Case: Seven Network Ltd v News Ltd (2005) 225 ALR 672
Outcome: cited
Ms Rich did not argue that a salaried, or in-house lawyer, necessarily lacks the independence necessary for client legal privilege to attach to his or her advice. Rather she placed reliance on the approach adopted by Graham J in Seven Network Ltd v News Ltd (2005) 225 ALR 672 at [15] where his Honour said: In my opinion, an in-house lawyer will lack the requisite measure of independence if his 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. 44 In arguing that OGC was in a position to provide independent advice to them, the respondents placed weight on the following passages from the reasons for judgment of Tamberlin J in Seven Network Ltd v News Ltd [2005] FCA 142 concerning documents generated by an in-house counsel: 4. 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. 5. 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. Commercial reality requires recognition by the courts of the fact that employed legal advisers not practising on their own account may often be involved to some extent in giving advice of a commercial nature related to the giving of legal advice. Such involvement does not necessarily disqualify the documents relating to that role from privilege. The matter is necessarily one of fact and degree and involves a weighing of the relative importance of the identified purposes. ... 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 Mr Philip 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 Mr Philip 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. 45 In reliance on the above passages the respondents submitted as follows: A reading of these passages ... shows that when Tamberlin J was referring to 'independence', his Honour was focussing specifically on the issue of whether the in-house lawyer is, in generating the particular communication or document, performing a legal function distinct from (that is, independent of) the commercial activities or management of the client. That is, 'independence' has to be determined having regard to whether or not the person in question was performing a legal function (rather than a commercial or management function) in making a communication or preparing a document. The decision is not authority for the proposition that an in-house lawyer is, prima facie, someone who is not independent of the client. Nor is it authority for the proposition that, where there is some issue about independence in the sense outlined above, none of the documents generated by the in-house counsel can attract privilege. Instead, as the analysis of the documents generated by Mr Phillip shows, privilege can still be maintained in all documents generated in a legal context, or which embody or refer or relate to legal advice. 46 I am not persuaded that Tamberlin J in Seven Network Ltd v News Ltd intended to conflate the criteria for a claim of client legal privilege in the way suggested by the above submissions. The requirement that the legal adviser be independent is principally concerned with the nature of the relationship between the client who claims client legal privilege and the legal adviser. The requirement that the communication be made for the dominant purpose of obtaining legal advice or to conduct or aid in the conduct of litigation in reasonable prospect is concerned with the object and subject matter of the communication. Each criterion must be satisfied before a claim for client legal privilege will succeed. 47 I therefore turn to consider the evidence concerning the nature of the relationship between OGC, Ms Rich and the respondents. The person directly responsible for the legal advice and other legal services provided by OGC is the holder of the position of General Counsel. At all relevant times the holder of the position of General Counsel has been a partner in PwC. Elizabeth Jane Dibbs, solicitor, was General Counsel for the period from 1 July 1998 until her retirement in December 2004. At all times while she was General Counsel she held a current practicing certificate and each of the solicitors in OGC also held a current practicing certificate. Ms Dibbs' successor as General Counsel was Meredith Kim Beattie, solicitor. Prior to joining PwC on 8 February 2005, Ms Beattie had been a partner in the legal firm Blake Dawson Waldron for almost 16 years. She has maintained her practicing certificate as General Counsel and each of the solicitors in OGC continues to hold a practicing certificate. 48 I accept the evidence of Ms Dibbs and Ms Beattie concerning the general functioning of OGC. Their evidence demonstrated that OGC operates as a separate functional unit with PwC. Both Ms Dibbs and Ms Beattie have regarded it as essential that OGC operate on a professional basis, providing professional legal advice and services to PwC with the same level of objectivity as would external lawyers. Separate files are opened within OGC and marked accordingly. Working documents and current files are either kept in a separate and secure OGC area or in lawyers' offices capable of being locked. OGC is separately located on an administrative floor away from the business units of PwC. Neither Ms Dibbs nor Ms Beattie has held any management or executive positions at PwC, nor have any of the other solicitors in OGC. Nonetheless, Ms Howard, the Deputy General Counsel, has fulfilled the role of secretary to the Board of partners and was (perhaps is) a member of the Partnership Amendment Review Committee. In both capacities Ms Howard's role has been to provide professional legal advice and legal services and incidental administrative services such as preparing agendas and collating papers.