“when a person obtains skilled legal advice about tax law from an accountant, as opposed to a lawyer”
“The law has been established for at least 150 years, since the time of Lord Brougham LC in 1833 in Greenough v Gaskell 1 M & K 98: subject to recognised exceptions, communications seeking professional legal advice, whether or not in connection with pending court proceedings, are absolutely and permanently privileged from disclosure even though, in consequence, the communications will not be available in court proceedings in which they might be important evidence.”
“To force from the party himself the production of communications made by him to professional men seems inconsistent with the possibility of an ignorant man safely resorting to professional advice, and can only be justified if the authority of decided cases warrants it. But no authority sanctions the much wider violation of professional confidence, and in circumstances wholly different, which would be involved in compelling counsel or attorneys or solicitors to disclose matters committed to them in their professional capacity, and which, but for their employment as professional men, they would not have become possessed of. As regards them, it does not appear that the protection is qualified by any reference to proceedings pending or in contemplation. If touching matters that come within the ordinary scope of professional employment, they receive a communication in their professional capacity, … or, which amounts to the same thing, if they commit to paper … matters which they know only through their professional relation to the client, they are not only justified in withholding such matters, but bound to withhold them, and will not be compelled to disclose the information or produce the papers in any Court of law or equity, either as party or as witness. If this protection were confined to cases where proceedings had commenced, the rule would exclude the most confidential, and it may be the most important of all communications — those made with a view of being prepared either for instituting or defending a suit, up to the instant that the process of the Court issued.” “… The protection would be insufficient, if it only included communications more or less connected with judicial proceedings; for a person oftentimes requires the aid of professional advice upon the subject of his rights and his liabilities, with no references to any particular litigation, and without any other reference to litigation generally than all human affairs have, in so far as every transaction may, by possibility, become the subject of judicial inquiry. …” “The foundation of this rule is not difficult to discover. It is not (as has sometimes been said) on account of any particular importance which the law attributes to the business of legal professors, or any particular disposition to afford them protection, though certainly it may not be very easy to discover why a like privilege has been refused to others, and especially to medical advisers. But it is out of regard to the interests of justice, which cannot be upholden, and to the administration of justice, which cannot go on, without the aid of men skilled in jurisprudence, in the practice of the Courts, and in those matters affecting rights and obligations which form the subject of all judicial proceedings. If the privilege did not exist at all, every one would be thrown upon his own legal resources; deprived of all professional assistance, a man would not venture to consult any skilful person, or would only dare to tell his counsellor half his case. If the privilege were confined to communications connected with suits begun, or intended, or expected, or apprehended, no one could safely adopt such precautions as might eventually render any proceedings successful, or all proceedings superfluous.”
“ … privilege springs essentially from the basic need of a man in civilised society to be able to turn to his lawyer for advice and help, and if proceedings begin, for representation; it springs no less from the advantages to a society which evolves complex law reaching into all the business affairs of persons, real and legal, that they should be able to know what they can do under the law, what is forbidden, where they must tread circumspectly, where they run risks.”
“ The professional privilege relied on is a well-known legal professional privilege, and that is conveniently summarised by Lord Watson in Lyell v Kennedy(1883) 9 AC 81 at 90, where he said: “ The general principle of law relating to the protection of communications between a client and his agent was very well stated by the late Vice Chancellor Kindersley in the case of Lawrence v Campbell. He says, “ the general principle is founded upon this, that the exigencies of mankind require that in matters of business which may lead to litigation men should be enabled to communicate freely with their professional advisers, and their communications should be held confidential and sacred, and that no one should have a right to their production. And again the learned Vice Chancellor observes, “ It is now necessary, as it formerly was, for the purpose of obtaining “ protection ” (the word is printed “ production” but he clearly ought to stand “ protection”) that communications should be made either during or relating to an actual or even to an expected litigation. It is sufficient if they pass as professional communications in a professional capacity””
“where legal advice is sought in confidence from a qualified legal adviser in his professional capacity, privilege may be claimed for the communications made for that purpose”
“A qualified legal adviser is one who is officially recognised by the competent authorities in this country, or a foreign state, as being a member of a profession of persons fit to advise on the branch of law in respect of which the said advice is sought.” --------------- Mr Prescott's submissions are, I think, essentially these: In view of the developments that have been made in the status and practice of patent agents (1) within certain fields of law, including the law of industrial copyright, a patent agent is, in modern circumstances, to be regarded as a legal adviser within the common law exemption; alternatively; (2) in line with the course adopted by the House of Lords, in D v National Society for the Prevention of Cruelty to Children[1978] AC 171 , the court should extend the privilege if hitherto limited to solicitors, counsel and foreign lawyers to cover patent agents. [ He then briefly sets out the history of the development in the status of patent agents ] Since 1919, therefore, no person can practice as a patent agent unless he is registered as such - and to be registered, he has to pass examinations, including examinations on certain aspects of law. In 1932 the Patents Appeal Tribunal was created, and patent agents had the right of audience before the Patents Appeal Tribunal as in the Patent Office. Then, in 1968, by the Civil Evidence Act of that year section 15 (to which I will have to refer in greater detail later), statutory privilege was given to certain communications for the purposes of certain proceedings under the Patents Act. That privilege was confirmed and extended by thePatents Act 1977 , and inasmuch as, by the latter Act, the Patents Appeal Tribunal was abolished, and appeal from the Patent Office was made to lie to the Patents Court, which was a branch of the High Court. Patent agents were given the right of audience in the High Court on appeals from the Patent Office. They also have rights to act as European patent attorneys though, as this case has no special European element, I do not need to explore that further. The examinations which the would-be patent agent has to pass include, in the aspects of law covered, not merely patent law but registered designs, trademarks and industrial copyright. The patent agent has, in addition to the right of audience in the Patents Office and formerly the Patents Appeal Tribunal (and now in the Patents Court) the right of access to counsel direct without the intervention of a solicitor, and it is understandable that a patent agent with access to the register, will often be asked, by an inventor, to consider whether a particular invention can be safely proceeded with. In answering that he will, if he is conscientious and has an adequate knowledge of law, not merely search the register to find out if there is any prior patent which the invention would infringe, but also warn his client, at least, of other possible risks under the law of copyright or registered designs. It is important, however, to bear in mind that there are many other circumstances in which a person may seek or obtain advice on a point of law from someone who is not a solicitor or barrister in this country or a foreign lawyer. For instance, a trade mark agent may often be asked to give, or will give, advice on matters of trade mark law. A trademark agent has the right of audience in proceedings in the Trade Mark Registry, and also he has direct access to counsel without the intervention of solicitors in matters of trade mark law. There is, however no statutory registry of trade mark agents, and no detailed provision as to their qualifications. In the next place accountants may very often be asked by clients to give advice on tax matters or on matters of company law, and there are many people who would regard an accountant as better qualified than a solicitor to give advice on tax matters. There is no statutory Register of accountants; there is no statutory qualification they must have before they can style themselves "accountant." They may be members of the Institute of Chartered Accountants, but they do not have to be. They have the right of audience, on Tax Appeals before the Commissioners, though not in the High Court. Architects, in the next place, may incidentally advise or be asked to advise on matters of planning or building law, or advise on a proposed building project or development. They have to be registered and cannot call themselves architects unless they are registered, and if registered they have to pass examinations to show their professional competence - but I do not think anyone would regard architects as a genus of lawyers. Then, finally, there are the more nebulous categories of people who style themselves "tax consultants" or "planning and design consultants." Mr Prescott would accept that all those categories are not covered by professional privilege for one reason or another, because they do not satisfy his test - there is no Register except for architects, and architects have never been recognised by the legislature as qualified to advise in law. But it emphasises the difficulty in drawing a line between barristers and solicitors, the recognised categories of legal advisers, and others. In point of fact, as I read Mr Prescott's definition, it does not help patent agents, because I do not see that Parliament has ever recognised patent agents as fit to advise on the law of industrial copyright, or to be concerned with copyright litigation. ------------------- Leaving aside, however, whether Mr Prescott fails by his own test, it seems to me that the position is that it is impossible to uphold an utterly wide test of privilege extending to any communication by the litigant with any person from whom he has sought, or happens to have received, advice on any point of law relevant to the litigation in question. It is far too wide, and the courts have never adopted such a wide approach. The narrow approach of the common law is to recognise certain types of person as being legal advisers, communications with whom matters of law are privileged. Besides barristers and solicitors, this, it seems from the old authorities, originally also included scriveners and doctors of the civil law practising in Doctors’ Commons and Proctors in the Ecclesiastical Courts - whether or not they were solicitors. But those were regarded as varieties of lawyer. I do not regard the patent agent as a variety of lawyer, and I take the view that the patent agent is not within the common law privilege. As to the extension of the privilege by analogy, Mr Prescott's first difficulty is that Parliament has intervened by theCivil Evidence Act 1968, section 15 , which I have mentioned [ and he sets this out] ----------------- It is conceded - and indeed, it is obvious from the wording of the section - that what passed between these defendants and their patent agents is not remotely within the area of privilege described by the section. But it seems to me that it would be quite impossible for this court, in the face of that limited grant of privilege by Parliament, to hold that there exists a much wider, general privilege covering the advice of patent agents to their clients on matters of law - not even limited to matters arising under the Patents Act. Moreover, if the court is to declare that a privilege is to be established by analogy, there must be a clear indication that the public interest so requires. I can see no such indication in the present case; in particular, no such indication which would warrant extending the general privilege to patent agents, but denying it to members of other professions, not being barristers or solicitors, who happen to give advice to their clients on matters of law. [ He then goes on to deal with matters relating to a report of the Law Reform Committee on Privilege in Civil Proceedings and comments thereon in the House of Lords in D v National Society for the Prevention of Cruelty to Children]”
“ In my judgment, as Dillon LJ has already said, there are no grounds here of public policy for enlarging the privilege; indeed, in a case such as the present to which my Lord has already drawn attention, the onus of proof is on the defendants, and if there were any real need for altering the nature of the privilege, the court would not necessarily be in favour of enlarging it. The other matter which I regard as conclusive against the case put forward by Mr Prescott was the provision, in theCivil Evidence Act 1968 , which deals with this particular problem, because Mr Prescott had to argue before us that the court ought not to conclude that that provision did not limit the privilege of a patent agent. However, when one looks at the 16th Report of the Law Reform Committee it becomes absolutely clear, even if one wished to say otherwise, that that provision was conclusive because the Committee, as my Lord has pointed out, set out what the precise legal position was, without that provision.” “where legal advice is sought in confidence from a qualified legal adviser in his professional capacity, privilege may be claimed for the communications made for that purpose” “A qualified legal adviser is one who is officially recognised by the competent authorities in this country, or a foreign state, as being a member of a profession of persons fit to advise on the branch of law in respect of which the said advice is sought.”
“ The expression "legal professional privilege" is unhappy, because it falsely suggests a privilege enjoyed by the legal profession when in truth it is not the legal profession but the client who enjoys the privilege. It also suggests, surely wrongly, that a litigant in person is denied in preparing his litigation, the protection of secrecy which is enjoyed by a litigant who instructs a lawyer. The expression "litigation privilege," which has also and perhaps increasingly been used, avoids that objection but is itself open to the objection that it suggests a privilege pertaining to litigation, whereas it is clear that the privilege covers communications between the client and his agent and his professional legal adviser even when no litigation is pending or contemplated. ” and and (2) M & W Grazebrook Ltd v Wallens[1973] ICR 256 , where in relation to the predecessor of the industrial tribunal, which like Tribunals dealing with tax litigation is a statutory tribunal with rights of audience for non-lawyers with relevant expertise, Sir John Donaldson concluded that the communications between the client and his non-lawyer representative, and communications between that representative and third party witnesses, are privileged despite the fact that the representative may have no professional qualification. Sir John Donaldson gave these reasons at 259 B/C: “Before industrial tribunals it is the rule, rather than the exception, for parties to be represented by persons other than lawyers. Indeed, it is the policy of Parliament to encourage such representation. If the law to be applied to industrial tribunals were not as stated in the note in the county court rules [see p.258G: “Communications not only with legal advisers, but with other agents, with an actual view to the litigation in hand, and the mode of conduct of it, also are privileged”], the position would arise that, for example, a personnel officer, when examining as a witness a works foreman, could, at the end of the works foreman’s evidence, be called upon to hand over the proof of evidence from which he had been examining the witness. Obviously, that would be a wholly untenable situation.”
“As that citation shows it was pointed out it was not easy to discover why a like privilege had been refused to others and I would add that in the modern age it is not easy to see why the logic, purpose and public interest underlying the privilege when litigation is not contemplated supports the privilege in respect of communications with a lawyer but not, for example, an accountant on the same subject matter”
“This is the article on Information Powers and Legal Advice foreshadowed in Tax Bulletin Issue 41 (June 1999, page 676). Its purpose is to explain our view on the question of claims to professional or legal privilege which are sometimes made in response to requests for information. …” “… The same principles apply equally to advice provided by lawyers and that from tax advisers. References to ‘legal advice’ in this article should therefore be read as covering all tax advice whether or not it is given by lawyers.”
“As the preference is not to mention the declaration and payment of the dividend by PCAHL the “outline proposal” element of the note is brief and just details the intention to issue the warrants to SNC...Just a presentational point, we mention that the reason for the issue of the warrants is to facilitate the winding up of PCAHL, but we do not explain how the issue helps to achieve that – perhaps a point to gloss over... Please do NOT include reference to the dividend in the approvals note as that would give it an inevitability. As you know, Robin has let us have a copy of the proposed steps to effect the payment of the charge by PGL. Myself and David have had discussions to try and “put a little flesh on the bones” and as a result have numerous questions for PwC e.g. duration and terms of the warrant, are the Australian directors aware of the proposals, nature of the investment in the partnership – capital or debt-, does the partnership need a general partner, how does PCAHL reconcile the issue of the warrants which will include a provision that no dividends will be paid during the term of the warrant with the fact that it will propose to pay a dividend to PGL on the same day, etc, etc... ” (8) These extracts indicate that the contents of the final transactional documents may not include all the facts (the omission of reference to dividends in the approvals paper for example) and that the correspondence with the accountants (who are the scheme promoters) is not confined to advice on the taxation treatment. The accountants were closely involved in the arrangements for implementation of the scheme and sight of the documents sought is (or – in the words of the statutory test – may be) relevant to the tax liability or its amount. (9) The Special Commissioner’s decision on relevance was as follows: “The Officer considers that the true purpose of the transactions has been at least glossed over and that a decision to declare the dividend may already have been made. In the light of these e-mails I cannot accept [Prudential’s] contention that “HMRC has been provided with the key facts”