Built Environs WA Pty Ltd v Perth Airport Pty Ltd [No 5] [2021] WASC 237
In the construction industry, it is common for third parties to be appointed to act as the superintendent in construction contracts. Professional project management firms will be familiar with the unique role of the superintendent and the balancing act between acting as the principal’s agent and acting as an independent certifier which it entails.
Notwithstanding the commonality of this arrangement, superintendents can find themselves caught in the crosshairs when a dispute arises, and the contractor seeks access to the superintendent’s communications (including correspondence with the principal) through the document disclosure process. It is critical that you know your rights, including when you can refuse to disclose certain documents on the basis that the documents are subject to legal professional privilege, which protects confidential communications made for the purpose of obtaining legal advice or for use in a legal dispute.
The recent decision of the Supreme Court of Western Australia in Built Environs WA Pty Ltd v Perth Airport Pty Ltd [No 5] [2021] WASC 237 considers the question of whether legal professional privilege can be maintained over communications between a solicitor and an appointed third party.
The case ultimately demonstrates that the courts will closely scrutinise the independent functions and responsibilities of third parties to determine whether a claim for privilege over a particular communication can be maintained.
Facts
In this case, Perth Airport Pty Ltd’s (Perth Airport) solicitors sent documents to APP Corporation Pty Ltd (APP), who had been appointed by Perth Airport to act as the Superintendent for the T1 Domestic Pier and International Departures Expansion Project at Perth Airport. Those documents were later produced to Built Environs WA Pty Ltd (Built Environs) for inspection but with the privileged portions of the legal advice redacted.
Built Environs challenged the redactions and said that any privilege in the documents had been waived by Perth Airport when the documents were provided to APP. Built Environs argued that APP’s role partly included independent certification functions under the construction contract, which meant that all communications passing between APP and Perth Airport, or APP and Perth Airport’s solicitors, were fully disclosable in a non-redacted form.
Perth Airport maintained its claim for privilege over aspects of the documents on the basis that:
(a) the redacted documents contained legal advice which did not relate to any of the independent functions identified for APP in its role as an independent certifier; and
(b) those communications were shared with APP in their capacity as agent for Perth Airport and not as an independent certifier.
The specified functions of the third party
The various distinct roles of APP were expressly set out in the terms of the relevant construction contract, being roles similar to those as would be expected for any superintendent under a contract of similar nature. As an independent certifier, APP was to perform specific functions as a Superintendent which included assessing and determining extension of time claims, valuing variation claims and certifying payment claims.
APP was also a general agent to Perth Airport under the contract. To put it simply, APP was engaged to perform tasks on behalf of the principal, which included communicating with Perth Airport’s solicitors. APP, in this sense, was an extension of the principal when it was not carrying out any functions as an independent certifier.
Key principles
The principles of legal professional privilege are well established and were reaffirmed by the Supreme Court of Western Australia.
Scope of legal professional privilege
Communications with third parties are protected by legal professional privilege where it is brought into the existence for the dominant purpose of:
(a) Giving or obtaining legal advice; or
(b) Use in actual or reasonably anticipated legal proceedings.
A document will therefore be protected by a claim for privilege (or can be redacted) if it contains legal advice, or sheds light on the substance of the legal advice which was given.
This privilege can be waived. Providing a privileged document to the other side or to a third party on an open basis will generally result in privilege in that document being lost, because the publication is inconsistent with the confidentiality of the document.
Decision
The Court held that whether sharing documents with a third party constituted a waiver of the privilege depended largely on the role of that third party.
It was determined that where documents are shared with a superintendent acting in its independent certifier capacity, then those documents may not be protected by a claim for legal professional privilege. In that instance, a waiver of privilege may occur, and the communications may be disclosable to a requesting party.
However, if documents are shared with a superintendent who is acting in its capacity as agent to the principal, the privilege is extended to cover those communications. There will be no waiver of privilege in that circumstance.
Here, APP, as an agent to Perth Airport, owed certain obligations of confidentiality to Perth Airport in respect of material disclosed to APP. Where APP was operating in its general agency capacity under the contract, the Court held that it was perfectly legitimate for Perth Airport to share its solicitor’s advice with APP on the understanding that the advice was to be kept confidential.
Key takeaway
The sharing of confidential and privileged communications with third party consultants, who are retained for the purpose of seeking legal advice or during the course of litigation, may be protected by privilege.
However, some risks arise when circulating privileged communications to third parties who perform a variety of independent functions. This risk is pronounced when considering the high degree of involvement which most superintendents have when a dispute arises between a principal and contractor. It is not uncommon for a principal’s solicitors to directly communicate with the superintendent to prepare the principal’s reply to a claim received from the contractor.
Where a dispute arises about privilege, the courts will closely examine whether the third party was acting as an agent for a principal when sending or receiving privileged communications, or whether the third party is acting in some other capacity.
The risk of inadvertently waiving privilege can be mitigated by clearly setting out the limited and specific purpose for which the privileged document is being disclosed to the third party in correspondence with that third party. This will assist in countering a claim that privilege has been waived and prevent sensitive communications from being used against you in a dispute.
*As a disclaimer, the content does not constitute legal advice and should not be relied upon as such. Appropriate legal advice should be obtained in actual situations. Feel free to contact us should you require any assistance in resolving a legal dispute
This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader’s specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.
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