Professional indemnity: No waiver of privilege based on denial in pleadings
A recent Queensland District Court matter, Lu v Fenson Legal Pty Ltd & Anor  QDC 253, highlighted the risk of waiving legal professional privilege (LPP) via denials in pleadings.
The plaintiff in the matter alleged that her former solicitors provided her with negligent advice in relation to her acquisition of an apartment in Melbourne. She alleged they failed to advise her of the cooling-off period and, had she been aware of that right, she would have terminated the contract within that period.
The defendants defended the claim on the basis that:
The plaintiff denied both of these allegations. The defendants issued notices of non-party disclosure to a number of solicitors who had previously acted for the plaintiff in property transactions, seeking documents in relation to advice previously given to the plaintiff in relation to cooling-off provisions.
The Queensland District Court matter centred on the plaintiff’s objection to the notices of non-party disclosure. The plaintiff objected on the basis that the documents requested were protected by LPP. The defendants argued that the plaintiff impliedly waived privilege over the requested documents by her denial in her reply to the defendants’ defence. Specifically, they contended that the plaintiff’s denial gave rise to an implied waiver, because her assertion that the defendants’ failure to advise her of the cooling-off period caused her loss, was inconsistent with her having received advice about cooling-off periods in the past.
District Court Judge Porter noted that the application came down to one issue - would legal professional privilege in documents falling within the scope of the notice of non-party disclosure have been waived by the plaintiff’s reply?
Judge Porter’s findings are summarised as follows:
Take away points
Judge Porter commented that, “Particular care must be exercised when considering whether an implied waiver arises where the holder of the privilege is responding to an allegation by the other party in a pleading. The potential for the other party to contrive a waiver of privilege by tactical pleading arises in such a situation".
This decision serves as a reminder to parties in professional indemnity matters to be mindful of maintaining LPP when drafting pleadings. Judge Porter’s remarks highlight the potential for other parties to deliberately word pleadings in a calculated effort to draw out a waiver of LPP from another party by way of an admission or denial. Litigants should take care to avoid any pleadings which place privileged communications in issue.