FEDERAL COURT OF AUSTRALIA

Song v Commissioner of Taxation [2018] FCA 840

ORDERS

THE COURT ORDERS THAT:

1.    The parties provide minutes of proposed orders giving effect to these reasons within 7 days.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

DAVIES J:

1    The applicant has made a claim of legal professional privilege over a number of documents that the respondent (“the Commissioner”) obtained from the applicant’s premises pursuant to the Commissioner’s access powers under s 353-15 of Schedule 1 to the Taxation Administration Act 1953 (Cth). The Commissioner’s access powers were used in connection with an audit of the individual taxation affairs of the applicant, her husband and her son and companies with which they are associated. A schedule of the documents over which legal professional privilege is claimed has been prepared which identifies the privilege holder and the basis of the privilege claim which, in each instance, is under the legal advice head of privilege. There are 23 primary documents, being original emails, emails forwarding chains of emails and attachments as described in the schedule. The schedule also identifies the basis of the Commissioner’s comments on the privilege claims.

2    The privilege claimants are:

(a)    the applicant in her personal capacity and in her capacity as a director of Soma (Aust.) International Pty Ltd (“Soma”), Dynasty International Australia Pty Ltd (“Dynasty”) and Lyu Song Investments Pty Ltd (“Lyu Song Investments”);

(b)    Mrs Ting Ding Wang (“Mrs Wang”); and

(c)    Henan Prosper Skin and Leather Co. Ltd (“Henan Prosper”).

3    In support of those claims, the applicant has filed an affidavit in support and also relies on the affidavit evidence of Xingai (Julia) Song (“Julia Song”), the chief financial officer of Henan Prosper and Man Yau Frank Ng (“Mr Ng”), the principal lawyer in the firm of APAC Legal. There is also an affidavit of Kaitlin Pippi Lowdon, a solicitor employed by the solicitors for the applicant, which annexes translations of the documents in question (which are in Chinese language), and an affidavit of Simon John Dollard, also a lawyer employed by the solicitors for the applicant who exhibited to his affidavit a copy of the current Law of the People’s Republic of China on Lawyers from the Supreme People’s Court of the People’s Republic of China website and a copy of the Lawyers Law of the People’s Republic of China effective 1 January 1997, downloaded from the website of the Congressional-Executive Commission on China created by the United States Congress in October 2000.

4    The legal advisers to whom, or from whom, the communications are claimed to attract legal professional privilege in the documents in question are:

(a)    Mr Ng from APAC Legal (an Australian law firm);

(b)    Joseph Jinping Wang (“Joseph Wang”), legal affairs manager of Henan Prosper;

(c)    Pengeng (Ajax) Xue (“Ajax Xue”) and Arno Erhu Liu, corporate legal staff of Henan Prosper;

(d)    Mr Li, a lawyer from Henan Gia Tai (a law firm);

(e)    Austin Zhang of the law firm of Mossack Fonseca & Co (“Mossack Fonseca”), based in Shenzhen, China and various named staff said to have been working under his supervision; and

(f)    the Hong Kong law firm, Tonis Group Limited.

5    The parties were not in dispute about the general principles which govern legal advice privilege. In AWB Ltd v Cole (No. 5) (2006) 155 FCR 30 at [44] there is a helpful summary of the principles which, relevantly, include the following matters:

(a)    for a communication between a lawyer and his or her client to qualify for advice privilege the communication must be confidential, the legal adviser must be acting in his or her professional capacity and the communication made, or the document brought into existence, for the dominant purpose of giving or obtaining legal advice;

(b)    the party claiming privilege carries the onus of proving that the dominant purpose that led to the making of the confidential communications was to enable the legal adviser to give, or the client to receive, legal advice;

(c)    the purpose for which a document is brought into existence is a question of fact that must be determined objectively. Evidence as to purpose from the maker of the document or the person who authorised or sought it may be received but is not conclusive;

(d)    the existence of legal professional privilege is not established merely by the assertion that privilege applies or that communications were undertaken for the purpose of obtaining or giving legal advice;

(e)    in the ordinary case, where the communications take place between a client and his or her independent legal advisers or between a client’s in-house lawyers and those legal advisers, proof of those facts alone will provide a sufficient basis for a conclusion that legitimate legal advice is being sought or given;

(f)    the concept of legal advice is of broad compass and includes all communications relating to, and arising from, the normal lawyer-client relationship involving the provision of legal advice or legal services, but does not extend to advice that is purely commercial or of a public relations character;

(g)    legal professional privilege is capable of attaching to communications between a salaried legal adviser and his or her employer provided that the legal adviser is consulted in a professional capacity in relation to a professional matter and the communications are made in confidence and arise from the relationship of lawyer and client;

(h)    in the absence of a formal or express retainer, the existence of all lawyer-client relationships can be implied or inferred; and

(i)    the Court has power to examine documents over which legal professional privilege is claimed and, where there is a disputed claim, the Court should not be hesitant to exercise such a power.

6    The following other principles are also relevant in the present case:

(a)    legal professional privilege extends to communications between a party and the party’s professional legal adviser, if confidential and made to or by the adviser in his or her professional capacity and with a view to obtaining or giving legal advice or assistance, even if the communications are made through agents of the party and the solicitor or either of them: see Wheeler v Le Marchant (1881) 17 Ch D 675; Trade Practices Commission v Sterling  (1979) 36 FLR 244 at 2;

(b)    a confidential communication prepared by a third party, or prepared by the client and provided to a third party, will attract privilege (regardless of that party’s relationship with the client) provided that the communication was prepared and made with the dominant purpose of the client seeking and obtaining legal advice from the client’s lawyer: Pratt Holdings Pty Ltd v Commissioner of Taxation (2004) 136 FCR 357;

(c)    where information is passed by the lawyer or client to the other as part of a continuum aimed at keeping both informed so that advice may be sought and given as required, privilege will attach: Balabel and Another v Air India (1988) Ch 317 at 330;

(d)    legal professional privilege attaches to communications between a client and his or her foreign lawyers: Kennedy v Wallace (2004) 142 FCR 185 at [62], [198]-[215]; and

(e)    legal professional privilege does not apply to a lawyer-client communication where legal assistance has been sought in furtherance of a crime or fraud: The Attorney-General for the Northern Territory of Australia v Kearney (1985) 158 CLR 500; Commissioner of Australian Federal Police and Another v Propend Finance Pty Limited and Others (1997) 188 CLR 501; Lock, in the matter of Cedenco JV of Australia Pty Ltd (in liq) [2017] FCA 1306 at [86].

7    It was submitted for the applicant that the Court could decide the privilege claims in favour of the applicant on the evidence without looking at the documents. It became apparent, however, that the privilege claims in respect of some of the documents could not be determined without an examination of those documents. In the end I examined all of the documents.

8    In summary, the privilege claims raise the following matters for consideration:

(a)    whether the applicant has established that the communications were undertaken, or the documents brought into existence, for the dominant purpose of giving or obtaining legal advice;

(b)    whether, insofar as the communications were made through a third party, the third party was an agent of the applicant for the purposes of communicating with the lawyer to obtain or receive the advice; and

(c)    whether, insofar as the legal advice was given by, or sought from, a foreign lawyer, the applicant has established that the person from whom the advice was sought, or was given, is a qualified lawyer and the advice was provided or sought from that person in that capacity.

9    Although the Commissioner’s written submissions addressed the principle that legal professional privilege does not apply to a lawyer-client communication where legal assistance has been sought in furtherance of a crime or fraud, such a consideration does not bear upon the privilege claims made in this case. Not only was there nothing in the evidence to provide any foundation for the Commissioner to make a submission that the exception may apply in this case, the Commissioner did not even suggest a basis for considering that the exception may have relevance in the present case. It is not for the Court to trawl through the documents to identify for itself whether there may be a basis for the exception to apply and the submission was advanced without any proper basis for putting it forward.

The legal professional privilege claims on behalf of Soma

10    These claims apply to documents 6 and 9.

11    The applicant is a director of Soma which owns a commercial investment property at Unit 22, 792-806 Heatherton Road, Springvale (“the Heatherton Road property”). The applicant gave evidence that Mr Ng of APAC Legal provided legal services to Soma in late 2013 in relation to the grant of a lease to a new tenant (“the new lease”) and a lease dispute that developed with the lessee in 2013-2014. The applicant deposed that she authorised Mr Ng to communicate directly with the property manager, Ms Michelle Varney of Wealth Commercial Property Services, in relation to those matters.

12    Document 6 was described by the applicant as an email dated 3 March 2014 from Mr Ng to Ms Varney and to another APAC Legal lawyer who assisted Mr Ng with the lease dispute. The email was also copied to the applicant, as well as to Ms Su, another Soma director, and to various other APAC Legal staff. The email subject is “140303 re: lease at Unit 22, 792-806 Heatherton Road”. The applicant deposed that the email contains legal advice from Mr Ng in relation to the lease dispute and forwards a chain of earlier correspondence said to convey or contain instructions from Ms Varney in relation to the lease dispute and/or the new lease. Inspection of document 6 and the email chain of earlier correspondence discloses that the description of the contents given by the applicant is accurate.

13    Document 9 was described by the applicant as an email from Mr Ng to her and to Ms Su dated 26 November 2013 with the subject matter “Your Heatherton Land” and contained a request for instructions and advice in relation to the Heatherton Road property.

14    Legal professional privilege was claimed in respect of documents 6 and 9 on the basis that both documents were:

Created for the dominant purpose of providing legal advice and legal services to client in relation to the Heatherton Road property.

Document 6

15    Although the Commissioner challenged the privilege claim on document 6, he put no submission as to why the privilege claim was not made out. An inspection of the document confirmed the description of the document in the evidence and I am satisfied that document 6 is protected by legal professional privilege.

Document 9

16    In relation to document 9, the Commissioner argued that the applicant’s evidence was insufficient to find a conclusion that privilege attached to the document as the evidence did not make clear whether the request for instructions in the advice was referrable to the retainer earlier mentioned by the applicant in her evidence. An inspection of the document confirms that Mr Ng’s communication to the applicant was part of a continuum of communications between the applicant and Ms Su on behalf of Soma and Mr Ng in relation to matters relating to the Heatherton Road property. In Balabel v Air India at 330 Taylor LJ said:

Privilege obviously attaches to a document conveying legal advice from solicitor to client and to a specific request from the client for such advice. But it does not follow that all other communications between them lack privilege. In most solicitor and client relationships, especially where a transaction involves protracted dealings, advice may be required or appropriate on matters great or small at various stages. There will be a continuum of communication and meetings between the solicitor and client. The negotiations for a lease such as occurred in the present case are only one example. Where information is passed by the solicitor or client to the other as part of the continuum aimed at keeping both informed so that advice may be sought and given as required, privilege will attach. A letter from the client containing information may end with such words as “please advise me what I should do.” But, even if it does not, there will usually be implied in the relationship an overall expectation that the solicitor will at each stage, whether asked specifically or not, tender appropriate advice. Moreover, legal advice is not confined to telling the client the law; it must include advice as to what should prudently and sensibly be done in the relevant legal context.

Document 9 satisfies this test as the advice that was given is such that the client would reasonably expect to be given that advice: see also Brookfield Multiplex Ltd v International Litigation Funding Partners Pty Ltd (No 2) (2009) 180 FCR 1 at [21].

17    I am satisfied that document 9 is protected by legal professional privilege.

The legal professional privilege claims on behalf of Dynasty

18    The evidence concerning these claims was as follows.

19    Dynasty is engaged in a business of importing and exporting raw sheep skins and related products for use in garment and shoe manufacturing. The applicant and Jian Ying (Harry) Shi (“Harry Shi”) are, and since January 1998 have been, the directors of Dynasty. The applicant owns all its ordinary class shares.

20    Henan Prosper is one of Dynasty’s customers in China. Henan Prosper is an importer, tanner and exporter of sheep and lamb skins and related products. The applicant’s husband, Hui (Michael) Lyu, is a director of Henan Prosper and Julia Song is Henan Prosper’s Chief Financial Officer.

21    The applicant deposed that because of Dynasty’s business relationship with Henan Prosper and her personal relationships with its directors, she has from time to time sought advice and assistance from Henan Prosper staff on legal and commercial issues concerning Dynasty’s China operations. Julia Song similarly gave evidence that Dynasty has a substantial business relationship with Henan Prosper and that over the years she and other Henan Prosper staff have assisted the applicant with legal and business issues in relation to Dynasty. The applicant and Julia Song both deposed to the confidentiality of those communications.

22    Henan Prosper has an in-house legal department and documents 15, 7, 8, 16 and 58 are all claimed to contain confidential communications from Henan Prosper’s in-house legal staff to the applicant/Dynasty or from the applicant/Dynasty to Henan Prosper’s in-house legal staff, either directly or via agents of one or both parties, for the dominant purpose of giving or obtaining legal advice. There were three in-house legal staff involved in those communications – Joseph Wang, Ajax Xue and Arno Erhu Liu.

23    The evidence of Julia Song was that Joseph Wang was qualified under Chinese law to practise as a lawyer and was the head of the Henan Prosper legal department from May 2013 to September 2017. She exhibited Henan Prosper’s employment record of Joseph Wang, which showed that prior to his employment as head of the Henan Prosper legal department, he was employed by “Jiangxi Kangrun/Shenzhen Kangshun Law Firm” in a position described as “Lawyer” for approximately seven years.

24    Julia Song described Ajax Xue and Arno Erhu Liu as “corporate legal staff” working under the supervision of Joseph Wang. Ajax Xue was said also to be a member of the human resources staff reporting to the Deputy General Manager, Operations (Cheng Ma (Mark)). Their employment records with Henan Prosper were also in evidence. Ajax Xue’s employment record showed that he completed a diploma in law in 2007 and a bachelor’s degree in law/law juris in 2009 and that he was employed as a legal officer at Henan Prosper between December 2012 and December 2013. Arno Erhu Liu’s employment record showed that he completed a bachelor’s degree in law in 2012 and that he was employed as a legal officer at Henan Prosper between March 2014 and June 2017. His prior employment was shown to include work as a law clerk in a law firm.

25    The Commissioner contended that the evidence did not establish that the legal staff had the requisite qualifications and independence for their communications to constitute legal advice by a qualified lawyer that would attract privilege. The Commissioner pointed to the fact that according to Joseph Wang’s employment record at Henan Prosper he held a bachelor’s degree and master’s degree in English literature. There was no record of him holding a degree in law and no formal evidence that he held a lawyer’s practice certificate. The Commissioner similarly argued that there was no evidence that Ajax Xue and Arno Erhu Liu were admitted to practice.

26    I am prepared to accept the evidence of Julia Song that Joseph Wang was a qualified lawyer at the time he was head of the Henan Prosper legal department. I regard Julia Song’s evidence that he qualified under Chinese law to practise as a lawyer as carrying more weight than his employment record about his tertiary qualifications. It seems to me that her evidence can be accepted as reliable in view of Joseph Wang’s appointment as the head of Henan Prosper’s legal department, his prior employment record as a lawyer and Julia Song’s evidence that Joseph Wang had represented Henan Prosper in court. It may reasonably be inferred that he had the right to represent Henan Prosper in his professional capacity as a lawyer.

27    Whilst there was no evidence that Ajax Xue and Arno Erhu Liu were admitted to practice, the evidence is that both of them had law degrees and they worked in the in-house legal department at Henan Prosper. This is not the kind of case where the circumstances raise the question as to whether either of them was a lawyer at all: Kennedy v Wallace at [204]. However, their position is different to Joseph Wang in that there was no evidence that they were qualified under Chinese law to practise as lawyers. Lack of proof that they held a lawyer’s practice certificate is not of itself fatal to establishing that privilege attached to their communications. Privilege can attach to communications by employee legal advisers working under the supervision of a qualified lawyer, provided the communications arose in the course of a professional relationship of lawyer/client and the legal adviser is consulted in that professional capacity. The evidence was that Ajax Xue worked under the supervision of Joseph Wang, whom I have accepted was a qualified lawyer and although there was no specific evidence about Arno Erhu Liu working under the supervision of Joseph Wang, I am prepared to draw that inference given that he was employed in the legal department and Joseph Wang was head of the department.

28    I turn now to the documents.

Misappropriated funds issue

29    The claim of privilege attaching to documents 15, 7, 8 and 16 is that the documents were created for the dominant purpose of providing legal advice to the client in relation to the “misappropriated funds issue”.

30    The applicant deposed that in around 2013, funds transferred electronically by Dynasty to Hebei Zhaoxin Fur Products Company Limited (“Hebei Zhaoxin”), a Chinese fur company, were misappropriated. In her capacity as a director of Dynasty she sought assistance from “several Henan Prosper staff” in relation to the misappropriated funds issue. Those persons were said to have included Julia Song and Ajax Xue.

Document 15

31    Document 15 was described by the applicant as an email from Ajax Xue to the applicant and Julia Song dated 16 January 2013, copied to Harry Shi (the other Dynasty director). The applicant deposed that the email concerns legal advice provided by Ajax Xue in relation to the misappropriated funds issue and forwards two earlier emails, one of which was said to contain legal advice from Ajax Xue in relation to the misappropriated funds issue and the other which was said to be correspondence from the applicant to Julia Song forwarding background correspondence between Dynasty and Hebei Zhaoxin in relation to the misappropriated funds issue. The applicant deposed that this correspondence was provided by her to enable Julia Song to seek legal advice on Dynasty’s behalf in relation to the misappropriated funds issue.

32    The Commissioner’s comments on the privilege claim were that:

The privilege claim depends upon establishing that:

•    Ajax Xue was a lawyer at the relevant time. There was no evidence of his admission as a lawyer, or that he was bound by professional duties or had the requisite quality of independence from his employer; and

•    advice was being sought from/given by Ajax Xue in his professional capacity as a lawyer (and not in his separate capacity as a member of Henan Prosper’s management staff).

There was no evidence that Ajax Xue, if qualified, acted in a professional capacity in respect of advice provided to Dynasty. There is no evidence of a relationship between the corporate legal staff of Henan Prosper and Dynasty which would involve the duties inherent in a lawyer’s retainer. Ordinarily the duties of corporate legal staff are owed to their employer. This is inconsistent with a lawyer-client relationship with an entity outside of that relationship.

33    I am satisfied that document 15 is protected by legal professional privilege.

34    First, inspection of document 15 and the email chain of earlier correspondence discloses that the description of the contents given by the applicant is accurate.

35    Secondly, based on the evidence of the applicant and Julia Song, I accept that the document conveys legal advice to the applicant, conveyed to her through Julia Song acting as her agent.

36    Thirdly, I accept the evidence of the applicant and Julia Song that Dynasty from time to time sought and obtained legal advice from the Henan Prosper in-house legal department and I accept the applicant’s evidence concerning how she came to receive advice from Ajax Xue in relation to the misappropriated funds issue, which is consistent with what appears in document 15. Based on that evidence, I accept that the communications arose in the course of a professional relationship of lawyer/client between the applicant/Dynasty and the Henan Prosper in-house legal department.

37    Fourthly, inspection showed that the legal advice came from Ajax Xue in his capacity as a member of the legal department, not in his separate capacity as a member of Henan Prosper’s management staff. Although Joseph Wang was not copied into the email chain, there is no reason to doubt that Ajax Xue gave the advice under the supervision of Joseph Wang.

38    Fifthly, based on the evidence of the applicant and Julia Song, the in-house legal department was acting in the position of external legal advisers to the applicant/Dynasty in the same way as lawyers in independent practice, and the issues about independence that arise in the context where advice is given by in-house counsel to his or her employer do not apply.

39    Sixthly, I accept that the communications were made for the dominant purpose of obtaining and giving legal advice.

Documents 7 and 8

40    Documents 7 and 8 can be considered together. Document 7 was described by the applicant as an email dated 16 January 2013 from Ajax Xue to her and to the email address of a Mr Li, said by the applicant to be an external lawyer recommended to her by Ajax Xue whom the applicant was considering appointing to act on Dynasty’s behalf in relation to the misappropriated funds issue. Julia Song gave evidence that Mr Li is a lawyer from Henan Gia Tai, an external law firm retained from time to time by Henan Prosper around the time that document was created.

41    The subject matter of document 7 is “Power of Attorney”. Document 8 is an attachment to the email. The applicant deposed that the email and its attachment contain information relating to Dynasty’s appointment of Mr Li to provide legal advice.

42    The Commissioner’s comments on the privilege claim were that:

To the extent it is claimed that the communication was from Ka Li having the dominant purpose of seeking or providing legal advice:

•    Mr Li’s competence, independence and professional duties are not established. There is no objective verification of his professional identity. There is no more than an assertion that he was an external lawyer recommended by Ajax Xue.

•    It is not clear on the evidence whether Ka Li was at that time appointed to act on behalf of Dynasty and thus engaged in a capacity as [a] lawyer.

•    In any event, communications relating to the retainer of a lawyer are not protected by legal professional privilege.

To the extent the claim is that Ajax Xue was here giving legal advice to Dynasty:

•    There is no evidence that Ajax Xue, if qualified, acted in a professional capacity (that is in a lawyer-client relationship) in respect of advice provided to Dynasty. Ordinarily an employee’s duties are to their employer;

•    Advice or recommendations about engaging a particular lawyer are not advice of a legal nature.

43    A review of the attachment shows that the communications were in relation to engaging Mr Li to act on behalf of Dynasty. Privilege does not attach to the existence or creation of the retainer itself (Cook v Pasminco Ltd (No 2) (2000) 107 FCR 44 at [47]) and the document does not otherwise record the content of legal advice. Accordingly, I do not accept that documents 7 and 8 are protected by legal professional privilege.

Document 16

44    Document 16 was described by the applicant as an email from Ajax Xue to her and Mr Ng dated 23 January 2013, copied to Mr Li. The email was said to contain legal advice from Mr Li and Ajax Xue in relation to the misappropriated funds issue. The email forwards an email from the applicant to Mr Ng and his assistant, which in turn forwards to Mr Ng an email from Ajax Xue to Mr Li and the applicant, copied to Julia Song and Mr Shi. The earliest email was said to attach documentation prepared in relation to the misappropriated funds issue.

45    The Commissioner made the same comments on the privilege claim as he made in relation to documents 7 and 8.

46    These emails fall into a different category though. It is apparent from a review of these emails that Ajax Xue was acting as agent for the applicant with respect to legal advice obtained for the applicant from Mr Li in relation to the misappropriated funds issue. It also appears that Mr Ng was copied into the correspondence for the purpose of providing follow-up legal advice to the applicant. Although there is no direct evidence, it would appear from the content that Dynasty/the applicant had by then retained Mr Li to provide advice. Based on the evidence of Julia Song about Mr Li and also what appears on document 8, there is no reason to doubt that Mr Li was a qualified lawyer. Accordingly, I accept that the communications were made for the dominant purpose of obtaining and giving legal advice, and am satisfied that document 16 is protected by legal professional privilege.

Funds Contract review

47    This category applies to document 58. The applicant’s evidence was that in around March 2015 she asked Holly Zhang, a member of Henan Prosper’s accounts department under the supervision of Julia Song, to assist her with obtaining legal advice on a contract provided to her by the China Daotong Cultural Preservation Fund. Document 58 was described by the applicant as an email from Holly Zhang to the applicant dated 30 March 2015 with the subject “Forward: Fund Contract Review”. The email forwards an email from Arno Erhu Liu from Henan Prosper’s legal department, copied to Joseph Wang and Pengfei (Roland) Liu (“Roland Liu”), described by Julia Song in her affidavit as a staff member of Henan Prosper with the title “General Staff, Funds”, and was said to contain legal advice in relation to the fund contract.

48    The basis of the privilege claim is that the document was:

Created for the dominant purpose of conveying to client legal advice on a commercial contract.

49    The Commissioner’s comments on the privilege claim were that:

The facts do not establish:

•    The nature of Dynasty’s interest in the China Daotong Cultural Preservation Fund; or

•    The existence of an agency relationship between Henan Prosper or Holly Zhang … and Dynasty for the purposes of Dynasty obtaining advice in relation to that fund.

To the extent the claim is that Erhu Liu was here giving legal advice to Dynasty there is no evidence that Erhu Liu was qualified as a lawyer or whether if qualified he acted in a professional capacity (ie, in a lawyer-client relationship) in respect of advice provided to Dynasty.

Inspection of the document may assist in verifying whether the communications were for the dominant purpose of Dynasty receiving legal advice.

50    I am satisfied hat document 58 is protected by legal professional privilege.

51    First, a review of the email confirms the applicant’s evidence concerning the content of the email.

52    Secondly, based on the evidence of the applicant and Julia Song, the in-house legal department was acting in the position of external legal advisers to the applicant/Dynasty in the same way as lawyers in independent practice and the issues about independence that arise in the context where advice is given by in-house counsel to his or her employer do not apply.

53    Thirdly, the legal advice came from Arno Erhu Liu, copied to Joseph Wang. There is no reason to doubt that Arno Erhu Liu gave the advice in his capacity as a member of the legal department under the supervision of Joseph Wang.

54    Fourthly, I accept that the communications arose from the relationship of lawyer and client and were made for the dominant purpose of obtaining and giving legal advice.

The legal professional privilege claims made by the applicant

55    These claims fall under three headings.

Exhibition Street Property

56    The applicant gave evidence that from October 2008 to July 2014 she was the sole registered owner of the property at Unit 511/181 Exhibition Street, Melbourne (“Exhibition Street property”). In around May 2012 she instructed Mr Ng to prepare the necessary documents and provide advice to her in relation to the sale of the Exhibition Street property.

57    Document 11 is an email from Sonia Pan from the Melbourne branch of the Bank of China dated 4 June 2014 to Mr Ng’s email address copied to the applicant and to Bowan Huang of Bank of China. The subject matter is “Forward: Xaio Song – Unit 511/181 Exhibition Street Melbourne VIC 3000”. The applicant deposed that the document contains information provided by the Bank of China in response to a request from Ellin Yin, an APAC law clerk, for information required in connection with the sale of the Exhibition Street property. The email forwards an email from Ms Yin to Bowan Huang copied to Mr Ng which contains the request for information.

58    The basis of the privilege claim is that the document was:

Created for the dominant purpose of providing and obtaining information in the provision by Frank Ng of legal advice and legal services to [the applicant] in relation to the sale of the Exhibition Street property.

59    The Commissioner’s comments on the privilege claim were that:

An email from a third party to a lawyer for the purposes of the lawyer having [t]he instructions necessary to advi[s]e a client in respect of a transaction ordinarily attracts legal professional privilege.

Inspection of the document may confirm that the information being supplied by Bank of China to Mr Ng was for the dominant purpose of Mr Ng giving legal advice to [the applicant].

60    An inspection of the document confirms that the information supplied by the Bank of China to Mr Ng was for the dominant purpose of Mr Ng giving legal advice to the applicant. I am satisfied that document 11 is protected by legal professional privilege.

Assembly Apartments

61    The applicant gave evidence that she is a director of Lyu Song Investments Pty Ltd which is trustee of the Lyu Song Family Trust. In around 2016 she instructed Mr Ng to provide advice in relation to the purchase of the acquisition by Lyu Song Investments Pty Ltd of property at a development called the “Assembly Apartments”.

62    Document 66 is an email that is said to contain advice from Mr Ng to the applicant in relation to the purchase of the acquisition by Lyu Song Investments Pty Ltd of property at a development called the “Assembly Apartments”. The email forwards an earlier email from Ellin Yin of APAC Legal to the applicant’s personal assistant, copied to Mr Ng. Document 67 is a copy of document 66.

63    The basis of the privilege claim is that the document was:

Created for the dominant purpose of providing legal advice and legal services to client in relation to the purchase of the Assembly Apartments.

64    The Commissioner’s comments on the privilege claim were that:

There is no evidence that Ellin Yin was a lawyer. She is described as a “law clerk”.

Further, it is not clear whether advice from Frank Ng was of a legal advice (properly understood) or purely commercial advice.

Inspection of these documents may reveal whether Ellin Yin acted as an agent for Frank Ng in the context of this communication and whether the advice was legal advice.

65    Inspection of these documents does reveal that the advice in both documents was legal advice, not commercial advice, and that the advice given by Ellin Yin was under the letterhead of APAC Legal. It may reasonably be inferred that Ellin Yin was acting under the direction of Mr Ng who was copied into the correspondence. I am satisfied that documents 66 and 67 are protected by legal professional privilege.

Hong Kong immigration advice

66    The applicant gave evidence that in June 2011, she asked Shanmei (Atty) Liang (“Atty Liang”), a staff member of Henan Prosper under the supervision of Julia Song, to assist her to obtain legal advice in relation to Hong Kong immigration matters.

67    Document 63 was said to record advice on Hong Kong immigration from Ada Liu to the applicant. The applicant described Ms Liu as a staff member of Mossack Fonseca, an external law firm used by Henan Prosper. The email forwards an email from Maple Du, a staff member of Mossack Fonseca, to Atty Liang, copied to “Mossfon Asia Legal Dept” and was said to contain advice from Maple Du and attached a document said to contain further advice on Hong Kong immigration.

68    The basis of the privilege claim is that the document was:

Created for the dominant purpose of conveying to client legal advice of Mossack Fonseca in relation to Hong Kong immigration matters.

69    The Commissioner’s comments on the privilege claim were that:

The facts do not establish the existence of an agency relationship between Henan Prosper or Atty Liang, said to be a supervisor in Finance at Henan Prosper (reporting to Holly Zhang) and [the applicant] for the purposes of [the applicant] obtaining advice in relation to Hong Kong immigration.

It is not necessarily to be accepted that advice in relation to Hong Kong immigration matters is legal advice.

The email address “Mossfon Asia Legal Dpt” suggests that certain staff at Mossack Fonseca did not work in the legal department.

The evidence does not establish whether “staff members” of Mossack Fonseca, including Ada Liu and Maple Du, were lawyers, as that term is properly understood.

70    The Commissioner’s comments ignore the evidence of Julia Song that, from time to time in her capacity as CFO of Henan Prosper, she obtained legal advice from Mossack Fonseca, an external law firm. She gave instructions to the principal, Mr Austin Zhang, and various staff who worked under him who included Ada Liu, Alice Xu, Emma Zhau, Victor Yan, Jessica Wang, Petty Fan and Candy Wang. There is no reason to doubt the evidence that Mossack Fonseca is an external law firm. Furthermore, a review of the documents shows that the advice was in the nature of legal advice and Maple Du signed off as “MF Legal”. It is to be inferred that Ada Liu and Maple Du were either qualified lawyers or, if not qualified lawyers, were acting under the supervision of Austin Zhang in giving the advice. Moreover, the evidence of the applicant and Julia Song explained how the advice came to be given to the applicant by Mossack Fonseca and I accept that Atty Liang was acting as agent for the applicant in procuring the advice from Mossack Fonseca. Accordingly, I am satisfied that document 63 is protected by legal professional privilege.

The legal professional privilege claim of Mrs Wang

71    Document 65 is an email from Zhipeng (Ali) Wang to the applicant dated 23 January 2013 and forwards earlier emails from Mr Ng to Ali Wang. Both emails are said to contain legal advice from Mr Ng to Ali Wang in respect of a dispute arising from a motor vehicle accident involving Ali Wang’s vehicle. The applicant deposed that Ali Wang was an employee of Dynasty and also the son of Heping Wang, who, with her husband, were directors of Henan Prosper. The applicant deposed that Ali Wang told her that a dispute had arisen in relation to a car accident involving his vehicle which was being driven at the time of the accident by Ali Wang’s wife and the applicant contacted Mr Ng and asked him to provide legal advice to Ali Wang in relation to that dispute. Mr Ng gave similar evidence. He deposed that in Chinese culture it is common to share, on a confidential basis, information in relation to business dealings with family and entrusted family friends. He deposed that since around 2010 he has provided legal advice to the applicant and in around 2013 the applicant asked him to assist her friend Ali Wang in relation to a dispute from a motor vehicle accident involving Ali Wang’s vehicle. He deposed that although the client to whom he provided advice was Mrs Wang, he was retained by Ali Wang on Mrs Wang’s behalf and the advice was provided by Mr Ng to Ali Wang.

72    The basis of the privilege claim is that the document was:

Created for the dominant purpose of Ting Ding Wang obtaining legal advice form Frank Ng in relation to a motor vehicle accident.

Alternatively records legal advice and was made in confidential circumstances consistent with the maintenance of privilege.

73    The Commissioner made no comment on the privilege claim. A review of the document in question confirms that the privilege claim was properly made and that the claim is made out on the evidence.

74    I am satisfied that document 65 is protected by legal professional privilege.

The legal professional privilege claims of Henan Prosper

Document 10

75    Document 10 is an email from Emily@prosper.com.cn to the applicant said to contain legal advice in relation to a document requiring Ali Wang’s signature. The applicant deposed that because of her personal relationship with Ali Wang, his father, Heping Wang, occasionally arranged for confidential documents for Ali Wang to be sent to her to assist when Ali Wang was slow in responding to communications. She deposed that to the best of her recollection she believes that this email was sent to her in that context.

76    The basis of the privilege claim is that the document was:

Created for the dominant purpose of conveying advice and instructions in the provision of legal services to Henan Prosper.

77    The Commissioner’s comments on the privilege claim were that:

As a matter of principle, a communication which has as its dominant purpose procuring the execution of the final form of a legal document may not be a privileged communication. Whether privilege attaches to the communication will depend upon the background facts and circumstances, including whether advice is to be implied from the request for signature.

Here there is no evidence of the identity of the lawyer alleged to have given the legal advice, or their professional qualifications. There is no evidence relating to the preparation of the document. The person requesting the signature is Emily Lu (said to be a procurement manager for Henan Prosper …). This suggests that legal advice is not able to be implied from the request for signature.

Inspection of the document may reveal whether the author of the email expressly records any advice in relation to the document.

78    In my view the state of the evidence is insufficient to establish that privilege attaches to the document and an inspection of the document does not take the matter further. Accordingly, I am not satisfied that document 10 is protected by legal professional privilege.

Document 1

79    Document 1 is an email said to be from Julia Song to the applicant with the subject “Fwd: GRAND WELL INTERNATIONAL LIMITED – Change of director Advance Signing documents”, copied to Emily Lu and Jim Wei of Henan Prosper. The email was said to contain instructions to Mossack Fonseca in relation to draft corporate documents prepared by the firm on Julia Song’s instructions which are attachments to the email. The email forwards: (1) an email from Ada Liu from Mossack Fonseca to Julia Song with the same subject heading and is copied to Jim Wei of Henan Prosper and to Alice Xu, Emma Zhou and Victor Yuan at Mossack Fonseca and said to contain the instructions; (2) two further emails from Ada Liu to Julia Song, both with the same subject heading and copied to the same Mossack Fonseca staff members and also to Jessica Wang of Mossack Fonseca, and said to convey further instructions relating to draft corporate documents prepared by Mossack Fonseca on Julia Song’s instructions; and (3) an email from Ada Liu to Julia Song with the subject “Grand Well International Limited 2008 Declaration Form” copied to Alice Xu, said to request information relating to the corporate documents that Julia Song had instructed Mossack Fonseca to prepare.

80    The basis of the privilege claim is that the document was:

Created for the dominant purpose of conveying advice and instructions in the provision of legal services to Henan Prosper.

Alternatively records legal advice and was made in confidential circumstances consistent with the maintenance of privilege.

81    The Commissioner’s comments on the privilege claim were that:

The evidence does not establish whether the “staff members” of Mossack Fonseca, including Ada Liu, Alice Xu, Emma Zhou or Victor Yuan, were lawyers, as that term is properly understood.

It is not clear why draft corporate documents prepared by Mossack Fonseca for Henan Prosper were sent to a director of one of Henan Prosper’s suppliers (namely, Dynasty).

There is no evidence that Mossack Fonseca’s practice was a purely legal practice. The preparation of corporate documents to effect transactions of a company secretarial nature is sometimes, but not necessarily, a task performed by lawyers.

If it is accepted that corporate documents were prepared for execution on Julia Song’s instructions…that conclusion is not necessarily sufficient to establish that the communications were for the dominant purpose of Henan Prosper seeking legal advice.

Some of these matters might be resolved by inspection of the documents.

82    For the reasons earlier given there is no reason to doubt the evidence that Mossack Fonseca is an external law firm and it is to be inferred that the relevant staff members at Mossack Fonseca were either qualified lawyers or, if not qualified lawyers, were acting under the supervision of Austin Zhang in their communications.

83    Furthermore, inspection of the document showed that the document contains instructions in the provision of legal services and legal advice to Julia Song and to the applicant, conveyed to the applicant through Julia Song acting as her agent. Accordingly, I am satisfied that document 1 is protected by legal professional privilege.

Document 13

84    Document 13 is an email said to be from Atty Liang of Henan Prosper to the applicant, copied to Julia Song, which was said to convey a request from Mossack Fonseca for information and contains an email chain. All the emails in the chain have the same subject of “Re 20121009 Spanish company matters” and are between staff members of Mossack Fonseca and staff members of Henan Prosper. The emails were said to contain legal advice, instructions and requests for further information.

85    The basis of the privilege claim is that the document was:

Created for the dominant purpose of conveying requests for instructions, instructions and advice in provision of legal services by Mossack [Fonseca] to client.

86    The Commissioner’s comments on the privilege claim were that:

The evidence does not establish whether the “staff members” of Mossack Fonseca, including Petty Fan and Candy Wang, were lawyers, as that term is properly understood.

The grounds of objection include the other comments made in respect of document 1.

87    I am satisfied that document 13 is protected by legal professional privilege.

88    First, for the reasons earlier given there is no reason to doubt the evidence that Mossack Fonseca is an external law firm and it is to be inferred that the relevant staff members at Mossack Fonseca were either qualified lawyers or, if not qualified lawyers, were acting under the supervision of Austin Zhang in their communications.

89    Secondly, from my review of the document the description of the contents given by Julia Song is accurate.

90    Thirdly, I accept that the document contains instructions for legal services and legal advice provided to Julia Song and to the applicant, conveyed to her through Julia Song acting as her agent.

Document 14

91    Document 14 is an email said to be from Julia Song to Michael Lyu, copied to the applicant and Mark Ma (Deputy General Manager, Operations of Henan Prosper) with the subject matter “Re: Dynasty share transfer consultation last year”. Julia Song deposed that around this time, Henan Prosper was considering acquiring shares in Dynasty. The email is said to contain Michael Lyu’s instructions to Julia Song and records legal advice in relation to the potential share transfer obtained by Julia Song from Mr Ng.

92    The basis of the privilege claim is that the document was:

Created for the dominant purpose of conveying advice provided by Frank Ng to clients.

Alternatively records legal advice and was made in confidential circumstances consistent with the maintenance of privilege.

93    The Commissioner’s comments on the privilege claim were that:

This appears to be an exchange of emails between management (Julia Song, Mark Ma) and a director (Michael Lyu) of Henan Prosper and the applicant relating to a contemplated acquisition of Dynasty by Henan Prosper. This exchange is not itself a privileged communication.

Such a document will be privileged only to the extent that the disclosure of its content would disclose the content of a separate privileged communication

It appears from the description of this email chain that the privilege claim in respect of it should be a partial claim only, extending no further than is necessary to protect privilege in the original lawyer-client communication.

There is no explicit evidence of a retainer of APAC by Henan Prosper.

94    I accept that the privilege claim has been partially made out. Inspection of the document showed that it records legal advice to Julia Song and to the applicant, conveyed to her through Julia Song acting as her agent. It also records accounting advice which is not privileged. Document 14 should be produced in a redacted form containing only the non-privileged part of the document.

Document 17

95    Document 17 is an email which was said to be from Jim Wei from Henan Prosper sent on Julia Song’s instructions to the applicant conveying instructions from Mossack Fonseca in relation to corporate documents prepared by Mossack Fonseca on Julia Song’s instructions. The email forwards 14 emails forming part of the email chain.

96    The basis of the privilege claim is that the document was:

Created for the dominant purpose of conveying requests for instructions, instructions and advice in provision of legal services by Mossack [Fonseca] to client.

Alternatively records legal advice and was made in confidential circumstances consistent with the maintenance of privilege.

97    The Commissioner’s comments on the privilege claim were that:

The evidence does not establish whether the “staff members” of Mossack Fonseca, including Ada Liu and Alice Xu, were lawyers, as that term is properly understood.

It is not clear why an email chain between Mossack Fonseca and Henan Prosper was sent to a director of one of Henan Prosper’s suppliers (namely, Dynasty).

98    I am satisfied that document 17 is protected by legal professional privilege.

99    First, inspection of the documents confirms the description of the documents given in the evidence.

100    Secondly, the email chain records legal advice sought and given by Mossack Fonseca to Julia Song and to the applicant, conveyed to her through Julia Song acting as her agent.

101    Thirdly, for the reasons earlier given there is no reason to doubt the evidence that Mossack Fonseca is an external law firm and it is to be inferred that the relevant staff members at Mossack Fonseca were either qualified lawyers or, if not qualified lawyers, were acting under the supervision of Austin Zhang in their communications.

Documents 34 and 37

102    Documents 34 and 37 are part of the same email chain. Document 34 was said to be an email from Jim Wei from Henan Prosper sent on Julia Song’s instructions to the applicant forwarding correspondence conveying instructions from Julia Song to Mossack Fonseca and advice from Mossack Fonseca in relation to corporate documents prepared by Mossack Fonseca on Julia Song’s instructions. Document 37 is an earlier email said to be from Jim Wei from Henan Prosper sent on Julia Song’s instructions to the applicant forwarding some of the same emails as document 34.

103    The basis of the privilege claim is that the document was:

Created for the dominant purpose of conveying requests for instructions, instructions and advice in provision of legal services by Mossack [Fonseca] to client.

Alternatively records legal advice and was made in confidential circumstances consistent with the maintenance of privilege.

104    The Commissioner’s comments on the privilege claim repeat the comments in respect of document 1.

105    I am satisfied that documents 34 and 37 are protected by legal professional privilege.

106    First, inspection of the documents confirms the description of the documents given in the evidence.

107    Secondly, the email chain records legal advice sought and given by Mossack Fonseca to Julia Song and to the applicant, conveyed to her through Julia Song acting as her agent.

108    Thirdly, for the reasons earlier given there is no reason to doubt the evidence that Mossack Fonseca is an external law firm and it is to be inferred that the relevant staff members at Mossack Fonseca were either qualified lawyers or, if not qualified lawyers, were acting under the supervision of Austin Zhang in their communications.

Documents 23 and 28

109    Documents 23 and 28 can be considered together although each document relates to a different subject matter. The reason is that each of these documents is a continuation of documents 17 and 34, and 37 respectively. Inspection of the documents showed that the nature of the legal advice given might be inferred from the documents: AWB v Cole at [29]. Accordingly, documents 23 and 28 are protected by legal professional privilege.

Document 43

110    Document 43 was said to be an email from Jim Wei from Henan Prosper to the applicant, copied to Julia Song, forwarding correspondence conveying instructions from Jim Wei to Mossack Fonseca and advice from Mossack Fonseca in relation to corporate documents prepared by Mossack Fonseca on Julia Song’s instructions. The email forwards 10 earlier emails all relating to the same subject matter.

111    The basis of the privilege claim is that the document was:

Created for the dominant purpose of conveying requests for instructions, instructions and advice in provision of legal services by Mossack [Fonseca] to client.

Alternatively records legal advice and was made in confidential circumstances consistent with the maintenance of privilege.

112    The Commissioner’s comments on the privilege claim repeat the comments in respect of document 1.

113    I am satisfied that document 43 is protected by legal professional privilege.

114    First, from my review of the document the description of the contents given by Julia Song is accurate.

115    Secondly, the email chain records legal advice sought and given to Jim Wei by Mossack Fonseca and conveyed by Jim Wei as agent to Julia Song and the applicant.

116    Thirdly, for the reasons earlier given there is no reason to doubt the evidence that Mossack Fonseca is an external law firm and it is to be inferred that the relevant staff members at Mossack Fonseca were either qualified lawyers or, if not qualified lawyers, were acting under the supervision of Austin Zhang in their communications.

Document 59

117    Document 59 was said to be an email from Julia Song to the applicant containing instructions to the applicant in relation to corporate documents. The document attaches documents said to be draft corporate documents prepared by Mossack Fonseca on Julia Song’s instructions.

118    The basis of the privilege claim is that the document was:

Created for the dominant purpose of conveying requests for instructions, instructions and advice in provision of legal services by Mossack [Fonseca] to client.

Alternatively records legal advice and was made in confidential circumstances consistent with the maintenance of privilege.

119    The Commissioner’s comments on the privilege claim repeat the comments in respect of document 1.

120    I am satisfied that document 59 is protected by legal professional privilege.

121    First, inspection of the document confirmed the accuracy of the description given by Julia Song.

122    Secondly, for the reasons earlier given there is no reason to doubt the evidence that Mossack Fonseca is an external law firm and it is to be inferred that the relevant staff members at Mossack Fonseca were either qualified lawyers or, if not qualified lawyers, were acting under the supervision of Austin Zhang in their communications.

123    Thirdly, I accept that the document contains legal advice to the applicant, conveyed to her through Julia Song acting as her agent.

Document 62

124    Document 62 is an email from Holly Zhang of Henan Prosper to the applicant, copied to Julia Song. The email is said to forward instructions in relation to draft share transfer documents prepared by Tonis Group Limited on Julia Song’s instructions. Julia Song deposed that Tonis Group Limited was a law firm used by Henan Prosper around this time. The email was said to forward a chain of correspondence (23 emails) with “Phyllis” of Tonis Group Limited, containing requests for instructions and legal advice.

125    The basis of the privilege claim is that the document was:

Created for the dominant purpose of conveying advice provided by Tonis to clients.

Alternatively records legal advice and was made in confidential circumstances consistent with the maintenance of privilege.

126    The Commissioner’s comments on the privilege claim were that:

The evidence does not establish the identity of “Phyllis” of Tonis Group Limited; or whether “Phyllis” was a lawyer, properly understood.

Other than the assertion that Tonis was a law firm used by Henan Prosper around 2014, there is no information about that entity or its activities. There is no evidence that its practice was a purely legal practice. The preparation of corporate documents to effect transactions of a company secretarial nature is sometimes, but not necessarily, a task performed by lawyers.

127    I am satisfied that document 62 is protected by legal professional privilege.

128    First, there is no reason to doubt the evidence that Tonis Group Limited is an external law firm used by Henan Prosper and it is to be inferred that the relevant staff members at Tonis Group Limited were either qualified lawyers or, if not qualified lawyers, were acting under the supervision of a qualified lawyer in their communications.

129    Secondly, the email chain records legal advice sought by and given to Henan Prosper by Tonis Group Limited.

130    Thirdly, although some of the emails do not contain privileged communications, those emails are a continuation of an email chain recording the legal advice sought and given to Henan Prosper by Tonis Group Limited. Privilege attaches to these other emails as the nature of the advice given might be inferred from those emails.

conclusion

131    I have determined that the following documents do attract legal professional privilege: documents 1, 6, 9, 11, 13, 15, 16, 17, 23, 28, 34, 37, 43, 58, 59, 62, 63, 65, 66, and 67 (being a copy of document 66).

132    I have determined that the following documents do not attract legal professional privilege: documents 7, 8, and 10.

133    I have determined that document 14 partially attracts legal professional privilege.

134    The parties are directed to provide minutes of proposed orders giving effect to these reasons within 7 days.

Associate:

Dated:    2 August 2018