A Company and Others v Commissioner, South African Revenue Service

• Jurisdiction: South Africa
• Citation: 2014 (4) SA 549 (WCC)

A Company and Others v Commissioner, South African Revenue Service
2014 (4) SA 549 (WCC)

2014 (4) SA p549

Citation	2014 (4) SA 549 (WCC)
Case No	16360/2013
Court	Western Cape Division, Cape Town
Judge	Binns-Ward J
Heard	February 13, 2014
Judgment	March 17, 2014
Counsel	MJ Fitzgerald SC (with AM Smalberger) for the applicants.; AR Sholto-Douglas SC (with M Blumberg) for the respondent.

Flynote : Sleutelwoorde B

Evidence — Privilege — Legal professional privilege — Legal advice privilege — Ambit — Extending to disclosure of actual communications between attorney and client in respect of seeking and giving legal advice, and such parts of documents from which such content may be inferred. C

Evidence — Privilege — Legal professional privilege — Legal advice privilege — Attorney's fee notes — Not privileged category of document per se — Privilege only extending to parts of fee notes disclosing content of privileged communications between attorney and client or from which such content may be inferred — Test to be applied whether, objectively, reference to legal advice disclosing content (and not only existence) of privileged material. D

Evidence — Privilege — Legal professional privilege — Legal advice privilege — Attorney's fee notes — Manner of asserting legal privilege — Incumbent on party claiming privilege to contextualise claim so as to facilitate determination of issue without court having to resort to private judicial inspection. E

Headnote : Kopnota

The applicants, three companies in a group of companies, had applied for a declaratory order that certain content of two fee notes (invoices) rendered by their attorneys to the first applicant (A Co) was subject to legal professional privilege, more particularly legal advice privilege. Copies of the invoices had been supplied to the Commissioner of the South African F Revenue Service (SARS) but the applicants had redacted what they considered subject to the claim of privilege. The application by the companies for declaratory relief had been brought in the context of the Commissioner's insistence on being provided with unexpurgated copies of the documents concerned. The applicants' replying affidavit clarified that the claim was not based on the documents per se being privileged but that 'certain of the contents of the disputed invoices [were] privileged, to the extent that they G set out the nature of the advice sought by the applicants from their attorneys and/or the advice given by those attorneys'.

The issue was whether the privilege claimed subsisted, ie whether the ambit of the legal professional privilege extended to the redacted parts of an otherwise unprivileged document that had been disclosed. However, since H disclosure of part of a privileged document may constitute an implied or imputed waiver of the whole, the court considered it appropriate to also decide whether a lawyers' fee note qualified by its nature and as a general rule as a privileged document. A further issue, which arose from the applicants' indication they would make uncensored copies of invoices available for inspection by the court at the hearing for purposes of a 'judicial peek', was the appropriate manner of asserting the claimed privilege. I

Held: As to the ambit of the privilege, the most relevant case law was all foreign. The line of English authority that appeared to cloak solicitors' fee notes with privilege as a blanket rule should not be followed. Applying the reasoning of a different line of English case law in the local context impelled the conclusion that fee notes were not amenable to any blanket rule that would characterise them as privileged communications per se: They were J

2014 (4) SA p550

A not created for the purpose of the giving of advice and were not ordinarily of a character that would justify it being said of them that they were directly related to the performance of the attorney's professional duties as legal adviser to the client. (Paragraphs [21], [28] and [30] at 561D, 565C and 567B – D.)

However, it was readily conceivable that attorneys' fee notes might contain B references to legal advice sought and given in the course of a narration of the services in respect of which the fees had been raised. Disclosure by reference (in a document which was not itself privileged) of the mere fact that advice had been sought or given did not give rise to any privilege. The matter in respect of which the privilege may be claimed was the actual C communications between the client and the lawyer involved in the seeking and giving of the advice, or references in documents that would disclose their content or from which their content might be inferred. Thus, where a fee note set out the substance of the privileged communications in respect of the seeking or giving of legal advice, or contained sufficient particularity of their substance to constitute secondary evidence thereof, those parts, but D not the document as a whole, would be amenable to the privilege. The test was whether, upon an objective assessment, the references disclose the content, and not just the existence, of the privileged material. (Paragraphs [31], [34] and [36] at 567F/G – I, 570F – G and 571C – D.)

The privilege should be asserted in such cases in precisely the manner that the applicants did — by redacting the information so as to disclose those parts of E the document that were not subject to the privilege and covering up those that were. A party asserting the legal professional privilege should generally be able to provide a rational justification for such claim without needing to disclose the content or substance of the matter in respect of which the privilege is claimed. Private judicial inspection of the content of allegedly privileged material is a practice which should be followed as a last resort. It F was incumbent on a party to contextualise the claim to privilege as far as possible so as to facilitate determination of the issue without a private judicial inspection, or at least to minimise the effect of the one-sided treatment of the issue that a private inspection necessarily occasioned. (Paragraphs [34], [38] and [39] at 570G – H, 572C/D and 572D – E.)

Cases Considered

Annotations

G Case law

Southern Africa

Lane and Another NNO v Magistrate, Wynberg 1997 (2) SA 869 (C): referred to

Lenz Township Co (Pty) Ltd v Munnick and Others 1959 (4) SA 567 (T): referred to

Mohamed v President of the Republic of South Africa and Others 2001 (2) SA 1145 (C): referred to

President of the Republic of South Africa v M & G Media Ltd 2011 (2) SA 1 (SCA) (2011 (4) BCLR 363): dictum in para [52] applied H

President of the Republic of South Africa and Others v M & G Media Ltd 2012 (2) SA 50 (CC): dictum in para [39] applied

S v Kearney 1964 (2) SA 495 (A): referred to

S v Safatsa and Others 1988 (1) SA 868 (A): dictum at 885 – 886 applied

South African Football Union and Others v President of the Republic of South Africa and Others I 1998 (4) SA 296 (T): referred to

2014 (4) SA p551

Thint (Pty) Ltd v National Director of Public Prosecutions and Others; A Zuma v National Director of Public Prosecutions and Others 2009 (1) SA 1 (CC) (2008 (2) SACR 421; 2008 (12) BCLR 1197; [2008] ZACC 13): dictum in para [184] applied

Van der Linde v Calitz 1967 (2) SA 239 (A): referred to.

Australia B

Baker v Campbell (1983) 49 ALR 385 ([1983] HCA 39; (1983) 153 CLR 52; 57 ALJR 749): dictum in para [24] applied

Pratt Holdings Pty Ltd v Commissioners of Taxation (2004) 207 ALR: dictum in para [20] considered.

England C

AM & S Europe Ltd v Commission of the European Communities [1983] 3 WLR 17 ([1983] QB 878; [1982] ECR 1575; [1983] 1 All ER 705): applied

Balabel and Another v Air India [1988] Ch 317 ([1988] 2 All ER 246 (CA)): dicta at 249 and 254 – 256 applied

Chant v Brown (1852) 9 Hare 790: doubted D

Dickinson (t/a John Dickinson Equipment Finance) v Rushmer (t/a FJ Associates) [2002] 1 Costs LR 128 (Ch D): doubted

Financial Services Compensation Scheme Ltd v Abbey National Treasury Services plc [2007] EWHC 2868 (Ch): dictum in paras [16] – [18] applied

GE Capital Corporate Finance v Bankers Trust Company [1995] 1 WLR 172 (CA) ([1995] 2 All ER 993): considered E

Galadari's Receivers v Zealcastle Ltd (6 October 1986) (unreported): applied

Hellenic Mutual War Risks Association (Bermuda) Ltd and General Contractors Importing and Services Enterprises v Harrison (The 'Sagheera') [1997] 1 Lloyd's Rep 160 (QB): doubted

International Business Machines Corp and Another v Phoenix International (Computers) Ltd F [1995] 1 All ER 413 (Ch D): doubted

Minter v Priest [1930] AC 558: applied

Three Rivers District Council & Ors v Bank of England (No 6) [2004] UKHL 48 ([2004] 3 WLR 1274; [2005] 1 AC 610): dicta in paras [10] and [111] applied

Turton v Barber (1874) LR 17 Eq 329: doubted. G

New Zealand

Kupe Group v Seamar Holdings [1993] 3 NZLR 209: referred to

Re Merit Finance and Investment Group Ltd [1993] 1 NZLR 152: dictum at 158 – 159 applied.

United States H

Clarke v American Commerce National Bank 974 F 2d 127 (9th Cir 1992): applied

Hampton Police Association, Inc v Town of Hampton 20 A 3d 994 (2011) (162 NH 7): referred to

In re Grand Jury Witness (Salas and Waxman) 695 F 2d 359 (9th Cir 1982): I applied

Levy v Senate of Pennsylvania 65 A 3d 361 (2013): referred to.

Case Information

MJ Fitzgerald SC (with AM Smalberger) for the applicants.

AR Sholto-Douglas SC (with M Blumberg) for the respondent. J

2014 (4) SA p552

A An application for a declaratory order.

Order

1.

The application by the respondent to compel compliance by the applicants with the notice given in terms of rule 35(12) is dismissed.

2.

B It is declared that the following portions of the applicants' attorneys' tax...