All information that a lawyer receives from their client is considered to be 'confidential'. Some of that information is also considered 'privileged'. The principle of 'legal professional privilege' (also known as 'client legal privilege') is a fundamental principle of Australia's common law legal system and protects certain communications between a lawyer and their client from compulsory disclosure. To establish that legal professional privilege exists, the information or communication must:

  • pass between the client and the lawyer;
  • be for the dominant purpose of obtaining legal advice or for use in existing or anticipated litigation; and
  • be confidential.

The rationale behind legal professional privilege is that the law should encourage parties to disclose all relevant information to their lawyers. That puts the lawyer in the best possible position to sift through all of the facts and present a relevant, truthful account of the client's case to the court. Although legal professional privilege creates protection for clients, it is a mechanism which is aimed at upholding the administration of justice.

Waiver of privilege

In some circumstances, the legal professional privilege which exists in a document may be 'waived', and the protection which the privilege affords to clients can be lost. For example, where legal advice is deliberately disclosed to another party (thereby eroding confidentiality in the document) any legal professional privilege in that document will automatically be lost. This is known as 'express' waiver. However, sometimes waiver of privilege will occur where the privilege-holder acts in a manner inconsistent with the privilege, thereby 'impliedly' waiving privilege. 1 When asked to determine if privilege has been impliedly waived, courts will consider broader notions of fairness, including whether it is unfair or misleading for a person to rely on legal professional privilege in circumstances where they have acted inconsistently with the privilege.2

What then, amounts to conduct which is 'inconsistent' with the maintenance of legal professional privilege? A simple example is where a party expressly states that they have relied on advice from their lawyers in making a decision or taking a particular action. By expressly referring to the legal advice (or the substance or gist of it) as justification or explanation for their conduct, a court is likely to form the view that it is not permissible for the client to simultaneously withhold the advice from disclosure. For example, privilege was taken to be waived in a statement released to the market by a company which read, 'The Board's lawyers have been instructed to vigorously defend the claim and have advised that the plaintiffs' claim will not succeed''.3 Further, during the course of a commercial dispute, where a party indicated that it had received 'legal advice supporting this position', privilege was determined to have been impliedly waived.4

A lesson in waiver: Sanrus Pty Ltd & Ors v Monto Coal 2 Pty Ltd [2019] QSC 144

The recent decision of the Supreme Court of Queensland in Sanrus Pty Ltd & Ors v Monto Coal 2 Pty Ltd5has highlighted a number of other ways in which legal professional privilege can potentially be waived and serves as a timely reminder for clients and lawyers alike. The judgement of Flanagan J (which was delivered during the trial of the substantive dispute between the parties) answered three main questions, all relating to the issue of wavier of legal professional privilege.

First Question – was privilege waived by the defence filed by the defendants?

In answering the First Question, Flanagan J was required to consider the substantive dispute between the parties. In summary, the parties had fallen into dispute in respect of each of their obligations to develop a mining project. Pursuant to clause 5.1 of their joint venture agreement, both parties had agreed to:

'use all reasonable efforts to obtain the grant of the Mining Lease and to, having regard to all relevant factors relating to the [Project] and the economic viability of the [Project], develop Stage 1'

The plaintiffs alleged that the above clause in the joint venture agreement required the defendants in the proceeding (Monto Coal) to use all reasonable steps to develop the first stage of the mining project. Monto Coal, on the other hand, refuted the plaintiffs' interpretation of clause 5.1 and further alleged that the parties shared a 'common assumption' regarding the progress of the project and therefore until the project was economically viable, there was no obligation on either party to proceed with the project. This 'common assumption' was expressly pleaded in the defence which had been filed by the defendants.

The Plaintiffs argued that the defendants, by framing their defence in such a way, had put into issue the state of mind and subjective beliefs of officers of Monto Coal (who held the 'common assumption'). The plaintiffs further argued that this state of mind was likely to have been informed by legal advice received by Monto Coal. On this basis, the Plaintiffs said that defendants had impliedly waived the content of the legal advice which was likely to have contributed to the state of mind of the officers of Monto Coal. The plaintiffs sought production of the legal advice and an opportunity to cross-examine the defendants on the content of that legal advice.

In the course of his judgment, Flanagan J undertook a detailed review of the case law in respect of implied waiver based on allegations made in pleadings and found that on the proper construction of the pleadings, the defendants had not pleaded their case in a manner which revealed that the state of mind held by the officers of Monto Coal was likely to have been informed by legal advice.6 Flanagan J noted that there was nothing in the defence which made an assertion as to the content of legal advice received by the defendants.7 Importantly, His Honour also found that even if there was an objective likelihood that the state of mind pleaded by the defendants could have been informed by any legal advice received, mere likelihood was insufficient to result in an implied waiver of privilege. In this regard, His Honour somewhat resolved an apparent inconsistency in Australian case law on this issue.

Second Question – can inadvertent disclosure waive privilege?

The second question which Flanagan J was required to answer was whether the inadvertent or accidental disclosure of legal advice could amount to a waiver of privilege. In particular, the plaintiffs referred to an instance where the defendants inadvertently failed to object to the tender of documents at trial which contained material which was subject to legal professional privilege.

Ordinarily, where a party accidentally discloses a privileged document to another party, courts will permit the correction of that mistake and order the return of the document.8 The plaintiffs argued that privilege in the document had been waived by the defendants failing to object to its tender and that it would be 'unfair' for that error to now simply be undone by an order of the court. On that basis, the plaintiffs argued that the entire document should be subject to examination by the parties.

In refusing to accept that the inadvertent failure of the defendants amounted to a waiver of legal professional privilege, Flanagan J referred to the following contextual factors:

  • the defendants had acted promptly upon first becoming aware of the inadvertent disclosure9;
  • a number of duplicate or near-duplicate versions of the document (which were redacted to remove privileged material) had already been tendered into evidence;
  • the conduct of the defendants 'should be viewed in the context of what is a large commercial case involving voluminous documents'10
  • the tender of the privileged documents occurred in the context of a bulk tender of documents;
  • the privileged documents had not yet been specifically referred to in the proceeding;
  • the trial judge who received the tendered documents was capable of 'put[ing] any knowledge gained from inadvertent disclosure to one side'11; and
  • it was otherwise not 'unfair' to allow the error of the defendants to be corrected.

Although not referenced in the judgment of Flanagan J, it is also relevant to note that under the Australian Solicitor Conduct Rules, lawyers are under a strict ethical obligation to notify an opposing lawyer that confidential material (including privileged material) has been inadvertently disclosed to them and arrange for the deletion or destruction of such material.12

Third Question – waiver in part, waiver in whole?

The final question that Flanagan was required to answer was whether, in disclosing part of a privileged file note to the plaintiff, the defendants had waived privilege in the entire document. Using the test described above, it is arguably unfair and inconsistent to essentially 'cherry pick' parts of a privileged document without disclosing the entirety of a document. As a starting point, Flanagan J referred to a number of authorities in Australia which have held that fairness usually requires that disclosure of a privileged document requires that the entire document be disclosed to ensure that the other party 'is not misled by an inaccurate perception of the disclosed communication'.13

However, upon review of the documents, Flanagan J concluded that the redacted parts of the document would not cause the plaintiffs to form an inaccurate perception of the unredacted parts. In other words, the plaintiffs were able to fully understand the document without having regard to the privileged material which had been redacted by the defendants. On that basis, Flanagan saw no reason to compel production of an unredacted version of the entire document.

Key Takeaways

Although the decision in Sanrus Pty Ltd & Ors v Monto Coal 2 Pty Ltd does not raise any new points of law, it serves as a timely reminder of the fundamental principles relating to waiver of legal professional privilege (both express and implied) and highlights the different ways that privilege can be lost, either through deliberate or inadvertent acts.

In his judgment, Flanagan J highlights the need for careful pleading, especially in cases where the subjective beliefs of parties (which may relate to legal rights and obligations) are likely to be an issue as between the parties.

Further, the decision reinforces the utmost care and attention which must be taken when providing documents to opposing litigants through compulsory processes such as disclosure, as well during the tendering of evidence at trial.

Whilst caution should always be taken when referring to legal advice or matters which may relate to legal advice, the decision in Sanrus confirms the position that when determining if privilege has been waived, courts will ultimately look to whether an inconsistency arises between the conduct of a privilege-holder and the maintenance of the privilege itself.


1 Mann v Carnell (1999) 201 CLR 1.

2 Osland v Secretary to Department of Justice (2008) 234 CLR 275.

3 Switchcorp Pty Ltd v Multimedia Ltd [2005] VSC 425.

4 Ampolex Ltd v Perpetual Trustee Co (Canberra) Ltd (1996) 40 NSWLR 12.

5 [2019] QSC 144.

6 Ibid at [47].

7 Ibid at [57].

8 Expense Reduction v Armstrong (2013) 250 CLR 303 at 319.

9 Ibid.

10 [2019] QSC 144 at [76].

11 Ibid at [80].

12 Rule 31, Australian Solicitor Conduct Rules 2012.

13 Attorney-General (NT) v Maurice (1986) 161 CLR 475.

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.