An Australian footnote to Three Rivers

14 January 2005

Edward Alder, Rosamund Cresswell

A series of recent decisions by the courts of England and Wales has pushed legal professional privilege issues into the spotlight[1].

In the now well-known Three Rivers No 5 decision, the English Court of Appeal held that where a large organisation instructs lawyers, not every employee of the organisation who deals with the lawyers will qualify as "the client" for the purposes of legal privilege. Which employees qualify as “the client” will depend on the facts of the individual case. It is clear that certain employees may be treated as third parties with the result that for certain purposes their communications will not be protected.

The Supreme Court of the Australian Capital Territory had occasion to consider another dimension to this issue in Vance v Air Marshall McCormack in his capacity as Chief of Air Force & Anor [2004] ACTSC 78. The case concerned whether communications between senior Army officers and qualified in-house Army lawyers (known as Defence Legal Officers (DLOs)) regarding termination of the claimant's employment in the Army were privileged at all.

It has long been held in Australia (Waterford v Commonwealth [1987] HCA 25), as elsewhere, that communications with in-house lawyers are usually protected by the same privilege as communications with external lawyers. Like some in-house lawyers in Hong Kong, the DLOs did not hold practising certificates. Also, the relevant defence legislation did not excuse them from the need to hold certificates in order to practice (as is the case for some government lawyers).

The judge held that in-house lawyers qualify for privilege if they demonstrate in their work "continued adherence to ethical and professional standards" and retain "independence" from their employers as required by "professional standing". Mere admission to practice, as opposed to holding a current practising certificate, is not sufficient.

Where an organisation that is in litigation claims privilege in communications with its non certificate holding in-house lawyers, it is for the organisation to prove that its lawyers continue to meet the tests. In this case, the DLOs reported to non-lawyers and the Army's disciplinary culture that applied to the DLOs was considered to militate against the DLOs having true independence.

The judge ordered the Army to produce various communications by the DLOs, although communications relating to the case with outside counsel were privileged.

This case demonstrates that where an in-house lawyer has moved into a mixed legal and commercial role and does not hold a practising certificate, it may be difficult to maintain that their communications with other staff attract privilege.

[1]These decisions have been reviewed by Jeremy Sharman and Catherine Milton of Bird & Bird’s London office and by Edward Alder and Rosamund Cresswell of the Bird & Bird’s Hong Kong office. These reviews can be viewed here.