Case: Attorney-General (NT) v Kearney [1985] HCA 60 ; (1985) 158 CLR 500
Outcome: considered
between a lawyer and client which facilitate a crime or fraud are not protected by legal professional privilege. This principle is often referred to as the 'fraud exception' to legal professional privilege, but this does not capture its full reach: Attorney-General (NT) v Kearney [1985] HCA 60 ; (1985) 158 CLR 500 (' Kearney' ) at 515; Propend at 546; Clements, Dunne &amp; Bell Pty Ltd v Commissioner of Australian Federal Police (2001) 188 ALR 515 (' Clements' ) at 521-522 [30]. The principle encompasses a wide species of fraud, criminal activity or actions taken for illegal or improper purposes: see North J's review of the authorities in Clements at 522-526 [35]-[44]. The scope of conduct caught by the principle has been articulated in a variety of ways, often without particular precision: Propend at 545. Classic formulations have spoken of communications in furtherance of a 'crime or fraud': R v Cox and Railton (1884) 14 QBD 153 (' R v Cox' ) at 165; a 'criminal or unlawful proceeding': Bullivant v Attorney-General (Vic) [1901] AC 196 (' Bullivant' ) at 201; 'any unlawful or wicked act': Annesley v Anglesea (1743) 17 St Tr 1139 at 1229; and 'all forms of fraud and dishonesty such as fraudulent breach of trust, fraudulent conspiracy, trickery, and sham contrivances': Crescent Farm (Sidcup) Sports Ltd v Sterling Offices Ltd [1972] Ch 553 at 565. In Kearney , the High Court applied the principle to deny legal professional privilege to legal advice obtained by the Northern Territory Government which was prima facie a 'deliberate abuse of statutory power' to defeat a land claim under the Aboriginal Land Rights (Northern Territory) Act 1976 (Cth). In his reasons for judgment, Gibbs CJ (with whom Mason and Brennan JJ agreed) stated at 515 that 'legal professional privilege will be denied to a communication which is made for the purpose of frustrating the processes of the law itself, even though no crime or fraud is contemplated.' Some authorities have expressed the principle as applicable to prevent a 'fraud on justice' in a broad sense. The concept of a 'fraud on justice' was adopted by Lander J in Gartner v Carter [2004] FCA 258 (' Gartner v Carter' ) to deny protection to a communication between a lawyer and client for the purpose of the client putting assets beyond the reach of the legitimate claims of secured creditors: at [130] and [139]-[140]. It is important to bear in mind that the fraud exception is based on public policy grounds. The principle is sufficiently flexible to capture a range of situations where the protection of confidential communications between lawyer and client would be contrary to the public interest: see Kearney at 514-515; R v Cox at 614. This aspect of the principle is reflected in the statement that '[t]he privilege takes flight if the relationship between lawyer and client is abused': Clark v United States (1933) 289 US 1 at 15; see also Kearney at 514 and 524. For the principle to apply, there must be more than a mere assertion or allegation of fraud or impropriety: Bullivant at 201, 203 and 204-205. In Propend at 514, Brennan CJ expressed the test as being one of 'reasonable grounds for believing' that the relevant communication was for an improper purpose. The requirement has also been described as one of a 'prima facie case': Butler v Board of Trade [1971] 1 Ch 680 (' Butler' ) at 689; cf Baker v Evans (1987) 77 ALR 565 at 574. In Kearney at 516, Gibbs CJ approved the test formulated in O'Rourke v Darbishire [1920] AC 581 at 604, namely that 'there must be something to give colour to the charge'; 'the statement must be made in clear and definite terms, and there must further be some prima facie evidence that it has some foundation in fact'. The High Court in Propend applied this test: at 514 per Brennan CJ, at 521 per Dawson J, 534 per Toohey J, 546 per Gaudron J, 556 per McHugh J, and 592 per Kirby J.