The ALRC is to report on legal professional privilege

By Kirsten Webb and Stephanie Panayi.

Key Points:
If the ACCC can see material previously protected by legal professional privilege, there will be important implications for how legal advice is sought.

The Australian Law Reform Commission ("ALRC") is to inquire into and report on the application of legal professional privilege to the coercive information gathering powers of Commonwealth bodies.

The Inquiry follows a recommendation by Commissioner Cole in the AWB case. In that case, Commissioner Cole had no power to compel AWB to disclose documents in respect of which AWB's claims for legal professional privilege were upheld. The Inquiry comes amid concerns cited by the Federal Attorney-General that "legal professional privilege is used to frustrate enforcement of Australian laws by investigatory agencies such as the Australian Securities and Investments Commission".

Unless expressly abrogated by statute, material to which legal professional privilege attaches would ordinarily fall outside the scope of the regulators reach. In essence, legal professional privilege is a common law right which protects certain confidential communications between a lawyer and client from compulsory production to a court or regulator.

The ALRC will consider whether it is desirable:

• to modify or abrogate the privilege in order to achieve a more effective performance of Commonwealth investigatory functions;
• to clarify all existing federal provisions that modify or remove the privilege, with a view to harmonising them across the Commonwealth statute book; and
• to introduce or clarify other statutory safeguards where the privilege has been modified or abrogated, with a view to harmonising them across the Commonwealth statute book.

Most Commonwealth regulatory authorities, including the ACCC, have investigative powers, enshrined in legislation, to compel a person or corporation to provide information or to produce documents.

The ALRC's inquiry comes at a time when the Commonwealth Parliament has seen fit to state expressly in section 155 of the Trade Practices Act that the ACCC does not have the power to require a person to produce a document that would disclose information that is the subject of legal professional privilege. Parliament's decision follows:

• the High Court's decision in Daniels Corporation International Pty Limited v Australian Competition and Consumer Commission (2002) 192 ALR 561 that legal professional privilege is an important common law immunity not to be abrogated without clear words or necessary implication; and
• the conclusion of the Dawson Committee in January 2003 that "Legal professional privilege should be specifically preserved under the [Trade Practices] Act to ensure that corporations and individuals are not discouraged from seeking legal advice or are inhibited in giving instructions to their lawyers". The Dawson Committee considered that legal professional privilege is in the public interest by facilitating the obtaining of legal advice, particularly in relation to the complexities of competition law, and by promoting the observance of the law.

Should the Inquiry find that legal professional privilege should be modified or removed for ACCC investigations, a range of legal and practical issues are likely to arise, such as the way in which legal advice is sought and provided and the use by the ACCC of information that would have been subject to legal professional privilege abrogated or modified by statute. This will be particularly important in light of the proposed introduction of criminal sanctions for hard-core cartels and for future civil penalty proceedings.

The ALRC will issue its Issues Paper in April; consultations are invited between April and August 2007 and the ALRC's final report is due in December this year.