In the second post of our legal professional privilege series, we examine instances when such a privilege may be lost by waiver. Waiver of legal professional privilege may be express or implied and, as stated by Justice Kirby in Goldberg v Ng (1994) 33 NSWLR 639, ‘It is simple to destroy the privilege’.
Broadly speaking, waiver of privilege occurs when the party entitled to claim the privilege performs an act which is inconsistent with the maintenance of such privilege. It is the client alone who may waive legal professional privilege. The doctrine of waiver is fairly settled in Australian law however ambiguity can arise when an attempt is made to accurately categorise whether a waiver of legal professional privilege is express or implied.
Express waiver occurs where a party deliberately and intentionally discloses material which is subject to legal professional privilege. Typically, there is little or no difficulty in identifying the precise acts which constitute the express waiver of privilege; such acts usually consist of disclosing documents to persons who owe no obligation of confidentiality to the original holder of privilege. Importantly, once the legal professional privilege has been waived, it can never be retrieved.
It is far more difficult to ascertain precisely when implied waiver occurs. Where the law deems the privilege holder has an intention to act inconsistently with the maintenance of legal professional privilege, despite the fact that no actual intention exists, that privilege will have been waived by implication. An individual will be prevented from hiding behind a veil of secrecy and denying the other party a reasonable opportunity to scrutinise legal advice, where that advice is sought to be used for forensic purposes or to support a position in legal proceedings.
The recent Federal Court decision of Krok v Commissioner of Taxation  FCA 51 examined the issue of implied waiver in the context of income tax assessments. In appealing assessments raised by the Commissioner of Taxation, a taxpayer (Mr Krok) was found to have impliedly waived his right to legal professional privilege in relation to legal advice he had received when he partially disclosed the ‘gist’ of the legal advice in sworn affidavits.
The Commissioner had alleged that Mr Krok’s financial arrangements constituted ‘a sham or a façade’. In response, Mr Krok argued that no taxpayer who had acted upon legal advice could sensibly respond to an allegation of perpetrating a sham without disclosing the fact that legal advice had been received and acted upon. The Court found that Mr Krok’s purpose in disclosing the ‘gist, substance or effect’ of the advice was to advance his own case in relation to the taxation appeals and that he was seeking to obtain a ‘forensic advantage’ in the proceedings by deploying partial disclosure of the legal advice he had received.
His Honour Justice Wigney concluded that the unfairness was ‘manifest’ in the sense that the Commissioner was denied the opportunity to fully scrutinize the advice and test whether what had been disclosed by Mr Krok was accurate and complete. His Honour ultimately held that the partial disclosure of the legal advice provided by Mr Krok was inconsistent with the maintenance of privilege over such advice, and as such, the privilege had been impliedly waived.
The decision in Krok serves as a timely reminder that individuals cannot ‘double-dip’ when it comes to legal professional privilege. A party cannot both rely upon legal professional privilege in defence of their actions and to conceal such advice.