By Drazen Kozaric, Special Counsel on 04/07/2022 – [Source]
In Commissioner of Taxation v PricewaterhouseCoopers [2022] FCA 278, the ATO successfully challenged a claim of legal professional privilege by PricewaterhouseCoopers (a multi-disciplinary partnership) on behalf of its client.
The ATO served a notice to produce documents on PWC and its client. PWC refused to produce the documents on the ground of legal professional privilege. At the hearing, the ATO alleged that PWC claimed privilege in relation to circa 15,500 documents were not covered by legal professional privilege and that its client agreement did not establish a relationship of solicitor and client. The Court did not accept the ATO’s argument that there was no relationship of solicitor and client. Furthermore, it held that the fact that PWC is a multidisciplinary firm was not enough to determine the nature of its relationship with its client. The Court required the documents to be examined to assess the dominant purpose of each document. It did not accept a claim of privilege in relation to documents whose dominant purpose was not giving or receiving legal advice. The Court, however, concluded that legal professional privilege may apply to documents created by non-lawyers if a role of a lawyer in creation of the documents is substantive. In this instance, it held that a significant number of the documents were not covered by the legal professional privilege.
Take away: The case indicates the ATO’s tougher approach to claims of (blanket) legal professional privilege and its intention to scrutinise such claims. This is further supported by its current development of a new legal professional privilege protocol. The case also emphasises the importance of well drafted costs agreements between legal professionals and their clients, especially if the matter involves multiple teams from different countries. It should be noted that legal professional privilege is not recognised, at least not in the same way as it is in Australia, in every country.
