FEDERAL COURT OF AUSTRALIA

Commissioner of Taxation v PricewaterhouseCoopers [2022] FCA 278

CORRIGENDUM

1.    The paragraph before paragraph 95 (without a paragraph number) is renumbered paragraph 95.

2.    Paragraph 95 is renumbered paragraph 96.

ORDERS

THE COURT ORDERS THAT:

1.    Within 21 days, the parties provide any agreed proposed minute of orders to give effect to the Court’s reasons for judgment.

2.    If the parties cannot agree, then within 28 days, each party file and serve:

(a)    a proposed minute of orders to give effect to the Court’s reasons for judgment; and

(b)    a brief written submission in support of the proposed orders.

3.    Subject to further order, on the ground that the order is necessary to prevent prejudice to the proper administration of justice, the Court’s reasons for judgment of the date of this order be published only to the respondents and the amici curiae, and be kept confidential (save that the orders, the sections headed “Introduction”, “The Sample Documents”, “The Hearing and Evidence” and “Conclusion”, and the Annexure will be provided to the applicant and made available to the public).

4.    Within seven days, the respondents prepare, and provide to the Court, proposed redactions to the Court’s reasons for judgment. The Court will then prepare a redacted version of the reasons for judgment, which will be provided to the applicant and made available to the public.

5.    The proceeding be listed for a case management hearing on a date to be fixed.

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

TABLE OF CONTENTS

REASONS FOR JUDGMENT

MOSHINSKY J:

INTRODUCTION

1    The issue to be dealt with in these reasons is whether certain documents are subject to legal professional privilege.

2    The issue arises in the following way.

3    Flora Green Pty Ltd (Flora Green), JBS Holdco Australia Pty Ltd (JBS Holdco Australia) and JBS Australia Pty Ltd (JBS Australia) are Australian companies that are wholly owned (directly or indirectly) by JBS SA, a Brazilian multinational company listed on the Brazil Stock Exchange. JBS SA’s Australian subsidiaries, including Flora Green, JBS Holdco Australia and JBS Australia, are referred to as the JBS Australia Group in these reasons. JBS SA and its subsidiaries, including the JBS Australia Group, are referred to as the JBS Global Group. Flora Green is the head company of a multiple entry consolidated (MEC) group, and JBS Holdco Australia and JBS Australia are subsidiary members of the group.

4    In February 2019, the Commissioner of Taxation (the Commissioner) commenced an audit of Flora Green, as head company of the MEC group. In the course of the audit, the Commissioner issued notices to produce documents under s 353-10 of Sch 1 to the Taxation Administration Act 1953 (Cth). The notices were issued to: (a) Glenn Russell, a partner of PricewaterhouseCoopers Australia (PwC Australia), which is a multi-disciplinary partnership that provided services to the JBS Australia Group; and (b) Flora Green.

5    In response to the notices, legal professional privilege was claimed by PwC Australia (on behalf of Flora Green or another member of the JBS Global Group) and by Flora Green or another member of the JBS Global Group over approximately 44,000 documents.

6    The Commissioner disputes the claims of privilege over approximately 15,500 documents (the Documents in Dispute). They comprise emails and attachments to emails brought into existence between 3 September 2013 and 6 May 2016 (the Relevant Period).

7    By the present proceeding, the Commissioner seeks declaratory relief to the effect that the Documents in Dispute are not subject to legal professional privilege. The respondents to the proceeding are PwC Australia, Flora Green, JBS Holdco Australia and JBS Australia. I will refer to Flora Green, JBS Holdco Australia and JBS Australia as the JBS Parties.

8    In his amended originating application, the Commissioner relies on three grounds, which can be summarised as follows:

(a)    The form of the engagements, reflected in the relevant ‘Statements of Work’ by which PwC Australia purported to provide legal services to the JBS Parties, did not establish a relationship of lawyer and client sufficient to ground a claim for legal professional privilege.

(b)    Further or alternatively, as a matter of substance, the services provided by PwC Australia to the JBS Parties pursuant to the engagements, were not provided pursuant to a relationship of lawyer and client sufficient to ground a claim for legal professional privilege.

(c)    Alternatively, the Documents in Dispute are not, or do not record, communications made for the dominant purpose of giving or obtaining of legal advice from one or more lawyers (of PwC Australia).

9    The first two grounds are general grounds which, if made out, would apply to all of the Documents in Dispute. In contrast, the third ground requires a document-by-document analysis to determine whether the document is subject to legal professional privilege.

10    In his amended originating application, the Commissioner seeks declarations as follows:

(a)    A declaration that the Documents in Dispute are not, and do not record, communications fairly referable to a relationship of lawyer and client.

(b)    Further and alternatively, a declaration that the Documents in Dispute are not, and do not record, communications which are protected by legal professional privilege.

11    A number of case management hearings took place at which there was discussion as to how best to manage the proceeding given the large number of Documents in Dispute. That discussion took place in the context of the overarching purpose of the civil practice and procedure provisions, namely to facilitate the just resolution of disputes according to law, and as quickly, inexpensively and efficiently as possible: see s 37M of the Federal Court of Australia Act 1976 (Cth).

12    Ultimately, the Court decided to set down for hearing a separate question relating to 100 sample documents: 50 to be selected by the Commissioner, and 50 to be selected by the respondents. By an order made on 18 December 2020 (as varied by an order made on 7 May 2021), the following question (the Separate Question) was ordered to be determined separately and in advance of the other questions in the proceeding:

In respect of the 50 sample documents identified by the applicant and the 50 sample documents identified by the respondents, is the applicant entitled to the relief sought in the amended application?

13    The Separate Question was set down for hearing in circumstances where the Commissioner (and his lawyers) did not have access (and were not expected to have access) to the Documents in Dispute, the documents being the subject of extant legal professional privilege claims. Thus, while the respondents had access to the Documents in Dispute in selecting their 50 sample documents, the Commissioner did not. The Commissioner had access to a schedule that listed the documents and provided some details about them. But he did not have access to the documents themselves. The Commissioner was therefore required to select his 50 sample documents without seeing the documents.

14    In circumstances where the Commissioner and his lawyers did not have access to the sample documents, the Court appointed three barristers as amici curiae to assist the Court in relation to the Separate Question (the Amici Curiae). The respondents did not object to the Amici Curiae having access to the sample documents and to the confidential material relied on by the respondents in relation to the privilege issue.

15    I will refer to the 50 sample documents selected by the Commissioner in his revised list of sample documents and the 50 sample documents selected by the respondents in their revised list of sample documents as the Sample Documents.

16    The respondents have provided a copy of the Sample Documents to the Court, with the documents arranged in chronological order, and with an index of the documents. Where a Sample Document comprises an email and an attachment or attachments, the respondents have treated this as two or more documents. Accordingly, the respondents’ index comprises 116, rather than 100, documents.

17    As already noted, PwC Australia is a multi-disciplinary partnership, as distinct from a traditional law firm. It provides both non-legal and legal services. Some of its partners are Australian legal practitioners and some are not.

18    For present purposes, the relevant services were generally provided by PwC Australia to the JBS Parties pursuant to an umbrella engagement agreement dated 26 February 2014 and signed on 16 July 2014 (the Umbrella Engagement Agreement) and nine statements of work (with dates ranging from 31 October 2014 to 22 April 2016) (the Statements of Work). Each Statement of Work identified the particular work to be carried out and described the services to be provided as “legal services”. Each Statement of Work:

(a)    identified the “PwC team” that would carry out the work under two headings: “Australian Legal practitioners” (ALPs) and “Non legal practitioners” (NLPs);

(b)    contained a statement to the effect that “Non legal practitioners may assist in the provision of the legal services under the direction of the Australian legal practitioners”; and

(c)    contained a statement to the effect that, “[t]o facilitate delivery of the services you [that is, the JBS Parties] appoint the non legal practitioners who assist in the provision of the legal services as your agents for the purpose of communications to and from the legal services team. This includes giving instructions to and receiving legal advice and services from the Australian legal practitioners”.

19    Further, some of the Statements of Work set out the charge-out rates for each Australian legal practitioner and each non-legal practitioner. It is notable that, in such cases, the charge-out rate for at least one of the non-legal practitioners was higher than the charge-out rate (or rates) for the Australian legal practitioner (or practitioners).

20    For the reasons that follow, I do not accept the general propositions encapsulated in grounds (a) and (b) of the Commissioner’s amended originating application. In summary, I am not satisfied that, as a general proposition, no relationship of lawyer and client (sufficient to ground a claim for legal professional privilege) came into existence. I am satisfied that, at least in some relevant circumstances, a lawyer-client relationship existed between Mr Russell (an Australian legal practitioner) (and other Australian legal practitioners at PwC Australia) and one or more of the JBS Parties.

21    It is therefore necessary to consider, on a document-by-document basis, whether each Sample Document is subject to legal professional privilege. This requires consideration of whether the Sample Documents are, or record, communications made for the dominant purpose of giving or receiving legal advice. This question is to be determined by reference to the content of the document, its context, and the relevant evidence relating to the document. A critical part of the context in the present case is that the services were provided by a multi-disciplinary partnership and that the team carrying out the work comprised both lawyers and non-lawyers. Another contextual matter is the involvement of overseas PricewaterhouseCoopers (PwC) firms in many of the same projects (under separate engagements). At least in the case of PwC Brazil and PwC USA, the overseas firms were not able to provide legal advice and made clear that they were not doing so.

22    For the reasons that follow, I have concluded that many of the Sample Documents are privileged, but that many are not. The Annexure to these reasons sets out, for each of the documents listed in the respondents’ index of 116 documents, my conclusion as to whether the document is privileged (“P”), partly privileged (“PP”) or not privileged (“NP”). Of the 116 documents listed in the Annexure, I have concluded that:

(a)    49 are privileged;

(b)    6 are partly privileged; and

(c)    61 are not privileged.

23    These conclusions have been reached through a process of consideration of each of the Sample Documents. In many cases, I have concluded that the communication does not satisfy the dominant purpose test, that is, I have concluded that the document is not (and does not record) a communication made for the dominant purpose of giving or receiving legal advice.

24    For ease of reference in these reasons, I will refer to the Sample Documents by reference to the number appearing in the first column of the Annexure. Thus, Document 1 is the first document in the Annexure, which is the applicant’s Sample Document 18.

25    Parts of my reasons are confidential because they disclose the contents of documents over which privilege is claimed. In the circumstances, I will make an order that, subject to further order, the Court’s reasons for judgment of the date of this order be published only to the respondents and the Amici Curiae, and be kept confidential (save that the orders, the sections headed “Introduction”, “The Sample Documents”, “The Hearing and Evidence” and “Conclusion”, and the Annexure will be provided to the applicant and made available to the public). This is to enable the respondents to prepare, within a period of seven days, proposed redactions to the Court’s reasons for judgment. The Court will then prepare and publish redacted reasons for judgment, which will be provided to the applicant and made available to the public.

THE SAMPLE DOCUMENTS

26    The process of identifying the 50 sample documents was somewhat iterative because, after the Commissioner had served a draft list of 50 sample documents (dated 23 April 2021), the JBS Parties withdrew their claims of privilege over some of those documents (and released them to the Commissioner). It was therefore necessary for the Commissioner to identify additional documents to complete his list of 50 sample documents.

27    Subsequently, after the Commissioner had filed and served his list of 50 sample documents (dated 14 May 2021), the JBS Parties withdrew their claims of privilege over some of those documents (and released those documents to the Commissioner). The Commissioner then identified potential replacement sample documents, but the JBS Parties withdrew their claims of privilege over many of those documents (and released them to the Commissioner). The Commissioner then selected replacement sample documents, and filed and served a revised list of 50 sample documents (dated 11 June 2021). The respondents also revised their list of 50 sample documents, and filed and served a revised list of sample documents (dated 6 May 2021).

28    Since the filing and service of the parties’ revised lists of sample documents, the JBS Parties have withdrawn their claims of privilege over some of the documents in the revised lists (and released the documents to the Commissioner) and have withdrawn their claims of privilege over parts of other documents in the revised lists (and partially released those documents to the Commissioner). However, the revised lists of sample documents have not been further revised. Accordingly, the revised lists of sample documents (which form the basis of the index of Sample Documents in the Annexure to these reasons) contain some documents over which privilege is no longer claimed or over which privilege is no longer claimed over the whole of the document. I will identify the relevant documents in due course in these reasons.

THE HEARING AND EVIDENCE

29    The hearing of the Separate Question took place over five hearing days. Given restrictions in place due to the COVID-19 pandemic, the hearing was conducted by video-conference using Microsoft Teams.

30    The Commissioner relied on six affidavits of Suzanne Emery, an Acting Client Engagement Director in the Australian Taxation Office, dated 1 June 2020, 3 December 2020, 2 June 2021, 16 June 2021, 9 August 2021 and 2 September 2021. Ms Emery was not cross-examined. The Commissioner also tendered a number of documents.

31    PwC Australia called Mr Russell to give evidence. Mr Russell was PwC Australia’s overall engagement partner for the JBS Australia Group during the Relevant Period. Mr Russell’s evidence in chief was contained in an affidavit dated 19 July 2021, supplemented by some oral evidence. Mr Russell was cross-examined. To some extent, Mr Russell’s evidence involved matters of legal characterisation (eg whether certain advice was legal advice). While I accept that Mr Russell holds the views that he expressed, ultimately, the correct legal characterisation is a matter for the Court to determine. I will discuss Mr Russell’s evidence in more detail later in these reasons.

32    PwC Australia also relied on two affidavits of Andrew Korlos, an employee solicitor at PwC Australia. Mr Korlos was not cross-examined.

33    The JBS Parties called the following witnesses, who were cross-examined:

(a)    Maria Cristina de Almeida Manzano, the Legal Manager (Taxation) of JBS SA; and

(b)    Edison Alvares, the Chief Financial Officer of the JBS Australia Group.

Ms Manzano answered questions in a straightforward manner. I accept her evidence. Mr Alvares answered questions clearly, concisely and candidly. I accept his evidence.

34    As noted above, the respondents provided a copy of the Sample Documents to the Court. I indicated during the hearing that I would read the Sample Documents, and I confirm that I have done so.

35    Parts of the hearing were conducted on a confidential basis, without the Commissioner or his lawyers or the public being ‘present’ (i.e. without the Commissioner or his lawyers or the public having access to the online hearing), because it was necessary to refer to the contents of the Sample Documents (in respect of which privilege was claimed). Senior counsel for the Commissioner accepted that this procedure was appropriate in the circumstances.

36    The Amici Curiae made submissions at the hearing, but did not cross-examine any witnesses. They were ‘present’ throughout the hearing, including the confidential parts. Parts of the Amici Curiae’s (written and oral) submissions were provided on a confidential basis.

BACKGROUND FACTS

37    In this section of the reasons, I set out my findings as to general factual matters, by way of background and context for the consideration of the Separate Question. These background facts are based on the affidavit and oral evidence, and the documents tendered in evidence.

JBS Global Group

38    JBS SA is a Brazilian multinational company listed on the Brazil Stock Exchange. It is a global leader in the processing of animal protein and operates through five business units in more than 15 countries, including the United States of America and Australia.

39    The JBS Global Group conducts its operations in Australia through the JBS Australia Group, which includes Flora Green, JBS Holdco Australia and JBS Australia. Each of those three companies is wholly owned (directly or indirectly) by JBS SA. Until late 2015, the JBS Australia Group was held by an intermediate holding company in the United States, JBS US Holding, LLC (US Holding). In around September 2015, US Holding was migrated to Australia and renamed Flora Green.

40    The JBS Global Group also conducts operations through subsidiaries in the United States (JBS USA).

41    The key relevant personnel at the JBS Australia Group during the Relevant Period were:

(a)    Mr Alvares, who has been the Chief Financial Officer of the JBS Australia Group since October 2007. He is also the public officer and a director of Flora Green, a director of JBS Holdco Australia and a director of JBS Australia.

(b)    Jason Sinokula, who was the Tax Manager of JBS Australia from March 2008 until February 2016. Mr Sinokula reported to Mr Alvares until around January 2016. His responsibilities included managing the taxation affairs of JBS Australia.

(c)    Jose Marinho, who has been the Treasurer of JBS Australia since January 2014.

(d)    Jacinta Dale, the General Counsel and Company Secretary of JBS Australia, and an in-house lawyer at JBS Australia during the Relevant Period. Ms Dale was admitted as a solicitor of the Supreme Court of Queensland on 16 December 2005.

42    The key relevant personnel at JBS SA during the Relevant Period were:

(a)    Khalil Kaddissi, who was the Legal Director (Corporate and Tax) of JBS SA from September 2014 until late 2017. Mr Kaddissi is registered to practise law in Brazil. During the Relevant Period, Mr Kaddissi reported to the Chief General Counsel of JBS SA. His responsibilities included advising the JBS SA Board on corporate and taxation issues arising from transactions and proposals to be undertaken by the JBS Global Group.

(b)    Ms Manzano, who has been the Legal Manager (Taxation) of JBS SA since July 2014. Ms Manzano is registered to practise law in Brazil. During the Relevant Period, Ms Manzano reported to Mr Kaddissi. Her responsibilities included corporate restructuring and international corporate and tax matters.

43    The key relevant personnel at JBS USA during the Relevant Period were:

(a)    Denilson Molina, who has been the Chief Financial Officer of JBS USA since 2011.

(b)    Cindy Garland, who was the Taxation Manager of JBS USA from September 2002 until February 2017. During the Relevant Period, Ms Garland reported to Mr Molina. Her responsibilities included all tax matters concerning JBS USA.

(c)    Nicholas White, who was the General Counsel of JBS USA. He is admitted to practise law in the Supreme Court of Colorado.

PwC Australia

44    PwC Australia was registered as a multi-disciplinary partnership on 1 February 2008. PwC Australia describes a multi-disciplinary partnership as a partnership between legal and non-legal practitioners where the business of the partnership includes the provision of legal and non-legal services. PwC Australia is part of a global network of firms operating in 158 countries under the PricewaterhouseCoopers, or PwC, brand. Three offices of the global network are particularly relevant in this proceeding: PwC Brazil, PwC USA and PwC Australia.

45    Practitioners from PwC Australia who are referred to in documents that are relevant to this proceeding were either ALPs, NLPs or admitted as a lawyer but not holding a practising certificate during the Relevant Period. The key relevant personnel at PwC Australia during the Relevant Period were:

(a)    Mr Russell, who has worked at PwC Australia since February 2005 and has been a partner since July 2012. He has been the overall engagement partner for the JBS Australia Group since late 2013. Mr Russell was admitted as a solicitor of the Supreme Court of Queensland on 14 July 2014. On 15 September 2014, Mr Russell received an unrestricted principal practising certificate authorising him to engage in legal practice, subject to certain conditions, and subject to an undertaking to complete a practice management course. One of the conditions was that Mr Russell practise only in the area of taxation law. Following completion of the Queensland Law Society Practice Management Course – Partial Course in about December 2014, he received a new practising certificate that omitted the undertaking referred to in the earlier practising certificate. On 15 May 2020, Mr Russell received an email from the Queensland Law Society informing him that the conditions annexed to his unrestricted principal practising certificate had been removed. Mr Russell’s professional background is set out in his affidavit. He became a partner of PwC Australia in July 2012, as an equity partner. During his time at PwC Australia (both before and after he became a partner) he has worked almost entirely in tax advisory work, which has included advising on corporate and international tax matters and the provision of consulting services in relation to the operation of the Income Tax Assessment Act 1997 (Cth) (ITAA 1997), the Income Tax Assessment Act 1936 (Cth) (ITAA 1936) and the Taxation Administration Act, and the provision of advice on Australia’s various tax treaties for the avoidance of double taxation as incorporated into Australian legislation by the International Tax Agreements Act 1953 (Cth). Mr Russell sat within the tax practice at PwC Australia, which is known as the Tax and Legal Group, and within that group in an area known as Corporate Tax Queensland.

(b)    Neil Fuller, who was an international tax partner at PwC Australia from 1988 to July 2019. During the Relevant Period he was what was known in PwC as a “rover”, being an experienced tax partner who was available to tax engagement partners as a resource on client matters, and was based in Sydney. Mr Fuller was an NLP during the Relevant Period.

(c)    Chris Stewart, who has worked at PwC Australia since at least 2005 and was a Director in Mr Russell’s team during the Relevant Period. Mr Stewart was an NLP during the Relevant Period.

(d)    Theo Denovan, who has worked at PwC Australia since 2012 and has been a partner since around July 2016. He worked in International Tax Services, which was a group within the Tax and Legal Services line of business at PwC Australia, and was an NLP during the Relevant Period.

(e)    Tom Seymour, who is the Chief Executive Officer of PwC Australia. He was the Managing Partner of the Tax and Legal Business from July 2012 until June 2016. Mr Seymour was an NLP during the Relevant Period.

(f)    Ben Lannan, who has been a partner at PwC Australia since January 2010. He was a transfer pricing partner until June 2017 and is currently an International Trade partner. Mr Lannan was an NLP during the Relevant Period.

(g)    Stefan DeBellis, who has worked at PwC Australia since around July 1992. He was a Principal during the Relevant Period and is a stamp duty specialist. Mr DeBellis was an NLP during the Relevant Period. He was assisted by Rachael Cullen and Jess Fantin, who were ALPs during the Relevant Period.

(h)    Peter Dunn, who was a partner at PwC Australia from around 1999 until mid-2019. Mr Dunn was an NLP during the Relevant Period.

(i)    Benn Wogan, who was a Director – Legal at PwC Australia from July 2012 until February 2018. Mr Wogan was an ALP during the Relevant Period. He was located on the same floor as Mr Russell in PwC Australia’s Brisbane office.

(j)    Zameer Ali, who was a Manager at PwC Australia from around 2012 and a Senior Manager from July 2015 until February 2018. Mr Ali was an ALP from 19 September 2014 to 18 April 2016.

PwC Brazil and PwC USA

46    The key relevant personnel at PwC Brazil during the Relevant Period were:

(a)    Mark Conomy, an International Tax Director at PwC Brazil. He was a Manager at PwC Brazil from February 2014 until June 2016.

(b)    Priscila Vergueiro, a tax partner at PwC Brazil. She was a Senior Tax Manager at PwC Brazil between July 2011 and July 2016.

47    The key relevant personnel at PwC USA during the Relevant Period were:

(a)    John Kulich, who has been a Principal at PwC USA since August 2002. Mr Kulich was the relationship partner for JBS USA in relation to tax work during the Relevant Period.

(b)    Robert Stout, who worked at PwC USA during the Relevant Period (although it is unclear on the evidence what position he held during that time). He has been an International Tax Services Principal at PwC USA since July 2017.

(c)    Jon Cox, who has been an International Tax Associate at PwC USA since August 2015.

Other external lawyers

48    Apart from PwC Australia, other external lawyers were engaged in Australia, the United States and Brazil to assist JBS on various legal aspects of the relevant projects (described below), in particular GRAP and Project Chelsea. For example, Allens in Australia, White & Case in the United States and Mattos Filho in Brazil.

PwC Australia’s MDP Protocols for legal services

49    The evidence includes a PwC Australia document headed “MDP Protocols for legal services” dated 27 September 2013 (the MDP Protocols). The document is 38 pages in length, including Appendices A, B and C. The letters “MDP” refer to multi-disciplinary partnership. Mr Russell gave evidence during cross-examination that the protocols were part of a suite of policies that partners and staff are aware of, and that it is generally known that they need to be followed.

50    Section 2 of the MDP Protocols is headed “Legal Services” and states in part:

Tax advisory services such as tax structuring advice and other advice about compliance with taxation legislation can be provided as either legal or non-legal services depending on the capacity in which the service is provided and the disclosure to the client about the nature of that service.

(Emphasis added.)

As the words highlighted in bold indicate, the MDP Protocols proceed on the basis that certain services can be provided as legal services or as non-legal services. I note that this is a recurrent theme in PwC Australia’s documentation and in its affidavit evidence in this proceeding.

51    Section 2 of the MDP Protocols also includes the following:

2.5    Can non-legal Partners and staff be involved in the provision of legal services?

Not all aspects of legal services must be provided by persons holding the requisite legal qualifications. For example, law graduates who have not yet been admitted to practice (known within the firm as ‘Graduates’) and paralegals, working under the supervision of AALP Partners or Principals, can perform tasks to assist an AALP to provide legal services.

Provided the client has received the appropriate statutory disclosures regarding the involvement of non-lawyers in the delivery of particular legal services, where a Partner or staff member not listed on the AALP list provides assistance to a Partner or staff member on the AALP list to enable the latter to provide legal services to a client, that assistance can form part of the legal services. Any communications that the non-legal Partner or staff members have with the client in respect of matters which relate to the legal advice must be communicated to, or at the direction of, the AALP Partner or Principal. This is depicted in Appendix A (Correct Model).

Importantly, advice given to a client by a non-lawyer (who is not acting at the direction of a lawyer) will not attract LPP.

An AALP Partner or Principal must not perform an engagement to provide legal services if he or she does not possess sufficient relevant professional expertise to form his or her own view about the subject matter (with support from a relevant technical expert). For example, an AALP Partner or Principal who is not a transfer pricing specialist must not issue legal advice about transfer pricing prepared by a transfer pricing technical expert, unless he or she possesses sufficient relevant professional expertise to understand the advice and conclude that there is no reason to doubt the technical accuracy of its content.

This can be likened to a litigation solicitor who briefs Counsel for an advice on evidence prior to a court hearing. Although the solicitor has extensive experience in the conduct of litigation, he or she is not a specialist in the rules of evidence. Nevertheless, the solicitor does possess sufficient relevant professional expertise to review Counsel’s advice and consider whether there is any reason to doubt its accuracy (eg. failure to consider an essential part of the client’s case or overlooking an obvious evidentiary requirement) before advising the client on evidence.

Another example is where a partner in a traditional (non-MDP) law firm has been engaged by a corporate client to advise on the state of compliance by the client with all of the external legal and regulatory compliance obligations which the client is required to meet. The partner leading the engagement may enlist the support of a colleague who has specialist expertise in the area of environmental law. Although not possessing the same degree of specialist expertise, the lead partner’s general experience with compliance work will allow him or her to review the specialist advice prepared by the colleague and form a view as to whether it is well-reasoned, complete and accurate.

In contrast to the above examples, an AALP Partner or Principal who has little or no professional experience in providing tax advice (eg. a lawyer whose sole professional expertise is in the field of real property transactions) will not be able to provide a client with tax advice as a legal service (even with the support of a tax technical expert) because he or she will not possess sufficient relevant professional experience to understand and form a view about the technical accuracy of the tax advice.

52    Section 8 of the MDP Protocols is headed “Legal Professional Privilege” and states in part:

Privilege will generally be available where a lawyer requests a third party expert to assist with a matter that is beyond the lawyer’s own expertise but upon which the lawyer needs expert advice in order to provide legal advice to his or her client. The client is able to claim LPP over the expert’s report/advice because it came into existence so that the lawyer could advise his or her client.

This is what happens in the conduct of our MDP when an ALP who has been engaged by a client to provide legal advice, informs the client and obtains instructions that in order to provide that legal advice he or she will be calling on the assistance of expert tax practitioners who are not themselves lawyers but who will assist the ALP in providing legal advice or whose tax advice will be incorporated into and become an integral part of the legal advice.

In so far as the non−legal team relay information to and from the client to the ALP providing legal services, they must do so as an agent of the client under the terms of the legal engagement letter or SoW in order for the client to be able to claim LPP in respect of those communications.

I note that the particular engagements in issue in the present case appear to have been established with the above principles in mind.

53    Appendix A to the MDP Protocols sets out the following diagrams regarding the “correct model” and the “incorrect model” of engagement where a legal services engagement involves non-lawyers:

Again, I note that the particular engagements in issue in this case appear to have been established with the above principles in mind.

Background to the relevant engagements

54    In early 2014, PwC Australia delivered a presentation to JBS SA regarding the services it proposed to provide in relation to the “global reorganisation” of the JBS Global Group. These services are described in the initial “global reorganizational proposal” as relating to a “tax structuring initiative” and the “selection of a more efficient global structure”. The “global reorganizational proposal” contained no reference to services being provided as legal services, and expressly excluded drafting legal documentation from the scope of the services.

55    In late May 2014, Mr Russell and Mr Fuller went to Sao Paulo to meet with JBS SA, together with Mr Kulich from PwC USA and representatives from PwC Brazil. During these meetings, they discussed potential streams of work that PwC Australia could undertake for JBS SA.

56    Subsequently, Mr Russell received an email from Philippe Jeffrey, who was a partner in the Sao Paulo office of PwC Brazil, informing him that JBS SA had accepted parts of the proposal discussed during the meetings.

57    Mr Russell gave the following evidence in his affidavit regarding the proposed engagements of PwC Australia:

127.    Before I learned that JBS wished to engage PwC Australia for this further work, I gave some consideration to the form of any engagement by JBS from an Australian perspective in respect of the work for which we had pitched in Sao Paulo. This included the possibility that JBS may prefer to have its tax advice provided as a legal service. In this regard, I refer to my discussion in paragraphs 32 to 34 above concerning the provision of tax advice. I considered that I should raise with JBS whether they wanted their tax advice provided as a legal service and obtain clarity from them as to this matter before any engagement on the contemplated work was entered into.

128.    At this time, I was completing my practical legal training and anticipated that I would be very shortly admitted as a legal practitioner. I also considered that the work under the proposed engagement would go on for some extended period of time. As such, I anticipated that I would, within a fairly short period of time, be in a position to assume a lead partner role on a legal engagement, and provide legal advice under that engagement, if that was what JBS wanted. But until that time I could not enter into a Legal SoW. I therefore spoke to one of my partners who was a tax specialist and admitted as a lawyer, Chris McLean. The SoW to JBS to which I refer in paragraph 47(a) and 134 was then issued. While this engagement did not ultimately proceed, to the extent some preliminary work was done in relation to it, I became the relevant lawyer partner for that engagement after I was admitted.

129.    In about late May 2014 or early June 2014, I attended a meeting at JBS’ premises in Dinmore, Queensland, with Mr Alvares and Mr Lannan. During the meeting, I said to Mr Alvares words to the effect that: “I will soon be admitted as a solicitor. It is possible for tax advice provided by PwC Australia to be provided as a legal service, which would include the benefit of communications attracting legal professional privilege”. He said to me words to the effect that he would think about it.

130.    I subsequently had a telephone conversation with Mr Alvares, which to the best of my recollection occurred in early June 2014, in which I said words to the effect:

Me:    “Do you remember how we recently had a conversation about potentially providing tax advice as legal advice and the benefits of that? Whilst I have not yet been admitted, if you are interested in our Australian work being provided as legal advice, would you like me to bring in a colleague who is a lawyer ?”

Mr Alvares:    “Yes, let’s do that.”

131.    I cannot now recall if I mentioned Mr McLean by name, but it is likely that I did so.

132.    Following my discussion with Mr Alvares, it was my understanding that the JBS Australia Group wished to obtain tax advice as a legal service. Going forward, when I prepared SoWs for tax advice for the JBS Australia Group (or for JBS entities outside Australia), I prepared them as Legal SoWs. To the best of my recollection, no one at JBS ever suggested that these services should not be provided as legal services. I did not consider this to apply to the due diligence work undertaken by PwC Securities or to compliance work (of the kind done under the non-legal SoW dated 18 December 2015 to which I refer at paragraph 45).

(Emphasis added.)

58    Mr Alvares gave evidence in his affidavit (which I accept) that, after June or July 2014, he expected that Mr Russell would be giving him legal advice under future engagements and that it would be subject to legal professional privilege.

59    On 10 June 2014, Mr Russell sent an email to Gustavo Carmona (PwC Brazil), copied to Neil Fuller (PwC Australia), John Kulich (PwC USA), Robert Stout (PwC USA), Theo Denovan (PwC Australia), Philippe Jeffrey (PwC Brazil) and Mark Conomy (PwC Brazil) with the subject line, “JBS work – adm aspects”. The email stated:

Hi Gustavo,

We would like to set up the Australian component of the work as a legal engagement, which will need a separate Australian engagement letter. Undertaking an engagement of this nature as a legal services is highly preferred and common in Australia. We would recommend that this separate engagement letter is addressed to and signed by both JBS Brazil and JBS Australia. Contracting in this way will also simplify matters from an Australian GST perspective − i.e. will ensure that JBS (who will be paying for the Australian component of the work) will be able to claim input tax credits for the GST that will apply to the work.

Let me know if you would like to discuss in more detail.

Regards

Glenn

60    Subsequently, on the same day, Mr Russell sent the following further email:

Gustavo,

The other advantage of setting the engagement up as a legal engagement is that provided certain protocols are followed, legal advice is privileged and therefore the Australian Taxation Office should not be able to obtain copies of it in the event of any ATO review activity. Mark will be able to explain in more detail, otherwise let me know if you would like to discuss further.

Regards

Glenn

(Emphasis added.)

The Umbrella Engagement Agreement

61    Under cover of a letter dated 26 February 2014, PwC Australia provided a proposed umbrella engagement agreement to JBS Holdco Australia. The covering letter was from Mr Russell to Mr Alvares. Mr Alvares signified his acceptance of the terms by signing the letter on behalf of JBS Holdco Australia on 16 July 2014. Thus, the Umbrella Engagement Agreement was entered into on that date.

62    The Umbrella Engagement Agreement provided in part:

1.    Our work

This agreement sets out the terms on which we will provide you with tax and legal services. When you request us to provide services under this agreement, we will agree with you:

•    the scope of the services we will provide

•    the members of the Group who are our clients for those services

•    your responsibilities relating to the services

•    the basis on which we will calculate our fee for the services

•    details of the proposed timeframe for providing the services

•    details of the PwC team providing the services

•    any special terms agreed between us in relation to the services.

We will normally agree these with you in a Statement of Work or other correspondence we agree in relation to our services (SoW).

If we perform tax services at your request without a SoW or separate engagement letter the terms of this agreement apply to those services. Legal services will only be provided under the terms of an SoW or separate engagement agreement.

The services will be provided solely for the members of the Group described as clients in the relevant SoW or other agreement. A client named in a SoW may disclose a deliverable provided under the SoW to members of the Group who are not clients under the SoW. The disclosees who are not clients under the SoW each agree that they will not:

(a)    rely on the deliverable;

(b)    bring any claim against us in relation to the deliverable; or

(c)    disclose the deliverable except as required by law.

The services we are able to provide under this agreement include:

•    income tax consulting

•    assisting you with your income tax compliance obligations

•    assisting you and your expatriates in relation to their taxation affairs

•    Goods and Services Tax (GST) services

•    assisting you with R&D matters

•    transfer pricing services

•    assisting you with customs matters

•    stamp duty services

•    assisting you with employment tax matters

•    legal services.

In identifying the types of services in this way, the agreement (at least arguably) distinguished between legal services (being the last item in the above list) and the other types of services in the list.

63    The Umbrella Agreement contained a paragraph with the subject, “Legal services or non-legal services”. This stated that services would not be provided as legal services “unless specifically disclosed as such under an SoW [statement of work] or engagement letter”. It was also stated that services which are not provided as legal services may still be provided by partners or professional staff of PwC Australia who are ALPs, who are acting in a capacity other than as an ALP (for example, as a registered tax agent). It was stated that, in those circumstances, the rights and obligations of the parties would be different from those arising had the services been provided as legal services.

64    During cross-examination of Mr Russell, the following exchange took place about the tax advice services provided by Mr Russell to JBS Australia before and after he was admitted as a lawyer (in July 2014):

[SENIOR COUNSEL FOR THE COMMISSIONER]: And until you became a lawyer in mid-2014, you were providing that advice in your role at PwC as a tax adviser, weren’t you?---Yes, I was.

And would you say you were providing it in your role as an accountant tax adviser?---To the extent that I have an accounting designation, that – that would be correct, but – yes.

Right. And once you became a lawyer, you continued to give the same type of advice, didn’t you?---To some extent, yes.

So the only difference was that now you were a lawyer, you say you were able to provide the same advice as legal advice and not as non-legal advice; is that right?---It is, yes.

The projects

65    In this section, the relevant projects undertaken by PwC Australia for the JBS Australia Group or the JBS Global Group are summarised. (The Statements of Work will be discussed in the next section.) I note that some projects were the subject of multiple Statements of Work. Further, it is not necessarily the case that a Statement of Work covered a single project.

Project Twiggy

66    Project Twiggy was undertaken by the JBS Global Group between October 2014 and April 2015. It related to the acquisition by JBS Australia of the Primo group of companies (Primo). Primo was a leading producer of smallgoods in Australia.

67    Because JBS Australia was (at that time) held indirectly by JBS SA through entities in the United States, the proposal to acquire Primo raised taxation and corporate issues in Australia, the United States and Brazil. PwC Australia and PwC USA were therefore engaged to advise on the acquisition and were assisted by PwC Brazil. Project Twiggy involved consideration of the structure and finance of the acquisition of Primo and the tax effects of different options.

68    PwC Australia performed work in relation to Project Twiggy pursuant to the Statement of Work dated 13 November 2014 and the Statement of Work dated 9 December 2014.

69    Mr Alvares gave evidence in his affidavit (which I accept) that Mr Russell was the principal point of contact for JBS Australia in relation to Project Twiggy, and he expected that any final advice would be either from him or reviewed and approved by him. Mr Alvares gave evidence (which I accept) that, while he understood that others would be working and providing their expertise on the matter, he always expected that Mr Russell would give the final assurance and approval for the content of the advice JBS Australia would receive from PwC Australia, and when he saw views expressed by other PwC Australia personnel in emails and memos or during meetings, it was his practice to always speak to Mr Russell and ask for his views on the subject.

70    Mr Alvares gave evidence in his affidavit (which I accept) that he expected Mr Russell to liaise with PwC USA, and that he (Mr Alvares) had many conversations during 2014 and 2015 with various members of the JBS and PwC teams about the need to communicate with each other to ensure that all were well informed of what each other was doing.

Project Twiggy Phase 2

71    Project Twiggy Phase 2 was undertaken by the JBS Global Group between around January 2015 and November 2015.

72    The JBS Global Group had taken certain restructuring steps to address a change in Brazilian tax law. One of those steps was to insert an Australian company, Burcher Pty Ltd (Burcher), into the JBS Global Group, above US Holding (the intermediate holding company of the JBS Australia Group). Project Twiggy Phase 2 commenced when JBS SA became aware that taking this step [redacted].

73    PwC Australia was engaged to advise the JBS Australia Group and the broader JBS Global Group on how to fix this problem, including considering issues relating to the creation of a new tax consolidated group for the JBS Australia Group.

74    Project Twiggy Phase 2 was related to the advice being given by PwC Australia on the structure and finance of the Primo acquisition, [redacted].

75    The scope of Project Twiggy Phase 2 was subsequently expanded to include consideration of migrating US Holding to Australia. This involved US Holding becoming an Australian resident company, being incorporated and registered in Australia, being renamed Flora Green and being appointed as the head company of a new income tax consolidated group.

76    PwC Australia performed work in relation to Project Twiggy Phase 2 pursuant to the Statements of Work dated 9 December 2014, 15 January 2015, 25 June 2015 (as expanded by a letter dated 25 July 2015) and 31 August 2015.

Global Regional Alignment Project

77    The Global Regional Alignment Project (GRAP) was undertaken by the JBS Global Group between July 2015 and December 2015. The key objective of the GRAP was to create a group structure that allowed for the efficient movement of funds around the group, the repatriation of funds to Brazil, and the possibility of an initial public offering. Other aspects of the GRAP included:

(a)    [redacted];

(b)    the transfer of the JBS Australia Group out of the ownership structure of JBS USA ([redacted]).

78    The GRAP was required to be approved by the JBS SA Board and was managed by Mr Kaddissi.

79    The JBS Global Group engaged a team of advisors including PwC in Brazil, the United States, Australia, Ireland, the United Kingdom, the Netherlands and Luxembourg. Work on the GRAP principally involved the development of several step plans, on which PwC personnel provided input on the tax issues and implications arising in each jurisdiction.

80    PwC Australia performed work in relation to the GRAP pursuant to the Statements of Work dated 9 December 2014, 15 January 2015, 25 June 2015 (as expanded by the letter dated 25 July 2015) and 11 September 2015.

81    Mr Alvares gave evidence in his affidavit (which I accept) that, while he understood and expected that all the PwC Australia team members listed on the statements of work would be working on the GRAP, he was looking to Mr Russell to give the final advice to him, and he was expecting that all the advices received by JBS Australia from PwC Australia would be reviewed and approved by him. Mr Alvares also gave evidence (which I accept) that it was critical to him that Mr Russell and the PwC Australia team kept in regular contact with the PwC team in the USA, to ensure they were each fully aware of what was happening in each other’s jurisdiction to avoid the possibility that a step or event in one place had an adverse impact in another.

Return of capital project

82    The return of capital project was undertaken by the JBS Global Group between April 2016 and June 2016. It related to the repatriation of funds from JBS Australia to JBS USA by way of a return of capital so that JBS USA could avoid using debt facilities.

83    PwC Australia performed work on this project pursuant to the Statement of Work dated 18 April 2016.

Project Chelsea

84    Project Chelsea was undertaken by the JBS Global Group between November 2015 and 2017. It related to a proposal to list part of the JBS Global Group on the New York Stock Exchange. This was referred to as an “inversion”. The JBS Global Group required consent from one of its largest shareholders, the Brazilian Development Bank, before Project Chelsea could proceed.

85    Several law firms were engaged to advise on the potential initial public offering including White & Case in the United States and Mattos Filho in Brazil.

86    Project Chelsea did not ultimately complete.

87    PwC Australia performed work in relation to Project Chelsea pursuant to the Statement of Work dated 22 April 2016.

The Statements of Work

88    The nine statements of work (or SoWs) that are directly relevant for present purposes are referred to in these reasons as the “Statements of Work”. I note that in some of the affidavits these statements of work are referred to as the “Contested SoWs”. The key details are:

(a)    Statement of Work between PwC Australia and JBS Australia dated 31 October 2014 with the description “Project Twiggy Legal Services” (Statement of Work No 1).

(b)    Statement of Work between PwC Australia and JBS Australia dated 13 November 2014 with the description “Project Twiggy Legal Services – Income tax and stamp duty advice” (Statement of Work No 2).

(c)    Statement of Work between PwC Australia and JBS Australia dated 9 December 2014 with the description “Project Twiggy Legal Services – Income tax and stamp duty advice (Phase 2)” (Statement of Work No 3).

(d)    Statement of Work between PwC Australia and JBS Australia dated 15 January 2015 with the description “Global Restructure Project – Australian Income Tax and Stamp Duty Legal Advice” (Statement of Work No 4). This Statement of Work was signed by Mr Sinokula on behalf of JBS Holdco Australia on 16 January 2015.

(e)    Statement of Work between PwC Australia and JBS SA dated 25 June 2015 with the description “Legal services in relation to a global reorganisation of the JBS group”. The scope of the Statement of Work dated 25 June 2015 was expanded to include specified accounting services by an email from Mr Russell and Mr Fuller to Mr Alvares dated 25 July 2015. This Statement of Work, as extended, is referred to as Statement of Work No 5.

(f)    Statement of Work between PwC Australia and JBS Australia dated 31 August 2015 with the description “Legal Services – Project Twiggy Phase 2” (Statement of Work No 6). This Statement of Work was signed by Mr Alvares on behalf of JBS Australia.

(g)    Statement of Work between PwC Australia and JBS Australia dated 11 September 2015 with the description “Legal Services – Global Regional Alignment Project” (Statement of Work No 7). This Statement of Work was signed by Mr Alvares on behalf of JBS Australia.

(h)    Statement of Work between PwC Australia and JBS Australia dated 18 April 2016 with the description “Legal Services – Assistance with Return of Capital” (Statement of Work No 8).

(i)    Statement of Work between PwC Australia and JBS SA dated 22 April 2016 with the description “Legal Services – Project Chelsea”. This Statement of Work was signed by Mr Kaddissi on behalf of JBS SA on 27 April 2016 (Statement of Work No 9).

89    Each of the Statements of Work:

(a)    identified the client as JBS Australia (save for Statements of Work Nos 5 and 9);

(b)    was expressly stated to be for the provision of legal services;

(c)    provided that the services the subject of the Statement of Work would be provided by identified ALPs including, but not limited to, Mr Russell (other than in the case of the Statements of Work Nos 1 and 5, where Mr Russell was the only ALP referred to);

(d)    distinguished between the PwC personnel who would provide the services as either ALPs or NLPs;

(e)    stated that “[n]on legal practitioners may assist in the provision of legal services under the direction of the Australian legal practitioners”;

(f)    included a “Communications Protocol” in the following terms:

Communications Protocol

To facilitate delivery of the services you appoint the non legal practitioners who assist in the provision of the legal services as your agents for the purpose of communications to and from the legal services team. This includes giving instructions to and receiving legal advice and services from the Australian legal practitioners.

We will communicate with you regarding our legal services and provide our legal advice separately from communications and advice regarding any non-legal matters.

(g)    incorporated the additional terms of business for legal services set out in the Umbrella Engagement Agreement; and

(h)    was sent under cover of a letter stating that the Statement of Work took precedence over the Umbrella Engagement Agreement to the extent of any inconsistency.

90    Each Statement of Work set out in broad terms the nature and ambit of the services that PwC Australia was to provide under the Statement of Work. These sections of the Statements of Work are important for present purposes and are set out below, in addition to certain other parts of the Statements of Work.

91    During cross-examination, Mr Alvares was asked questions about the distinction between legal statements of work and non-legal statements of work:

[SENIOR COUNSEL FOR THE COMMISSIONER]: Yes. Now, when you are entering into a statement of work, you have to make a decision whether it’s going to be called a legal statement of work or a non-legal statement of work; are you aware of that?---No, I am not, to be honest.

Right. So you don’t – you’re not aware that there is two types of statements of work, what they call an SOW. There’s a legal SOW and a non-legal SOW?---No, for me, they’re all the same.

Statement of Work No 1

92    Statement of Work No 1 (Project Twiggy Legal Services) included the following covering letter dated 31 October 2014:

Dear Edison [Mr Alvares]

This Statement of Work (SoW) sets out the legal services we will provide under our Umbrella Engagement Agreement with JBS Holdco Australia Pty Ltd dated 16 July 2014.

Terms defined in the Umbrella Engagement Agreement have the same meaning when used in this SoW, except where otherwise indicated. If anything in this SoW is inconsistent with the Umbrella Engagement Agreement, this SoW takes precedence.

JBS Australia Pty Ltd (Client or you) is our client under this SoW.

If you have any questions in relation to this document, please call me on [number omitted] or Neil Fuller on [number omitted].

Yours sincerely

Glenn Russell

Partner

Each of the Statements of Work included a similar covering letter.

93    The Statement of Work identified the scope of the services to be provided as follows:

1    Scope of our services

PwC is a regulated Multi-Disciplinary Partnership in certain States of Australia. The services described in this letter are legal services regulated by the Legal Profession Act 2004 (NSW) or a corresponding law (as defined in the Act) and the ‘additional terms of business for legal services’ in the Umbrella Engagement Agreement apply. The scope of the legal services we will provide under this SoW is set out below.

This document is also an offer to enter into a costs agreement with you for the legal services. The additional terms of business for legal services include important disclosures about legal costs. lf we become aware of a substantial change to any disclosure regarding costs that we have made to comply with the Act or a corresponding law, we will disclose the change in writing as soon as reasonably practicable after we become aware of it.

The scope of the services we will provide is set out below (the Services) in two phases. Any amendment to this scope must be agreed in writing between us.

1.1    Phase 1 – [Redacted]

[Redacted].

[Redacted].

1.2    Phase 2 – [Redacted]

[Redacted].

[Redacted].

94    Section 2 was headed “Fees and expenses” and set out estimated costs for different phases of the work. This was followed by a table, setting out the hourly rate for various personnel (and categories of personnel):

95    A similar form of table appeared in several of the other Statements of Work.

96    Section 3 was headed “PwC team” and was in the following terms:

The services will be provided by the following Australian legal practitioners.

Non legal practitioners may assist in the provision of the legal services under the direction of the Australian legal practitioners. It is anticipated that the following non legal practitioners will assist in the provisions of the legal services.

97    Section 4 was headed “Communications Protocol” and comprised the text set out [89] above.

Statement of Work No 2

98    Statement of Work No 2 (Project Twiggy Legal Services – Income tax and stamp duty advice) stated (in Section 1) that, broadly, the scope of work covered advice in relation to: income tax implications of Project Twiggy; and stamp duty advice in relation to Project Twiggy. Sections 2 and 3 then stated:

2    Income Tax

Our income tax advice will be provided in two phases. The services to be provided under each phase are set out below.

1.1    Phase 1 – [Redacted]

This Phase of work will include all work undertaken to the point of signing the SPA. Phase 1 will include work and advice necessary to determine, in principle, [redacted].

[Redacted].

[Redacted].

-    [redacted]

-    [redacted]

-    [redacted]

-    [redacted]

-    [redacted]

-    [redacted]

We will work closely in conjunction with PwC in the US in undertaking this Phase of work. At the conclusion of our work, [redacted]. Our work will also involve us participating in [sic]

Scope exclusions

Excluded from the scope of our work is the following:

-    Accounting advice

-    Advice in respect of the Corporations Law, or any other legal advice that does not relate to income tax.

-    Reviewing or commenting upon any financial model developed

-    Valuation advice

1.2    Phase 2 – [Redacted]

[Redacted].

[Redacted].

3    Stamp Duty

Background and assumptions

The scope of our stamp duty advice will be based on the understand that:

•    [Redacted].

•    [Redacted].

•    [Redacted].

Work to be performed

Our stamp duty services will be provided in three phases. The services to be provided under each phase are set out below.

3.1    Phase 1 – [Redacted]

•    [Redacted];

•    [Redacted];

•    [Redacted]; and

•    [Redacted].

3.2    Phase Two – [Redacted]

•    [Redacted];

•    [Redacted];

•    [Redacted];

•    [Redacted];

•    [Redacted];

•    [Redacted];

•    [Redacted];

•    [Redacted];

•    [Redacted];

•    [Redacted]; and

•    [Redacted].

3.3    Phase Three - [Redacted]

•    [Redacted];

•    [Redacted]:

o    [redacted];

o    [redacted];

o    [redacted];

o    [redacted];

•    [Redacted];

•    [Redacted]; and

•    [Redacted].

Deliverable

•    [Redacted]; and

•    [Redacted].

99    Section 4 was headed “Fees and expenses” and included a table listing various PwC personnel (and categories of personnel) and their hourly charge-out rates. Section 5 was headed “PwC team” and comprised two tables: a table listing four ALPs, and a table listing five NLPs. Section 6 was headed “Communications Protocol” and had the same text as referred to above.

Statement of Work No 3

100    Statement of Work No 3 (Project Twiggy Legal Services – Income tax and stamp duty advice (Phase 2)) stated (in Section 1) that, broadly, the scope of the work covered advice in relation to: income tax implications of implementing the Project Twiggy acquisition structure; and stamp duty advice in relation to Project Twiggy implementation. Sections 2 and 3 stated in part:

2.    Income Tax

Our income tax advice will be provided in two phases. The services to be provided under each phase are set out below.

1.1    Phase 2 – [Redacted]

[Redacted]. Our work will include advice on the following components:

1)    [Redacted]

2)    [Redacted]

3)    [Redacted]

4)    [Redacted]

5)    [Redacted]

6)    [Redacted]

7)    [Redacted]

8)    [Redacted]

We will work closely in conjunction with PwC in the US in undertaking this Phase of work. At the conclusion of our work, we issue a detailed letter of advice summarising our work.

…

3    Stamp Duty

Background and assumptions

The scope of our stamp duty advice will be based on the understanding that:

•    [Redacted].

•    [Redacted].

•    [Redacted].

Work to be performed

Our stamp duty services will be provided in three phases. The services to be provided under each phases Two and Three are set out below.

3.1    Phase Two – [Redacted]

•    [Redacted];

•    [Redacted];

•    [Redacted];

•    [Redacted];

•    [Redacted];

•    [Redacted];

•    [Redacted];

•    [Redacted];

•    [Redacted];

•    [Redacted]; and

•    [Redacted].

3.3    Phase Three - [Redacted]

•    Preparation of a detailed estimate of the landholder duty payable in each relevant jurisdiction, ensuring duty is quarantined from non-dutiable items, duty is confined to the transaction value and any exclusions for interests previously held are properly claimed;

•    Preparation and lodgement of:

o    [redacted];

o    [redacted];

o    [redacted];

o    [redacted];

•    [Redacted];

•    [Redacted]; and

•    [Redacted].

Deliverable

•    [Redacted]; and

•    [Redacted].

101    Section 4 was headed “Fees and expenses” and adopted a similar form to that section in the Statements of Work described above. Section 5 was headed “PwC team” and identified four ALPs and five NLPs. The Communications Protocol was set out in section 6.

Statement of Work No 4

102    Statement of Work No 4 (Global Restructure Project – Australian Income Tax and Stamp Duty Legal Advice) stated (in Section 1) that, broadly, the scope of work covered advice in relation to Australian income tax and stamp duty issues associated with the global restructure executed by the JBS Global Group in December 2014. Sections 2 and 3 stated:

2.    Income Tax

We have been asked to undertake the following specific items of work under this engagement:

1)    Preparation of calculations required to be undertaken as a result of the JBS Australia multiple entry consolidated (MEC) tax group deconsolidating. These calculations will result in the quantification of any tax payable as a result of the deconsolidation.

2)    Preparation of Allocable Cost Amount (ACA) calculations for a potential tax consolidation of the JBS Australia Group. We will also prepare a summary of the calculations that outlines the potential benefits and costs of consolidating for tax purposes.

3)    Planning/Structuring advice associated with the issues associated with the broader Global Restructure.

3    Stamp Duty

The scope of this engagement will also cover any advice required in relation to potential Australian Stamp Duty issues associated with the work that we will assist JBS with in relation to its global restructure.

103    Section 6 was headed “Fees and expenses” and set out a table of PwC personnel (and categories of personnel) and their charge-out rates:

104    The “PwC team” was set out in section 7. This section was as follows:

105    Section 8 was headed “Communications Protocol” and was in the same terms as referred to above.

106    Mr Russell gave the following evidence with reference to Statement of Work No 4, dated 15 January 2015, and in particular the description of the scope of work in that document:

[SENIOR COUNSEL FOR THE COMMISSIONER]: … Do you regard the presentation of calculations as legal work?---In – in respect of item - - -

Number 1. Preparation of calculations?---In respect of 2.1 there I – absolutely I do.

So the preparation of the calculations is legal work and the actual quantifications of the tax payable, is that legal work?---Yes, it is.

Did you regard the preparation of the allocable cost amount as legal work?---I did.

And the summary of the ACA calculations, is that legal work?---It is.

Do you regard the planning, the structure advice associated with the broader global structure as legal advice?---Yes, I do.

…

Do you regard the preparation of advice about Australian stamp duty as legal work?---Yes, I do.

While I accept that Mr Russell holds the views he expressed in the above passage, I consider the issue raised to be one of legal characterisation, which is ultimately for the Court to determine.

Statement of Work No 5

107    Statement of Work No 5 (Legal services in relation to a global reorganisation of the JBS group) stated (in Section 1) that, broadly, the scope of work covered advice in relation to Australian income tax and stamp duty issues associated with the global reorganisation of the JBS Global Group, [redacted]. The work to be performed was then identified:

We will provide legal services as requested by you. In particular, we will provide legal services relating to the proposed global reorganisation of the JBS Group and any other transactions associated with the reorganisation. We expect that this will include [redacted]:

•    [Redacted]

•    [Redacted]

•    [Redacted]

•    [Redacted]

•    [Redacted]

•    [Redacted]

108    Section 2 was headed “Fees and expenses” and identified PwC personnel (and categories of personnel) and charge-out rates. Section 3 described the “PwC team” – the only ALP was Mr Russell; two NLPs were identified. Section 4 was the “Communications Protocol”, in the same form as set out above.

109    The email dated 25 July 2015 from Mr Russell and Mr Fuller to Mr Alvares extended the scope of the engagement as follows:

Following the recent meeting in the US between JBS and PwC, PwC was requested to expand the scope of the originally agreed tax advice to include certain accounting assistance. The scope of this work is as follows:

Scope of the accounting services

The accounting services [we] will provide under this scope extension include:

•    reviewing multiple iterations of the draft steps plans, discussions with PwC US and PwC global tax teams

•    consideration of applicability of fair value accounting on incorporation of Australian newco’s when assets and investments are contributed by the parent for equity;

•    consideration of the requirements in the literature for parent entity accounting when a subsidiary recognises gains/losses

•    consideration of distribution accounting and gain recognition where subsidiaries make distributions to a parent

•    preparation of summary of accounting concepts and issues regarding the Australian entities within the proposed re-organisation plan

We will not be commenting on the commercial or other desirability of transactions or accounting treatment. Our work will not constitute an audit conducted in accordance with generally accepted auditing standards, or other attestation or review services. Accordingly, we will not express an audit opinion or provide any other form of assurance under the terms of this engagement.

The initial scope of work that we will perform is the provision of a summary outline setting out accounting issues, concepts and considerations under Australian Accounting Standards for the proposed re-organisation of the JBS group as set out in the draft steps plan circulated by JBS in the individual Australian JBS group companies.

Statement of Work No 6

110    Statement of Work No 6 (Legal Services – Project Twiggy Phase 2) included the following statement of the work to be performed:

We will provide legal services as requested by you. In particular, we will provide legal services relating to Phase 2 of Project Twiggy. In the course of providing these legal services we may seek advice on accounting and tax issues from non-legal members of PwC.

To the extent that our services include tax compliance services such as the documentation and preparation of taxation returns and related filings, these will not attract legal professional privilege. Only communications and documents created for the dominant purpose of providing legal advice can attract legal professional privilege.

Legal Services

1.    Income Tax

•    [Redacted].

•    [Redacted].

•    [Redacted].

•    [Redacted].

2.    Corporate Legal Services

•    [Redacted].

•    [Redacted].

•    [Redacted].

•    [redacted;.

•    [Redacted];

•    [redacted]; and

•    [redacted].

•    [Redacted].

3.    Accounting

•    Accounting advisory assistance on the proposed transaction steps to undertake Project Twiggy Phase 2.

Our work will not constitute an audit conducted in accordance with generally accepted auditing standards, or other attestation or review services. Accordingly, we will not express an audit opinion or provide any other form of assurance under the terms of this engagement.

The accounting services outlined in this letter will be prepared for JBS Australia Pty Ltd for its sole purpose in the context of assisting the management in formulating the accounting treatment for the relevant subject confirmed in this SoW. However, we acknowledge that you will provide a copy of the related accounting deliverables to your auditor.

Deliverable

Our deliverables in respect of this engagement may include the following:

•    Preparation of the detailed step plan.

•    Formal tax opinions - for example, in relation to tax consolidation outcomes and the application of Australia’s General Anti-Avoidance Provisions.

•    Drafting all Australian legal documents to complete the step plan and completion assistance.

•    Accounting advice in the form of a technical memorandum.

•    Meetings and discussions with relevant stakeholders.

111    Section 3 was headed “Fees and expenses” and set out an overall fee for the work. Section 4 was headed “Our team” and set out two tables – the first with the names of three ALPs; the second with the names of six NLPs. Immediately after those tables, there was a heading “Communications Protocol”, with the text set out above.

Statement of Work No 7

112    Statement of Work No 7 (Legal Services – Global Regional Alignment Project) outlined the following work to be performed:

We will provide legal services as requested by you. In particular, we will provide legal services relating to the proposed global regional alignment of the JBS Group and any other transactions associated with the group reorganisation. In the course of providing these legal services we may seek advice on accounting and tax issues from non-legal members of PwC.

Legal Services

1.    Income Tax

•    [Redacted].

•    [Redacted].

•    [Redacted].

•    [Redacted].

•    [Redacted].

•    [Redacted].

•    [Redacted].

•    [Redacted].

•    [Redacted].

•    [Redacted].

•    [Redacted].

2.    Stamp Duty

•    [Redacted].

•    [Redacted].

3.    Accounting

•    Accounting advisory assistance on the proposed transaction steps to undertake the global restructure.

•    Accounting balance sheet modelling of the proposed steps.

•    Attendance at discussions with your auditor in relation to the outcomes from our accounting advice.

Our work will not constitute an audit conducted in accordance with generally accepted auditing standards, or other attestation or review services. Accordingly, we will not express an audit opinion or provide any other form of assurance under the terms of this engagement.

The accounting services outlined in this letter will be prepared for JBS Australia Pty Ltd for its sole purpose in the context of assisting the management in formulating the accounting treatment for the relevant subject confirmed in this SoW. However, we acknowledge that you will provide a copy of the related accounting deliverables to your auditor.

4.    Corporate Legal Services

•    [Redacted].

•    [Redacted].

•    [Redacted].

•    [Redacted].

•    [redacted];

•    [redacted];

•    [redacted];

•    [redacted];

•    [redacted];

•    [redacted];

•    [redacted];

•    [redacted];

•    [redacted];

•    [redacted]; and

•    [redacted].

•    [Redacted].

To the extent that our services include tax compliance services such as the documentation and preparation of taxation returns and related filings, these will not attract legal professional privilege. Only communications and documents created for the dominant purpose of providing legal advice can attract legal professional privilege.

Deliverable

Our deliverables in respect of this engagement may include the following:

•    Preparation of the detailed … global regional alignment step plans,

•    Formal tax opinions - for example, in relation to financing and the application of Australia’s General Anti-Avoidance Provisions.

•    Transfer Pricing documentation in the form of an Arm’s Length Debt Test Report and/or interest rate benchmarking report.

•    Stamp duty advice on the transaction steps and lodgements for the relevant Offices of State Revenue.

•    Drafting all Australian legal documents to complete the step plan and completion assistance.

•    Accounting advice in the form of a technical memorandum.

•    Meetings and discussions with relevant stakeholders.

113    During cross-examination, Mr Russell said that this Statement of Work described a very large amount of work. He said it was the largest Statement of Work in terms of work required and fees charged over the Relevant Period.

114    Section 2 was headed “Fees and expenses” and set out a fixed fee for the work (US$2,040,843 including GST). Section 4 was headed “Our team” and comprised two tables – the first with the names of three ALPs; the second with the names of eight NLPs. The three ALPs were Mr Russell (a Legal Partner), Benn Wogan (a Legal Director) and Zameer Ali (a Senior Manager). The NLPs included Neil Fuller (International Tax Partner), Stefan DeBellis (Stamp Duty Partner), Ben Lannan (Transfer Pricing Partner), Jonathon Moss (Accounting Partner), Chris Stewart (Director) and Theo Denovan (International Tax Director). Although not named, Mr Dunn, an NLP, also assisted with the tax advice in connection with this Statement of Work. These tables were followed by the “Communications Protocol”, which had the same text as set out above.

Statement of Work No 8

115    Statement of Work No 8 (Legal Services – Assistance with Return of Capital) included the following description of the work to be performed:

The scope of our work is as follows. We will provide legal services as requested by you. In particular, we will provide legal services relating to the proposed return of capital distributions from JBS Australia Pty Ltd to JBS Ansembourg Holding Sarl through a series of interposed entities, repayment of various notes and any other associated transactions. In the course of providing these legal services, we will seek advice on accounting and tax issues from non-legal members of PwC.

Legal Services

1.    Australian Income Tax

•    [Redacted].

•    [Redacted].

•    [Redacted].

2.    Irish Income Tax

•    [Redacted].

•    [Redacted].

3.    Luxembourg Income Tax

•    [Redacted].

•    [Redacted].

•    [Redacted].

•    [Redacted].

•    [Redacted]:

•    [Redacted];

•    [Redacted]; and

•    [Redacted].

4.    Australian Accounting

•    Consideration of the accounting literature relevant to single entity accounting on a historic cost basis as to whether Baybrick Pty Ltd (Baybrick) and Industry Park Pty Ltd (Industry Park) can recognise net income arising from a distribution made by the trading subsidiaries for the purpose of determining whether a distribution can be made.

•    Specific consideration of the impairment literature and potential automatic triggers of impairment testing as Baybrick and Industry Park have initially recognised the investment in the Australian trading companies at fair value.

•    Single entity accounting for the settlement of the outstanding loan notes done as part of the distribution (i.e whether there is a gain/loss (or not) arising on settlement).

•    Advice considering the above, addressing the question whether Baybrick/Industry Park are required to assess the carrying value of investments in subsidiaries for impairment if a distribution is paid. Additionally, consideration of the single entity income statement impact of any potential impairment recognised on those subsidiary investments.

5.    Australian Corporate Legal and Documentation

•    [Redacted].

•    [Redacted].

•    [Redacted].

•    [Redacted]:

•    [Redacted];

•    [Redacted];

•    [Redacted];

•    [Redacted]; and

•    [Redacted].

•    [Redacted].

•    [Redacted]:

•    [Redacted];

•    [Redacted];

•    [Redacted];

•    [Redacted].

To the extent that our services include tax compliance services such as the documentation and preparation of taxation returns and related filings, these will not attract legal professional privilege. Only communications and documents created for the dominant purpose of providing legal advice can attract legal professional privilege.

Deliverable

Our deliverable in respect of this engagement will be:

•    [Redacted]

•    [Redacted]

•    [Redacted]

•    [Redacted]

•    [Redacted]

•    [Redacted]

•    [Redacted]

116    Section 3 was headed “Fees and expenses” and set out estimated fees for various components of the work. Section 4 was headed “Our team” and included two tables – one with three ALPs; the other with five NLPs. The “Communications Protocol”, with the text set out above, followed these tables.

Statement of Work No 9

117    Statement of Work No 9 (Legal Services – Project Chelsea) identified the following work to be performed:

The scope of our work is as follows. We will provide Australian legal services as requested by you. In particular, we will [redacted] (Project Chelsea). In the course of providing these legal services, we will seek advice on tax issues from non-legal members of PwC.

Legal Services

1.    Income Tax

•    [Redacted].

•    [Redacted].

•    [Redacted].

•    [Redacted].

2.    Corporate Legal Documentation

•    [Redacted].

•    [Redacted].

•    [Redacted].

3.    Stamp Duty

•    [Redacted]:

1.    [Redacted];

2.    [Redacted];

3.    [Redacted].

•    [Redacted].

•    [Redacted].

•    [Redacted].

•    [Redacted].

•    [Redacted].

•    [Redacted].

•    [Redacted].

•    [Redacted].

Deliverable

Our deliverable in respect of this engagement will be:

•    [Redacted]

•    [Redacted]

•    [Redacted]

•    [Redacted]

…

•    [Redacted]

Section 3 was headed “Fees and expenses” and set out hourly rates for different categories of personnel. Section 4 was headed “Our team” and comprised two tables – the first table set out the names of three ALPs; the second table set out the name of six NLPs. The “Communications Protocol”, in the terms set out above, followed the tables.

Communications referring to privilege

118    On 17 February 2015, Jess Fantin (PwC Australia) sent an email to Stefan DeBellis and Glenn Russell (both of PwC Australia) with the subject line, “DMS Sign Off – JBS”. The email included hyperlinks to a series of documents. The email stated:

Stefen and Glenn,

Can you please sign off the below documents in DMS for JBS? Glenn I have included you in order to claim privilege and as you are project partner for stamp duty purposes.

Kind regards

Jess

(Emphasis added.)

119    On 22 August 2015, John Kulich (PwC USA) sent an email to a group of people with the subject line “JBS update – agreement in principle”. The email stated in part:

Last night I spoke with Denilson and Khalil. After much discussion, their request was for a fixed fee global engagement of $7.2M - which equates to an 18% further discount across the board from our original quote (which we all know already had significant discounts). I’ve prorated the discount and will be reaching out to you all shortly on some of the more specific county [sic] comments they provided.

I told them I would get back with them today and I plan on agreeing to the fixed fee.

I need to sort out the engagement letters. I think its [sic] going to play out where AU will engage directly with JBS (due to legal privilege), and the US will engage directly with the JBS for all other services with the exception of legal - there will need to be local country engagement letters in place. We should all check with our accounting folks to see how this needs to be done. Everything has to be coordinated through the US at JBS’s request.

(Emphasis added.)

120    On 16 October 2015, Tom Seymour, Managing Partner, PwC Asia Pacific & Americas Tax and Legal, sent an email to John Kulich (PwC USA) and Neil Fuller (PwC Australia), copied to Peter Dunn (PwC Australia), with the subject line “JBS”. The email stated in part:

John and Neil

Pete and I met with Edison Alvares and his team this afternoon. It was a constructive meeting and in broad terms the feedback provided was consistent with the messages previously provided to you both. We have agreed with Edison that Pete will take the lead from the Australian side going forward with Glenn continuing on in a support role in order to ensure the timely delivery of the project and LPP is maintained.

(Emphasis added.)

121    Although this email suggests that Mr Russell would be moving to a “support role” going forward, Mr Russell’s evidence (which I accept) was that his role did not change, and it remained exactly the same as before.

122    On 6 October 2016, Mr Russell sent an email to John Kulich (PwC USA), copied to Peter Lee (PwC USA), Jon Cox (PwC USA), Rob Stout (PwC USA), Michael Bona (PwC Australia), Dritton Jemaylay Xhemajlaj and Neil Fuller (PwC Australia), with the subject line, “TP Team doc”. The email stated in part:

Excellent news. Congrats Peter, well done. Peter - I have copied the Australian TP team on this email … Can you please make sure that you are connected in with them as early as possible through the engagement phase?

As a generally [sic] rule JBS like to have Australian tax advice prepared as a legal service so that the work is covered by Legal Professional Privilege in Australia. We have always been able to accommodate this through ensuring that we set up the engagement in the correct way at the outset.

(Emphasis added.)

Charge-out rates of ALPs and NLPs

123    In the course of cross-examination, Mr Russell was taken to Statement of Work No 1, dated 31 October 2014, and in particular the charge-out rates for Mr Fuller ($1,459), Mr Denovan ($1,141) and Mr Russell ($862). It was pointed out that Mr Fuller and Mr Denovan were both NLPs, while Mr Russell was an ALP. Mr Russell gave evidence that the charge-out rates were set by business leaders. The following exchange took place during cross-examination:

[SENIOR COUNSEL FOR THE COMMISSIONER]: Now, on this SOW that we were looking at, which is a contested SOW, I read out who was charging. Not everybody, but I did read out Fuller and Stewart and Denovan and Russell’s rates as well, which is listed on the SOW. I wanted to ask the witness this. Would you agree that it is unusual that non-legal practitioners who merely assist you to provide services were [charging] so much more than what you charge for doing that work?---No. I don’t think that – not specifically, understanding the way in which rates are set. I – that rate is purely a product of what spat out of a system, so I never really particularly thought about that.

So you would not agree that it appears an odd circumstance that someone like Chris Stewart is charging 816, Theo Denovan is charging 1141, and Neil Fuller is charging 1459, and they are designated assistants to you who’s only charging 862. That’s not an odd circumstance?---It may do. It may appear that way, but it didn’t to me. Doesn’t to me. Because I understand the differential in rates between geographies.

Right. So the assistants – it’s quite common to you that assistants to an ALP are regularly charging much higher rates per hour than the ALP?---It would depend on – it would depend on who’s assisting.

Yes. But say it’s Neil Fuller under an SOW. We’ve just seen that he charges $1459 in this SOW. Is that quite a common occurrence that someone who charges that much, like Neil Fuller, would be a designated assistant to you?---It – it could – as I said, it could very well be common depending on who the person is and where they’re from. Rates are different in any geographic location.

124    Mr Russell gave evidence that he did not set the rates and he did not know how they were set. He also said that the experience of the practitioner may be relevant in setting the rates.

General matters regarding the engagements

125    Mr Russell gave evidence in his affidavit about the way the work was performed under the relevant engagements. He stated at paragraphs 79 to 87 of his affidavit:

79.    My work on the Projects involved me advising as to the adoption and implications of proposed structures for Australian taxation purposes. The corporate structures and matters I was advising upon for the purposes of the Projects were complicated and involved. For me to properly advise as to the adoption and implications of some proposed structures as part of the Projects involved an iterative process, often in conjunction with development and consideration of a step plan, setting out the steps proposed to implement the structure. Proposals, options and steps were progressively analysed and varied as part of that process before I could arrive at a concluded position. This iterative process required me to give advice progressively and informally (that is, not as formal written opinions) as proposed structures were considered and rejected.

80.    I was the partner responsible for the tax advice which was provided to JBS under the Contested SoWs and in relation to the Projects. I was conscious of that throughout my work on those engagements (and more generally). I was also the person with primary responsibility for directing the work undertaken by those who assisted me. I have provided further detail in respect of the PwC Australian team above in paragraphs 70 - 75. Throughout the Relevant Period, I regularly directed them as to the work that I wanted them to perform and they regularly reported to me as to this work.

81.    I also considered, in relation to aspects of the various Projects, for me to provide my advice as to the Australian taxation issues (including as to the adoption and implications of a proposed structure, step or action), that I needed input in relation to various other subject matter areas. In undertaking my work during the Relevant Period, I sought, and considered, such input. The nature of the input depended on the Project and the particular issue being considered. However, at different points in time throughout the Relevant Period, and in relation to various issues that arose throughout, this input included:

(a)    input as to the Australian accounting implications;

(b)    input as to potential stamp duty implications;

(c)    input as to potential transfer pricing issues and documentation; and

(d)    input as to potential issues and implications arising under foreign taxation laws, including, in particular in the United States or Brazil (but also in some other jurisdictions such as Luxembourg, the United Kingdom and Ireland).

82.    So, for example, in undertaking my work, I did not consider that it would be sensible (and would be against my instructions from Mr Alvares) for me to advise as to the appropriateness of a structure or step or action if it gave rise to significant adverse implications under the taxation rules of another country or significant adverse stamp duty implications. There would be no point to me doing so, as such a structure would not be viable. Therefore, I considered that before and while giving such advice, I had to be satisfied in respect of any foreign tax implications and stamp duty implications.

83.    In relation to various issues, I considered that for me to provide tax advice to JBS it was necessary for me to understand a number of aspects of the Australian accounting implications to potential and actual transactions. For example, in respect of the GRAP:

(a)    [redacted].

(b)    [redacted].

(c)    [redacted] (as I have described above).

84.    In relation to various issues, I also considered that for me to provide tax advice to JBS it was necessary for me to understand the likely Australian stamp duty implications of the steps in any transaction that was being considered. [Redacted].

85.    Further, [redacted].

86.    So, by way of example, one particular issue I became aware of following discussions with personnel of PwC Brazil [redacted].

87.    Ultimately, the Australian tax advice reflected in the deliverables provided to JBS under the Contested SoWs set out my opinion, following my consideration of the relevant matters including the input which I received in respect of other subject matters.

I accept this as an accurate description of Mr Russell’s general practice in relation to the projects.

126    Mr Russell also gave evidence in his affidavit about his usual practice in preparing advices. He stated at paragraphs 89 to 91 (which I accept as an accurate description of Mr Russell’s usual practice):

89.    As a partner, it was not my usual practice during the Relevant Period to undertake the first substantial drafting exercise in respect of a detailed advice. I was usually responsible for the supervision and direction of such advice. I provided supervision and direction in the preparation of such advice and I usually discussed its contents before asking those assisting me to prepare the first draft. I was usually heavily involved in the development of the text after the first draft was prepared, and I provided instructions and comments as to the content of the advice. I was also involved in drafting substantive aspects of the advice where necessary, and re-drafting the text provided by others. I reviewed such advice and satisfied myself that the advice reflected my views and opinions before it was finalised. In the context of advices I prepared for JBS, I followed that practice, with one or more of Mr Stewart, Mr Ali, Mr Campbell and Ms Low taking the lead on the first substantial drafting exercise.

90.    It was the practice within PwC at the time, and my practice, to have another partner (or partners) review advice on complex tax matters for the purposes of quality assurance. In the context of advices I prepared for JBS, I asked Mr Fuller or Mr Dunn (and while I cannot recall, it was likely I also asked other partners) to review my advice.

91.    In my experience it is not unusual to provide a formal written opinion in respect of a transaction following its implementation. The steps are implemented on the basis of advice provided incrementally (largely in emails and comments in updated step plans, or in documents that captured advice on a step by step basis as the GRAP steps evolved) in the development of the transaction. A step plan for the transaction is usually developed with comments (including comments as to tax implications) on those steps provided by the advisers. That is commonly used as “working advice”. This “working advice” is then written up in a more detailed formal opinion. This was the approach that was taken with Project Twiggy, Project Twiggy - Phase 2 and the GRAP. However, these in large part reflected analysis which had been undertaken a significant time beforehand, in the process of the proposed transactions being considered and developed. As steps were proposed and options developed I would consider the income tax implications of them as part of my consideration as to whether to recommend them to the JBS Australia Group.

127    In cross-examination, Mr Russell gave the following evidence:

[SENIOR COUNSEL FOR THE COMMISSIONER]: … in your affidavit, there are many references to what you say is your advice, and I’m curious to know and understand what you mean by this. So when you have substantial input from NLPs, or non-legal practitioners, do you still say that you, as the lawyer, are providing the advice?---I do. Yes.

128    Mr Russell gave evidence during cross-examination that he did not hold himself out to be a “deep stamp duty expert” and that he did not practise in that area on a day-to-day basis. Further, he said that he did not hold himself out to be a “deep specialist in transfer pricing”. Mr Russell gave the following evidence:

Where you have a matter which is outside your expertise – that is, you do not have sufficient relevant professional expertise – you will need to get one of your assistants to prepare the first draft. Is that correct?---Yes, that is correct as a general proposition.

129    The following exchange subsequently took place:

Mr Russell, I’m not asking you about simple quick answer advices. I’m asking you where you have an area which is outside your expertise – for example, transfer pricing or stamp duty – and it is substantial, and it is complex, and it’s highly technical, like transfer pricing is, then you would get someone else, one of your assistants in your team, to write the first draft?---Yes. As I’ve explained, that’s – that’s my general practice. That’s right.

And that would be because you do not have the same level of expertise as your assistant?---In – in those two areas that you referred to, I agree with you.

Thank you. Then I put to you the next thing that would happen is your function would be to read that draft advice. Yes?---Yes.

You would – thank you. Then you would come to a level of understanding of that advice?---Yes. Yes.

And then the next step would be that you would conclude that there’s no reason to doubt its accuracy. Its technical accuracy?---Unless there was something I disagreed with or I – or I wanted to challenge or discuss particularly, which is regularly the case. Then if I was comfortable with it after that process then, yes, I would – I would conclude it’s accurate and I would be happy with it as my advice.

130    Mr Russell also gave the following evidence:

When you read a draft advice on an area outside your expertise, do you spend time – appropriate time on the job to actually come to your own view about that advice?---Generally, I do, yes.

So that’s how it becomes your advice?---Yes.

131    During cross-examination, Mr Russell was asked questions about the relative expertise of the ALPs and the NLPs listed in the Statement of Work. In the context of Statement of Work No 7, Mr Russell accepted that the four NLPs who were partners were more experienced than he was in their particular fields. The following exchange took place:

It’s not correct to characterise their role – and that’s the four specialists that I’ve read out; I’ve left out the more junior NLP. It’s not correct to characterise their role in this project as mere assistants to you, is it?---I don’t agree with you on that.

So I would suggest that this agreement is not an agreement to engage just you as a lawyer but to engage a large group of experienced tax advisors for the benefit of their collective advice?---I totally disagree with that.

132    Mr Russell also gave the following evidence:

Right. So you refer on a number of occasions in your evidence to second partner review, and you do so at paragraph 190?---Yes.

Sometimes, you refer to it as quality assurance, at paragraph 90. Now, you say at paragraph 90 of your affidavit that in the context of advices you prepared for JBS, you asked Mr Fuller or Mr Dunn to review your advice for the purposes of quality assurance. That’s what you say at paragraph 90; is that correct?---Yes, it is.

Both of those partners were capable of reviewing your advice because they themselves were experienced tax advisors; is that right?---Yes, I agree.

Now, Mr Fuller and Mr Dunn didn’t only review your advice. They, in fact, signed off on it; would you say that’s correct?---No, I would not say that’s correct.

133    Insofar as the evidence set out in [127]-[132] above relates to Mr Russell’s general practice, I accept that evidence as an accurate description of his general practice. Insofar as views are expressed about matters of legal characterisation, I accept that Mr Russell holds the views that he expressed; ultimately, however, this is a matter for the Court to determine.

134    Ms Manzano gave evidence in her affidavit (which I accept) that, in the case of each of the projects described in her affidavit, it was her expectation that the PwC team (i.e. PwC USA, PwC Brazil and PwC Australia) would liaise with each other to ensure a co-ordinated response to JBS. She also gave evidence (which I accept) that it was important during each of the projects that the teams in each jurisdiction were aware of what was happening elsewhere, so that there was a “co-ordinated approach” and so that there were no adverse impacts in one jurisdiction due to an event in another.

APPLICABLE PRINCIPLES

General matters

135    As a preliminary matter, I note that, in the circumstances of this proceeding, s 118 of the Evidence Act 1995 (Cth) is not engaged; rather, it is the common law doctrine and principles of legal professional privilege that apply.

136    This proceeding is concerned with the advice limb of the common law doctrine of legal professional privilege. In essence, that limb protects from disclosure confidential communications between a lawyer and client made for the dominant purpose of giving or obtaining legal advice or the provision of legal services: Esso Australia Resources Ltd v Commissioner of Taxation (1999) 201 CLR 49 (Esso) at [35] per Gleeson CJ, Gaudron and Gummow JJ; Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543 (Daniels) at [9] per Gleeson CJ, Gaudron, Gummow and Hayne JJ. For ease of expression, in the balance of these reasons, I will not refer repeatedly to the element of confidentiality, which is not here in issue.

137    It is now settled that legal professional privilege is a rule of substantive law: Daniels at [9] per Gleeson CJ, Gaudron, Gummow and Hayne JJ. Being a rule of substantive law and not merely a rule of evidence, legal professional privilege is not confined to the processes of discovery and inspection, and the giving of evidence in proceedings: Daniels at [10]. Rather, in the absence of a provision to the contrary, it may be availed of to resist the giving of information or the production of documents in accordance with investigatory procedures of the kind in s 155 of the Trade Practices Act 1974 (Cth) (now s 155 of the Competition and Consumer Act 2010 (Cth)): Daniels at [10].

138    The underlying rationale for legal professional privilege is that a person should be entitled to seek and obtain legal advice without the apprehension of being prejudiced by subsequent disclosure: Esso at [35], [57] per Gleeson CJ, Gaudron and Gummow JJ, at [78] per McHugh J, at [166] per Callinan J; see also Grant v Downs (1976) 135 CLR 674 (Grant v Downs) at 685 per Stephen, Mason and Murphy JJ; Baker v Campbell (1983) 153 CLR 52 (Baker v Campbell) at 114-116 per Deane J. The doctrine of legal professional privilege seeks to strike an appropriate balance between the competing public interests of encouraging full and frank disclosure by clients to their lawyers, which supports the administration of justice by encouraging the candid obtaining of legal advice and assistance, and seeking the fullest possible access by courts to information relevant to the issues in a case.

139    To qualify as privileged, the lawyer’s advice must satisfy the description of professional advice given by a lawyer in his or her capacity as such: AWB Ltd v Cole (2006) 152 FCR 382 (AWB (No 1)) at [101] per Young J.

140    The privilege belongs to the client and not the lawyer: Esso at [1] per Gleeson CJ, Gaudron and Gummow JJ.

141    Legal professional privilege attaches to a copy document that is provided to a lawyer if the copy was made for the dominant purpose of obtaining legal advice, even where the original document is not privileged: Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501 (Propend); Esso; AWB Ltd v Cole (No 5) (2006) 155 FCR 30 (AWB (No 5)) at [44(11)] per Young J.

142    The privilege extends to any document prepared by a lawyer or client from which there might be inferred the nature of the advice sought or given: Propend at 569 per Gummow J; AWB (No 1) at [127]-[139] per Young J. Examples include communications between the various legal advisers of the client, draft correspondence with the client, and legal research memoranda.

Dominant purpose

143    In order for privilege to arise, it is not sufficient that giving or obtaining legal advice or providing legal services was in part the purpose; it must be the dominant purpose of the relevant communication. In Commissioner of Taxation (Cth) v Pratt Holdings Pty Ltd (2005) 225 ALR 266 (Pratt Holdings (on remitter)), on remitter from the Full Court (discussed below), Kenny J said (at [30]):

(7)    The dominant purpose is not the same as the “primary” or the “substantial” purpose: see Grant v Downs at CLR 678; ALR 580–1 per Barwick CJ. The “dominant” purpose may be described as the ruling, prevailing, paramount or most influential purpose: see Mitsubishi Electric at [10], citing Federal Commissioner of Taxation v Spotless Services Ltd (1996) 186 CLR 404 at 416; 141 ALR 92 at 97–8 per Brennan CJ, Dawson, Toohey, Gaudron, Gummow and Kirby JJ. The “dominant purpose” brings within the scope of the privilege a document brought into existence for the purpose of a client being provided with professional legal services notwithstanding that some ancillary or subsidiary use of the document was contemplated at the time …

144    Justice Kenny also stated at [30]:

(8)    Where two purposes are of equal weight, neither is dominant in the relevant sense. Hence:

(a)    a document is not privileged from production where one purpose for its creation is to obtain legal advice, but there is another equally important purpose; and

(b)    if the decision to bring the document into existence would have been made irrespective of any intention to obtain legal advice, the purpose of obtaining legal advice cannot be the dominant purpose for the making of the document.

145    Whether the dominant purpose of a communication is such as to render it privileged is to be determined as a matter of substance, including by reference to the “content, context and evidence as well as the form of the document”: Seven Network Ltd v News Ltd [2005] FCA 142 (Seven) at [6] per Tamberlin J; see also Pratt Holdings (on remitter) at [30] per Kenny J; Kenquist Nominees Pty Ltd v Campbell (No 5) [2018] FCA 853 (Kenquist Nominees) at [11] per Thawley J.

146    Whether a communication is for the dominant purpose of legal advice depends on the particular facts. The character of some documents may be sufficient to establish the purpose for which they were brought into existence. In other instances, particularly in a case where the documents themselves do not disclose the purpose for which they were created, it may be necessary to identify the circumstances in which the communication took place and the topics to which the instructions or advice were directed: Kennedy v Wallace (2004) 142 FCR 185 at [12]-[17], [41] per Black CJ and Emmett J, and at [144]-[145], [166]-[177] per Allsop J (as the Chief Justice then was); AWB (No 5) at [44(3)] per Young J; Telstra Corporation Ltd v Minister for Communications, Information Technology and the Arts (No 2) [2007] FCA 1445 at [41] per Graham J.

147    The fact that a document is labelled as privileged or as being prepared for legal advice will not establish a privileged dominant purpose: Seven at [6] per Tamberlin J.

Continuum of communications

148    It is established that legal professional privilege may attach to a broader range of communications than formal legal advice and requests for such advice. In Balabel v Air India [1988] 1 Ch 317 (Balabel), Taylor LJ (with whom Lord Donaldson MR and Parker LJ agreed) said at 330:

Although originally confined to advice regarding litigation, the privilege was extended to non-litigious business. Nevertheless, despite that extension, the purpose and scope of the privilege is still to enable legal advice to be sought and given in confidence. In my judgment, therefore, the test is whether the communication or other document was made confidentially for the purposes of legal advice. Those purposes have to be construed broadly. 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.

(Emphasis added.)

149    However, this is not to say that all communications between a lawyer and a client upon matters within the ordinary business of the lawyer are privileged. In Balabel, after discussing various authorities, Taylor LJ stated at 331:

It follows from this analysis that those dicta in the decided cases which appear to extend privilege without limit to all solicitor and client communication upon matters within the ordinary business of a solicitor and referable to that relationship are too wide.

150    The passage from Balabel set out at [148] above has been cited with approval on many occasions: see, eg, DSE (Holdings) Pty Ltd v InterTAN Inc (2003) 135 FCR 151 (DSE) at [38], [45], [52] per Allsop J; Three Rivers District Council v Governor and Company of the Bank of England [2005] 1 AC 610 at [58]-[60], [62], [111]-[112]; Kenquist Nominees at [16] per Thawley J.

151    In DSE, after referring to several passages from Balabel, and discussing the judgment of Colman J (as his Lordship then was) in Nederlandse Reassurantie Groep Holding NV v Bacon & Woodrow [1995] 1 All ER 976, Allsop J stated at [45]:

I do not read the reasons of Taylor LJ as extending the privilege beyond legal advice. The reasoning of Taylor LJ was clearly directed to the privilege being so limited. What legal advice is, however, goes beyond formal advice as to the law. This recognition does not see the privilege extend to pure commercial advice. In any given circumstance, however, it may be impossible to disentangle the lawyer’s views of the legal framework from other reasons that all go to make up the “advice as to what should prudently and sensibly be done in the relevant legal framework” (Taylor LJ in Balabel at 330). That is how I read this last cited paragraph of Colman J: not extending the privilege beyond legal advice to commercial advice, but as recognising the form and nature of advice in a practical day to day context.

152    After discussing Dalleagles Pty Ltd v Australian Securities Commission (1991) 4 WAR 325, a judgment of Anderson J which adopted a similar approach to that in Balabel, Allsop J in DSE stated at [52]:

No debate took place before me as to whether any reconciliation between Balabel and Dalleagles was required, or whether Anderson J’s expression of the scope of the privilege is wider than that of Taylor LJ. (Balabel was not referred to by counsel before me, or before Anderson J.) I doubt that there is any difference of substance. What underlies the expression of opinion in both cases is the recognition that the obligation of the lawyer to advise, once retained, is pervasive. It would be rare that one could, with any degree of confidence, say that a communication between client (or agent) and lawyer, in the circumstances of a retainer requiring legal advice and the directing of the client by a legal adviser, was not connected with the provision or requesting of legal advice. For the reasons given by Taylor LJ in Balabel, Colman J in Nederlandse and Anderson J in Dalleagles, too literal a requirement of identifying legal advice as express advice about the law would place undue emphasis on formalism and undermine the privilege.

153    Difficulties can arise when legal advice and non-legal advice are intermingled. In Kennedy v Wallace, Allsop J at [157] referred to the facts of the case and then stated:

A person can see a legal adviser and receive legal advice and commercial or other non-legal advice. The former will be privileged, the latter not. Difficulties of course can arise in demarcation. Difficulties can arise if the advice is intermingled. The resolution of the issue will generally be a question of fact.

Agent of client

154    For the purposes of legal professional privilege at common law, the description of a client includes an agent of the client: Pratt Holdings Pty Ltd v Commissioner of Taxation (2004) 136 FCR 357 (Pratt Holdings) at [1], [22] per Finn J, with whom Merkel J agreed; DSE at [75] per Allsop J. Whether or not a person is an agent of the client is a question of fact: DSE at [94]. What is necessary is that the third party be the client’s deputed agent to communicate with the lawyer in connection with the provision of legal advice: DSE at [96]; see generally [75]-[96]. Merely labelling a person as an agent does not establish that they are in fact an agent: see South Sydney District Rugby League Football Club Ltd v News Ltd (2000) 177 ALR 611 at [134] per Finn J, cited in Tabcorp Holdings Ltd v State of Victoria [2013] VSC 302 at [106] per Sifris J.

155    If it is determined that a person is an agent of the client, and the agent communicates with the lawyer on behalf of, and at the direction of, the client for the dominant purpose of obtaining legal advice, then those communications are privileged: Pratt Holdings at [1], [22]. In circumstances of agency, the agent “stands in exactly the same position as the client as regards protection, and his communications with the solicitor stand in the same position as the communications of his principal with the solicitor”: Wheeler v Le Marchant (1881) 17 Ch D 675 (Wheeler) at 684-685 per Cotton LJ.

Third parties

156    It is now established that legal professional privilege can extend to communications between the client or lawyer and a third party who is not an agent: Pratt Holdings at [41]-[42], [49] per Finn J (with whom Merkel J agreed), [105]-[107] per Stone J (with whom Merkel J also agreed). See also Nipps (Administrator) v Remagen Lend ADA Pty Ltd (No 6) [2021] FCA 694 at [19] per McKerracher J, quoting Nipps (Administrator) v Remagen Lend ADA Pty Ltd (No 3) (2021) 152 ACSR 196 at [30]-[35] per Banks-Smith J.

157    In Pratt Holdings, Finn J set out at [22] what was then considered to be the orthodox position. His Honour stated:

When one turns to such authority as there is on the question raised by these appeals, adherence to historical assumption appears to hold sway. As I indicated at the beginning of these reasons the apparent orthodoxy is that:

(i)    a documentary communication authored by an employee which satisfies the dominant purpose test will be privileged whether or not communicated by the employee to the legal adviser;

(ii)    a documentary communication authored and communicated to the legal adviser on behalf of the principal by an agent at the principal’s behest which satisfies the dominant purpose test will be privileged; but

(iii)    a documentary communication prepared by a third party (not being an employee or “agent”) with the dominant purpose of the party procuring its creation being its being communicated by that party to the legal adviser is not privileged in the hands of the third party.

158    The issue in Pratt Holdings was whether the proposition expressed in (iii) was correct. Justice Finn stated at [23] that the proposition in (iii) was routinely accepted as being a consequence of the decision in Wheeler, notwithstanding that that case did not involve a documentary communication authored by a third party for transmission by its principal to a legal adviser to obtain legal advice. Justice Finn set out a passage from Wheeler, and described the result as “unsurprising” and the observations in the passage as “unobjectionable”.

159    At [29], Finn J noted that, while there was a deal of Australian authority (mostly at first instance) on third party communications with legal advisers, there was little that touches directly on the issue in dispute in the appeals. After reviewing the case law, Finn J stated at [34] that, in the absence of binding authority, or for that matter Australian appellate authority which the Full Court should follow as a matter of comity, the issue fell to be decided by reference to principle, legal policy and to such authority of other jurisdictions as was persuasive when considered in our domestic setting.

160    At [35], Finn J stated:

Where the issue, as here, is with whether a document attracts legal advice privilege at the time it is brought into existence (as distinct from whether a copy of it is privileged when communicated at a later date: cf Propend Finance), the obvious starting point is with what was the intended use (or uses) of that document which accounted for it being brought into existence: Grant v [Downs] at 692; Propend Finance at 508. In answering that question — which is a question of fact: Waterford v Commonwealth (1987) 163 CLR 54 at 66 — attention necessarily must focus on the purpose (or purposes) of the person who created the document, or who, if not its author, had the authority to, and did, procure its creation: Grant v Downs at 677; Hartogen Energy Ltd (in liq) v Australian Gas Light Company (1992) 36 FCR 557 at 568-569; Mitsubishi Electric Australia at 338; Guinness Peat Properties Ltd v Fitzroy Robinson Partnership [1987] 1 WLR 1027 at 1036 ff.

161    After referring to the circumstances of the case, which involved the preparation of a report by Pricewaterhouse Coopers at the request or direction of a Mr O’Halloran of Pratt Holdings Pty Ltd (Pratt Holdings), and noting that the primary judge had not found it necessary to make a finding as to what Mr O’Halloran’s (and hence Pratt Holdings’) purpose was or purposes were in procuring the report, Finn J stated at [37]-[39]:

37    Let it be assumed that his dominant purpose was to personally communicate that report or its contents to Arnold Bloch Leibler (ABL) for the purpose of obtaining the required legal advice. This assumption, I should interpolate, conceals the real difficulties that can arise in a case such as the present — a matter returned to below.

38    It is accepted that, when Pratt Holdings received the report and sent it to ABL in effectuation of its purpose, that communication with its solicitors attracted legal advice privilege. What is not accepted is that the step which was a necessary precondition to effectuating that purpose — ie, the transmission of the report from PricewaterhouseCoopers to Pratt Holdings for its submission to ABL — resulted in the report and its pendant documents, if I might so describe them, having or retaining the character of privileged documents in PricewaterhouseCooper’s hands for which Pratt Holdings could claim privilege.

39    I have already commented upon what I consider to be the patent artificiality flowing from the denial of privilege in such circumstances. If Pratt Holdings had its own and appropriately qualified accounting staff which prepared a like report, that report would have been privileged. Equally, if it had directed PricewaterhouseCoopers to send the report directly to ABL, it would likewise be privileged as Pratt Holdings would have thus constituted PricewaterhouseCoopers its agent to make the, or else a part of the: see Propend at 571-572; communication by Pratt Holdings to ABL for the purpose of obtaining legal advice.

162    After noting that, on the facts of the case, PricewaterhouseCoopers was not relevantly the agent of Pratt Holdings, Finn J stated at [41]-[42]:

41    To deny that a third party is an agent in such circumstances does not, though, provide a sufficient or principled reason for denying privilege to the documentary communication (or contents) it has authored. The important consideration in my view is not the nature of the third party’s legal relationship with the party that engaged it but, rather, the nature of the function it performed for that party. If that function was to enable the principal to make the communication necessary to obtain legal advice it required, I can see no reason for withholding the privilege from the documentary communication authored by the third party. That party has been so implicated in the communication made by the client to its legal adviser as to bring its work product within the rationale of legal advice privilege.

42    There are, in my view, clear reasons of policy that support extending the privilege to such third party authored documentary communications. Whether a natural person or a corporation, a party seeking to obtain legal advice may not have the aptitude, knowledge, skill and expertise, or resources to make adequately, appropriately or at all such communication to its legal adviser as is necessary to obtain the advice required. Such is commonplace today where advice is sought on complex and technical matters. To deny that person the ability to utilise the services of a third party to remedy his or her own inability or inadequacy unless he or she is prepared to forego privilege in the documents prepared by the third party, is to disadvantage that person relative to another who is able adequately to make the desired communication to a legal adviser by relying upon his or her own knowledge, resources, etc.

(Emphasis added.)

163    At [44], Finn J noted that, for the purposes of the earlier discussion, he had assumed that PricewaterhouseCooper’s report had been prepared at Mr O’Halloran’s direction with the dominant purpose of it being, or being part of, Pratt Holdings’ communication to ABL to obtain legal advice. His Honour then stated: “That assumption is a large one.” In the paragraphs that followed, Finn J discussed (in terms that are highly relevant for present purposes) some of the issues relating to purpose in the context of communications involving third parties:

45    While the question of Pratt Holdings’ purpose(s) in this matter is simply one of fact, particular care needs to be taken in evaluating evidence of purpose in a setting in which the third party performs a professional function for a principal in a non-litigation setting but in a matter in which legal advice is to be or is being sought by that principal. There is a number of reasons why this is so. First, the third-party principal relationship (be it accountant-client, assessor-client or otherwise) will not as such attract privilege to any exchanges made in it: Baker v Campbell at 66, 75, 94 and 128. For this reason alone caution needs to be taken in determining whether the parties’ relationship has a character other than the above for privilege purposes.

46    Second, the matter or transaction in respect of which legal advice is sought may well be one in which the principal considers it necessary or appropriate to obtain advice as well from other professional and business sources. In determining the preferred structure of a business transaction, for example, a person might consult not only a lawyer, but also one or more of an accountant, a financial planner and a merchant banker for advice: cf Kennedy v Wallace at [60]. The advices given by such other advisers will rarely be capable of attracting privilege for the reason that they will almost invariably have the character of discrete advices to the principal as such, with each advice, along with the lawyer’s advice, having a distinctive function and purpose in the principal’s decision-making — albeit all of the advices may be interrelated in the sense of providing collectively a basis for informed decision by the principal. Those other advices will not later acquire the character of privileged documents in the respective adviser’s hands: cf Propend; merely because the principal subsequently makes the advices available to his or her lawyer when obtaining legal advice. Importantly, as Deane J observed in Baker v Campbell at 112, privilege does not “extend to protect things lodged with a legal adviser for the purpose of obtaining immunity from production”. Neither does it extend to third party advices to the principal simply because they are then “routed” to the legal adviser.

47    Third, notwithstanding the principal’s stated purpose in having a documentary communication brought into existence, the principal may have so conducted himself or herself in the matter as to indicate that the intended use of the document authored by the third party was not its communication to the legal adviser as the principal’s communication, but rather it was to advise and inform the principal concerning its subject matter, with the principal then determining (a) in what manner, if at all, the whole or part of the document would be used by the principal in making its own communication or (b) the purpose(s) for which the document could or should be used. The less the principal performs the function of a conduit of the documentary information to the legal adviser, the more he or she filters, adapts or exercises independent judgment in relation to what of the third party’s document is to be communicated to the legal adviser, the less likely it is that that document will be found to be privileged in the third party’s hands. This will be because the intended use of the document is more likely to be found to be to advise and inform the principal in making the principal’s communication to the lawyer (whether or not that communication embodied wholly or substantially the content of the document) and not to record the communication to be made.

(Emphasis added.)

164    It is important to note the carefully terms in which Finn J expressed his reasons, and the approach indicated in the above passage as to the ascertainment of dominant purposes in a context involving communications with third parties.

165    In separate reasons, Stone J came to the same conclusion. I note that, at [86], Stone J referred to the fact that the situations in which people need legal advice are increasingly complex and that the client may need the assistance of third party experts “if he or she is to be able to instruct the legal adviser appropriately” (emphasis added). Similarly, at [104], Stone J referred to the increasing complexity of commercial arrangements and of the law, including tax, corporations and securities legislation, and observed that a “company that wishes to obtain legal advice as to its obligations under such legislation may well need to rely on experts to assist it in instructing its legal advisers” (emphasis added). I have emphasised these words, as they indicate the type of communications that were the focus of consideration in Pratt Holdings.

166    In the following passage, as well as setting out her conclusion on the issue, Stone J emphasised the difficulties in proving dominant purpose in cases involving communications with third parties:

105    The coherent rationale for legal professional privilege developed by the High Court does not lend itself to artificial distinction between situations where that expert assistance is provided by an agent or alter ego of the client and where it is provided by a third party. Nor, in my view, should the availability of privilege depend on whether the expert opinion is delivered to the lawyer directly by the expert or by the client. Provided that the dominant purpose requirement is met I see no reason why privilege should not extend to the communication by the expert to the client. This approach is consistent with the High Court’s ruling in Daniels (see [84]) that legal professional privilege protects communications and therefore prevents the disclosure of information or documents that would reveal communications protected by the doctrine.

106    I do not accept that this approach would lead to uncontrollable extension of the privilege. The difficulties in proving the relevant purpose should not be underestimated. Advice as to commercially advantageous ways to structure a transaction are extremely unlikely to attract privilege because the purpose in putting the advice together will, in most cases, be quite independent of the need for legal advice. Even if the parties have in mind that the advice will be submitted to a lawyer for comment, the purpose is unlikely to be the dominant purpose. Determining the dominant purpose underlying a communication may be difficult but no more so than many questions that come before courts. Courts would need to take into account exactly what function was served by the expert advice and whether it was really required in order to instruct the legal advisers fully. Obviously if the third party is an agent of the client and the client has the requisite purpose the determination is comparatively simple. Similarly if the material sought by the lawyer is required for litigation it is not difficult to determine the chain of authority and to find the requisite purpose; see, however, [90]. Ultimately the question is one of fact and the onus is on the person seeking privilege protection to establish the case.

(Emphasis added.)

167    Although the question of “onus” is discussed in more detail below, it is convenient to note at this point that, in the last sentence of the above passage, Stone J (with whom Merkel J agreed) held that the onus is on the person seeking privilege protection to establish the case.

168    The judgment in Pratt Holdings was followed by the Full Court of this Court in State of New South Wales v Betfair (2009) 180 FCR 543 at [26] per Kenny, Stone and Middleton JJ; see also at [29]-[31], [40].

169    In Asahi Holdings (Australia) Pty Ltd v Pacific Equity Partners Pty Ltd (No 4) [2014] FCA 796 (Asahi), Beach J followed the judgment of the Full Court in Pratt Holdings in setting out relevant principles. In particular, Beach J stated at [40]:

… where a third party such as an accountant, broker, merchant banker, financial adviser, due diligence specialist and others of a non-legal genus perform work for a client in a non-litigation setting, care needs to be taken with analysing the precise purpose for each communication. Take a substantial acquisition or merger. A client may engage and seek advice from a number of non-legal advisers as well as consulting lawyers. Legal and non-legal advice might be sought on the structure, bid vehicle, terms and conditions of any offer or agreement, finance of the bid vehicle, due diligence of the assets and liabilities of the target, assessment of the financial metrics of the target pre and post-acquisition such as EBITDA including any underlying projections, and so forth. In short, legal and non-legal advice might be sought on the same topic so that the topic in all its dimensions is fully analysed by and for the client. The various advices given by the non-legal advisers “will rarely be capable of attracting privilege for the reason that they will almost invariably have the character of discrete advices to the principal as such, with each advice, along with the lawyer’s advice, having a distinctive function and purpose in the principal’s decision making…” (Pratt at [46]).

170    The following principles or propositions concerning communications between a (non-agent) third party and a lawyer or client, and the question of legal professional privilege, emerge from the authorities discussed above:

(a)    The important consideration is the nature of the function the third party performed for the client. If that function was to enable the client to make a communication necessary to obtain legal advice, privilege may attach to a documentary communication authored by the third party. The third party has been “so implicated” in the communication made by the client to its legal adviser as to bring the third party’s work-product within the rationale of legal advice privilege: Pratt Holdings at [41] per Finn J (Merkel J agreeing).

(b)    The question of the client’s purpose or purposes is one of fact. Particular care needs to be taken in evaluating evidence of purpose in a setting in which the third party performs a professional function for a client in a non-litigation setting, but in a matter in which legal advice is to be or is being sought by that client: Pratt Holdings at [45] per Finn J (Merkel J agreeing); see also at [106] per Stone J (Merkel J agreeing).

(c)    For example, in determining the preferred structure of a business transaction, a person (the client) might consult not only a lawyer, but also one or more of an accountant, a financial planner and a merchant banker for advice. The advices given by such other advisers will rarely be capable of attracting privilege for the reason that they will almost invariably have the character of discrete advices to the client, with each advice, along with the lawyer’s advice, having a distinctive function and purpose in the client’s decision-making – albeit all of the advices may be interrelated in the sense of providing collectively a basis for informed decision by the principal: Pratt Holdings at [46] per Finn J (Merkel J agreeing); Asahi at [40] per Beach J; see also Pratt Holdings at [106] per Stone J (Merkel J agreeing).

(d)    Privilege does not extend to protect “things lodged with a legal adviser for the purpose of obtaining immunity from production”: Baker v Campbell at 112 per Deane J; Pratt Holdings at [46] per Finn J (Merkel J agreeing). Nor does it extend to third party advices to the client simply because they are then “routed” to the legal adviser: Pratt Holdings at [46].

Law graduates

171    Given that PwC Australia’s model for the provision of legal services relies in part on an analogy with work done by law graduates in a traditional law firm or legal practice within an accounting (or professional services) firm (see [51] above), it is relevant to make some observations about the way in which such work may be characterised for the purposes of legal professional privilege.

172    It is not uncommon in traditional law firms, and, I assume, legal practices within accounting (or professional services) firms, for law graduates (previously known as articled clerks) to prepare draft letters of advice or memoranda of advice under the direction and supervision of a legally qualified partner or employee solicitor. The partner or solicitor then substantively reviews the advice, makes whatever changes he or she considers appropriate, and sends the letter or memorandum to the client under his or her own name (or the law firm’s name). In such a scenario, although most or even all of the drafting has been carried out by the law graduate, the letter or memorandum may be treated as the legal work of the partner or solicitor (and hence capable of attracting legal professional privilege) in circumstances where the law graduate’s work was carried out under the supervision and direction of the lawyer, the lawyer substantively reviewed the draft, and the lawyer adopted the work as his or her own by sending it out under his or her name. See generally Kiefel v State of Victoria [2012] FCA 622 at [16]-[18] per Gordon J; Glengallan Investments Pty Ltd v Arthur Andersen [2002] 1 Qd R 233 at [19] per Williams JA, with whom McPherson JA and Ambrose J agreed. In considering whether these elements are present, it is relevant to consider the expertise of the lawyer in relation to the relevant legal work; the lawyer must have sufficient knowledge and experience to be able to substantively review the law graduate’s work.

173    Importantly, in the scenario described above, the role of the lawyer in the preparation and finalisation of the advice is substantive; the lawyer is not merely a conduit through which advice is provided by the law graduate to the client.

Parts of documents

174    The parties and the Amici Curiae approached the issues in this proceeding on the assumption that it is open to the Court to hold that privilege applies to part, as distinct from the whole, of a particular documentary communication. I accept that it is open to the Court to do so in an appropriate case. In Kennedy v Wallace, Allsop J stated at [158]-[159]:

158    If there is one conversation or one body of writing incapable of being broken up into which there is intermingled privileged material and non-privileged material the communication as one or as a whole will only be protected if the dominant purpose of the communication or the creation of the writing was to give or receive or record legal advice.

159    If a conversation or a note can be divided up such that privileged and non-privileged material can be segregated, the communications or writing made for the dominant purpose of obtaining legal advice will be privileged, even if the balance of the communications, perhaps even if most of the communications go to other matters. One does not lose privilege on a note made as an aide-memoire for the asking of legal advice by putting 10 other notes on the same page to remind one to ask about 10 other topics. It depends on the nature of the communication or writing and the circumstances of the creation of the document.

Email chains

175    The application of the principles of legal professional privilege in the context of email chains was discussed by Thawley J in Kenquist Nominees at [19]. Relevantly for present purposes, I consider that the principles apply to email chains in the following way (referring to the latest email in time as the “latest email”):

(a)    If the communication being the latest email was made for the dominant purpose of the giving or receiving of legal advice, then it may be that the email chain will be privileged because the earlier emails in the chain are to be regarded as copies of documents provided for the dominant purpose of the giving or receiving of legal advice.

(b)    For example, if the dominant purpose of the communication being the latest email was the giving of legal advice by a lawyer, then it may be that the email chain will be privileged because the earlier emails in the chain are to be regarded as copies of documents furnished by the lawyer with the advice being the latest email: see Kenquist Nominees at [19(2)].

(c)    By way of further example, if the dominant purpose of the communication being the latest email was the obtaining of legal advice from a lawyer, then the email chain may be privileged because the earlier emails are to be regarded as copies of communications provided to the lawyer for the dominant purpose of obtaining legal advice: see Kenquist Nominees at [19(3)].

(d)    The same principles can apply to earlier emails in the chain. For example, it may be that the latest email in the chain is not privileged, but the penultimate email (in time) may be a communication made for the dominant purpose of the giving or receiving of legal advice, and the earlier emails are to be regarded as copy documents which have been provided for the same dominant purpose.

Onus of proof

176    One of the issues between the parties concerns the onus of proof in the present case. The Commissioner contends that the onus is on the party claiming privilege. The respondents contend that the onus is on the Commissioner, as the moving party in the proceeding.

177    Ultimately, I do not consider the issue of onus to be of particular significance in this case, because there is sufficient material before the Court for the privileged status of most, if not all, of the Sample Documents to be determined regardless of onus. Nevertheless, if and to the extent that it matters, I express the following views.

178    Generally, at common law the “party asserting a claim” is required to prove that claim (Federal Commissioner of Taxation v Cassaniti (2018) 266 FCR 385 at [5] per Logan J), and ordinarily this rule applies where a party seeks a declaration, including a negative declaration. However, it does not follow from this that the Commissioner bears the onus of proof in the present case. To the contrary, and although the position is not free from doubt, in my view the circumstance that the claim for a negative declaration concerns whether documents are protected by legal professional privilege (see, in particular, the second declaration sought by the Commissioner, set out at [10] above) means that the onus is on the party claiming privilege.

179    The relief sought by the Commissioner in the present case is substantially the same as the relief sought in the litigation relating to legal professional privilege involving Pratt Holdings. The structure of the proceeding is described in Commissioner of Taxation v Pratt Holdings Pty Ltd (2003) 195 ALR 717 (Pratt Holdings (first decision)), which was the subject of appeal in Pratt Holdings. The Commissioner, in the course of a tax audit, sought to access documents under s 263 of the ITAA 1936, and Pratt Holdings denied the Commissioner access, on the ground of legal professional privilege. The Commissioner issued an application in the Federal Court seeking two declarations: first, a negative declaration, that the documents were not privileged; and second, a declaration that, in the terms of s 263, he was entitled to have “full and free access” to the documents under that provision: see Pratt Holdings (first decision) at [1] per Kenny J. In effect, the second declaration was consequential on the first.

180    In the first decision, Kenny J stated that it was for Pratt Holdings to establish that the documents in dispute were privileged: Pratt Holdings (first decision) at [67], citing Waugh v British Railways Board [1980] AC 521 at 541 (a case decided in the context of a dispute as to inspection upon discovery). On appeal, Stone J, with whom Merkel J agreed, expressed the same view, namely that the onus is on the person seeking privilege protection to establish the case: Pratt Holdings at [106] (quoted above). Justice Finn did not address this issue, but observed that whether a document attracts legal advice privilege is a question of fact, before addressing the evidence adduced by Pratt Holdings as to the purpose that led to the creation of the documents: at [35]-[45]. The matter was remitted to the primary judge, who again stated that Pratt Holdings carried the onus of establishing its claim for privilege: Pratt Holdings (on remitter) at [30(1)]. Justice Kenny stated:

(1)    Pratt Holdings carries the onus of establishing its claim for privilege, whether by evidence as to the circumstances in which the documents were brought into existence, reference to the nature of the documents, or by argument: see Grant v Downs (1976) 135 CLR 674 at 689; 11 ALR 577 at 589 per Stephen, Mason and Murphy JJ (Grant v Downs) and Mitsubishi Electric Australia Pty Ltd v Victoria WorkCover Authority (2002) 4 VR 332; [2002] VSCA 59 (Mitsubishi Electric) at [11] per Batt JA, with whom Charles and Callaway JJA relevantly agreed.

181    PwC Australia submits that, in these cases, the issue of onus appears to have been assumed and not the subject of argument or dispute between the parties. It is not clear from the judgments whether or not that is the case. In any event, in circumstances where the Court in each of the three cases expressed a clear view on the matter, I consider it appropriate to follow those decisions.

182    Further, and consistently with the above, in Australian Crime Commission v Stewart (2012) 87 ATR 31 (ACC v Stewart), the Australian Crime Commission sought a declaration that legal professional privilege did not apply. Justice Stone held at [69] that it was for “the respondents, being the parties who claim the benefit of legal professional privilege to prove that the applicable criteria have been met”.

GROUND A

183    By ground (a) of the amended originating application, the Commissioner contends that the form of the engagements, reflected in the Statements of Work, did not establish a relationship of lawyer and client sufficient to ground a claim for legal professional privilege. By his particularisation of ground (a), the Commissioner contends that the interposition of the NLPs, whose role is to: (a) assist the ALPs in the provision of legal services to the client; (b) act under the direction of the ALPs; (c) act as agents of the client for the purposes of giving instructions to the ALPs; and (d) act as agents of the client for the purposes of receiving legal advice and services from the ALPs, undermines any relationship of lawyer and client, and does not allow for the creation of a relationship of lawyer and client.

184    In support of this ground, the Commissioner submits that, what can be seen in the engagement structure embodied in the Statements of Work is an “especially formalistic attempt” to bring NLPs within the scope of a relationship between the ALPs and the client; in so doing, the Statements of Work create a role for the NLPs that is “so obscure and multifaceted” that it prevents the lawyer-client relationship necessary for privilege from arising.

185    The Commissioner accepts that, as a matter of structure there is nothing inherently wrong with a lawyer being assisted by a non-lawyer (such as a law clerk or a paralegal) who acts on the lawyer’s behalf as servant or agent or alter ego and under his or her supervision. The Commissioner also accepts that privilege may arise in respect of communications to and from a third party who performs a function in furtherance of the solicitor-client relationship.

186    The Commissioner submits, however, that the Statements of Work, by the “Communications Protocol” “introduce something quite radical”. Although the Communications Protocol has been set out above, I set it out here for ease of reference:

Communications Protocol

To facilitate delivery of the services you appoint the non legal practitioners who assist in the provision of the legal services as your agents for the purpose of communications to and from the legal services team. This includes giving instructions to and receiving legal advice and services from the Australian legal practitioners.

We will communicate with you regarding our legal services and provide our legal advice separately from communications and advice regarding any non-legal matters.

187    The Commissioner submits that this term serves to appoint the very same NLPs who are said to “assist” the ALPs and to act under the ALPs’ direction as agents of the client, including for the purposes of:

(a)    giving instructions to the ALPs (as agents of the client);

(b)    receiving advice from the ALPs (as agents of the client); and

(c)    receiving services from the ALPs (as agents of the client).

188    The Commissioner submits that, in appointing the non-lawyers as the client’s agents, the Statements of Work have a very different result, namely they prevent any lawyer-client relationship arising in the first instance; that is because the structure designates to the non-lawyers conflicting roles:

(a)    First, they have the role of “assisting” the lawyers in the provision of legal services and under their direction.

(b)    Second, they have the role of representing the client vis-à-vis the lawyer, including by giving instructions to the lawyers and by receiving legal advice and services from them.

189    The Commissioner submits that: what results is the non-lawyers having a foot in both camps: at any one time, they are both the “lawyer” and the “client” in the purported lawyer-client relationship; what results from the appointment of the lawyer’s NLP colleagues as agents of the client vis-à-vis the lawyer is an “impermissible intertwining” of the adviser and the client, and the “collapse of the necessary independence” required for a lawyer-client relationship to arise; the result is a “flawed engagement structure” which undermines the ability of the nominated ALPs to act in the professional capacity of a lawyer.

190    In my view, as a matter of form, the Statements of Work do establish a relationship of lawyer and client sufficient to be able to ground a claim for legal professional privilege. The key features of the Statements of Work have been summarised at [89] above. Each Statement of Work identifies the client, the ALPs who are to provide the services, the NLPs who will assist the ALPs in the provision of those services, and describes the services to be provided as legal services. The identified ALPs are lawyers qualified such as to be capable of being in a lawyer and client relationship which gives rise to privileged communications.

191    In these circumstances, and noting that there is no prescribed form for a retainer that must be met in order for privilege to arise, as a matter of form the Statements of Work are capable of establishing the requisite lawyer and client relationship within which communications may be protected by legal professional privilege.

192    While the structure of the relevant engagements, in particular the appointment or nomination of the NLPs as agents of the client (for the purpose of communications to and from the legal services team) and as persons who may assist in the provision of legal services (under the direction of the ALPs), is perhaps confusing, I am not satisfied that, as a matter of principle, the same person cannot be appointed to both roles or that there is necessarily a conflict between the roles. Both in acting as agent (in the limited way described in the Statement of Work) and in providing assistance, the NLP is acting in the best interests of the client – there is no necessary conflict of interest. I therefore do not consider that this aspect of the structure precludes the establishment of a lawyer-client relationship sufficient to ground a claim for legal professional privilege.

193    Insofar as the Commissioner contends that the structure produces a loss of independence, the requirement of independence has generally arisen in the context of in-house lawyers and issues of legal professional privilege. I am not satisfied that this requirement presents a difficulty in relation to the role of the NLPs in the present case. The limited scope of the NLPs’ appointment as the client’s agents (instructing the ALPs, and receiving advice and services from the ALPs) does not result in the NLPs having an “interest” in the outcome of the matter; they remain able to be professionally detached.

194    For these reasons, ground (a) is not made out.

GROUND B

195    By ground (b), the Commissioner contends that, as a matter of substance, the services provided by PwC Australia pursuant to the engagements reflected in the Statements of Work were not provided pursuant to a relationship of lawyer and client sufficient to ground a claim for legal professional privilege.

196    The Commissioner particularises ground (b) as follows:

(a)    the services provided under the Statements of Work involved substantial non-legal input from NLPs, including NLPs who were senior partners of PwC Australia with their own areas of expertise;

(b)    the engagement of individual ALPs and NLPs under each Statement of Work was express and in writing;

(c)    having regard to the relative seniority, experience, and expertise of the ALPs and the NLPs vis-à-vis each Statement of Work, and the relative contribution by the ALPs and NLPs vis-à-vis each other (in terms of hours recorded and billed, and relative charge-out rates) in the performance of services for the JBS Parties:

(i)    the services performed by the NLPs cannot be characterised as being in the nature of assistance to the ALPs;

(ii)    the services performed by the NLPs pursuant to the Statements of Work cannot be characterised as having been performed under the direction of the ALPs;

(iii)    the NLPs did not act as agents for the client for the purposes of giving instructions to the ALPs or receiving legal advice and services from the ALPs; and

(iv)    the ALPs’ contribution to the services performed is insufficient to ground a claim for legal professional privilege.

197    The Commissioner submits that the evidence reveals that:

(a)    First, the real substance of the engagements reflected in the Statements of Work was for the provision of advice by a diverse group of accountant and tax advisers with their own distinct specialties in their capacities as accounting and tax advisers.

(b)    Second, the services performed pursuant to the Statements of Work included advice on issues outside of the expertise of the nominated ALP partner, Mr Russell.

(c)    Third, Mr Russell’s own role was not primary.

(d)    Fourth, many of the NLPs who performed services pursuant to the Statements of Work were more senior than the ALPs and commanded higher charge-out rates.

(e)    Fifth, the majority of the work performed pursuant to the Statements of Work, in terms of hours recorded, was performed by NLPs and not ALPs.

(f)    Sixth, Mr Russell provided services to JBS already, and simultaneously, in the capacity of a non-legal tax adviser.

198    The Commissioner makes detailed submission about each of these matters. It is not necessary to set out those submissions. The Commissioner submits that, in total, what these matters demonstrate is that the Statements of Work do not reflect the reality that JBS engaged PwC Australia as a multi-disciplinary adviser in order to receive multifaceted advice from a group of experienced tax advisers, only some of whom happened to be lawyers. The Commissioner submits that there is no lawyer-client relationship in that situation.

199    I note that, by ground (b), the Commissioner does not seek to impugn the lawyer and client relationship by reference to the character of the services sought and provided under the Statements of Work, and nor could he have done so, not having had access to copies of the Statements of Work in which the parts setting out those services were unredacted. Rather, by ground (b), the Commissioner asks the Court to conclude, from the available material as to the expertise, experience, seniority and quantitative contributions of the ALPs and NLPs involved in the provision of services under the Statements of Work, that the services performed pursuant to them were not fairly referable to a lawyer and client relationship and are not protected by legal professional privilege.

200    I accept some of the factual contentions advanced by the Commissioner in connection with this ground. In particular:

(a)    I accept that the services provided under the Statements of Work involved substantial non-legal input from NLPs, including NLPs such as Mr Fuller and Mr DeBellis, who were senior partners of PwC Australia with their own areas of expertise (international tax and stamp duty respectively).

(b)    As noted above, some of the NLPs who performed services pursuant to the Statements of Work had higher charge-out rates than the ALPs who performed services pursuant to the Statements of Work.

201    Insofar as the Commissioner relies on estimates prepared by Ms Emery of the relative amounts of work performed by ALPs and NLPs, I note that these estimates are contested. I do not consider it necessary to make findings about this factual issue in order to determine this ground.

202    For the reasons that follow, in my view, ground (b) is not made out.

203    Ground (b) is framed by the Commissioner as a global proposition in relation to all work done pursuant to all of the Statements of Work, rather than a proposition put by reference to the creation of any particular document. As such, the ground is advanced as founding the conclusion that all of the Documents in Dispute are not privileged, rather than as producing a conclusion in relation to any particular document.

204    In circumstances where I have concluded that the form of the Statements of Work establishes a relationship of lawyer and client sufficient to be able to ground a claim for legal professional privilege (see ground (a), above), it is not possible, by reference to the expertise, experience, seniority and quantitative contribution of the ALPs and NLPs involved in the provision of services under the Statements of Work, to conclude as a global matter that the services performed pursuant to them were not fairly referable to a lawyer and client relationship, so as not to be protected by legal professional privilege.

205    Whether or not the Documents in Dispute are privileged is to be determined by reference to whether, as to each particular document, it constitutes or records a communication made for the dominant purpose of giving or obtaining legal advice. That question is to be determined by reference to the content of the document, its context, and the relevant evidence relating to it. The question cannot be determined on a global basis.

206    Further, having regard to the Sample Documents and the evidence in relation to them, I am satisfied that, at least in some relevant circumstances, a lawyer-client relationship existed between Mr Russell (an Australian legal practitioner) (and other Australian legal practitioners at PwC Australia) and one or more of the JBS Parties.

207    Many of the matters relied on by the Commissioner in support of this ground may well be relevant when it comes to consider, in the course of ground (c), each of the Sample Documents. However, I do not consider those matters, whether considered individually or cumulatively, to be sufficient to conclude that, as a matter of substance, services provided pursuant to the engagements were not provided pursuant to a relationship of lawyer and client sufficient to ground a claim for legal professional privilege.