In-house counsel advising on foreign law: Is it privileged?

SUMMARY

This article considers whether legal advice on the law of a foreign jurisdiction is privileged.  This question is particularly pertinent to in-house counsel.  The globalisation of commerce and the growth of multinational companies have seen an increase in the number of in-house counsel whose role may extend into jurisdictions in which they are not admitted.  The Queensland Supreme Court was asked recently in Aquila Coal Pty Ltd v Bowen Central Coal Pty Ltd [2013] QSC 82 (hereafter Aquila Coal) to consider whether advice provided by a foreign lawyer on Queensland law was privileged in circumstances where the foreign lawyer was not admitted in Australia.  The decision is significant because the court found, no doubt to the relief of many in-house counsel, that privilege can attach to such advice.  This article discusses the decision in Aquila Coal, together with the broader privilege issues that it raises, and considers its implications for the in-house profession.

INTRODUCTION

The proliferation in recent decades of multinational companies has witnessed the growth in global businesses whose operations span many jurisdictions. Those businesses frequently have permanent in-house legal capabilities.  Indeed, their in-house lawyers may themselves be based throughout a number of the jurisdictions in which the business operates.  From time to time, those lawyers may be asked to advise on legal issues concerning a jurisdiction in which they have not been admitted to practice. Is such advice protected by privilege?

In Aquila Coal, the Supreme Court of Queensland had to consider whether privilege attached to legal advice provided by an in-house counsel who was advising on Queensland law but who had not been admitted in Queensland, or indeed in any other jurisdiction in Australia.  Rather, the in-house counsel had been admitted in a foreign jurisdiction, namely New York. In short, the court found that privilege could attach to such advice.

This article discusses the decision in Aquila Coal and its implications.  It does so by reference to the three situations in which the application of privilege may arise when foreign law is involved, namely:

(a)    first, when a foreign lawyer advises on Australian law;

(b)    second, when an Australian lawyer advises on foreign law; and

(c)    third, when a foreign lawyer advises on foreign law.

The impact of the uniform evidence legislation on the application of privilege in these situations is also considered.

However, before discussing these issues, the test and rationale for the doctrine of legal professional privilege, together with the principles which have developed governing its application to in-house counsel, are revisited.

THE TEST AND RATIONALE FOR PRIVILEGE

It is well established that legal professional privilege is a substantive and fundamental common law right: Daniels Corp International Pty Ltd v Australian Competition and Consumer Commission (2002) 

213 CLR 543¹.  It allows a party to withhold the disclosure of communications which are properly the subject of a claim to privilege.  The ability to withhold the disclosure of communications extends beyond adversarial proceedings and includes such matters as the ability to resist disclosure pursuant to a search warrant: Baker v Campbell (1983) 153 CLR 52.

The test of whether a communication or document is subject to legal professional privilege is whether the communication was made or the document was prepared for the dominant purpose of obtaining or providing legal advice (ie legal advice privilege) or to conduct or aid in the conduct of litigation in reasonable prospect (ie litigation privilege): Esso Australia Resources Ltd v Federal Commissioner of Taxation (1999) 201 CLR 49 at [2] and [61] per Gleeson CJ, Gaudron  and Gummow JJ.

Barwick CJ in Grant v Downs (1976) 135 CLR 674 put it like this (at 677):

Having considered the decisions, the writings and the various aspects of the public interest which claim attention, I have come to the conclusion that the Court should state the relevant principle as follows: a document which was produced or brought into existence either with the dominant purpose of its author, or of the person or authority under whose direction, whether particular or general, it was produced or brought into existence, of using it or its contents in order to obtain legal advice or to conduct or aid in the conduct of litigation, at the time of its production in reasonable prospect, should be privileged and excluded from inspection.

The dominant purpose is a reference to the “ruling, prevailing, or most influential purpose”:
Federal Commissioner of Taxation v Spotless Services Ltd (1996) 186 CLR 404 at 416.

The underlying rationale for legal advice privilege is perhaps best explained in a frequently cited passage by Mason J, as his Honour then was, Stephen and Murphy JJ in Grant v Downs (at 685):

The rationale of this head of privilege, according to traditional doctrine is that it promotes the public interest because it assists and enhances the administration of justice by facilitating the representation of clients by legal advisers, the law being a complex and complicated discipline.  This it does by keeping secret their communications, thereby inducing the client to retain the solicitor and seek his advice, and encouraging the client to make a full and frank disclosure of the relevant circumstances to the solicitor.  The existence of the privilege reflects, to the extent to which it is accorded, the paramountcy of this public interest over a more general public interest, that which requires that in the interests of a fair trial litigation should be conducted on the footing that all relevant documentary evidence is available.

In terms of procedure, where a party makes a valid claim to privilege over a document, that document need not be disclosed².   Typically, claims to privilege are made in the list of documents provided to the other party during disclosure, which, depending on the rules, may need to be verified by affidavit or, if a claim to privilege is challenged, may then need to be verified by affidavit.³.

If a party remains unsatisfied with the other party’s claims to privilege it may bring an application seeking disclosure of those documents.⁴ In such an application, the onus of establishing that the documents are privileged lies with the party asserting privilege: Grant v Downs (at 689); see also AWB v Cole (No 5) [2006] FCA 1234 at [44](1). During the course of the application, the court may inspect the documents to determine whether they attract privilege. Indeed, the High Court has stated that courts have exercised this power too sparingly in the past: Grant v Downs (at 689). This can be achieved, in a practical sense, by handing a confidential folder containing the documents to the judge, but not to the party contesting the privilege claim.

Cross-examination may be permitted during the application in order to determine the dominant purpose for which a document was created: Seven Network Ltd v News Ltd [2005] FCA 142 at [3].  Put another way, in determining whether a document was created for the dominant purpose of legal advice or anticipated litigation, it may be necessary to consider the state of mind of the person creating the document and to examine a number of diverse purposes and to balance them to resolve the question: Esso (at [73]).

Many of the cases dealing with privilege concern in-house counsel. This may be due to the special relationship that in-house counsel occupy. That is, an in-house counsel is both legal adviser and employee. For this reason, a significant amount of jurisprudence has developed addressing the position of in-house counsel.

THE POSITION OF IN-HOUSE COUNSEL

The starting point in any discussion on the application of privilege to in-house counsel is the High Court’s decision in Waterford v Commonwealth of Australia (1987) 163 CLR 54. That case concerned whether privilege attached to confidential communications between government agencies and their salaried legal officers that were undertaken for the purpose of seeking or giving legal advice.

In short, the High Court found that privilege could attach to such communications. Central to the court’s reasoning in Waterford were two factors: first, whether the salaried lawyers were independent of their employer, and secondly, whether the lawyers were competent. In upholding the privilege claim, Brennan J, as his Honour then was, stated (at 70):

If the purpose of the privilege is to be fulfilled, the legal adviser must be competent and independent. Competent, in order that the legal advice be sound and the conduct of litigation be efficient; independent, in order that the personal loyalties, duties or interests of the adviser should not influence the legal advice which he gives or the fairness of his conduct of litigation on behalf of his client. If a legal adviser is incompetent to advise or to conduct litigation or if he is unable to be professionally detached in giving advice or in conducting litigation, there is an unacceptable risk that the purpose for which privilege is granted will be subverted. As to competence, there is much to be said for the view that admission to practice as a barrister or solicitor is the sufficient and necessary condition for attracting the privilege, but the question was not argued and need not be decided.

Similarly, Mason J, as his Honour then was, and Wilson J stated (at 62):

Whether in any particular case the relationship is such as to give rise to the privilege will be a question of fact. It must be a professional relationship which secures to the advice an independent character notwithstanding the employment.

More recent decisions have developed these principles insofar as they apply to in-house counsel.

Thus, in Seven Network Ltd v News Ltd, Tamberlin J stated (at [4]-[5]):

The dominant purpose test has particular importance in relation to the position of in-house counsel because they may be in a closer relationship to the management than outside counsel and therefore more exposed to participation in commercial aspects of an enterprise. The courts recognise that being a lawyer employed by an enterprise does not of itself entail a level of independence. Each employment will depend on the way in which the position is structured and executed. For example, some enterprises may treat the in-house adviser as concerned solely in advising and dealing with legal problems. As a matter of commercial reality, however, both internal and external legal advisers will often be involved in expressing views and acting on commercial issues.

The authorities recognise that in order to attract privilege the legal adviser should have an appropriate degree of independence so as to ensure that the protection of legal professional privilege is not conferred too widely.

Thus, Tamberlin J was also concerned with determining whether the in-house counsel had “an appropriate degree of independence” before privilege could attach. It is clear from the above comments that Tamberlin J was also cognisant of the difficulties that can arise where an in-house counsel’s role may extend into commercial matters. In this regard, his Honour’s conclusion was significant (at [38]):

I am cognisant of the fact that there is no bright line separating the role of an employed legal counsel as a lawyer advising in-house and his participation in commercial decisions. In other words, it is often practically impossible to segregate commercial activities from purely “legal” functions. The two will often be intertwined and privilege should not be denied simply on the basis of some commercial involvement.  In the present case, however, I am persuaded that [the in-house counsel] was actively engaged in the commercial decisions to such an extent that significant weight must be given to this participation.  In many circumstances where in-house counsel are employed there will be considerable overlap between commercial participation and legal functions and opinions.  As can be seen from the specific rulings below, I am not persuaded that in this proceeding [the in-house counsel] was acting in a legal context or role in relation to a number of the documents in respect of which privilege was claimed.  Nor am I persuaded that the privilege claims were based on an independent and impartial legal appraisal.

Thus, Tamberlin J was of the opinion that the in-house counsel had crossed the rubicon and was not acting in a legal role in relation to a number of the documents over which privilege had been claimed.  Each case, of course, turns on its own facts.  For this reason, his Honour’s remark that “privilege should not be denied simply on the basis of some commercial involvement” is noteworthy.

In Telstra Corp Ltd v Minister for Communications, Information Technology and the Arts (No 2) [2007] FCA 1445, Graham J set out a test for when an in-house lawyer lacks the necessary measure of independence (at [35]-[36]):

In my opinion an in-house lawyer will lack the requisite measure of independence if his or her advice is at risk of being compromised by virtue of the nature of his employment relationship with his employer.  On the other hand, if the personal loyalties, duties and interests of the in-house lawyer do not influence the professional legal advice which he gives, the requirement for independence will be satisfied.

In the case presently before the Court, there is no evidence, as I have earlier remarked, going to the independence of the internal legal advisers involved in the communications said to have been brought into existence for the dominant purpose of providing or receiving legal advice.  There is nothing to indicate from the description of the six documents with which the Court is presently concerned that they must be documents for which privilege is properly claimed.  Different considerations may apply if, say, the documents in question were opinions expressed by identified senior counsel where one might start off with the premise that by its nature the document would have privilege attaching to it.  This is not such a case.

Thus, Graham J considered that the requirement for independence would be satisfied provided that the personal loyalties, duties and interests of an in-house lawyer do not influence the lawyer’s advice. Resolving this question, however, is not a straight forward matter for a court.

In Australian Hospital Care (Pindara) Pty Ltd v Duggan (No 2) [1999] VSC 131, Gillard J discussed the burden of proof in relation to a claim for privilege by an in-house counsel:

In my opinion once the client swears the affidavit of documents claiming legal professional privilege in a way which leads the court to the conclusion that the claim is properly made, then the prima facie position is that the legal adviser was acting independently at the relevant time.

It follows that if any other party to the litigation disputes the claim for legal professional privilege then it has the evidentiary burden of establishing facts which prima facie rebut the presumption.

…

If the party opposing the claim for privilege does establish facts which rebut the prima facie presumption then in the end result the party claiming the privilege must establish the propriety and validity of the claim.

The court may, after considering the issues, reach the conclusion that the lawyer was acting independently and accordingly the privilege is upheld, or that the lawyer was not acting independently and accordingly there is no privilege, or the court may reach a position where it is in doubt.  If the latter stage is reached then the court should inspect the documents to determine the propriety and validity of the claim.

… the mere fact that the legal adviser is an employee of the client or that his duties may involve performing non-legal work do not establish that at the relevant time he was not acting independently.  It is recognised that employees will perform non-legal work and it is an essential element of the establishment of the privilege that at the relevant time the employee was performing legal work.  The fact of employment is relevant but the weight to be attached to that fact in considering independence will depend on all the circumstances.⁵

Thus, Gillard J considered that the fact of employment does not result in a lack of independence. Like Tamberlin J in Seven Network Ltd v News Ltd Gillard J also found that simply because the in-house counsel’s duties involve non-legal work does not mean that the in-house counsel’s legal work is not privileged.

However, legal advice privilege can only ever attach when legal advice is actually given or requested by an in-house counsel.  With modern communications, in-house counsel are no doubt the recipients of emails that are sent to others within the business, but which are copied to the in-house counsel.  Simply copying an email to an in-house counsel will not be sufficient to attract privilege unless that is done for the dominant purpose of seeking legal advice, or to conduct or aid in the conduct of actual or anticipated litigation. In this context, Katzmann J stated in Dye v Cth Securities Ltd (No 5) [2010] FCA 950 (at [50]):

The email appears to have been copied to [the in-house counsel] for the purpose of keeping him informed of the status of the applicant’s complaints and so that he was aware of what Mr Carroll was doing about them, not for the dominant purpose of seeking his legal advice or to conduct or aid in the conduct of litigation in reasonable prospect.

Nonetheless, the overriding principle remains that communications involving in-house counsel are capable of attracting privilege, provided the other requirements for a privilege claim are established.  Put another way, whilst a court may look at the position of in-house counsel more closely, “there is no doubt that legal professional privilege may attach to communications with a lawyer who is a salaried employee”: GSA Industries (Aust) Pty Ltd v Constable [2002] 2 Qd R 146 per Holmes J (as her Honour then was) at [14].

How then do these principles operate when questions of foreign law are involved?  It is worth noting at the outset that the principles discussed below apply equally to any legal advisers.  However, it is likely that in-house counsel will encounter these issues more frequently than lawyers in private practice.

FIRST SITUATION: FOREIGN LAWYER ADVISING ON AUSTRALIAN LAW

Turning then to the first situation in which questions of foreign law may arise — when a foreign lawyer advises on Australian law.

This was the situation which confronted Boddice J in Aquila Coal.  In that case, Aquila Coal had entered into a joint venture agreement with the defendant, Bowen Central Coal Pty Ltd (BCC), for the development of a proposed mine in central Queensland.   The application before the court concerned Aquila Coal’s claim that certain documents over which BCC claimed privilege were not in fact privileged and should be disclosed.

A preliminary issue for determination was a submission by Aquila Coal that documents created by BCC’s in-house counsel were incapable of attracting privilege.  This was because the in-house counsel had never been admitted as a lawyer in Australia. Instead, BCC’s in-house counsel had been admitted in a foreign jurisdiction, in this case New York.  Thus, the question for the court was whether advice provided by a foreign lawyer on questions of Australian law could attract privilege.

Central to Aquila Coal’s argument was the Queensland Court of Appeal’s decision in Glengallan Investments Pty Ltd v Arthur Anderson [2002] 1 Qd R 233.  In that case, the court was required to determine whether privilege could attach to advice provided by partners at Arthur Anderson who held law degrees, but were not admitted to practice.  The Court of Appeal found that the advice was not privileged because privilege “can only attach where a lawyer admitted to practice is involved”: (at 245).  However, the court was silent as to whether admission to practice in Australia was required, or whether it was sufficient to be admitted in a foreign jurisdiction.

In seeking to uphold its claim to privilege, BCC relied upon McLelland J’s decision in Ritz Hotel Ltd v Charles of the Ritz Ltd [No 4] (1987) 14 NSWLR 100.  That case concerned a claim for privilege by an in-house counsel who was a member of the New York State Bar.  In upholding the claim to privilege, McLelland J stated (at 101-102):

The author of the document, Mr Morrazzo, is a qualified lawyer and member of the Bar of the State of New York and the Federal District Court for the Southern and Eastern Districts of New York.  He is an expert of trade mark law.  He is employed by Revlon Inc, the parent company of the second defendant, in what is called its Law Department, which consists of a group of attorneys and their support staff, whose function is to provide legal advice and counsel to the management of Revlon Inc and its subsidiaries. …

I am satisfied that the sole purpose of the bringing into existence of this memorandum was to provide legal advice on these matters to Revlon Inc in connection with the proposed acquisition, that in doing so Mr Morrazzo was acting in his capacity as a professional legal adviser to the company, and that the memorandum was of a confidential nature.

It was submitted that because many of the trade marks were registered in foreign countries and that the litigation (or much of it) was in foreign courts, Mr Morrazzo was not competent to give legal advice in relation to such matters, notwithstanding his legal qualifications in the United States.

I do not consider that legal professional privilege is as limited as this submission would suggest. … it seems to me that legal professional privilege is not confined to legal advice concerning or based on the law of a particular jurisdiction in which the giver of the advice has his formal qualification.  For instance, I have no doubt that legal advice by a lawyer qualified in New South Wales on matters involving the law of, for example, Victoria or the United Kingdom, would, in appropriate circumstances, attract legal professional privilege. Similarly, and  particularly in a field with such international ramifications as trade mark law, I see no reason why legal advice from a lawyer qualified in New York, concerning trade marks and trade mark litigation in another country, would not, in appropriate circumstances attract legal professional privilege.

Whilst Charles of the Ritz was no doubt of assistance in seeking to uphold BCC’s claim to privilege, the ratio of that decision is not clear.  Whilst it is clear that the in-house counsel in that case was qualified in New York, it is unclear from the judgment which country’s laws the in-house counsel was advising on.  Further, the advice concerned trade mark law, a field with “international ramifications”.  Does it make a difference if the advice concerns issues that do not have international ramifications?

Charles of the Ritz was referred to, without disapproval, by Holmes J (as her Honour then was), in GSA Industries (Aust) Pty Ltd.  Again, that case concerned the position of in-house counsel. Her Honour’s comments are significant:

There is no amplification in the material submitted on behalf of the respondent as to what the position of legal counsel entails, and it is not asserted that Mr Moratti is admitted to practise as barrister or solicitor.

There is no doubt that legal professional privilege may attach to communications with a lawyer who is a salaried employee. The question was considered in The Attorney-General for the Northern Territory of Australia v Kearney and answered in the affirmative, at least in relation to government employees, in Waterford v The Commonwealth of Australia. In Ritz Hotel Ltd v Charles of the Ritz Ltd McLelland J concluded that a company employee who was a qualified lawyer and a member of the New York State Bar, was acting as a professional legal adviser whose communications were capable of attracting legal professional privilege. It is to be noted, however, that the lawyer in that case was admitted to practice, albeit in another jurisdiction.

…

Whether admission to practise be relevant to independence or to competence, it is clear, in this State at least, that privilege exists only in respect of legal advisers admitted as barrister or solicitor: Glengallan Investments Pty Ltd v Arthur Andersen.  Having regard to that authority, and the absence of any evidence that Mr Moratti was an admitted practitioner, I conclude, inevitably, that his communications, whether involving legal advice or not, could not attract privilege as the communications of a legal practitioner.⁷

In Aquila Coal, Boddice J had to consider the application of the above principles to BCC’s claims to privilege.  Usefully, his Honour summarised the position governing the application of privilege to in-house counsel as follows:

Where the legal advisers are employees of the party to the litigation, legal professional privilege may still attach, provided the claim relates to a qualified lawyer acting in the capacity of an independent professional legal adviser. Independence is crucial, as an important feature of inhouse lawyers is that at some point the chain of authority will result in a person who is not a lawyer holding authority, directly or indirectly, over the inhouse lawyer. The relevant question for consideration is whether the advice given is, in truth, independent.

In the case of inhouse lawyers, there is no presumption of a lack of independence.⁸

Thus, again, independence is critical and the court does not start with a presumption that an in-house counsel lacks independence.  Ultimately, his Honour concluded that “the authorities relied upon by [Aquila Coal] do not support a finding that legal professional privilege cannot attach to the advice given by [BCC’s] inhouse lawyers or to the instructions provided to those inhouse lawyers, simply because [BCC’s] general counsel was not admitted as a legal practitioner in Australia”: (at [22]).  The essence of his Honour’s reasoning is found in the following passages:

A conclusion that legal professional privilege can attach to the documents in question, notwithstanding that the defendant’s general counsel is not admitted as a legal practitioner in Australia, is consistent with the purpose of, and rationale behind, the doctrine of legal professional privilege.

Legal professional privilege is the privilege of the client, not the lawyers. It exists even where the client erroneously believed the legal adviser was entitled to give the advice. It would be contrary to the notion of the privilege being that of the client that the client should lose the privilege merely by reason that the legal adviser, who is admitted elsewhere, is not admitted in Australia.⁹

In reaching this finding, his Honour also dealt with a submission by Aquila Coal that (1) the restrictions on the in-house counsel practicing law contained in the Legal Profession Act 2007 (Qld) (the LPA) and (2) the in-house counsel’s lack of a practising certificate, both supported a conclusion that privilege should not apply. His Honour stated:

The provisions of the Legal Profession Act 2007 (Qld) (and their corresponding equivalents in the other jurisdictions in Australia) also do not support such a finding.  That Act provides for the regulation of legal practitioners.  It does not purport to regulate the availability of legal professional privilege.  Further, the lack of a current practising certificate, whilst a very relevant factor in determining whether legal professional privilege exists in respect of advice given by inhouse legal representatives, is not determinative of the existence of privilege.¹⁰

Thus, his Honour did not consider the provisions of the LPA were relevant in determining whether privilege applied, nor was his Honour persuaded to reject the privilege claim by reason of the absence of a practising certificate.  Putting this aside, it is nonetheless important for any lawyer to abide by the practising requirements contained in the LPA, given the potential ramifications for that lawyer of not doing so.

In summary, legal advice privilege can still attach to advice provided by a foreign lawyer on questions involving Australian law, provided that the foreign lawyer is admitted in a foreign jurisdiction and displays the necessary degree of independence from the business.¹¹ Similarly, litigation privilege can also attach to documents created by that lawyer for the dominant purpose of conducting or in aid of litigation in Australia, again, provided that those same conditions apply.

What then of the converse situation?  That is, where an in-house counsel admitted to practice in Australia advises on foreign law?

SECOND SITUATION: AUSTRALIAN LAWYER ADVISING ON FOREIGN LAW

The second situation in which questions of foreign law may arise is where an Australian lawyer advises on questions involving foreign law.  It is this situation which is perhaps of most significance to in-house counsel who are admitted in Australia, but not admitted in the foreign jurisdiction.

Take the following example. A general counsel works in Australia for a British-based oil and gas company. The general counsel has been admitted in Australia, but not elsewhere.  The general counsel reports to the global head of legal in London and is responsible for the legal function of the company’s operations in Australia, New Zealand and South East Asia.  The general counsel advises on a contract governed by Singaporean law. Is such advice privileged?

Again, in order for privilege to apply, the necessary pre-conditions discussed above would need to be met.  That is, the general counsel would need, at the least, to be admitted in Australia.  The advice would also need to be confidential and provided by the general counsel acting in the capacity of an independent professional legal adviser.  Beyond that, there does not appear to be any authorities concerning whether advice by an Australian lawyer on foreign law can attract privilege.

In principle, if the decision in Aquila Coal is followed, such advice may also be privileged.  Applying his Honour Boddice J’s reasoning, such a finding would be consistent with the purpose of and rationale behind the doctrine of legal professional privilege.  That is, it would be contrary to the doctrine of privilege that privilege should be lost merely by reason that the general counsel, whilst admitted in Australia, is not admitted in the foreign jurisdiction in respect of which the advice is given, namely Singapore.¹²

However, a respectable argument exists that such advice is not privileged. It is this.  The in-house counsel’s employer must know, or, at the least, ought to know, that the in-house counsel is not admitted in Singapore.  It is not a case of a lay client mistakenly believing that a solicitor was admitted to practice, in which case, privilege can still apply: see Grofam v ANZ (1993) 45 FCR 445.  In Grofam, the Full Federal Court reached this view because “legal professional privilege is essentially concerned with the protection of the client” (at 456).

Turning then to the case at hand — why does an in-house counsel’s employer require any “protection” when it knows, or ought to know, that the in-house counsel is not admitted in Singapore?  Put another way, what public interest exists in maintaining privilege in those circumstances?  Indeed, is there even a relationship of lawyer and client upon which privilege could attach?

Perhaps the most that can be said is that, on the current state of the authorities, doubt exists as to whether privilege attaches to legal advice provided by an Australian lawyer on foreign law.  Whilst the reasoning in Aquila Coal suggests that it does, that case did not decide this point.

For this reason, in-house counsel would no doubt take comfort from a decision in which the ability of privilege to apply in these circumstances is confirmed.

THIRD SITUATION: FOREIGN LAWYER ADVISING ON FOREIGN LAW

The third situation in which questions of foreign law may arise is where a foreign lawyer advises on questions involving foreign law.  Changing the above factual scenario slightly, the British oil and gas company again requires advice on a contract which is governed by Singaporean law.  Instead of providing the advice in-house, the general counsel engages a Singaporean law firm to provide the advice on Singaporean law.  Is such advice privileged from disclosure in proceedings brought in Australia?

This question came before the Full Federal Court in Kennedy v Wallace (2004) 142 FCR 185.  In obiter, Allsop J (as his Honour then was) discussed whether privilege could apply in this situation.  His Honour started by considering the reality of modern commercial life in which the assistance of foreign lawyers may be necessary:

Members of the community may well need to seek the assistance of foreign lawyers. The considerations of the kind that Wilson J spoke of in Baker v Campbell: the multiplicity and complexity of the demands of the modern state on its citizens, the complexity of modern commercial life and the increasing global interrelationships of legal systems, commerce and human intercourse, make treatment of the privilege as a jurisdictionally specific right, in my view, both impractical and contrary to the underlying purpose of the intended protection in a modern society.¹³

Thus, given the realities of the modern world, his Honour considered that privilege should not be restricted to advice on local law. Put another way, Allsop J considered that privilege should not be a “jurisdictionally specific right”. In upholding the claim to privilege, Allsop J also relied on the rationale underpinning the privilege doctrine:

A refusal to recognise foreign lawyer’s advice privilege or narrowly to constrict advice privilege to the precise communication requesting or imparting the advice … would undermine the rationale of the privilege. It would also undermine the administration of justice by enlivening a threat in this jurisdiction to the confidentiality of communications which would otherwise be protected in other places.

…

The above conclusion as to the place of foreign lawyers undermines, from a legal perspective, any view which may be taken to have been expressed by the primary judge that the claim for privilege must fail for lack of connection between the advice and the administration of justice in Australia because it was advice of a foreign lawyer.¹⁴

In short, his Honour considered there was “no basis for viewing foreign lawyers and foreign legal advisers differently to Australian lawyers and legal advice”.¹⁵

Interestingly, his Honour left open the question of whether advice on foreign law by a foreign lawyer could be privileged in Australia in circumstances in which the advice was not privileged under the foreign law. His Honour stated:

Also, nothing I have said should be taken as expressing a view on the existence of privilege in Australia where, under the legal system governing the foreign lawyer, or under the legal system of the state where the advice was given, no privilege would attach.¹⁶

In summary, if Allsop J’s remarks find support elsewhere,¹⁷ there is nothing to prevent advice on foreign law by a foreign lawyer from attracting privilege.

THE IMPACT OF THE UNIFORM EVIDENCE ACT REGIME

The common law position, as set out above, has been modified somewhat in the jurisdictions in which the uniform evidence legislation applies.  For convenience, the provisions of the Commonwealth Act, the Evidence Act 1995 (Cth) (the Evidence Act) are referred to below.

The Evidence Amendment Act 2008 (Cth) made a number of changes to the Evidence Act, including changes with respect to the application of privilege.  These changes implemented the majority of recommendations made in a joint report published by the Australian, NSW and Victorian Law Reform Commissions in February 2006.

Under s 118 of the Evidence Act, privilege can attach to a confidential communication between a client and a “lawyer”.  The 2008 amendments extended the definition of “lawyer” to include foreign lawyers. In particular, a “lawyer” now includes “Australian registered foreign lawyers” and “overseas registered foreign lawyers”: s 117.  An “Australian registered foreign lawyer” is a person registered as a foreign lawyer under the law of one of the States or Territories.¹⁸ An “overseas registered foreign lawyer” is a natural person who is properly registered to engage in legal practice in a foreign country by an entity that has that function.¹⁹ Thus, by these amendments the definition of lawyer includes anyone that is properly registered in a foreign country as a lawyer.

Noticeably, however, the Act is silent as to whether privilege attaches to advice provided by a lawyer on the law of a jurisdiction other than the one in which they are admitted to practice.

Relevantly, the Explanatory Memorandum introducing the new definition of lawyer stated:²⁰

This item also extends the definition of “lawyer” so that it includes a person who is admitted in a foreign jurisdiction.  The rationale of client legal privilege to serve the public interest in the administration of justice and its status as a substantive right means it should not be limited to advice obtained only from Australian lawyers.  This position reflects the reasoning of the Full Federal Court in Kennedy v Wallace (2004) 142 FCR 185.

Thus, privilege should not be restricted to advice from Australian lawyers.  As the Explanatory Memorandum notes, the amendments are said to reflect the common law position in Kennedy v Wallace. Kennedy v Wallace, however, only dealt with the third situation identified above, that is, where a foreign lawyer advises on foreign law.  Thus, s 118 confirms that such advice is privileged.  However, Kennedy v Wallace was not concerned with the first or second situations identified above, that is, where a foreign lawyer advises on Australian law, or an Australian lawyer advises on foreign law.  For that reason, the amendments do not seem to have any application to these two situations.  The common law, as discussed earlier, still applies.  The amendments only impact upon the third situation (ie. foreign lawyer advising on foreign law) and simply reflect the position at common law.  Thus, in summary, the expanded definition of “lawyer” in the Evidence Act does not seem to have changed the common law position that applies in any of the three situations discussed earlier.

Further, it is worth noting that the Evidence Act only applies to privilege claims at trial, and to certain interlocutory processes or document requests pursuant to a court order.²¹ The Evidence Act has no application to non-curial proceedings.

Before concluding, s 119 of the Evidence Act also requires comment. That section is headed “Litigation” and establishes a statutory test for claiming litigation privilege.²²   It extends privilege to confidential communications between a lawyer and a client made for the dominant purpose of providing “professional legal services” with respect to actual, anticipated or pending proceedings in Australia or in an overseas court. Privilege also attaches to confidential communications between a lawyer and another person, as well as the contents of a confidential document, provided the communication was made, or the document was prepared, for that same dominant purpose.  In order for the privilege to apply, it is also necessary that the client “is or may be, or was or might have been” a party to the Australian or overseas proceedings.

The same expanded definition of “lawyer” as set out above applies.  Thus, communications with foreign lawyers acting for clients in proceedings before an overseas court can attract privilege. In particular, the provision of “professional legal services” to such a client is privileged if that was the dominant purpose of the communication. “Professional legal services” is not defined in the legislation. Odgers²³  takes the view that a document prepared for use in such proceedings will be privileged.²⁴

Thus, in short, the effect of the expanded definition of “lawyer” seems to be this.  Privilege may be claimed over communications with foreign lawyers with respect to actual, anticipated or pending proceedings in foreign courts provided that the dominant purpose of the communication was for the provision of “professional legal services”. Similarly, privilege may be claimed over documents prepared for use in such proceedings, again provided that that same dominant purpose is present. In this manner, s 119 provides statutory recognition of litigation privilege to communications with foreign lawyers in relation to foreign proceedings. No doubt this is welcome news for multinational companies who may be involved in a number of cross-border disputes at any one time.

CONCLUSION

The decision in Aquila Coal represents a significant win for the in-house profession.  It confirms that advice on Australian law provided by a lawyer admitted in a foreign jurisdiction can attract privilege.  That is, privilege can still attach to the advice even though the foreign lawyer was not admitted in Australia.

In Aquila Coal, the court grounded its decision by looking to the purpose of, and rationale behind, the doctrine of privilege.  The court reasoned that it would be contrary to the notion of privilege that privilege could be lost by reason of the lawyer being admitted elsewhere, but not in Australia. Adopting that same analysis, advice on foreign law by lawyers admitted in Australia may also attract privilege – provided, of course, that the other requirements for a privilege claim are met.  However, as outlined above, there is a respectable argument to the contrary.  The amendment to the definition of “lawyer” in the Evidence Act does not seem to have changed the position at common law.  Thus, judicial confirmation that privilege can apply to advice on foreign law would no doubt be welcome news for multinational companies and their in-house counsel.

Dan Butler
Barrister at Law, Gerard Brennan Chambers

I am grateful to Chris Crawford for comments on an earlier draft of this article.

This article has been reproduced with the kind permission of Thomson Reuters (Professional) Australia Limited (www.thomsonreuters.com.au).  This article was first published in February 2014 by Thomson Reuters in the Australian Business Law Review and should be cited as In house counsel advising on foreign law: is it privileged,? Butler, (2014) 42 ABLR 5.  For all subscription inquiries please phone from Australia: 1300 304 195, from Overseas +61 2 8587 7980 or online at www.thomsonreuters.com.au/catalogue.  The official PDF version of this article can also be purchased separately from Thomson Reuters.

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1. At [9], [11], [44] and [132].
2. See eg, r 212 of the Uniform Civil Procedure Rules 1999 (Qld); r 21.5 of the Uniform Civil Procedure Rules 2005 (NSW).
3. See r 213 of the Uniform Civil Procedure Rules 1999 (Qld); r 21.4 of the Uniform Civil Procedure Rules 2005 (NSW); r 29.04 of the Supreme Court (General Civil Procedure) Rules 2005 (Vic) and r 20.17 of the Federal Court Rules (Cth).  Some rules provide that the affidavit must be made by a person who knows the facts giving rise to the claim: see r 213 of the Uniform Civil Procedure Rules 1999 (Qld); r 29.10 of the Supreme Court (General Civil Procedure) Rules 2005 (Vic).
4. See eg. R 223 of the Uniform Civil Procedure Rules 1999 (Qld).
5. Australian Hospital Care (Pindora) Pty Ltd v Duggan (No 2) [1999] VSC 131 at [67], [68], [70], [71], [81] and [82].  Relied upon by Boddice J in Aquila Coal Pty Ltd v Bowen Central Coal Pty Ltd [2013] QSC 82 at [9].
6. Aquila Coal Pty Ltd v Bowen Central Coal Pty Ltd [2013] QSC 82 at [1].
7. GSA Industries (Aust) Pty Ltd v Constable [2002] 2 Qd R 146 at [13], [14] and [17].
8. Aquila Coal Pty Ltd v Bowen Central Pty Ltd [2013] QSC 82 at [8] and [9].
9. Aquila Coal Pty Ltd v Bowen Central Pty Ltd [2013] QSC 82 at [24] and [25].
10. Aquila Coal Pty Ltd v Bowen Central Pty Ltd [2013] QSC 82 at [23].
11. See also Great Atlantic Insurance Co v Home Insurance Co [1981] 1 WLR 529 at 536 (Templeman LJ); referred to in Grofam v ANZ (1993) 45 FCR 445 at 455.
12. Aquila Coal Pty Ltd v Bowen Central Pty Ltd [2013] QSC 82 at [25].
13. Kennedy v Wallace (2004) 142 FCR 185 at [200].
14. Kennedy v Wallace (2004) 142 FCR 185 at [202] and [216].
15. Kennedy v Wallace (2004) 142 FCR 185 at [207].
16. Kennedy v Wallace (2004) 142 FCR 185 at [214].
17. See Australian Crime Commission v Stewart [2012] FCA 29, upheld on appeal: Stewart v Australian Crime Commission (2012) 206 FCR 347.
18. See the definition in the Dictionary and reg 10 of the Evidence Regulations 1995 (Cth).
19. See the definition in the Dictionary.
20. Explanatory Memorandum to the Evidence Amendment Bill 2008 at [174].
21. See Esso v Federal Commissioner of Taxation (1999) 201 CLR 49 and s 131 of the Evidence Act 1995 (Cth).
22. Although the section can also extend to legal advice: see Odgers S, Uniform Evidence Law (100th ed, Thomson Reuters, 2012) at [1.3.10720].
23. Odgers, n 22 at [1.3.10720].
24. Relying upon Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (1998) 81 FCR 526.