Chan v Chief Commissioner of State Revenue [2021] NSWCATAD 170

Background

The Respondent assessed the Applicant for surcharge land tax for the 2017, 2018 and 2019 land tax years. Objections against the assessments were disallowed and the Applicant subsequently applied to the Tribunal for review of the assessments.

The proceedings settled prior to hearing, with the Respondent agreeing to revoke the assessments for the 2018 and 2019 land tax years and issue new assessments that applied the exemption to surcharge land tax under s. 5B of the Land Tax Act 1956 (“LT Act”)to one of the Applicant’s properties and the Applicant agreeing to withdraw her application for review of the 2017 land tax assessment.

The Applicant is seeking that the Respondent pay her costs of the proceedings, claiming the Respondent should have accepted much earlier that the assessments for 2018 and 2019 were wrong and that the delay in revoking the assessments constitutes “special circumstances” under s. 60(2) of the Civil and Administrative Tribunal Act 2014 (“CAT Act”).

In furtherance of the claim for costs, the Applicant caused a summons to be issued to the Respondent that sought production of the following documents (among others):

“Emails and other written communications between personnel engaged by or on behalf of the Respondent, or the Office of State Revenue, that were concerned in any way with:

1. the Respondent’s consideration of the Applicant’s application for an exemption from having to pay surcharge land tax in respect of her principal place of residence; and
2. the construction of s 5B Land Tax Act 1955 (NSW) asserted by the Applicant’s solicitor.”

The Respondent produced 47 emails and claimed that 43 of those emails were subject to client legal privilege (“Emails”).

The statutory framework

Section 67 of the CAT Act 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) Pt 3.10 of the Evidence Act 1995.

Part 3.10 of the Evidence Act includes ss. 118 and 119, which protect against the disclosure of confidential documents and confidential communications prepared or made for the dominant purpose of providing legal advice to the client (s. 118) 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 (s. 119).

Submissions

The Respondent objected to the disclosure of the Emails on the basis that they were subject to client legal privilege pursuant to s. 118 and/or s. 119 of the Evidence Act.

In respect of whether the Emails satisfied the dominant purpose test, the Applicant submitted that an Email may have been created in the course of and for the dominant purpose of the Respondent discharging the Respondent’s statutory duty in determining the Applicant’s claim for the exemption in s. 5B of the LT Act. Further, the Applicant submitted that the Respondent’s statutory duty is of paramount importance, that the Respondent is bound to discharge it and even if that discharge occurred in the course of litigation, the dominant purpose can still be the discharge of the Respondent's statutory duty.

The Respondent submitted that the Emails were created in relation to providing advice in connection with proceedings that were currently on foot and are privileged under s. 118 and/or s. 119 of the Evidence Act.

Decision

Senior Member Frost accepted that each Email was a “confidential communication” and then summarised the relevant test and principles for determining the “dominant purpose” issue in a client legal privilege claim at [14] as follows:

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.

Senior Member Frost held that 40 emails they were “created directly as a result of, and in response to, a confidential communication between a lawyer in the Crown Solicitor’s Office and one of the Chief Commissioner’s officers”, and that “[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”. As such s 119 applied. In making this decision, Senior Member Frost noted that even if it is accepted that the Chief Commissioner’s statutory duty is of paramount importance, “the paramountcy of the duty cannot have the effect of displacing the objectively determined dominant purpose” (at [43]).

For the remaining emails, Senior Member Frost held as follows:

• 1 email contained three separate communications between different officers of the Respondent, plus the entire email chain in one of the privileged Emails. Those three communications were made immediately after the creation of the privileged Email, but they are directed to internal matters rather than the actual proceedings between the parties and as such those three communications alone were not protected from disclosure.
• 1 email comprised internal communications providing information and comments between officers of the Respondent and should be made available to the Applicant.
• 1 email contained three communications that did not appear to have been created for either of the relevant purposes in ss. 118 or 119 and therefore should be made available to the Applicant.
• 2 emails (which were identical) contained 3 communications made after the date of the relevant communication to the Respondent’s solicitor and therefore could not possibly have been created for either of the relevant purposes under s 118 and s 119. Those 3 communications are severable from the remainder of each of the documents and should be made available to the Applicant.

Senior Member Frost also noted that privilege was no longer claimed over 3 emails, and 1 email was not caught by the Summons.

Orders

The Tribunal made orders in accordance with the above findings.

https://www.caselaw.nsw.gov.au/decision/17a11f19c6f1832ea815c397