Australia: Responding to a Regulator´s Request for Documents

The provision of documents by compulsion to regulators such as the Australian Securities & Investments Commission and the Australian Crime Commission raises complex privilege issues. It is clear that legal professional privilege continues to apply unless relevant governing legislation limits its application expressly or by clear implication. What remains unclear however, is the process by which privilege should be claimed in response to a regulator's demand. This includes the information which should be given to a regulator in support of such a claim and the procedure to resolve any dispute as to the validity of a claim.

There seems no practical alternative to giving a regulator a list of the documents over which privilege is claimed. A regulator would otherwise have no way of knowing which documents have been withheld or the basis on which privilege is claimed. In that event, a regulator may feel compelled to approach the court for declaratory relief. If so, a court may be critical of a party's failure to provide a list (which may have obviated the need for the application) and order costs in favour of the regulator. This may occur even if the documents are found by the court to be privileged.

However, if a list is given to a regulator it must include only a bare description of the privileged documents and not directly or indirectly disclose the substance of their contents. Even partial disclosure of the contents of a privileged document is likely to constitute a waiver in respect of the contents of the entire document or, worse, waiver in respect of the issues to which the document relates. Waiver may occur if a person entitled to claim privilege acts in a way which is inconsistent with the confidential nature of the privileged communication. Any act which compromises confidentiality may cause privilege to be lost, even if unintentional.

In court proceedings, rules of court, practice notes and precedent provide guidance as to applicable procedure. The adversarial mindset of parties also tends to reduce the risk of an inadvertent disclosure of privileged information. However, legislation which gives regulators power to demand documents is invariably silent as to how a claim for privilege should be made and what information must be given to a regulator. This uncertainty, often coupled with a desire to avoid confrontation, may increase the risk of unintentional waiver.

Regulators will often suggest that documents over which privilege is claimed be placed in their custody on the basis that they be sealed pending agreement or court determination as to their status. This should be resisted. As there is no requirement to physically produce privileged documents to a regulator, a decision to relinquish possession of them may of itself constitute an act inconsistent with the maintenance of confidentiality and result in a waiver. This is regardless of the fact that documents may have been given to a regulator with the protection of an undertaking by that regulator to keep the documents sealed. The issue is compounded by the fact that privilege may often reside in more than one party (as in the case of joint privilege or common interest privilege) yet the regulator may have sought the documents from only one of the parties and the applicable legislation may prohibit communication between the holders of the privilege. The law is unclear on these issues and caution must therefore be exercised.

If the documents are in fact seen by a regulator, whether through inadvertence or otherwise, it is highly likely that any privilege has been compromised. A party's only remedy may then be to seek some form of equitable relief to prevent further use of the documents. Even if such relief were available, it cannot remedy any forensic advantage gained by a regulator as a consequence of having seen the documents.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.