Legal Professional Privilege And Bankruptcy… Are Communications Between You And Your Solicitor Still Protected?
It is a widespread view that the fundamental basis of all enduring relationships is trust. We often reveal to those closest to us our most personal and intimate thoughts because we trust that they will keep that information confidential.
Your relationship with your solicitor is very similar. In the legal world, this relationship of trust and confidentiality is protected by what we call ‘legal professional privilege’, or simply ‘legal privilege’.
What this means is that all communication between you and your solicitor is protected by “the Common Law”. That is, by previous judgments of the Courts.
In Australia, legal professional privilege is a core principle of the Rule of Law.
The first step in bankruptcy…and the conflict of disclosure…
As you might already be aware, the law is not always so clear cut. There are instances where your right to legal professional privilege may be in jeopardy.
One such instance where this may occur is if you are declared bankrupt.
The first step to occur in the event of a bankruptcy is the appointment of a ‘trustee’. The role of the trustee is to effectively manage your bankruptcy. They do this by acting as a mediator between you and those to whom you owe money, your creditors.
One of the ways you have to assist your trustee is by providing to them all information relating to your circumstances. You are obliged to provide such information.
This includes, but is not limited to, all books, bank statements, tax returns, correspondences, and any other documents which your trustee requests the disclosure of.
If you are represented by a solicitor, your trustee may request these documents from them. In this event, your trustee may request the disclosure of communications between you and your solicitor.
The problem with your trustee requesting the disclosure of communications between you and your solicitor is that it cuts across legal professional privilege. In other words, your Common Law right to the confidentiality of communication between you and your solicitor is in jeopardy.
So, what does this mean from a legal perspective?
The legal stuff
This conflict of interests raises a particularly interesting situation. The basis upon which your trustee may request privileged communications between you and your solicitor relies on a provision of the Bankruptcy Act, to allow a request for disclosure of all material which may aid his or her aim of discovery.
While this provision outlines the documents that your trustee may request, its contents remain open to interpretation.
The relevant provision of the Bankruptcy Act does not necessarily provide that the trustee is automatically entitled, upon request, to communications between you and your solicitor.
The courts have, in their judgments, moved to ensure that a person who has gone into bankruptcy has their communications between them and their solicitor protected under legal professional privilege.
What you should do…
The trust that we form in our relationship with you is something we take very seriously.
While it is sometimes considered that legal professional privilege is a given, the law is unclear in this area where it relates to disclosure under the Bankruptcy Act. It is not uncommon to see claims of privilege referred to Counsel for a more experienced opinion.
If this article relates to you, you should have a chat to your solicitor as to what information is to be claimed to be under privilege.
T: 1300 287 911