AWB Ltd delayed the investigation by nearly a year, were the subject of extensive criticism by Royal Commissioner Cole, and led to the amendment of the Royal Commissions Act 1902 (Cth).

The ALRC’s inquiry started in early 2007, and centred on the following questions:

  • would further modification or abrogation of client legal privilege in some areas be desirable to achieve more effective performance of commonwealth investigatory functions?
  • would it be desirable to clarify existing provisions for the modification or abrogation of client legal privilege, with a view to harmonising them across the commonwealth statute book?
  • would it be desirable to introduce or clarify other statutory safeguards where client legal privilege is modified or abrogated, with a view to harmonising them across the commonwealth statute book?

The ALRC released two consultation documents – an Issues Paper (IP 33), released in April 2007, and a Discussion Paper (DP 73), released in September 2007. A wide spectrum of stakeholders was consulted over the course of the inquiry.

The need for reform

As well as difficulties in royal commissions, several other developments highlighted the need for clarification of the application of privilege in the context of federal investigations. In The Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543, a case concerning the ACCC’s coercive power under s155 of the Trade Practices Act 1974 (Cth), the High Court of Australia held that client legal privilege could only be abrogated expressly or by necessary implication. While this decision clarified the principles that apply when considering whether privilege has been abrogated, it also created considerable uncertainty in relation to the powers of many federal investigatory bodies under their own particular legislation – uncertainty that now can be resolved only through litigation.

The legislation that has established each of the federal bodies does not take a uniform approach to privilege and few federal statutes either expressly uphold or abrogate the privilege in relation to their information-gathering powers. Throughout the inquiry, the ALRC heard from lawyers and clients that policies and practices vary considerably among federal bodies. For example, ASIC’s approach until very recently was based on a view that the principles enunciated in Daniels did not apply to some of its coercive powers.

From the other perspective, concerns were also expressed to the inquiry by federal agencies that the privilege sometimes has been abused and that parties have resorted to making privilege claims to delay investigative proceedings or as a shield to hide critical information.

The ALRC’s final report, Privilege in Perspective: Client legal privilege in federal investigations (ALRC 107, 2008), was published in February 2008.[1] The report recommends 45 changes to the law and practice governing claims of client legal privilege over material sought by federal investigatory bodies and royal commissions of inquiry.

The recommendations

The ALRC sought to examine the rationale for privilege in the modern context; to consider whether there are any common principles that should apply regardless of the agency involved; to identify the types of circumstances – if any – in which privilege might be modified or abrogated; to identify improvements to the processes for making and handling claims of privilege; and to increase the accountability of lawyers maintaining such claims on behalf of clients.

Client legal privilege should be abrogated or modified only in exceptional circumstances.

Following extensive consideration of the issues, including the approach in other jurisdictions, the ALRC expressly supports the underlying rationale for client legal privilege – that the protection of the confidentiality of communications between a lawyer and a client facilitates compliance with the law and access to a fair hearing, thereby serving the broad public interest in the effective administration of justice.

However, client legal privilege clearly conflicts with other important public interests, including that all relevant material should be available to a court – and, presumably, investigations conducted by government agencies.

Claims of client legal privilege undoubtedly present difficulties for investigators, since they would prefer access to all the evidence concerning the role played by parties to an alleged contravention of the law. Litigating claims of client legal privilege is also time-consuming and expensive, and may delay and frustrate investigations.

Some agencies, including those involved in high-profile cases such as ASIC and the ACCC, told the ALRC that abrogation of privilege would stop the delay that often hampers complex investigations. However, a significant number of stakeholders did not agree that modification or abrogation of the privilege would achieve greater efficiency or effectiveness in the work of federal investigatory agencies. They argued that delay was a problem in a minority of cases and agreed that efficient resolution of claims was more likely to help agencies than modification or abrogation of the privilege doctrine. In addition, it was strongly contended that abrogation would have negative consequences in terms of clients not seeking legal advice or seeking only oral or undocumented advice.

While a case can be made that client legal privilege claims do frustrate and delay investigations, the ALRC found that efficiency and effectiveness of investigations are not in themselves sufficiently good reasons for abrogation of the privilege. The frustrations evident in the examples given to this inquiry were due largely to a lack of clear processes for resolution of claims, rather than a fundamental problem with the doctrine itself.

Abrogation should be considered only in circumstances in which there is a higher competing public interest in the availability of otherwise privileged information. This must be something considerably greater than the ordinary investigatory interests of a federal body. The ALRC has therefore recommended that where the Australian Parliament believes that exceptional circumstances exist to warrant a departure from the standard position, it can legislate to abrogate client legal privilege in relation to a particular investigation undertaken by a federal investigatory body, or a particular power of a federal investigatory body.

The ALRC has identified three examples where a higher public interest may warrant abrogation of the privilege: major investigations which fit specified criteria; some royal commissions; and where the privilege is abrogated in legislation concerning the oversight of public sector agencies.

In the case of major investigations, the ALRC has recommended that abrogation should only be considered where:

(a) the inquiry concerns a matter (or matters) of major public importance that has a significant impact on the community in general or on a section of the community, or is a covert investigation;

(b) the information sought cannot be obtained in a timely and complete way by using alternative means that do not require abrogation of client legal privilege; and especially

(c) the degree to which a lack of access to the privileged information will hamper or frustrate the operation of the investigation and, in particular, whether the legal advice itself is central to the issues being considered by the investigation.

Where client legal privilege is abrogated, the ALRC has recommended the introduction of a default safeguard into legislation providing that a federal body that seeks to rely on otherwise privileged information as evidence in any court proceedings must apply to the court for permission. This would apply where legislation is silent as to what use a federal investigatory body can make of otherwise privileged information that it obtains through the use of coercive powers.

Changes to practice and procedure

A key theme in submissions and consultations was that, to the extent that there is a problem, it mainly lay in the domain of practice and procedure. Consequently, if there were greater transparency, clearer guidelines and procedures, many of the present problems could be solved – and a greater framework of cooperation and trust could be generated, while still respecting the fundamental principle of client legal privilege.

The ALRC also heard that federal bodies experience difficulties in testing privilege claims because the people who are the subject of coercive powers sometimes do not alert the federal body to the existence of a claim or, when claims are made, insufficient details are provided; and that there is an enormous disparity in the approaches taken by people subject to federal coercive powers to justify their claims of privilege.

To provide greater certainty and consistency in making claims and resolving privilege disputes, the ALRC recommends that the Australian Parliament should enact legislation of general application to cover various aspects of the law and procedure governing client legal privilege claims in federal investigations.

Specifically, the legislation should include a range of requirements with respect to claims, including:

  • the notification that federal bodies should give about the application of privilege to their coercive information-gathering powers;
  • provision of a reasonable opportunity to claim privilege;
  • the details of claims that should be provided, if requested by a federal body; and
  • the certification of the claim by a lawyer, if requested by a federal body.

Better education of lawyers

The ALRC’s recommendations also seek to ensure professional integrity in relation to claims of client legal privilege, focusing in particular on the role of professional disciplinary proceedings and legal ethics education. The ALRC found that there is considerable scope for improving the various levels of legal education to identify client legal privilege issues – both before and after admission to practice – to ensure a better understanding of the obligations of lawyers in relation to privilege claims within the context of a lawyer’s overall ethical responsibilities to the court. This emphasis should be reflected in criteria for admission, practical legal training, continuing legal education and best practice advice notes issued by legal professional associations. The ALRC has also made recommendations to clarify and enhance the existing disciplinary frameworks that apply to lawyers.

Tax advice privilege

The creation of a tax advice privilege is consistent with the compliance rationale of privilege – that to promote compliance clients ought to be protected fully in their communications in relation to tax law in the same way they are in other areas of the law. This does not necessarily mean that privilege is extended to tax advisers, but rather that the client’s communications in the nature of tax advice will be protected. If a federal body so requests, the claim that the tax advice is privileged must be certified by a lawyer.

The ALRC’s recommendations in Privilege in Perspective affirm the importance of client legal privilege as a fundamental principle of the common law that may be abrogated only in exceptional circumstances, and provide, through the enactment of federal client legal privilege legislation, a clear and consistent framework for making and resolving claims of client legal privilege in federal investigations. KATE CONNORS is Senior Legal Officer, Australian Law Reform Commission.

[1] Privilege in Perspective: Client legal privilege in federal investigations is available free online at or for purchase from the ALRC.


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