Case: Federal Commissioner of Taxation v Pratt Holdings Pty Ltd (2005) 225 ALR 266
Outcome: approved
AWB carries the onus of establishing that Exhibit 665 attracts legal professional privilege. In this Court, AWB has sought to discharge the onus by adducing evidence as to the circumstances in which the document was brought into existence and then communicated to others, by reference to the nature of the document itself, and by argument and submission. It has gone beyond, as it must, formulaic claims of the kind contained in Ms Peavey's affidavit: see Grant v Downs at 689 per Stephen, Mason and Murphy J; and Federal Commissioner of Taxation v Pratt Holdings Pty Ltd (2005) 225 ALR 266 (' FCT v Pratt Holdings' ) at 477 [30]. 107 The authorities accept that an appropriate starting point when applying the dominant purpose test is to ask what was the intended use or uses of the document which accounted for it being brought into existence: see Pratt Holdings Pty Ltd v Commissioner of Taxation [2004] FCAFC 122 ; (2004) 136 FCR 357 (' Pratt Holdings' ) at 366 [35] per Finn J. I would add that where the document is immediately communicated by its author to several other persons, including the author's legal adviser, by a circular email (which is the case here), it is also important to ask what was the dominant purpose of that email communication. 144 A traditional formulation of the second limb of legal professional privilege is that it applies to confidential communications passing between a client, the client's legal adviser and third parties for the dominant purpose of use in or in relation to litigation which is either pending or in contemplation: see FCT v Pratt Holdings at 284 [39] per Kenny J. This formulation was referred to, with apparent approval, by Finn J in the Full Court in Pratt Holdings at 360 [6]: see also Grant v Downs at 677 per Barwick CJ. 157 In Pratt Holdings , Stone J concluded that the High Court's exposition of legal professional privilege in Daniels , Esso and other cases demonstrates that it is supported by a single rationale which applies to both litigation privilege and legal advice privilege: at 381 [85]. Merkel J agreed with this conclusion. However, Stone J added that the existence of a single rationale does not mean that it is no longer necessary to have regard to the different categories of legal advice and litigation privilege. Finn J did not find it necessary to decide whether legal professional privilege should now be recognised as a unified doctrine which, though having two applications (ie advice and litigation), has a single rationale. His Honour regarded this controversy as a well recognised one and observed that, at an appropriate level of abstraction, a common and unifying rationale can be found for both manifestations of the privilege: at 361 [9]. 158 Legal professional privilege must be applied in a manner which is consistent with the policy reasons that justify its existence: see Pratt Holdings at 362 [18] and 367-368 [41]-[42] per Finn J, and 386 [105] per Stone J; and Three Rivers at 650 [35]. But this does not mean that the origins, and the distinctive scope and operation of the second limb of the privilege, are to be ignored. In my view, the authorities establish that the reason why litigation privilege has been recognised as a substantive rule of law and as a fundamental right, is that it operates to secure a fair civil or criminal trial within our adversarial system of justice. The rationale for litigation privilege does not support its extension to a commission of inquiry.