Legal advice privilege

2013 SCMR 403 SUPREME-COURT-OF-UK Judicial Precedent

Communication between counsel and clientLegal advice privilegeScope

Availability of legal advice privilege depended on the character of the advice which the client sought and the circumstances in which it was given, and not on the adviser's status, provided that the advice was given in a professional context

Advice on tax law from a chartered accountant would attract legal advice privilege in circumstances where it would have done so had it been given by a barrister or a solicitor

Legal advice privilege was attached to any communication between a client and his legal adviser which was made for the purpose of enabling the adviser to give or the client to receive legal advice; which was made in the course of a professional relationship, and which was made by member of a profession which had as an ordinary part of its function the giving of skilled legal advice

Various professions existed whose practitioners gave skilled legal advice on tax as part of their ordinary professional functions

Accountants were amongst such practitioners, therefore, any distinction between some skilled professional advisers and others was not only irrational, but inconsistent with the legal basis of the privilege

Recognising that legal advice privilege was attached to legal advice given by accountants would not involve any change to the principles governing the availability of the privilege, instead it would only involve recognising the fact that much legal advice falling within such principles was nowadays given by legal advisers who were not barristers and solicitors but accountants

Legal professional privilege was a creation of the common law, whose ordinary incidents were wholly defined by common law, therefore, in principle it was for the courts of common law to define the extent of the privilege

Appeal was allowed and case was remitted to the High Court to decide whether the material/documents requisitioned by the tax inspector would have been privileged if a solicitor or barrister had performed the functions that the accountants performed, and to quash the notices if it would have been.

2013 SCMR 403 SUPREME-COURT-OF-UK Judicial Precedent

Communication between counsel and clientLegal advice privilegeRights of clientScope

Legal advice privilege was conferred in support of the client's right to consult a skilled professional adviser and not in support of a right to consult the members of any particular professional body

Where advice on tax law was sought from and given by an accountant it should be subject to the same legal advice privilege attached to legal advice given by a member of the legal profession

In modern conditions accountants had the expertise to advise on tax law and it was firms of accountants rather than firms of solicitors who gave such advice and represented clients in disputes with tax authorities on many aspects of their tax affairs

Legal advice privilege extended to advice given by members of a profession, which had as an ordinary part of its function the giving of skilled legal advice, however such members must be part of a properly regulated professional body

Appeal was allowed and case was remitted to the High Court to decide whether the material/documents requisitioned by the tax inspector would have been privileged if a solicitor or barrister had performed the functions that the accountants performed, and to quash the notices if it would have been.

2013 SCMR 403 SUPREME-COURT-OF-UK Judicial Precedent

Communication between counsel and clientLegal advice privilegeApplicabilityScopeLegal advice privilege, as generally understood, applied only to advice that was given by lawyers

If legal advice privilege was determined not by the profession to which the adviser belonged but by the function that he was performing, it would amount to changing the ambit of the privilege, and would also be a significant change because the privilege as generally understood had clearly defined limits

Courts were not best placed to assess how profound a change it would be if legal advice privilege was extended to tax advice given by chartered accountants, and for assessing whether there were good reasons of policy for making such a change and what protections, if any, were needed to ensure that the ambit of the privilege was kept within limits that were acceptable

If there were reasons of public policy for making such a change, the matter should be left to the Parliament

Appeal was dismissed accordingly. [Minority view]

2013 SCMR 403 SUPREME-COURT-OF-UK Judicial Precedent

Communication between counsel and clientLegal advice privilegePrinciples

Legal advice privilege should, as far as possible, be based upon a principle which was clear, certain and readily understood

Extending legal advice privilege to any case where legal advice was given by a person who was a member of a profession which ordinarily included the giving of legal advice, would create uncertainty in the scope of the privilege

Debate as to whether particular professional persons, in particular situations, would or would not fall within the scope of legal advice privilege, would detract from the certainty and clarity which presently existed in the said privilege

Appeal was dismissed accordingly.

2013 SCMR 403 SUPREME-COURT-OF-UK Judicial Precedent

Communication between counsel and clientLegal advice privilegeScope

Legal advice privilege had developed and been accepted on a general basis in respect of lawyers because their business was normally dealing with legal matters

In relation to tax or any other particular areas where legal advice was given professionally, specific considerations might exist which could on examination point away from a recognition of legal advice privilege, or away at least from its recognition on an unqualified basis

If legal advice privilege was to be extended to professions other than lawyers, it would not be on a general basis and a careful distinction would have to be drawn between privileged and non-privileged activities, something which was normally irrelevant in the case of lawyers

Distinction between privileged and non-privileged activities would not necessarily be easy to draw

Any recognition in respect of tax accountants of a privilege which traditionally is regarded as relevant only to legal advice given by lawyers in the course of their profession, or of any parallel privilege, should take place, if at all, in Parliament, and not in the courts

Appeal was dismissed accordingly.

2013 SCMR 403 SUPREME-COURT-OF-UK Judicial Precedent

Communication between counsel and clientLegal professional privilegeLegal advice privilegeScope

Legal advice privilege applied to all communications passing between a client and its lawyers, acting in their professional capacity, in connection with the provision of legal advice, i.e. advice which related to the rights, liabilities, obligations or remedies of the client either under private law or under public law.

2013 SCMR 403 SUPREME-COURT-OF-UK Judicial Precedent

Communication between counsel and clientLegal professional privilegeLegal advice privilegePurpose

Legal advice privilege was based on the need to ensure that a person could seek and obtain legal advice with candour and full disclosure, secure in the knowledge that the communications involved could never be used against such a person

Legal advice privilege was conferred for the benefit of the client, and might only be waived by the client; it did not serve to protect the legal profession

Legal advice privilege existed to ensure that there was full and frank communication between attorneys and their clients, which promoted broader public interests in the observance of law and administration of justice

Principle that communications between clients and lawyers, whereby the clients were hoping for the assistance of the lawyers' legal skills, should be secure against the possibility of any scrutiny from others, whether the police, the executive, business competitors, inquisitive busybodies or anyone else was founded upon the rule of law.

2013 SCMR 403 SUPREME-COURT-OF-UK Judicial Precedent

Legal professional privilegeLegal advice privilegeScopeChartered accountant giving legal advice to a company/client in relation to a tax avoidance schemeTax inspector serving notices on company to produce certain documents relating to its tax affairs

Company refusing to disclose said documents on the ground that same related to legal advice given by the chartered accountant, therefore, they were covered by legal advice privilege

Question as to whether legal advice privilege applied to legal advice given by a professional other than a member of the legal profession

Appellant-company challenged validity of notices served by tax inspector by filing an application for judicial review

High Court rejected application for judicial review on the ground that, although the disputed documents would have attracted legal advice privilege if the advice in question had been sought from, and provided by, a member of the legal profession, no such privilege extended to advice, even if identical in nature, provided by a professional person who was not a qualified lawyer

Court of Appeal upheld the decision of the High Court

Validity

Main issue in the present appeal was whether legal advice privilege should attach to communications passing between chartered accountants and their client in connection with expert tax advice given by the accountants to their client, in circumstances where legal advice privilege would attach to such communications if the same advice was being given to the same client by a member of the legal profession

Universal belief was that legal advice privilege only applied to communications in connection with advice given by members of the legal profession

Legal advice privilege should not be extended to communications in connection with advice given by professional people other than lawyers, even where that advice was legal advice which that professional person was qualified to give

Various laws made by Parliament also implied that legal advice privilege was limited to advice given by lawyers

Allowing present appeal filed by appellant-company would amount to extending legal advice privilege beyond what were currently, and have for a long time been understood to be, its limits

Extending legal advice privilege to any case where legal advice was given by a person who was a member of a profession which ordinarily included the giving of legal advice would likely lead to a clear and well understood principle becoming uncertain, because it would be unclear as to which occupations would be members of a profession for such purpose

Further it was also unclear as to how a court would decide whether a profession was one which ordinarily included the giving of legal advice

Where professionals, other than members of the legal profession, give legal advice, it will often not represent the totality of the advice, and it might be difficult to resolve, as to whether, and, if so, in respect of which documents, legal advice privilege could be claimed

Difficulties might also arise in deciding how to deal with documents which contained legal and non-legal advice

Question as to whether legal advice privilege should be extended to cases where legal advice was given from professional people who were not qualified lawyers raised questions of policy which should be left to the Parliament, with its wide powers of inquiry and consultation and its democratic accountability

Extension of legal advice privilege to professions other than lawyers might only be appropriate on a conditional or limited basis, which could be properly considered and implemented by Parliament, and could not appropriately be assessed, let alone imposed, by the courts

Appeal was dismissed accordingly.