Legal professional privilege being eroded

Advice given by lawyers to their clients on trade practices matters are now subject to ‘discovery’, says Professor Bob Baxt.

There is little doubt that the area of the most frenetic activity where "government regulation" is concerned in recent months has been in the trade practices and consumer protection areas. In this month's Law Reporter we note a major decision of the Full Federal Court (Boral) giving what appears to be wider powers of the Australian Competition and Consumer Commission in relation to the operation of section 46 of the Trade Practices Act. Of greater importance, however, is the decision of the Full Federal Court in ACCC v Daniels Corporation International Pty Ltd (judgment handed down 16 March 2001). In this case the Full Federal Court has ruled that the doctrine of legal professional privilege, which is so important for business in carrying out its activities, has now been significantly limited.

It is likely that the decision will be appealed to the High Court although special leave has to be obtained from that court before the appeal can be heard.

Legal professional privilege is of critical importance to the way in which businesses operate in an economy such as that which exists in Australia. In effect it enables business to seek legal advice from lawyers in planning their business activities in the knowledge that the advice is private and privileged. With this protection in place any relevant advice received by a company cannot be obtained by a regulator such as the Australian Tax Office, Australian Securities & Investments Commission or the ACCC. Privilege also applies in a number of other areas which are becoming more and more important – environment and protection, occupational health and safety, food standards and labour relations. Over the years Parliament has chosen to erode the operation of the doctrine of legal professional privilege by a number of enactments. In the Daniels case the question was whether Parliament, when it empowered first the former Trade Practices Commission, and now the ACCC, to obtain information from companies or persons, or to personally question individuals, could do so without being "blocked" by the doctrine of legal professional privilege.

In the Daniels case the ACCC had used its powers under section 155 of the TPA to seek the legal advice that Daniels Corporation had obtained from Meerkin & Apel to its lawyers. Daniels Corporation argued that the advice that had been provided to it was protected by legal professional privilege. The ACCC argued that section 155 of the TPA overrode that doctrine and the question was referred to the Full Federal Court for determination. The Full Federal Court in an unanimous decision (separate judgments were written by Wilcox, Moore and Lindgren JJ) ruled that the language of the relevant parts of section 155 was specific enough to override the common law privilege. The thrust of this decision is that advice given by lawyers to their clients on trade practices matters are now subject to "discovery" through use of section 155 notices issues by the ACCC. This will no doubt lead to a lot of advice being given in more couched terms. Some advice may not even be put into writing in certain circumstances. Generally speaking the decision is likely to have a chilling effect on the development of proactive and innovative arrangements by the business community as regulators become more outspoken in their criticism of practices which may raise concerns under their relevant legislation.

There is of course no justification for lawyers or others advising clients to engage in illegal or fraudulent activity; however, much of the advice sought by businesses from lawyers is in relation to transactions raise interesting and important questions both under the TPA and under other provisions of the law. The result of the Daniels decision, if not overturned, will be the further erosion of legal professional privilege in more areas of this law with quite significant consequences for the operation of business in this country.

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