Australia: Purpose, Privilege And Duty – Surviving The Break Down

Last Updated: 22 August 2017
Article by Damon Booth and Louise Massey

The recent decision of Sharpe v Grobbel [2017] NSWSC 1065 acts as a reminder for lawyers about their duty to claim privilege for clients even if they are no longer acting. It highlights the point in time in which common interest privilege arises and the threshold to be met to establish a forensic purpose notwithstanding a break down in commercial relationships.


The proceedings centre around an unhappy falling-out between the four directors (and their related shareholder companies) of Climate Friendly Pty Ltd (Climate Friendly), an Australian company whose primary business relates to the development of land-based carbon projects in Australia.

The substantive proceedings concern the enforceability of a document (styled a Terms Sheet) executed by the directors of Climate Friendly, which the plaintiff directors allege binds the defendants to, inter alia, enter into a buy-back transaction which would reduce the third defendant's shareholding in Climate Friendly to approximately 50% and remove the casting vote currently held by the defendant directors. The defendants, for various reasons, contest that position.

Of import, Climate Friendly has filed a submitting appearance in the proceedings and is not legally represented in the proceedings.

Subpoena and plaintiffs' application to set aside

The defendant directors issued a subpoena upon Bakers who were retained by Climate Friendly to prepare the formal legal documents to implement the Terms Sheet (Subpoena). The Subpoena sought, inter alia, all documents recording or referring to advice provided by the law firm to Climate Friendly in relation to the proposed buy-back of Climate Friendly shares.

The law firm made a claim for privilege on behalf of Climate Friendly, which was not pressed by Climate Friendly (given its passive role in the proceedings). The plaintiff directors made an application to set aside the Subpoena on the basis that:

  • the Subpoena was issued for no legitimate forensic purpose; and
  • the documents sought were privileged from production.


On the question of whether the documents sought by the Subpoena were for a legitimate forensic purpose, Brereton J held:

  1. An issuing party is not required to show that it is 'likely' or 'on the cards' that documents sought under subpoena will materially assist its case. Instead, what is required is that the documents will add, in some way or another, to the relevant evidence in the case.
  2. The question is whether the documents called for are 'apparently relevant or capable of providing a legitimate basis for cross-examination' or whether they are manifestly irrelevant and incapable of touching matters of credit (in which case the subpoena will be an abuse of process).
  3. A stricter test would require an issuing party to be able to predict the contents of potentially relevant documents, and unduly constrain the ability of litigants to investigate the facts.
  4. Examination of the communications between Climate Friendly and its lawyers could conceivably reveal instructions and advice either disadvantageous to Climate Friendly and advantageous to the plaintiff directors' interests.

As such, there was a reasonable basis for concluding that the material called for will likely add, 'in some way or another', to the relevant evidence in the case.

On the question of privilege, Brereton J held:

  1. The documents in question were plainly confidential communications between Climate Friendly and Bakers, for the purposes of obtaining legal advice and assistance.
  2. It is a solicitor's duty to protect a client's privilege (unless waived by the client), including by asserting a claim on behalf of the client if the solicitor is asked to produce privileged documents. The law firm properly made a claim for privilege on behalf of their former client, which did not lapse simply because Climate Friendly did not itself appear to sustain it. The Court is obliged to consider that claim.
  3. Where solicitors act for multiple parties jointly, there is by reason of the joint retainer no privilege as between those parties. However, that principle goes further, and extends to circumstances in which multiple parties have a common interest in the subject matter of the communication, although only one of them retains a solicitor.
  4. If two parties have a common interest in the communication at the time the relevant communication is created, it does not matter that they subsequently fall out.
  5. Whether there is sufficient 'common interest' in the relevant communications is determined on the facts of the individual case.

Brereton J concluded that the law firm had been retained by Climate Friendly to implement a deal which had been negotiated between its principal shareholders. The communications from the law firm were not exclusively for Climate Friendly's benefit, but for the benefit of all interests who had joined in the Terms Sheet.Moreover, the defendant directors were, are and will remain directors of Climate Friendly and as such had (and have) every right to see the advice sought by Climate Friendly.

As such, Brereton J dismissed the plaintiffs' application, with costs.

The take away

To establish a legitimate forensic purpose a document must be 'sufficiently relevant' and 'could possibly throw light on the issues in the case'. To require a higher threshold would unduly constrain litigants and require them to attempt to predict the contents of potentially relevant documents which is almost impossible.

In establishing common interest privilege you need to look at the 'common interest' at the time the communication was made, regardless of the status of the current relationship.

It is important to remember that a solicitor has a duty to protect a client's privilege, requiring a claim for privilege to be made even where the client has failed to do so (or is incapable of acting).

Note: Dentons acted for the defendants in these proceedings.

Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
26 Sep 2018, Conference, New York, United States

Dentons is delighted to support a global IT services and consulting firm Miratech as an event host partner at their annual conference called M-Force18 New York on September 27th. The event will be held at Dentons New York office in the heart of Midtown Manhattan, opposite Rockefeller Center.

2 Oct 2018, Seminar, Dallas, United States

We are pleased to offer a program of five sessions designed specifically for in-house counsel. Topics will include:

  • In-house corporate ethical issues
  • What recent Supreme Court decisions mean for business
  • Keeping lawyers out of your benefit plans
  • Litigation tactics for in-house counsel
  • Employment issues in the age of #MeToo
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions