Australia: Waiver of Privilege – The Impact of ASIC’s Investigation Powers on Legal Professional Privilege
Public Law Report

In October 2009, the Court of Appeal in Victoria provided further guidance on the impact of the investigative powers of the Australian Securities and Investments Commission (ASIC) on the right to claim legal professional privilege (LPP) (Australian Securities and Investments Commission v Lindberg and Anor (2009) 261 ALR 207). The Court concluded that where an authority seeks to take possession of documents under compulsory powers it must allow the holder of LPP an adequate opportunity to protect the privilege. This longstanding principle does not apply, however, in circumstances where the authority has already taken possession of the documents from a third party.

Background

In August 2007, ASIC commenced an investigation into the affairs of AWB Ltd (AWB) in relation to its wheat sales to Iraq under the United Nations Oil-For-Food Programme. As part of its investigation, ASIC examined various parties under section 19 of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act), including current and former employees and former legal advisers of AWB, and obtained voluntary statements from others. As a result of its investigations, ASIC commenced civil penalty proceedings in the Supreme Court of Victoria against Andrew Lindberg, the former CEO of AWB, for breaches of directors' duties (specifically sections 180 and 181 of the Corporations Act 2001 (Cth)). Discovery orders were made requiring ASIC to provide Mr Lindberg with all transcripts and examinations conducted under section 19 and any other witness statements that related to questions raised by the pleadings. AWB, who was not a party to the proceedings, filed an application seeking orders that ASIC provide the discovered materials to its external lawyers in order to enable them to review the materials and assert and test claims for LPP. The trial judge granted these orders (Re AWB Ltd (No. 6); Australian Securities and Investments Commission v Lindberg [2009] VSC 330).

Judgment

On appeal, the Court of Appeal found in favour of ASIC. It held that where an authority seeks to take possession of documents under compulsive powers from a person who may wish to claim LPP, either on their own behalf or on behalf of another, the authority must give that person a practical and realistic opportunity to claim privilege. This principle does not apply to situations where the authority has already obtained possession of the documents from a third party. Nor does it create a right to be given the opportunity to claim the privilege by some other person. Once documents come into the possession of any party, the privilege is lost and cannot be asserted except in the context of a claim in equity to protect confidentiality.

Implications

This decision is the latest in a line of cases concerning AWB's attempt to protect communications that may be the subject of a claim of LPP which were received by ASIC during the course of its investigation (see, for example, AWB Ltd v Australian Securities and Investments Commission [2008] FCA 1877). The decision highlights the importance for companies to take adequate steps to limit the risk that a waiver of LPP occurs as a result of employees or former staff being obliged to attend a compulsory examination or disclose information to a regulator.

On 11 December 2009, the High Court granted AWB special leave to appeal the decision. On 4 March 2010, ASIC announced that it has agreed on a process for the settlement of AWB's claims for privilege. ASIC indicated that this process would ensure that AWB had an opportunity to protect any privileged information in the transcripts before they were disclosed in ASIC's proceedings. Accordingly, AWB's appeal to the High Court has been withdrawn.

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