Background
Andrew Naude, formerly DRA Global Limited’s managing director and chief executive officer, sought inspection of documents over which the seventh to ninth respondents claimed legal professional privilege. The documents concerned events in February 2022, when shareholders associated with the respondents requisitioned a general meeting to remove Mr Naude and another director and appoint new directors.
DRA’s lawyers alleged that the shareholders had acquired relevant interests in more than 20% of DRA’s voting shares through voting arrangements, contrary to s 606 of the Corporations Act 2001 (Cth). The requisition was withdrawn. The respondents then obtained advice from Corrs Chambers Westgarth and, after Takeovers Panel proceedings were commenced alleging unlawful association and voting power, retained lawyers to advise and represent them.
Mr Naude argued that the privilege claims could not stand because the communications were made in furtherance of an illegal purpose. He sought further affidavits, a determination that privilege was unavailable, and confidential inspection by a registrar or other court officer.
The Court’s Holding
Jackson J dismissed the interlocutory application and ordered Mr Naude to pay the seventh to ninth respondents’ costs. Even assuming, without deciding, that the alleged concerted conduct was unlawful and continued until the respondents’ cessation emails, the Court found no real basis to think the disputed lawyer-client communications furthered that purpose.
The circumstances instead supported the respondents’ sworn evidence that they sought Australian legal advice about compliance with the Corporations Act after receiving serious allegations, and later sought advice and representation in the Takeovers Panel proceeding. Advice on whether conduct is lawful, how to cease unlawful conduct, or how to defend allegations is not thereby advice in furtherance of wrongdoing.
The Court held that the affidavits were sufficiently detailed and supported by the objective circumstances; further document-specific evidence was unnecessary. Communications through Mr Delaney could remain privileged because he acted as a conduit for the respondents in obtaining legal advice.
Key Takeaways
- An alleged illegal purpose does not, by itself, displace legal professional privilege.
- The party challenging privilege must show a factual basis to infer that the particular communication furthered the alleged wrongdoing.
- Advice sought after allegations of illegality, including advice on compliance, mitigation and defence, may remain privileged.
Why It Matters
The decision draws an important line between legal advice used to advance unlawful conduct and advice obtained in response to allegations of unlawful conduct. The latter remains capable of protection even where the client may have acted illegally.
It also confirms that inspection of disputed privileged documents is discretionary. Courts may decline inspection where sworn privilege evidence is sufficiently specific and the surrounding facts give no reason to doubt it.