UK Case Re-examines Legal Privilege

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Downton Abbey… or the U.K. Supreme Court’s latest case on privilege law?

One of these will come up sometime soon at a social event.

“The public has the right to every person’s evidence,” said Supreme Court of  Canada Justice Ian Binnie in a 2010 ruling.  “That is the general rule.”

On Downton Abbey, will an important character be exonerated from a crime based on evidence that shows apparent innocence? A witness refuses to speak truthfully to someone investigating. A solicitor now has to make the next move … no, I won’t spoil it.

This week the U.K. Supreme Court decided that tax law advice provided by accountants is not covered by legal professional privilege. So the government and the court will have relevant evidence to use against the taxpayer. And tax law advice from a lawyer is privileged in the U.K., but the very same advice from an accountant is not.

The latest U.K. result may seem counterintuitive. Transnational accountancy firms offer extremely sophisticated tax advice and advocacy, and market their own tax planning “schemes” (like the one in the U.K. case).  Why differentiate between two groups of professionals?

Better still, if you’re not a tax professional or CFO, why should you pay any attention to a foreign court’s judgment on privilege and tax advice (let alone a law firm’s article on it)?

Now, I am not saying this is more interesting to most people than the goings-on at Downton Abbey.  But I do think privilege is one legal principle that actually matters to us all.

Lawyers fight about what evidence will be used at trial all the time, usually in pre-trial motions.  Privilege is often claimed to exclude relevant information, or even to obscure where information came from.

A couple of years ago investigative reporters from the National Post and The Globe & Mail newspapers tried to shield their sources from disclosure in court by claiming a “privilege” for journalists. In two of the numerous privilege cases over the past 25 years, the Supreme  Court of Canada decided that there was no such blanket exception to Justice Binnie’s general rule, but sometimes a source could remain completely confidential.

Rulings on privilege (and related law) affect our knowledge of what government, and specific people in it, are up to. The Globe case arose from journalists’ investigations into the so-called “sponsorship scandal”. The National Post case arose from bogus allegations against former Prime Minister Chrétien.

Privilege law goes beyond what people and companies do in their financial affairs, all the way to whether a person can speak openly, candidly and confidentially to his or her lawyer, a police officer, psychiatrist, physician, religious or spiritual counsellor, or tax accountant (not necessarily in that order) and to get confidential advice back from those people.

Canadian common law sometimes recognizes a “class” privilege that would exclude all communications from use or scrutiny by investigators, prosecutors, plaintiffs and courts. That protects and promotes the relationship in which the communication occurred.

At the same time, excluding relevant evidence distorts a fundamental purpose of the justice system: to find the truth. So usually a more flexible, case-by-case approach is taken. That is what happened when the journalists claimed privilege over communications with their “sources”.

The U.K. Supreme Court decided that the tax advice was not privileged, so that information will be available to revenue officials and the court.

Whether the Downton Abbey character will languish in jail for a crime he or she may not have committed, you’ll just have to watch and see.  Or raise it next time you’re out with friends.

Topics:  Accountants, EU, Legal Advice Privilege

Published In: Civil Procedure Updates, Tax Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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