CAN A BODY CORPORATE WITHHOLD AN OWNER’S ACCESS TO A LAWYER’S WRITTEN ADVICE?

 

Let’s take look at this scenario: A body corporate believes that an owner is in breach of the scheme by-laws or that a caretaker is in breach of the management rights agreement. The body corporate engages a law firm to provide advice in relation to the alleged breach by the owner or caretaker. The law firm provides written advice to the body corporate. The owner or caretaker wants to see that advice and applies to inspect the records of the body corporate.

 

Whether a body corporate may withhold access to legal advice or other record requires an understanding of legal professional privilege, joint privilege, agency, and the circumstances that may constitute a waiver of that privilege.

 

What is legal professional privilege?

 

Legal professional privilege is a right that exists to protect communications passing between a lawyer and a client.

 

It is often thought that all communications between a lawyer and client are protected by privilege. However, a valid claim for privilege only applies to those communications made for the dominant purpose of providing legal advice or legal services to a client, or for use in current or anticipated litigation.

 

The Body Corporate and Community Management Act (Qld) 1997 does not override that right so it can be claimed by a body corporate when an owner applies to inspect records.

 

The body corporate has the responsibility of proving its claim of privilege.

 

The difficulty in the strata context is not so much whether legal professional privilege exists but rather who that privilege may be asserted against. This is answered by the principle of joint privilege.

 

Joint privilege

 

A body corporate may share privilege with some or all of its owners that have a common interest in the subject matter of the communication. Often parties can have more than one interest in obtaining legal advice and it is not enough to simply identify a common interest.

 

That common interest must have sufficient strength or quality to allow the protection of privilege to be shared.

 

If the interests of the body corporate and an owner in obtaining that written advice are diverged, then the body corporate can claim privilege against that owner and withhold access to that communication against that owner.

 

Agency

 

If a body corporate has a valid claim of privilege and the interest in the communication is not shared with an owner, that owner may ask another owner to obtain access to that communication to get around the claim of privilege.

 

The law closes this gap by providing that a body corporate can still withhold access to a communication if that communication is being accessed by an owner that is acting as an agent for an owner to which a claim for privilege exists.

 

Even if the above analysis results in a body corporate being able to claim privilege, it must be considered whether that privilege has been waived.

 

Waiver

 

As the owner of privilege, a client can choose to waive that right to privilege. In our experience this is often done inadvertently without an appreciation of the impact it may have on that person’s claim of privilege.

 

At its highest, privilege may be waived by conduct that is inconsistent with maintaining confidentiality in a communication. Applying this to an owners corporation, the type of conduct that may have the effect of waiving privilege includes:

  • making references to the content of legal advice in correspondence to all owners;
  • including copies of legal advice in meeting minutes;
  • proposing motions that refer to the outcome of legal advice.

 

However, if the conduct relates to limited actual or purported disclosure of the contents of a privileged communication, and an express understanding that the communication is not to be shown to anyone else, the conduct may not have the effect of waiving privilege.

 

If there is conduct that ordinarily constitutes a waiver of privilege, it is necessary to consider whether circumstances exist that would make it unfair to determine that privilege has been waived.

 

Fairness

 

If a body corporate has acted inconsistently with maintaining confidentiality in a communication, a court has discretion to consider the circumstances surrounding that conduct and whether it would be unfair to determine that privilege is waived. This will usually be most relevant where there has been no intentional waiver of privilege.

 

Summary

 

The application of legal professional privilege to communications in a strata context is complex and often overlooked. If a request to inspect the records of a body corporate is made and the body corporate is considering withholding access to records, the body corporate will no doubt obtain legal advice (which itself may be privileged) regarding the body corporate’s ability to not allow a communication to be inspected.

 

Failing to do so may result in the protection of privilege being lost forever.

 

 

 

 

Liability limited by a scheme approved under Professional Standards Legislation

Disclaimer – This article is provided for information purposes only and should not be regarded as legal advice.