CAN AN OWNERS CORPORATION WITHHOLD AN OWNER’S ACCESS TO A LAWYER’S WRITTEN ADVICE?

14 December 20

CAN AN OWNERS CORPORATION WITHHOLD AN OWNER’S ACCESS TO A LAWYER’S WRITTEN ADVICE?

Let’s take look at this scenario: an owners corporation believes that a building manager is in breach of its building management agreement or simply that an owner is breaching a by-law. The owners corporation engages a law firm to provide advice in relation to the alleged breach by the building manager or the by-law enforcement against the owner. The law firm provides written advice to the owners corporation. The building manager or the owner wants to see that advice and applies to inspect the records of the owners corporation.

Whether an owners corporation may withhold access to a 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 Strata Schemes Management Act (NSW) 2015 does not override that right so it can be claimed by an owners corporation when an owner applies to inspect records.

The owners corporation bears 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
An owners corporation 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 owners corporation and an owner in obtaining that written advice are diverged, then the owners corporation can claim privilege against that owner and withhold access to that communication against that owner.

Agency

If an owners corporation 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 an owners corporation 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 an owners corporation 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 an owners corporation 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 an owners corporation is made and the owners corporation is considering withholding access to records, the owners corporation will no doubt obtain legal advice (which itself may be privileged) regarding the owners corporation’s ability to not allow a communication to be inspected.

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

Article Written by: Brendan Pitman, Small Myers Hughes


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.
  

Additional Documents

Click here to download: 2021_01_Jan___Privilege.pdf

Share

Contact Us Now

Phone:+ 61 7 5552 6666
Fax:+ 61 7 5528 0955
Email:info@smh.net.au
Address:Level 2, 17 Welch St Southport, Qld, 4215
Postal:PO Box 1876
Southport 4215

Search

Search*
Search

Most Popular Articles

Management Rights News

Number of news items returned: 1 to 15 records of 109

The Different Types of Caretaking Agreements

17 November 2014

(19427 views)

 Essentially, there are three types of caretaking agreements in the marketplace: “Do” agreements; “Supervisory” agreements; Hybrid “Do” and “Supervisory” agreements. “Do” Agreements A “Do” agreement ...

Unit Entitlement in NSW

11 February 2013

(11696 views)

The issue of unit entitlement was recently looked at again as part of the Department of Fair Trading’s Discussion Paper ...

CARETAKING AND LETTING AGREEMENT ESSENTIALS PART 5: DISPUTE RESOLUTION AND TERMINATION

16 July 2015

(9077 views)

This month, we continue our examination of various clauses within caretaking and letting agreements and the important considerations to be ...

Is it Time to Change the Management Rights Model?

13 May 2013

(8998 views)

I think the time is right for the management rights industry to explore the creation of a new model. I ...

What Managers Need to know about the NSW Child Window Safety Devices Act 2013

17 January 2014

(8324 views)

Resident building managers have general obligations under their Caretaking Agreements to assist Owners Corporations with building and compliance issues. Managers ...

Be Careful with your Proxies!

03 October 2013

(7191 views)

In June this year, I wrote an article headed “Proxy Farming”, which set out the relevant restrictions on caretakers using ...

The Law Relating to Management Rights in Queensland

14 June 2010

(6861 views)

This article looks at the legislation in Queensland dealing with the constraints and obligations imposed on developers whilst they control ...

Short-Term Letting, Occupancy Limits And Tenant Representatives In NSW Strata

25 July 2017

(6697 views)

Occupancy Limits By-laws in NSW may limit the number of adult residents in a lot. The limit however cannot be fewer ...

Duty Bound or Duty Free - Do you know what Your Duties Are?

23 September 2013

(6530 views)

The day-to-day care and maintenance of your resort facilities and communal areas is essential to its ongoing performance and success. ...

Caretaking and Letting Agreement Essentials Part 1

03 September 2014

(6207 views)

We regularly prepare caretaking and letting agreements for new developments. However, it has become increasingly common for us to be ...

For Your Eyes Only!

15 April 2013

(5983 views)

Information is a commodity and for many, information is power. As you would most likely know from personal experience, the right ...

Owners Corporation Insurance - How do we Stop the Spiraling Costs?

12 August 2013

(5885 views)

In NSW, all strata schemes are required to be insured for the full replacement value, as well as public liability ...

Proxy Farming

10 June 2013

(5818 views)

It is often stated that Strata and Community Schemes represent the “fourth tier of Government” and, as such, voting (either ...

"Legal Action", All those in Favour say "Why"

15 July 2013

(5602 views)

I was recently involved in a New South Wales matter where an Executive Committee had received extensive legal advice from ...

Not Getting the Fundamentals Right

15 October 2013

(5315 views)

A recent decision of the NSW Consumer, Trader and Tenancy Tribunal (CTTT) has highlighted the importance of ensuring that the ...