Legal professional privilege - how far is the scope?

On 17 March 2015, the Federal Court of Australia quashed a multi-million dollar tax assessment against Garry Donoghue by the Australian Tax Office, as the documents used to make the assessment were subject to legal professional privilege.

In this Alert, Senior Associate Stephanie Tan and Law Graduate Marc McCaughey discuss the wide-reaching scope of legal professional privilege and consider it in light of this recent decision.

Background

In January 2010 Simeon Moore, a law student at Bond University met Garry Donoghue, a businessman involved in a number of litigation disputes. Moore suggested that he could help Donoghue with the disputes and proceeded to provide Donoghue with advice, an arrangement that continued for the next 7 months. In August 2010, Moore issued an invoice to Donoghue for over $700,000 for the work he had provided. The presiding judge described this sum as "outrageously extortionate" and noted that if the entries on the invoice were accurate Moore must have worked "each and every hour of each and every day" for periods of up to 17 days straight.

The relationship between Moore and Donoghue quickly deteriorated. This culminated in Moore releasing all of the information he had gathered during the course of advising Donoghue to the Australian Tax Office (ATO). In December 2011 Donoghue was issued a tax assessment in excess of $30 million. Donoghue then brought proceedings in the Federal Court seeking to have the assessment declared invalid as it was formed using documents subject to legal professional privilege. On 17 March 2015 his application was successful and the tax assessment struck down. It should be noted that the ATO may appeal the decision.

Legal Professional Privilege

Legal professional privilege is a well-established legal right to have confidential communications between a lawyer and a client, for the dominant purpose of obtaining legal advice or the provision of legal services, protected from...