Case note

Privilege where lawyers and accountants share a file

Commissioner of Taxation v PricewaterhouseCoopers (2022) 114 ATR 335; [2022] FCA 278

An advisory firm operating as a partnership of lawyers and non-lawyers claimed privilege over its tax advice to a multinational group. The Court held that the form of the engagement was valid and then examined the documents one at a time. More than half were not privileged.

Court

Federal Court of Australia

Bench

Moshinsky J

Decided

25 March 2022

Outcome

Of 116 sample documents, 49 were privileged, six partly and 61 not privileged

The facts

A Brazilian listed multinational in animal protein processing held Australian subsidiaries which were restructured in 2015: [38], [39]. It engaged an Australian advisory firm under an umbrella engagement agreement and nine subsequent statements of work. For all but two of those, the client identified was the Australian subsidiary rather than the Brazilian parent: [61], [89].

The advisory firm had been registered as a multi-disciplinary partnership since 2008, meaning a partnership between legal and non-legal practitioners providing both legal and non-legal services: [44]. Its people fell into three groups: Australian legal practitioners, non-legal practitioners, and people admitted but without a practising certificate during the relevant period: [45].

The detail of who was what mattered. The overall engagement partner held a practising certificate only from September 2014, and it was conditioned to practise in taxation law alone. Others working on the same engagement, including an international tax partner of long standing, were not lawyers at all: [45].

The Commissioner sought declarations that documents over which privilege was claimed were not privileged. A sample of 116 documents was selected for determination.

What was in dispute

The Commissioner put his case in stages. His broader contentions were that no lawyer and client relationship had been validly constituted at all in engagements of this kind. His narrower case was that, whatever the engagement said, the individual communications were not made for the dominant purpose of giving or obtaining legal advice.

What the Court decided

The broader contentions failed. The lawyer and client relationship in the engagements was validly constituted, and the form of the arrangement survived the challenge.

The narrower case largely succeeded. The Court applied the ordinary test and then worked through the sample document by document.

In order for privilege to arise, it is not sufficient that giving or obtaining legal advice or providing legal services was in part the purpose; it must be the dominant purpose of the relevant communication.

Moshinsky J at [143].

However, the mere fact that a communication was made pursuant to one or more of the Statements of Work (which describe the services to be provided as legal services) does not mean that the communication is necessarily subject to legal professional privilege. In each case, it is necessary to determine whether the communication was made for the dominant purpose of giving or receiving legal advice.

Moshinsky J at [219].

The results are the most useful thing about the decision. Of the 116 sample documents, 49 were held privileged, six partly privileged and 61 not privileged at all.

The line was drawn by subject matter and purpose rather than by who sent the document. Advice on Australian taxation law given by the lawyer to the client was generally privileged, and remained so where a non-lawyer had drafted it at his request, he had substantively reviewed it and had adopted it as his own advice: [931(g)]. Tax, accounting, valuation and stamp duty content produced by non-lawyers was not privileged, and did not become privileged because a lawyer was copied in, because the document was labelled, or because the lawyer sent it out under his own name: [147], [722], [931]. Valuation material from a non-lawyer failed even where the lawyer was party to the emails: [554].

Why the decision matters

The decision is the leading Australian authority on privilege in a practice that combines lawyers and other professionals, and its practical message is a caution rather than a technique.

What it confirms is that the structure of an engagement determines whether privilege is available. What it demonstrates is that availability is not protection. The party that had structured its engagement precisely to make privilege available still lost more than half of the sample, because privilege is decided communication by communication, on what each one is actually about.

For anyone deciding how to obtain advice on a cross-border tax position, three propositions follow. Advice on the law, from a lawyer, to the client, is the core case and is protected. Accounting, valuation and pricing content is not protected merely because it travels with legal advice or through a lawyer. And nothing is achieved by labelling, by routing correspondence, or by placing documents with a lawyer for safekeeping.

The case says nothing about whether there is a privilege for accountants as such, and it should not be cited for that. The proposition that Australian law recognises no equivalent privilege for accountants comes from other authority, and the administrative concession under which the Commissioner will not usually seek an accountant's advice papers is not mentioned in this judgment at all.

Where it stands

The decision stands and is heavily cited. The citator material read records 23 citing decisions to August 2026, none doubting it, and the reasoning has been endorsed at Full Court level.

No appeal appears in the citator. As always, a citator is not a procedural history, and the court file should be checked before any positive statement is made that the decision was not appealed.

The judgment construes the general law of privilege rather than any particular taxing provision, so nothing in the replacement of the transfer pricing rules affects it. One of the sample documents dealt with transfer pricing implications and was held privileged: [919(g)], [928].

A case note by Boettcher Law. It is general information about Australian law and a summary of a published decision, and it is not legal advice on any particular arrangement. Paragraph references are to the reasons of Moshinsky J.