In the event of a work health and safety (WHS) incident, regulatory enforcement or even assessing compliance with WHS laws, it is often prudent to obtain legal advice. Sometimes advice will be obtained from external lawyers, other times advice will be obtained from in-house legal teams, with such advice often being subject to legal professional privilege (LPP).
In the recent decision of ACN 154 520 199 Pty Ltd and Commissioner of Taxation (Taxation)  AATA 33, the Administrative Appeals Tribunal (AAT) has directed the Australian Tax Commissioner (the Commissioner) to produce any internal legal advice that could reasonably be expected to shed light on some of the issues in the principal proceedings.
This case dealt with the question of whether internal legal advice by in-house lawyers or officers of the Australian Tax Office, which may be subject to LPP, should be produced to the AAT. This article may be of interest to practitioners working for government agencies, particularly those who do not hold a practising certificate. It is important to be aware that in certain circumstances, LPP may not always provide protection against disclosure in legal proceedings.
The facts of this matter do not involve a WHS incident and are noted for context.
In April 2016, the Commissioner imposed a penalty of $58,059,829.75 on the Applicant, a refinery company now in liquidation. The penalty was imposed because the Applicant made false or misleading statements to the Commissioner on its Business Activity Statements (BAS) for the relevant period. In November 2016, the Applicant sought review of the decision in the AAT on the basis of a technical argument surrounding the goods and services tax (GST) attached to gold bullion and its subsequent refinery in the supply process (“the no refining issue”).
The Applicant wrote to the Respondent, stating it was aware of at least two legal advices about parts of the decision under review and requested the Respondent lodge legal advice and the instructions. The Respondent refused to produce the requested documents.
The Applicant argued that:
- The Tribunal should be satisfied that legal opinions by internal legal advisors on the “no refining issue” may be relevant to the decision under review. Section 37(2), as modified by s 14ZZF of the Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act), is a “safeguard” that empowers the Tribunal to direct the Commissioner to lodge further documents that, in the Tribunal’s opinion, “may be relevant to the review of the decision”.
- A document may be relevant if it “could reasonably be expected to throw light on some of the issues in the principal proceedings”.
- For LPP to attach to an advice, the author must hold a practising certificate — without one, the advice is not legal advice and therefore cannot be subject to LPP.
- It was not a “fishing expedition” because the Applicant was aware of one advice in respect of the “no refining issue”.
The Respondent argued that:
- the principle issue for the Tribunal was the question of “whether the shortfall amount attributable to the inaccurate BAS was a result of recklessness by the Applicant”
- the Applicant’s application was a fishing expedition because the Applicant could not say there was advice and could not identify facts giving rise to any reasonable suspicion that there was such advice(s), and
- the Respondent referred to Re Spicer Axle Structural Components Australia Pty Ltd v Secretary, Department of Industry, Tourism and Resources (2005) 83 ALD 104 to support its argument that, if the documents were subject to LPP, the Tribunal would automatically allow the Applicant to access those documents.
The AAT’s findings
The AAT ruled in favour of the Applicant, directing the Respondent under s 37(2) of the AAT Act to produce the internal legal advices written by officers of the ATO and upholding them as relevant to the review of the issue regarding GST exemption.
The Senior Member of the AAT held that the legal advices would address the Applicant’s “particular circumstances” and that such an application was not “premature or a fishing expedition”.
Legislation can impact LPP. Although statutory provisions will not be construed as abrogating LPP without clear words or necessary implication, it can be difficult to maintain LPP over information requested under compulsory information gathering powers.
In the event of a WHS incident, it is commonplace for legal advisors to require clients to undertake or commission incident investigations so legal advice can be provided. WHS legislation does not abrogate LPP but WHS regulators generally have the power to require a person to provide information and documents (with limited rights of refusal). WHS regulators often request information and investigations that may be subject to LPP. Sometimes it can be difficult for people responding to the request to navigate and decipher which information is protected by LPP and this can result in inadvertent waiver or disclosure.
In the context of this case, s 37(2) of the AAT Act provided that if the Tribunal believes particular documents may be relevant to its review of a decision, it may require the decision maker to lodge such document(s) with the Tribunal.
Importantly, s 37(3) grants the Tribunal broad powers requiring the production of documents and states those powers will apply notwithstanding any rule of law on privilege or the public interest. This broad power does not necessarily mean documents subject to LPP must be produced to other parties in the proceedings.
External and internal advices
In this case the claim of LPP applying to external legal advice was not contentious. The Applicant explicitly conceded that LPP would attach to any external legal advice and the Tribunal also reiterated that it would not order external advice to be disclosed to the Applicant.
However, the Respondent’s claim of LPP over internal advice was not as convincing and it is likely to be the subject of further challenge. In this decision, the Tribunal was yet to assess the documents and the Respondent’s claim for LPP based on the document content. The Applicant’s submissions on LPP and the requirement for a legal adviser to hold a practising certificate may also recur in subsequent proceedings.
What does this mean in practical terms?
A claim of LPP will not provide automatic protection against disclosure. Parties resisting disclosure on the grounds of LPP must be prepared to substantiate their claim. This is particularly true for WHS matters where regulators can, and frequently do, exercise compulsory information gathering powers.
The factual circumstances involved in seeking the advice and how the advice is used will also be relevant. Even if a document is created for the primary purpose of obtaining/providing legal advice or in anticipation of legal proceedings, clients must still exercise caution over disclosure and use to ensure LPP is not inadvertently waived. In-house legal counsel should be aware that some legislation can impact the confidentiality of legal advice. Clearly establishing the purpose of the advice and understanding the impact of relevant legislation is important. The holding (or not) of a current practising certificate may also be relevant.
Where the legal advice sought relates to a matter that could be the subject of legal proceedings or contentious decisions, it may be prudent to obtain external rather than internal legal advice.
In the area of WHS, a few key measures can help protect LPP:
- ensure there are clear protocols for seeking advice following a safety incident — this will include protocols for seeking internal and/or external legal advice following a safety incident
- ensure the protocols are understood and followed, and
- undertake disciplined document management to maintain confidentiality over documents created for the purposes of seeking legal advice and/or the advice itself.
These processes help establish and maintain LPP. It can also make the task of substantiating a claim of LPP more straightforward when clear and unambiguous protocols for obtaining legal advice are followed.
The author gratefully acknowledges the assistance of Bridget Bennett and Carlie Holt in the preparation of this article.
 Re KLGL and QCYY and APRA  AATA 452 at .
 See paragraph 38.
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