Case: JMA Accounting Pty Ltd v Commissioner of Taxation [2004] FCAFC 274 ; (2004) 139 FCR 537
Outcome: followed
Secondly, a government agency or authority (such as ASIC) in the exercise of its compulsory powers must provide the person the subject of the exercise of the power with a reasonable opportunity to claim legal professional privilege on his or her own behalf: see Federal Commissioner of Taxation v Citibank Ltd (1989) 20 FCR 403 , 414 and MM v Australian Crime Commission (2007) 244 ALR 452 at [35]-[36]; but see JMA Accounting Pty Ltd v Commissioner of Taxation [2004] FCAFC 274 ; (2004) 139 FCR 537 at [10] - [13] . Given the arrangements put in place by ASIC (see [9], [11] above), there was no (and could be no) complaint that the examinees were not provided with a reasonable opportunity to claim legal professional privilege on their own behalf. 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.