Case: Rochfort v Trade Practices Commission (1982) 153 CLR 134
Outcome: considered
If, however, ASIC meant to submit not that it could compel a person (here, an employee or former employee) to disclose a third party's (here, a company's) privilege by force of statute, but rather that the person may lack the standing to assert the third party's privilege, then that contention may be accepted. Just as an employee can only waive a corporation's privilege if he or she has authority to do so (typically, where the person is a current officer or director), so too may an employee only assert a claim of privilege belonging to a corporation if he or she has the requisite authority: Commodity Futures Trading Commission v Weintraub [1985] USSC 102 ; 471 US 343 , 348-49 (1985); In re Grand Jury Proceedings [2006] USCA1 234 ; 469 F3d 24 (1 st Cir 2006); Wrench LLC v Taco Bell Corporation 212 FRD 514 , 517 (WD Mich 2002) (collecting cases); see also S McNicol, Law of Privilege (1992) at 161-62 (citing Rochfort v Trade Practices Commission (1982) 153 CLR 134 for the proposition that an employee cannot assert the privilege of self-incrimination on behalf of a corporation [at that time corporations were still thought to have such a privilege] because the privilege is personal to the holder). To put it another way, the ASIC investigator was legally correct when he told counsel for AWB that "[n]either ... could [the employees] make the claim [of privilege on behalf of AWB] nor [could they] waive the claim...": [12] above. 30 That conclusion sounds, at least at first blush, as harsh or unjust. Even Mason J, in holding that an employee could not claim privilege against self-incrimination on behalf of his or her corporate employer in order to resist a subpoena, accepted that ( Rochfort at 145): To acknowledge that the employee's possession [of privileged information] is sufficient in itself to sustain an obligation to produce, without reference to his employer, would be to disregard the employer's rights with respect to his documents. What is more it would deprive him of the privilege of objecting to produce a document on the ground that it has a tendency to incriminate him. However, closer examination reveals both why this result is not as harsh as it first seems and why it is necessary. 31 First, although the examination under s 19 of the ASIC Act is private, it is an examination where "the inspector may give directions about who may be present during it, or during a part of it": s 22(1). If a direction is made for a person to attend, that person is entitled to attend the examination: s 22(2). The "person" referred to in s 22 is not the examinee's lawyer. The right of the examinee's lawyer to attend and address the inspector is separately and expressly provided for in s 23. Who then could that person be? One obvious contender is the legal adviser of the examinee's employer in circumstances such as those outlined in the extracts of the transcript (see [10] above). But ASIC did not permit that to occur. The power to make directions must include directions not only about the identity of the legal representative who might be entitled to attend on behalf of the company at any examination, but also about the non-disclosure of the contents of the examination to any person or entity (including the entity seeking to protect its privileged communications). 32 Of course, there cannot be a general rule that a legal representative of the employer or the former employer of the examinee should be permitted to attend to protect the employer's privilege. There may well be circumstances where to do so would jeopardise the investigation: see eg Gangemi v Australian Securities and Investments Commission [2003] FCA 494 ; (2003) 129 FCR 284 at [35] , [38]; see also Rochfort at 145 (Mason J) (stating that request for the production of privileged information should generally be directed to the employer but "the protection of the employer's interests [in the information] must give way to the public interest in the efficient administration of justice in case of collision between the two"). But in the absence of such a circumstance, the voluntary grant by ASIC of a limited right to be present in the manner outlined by counsel for AWB might have forestalled the issues raised in these proceedings. 36 I should also note that examinees were even given an opportunity to raise an issue as to a possible third-party privilege. No doubt this is the best policy, but whether it was required as a matter of law may be doubted: see Rochfort at 145-47 (noting that in general effort should be made to respect potential interests of the third-party lawyer but that there are various circumstances where the interests of justice will trump protection of those interests). In MM , Emmett J held that a person must be given a reasonable opportunity to claim privilege on behalf of others as well as himself or herself. In support of this proposition, his Honour relied on the Full Court's decision in Citibank ; however, that decision was disapproved by the later Full Court decision in JMA . Moreover, the conclusion in MM rested on a premise which may be in doubt. Emmett J reasoned (at [35]) that an examinee "would be obliged to make claims for privilege in respect of documents where the privilege might reasonably be expected to exist in order to ensure that such a claim for privilege would not be lost ." (Emphasis added.) In other words, his Honour found that the obligation to make a claim on behalf of others must exist in order to prevent waiver. However, as I have already noted, and as the parties in this case recognised from the start, only the holder of the privilege may waive it. Thus there is no possibility that the failure of an employee to claim privilege on behalf of the corporation would result in waiver or loss of the privilege (except perhaps where the employee is authorised to waive the privilege). To the contrary, it is precisely if a general duty to claim the privilege is imposed that a risk of waiver arises - that is, imagine that an employee under a duty was given a reasonable opportunity to claim privilege on behalf of the employer but failed to do so; under Mann v Carnell [1999] HCA 66 ; (1999) 201 CLR 1 that would be conduct inconsistent with the maintenance of the privilege and would mean that any employee, without the knowledge or authority of the corporate employer, could waive the corporation's privilege. For those reasons, it does not seem either necessary or wise to impose a general obligation on an examinee to claim privilege on behalf of a third party, nor to create a general obligation on behalf of the examiner to give the examinee a reasonable opportunity to make such a claim. While an employee may have an obligation in contract or equity to maintain the confidences of his or her employer ( NP Generations Pty Ltd v Feneley (2001) 80 SASR 151 at [16]-[19]), that cannot be converted into an ability to control the exercise of the employer's legal professional privilege.