The solicitor and “the other side’s witness”, part II

Part I is the extraordinary story of a leading labour lawyer in Melbourne who was found to have induced breach of contract in taking a statement from an ex-employee of the other side in a class action in which the lawyer was the plaintiffs’ solicitor. Unbeknownst to him, the ex-employee continued to be bound by a confidentiality agreement.

Part II is a simple case in which the defendant’s solicitor applied to enjoin the plaintiff’s solicitor from continuing to act, based on a conflict of duties, Grego v Great Western Insurance Brokers Pty Ltd [2006] WASC 284. It was a workers’ compensation case brought by a fisherman in relation to an injury said to have been sustained on the remote Abrolhos Islands. The defendant said the payment of wages by the company which engaged in the fishing activities (of which the plaintiff and his wife were the directors) was a retrospective fiddling of the books after the alleged accident. The plaintiff interviewed the defendant’s accountant in relation to discovered documents, having alleged a fraudulent conspiracy to claim loss of wages. The accountant willingly cooperated in the preparation of an affidavit. Its contents were not damaging to the plaintiff [20]. This was said to amount to an “obvious breach of the duty of confidence” owed by the accountant to the plaintiff as his client.

There is no criticism of the defendant’s solicitor in the judgment because there is no property in a witness. The accountant must have woken up to the inappropriateness of what he was doing, though, because he sent the draft affidavit to the plaintiff’s lawyer for comment before signing.

When told of this, the defendant’s lawyer objected, saying that the accountant had disclosed a privileged document to the plaintiff’s lawyer. He said a draft witness statement is privileged under the litigation limb of legal professional privilege (a normally uncontroversial proposition) and the accountant had interfered with the defendant’s privilege by providing it to the plaintiff’s solicitor. The accountant did go on to swear an affidavit in the terms of the draft, having taken counsel’s advice and having been advised by the plaintiff’s solicitor that it was entirely a question for the accountant whether he signed the affidavit or not (the judge found at [39] that this constituted the implicit conveying of the plaintiff’s consent to the swearing of the affidavit). So by the time of the injunction application, that had already occurred, and could not be restrained. There was no attempt to restrain the use of the affidavit in the litigation. The defendant applied for the plaintiff’s solicitor to be restrained on the basis that the solicitor had:

“2.1 wilfully infringed against the legal professional privilege of the [defendant] in a draft affidavit;

2.2 have placed [himself] in a position where [his] duties to the plaintiff and [his] duties to a material witness necessarily conflict;

2.3 by [his] actions have created a perception that [he] interfered with a witness in the giving of evidence.”

His counsel’s argument met with about as little success as is possible. Justice Peter Blaxell said:

“33 … if a solicitor obtains a witness statement or draft affidavit from a witness in circumstances where there is an obvious breach of a duty of confidence owed by that witness to the opposing party, then there can be no claim to privilege over the document against [the opposing] party. The reason for this is that the solicitor must be taken to know that the statement was made by the witness without the consent of the opposing party. Obviously, there can be no waiver of the pre-existing privilege without that consent.

34 Alternatively, [the defendant’s solicitor] necessarily waived any privilege that the [defendant] had in the draft affidavit by leaving it with [the accountant]. That conduct was inconsistent with any privilege being maintained given that [the accountant’s] continuing duty of confidence obliged him to consult with [the plaintiff] as to the contents of the affidavit before swearing it.”

The first basis is not a good one. The defendant’s solicitor would naturally consider, especially in light of the non-prejudicial nature of the matters disclosed in the draft affidavit, that the plaintiff had instructed his accountant to cooperate in the interview. A solicitor ought to be able to trust a fellow professional to know where the boundaries of his instructions lie. Besides, Justice Blaxell said at [31]:

“Although the surrounding circumstances suggest that Mr Clay may not have appreciated that he was inducing such a breach, he was certainly aware of the objective facts from which that conclusion must necessarily be reached.”

The second is problematical too. It is based on the same false premise, namely that the accountant must have been breaching his duty of confidentiality, but the appropriate inference in the defendant’s solicitor was naturally that he was not doing so. Professionals should be taken generally to be acting on their clients’ instructions. Otherwise, the system of agency whereby professionals speak to one another on their clients’ behalves would break down.

But there is a much better rationale for the non-recognition of legal professional privilege over the draft affidavit. That is that there could have been no expectation of confidentiality as against the accountant’s client, the plaintiff, in respect of a draft affidavit prepared by the defendant’s solicitor in litigation between the plaintiff and the defendant. Confidentiality is the often forgotten sine qua non of legal professional privilege.

The plaintiff’s solicitor owed no duty to the defendant to keep confidential the contents of the draft affidavit. That seems to have been the duty which was said to conflict with the duty to advance the plaintiff’s interests and disclose everything of interest to the plaintiff in the solicitor’s knowledge. The injunction application failed.

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