Professional Liability Guide

PROFESSIONAL LIABILITY GUIDE

In holding that the insured had waived privilege in the report, Bromberg J gave weight to the respondents’ submission that there was not a commonality of interest between the insurer and the insured. Unlike many situations involving an insurer and insured, such as when an insurer assumes the conduct of litigation on behalf of an insured, the insurer’s interests in this case aligned not with the insured but with the respondents in disproving the allegations of misleading or deceptive conduct. Consequently, there was a divergence of interests between the insured and the insurer, and the insured’s voluntary disclosure of the hitherto privileged report to a potential opponent (the insurer) was held to have been inconsistent with maintenance of the privilege. Determining whether privilege has been waived Marshall v Prescott 652 provides a three-step process for determining whether the legal professional privilege in a document is lost by providing it to a third party. Step 1: Is the document privileged? Common interest privilege prevents waiver of privilege that already exists in a document. Therefore, privilege must first attach to the document in question. As noted above, legal professional privilege protects the disclosure of communications or documents between clients and their legal advisers that are confidential and brought into existence for the dominant purpose of either:

ƒ seeking or giving confidential legal advice (advice privilege); or ƒ existing or anticipated litigation (litigation privilege).

It is, therefore, necessary to determine whether the dominant purpose for which the document was created is one of the above categories.

Step 2: Was the relationship between the parties sufficiently close that the transmission of the documents should not be held to amount to an implied waiver of the privilege? This step involves considering the relationship between the parties (i.e. the client that holds the privilege and the party to whom disclosure is made or contemplated), as well as the nature and purpose of the disclosure and whether there could be held to be an objective intention to waive privilege on the part of the holder.

Where a party’s interests are ‘ selfish ’ and potentially adverse to the interest of the other party, there will be no common interest privilege. 653

Step 3: Is it reasonable in the circumstances to conclude that there was an implied waiver of privilege? The role that legal professional privilege plays within the administration of justice requires that it should not be overborne lightly, and therefore the ultimate question must be whether it is reasonable in the circumstances to conclude that there was an implied waiver of privilege. An implied waiver of privilege will be found where the act of communicating the privileged communication is ‘ inconsistent ’ with maintaining the confidentiality that legal professional privilege protects. What constitutes ‘ inconsistent ’ in this context will depend, in part, on the context in which the disclosure is made. 654 If no such implied waiver can be found, the court will not interfere. 655

652 [2013] NSWCA 152. 653 Rich v Harrington (2007) 245 ALR 106. 654 Spotless Group Ltd v Premier Building and Consulting Group Pty Ltd (2006) 16 VR 1, 23. 655 Marshall v Prescott [2013] NSWCA 152 [64].

138

www.carternewell.com