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‘She’ll Be Right’: In the Land of the Fair Go, Is Privilege a Tall Poppy That Needs to Be Cut Down?


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Many readers would be familiar with the concept of legal professional privilege (LPP) from the Tom Cruise-hit film The Firm, a dramatisation of the John Grisham fiction novel of the same name. The privilege is a fundamentally important, basic right recognised in many legal systems, including Australian law. In Australian law, LPP is of common law origin, and is also recognised in some statutes.

Sometimes referred to as ‘client professional privilege’, LPP serves the public interest in the administration of justice (a public good). It protects the confidentiality of certain information communicated between client and lawyer. This is in order to facilitate the client receiving proper advice and representation from the latter.

In recent times, however (and consistent with what would seem to be an emerging trend amongst regulators internationally), the Australian Taxation Office (ATO) has been somewhat bellicose in its opposition to claims of LPP. The ATO insists that legal practitioners who, in its view, make unfounded privilege claims, leave themselves open to sanction for breaching their obligation to comply with the Federal Commissioner of Taxation’s coercive information-gathering powers in sections 353-10 and 353-15 of schedule 1 to the Commonwealth’s Taxation Administration Act 1953 (powers which, the ATO accepts, are subject to LPP).

In this regard, The Australian Financial Review has reported that ‘the ATO “frequently pushes taxpayers, and their advisers hard, to waive LPP, or push [sic] for disclosure, in circumstances that breach that privilege, or make it difficult for the lawyers to give frank and fearless advice, on privilege issues”’.

Section 39 of the Legal Profession Uniform Law

Interesting then, is section 39 of the state-based Legal Profession Uniform Law. Headed ‘Undue influence’, the section provides as follows:

A person must not cause or induce or attempt to cause or induce a law practice or a legal practitioner associate of a law practice to contravene this Law, the Uniform Rules or other professional obligations.

Penalty: 100 penalty units.

Section 39 (and its equivalent in non-Uniform Law states and territories, namely the Australian Capital Territory, the Northern Territory, Queensland and Tasmania) has attracted scant commentary, and appears yet to be considered by any court.

Whilst the precise contours of the provision are still to be determined, the conduct that has been described at pages 4 to 6 of the Law Institute of Victoria’s 12 November 2021 Draft Legal Professional Privilege Protocol public submission to the ATO (which The Australian Financial Review then highlighted) should, at the very least, give one pause for thought in relation to section 39.

Does the section apply to the ATO as a matter of (statutory) interpretation?

Conduct by public officials vis-à-vis section 39 clearly raises broad rule of law concerns. This is quite apart from the general issue of Crown immunity (the Legal Profession Uniform Law does not purport to apply to the government in general). The potential application of the section to federal government authorities raises further issues regarding intergovernmental immunity (the legal restrictions on the ability of one level of government to bind another by statute), and in relation to federal–state law conflict, as the Uniform Law is state law.

In terms of federal–state law conflict, no necessary inconsistency would appear to exist between section 39 and the Commissioner’s coercive information-gathering powers in sections 353-10 and 353-15 of schedule 1 to the (federal) Taxation Administration Act 1953. LPP already operates as a constraint on the latter provisions, independent of the existence of section 39.

Put simply, it would be strange indeed if the ‘great unwashed’ were bound by section 39 but a government official was not similarly constrained. He or she thus would be legally free to interfere with lawyers’ duties generally, with impunity. Surely this would jar with a stated purpose of section 39, which is ‘to ensure that clients of law practices are adequately protected’?

In case it is thought that applying duress is beyond loyal and faithful Australian servants of His Majesty, a notable example might be found in the facts of Mason v New South Wales. That federal government authorities (for instance, like the ATO) are, unexceptionally, capable of acting oppressively, unfortunately is borne out by the circumstances of cases such as Hyder v Federal Commissioner of Taxation.

Reflections on the new Legal Professional Privilege Protocol

In this regard, the ATO’s latest Legal Professional Privilege Protocol (in plain English, ‘guidelines’) could be seen as an attempt to ‘reset’, on paper at least, the ATO’s approach to LPP vis-à-vis legal practitioners and their clients.

What practical impact, if any, the Protocol in its current form will have, however, very much remains to be seen, because the Protocol raises its own issues.

For instance, the Protocol states that compliance with its provisions is ‘voluntary’ on the part of lawyers and their clients, but the consequences (or lack thereof) for the ATO itself of non-adherence to the terms of the Protocol are not entirely clear.

While the Protocol does acknowledge lawyers’ ‘professional obligations’ (maybe intending to reflect the meaning of this phrase as it appears in the Uniform Law?), the Protocol does not attempt to be comprehensive, being, on its own terms, expressly limited to privilege claims made in response to the Commissioner’s exercise of coercive information-gathering powers.

Curiously, the Protocol appears to overlook the comprehensive report into LPP by the independent and well-respected Australian Law Reform Commission. The former also makes no mention of the guidelines previously agreed to between the ATO and the Law Council of Australia on 26 July 1991 in relation to access procedures by ATO officers on lawyers’ premises (even though the Protocol apparently supersedes these guidelines, which, unlike the Protocol, were not unilateral in nature). The Law Council of Australia has expressed some misgivings regarding the Protocol.


Regardless of the Protocol, it would seem that well-meaning but overzealous ATO officers could potentially expose themselves to criminal culpability if they seek to pressure practitioners in relation to claims of LPP, contrary to section 39 and its equivalents.

In this regard, the observation of Justice Brandeis in Olmstead v United States would appear to be noteworthy:

Experience should teach us to be most on our guard to protect liberty when the government’s purposes are beneficent … The greatest dangers to liberty lurk in insidious encroachment by men [sic] of zeal, well-meaning but without understanding.


This post is both a high-level summary of, and an extension to, the material canvassed in the article — ‘“Under Pressure”? Section 39 of the Legal Profession Uniform Law and the Federal Commissioner of Taxation’ (2022) 37(2) Australian Tax Forum: A Journal of Taxation Policy, Law and Reform 273.

The post ‘She’ll Be Right’: In the Land of the Fair Go, Is Privilege a Tall Poppy That Needs to Be Cut Down? appeared first on Austaxpolicy: The Tax and Transfer Policy Blog.


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