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Commissioner's claim of legal professional privilege upheld

The High Court has upheld the Commissioner's claim of legal professional privilege in relation to legal advice provided by an in-house lawyer employed by the Commissioner.

The facts

The plaintiff, Accountants First Limited, was a tax agent. Its principal, Mr Kamal, became involved in a fictitious invoice writing scheme. Mr Kamal and the plaintiff pleaded guilty to Tax Administration Act 1994 charges. As a consequence, the Commissioner decided under s 34B of the Tax Administration Act to remove the plaintiff's tax agent status. The plaintiff is seeking judicial review of that decision.

A claim of legal professional privilege was made by the Commissioner in the course of discovery. The claim was made in relation to legal advice by an in-house lawyer employed by the Commissioner. The lawyer's general functions were to provide legal and technical assistance to various units within Inland Revenue. He had been employed by Commissioner for nine years during which time he had continually held a practising certificate.

After Mr Kamal was advised that Inland Revenue was considering removing the plaintiff's tax agent status, a meeting was arranged between the tax agent and Inland Revenue officials. Following that meeting the officials prepared a submission for the decision maker. The lawyer prepared a one-page background paper and authored the group's submission. The submission took the position that the seriousness of the convictions and the underlying conduct were incompatible with tax agent status. The lawyer was one of three Inland Revenue officials who attended the meeting with Mr Kamal. Privilege was not claimed in relation to any of these events.

Privilege was claimed in respect of two documents. The lawyer received a request for legal advice about the matter from the manager of the Community Compliance Unit of the Customer Services Group. The legal advice was given by email and privilege was claimed in the email. The second document was created eight days later. An official involved in the process asked the lawyer for a copy of the legal advice and for further legal advice on the matter. This was also provided by email and again privilege was claimed.

The issues were:

  • • whether at the time the advice was given, the lawyer was still properly to be seen as acting as an independent legal adviser, and

  • • whether the decision-maker had waived privilege.

  The High Court's decision

The High Court found that the lawyer's role in the process leading to the decision to cancel the plaintiff's standing as a tax agent had not compromised his status within the process as an independent legal adviser. The Court said that the legal advice in issue was given in direct response to a request for legal advice and the circumstances did not undermine the subsequent claim of privilege.

The Court noted that the lawyer was not the decision-maker. The Court commented that the lawyer's advice may be an important part of the process but that did not rob it of its privilege status.

The Court also found that there was no strength to the allegation of waiver of legal privilege in an affidavit prepared by the decision-maker for the purposes of judicial review proceedings.

Accountants First Limited v C of IR HC Wellington [2014] NZHC 1723 CIV-2014-485-2547, 23 July 2014.