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23 Jul 2014
Appeal Status
Not appealed

Privilege for in-house legal advice not waived

2014 case note - High Court found that advice provided to the CIR by an in-house lawyer was privileged and privilege had not been waived by the CIR.

Accountants First Limited v Commissioner of Inland Revenue [2014] NZHC 1723


The High Court dismissed the application. The Court found that advice provided to the Commissioner of Inland Revenue ("the Commissioner") by an in-house lawyer was privileged. Privilege in the legal advice had not been waived by the Commissioner.

Impact of decision

The advice of in-house lawyers attracts privilege in the normal way and will be upheld if they are not involved in the executive function. The court will be reluctant to go behind a lawyer who provides evidence that they were giving legal advice in the course of providing professional legal services.

Waiver in terms of section 65(3)(a) of the Evidence Act 2006 will only occur if the legal advice is put into issue in the proceeding. It is well established that this requires both asserting reliance on the advice, as well as injecting the substance of the advice into evidence. A bare reference to legal advice will be insufficient to amount to a waiver of privilege.


This decision relates to an interlocutory application brought by the applicant ("Accountants First Ltd") challenging the Commissioner's claim of legal professional privilege for advice provided by an in-house lawyer employed by the Commissioner.

The substantive matter is a judicial review. The applicant is a tax agent. Along with its principal, Mr Imran Kamal, the applicant was convicted of tax evasion under the Tax Administration Act 1994 ("TAA"). Consequently, a decision was made by the Commissioner under section 34B of the TAA to remove the applicant from the list of tax agents. The applicant is seeking judicial review of that decision.


The Court found that the lawyer's role in the process leading to the decision to cancel the applicant's standing as a tax agent did not compromise his status within the process as an independent legal adviser. The legal advice in issue was given in direct response to a request for legal advice and the circumstances did not undermine the subsequent claim of privilege. There was no strength to the allegation of waiver.

Legal advice

In Martinovich v Commissioner of Inland Revenue [2014] NZHC 1357 at [29], Fogarty J asked whether the in-house provider of advice was:

  • A lawyer on the Commissioner's staff who is a decision maker, exercising a delegated power to decide and thus performing an executive function, on the one hand, [or] a lawyer giving legal advice to a decision maker.

The applicant submitted the lawyer in question was so involved in the decision-making process that led to the removal of the applicant's tax agent status that his advice documents did not attract legal privilege.

Privilege was claimed over two documents. The first was advice given by email following a request on 8 August 2013 for legal advice in relation to the applicant's matter from the manager of the Community Compliance Unit of the Customer Services Group.

The second document was created eight days later. Another official involved in the process asked the lawyer for a copy of the legal advice and for further legal advice on the matter. This was provided by email.

The Court found that the circumstances supported the claim of privilege. The lawyer was employed to give internal legal advice. The lawyer described the request as being legal advice and the Court saw no reason to go behind that.

Further, the Court found the fact that the lawyer later authored a document within the process that did not attract privilege did not undermine the character of the advice given a month earlier.

The Court also noted that the lawyer was not in any sense the decision maker. His advice may be an important part in the process, but as noted in Miller v CIR (1997) 18 NZTC 13,001 at 13,020, that did not rob it of its privileged status.


The Court found there was nothing in this argument. The decision maker prepared an affidavit for the purposes of the judicial review proceeding in which she identified the documents that she had, and which she considered in reaching her decision. That was the only reference to the legal advice. The decision maker did not claim to have specifically relied on the advice, to have found it influential, nor did she seek to write the contents of the advice into her affidavit.

The Court held that it was well established that mere reference to a document does not threaten privilege, and that was the case here. While the limits inherent in judicial review, for example no cross-examination, mean the obligation of candour is strong, it does not mean that privilege did not apply or that there was something wrong in claiming it.

Evidence Act 2006