In Commissioner of Taxation v PricewaterhouseCoopers [2022] FCA 278, the Federal Court of Australia has provided a useful reminder of the bases on which legal professional privilege attaches to communications.
PricewaterhouseCoopers Australia (PwC Australia), a multi-disciplinary partnership, provided services to the JBS Australia Group (comprising Flora Green Pty Ltd (Flora Green), JBS Holdco Australia Pty Ltd (JBS Holdco Australia) and JBS Australia Pty Ltd (JBS Australia) (together, the JBS Parties)).
During an audit of Flora Green, the Commissioner of Taxation issued notices to produce to a partner of PwC Australia and Flora Green under s 353-10 of Sch 1 to the Taxation Administration Act 1953 (Cth).
Legal professional privilege was claimed by PwC Australia (on behalf of Flora Green or another member of the JBS Global Group) over approximately 44,000 documents that were otherwise responsive to the notices to produce.
The Commissioner relied on the following grounds to dispute those claims for privilege:
- the form of the engagements, reflected in the relevant ‘Statements of Work’ under which PwC Australia purported to provide legal services to the JBS Parties, did not establish a relationship of lawyer and client that was sufficient to ground a claim for legal professional privilege;
- as a matter of substance, the services provided by PwC Australia to the JBS Parties pursuant to the engagements were not provided pursuant to a relationship of lawyer and client sufficient to ground a claim for legal professional privilege; and
- alternatively, the selection of documents reviewed by the Court which were in dispute were not, and did not record, communications made for the dominant purpose of giving or obtaining legal advice from one or more lawyers (of PwC Australia).
The Court did not accept the first 2 grounds advanced by the Commissioner. In particular, Moshinsky J was not satisfied that “as a general proposition, no relationship of lawyer and client (sufficient to ground a claim for legal professional privilege) came into existence”. Rather, His Honour concluded that at least in some relevant circumstances, a lawyer-client relationship existed between the relevant partner of PwC Australia who was an Australian legal practitioner (and other Australian legal practitioners at PwC Australia) and one or more of Flora Green, JBS Holdco Australia and JBS Australia.
In relation to the third ground, the question to be determined was whether a document was, or recorded, a communication made for the dominant purpose of giving or receiving legal advice. In order to answer that question, Moshinsky J conducted a document-by-document review of a sample set of the relevant communications in respect of which legal professional privilege had been claimed.
In other case authorities the dominant purpose has been described as the ruling, prevailing, paramount or most influential purpose (see Federal Commission of Taxation v Spotless Services Ltd (1996) 186 CLR 404 at 416; Grant v Downs (1976) 135 CLR 674 at 678). Importantly, this means that a communication is not privileged if one purpose for its creation is to obtain legal advice but there are other equally (or more) important purposes.
Moshinsky J held that:
- the question of whether a document is subject to legal professional privilege is to be determined by reference to the content of the document, its context, and the relevant evidence relating to the document;
- a critical part of the context in this case was that the services were provided by a multi-disciplinary partnership and that the team carrying out the work comprised both lawyers and non-lawyers; and
- another contextual matter was the involvement of overseas PwC firms in many of the same projects (under separate engagements) and at least PwC Brazil and PwC USA made clear that they were not able to provide legal advice and that they were not doing so.
His Honour concluded that of the 116 documents in the sample set of documents:
- 49 documents were privileged;
- 6 documents were partly privileged; and
- 61 documents were not privileged.
A significant part of the reasons in the judgment is confidential because it would disclose the contents of documents in respect of which a claim for privilege has been made. Nonetheless, some useful lessons can be drawn. They include:
- whether the dominant purpose test is satisfied in relation to a particular communication requires consideration of all of the circumstances pertaining to the creation of that document; and
- those circumstances include:
- the context in which services are provided and in particular, whether the services encompass non-legal services as well as legal services; and
- whether the services are provided by both non-lawyers and lawyers, as opposed to lawyers alone.
- the context in which services are provided and in particular, whether the services encompass non-legal services as well as legal services; and