Authorities on implied or imputed waiver
75 In Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Limited [2013] HCA 46; (2013) 250 CLR 303, the High Court at 315-6 [30]-[31] provided the following pithy exposition of the nature of waiver, and especially how and why implied or imputed waiver exists:
According to its strict legal connotation, waiver is an intentional act done with knowledge whereby a person abandons a right (or privilege) by acting in a manner inconsistent with that right (or privilege) [Craine v Colonial Mutual Fire Insurance Co Ltd (1920) 28 CLR 305 at 326 (Craine); Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641 at 658]. It may be express or implied. In most cases concerning waiver, the area of dispute is whether it is to be implied. In some cases waiver will be imputed by the law [Goldberg v Ng (1995) 185 CLR 83 at 95-6] with the consequence that a privilege is lost, even though that consequence was not intended by the party losing the privilege. The courts will impute an intention where the actions of a party are plainly inconsistent with the maintenance of the confidentiality which the privilege is intended to protect [Mann v Carnell (1999) 201 CLR 1 at 13 [29] (Mann)].
In [Craine at 326], it was explained that "'[w]aiver' is a doctrine of some arbitrariness introduced by the law to prevent a man in certain circumstances from taking up two inconsistent positions … It is a conclusion of law when the necessary facts are established. It looks, however, chiefly to the conduct and position of the person who is said to have waived, in order to see whether he has 'approbated' so as to prevent him from 'reprobating'".
76 It follows that the central concept in implied or imputed waiver, is relevant and plain inconsistency of position.
77 The waiver asserted and relied upon by the applicants is an implied waiver, by which intention is imputed by the operation of the law, even though no subjective intention exists to lose privilege: Mann v Carnell [1999] HCA 66; (1999) 201 CLR 1 at 13 [29]. The plurality summarised the overarching principle at the conclusion of that paragraph as follows:
… What brings about the waiver is the inconsistency, which the courts, where necessary informed by consideration of fairness, perceive, between the conduct of the client and maintenance of the confidentiality; not some overriding principle of fairness operating at large.
78 In Goldberg v Ng (1995) 185 CLR 83 it was said by the majority at 95-6 (citations omitted):
The circumstances in which a waiver of legal professional privilege will be imputed by operation of law cannot be precisely defined in advance. The most that can be done is to identify a number of general propositions. Necessarily, the basis of such an imputed waiver will be some act or omission of the persons entitled to the benefit of the privilege. Ordinarily, that act or omission will involve or relate to a limited actual or purported disclosure of the contents of the privileged material. When some such act or omission of the person entitled to the benefit of the privilege gives rise to a question of imputed waiver, the governing consideration is whether "fairness requires that his privilege shall cease whether he intended that result or not". … That does not mean, however, that an imputed waiver must completely destroy the privilege. Like an express waiver, it can be limited so that it applies only in relation to particular persons, materials or purposes.
79 The majority in Goldberg v Ng further stated at 98:
… we are firmly of the view that where two or more distinct proceedings or procedures are related in the sense that there is general correspondence between the parties and they arise out of either the same dispute or closely connected disputes, conduct in relation to one proceeding or procedure, whether anticipated or already commenced, can found an imputed waiver for the purposes of all proceedings and procedures.
80 The above quotes illustrate that the authorities in this field may not provide a great deal of practical guidance beyond points of high principle which can be very difficult to apply. Some of the cases have produced outcomes which, even with careful analysis, appear inconsistent. As Dawson J observed in Attorney-General (NT) v Maurice (1986) 161 CLR 475 at 497-8 (citations omitted):
This is a difficult area of the law, but it is clear enough that an implied waiver may be required by fairness notwithstanding that it was not intended. It would not be fair to allow privilege to be waived with respect to a portion of a document or a conversation without requiring disclosure of the rest of it, at least if the document or conversation dealt with the one subject-matter …. So much may be obvious, but legal professional privilege is concerned with protecting the confidentiality of a relationship and if that confidentiality is abandoned by a particular disclosure it may be necessary in fairness, whether further disclosure was intended or not, to require disclosure extending beyond the particular communication … The cases are not entirely consistent and perhaps what is fair by way of disclosure must ultimately depend upon the relevant circumstances.
81 The central concepts are therefore conduct of the person who holds the privilege which is shown to be inconsistent with maintaining confidentiality, and fairness compelling disclosure by not allowing privilege to be maintained. The party asserting waiver bears the onus of establishing both. It follows that careful examination of what has occurred is required, and the outcome in other cases will generally not be of much assistance unless factually similar: Commissioner of Taxation v Rio Tinto Ltd [2006] FCAFC 86; (2006) 151 FCR 341 at 354 [45]. However, some understanding of the facts in the authorities is often required to understand how the principles propounded emerged and to an extent the practical limits to the application of those principles.
82 The limitation on using prior cases other than for points of principle has particular application to this case. A common situation in which privilege is found to be waived is when a party to litigation seeks to gain some forensic advantage in advancing or defending proceedings by relying on privileged advice to support the stance taken, yet inconsistently with that stance still seeks to maintain privilege, sometimes called "issue waiver": Rio Tinto Ltd at 356-9 [52]-[61]. This is the alternative argument relied upon by the applicants, considered below. However the primary basis that the applicants relied upon to establish waiver was the third party-communication of the entire Freshfields document to the KBA, and the use of the substance of parts of that document in subsequent communications passing between them, including by the KBA issuing four ordinances to Volkswagen AG.
83 The state of the law in relation to the impact of third party communications on privilege is not entirely satisfactory due to inconsistent approaches between and within several of the cases. The last sentence of the passage from Goldberg v Ng quoted above, namely that an implied or imputed waiver, like an express waiver, "can be limited so that it applies only in relation to particular persons, materials or purposes" is not as straightforward as it first appears, not least because of conflicting judicial views on the suggestion that implied, as opposed to express waiver, waiver can be limited. To better understand this point, it is necessary to examine the different perspectives expressed in the different judgments in two major cases: Goldberg v Ng (both in the Court of Appeal and the High Court) and Mann v Carnell in the High Court.
84 In Goldberg v Ng, a solicitor, Mr Goldberg, disclosed documents to the New South Wales Law Society that constituted privileged communications. He did so for the purpose of assisting with enquiries concerning a complaint lodged against him by former clients, and subject to an express requirement and agreement that they would not be shown to anyone else. In separate proceedings, essentially involving the same dispute as the subject of the complaint to the Law Society, Mr Goldberg's former clients sued for the return of moneys they had paid to Mr Goldberg's wife and in those proceedings subpoenaed the Law Society file.
85 In the Court of Appeal decision in Goldberg v Ng (1994) 33 NSWLR 639, which was upheld by majority in the High Court, albeit on different reasoning:
(1) Kirby P referred to the following passage from McHugh J's judgment in Giannarelli v Wraith (No 2) (1991) 171 CLR 592 at 607:
… a party either waives the privilege entirely … or asserts the privilege and maintains the confidentiality of his or her documents. This is the only acceptable view.
(2) Kirby P at 654B held that, "properly understood", the above passage did not preclude the concept of "limited waiver" being applied, as expressed in two English Court of Appeal cases: British Coal Corporation v Dennis Rye Ltd (No 2) [1988] 1 WLR 1113 at 1121-2 and Goldman v Hesper [1988] 1 WLR 1238 at 1244-5; and the Northern Ireland case Downey v Murray [1988] NI 600 at 604-5.
(3) Kirby P at 654B-C described limited waiver as an exception to the general rule on waiver that was correct as a matter of legal principle and policy. Reliance was placed by his Honour on the administration of justice rationale for the privilege expressed in Grant v Downs at 685 and in Maurice at 490, along with a strong focus on fundamental rights to maintain confidentiality notwithstanding disclosure to a third party for a specific and limited purpose in a specific context. His Honour, in dissent, concluded, also contrary to the outcome in the High Court, that Mr Goldberg's privilege should be maintained, a position supported by Toohey and Gummow JJ (also in dissent) in the High Court.
(4) By contrast, Clarke JA at 676 firmly rejected the view expressed in Goldman v Hesper or Downey v Murray that British Coal represented any concept of limited waiver, but rather was an example of a case in which there was no waiver at all, citing Thomason v Campbelltown Municipal Council (1939) 39 SR (NSW) 347 at 355, 357 per Jordan CJ for the notion that not all imparting to a third person constitutes a waiver.
(5) Mahoney JA did not consider it necessary to decide the issue of limited waiver, deciding the case on it being unfair to allow the privilege to be maintained as doubtless intended by Mr Goldberg when he had received the benefit of providing the material to the Law Society with the result that the plaintiff's complaint to the Law Society was dismissed. This provided a proper basis for imputing waiver.
86 In the High Court in Goldberg v Ng:
(1) The majority reached a contrary conclusion to Kirby P by different reasoning to the effect that, on the specific facts in that case, a limited waiver, although permitted by law, could not be maintained as a matter of fairness in that case, given the close association between the court proceedings and the disciplinary process. The difference between Kirby P and the majority in the High Court was therefore more one of characterisation on the facts of that case, rather than substantially divergent views on the correct principles.
(2) The quote from the majority judgment above at [78] may even be seen to endorse Kirby P's view as to the legal position of limited waiver being available in some situations, but not its application on the facts of that case.
(3) The majority held that disclosure by Mr Goldberg to the Law Society did not constitute express or intentional general waiver because confidence had been deliberately maintained: Goldberg v Ng at 95.5. However, their Honours found that it did constitute imputed or implied waiver because the disclosure was voluntary and made for the express purpose of rebutting the complaint made against him, in circumstances in which the court proceedings and the complaint procedure were closely related over precisely the same subject matter. There was a general correspondence between the parties to the dispute: the former clients were the complainant in the disciplinary proceeding and the plaintiff in the court proceeding, both arising out of the same dispute; Mr Goldberg was the responding party in both. There was a relevant inconsistency between the defence of the suit for the return of money, and the confidential steps taken to ward off the complaint: at 98, 101-2. Importantly, it seems that the majority in the High Court would not have imputed waiver by the fact of disclosure to the Law Society on its own - the inconsistency and relevant unfairness in maintaining that privilege in the Supreme Court proceedings were critical to finding waiver had taken place, not at the point of disclosure, but at the point of defence of the subsequent proceedings (albeit commenced first in time, without service being effected).
(4) The minority considered that because there had been no waiver, questions of fairness did not arise, and the privilege was maintained. That is, the minority considered that the law did not permit limited implied waiver, only limited express waiver.
(5) Toohey J observed at 106 that where material has been deliberately disclosed to a third party for a limited and specific purpose, the roles of express and implied waiver become blurred.
(6) Toohey J at 109 described the concept of limited waiver as "well accepted", but only as a qualification to express general waiver, not to implied or imputed waiver, and therefore not giving rise to considerations of fairness which only arises for implied or imputed waiver. It was for this reason that his Honour would not have implied waiver by Mr Goldberg, because the only basis for doing so - fairness - did not arise on that analysis. Gummow J at 116.5 agreed with Toohey J.
(7) Neither Toohey J nor Gummow J considered there had been any waiver at all by Mr Goldberg because he had expressly maintained confidentiality and therefore privilege.
(8) All five judgments endorse the principle that there can be limited waiver beyond which privilege is preserved, but only the majority extended that concept to implied waiver, and only then when the requisite inconsistency and unfairness arose: the bare fact of third party disclosure would not suffice even on the more expansive view of waiver held by the majority. As the discussion of Mann v Carnell below indicates, that position has since been forcefully maintained.
87 In Mann v Carnell in the High Court:
(1) The appellant, Dr Mann, believed he may have had a right to damages against the respondent, Ms Carnell, the Chief Minister of the Australian Capital Territory for defamation. The source of that right was believed to be contained in four documents which were in the form of confidential communications between legal advisers and the ACT in relation to certain litigation between Dr Mann and the ACT, and its settlement. It was accepted that those communications were privileged.
(2) While the holder of the privilege was the ACT, that was not lost by being provided to Ms Carnell. That was because she was, as Chief Minister, entitled to see the legal advice given to the ACT by its lawyers.
(3) The documents were provided to another member of the Legislative Assembly, Mr Moore, by way of a confidential briefing by Ms Carnell to satisfy him that prior proceedings brought by Dr Mann, and their settlement, did not involve a waste of public funds and that those who represented the ACT had acted responsibly and in accordance with legal advice. It was Dr Mann who had made allegations to that effect.
(4) The plurality held at 15-6 [33] that it was at least an oversimplification to describe the disclosure to Mr Moore as a third party disclosure. The critical fact which denied waiver was that Mr Moore was not at liberty to show the documents to Dr Mann, which would have been inconsistent with the confidentiality protected by the privilege. The plurality concluded at 15 [35]:
The purpose of the privilege being to protect the Territory from subsequent disclosure of the legal advice it received concerning the litigation instituted by [Dr Mann], there was nothing inconsistent with that purpose in [Ms Carnell] conveying the terms of that advice, on a confidential basis, to a member of the Legislative Assembly who wished to consider the reasonableness of the conduct of the Territory in relation to the litigation.
(5) An essential part of the conclusion reached in Mann v Carnell was therefore that the further communication was in circumstances in which confidence was maintained, it was not in truth a further communication beyond the proper functioning of the body politic who held the privilege, and the purpose of that further communication fell within the ambit of the purpose for the existence of the privilege.
88 The conclusion available to be reached following Goldberg v Ng and Mann v Carnell is that:
(1) A limited waiver may in some situations be effective in preserving privilege. The minority in Goldberg v Ng supported that outcome effectively in all cases subject to the necessary steps being taken to preserve privilege.
(2) In other situations limited waiver may be ineffective and be treated as constituting complete waiver and privilege is lost altogether.
(3) In yet other situations, limited waiver may provide a basis for some degree of limited implied or imputed waiver, provided there is also present conduct by (or perhaps on behalf of or in the interests of) the party asserting privilege that is relevantly inconsistent with its preservation. The conclusion reached may be informed by questions of specific unfairness, not general unfairness, as to be unfair in all the circumstances to the person against whom privilege is maintained. It is a question of factual analysis against the principles stated in those cases as to whether privilege has been preserved and if so as to whether, despite having been preserved, waiver should be imputed or implied.
89 What is critical in determining a privilege and waiver case is a clear appreciation of the metes and bounds of the applicable principles, and a due regard to questions of characterisation of events to ensure that any necessary nuance in application is observed. A number of cases following Goldberg v Ng and Mann v Carnell can assist in this process by illustrating the sorts of situations in which the line of inconsistency and resulting specific unfairness have, and have not, been crossed. Those outcomes inform, rather than dictate, the approach to be taken in this case, which must turn on its own facts and circumstances.
90 In Bennett v Chief Executive Officer of the Australian Customs Service [2004] FCAFC 237; (2004) 140 FCR 101:
(1) Tamberlin J at 104 [6], agreeing with Gyles J, after referring to Mann v Carnell at [29] and [34] and Maurice at 481, 488 and 493, applied that authority to the case at hand to uphold Mr Bennett's appeal in finding that legal professional privilege had been waived over a legal advice because the substance of the advice was conveyed in a letter sent to the solicitors for Mr Bennett by the solicitors for Customs, in order to emphasise and promote the strength and substance of the case to be made against him.
(2) Tamberlin J found that it would be inconsistent and unfair of the solicitors for Customs, having disclosed and used the substance of the advice in that way, to then seek to maintain privilege in respect of the parts of the advice which pertained to the conclusion that had been expressed. His Honour observed that it might have been different had it simply been asserted that Customs had taken legal advice and that the position adopted following consideration of that advice was that certain action would or would not be taken. That was because in those circumstances the substance of the advice was not disclosed, but merely the fact that there was advice and that it had been considered. However, once the conclusion of the advice was stated together with its effect, there was imputed waiver.
(3) Gyles J at 119 [64]-[65] referred to Australian Unity Health Ltd v Private Health Insurance Administration Council [1999] FCA 1770 in which Goldberg J held that a statement in a letter that separate legal advice supporting the Council's view of a rule had been received amounted to waiver. Gyles J went on to agree with that reasoning, observing at [65] "[t]he voluntary disclosure of the gist or conclusion of the legal advice amounts to waiver in respect of the whole of the advice to which reference is made including the reasons for the conclusion".
(4) Emmett J would have dismissed Mr Bennett's appeal, a further indication of how nuanced these decisions can be as to when the line of inconsistency has been crossed.
91 In Rio Tinto the Full Court:
(1) Observed at 356 [52] that a line of authority referred to, including in particular Mann v Carnell, shows that:
… where issue or implied waiver is made out, the privilege holder has expressly or impliedly made an assertion about the contents of an otherwise privileged communication for the purpose of mounting a case or substantiating a defence. Where the privilege holder has put the contents of the otherwise privileged communication in issue, such an act can be regarded as inconsistent with the confidentiality that would otherwise pertain to the communication.
(2) At 356-7 [53] quoted from Adelaide Steamship Co Ltd v Spalvins (1998) 81 FCR 360 at 371-2 to the effect that implied waiver, referred to as issue waiver, was "no more than a particular manifestation of the principles applying either to waiver by disclosure or implied consent to disclosure" and then further quoted the following from 371F-372B:
The usual type of case said to illustrate issue waiver at common law is one in which, in order to establish a particular right, claim, or defence a party who previously has been legally advised, or has provided advice, needs to show that the advice so given did, or did not, have a particular character … In other words the cases are ones in which, in the substantive proceeding brought, the privilege holder has put in issue the very advice received. We observe in passing that it is questionable whether advice can properly be said to be in issue in a proceeding merely because it may be relevant to an issue in it: see Rhone-Poulenc Rorer Inc v The Home Indemnity Company (3rd Cir 1994) 32 F (3d) 851 at 863; save, perhaps, where the proceeding is between client and legal adviser and the advice is relevant to the adviser's defence of that proceeding: see Lillicrap v Nalder & Son [1993] 1 WLR 94; 1 All ER 724. [emphasis added]
(3) Then considered a series of cases dealing with waiver, noting at 359 [61] that what is required is a "fact-based inquiry as to whether, in effect, the privilege holder had directly or indirectly put the contents of an otherwise privileged communication in issue in litigation, either in making a claim or by way of defence", citing and quoting Allsop J in DSE (Holdings) Pty Ltd v Intertan Inc [2003] FCA 384; (2003) 127 FCR 499 at 519-20 [58] where his Honour observed that waiver will occur, even in a case of undue influence, when:
… the party entitled to the privilege makes an assertion (express or implied), or brings a case, which is either about the contents of the confidential communication or which necessarily lays open the confidential communication to scrutiny and, by such conduct, an inconsistency arises between the act and the maintenance of the confidence, informed partly by the forensic unfairness of allowing the claim to proceed without disclosure of the communication. [emphasis in original]
92 Allsop J in DSE (Holdings) further observed at 520 [61]:
… I would express the matter as including the laying open of the confidential communication to necessary scrutiny, and by so doing (that is by expressly or impliedly making an assertion about the contents of the communication or laying the communication open to scrutiny) the inconsistency enunciated by Mann v Carnell is brought about. But it is the existence of that inconsistency that is important.
93 In Osland v Secretary, Department of Justice [2008] HCA 37; (2008) 234 CLR 275, the appellant had been convicted and sentenced to imprisonment for murder. Following unsuccessful appeals, she petitioned the Governor of Victoria for mercy. The Attorney-General subsequently issued a press release stating that he had obtained a joint advice from counsel, which recommended that the petition be denied, and that the Governor had denied the petition. The appellant sought access under the Freedom of Information Act 1982 (Vic) (the FOI Act) to a number of documents relating to her petition including the joint advice. That request for access was refused, save for two of 265 pages.
94 The Victorian Civil and Administrative Tribunal determined that the documents in dispute were the subject of privilege and privilege had not been waived, but after inspection ordered that access be granted pursuant to a provision of the FOI Act.
95 The Court of Appeal allowed an appeal by the Secretary, holding that the privilege had not been waived in the joint advice and, without inspecting the documents, held there was no basis on which the public interest could require that access be granted.
96 The High Court agreed that privilege in the joint advice had not been waived, and the plurality further found that the Court of Appeal was wrong not to inspect the documents. The arguments on waiver concerned differences between the parties as to the application of Mann v Carnell. In resolving those differences the majority emphasised the individual fact-finding and characterisation required, holding at 297 [46] and 298 [48]-[49]:
[46] The conduct of the Attorney-General in issuing the press release and including in it certain information about the joint legal advice is to be considered in context, which includes the nature of the matter in respect of which the advice was received, the evident purpose of the Attorney-General in making the disclosure that was made, and the legal and practical consequences of limited rather than complete disclosure.
…
[48] The evident purpose of what was said in the press release was to satisfy the public that due process had been followed in the consideration of the petition, and that the decision was not based on political considerations. The three eminent lawyers who gave the advice were appointed following consultation with the State Opposition. They were external to the Department. Their advice covered all the grounds upon which the petition was based. They recommended denial of the petition. Their advice was carefully considered, and the petition was denied. The Attorney-General was seeking to give the fullest information as to the process that had been followed, no doubt in order to deflect any criticism, while at the same time following the long-standing practice of not giving the reasons for the decision. This did not involve inconsistency; and it involved no unfairness to the appellant. If she had a legal right to reasons for the decision, then she still has it. If she had no such right, the press release did not deprive her of anything to which she was entitled. What the Attorney-General said did not prevent the appellant from making public her petition, or any part of it, as and when she desired.
[49] Whether, in a given context, a limited disclosure of the existence, and the effect, of legal advice is inconsistent with maintaining confidentiality in the terms of advice will depend upon the circumstances of the case. As Tamberlin J said in Nine Films and Television Pty Ltd v Ninox Television Ltd, questions of waiver are matters of fact and degree. … [citations omitted]
97 More recently, in Krok v Commissioner of Taxation [2015] FCA 51, Wigney J considered the question of waiver in the context of pre-trial discovery in an appeal by a taxpayer from decisions of the Commissioner of Taxation to disallow objections to notices of amended assessment. The tax dispute related to whether taxable income had resulted from certain asset sales, using structures involving the use of trusts and loans, asserted by the Commissioner to be shams or alternatively legally ineffective schemes by reason of the operation of Part IVA of the Income Tax Assessment Act 1936 (Cth). Certain documents comprising legal advice in relation to the structures used were listed as part of the discovery categories, with privilege claimed to resist inspection. Affidavits relied upon by Mr Krok referred to the advices.
98 Wigney J concluded that the partial disclosure of the gist of the advice Mr Krok had been given in the affidavits was sufficient in all the circumstances to create the requisite inconsistency between that disclosure and maintenance of confidentially over the balance of the advice given. That was because the partial disclosure, upon careful analysis, went beyond, as asserted, merely disclosing that as a result of advice given he had established the structures in question. The partial disclosure extended into the purpose and reasoning behind those structures, including their "tax efficiency". His Honour inferred that the evidence of the advice given would be relied upon to establish Mr Krok's state of mind and intention in entering into the arrangements, and thereby to advance his case in his appeals. Obtaining that forensic advantage, without full disclosure, was relevantly unfair, especially because it denied the Commissioner the opportunity to scrutinise the advice given and test whether the disclosure made was complete and accurate. The partial disclosure therefore put in issue and laid open to scrutiny the confidential communications in the otherwise privileged advice given.
99 The above line of authority makes it clear that quite specific inconsistency is necessary to establish waiver. Even reference to legal advice, without more, will not suffice. The inconsistency must be reasonably manifest.