23 March 2022
There are a wide range of workplace and safety scenarios where employers may undertake an investigation and obtain a written report. Sometimes these investigations and reports are set up to be the subject of the legal professional privilege. However, while the report may start out as being subject to a claim for legal professional privilege, this can be waived by subsequent conduct and result in ‘spilling the beans’.
A communication or document will attract legal professional privilege if it was brought into existence for the dominant purpose of giving or obtaining legal advice or the provision of legal services, including representation in legal proceedings.
There needs to be deliberate and careful planning to attract legal professional privilege in the context of an investigation. It cannot be for mixed purposes, and the substance of any report prepared as part of the investigation cannot be disclosed at a later date.
In the workplace and safety sphere, the following types of scenarios can arise when an incident occurs or a grievance arises:
In each of these scenarios, the question of whether the report and the associated material can be the subject of a claim for legal professional privilege arises.
The recent decision in TerraCom Limited v Australian Securities and Investment Commission  FCA 208 is a good reminder of this principle for businesses, both in the employment and safety spheres.
TerraCom Limited (TerraCom) is an ASX-listed resource explorer. In August 2019, TerraCom terminated Mr Williams’ employment in circumstances where he had made serious allegations against TerraCom. Mr Williams alleged that TerraCom pressured the Australian Laboratory Services to falsify test results about the quality of their coal (Allegations of Misconduct)
TerraCom instructed its legal advisors to act for and provide legal advice on the issues arising in relation to the Allegations of Misconduct. TerraCom’s legal advisors subsequently engaged Price Waterhouse Coopers (PWC) to provide forensic support through a report regarding the Allegations of Misconduct (Report).
The Report was seized in accordance with a warrant executed by ASIC in March 2021 and also captured in a Notice to Produce issued by ASIC in May 2021. TerraCom sought to rely on legal professional privilege to forbid ASIC from reviewing the Report (in respect of the warrant) and to not be obligated to provide the Report (in respect of the Notice to Produce).
In deciding whether the Report was subject to legal professional privilege, the Federal Court considered:
The Court found legal professional privilege applied to the Report as it was created by PWC for the dominant or sole purpose of it to be used by TerraCom’s legal advisors to provide legal advice to TerraCom.
In making this determination, the Court examined the engagement letters between TerraCom and its legal advisors and the engagement letter between TerraCom’s legal advisors and PWC. The Court also accepted evidence from a director of TerraCom that the Report was prepared for legal advice.
The overarching test to determine if a party has waived privilege is whether subsequent conduct in relation to the privileged material is ‘inconsistent’ with the retention of the privilege. This inconsistent conduct (and waiver of privilege) will often come about where privileged material, including a summary of the contents or outcome of privileged material is disclosed to third parties on a non-confidential basis.
ASIC argued that the following disclosures by TerraCom to third parties waived the legal professional privilege:
The Court found that the disclosure to Teneo did not waive legal professional privilege, as the disclosure was kept within a confidential advisory relationship, which is consistent privilege.
The Court dealt with the disclosures in the open letter and ASX announcement together. The Court found that TerraCom’s decision to rely on the outcome of the Report was deliberate and considered, and that using the findings of the Report to maintain the company’s commercial good standing and share price was not consistent with privilege, and therefore waived the legal professional privilege attached to part of the Report.
Given that the open letter and ASX announcement referred to only the outcome of the Report, rather than the entirety of its contents, the Court considered whether privilege over the whole Report was waived, or only partially waived in respect of the portions relied upon in the open letter and ASX announcement.
The Court was not able to separate this part of the report without leaving it disjointed and incomplete, and thus the Court determined that it was appropriate to establish the waiver of legal professional privilege attached to the whole report.
Applying the principles from the TerraCom decision to the scenarios detailed above, we make the following comments:
It is important for employers and businesses to be alert to these scenarios and to think through from the start and whether they wish to make a claim for legal professional privilege. If so, deliberate and careful steps need to be taken to establish the grounds for legal professional privilege and then to maintain it. This includes being alert to the effect of statements made to regulators and/or third parties concerning the matters the subject of a report.
If you have any questions about this article or need assistance with claiming legal professional privilege, please contact us or send us your enquiry here.
Authors: Stephen Trew, Michael Hope & Olivia Lawrence
The information in this article is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.