Case: MM v Australian Crime Commission (2007) 244 ALR 452
Outcome: considered
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. 37 But while there may be a question as to what obligations or abilities a person may have in respect of claims of privilege on behalf of third parties, it is clear that there is no requirement in the ASIC Act , which imposes an obligation on ASIC to afford a person or entity (other than the person the subject of the exercise of the compulsory power) (ie the third party itself): 1. an opportunity to intervene or interject in the exercise of the compulsory power over another in order to claim or assert legal professional privilege on behalf of itself: see, in particular Pts 3 and 7 of the ASIC Act ; or 2. notice that the exercise of its compulsory power in relation to another individual (such as an examinee) may result in that individual providing information that is subject to a claim of legal professional privilege by that third party. See by way of example, May v Deputy Commissioner of Taxation [1999] FCA 287 ; (1999) 92 FCR 152 at [31] , [36] and [38] and MM at [36] and [37]. 38 That is not surprising. If ASIC were under an obligation to notify a third party that the exercise of its compulsory power in relation to another individual (such as an examinee) may result in that individual providing information that is subject to a claim of legal professional privilege by that third party, by what criteria would ASIC determine when and in what circumstances it was required to notify a third party? Would ASIC be required to interrupt an examination upon becoming aware of the prospect of or the fact of information being provided by an examinee which might be the subject of a claim of privilege by a third party? How would ASIC determine if it was properly subject to a claim for legal professional privilege? The list of difficulties is endless and the possibility great that efficient and timely investigation of wrongdoing would be frustrated. 39 Moreover, there are measures that the third party can take to prevent disclosure of its privileged information even in the absence of a right to intervene. First, where an examinee is subject to the exercise of compulsory powers by a government authority and in possession of privileged information where the holder of the privilege is a third party, it is open to the holder of privilege to require or authorise the examinee to assert the holder's privilege to the authority: MM at [33] (cf s 122(3) of the Evidence Act 1995 (Cth)). Of course, the efficacy of this strategy is likely to be limited in situations where the third party does not have prior notice of the examination or other exercise of power over another under the ASIC Act . 40 Secondly, equity may restrain use of confidential information improperly obtained , especially where the information is used as a "springboard for a claim or defence in litigation": Cowell v British American Tobacco Australia Services Ltd [2007] VSCA 301 at [15] - [17] . As Emmett J noted in MM , there is nothing to prevent the holder of a claim for privilege making a privilege claim prior to the tendering of evidence against the holder of any information obtained by ASIC in circumstances not giving rise to a waiver: eg ss 76 - 83 of the ASIC Act ; ss 118 and 122 of the Evidence Act 1995 (Cth) and British Coal Corporation v Dennis Rye Ltd (No 2) [1988] 3 All ER 816. Put another way, "the right of the holder of the privilege not to have privileged material used in evidence against him or her [or it]" is not affected by the disclosure of the privileged material by a party within the scope of the privilege but not entitled to control its exercise: MM at [38]. This is a natural consequence of the basic principle that only the holder of the privilege may waive it. Moreover, although not applicable in the present case (because the third party here is a corporation, which has no privilege against self-incrimination: Daniels at [31]), that preservation of privilege extends not only to legal professional privilege but also privilege against self-incrimination because the ASIC Act abrogates privilege against self-incrimination (s 68(1)) and then provides a "use immunity" to the examinee in relation to information obtained in a s 19 examination where the requirements of s 68(2) are satisfied: s 68(3) of the ASIC Act . Interestingly, unlike other Commonwealth legislation, the "use immunity" in the ASIC Act only applies to persons in relation to the making of an oral statement or the signing of a record and not to the production of documents: s 76(1)(d) of the ASIC Act ; see also Privilege in Perspective , ALRC Report No 107 (2007) at Ch 7 and in particular, paras [7.65] [7.69] and [7.103] and [7.104]. 42 It is well established that "an administrative decision may be impugned if the decision maker was bound to take a factor into account in reaching his or her decision but failed to do so": MM at [40]. If a statute states expressly the factors that must be taken into account that will be decisive. However, if the relevant factors are not expressly stated, they must be determined by necessary implication from the subject matter, scope and purpose of the Act: Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40 ; (1985) 162 CLR 24 , 39-40; Minister for Immigration and Multicultural Affairs v Yusuf [2001] HCA 30 ; (2001) 206 CLR 323 , 347-348.