A fundamental talent of a good litigation lawyer is the ability to respond quickly, whilst refraining from acting in haste. Put another way, it is the wisdom to know which available strikes will (and will not) result in your client exposing its flanks.
Determining the best course of conduct for a matter is never an easy task – as being able to successfully predict the future course of a dispute predisposes that you already have full knowledge of its history, all of its participants and their individual character traits. Without this knowledge, the balance in almost every decision made will rest on a knife’s edge and the consequences of making a (retrospectively) poor decision can be extremely damaging.
By way of example, imagine that you are a producer and exporter of bulk wine. One of your customers places an order for 10 shipping containers of sweet red wine. As is your practice, you engage a wine processing facility to prepare the wine according to the required specifications.
Once the wine has been made, and an independent laboratory verifies that the wine meets the required specifications, you sign off on the test results and arrange for the wine to be collected from the facility and shipped to the customer in Europe.
Unfortunately, when the wine arrives in Europe you are told that the containers have expanded and are leaking. The shipping agent collects samples of the wine to be tested and informs you that it appears that the wine has started re-fermenting during transportation and is unsuitable for consumption as wine.
Consequently, the purchaser rejects the wine and refuses to pay for it. Neither your customer, nor the shipping agent, will take responsibility for the condition of the wine. You seek legal advice on the complex legal and scientific issues that have arisen.
Given the urgency of the matter, within just 2 days of being instructed your lawyer produces a professional and well-reasoned letter of advice that states that “on the information before us”, the wine was sound and in good condition at the time of being delivered to the shipping agent. Therefore, as the sale of the wine was made on a ‘free on board basis’, all risk in the wine passed to the end customer when the wine was delivered over the rail of the ship and the end customer remains liable to pay for the wine supplied accordingly.
You now have a difficult commercial decision to make. Do you, in reliance on the letter of advice, pursue your rights against the customer to have them pay for the wine? The customer has already refused to pay – and they are a good customer of yours. If you push the issue, you may lose their business. If you don’t, your business loses considerable profits.
In answer to this quagmire, your lawyer recommends that you forward a copy of the letter of advice to the shipping agent and the customer together with an email that notes that the legal advice you have received suggests that the customer remains liable to make payment for the wine and invites the customers to contact you to discuss the matter.
That sounds like a sensible idea to you. It is a quick, legally and factually well-reasoned, but not overly aggressive, approach. In fact, why wouldn’t you do it? It could result in a speedy resolution of the matter in your favour (which is clearly in your commercial interest).
Accordingly, you provide the shipping agent and the customer with a copy of the letter of advice. In fact, in order to keep them in the loop, you also provide a copy of the written legal advice to the processing facility.
Unfortunately, the letter of advice did not convince the end customer that it was required to pay for the wine. You decide that, for commercial reasons, you will not pursue payment from the customer or the shipping agent. Rather, you turn your attention to exploring whether something went wrong in the wine making process.
The above scenario was not dissimilar to the situation that arose in the recent decision by the Supreme Court in the matter of BMD Wines Pty Ltd v Thachi Wines Pty Ltd.
In that case, BMD Wines had (prior to the commencement of court proceedings) provided a copy of a letter of advice it had received from its lawyers to Globus Wines A/S (the customer), JF Hillebrand Australia (the shipping agent) and to Thachi Wines (the wine processing facility).
Following the commencement of court proceedings by BMD Wines against Thachi Wines, Thachi Wines contended that BMD Wines had waived the legal professional privilege that would have otherwise prevented the letter of advice from being read by, and/or relied upon by, Thachi Wines in the court proceedings.
In this regard, the importance of the letter of advice to Thachi Wines was noted to be that it evidenced that BMD Wines had received legal advice to the effect that the wine was sound and in good condition at the time of being delivered to the shipping agent, the sale of the wine was made on a ‘free on board basis’ and ,therefore, all risk in the wine passed to the end customer when the wine was delivered over the rail of the ship and the end customer was liable to pay for the wine.
Having waived its legal professional privilege in the letter of advice, Thachi Wines contended that BMD Wines was bound to also disclose any other legal advices it obtained in relation to the same subject or same issue. In doing so, the scope of that waiver should not be confined to any other legal advice that addressed the same subject matters or issues as the advice voluntarily disclosed. Rather, it should extend to the documents and information which were taken into account in formulating, or which otherwise underpinned or influenced, the legal advice chosen to be disclosed (i.e. all of the other confidential materials and communications passing between BMD Wines and its lawyers).
In determining that BMD Wines had, in disseminating its written legal advice, waived legal professional privilege in respect of that document, the Court noted that, in respect of the documents and information taken into account in formulating, or which otherwise underpinned or influenced, the legal advice (at paragraphs  and ):
“The privilege in respect of the documents is waived by implication. The effect of the advice was that the wine was sound and in good condition and within the required technical specifications. The legal advice was prepared by the solicitor “on the information before us”.
Clearly the plaintiff’s opinion as to those matters changed, because it instituted proceedings alleging that the wine was not of merchantable quality and was not within the required specifications. The change of position will be a significant issue at trial. As a matter of fairness, it seems to me that the defendant is entitled to inspect documents relied upon by the solicitor when he prepared the advice, so it is able to understand why the plaintiff’s position changed after receipt of the opinion.”
Given that communications between a client and a lawyer will typically contain information about the party’s strengths and weakness, as well as information regarding the lawyers’ strategy for the conduct of any matter, being required to give up that information to an opponent can be devastating for the party who has waived privilege (and invaluable for your opponent in the arena of the courts).
This decision highlights the need for parties (and their lawyers) to ensure that due consideration is always (to the extent possible at an early stage) given as to how a matter may unfold over time and, with those variances in mind, how a strategic decision made today could be a client’s undoing tomorrow. For example, had BMD Wines simply reproduced, and asserted in its own name, the conclusions of fact and law set out in the letter of advice (without making reference to the existence of the letter of advice, or that the conclusions were consistent with the legal advice it had obtained), the same legal and factual assertions would have been communicated to the customer and the shipping agent without it resulting in a waiver of the privileged communications that had passed between it and its solicitors.
 Supreme Court Action No. SCCIV-13-1624 (26 May 2015) (unreported).
 Legal professional privilege is the name given to the fundamental principal that provides that communications made between a client and a lawyer for the dominant purpose of the lawyer providing legal advice are confidential and not to be adduced as evidence in court. As was explained by Jackett C.J. in Re Director of Investigation and Research and Shell Canada Ltd. (1975) 55 DLR (3d) 713, “…the protection, civil and criminal, afforded to the individual by our law is dependent upon his having the aid and guidance of those skilled in the law untramelled by any apprehension that the full and frank disclosure by him of all his facts and thoughts to his legal advisor might somehow become available to third persons so as to be used against him“.
This communication provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such. Professional advice should be sought prior to any action being taken in reliance on any of the information. Should you wish to discuss any matter raised in this report, or what it means for you, your business or your clients' businesses, please feel free to contact us.