Chan v Chief Commissioner of State Revenue

Costs in the Tribunal

1. The general position in the Tribunal is that parties pay their own costs: Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act), s 60(1). That general position is displaced only if the Tribunal is satisfied that there are special circumstances warranting an award of costs: NCAT Act, s 60(2); see also s 60(3). The Applicant's 'special circumstances' claim is that the Chief Commissioner should have accepted the Applicant's construction of the relevant land tax legislation (s 58 of the Land Tax Act 1956 (NSW)) and granted the exemption in July 2020.

The privilege claim

1. The starting point is s 67 of the NCAT Act, which provides protection against the disclosure of a document if the Tribunal is satisfied that evidence of the document could not be adduced in proceedings before a NSW court by reason of the operation of (among others) Part 3.10 of Chapter 3 of the Evidence Act 1995 (NSW).
2. A document includes a part of a document; and disclosure of a document includes the provision of copies of the document, the granting of access to the document, and the disclosure of the contents of the document: NCAT Act, s 67(2).
3. The Chief Commissioner objects to the disclosure of the Documents on the basis that they are subject to client legal privilege pursuant to s118(a) and (c) and/or s119(a) and (b) of the Evidence Act 1995 (NSW).

Client legal privilege - the Evidence Act

1. Both ss 118 and 119 are contained in Part 3.10 of Chapter 3 of the Evidence Act; s 118 deals with 'legal advice' privilege and s 119 deals with 'litigation' privilege.
2. In summary, ss 118 and 119 provide protection against disclosure of confidential documents and confidential communications (both defined in s 117) prepared or made for the dominant purpose of providing legal advice to the client, or for the dominant purpose of the client being provided with professional legal services relating to actual or anticipated legal proceedings involving the client as a party.
3. The parties have provided a useful summary of the relevant test and principles that apply to the determination of a claim of client legal privilege under ss 118 and 119 of the Evidence Act. The summary includes these high-level propositions, with which I agree: 1. the onus is on the party claiming privilege to show that the documents for which privilege is claimed are privileged; 2. the dominant purpose must exist at the time the document is brought into existence; 3. dominant purpose is a question of fact; 4. dominant purpose must be determined objectively having regard to the nature of the document and all the circumstances (including the circumstances in which it was commissioned or prepared), but the subjective intention of the author and of the person or authority under whose direction the document was prepared is entitled to weight; and 5. the court (or Tribunal) has power to examine documents in cases where there is a disputed claim and should not be hesitant to exercise such a power.
4. That brief summary is contained in the parties' Joint Statement on Client Legal Privilege which also contains the following commentary on the various critical concepts involved (footnotes omitted; 'EA' is the parties' abbreviation for the Evidence Act): Dominant Purpose 11. The test of 'dominant purpose' has been expressed in terms of 'clear paramountcy'. It is not enough if two purposes are of equal weight or a particular purpose is 'greater than' another purpose or was the 'most important' purpose. 12. In the context of statutes dealing with taxation and revenue law it has been observed that the word 'dominant', when used to describe a purpose, is indicative of that which was the ruling, prevailing, or most influential purpose. 13. The word 'purpose' as it is used under s.118 and s.119 of the EA refers to the purpose that led to the creation of the document or the making of the communication. 14. Relevantly if the communication would have been made irrespective of any intention to obtain professional legal services, it is doubtful that the purpose of obtaining such services could be regarded as being the dominant purpose. 15. The contents of documents which satisfies this test attracts privilege regardless of if it was prepared by the client, lawyer or another person. The provision prevents not only the disclosure of the document that constitutes the confidential communication but also any other evidence that would reveal its contents. Disclosure does not occur if what is adduced in evidence merely causes the reader to wonder or speculate whether legal advice has been obtained and what was the substance of that advice. 16. A communication or document can have more than one purpose, only one of which is privileged. If the document can be divided up into segregated parts, (because a reference to a 'document' is defined in Part 2 of the Dictionary in the EA as including a reference to 'any part of the document') only the parts dealing with receiving or recording legal advice will be privileged. If there is intermingling then it is a question of fact as to the dominant purpose for which the document as a whole was created. Thus, the document will not be privileged merely because it is handed to a lawyer for the purpose of obtaining advice. Where a communication is not made for the dominant purpose of providing legal advice, the privilege does not apply. … Client 19. A 'client' includes a person or body (including an employer) who engages a lawyer to provide legal services or who employs a lawyer (including under a contract for service). 20. Relevantly, for this objection, the definition extends to an employee or agent of a client and subject to meeting the dominant purpose test, legal professional privilege may extend to notes, memoranda or other documents made by officers or employees of the client that relate to information sought by the client's legal adviser to enable him or her to advise. The privilege extend[s] to drafts, notes and other material brought into existence by the client for the purposes of communication to the lawyer, whether or not they are themselves actually communicated to the lawyer. 21. In order to determine the application of the privilege, it is necessary for the Tribunal to determine who was the client for the purpose of ss. 118 and 119 EA. The parties agree that the client in this case is the Chief Commissioner of State Revenue and his delegates being the persons employed by the Chief Commissioner of State Revenue at the office of Revenue NSW. Lawyer/s 22. In order to determine the application of the privilege, it is necessary for the Tribunal to determine who was a lawyer for the purpose of ss. 118 and 119 EA. 23. The parties agree that the relevant lawyer in this case [for] the purpose of ss. 118 and 119 EA is the Crown Solicitor and the persons employed in her office working on this case, such as Mr. Ryan McGowan and Mr. Michael Wixted. Copies of Documents 24. Under Part 2 Clause 8 of the Dictionary of the EA and s.67 of the Civil and Administrative Tribunal Act 2013, a 'document' includes any copy of the original. Subject to any questions of waiver (which is not in dispute), privilege may still apply to copies of a privileged document that comes into the hands of other parties. 25. Where original documents are not subject to privilege, privilege may still be attached to copies of such documents, provided the purpose of the creation of the copies satisfy the dominant purpose test. 26. Importantly, where documents are electronically copied in a chain of emails, the Court ought to consider the circumstances in which the emails were produced, and the final chain sent to its addressee. An examination of the final email in the chain may justify treating the entirety of the chain as if the individual emails had intentionally been copied for a protected purpose. 27. The decisions of Desane Properties Pty Ltd v State of New South Wales [2018] NSWSC 173, (Desane Properties) Zantran Pty Limited v Crow Resorts Limited (No 2) [2020] FCA 1024 and Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501 (Propend Finance) ought to assist the Tribunal in this regard, copies of which have been provided for convenience.
5. Apart from those paragraphs (each of which sets out the position as accepted by both parties), there are some areas of disagreement, as the following excerpts indicate: [Under the heading 'Dominant purpose':] 17. In order for the Tribunal to ascertain the dominant purpose of a communication, it is necessary for the Tribunal to identify the possible purposes that a communication may reasonably have had, having regard to the context in which it was initially made. The Applicant is of the view that in this case a Document may have been created in the course of and for the dominant purpose of the Respondent discharging the Respondent's statutory duty. 18. The Respondent's position is that any such emails were created in relation to advice and proceedings that were currently on foot and are privileged under s.118 and/or s.119 of the EA. The Applicant responds that the Respondent's statutory duty is of paramount importance, that the Respondent is bound to discharge it, and the fact that that discharge occurred in the course of litigation does not mean that the dominant purpose of such an email is not the discharge of the Respondent's statutory duty. … [Under the heading 'Copies of Documents':] 28. The Tribunal should be aware that the Applicant and Respondent have different views as to the import of these cases [that is, Desane Properties, Zantran and Propend Finance]. The Respondent is of the view that the emails in the various chains were created and forwarded to the Crown Solicitor for a purpose that is privileged. The original and the copied emails would be privileged. 29. The Applicant asserts that if the original instance of an email is not privileged as at the time it was first created, then forwarding it in circumstances which render the chain of which it is part as privileged, does not mean that the original instance of the email changes its status from non-privileged to privileged - the original instance of the email maintains its non-privileged status - see for example Propend Finance at [12] and [17] per Brennan CJ, [109] per Gaudron J, and [142] per McHugh J, and Desane Properties at [218] to [223] per Robb J.
6. The parties go on to note at [30] of the Joint Statement that the emails between the client and the CSO which included email chains that were forwarded to the CSO included: 1. Email 1: attaching Emails 2, 3 and 4; 2. Email 15: attaching Emails 2, 3, 4, 7, 8, 12 (part), 14, 16 and 17; 3. Email 19: attaching Emails 13, 18, 20 (part) and 21 (part); 4. Email 23: where a solicitor acting for the Respondent was blind carbon copied into the email, therefore attaching Emails 22 and 24; 5. Email 27: attaching Emails 28 and 29; 6. Email 29: attaching Emails 30 and 31; 7. Email 31: attaching Emails 27, 28, and 30; and 8. Email 35: attaching Email 39, 40, 41 (part), 42 (part), 43 (part), 44 (part), 45 (part), and 47 (part).
7. In conclusion, the Joint Statement includes the following: 31. Both the Applicant and Respondent accept that for the purposes of Part 3.10 of the EA: (a) the Respondent has neither waived nor lost privilege; (b) the Respondent has relevantly 'objected'; (c) adducing evidence of the Documents would amount to a "disclosure"; (d) the Respondent, his employees and officers the subject of the Documents were under an obligation not to disclose any of the emails or their contents; (e) the current matter before the Tribunal is a 'proceeding' under s.119; (f) the Applicant does not seek the production of any communication or document between the Crown Solicitor and the Respondent; and (g) The Respondent, his employees and officers the subject of the Documents fall within the definition of a 'client'. 32. The Applicant concedes that if it is so indicated on the face of each email, such an email is 'confidential communication' for the purposes of ss. 118 and 119 EA. The Applicant further concedes that if any person working at the Crown Solicitor's Office was copied into that email, it is also confidential communication. 33. In the event that the Tribunal is satisfied that client legal privilege does not apply to the whole of the contents of an email but merely part of it, the Parties accept that those parts of the content within the Documents which are privileged ought to be redacted. Any parts of an email which reveal the contents of privileged material ought to be redacted also.

Consideration

1. Each of Emails 1 to 4 is an email chain. Emails 4, 3 and 2 are interim versions of Email 1, which is the complete email chain in the series. Each intermediate email builds on the one that precedes it in time: Email 3 builds on Email 4, Email 2 on Email 3, and Email 1 on Email 2, with each of them containing one additional and more recent email message than the chain that is being added to. Each of Emails 1 to 4 was created directly as a result of, and in response to, a confidential communication between a lawyer in the CSO and one of the Chief Commissioner's officers. The dominant, indeed sole, purpose of their creation was for the Chief Commissioner to be provided with professional legal services relating to proceedings that were then on foot. Section 119 of the Evidence Act applies.
2. Email 5 was also created directly as a result of the same confidential communication referred to in [19]. Its author seeks advice from a colleague, for the sole purpose of assisting in the formulation of a response to the CSO so that the Chief Commissioner can be provided with professional legal services relating to proceedings that were then on foot. As with Emails 1 to 4, s 119 of the Evidence Act applies.
3. In relation to Email 6, privilege is no longer claimed. The document has now been made available to the Applicant.
4. Emails 7, 8 and 9 are indistinguishable in principle from Emails 1 to 4. Section 119 of the Evidence Act applies.
5. Email 10 contains three separate communications between different officers of the Chief Commissioner, plus the entire email chain in Email 5. Those three communications were made immediately after the creation of Email 5 but they are directed to internal matters rather than the actual proceedings between the parties. Those three communications, comprising the bulk of page 51 of the bundle, are not protected from disclosure and should be made available to the Applicant. The remainder of Email 10 is privileged and is not to be released.
6. Email 11 comprises internal communications providing information and comments between officers of the Chief Commissioner. The communications do not appear to have been created for either of the relevant purposes in s 118 or 119 of the Evidence Act. This document should be made available to the Applicant.
7. Email 12 comprises the chain from Email 7, plus an informal expression of gratitude from one officer to another. It is in the same category as Email 7; s 119 of the Evidence Act applies.
8. Email 13 contains a response to the question posed in Email 4. The dominant purpose of the response is to arm the receiving officer with material capable of being communicated to the CSO so that the Chief Commissioner can be provided with professional legal services relating to proceedings that were currently on foot. Section 119 of the Evidence Act applies.
9. Email 14 contains a question seeking clarification of the response provided in Email 3, together with the clarification requested. Like Email 3 itself, Email 14 was created directly as a result of, and in response to, a confidential communication between a lawyer in the CSO and one of the Chief Commissioner's officers. The dominant, indeed sole, purpose of their creation was for the Chief Commissioner to be provided with professional legal services relating to proceedings that were then on foot. Section 119 of the Evidence Act applies.
10. Emails 15 and 16, which for practical purposes are identical to each other, contain yet further communications directed towards finalising the response to the CSO, as initially requested in Email 4. The dominant purpose of these communications was for the Chief Commissioner to be provided with professional legal services relating to proceedings that were then on foot. Section 119 of the Evidence Act applies.
11. Email 17 is simply an interim version of Emails 15 and 16 and is similarly privileged.
12. Email 18 comprises Email 13 plus one other communication. It is plain from the uppermost communication in Email 19 (3 August 2020 at 11:56:53 AM) that the content of Email 18 was sought and provided in connection with the CSO's request in Email 4. The dominant purpose of the creation of the additional communication in Email 18 was for the Chief Commissioner to be provided with professional legal services relating to proceedings that were then on foot. As a result, Emails 18, 19, 20 and 21 (the latter three being interim versions of Email 18) are privileged.
13. Emails 22, 23 and 24 depict an email chain identical in principle to Emails 1 to 4. Section 119 of the Evidence Act applies to each of these emails.
14. In relation to Email 25, privilege is no longer claimed. The document has now been made available to the Applicant.
15. Email 26 is, as previously noted, not caught by the summons in the first place as it exclusively comprises emails between Revenue NSW and the CSO.
16. Emails 27 to 31 contain communications directed towards providing a response to the CSO's question in Email 27, in relation to proceedings that were then on foot. For identical reasons to those expressed in relation to Emails 1 to 4, s 119 of the Evidence Act applies to each of these emails.
17. Likewise, Emails 32, 34 and 35 contain communications directed towards providing a response to a question posed by the CSO. The dominant purpose of the creation of each of these emails was for the Chief Commissioner to be provided with professional legal services relating to proceedings that were then on foot. Section 119 of the Evidence Act applies.
18. In relation to Email 33, privilege is no longer claimed. The document has now been made available to the Applicant.
19. The three communications in Email 36 do not appear to have been created for either of the relevant purposes in s 118 or 119 of the Evidence Act. Email 36 is not privileged and should be made available to the Applicant.
20. Email 37 is identical to Email 35 and, like the latter, is privileged.
21. Emails 38 to 44 contain a number of communications, the dominant purpose of the creation of each of which was for the Chief Commissioner to be provided with professional legal services relating to proceedings that were then on foot. Section 119 of the Evidence Act applies to the entirety of these documents.
22. Emails 45 and 46 are identical to each other. The three uppermost communications in each of them (those that were created later than the communication sent on 3 December 2020 at 10:33 AM - in other words, those that comprise the bulk of pages 179 and 183 respectively) cannot possibly have been created for either of the relevant purposes in s 118 or 119 of the Evidence Act. Those communications are severable from the remainder of each of the documents and should be made available to the Applicant.
23. All but the uppermost communication in Email 47 is contained in each of Emails 38 to 44. That uppermost communication has the same character as the communications in Emails 38 to 44 and, like them, was created for the dominant purpose of enabling the Chief Commissioner to be provided with professional legal services relating to proceedings that were then on foot. Section 119 of the Evidence Act applies to Email 47.

Additional observations

1. It is appropriate for me to add some comments about the differing views of the parties as reflected in the Joint Statement.
2. First, as regards the Applicant's view expressed in [17]-[18] of the Joint Statement ([16] of these reasons), I consider the reference to the Chief Commissioner's 'statutory duty' to be something of a distraction. Even accepting, for the sake of the argument, that the statutory duty is of 'paramount importance', if the dominant purpose of the creation of the document is for one of the matters specified in the Evidence Act, then that is the end of the enquiry. In other words, the paramountcy of the duty cannot have the effect of displacing the objectively determined dominant purpose.
3. Secondly, even if the proposition put in [29] of the Joint Statement is correct, it has no relevance here since in each case the email was privileged as at the time it was first created.

Orders

1. The Tribunal makes the following orders: 1. With the exception of the documents or parts of documents listed in Order (2), the documents produced by the Respondent in response to the summons dated 12 January 2021 are privileged documents (NCAT Act, s 67) and the Applicant is denied access to them. 2. The following documents or parts of documents are not privileged: 1. Email 6; 2. The three communications included in Email 10, and comprising the bulk of page 51 of the bundle; 3. Email 11; 4. Email 25; 5. Email 33; 6. Email 36; and 7. The three uppermost communications in each of Emails 45 and 46 (created later than the communication sent on 3 December 2020 at 10:33 AM, and comprising the bulk of pages 179 and 183 respectively of the bundle). The Tribunal also notes that Email 26 is not caught by the summons. 1. The Tribunal allows the Respondent a period of 14 days from the date of publication of these reasons to raise any further grounds of objection with respect to the summons dated 12 January 2021. 2. Unless the Respondent raises any further grounds of objection in accordance with Order (3), then upon the expiry of the 14 day period specified in that Order: 1. The Tribunal grants the Applicant access to the documents or parts of documents specified in paragraphs (a) to (g) of Order (2); 2. To give effect to Order (4)(a), the Respondent is to compile two copies of an additional bundle of documents, each comprising a copy of each of Emails 11 and 36, and a redacted version of each of Emails 10, 45 and 46 (so as to preserve the privileged nature of the remainder of those documents). One copy of this additional bundle is to be provided to the Tribunal for its file, and the second copy is to be provided to the Applicant. 1. The matter is to be listed for further directions at the earliest opportunity, having regard to the matters specified in Orders (3) and (4). (Registry to note: Directions hearing to be conducted by Senior Member Frost if the Respondent raises further grounds of objection in accordance with Order (3); otherwise the matter may be dealt with in the Revenue Directions list.)

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 17 June 2021