Federal CoURt of Australia

Commissioner of Taxation v Alcoa of Australia Ltd [2025] FCA 651

ORDERS

THE COURT ORDERS THAT:

1. The appeal be allowed.

2. The decision of the Administrative Appeals Tribunal be set aside insofar as it relates to the release of documents referred to in [38]–[43] of the affidavit of Yen-Lin Faith Harako sworn on 6 September 2022.

3. The cross-appeal be dismissed.

4. The Respondent pay the Applicant’s costs, to be taxed if not agreed.

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

REASONS FOR JUDGMENT

HESPE J:

1 The applicant (Commissioner) appeals from a decision of the Administrative Appeals Tribunal made on 9 February 2024 to vary a decision of an officer of the Australian Taxation Office (ATO) that refused access to certain documents falling within a request made by the respondent (Alcoa) under the Freedom of Information Act 1982 (Cth) (FOI Act). Relevantly, the ATO officer had decided that some of the documents were exempt documents by reason of s 42 of the FOI Act. On review, the Tribunal concluded that some of those documents were not exempt and should be released to Alcoa.

2 Section 42 of the FOI Act relevantly provides:

(1)     A document is an exempt document if it is of such a nature that it would be privileged from production in legal proceedings on the ground of legal professional privilege.

(2)     A document is not an exempt document because of subsection (1) if the person entitled to claim legal professional privilege in relation to the production of the document in legal proceedings waives that claim.

3 The Tribunal concluded that although the disputed documents would be privileged from production in legal proceedings on the grounds of legal professional privilege, the claim for legal professional privilege had been waived.

4 This case concerns claims of legal professional privilege made by the Commissioner. More frequently, in the context of a tax dispute, the issue of legal professional privilege and waiver concerns claims for legal professional privilege made by taxpayers.

Background

5 In December 2016, the Commissioner commenced an audit of supply arrangements entered into by Alcoa between 1989 and 2009. In December 2019, the Commissioner issued a Statement of Audit Position (SOAP) setting out the Commissioner’s views at that time on the application of the transfer pricing provisions in Div 13 of Pt III of the Income Tax Assessment Act 1936 (Cth).

6 On 3 April 2020, Alcoa made a request pursuant to s 15 of the FOI Act for documents relating to the SOAP. The request was narrowed on 15 June 2020. As narrowed, the request was for:

any documents created, obtained, modified or otherwise held by the ATO in respect of the matters considered in the SOAP that:

1.    was created, obtained or modified by the Tax Counsel Network on or after 14 December 2018;

2.    are (or contain) a communication with any Expert not ordinarily employed in the Australian Taxation Office;

3.    are a communication sent by the Economist Practice in the 30 day period ended on the [business day after provision of the quality assurance approval of the Economist Practice report provided to Alcoa];

4.    are the 10 key work-in-progress drafts of the SOAP and the Economist Report discussed in [a telephone call on 9 June 2020];

but excluding documents previously provided to Alcoa.

7 By decision dated 16 July 2020 (Initial Decision), having identified 53 documents or bundles of documents that fell within the scope of the request, an ATO officer decided to:

(a) release 26 documents in full;

(b) release 20 documents in part. In respect of four documents, the parts not released were considered irrelevant and therefore s 22 of the FOI Act applied. Thirteen documents were considered exempt in part on the grounds of legal professional privilege and therefore s 42 of the FOI Act applied. One document was considered exempt in part under s 47F of the FOI Act because it contained personal contact details of an ATO officer. Some parts of documents disclosing ATO staff mobile phone numbers were considered exempt under s 47E(d) of the FOI Act;

(c) not release seven bundles of documents on the basis that they were exempt. One bundle was not released because the ATO officer considered s 37(2)(b) applied on the basis the documents in the bundle contained information that if disclosed would prejudice the effectiveness of lawful procedures for dealing with breaches or evasions of the law. Four bundles were considered exempt in full on the grounds of legal professional privilege and therefore s 42 of the FOI Act applied. Documents recording communications from the ATO’s Economist Practice relating to the draft Economist Practice report were considered exempt under s 47E(d) of the FOI Act on the basis that disclosure could reasonably be expected to have a substantial adverse effect on the proper and efficient conduct of the operations of the ATO. The ATO officer formed the view that release of these documents would cause the Economist Practice to be unwilling to engage in preliminary discussions with the audit team (prior to the Economist Practice advice being accredited for reliance by the audit team) which would cause the audit to be less effective and efficient.

8 On 31 July 2020, Alcoa requested an internal review of the Initial Decision. On 9 October 2020, an ATO officer conducted an internal review of the Initial Decision (Internal Review Decision). The Initial Decision was varied, resulting in the release of an additional 12 documents in part and an additional 12 documents in full. An exemption over 121 documents was maintained in full. A further six documents originally considered exempt were excluded from disclosure on the basis that they were outside the scope of the request.

9 The Internal Review Decision:

(a) affirmed the Initial Decision with respect to four documents that were released in part on the basis that the information not disclosed was irrelevant to the FOI request;

(b) identified an additional 12 documents where it was reasonably practicable to remove exempt or irrelevant material;

(c) released two documents in full and one document in part, that had originally been regarded as exempt under s 37(2)(b). Three documents continued to be regarded as exempt under s 37(2)(b);

(d) considered 97 documents exempt in full and 16 in part, on the basis that they were subject to legal professional privilege and s 42 of the FOI Act applied;

(e) released further information in relation to Economist Practice communications where those communications did not reveal the internal working processes, deliberations or communications that would impede the timing of the Economist Practice environment with future audit teams. The remaining documents were considered exempt under s 47E(d);

(f) applied s 47E(d) over four documents relating to an external expert that had been found by the Initial Decision to be exempt pursuant to s 45 of the FOI Act;

(g) considered some documents to be exempt on the basis that they contained deliberative matter for the purposes of s 47C of the FOI Act because they recorded opinions, interim decisions and deliberations of the ATO.

10 Following a decision by the Information Commissioner on 6 August 2021 not to undertake a review of the Internal Review Decision, Alcoa applied to the Tribunal for review of the Internal Review Decision.

proceedings before the tribunal

11 The process before the Tribunal resulted in a variation to the documents in dispute. The number of disputed documents increased largely as a result of ATO officers identifying additional documents as falling within the scope of the FOI request. Relevantly:

(1) Following the Internal Review Decision, 393 documents were in dispute. The ATO then withdrew exemption claims under ss 37(2)(b), 47C and 47E(d) relating to 29 documents. Alcoa did not seek disclosure of three documents. However, the ATO identified a further 76 documents as falling within the scope of the FOI request. The result was that 437 documents remained in dispute.

(2) On 4 May 2022, the Australian Government Solicitor (AGS) on behalf of the Commissioner wrote to Alcoa’s solicitors, stating that:

In the particular circumstances of this matter, the [Commissioner] proposes to waive privilege over communications with experts falling within paragraph 2 of your client’s revised request for access to documents dated 15 June 2020, save to the extent that those communications comprise or contain legal advice, requests for the provision of legal advice or instructions requested or provided for the purposes of legal advice.

(3) On 3 June 2022, AGS provided Alcoa’s solicitors with an initial schedule of documents for further release.

(4) In June 2022, 217 additional documents were identified as falling within the scope of the request.

(5) On 8 July 2022, AGS informed Alcoa’s solicitors that:

We advise that, since [3 June 2022], the respondent has conducted a further review of those documents following consultation with third parties and other relevant ATO stakeholders. As a result of that review, we have identified that a number of the documents included in the schedule provided to you on 3 June 2022 remain privileged on the basis that they were prepared for the dominant purpose of the ATO being provided with legal advice in relation to the identification, engagement and briefing of an expert, or advice in relation to the preparation of the expert’s report itself. This includes drafts of Mr Bodner’s report. However, we confirm that the final version of this report is no longer the subject of a claim for privilege and will be released, subject to necessary redactions as set out below …

We are instructed that Mr Bodner finalised his expert report on 15 June 2022 (final Bodner report), after the date of your client’s FOI request. As such, the final version of the report is, strictly speaking, outside of the scope of the request.

Despite the final report falling outside the scope of the FOI request, having regard to the history of this matter and the respondent’s decision to waive privilege in the expert report, the respondent proposes to release a copy of the final Bodner report to the applicant outside of FOI subject to the removal of protected information about other third party entities.

(6) Revised schedules of documents in dispute were prepared on 6 September 2022 and 20 June 2023.

(7) On 6 September 2022, a further 341 documents were located and identified as falling within the scope of the request.

12 The Tribunal conducted a hearing over eight days during May and June 2023, including a closed session across three days in which Counsel for the Commissioner made submissions by reference to the documents in issue.

Cross-examination of Ms Yen-Lin Faith Harako

13 Ms Harako had sworn two affidavits which were filed with the Tribunal. She was cross-examined before the Tribunal.

14 During cross-examination, Ms Harako was taken to an email dated 12 December 2019 from an officer in the ATO’s Economist Practice, Guiseppe Lunghitano (the 12 December email). The 12 December email had been released to Alcoa. It included the statement: “In the context of the above, we are aware that an Industry Expert has indicated an appropriate pricing range is 11%–14% of LME for sales of alumina for the period 1993–2009”.

15 It was put to Ms Harako that the “industry expert” referred to in the email was Mr Bodner, because he gave a similar pricing range in the final version of his report. Ms Harako stated that she understood the email (which appeared to be an extract from a draft of the report then being prepared by the Economist Practice for the purposes of the audit) was referring to material provided by Alcoa itself, because that material was cited in the equivalent passage of the final version of the Economist Practice report. She reiterated that view in response to questions in re-examination.

16 In cross-examination, Ms Harako was also taken to a draft of the Economist Practice report dated 12 December 2019 (the 12 December draft Economist Practice report), which had been released to Alcoa. That draft report included an unredacted comment that “Faith may also look at the Independent Expert report and especially his 11%–14% range in making that decision”. It was put to Ms Harako that this comment was also a reference to Mr Bodner’s report, and it disclosed that, as at 12 December 2019, Mr Bodner’s draft report included a pricing range of 11–14%. Ms Harako agreed that was what the document said.

17 In re-examination, Ms Harako was asked when she first became aware of the absence of redaction over the comment she had been taken to, and she stated that it was after she had sworn her affidavits. Ms Harako was also asked what her reaction was on learning of the absence of redaction, and she stated that she was surprised because she would have considered that information to be privileged. Ms Harako was then asked whether she considered the absence of redaction of the comment to be inadvertent or deliberate, and she stated that she thought it was inadvertent.

The decision of the TRIBUNAL

18 The Tribunal found that s 38 of the FOI Act did not apply to some of the documents, contrary to the Internal Review Decision.

19 Some of the claims for exemption under s 47F of the FOI Act were no longer pressed and the balance of the documents for which that exemption had been found on internal review to be satisfied were found by the Tribunal to be so exempt. The Tribunal also accepted the Commissioner’s position in respect of the documents claimed to be outside of the scope of the FOI request.

20 There is no appeal against those aspects of the Tribunal’s decision.

21 The Tribunal commenced its consideration of the claims for exemption under s 42 of the FOI Act by summarising some of the case law concerning legal professional privilege (at TR [20]–‍[25]).

22 The Tribunal then considered the background facts surrounding the creation of the documents. It considered events of 2019 as deposed by Ms Harako to provide the immediate context for the documents over which privilege was claimed (at TR [28]). The events deposed by Ms Harako as set out by the Tribunal (at TR [27]) extended over the period 2017 to 2019 and may be summarised as follows:

(1) In November 2017, the ATO directly briefed external Counsel to provide legal advice in relation to issues associated with the Alcoa audit.

(2) On 6 September 2018, the ATO issued a position paper to Alcoa on the application of the transfer pricing provisions.

(3) On 27 September 2018, the ATO engaged AGS to “work with Counsel and provide legal advice in relation to the issues arising in the audit”.

(4) To assist AGS and Counsel to provide their advice, AGS was briefed by the ATO to engage an industry expert “to advise in relation to issues relevant to the determination of the arm’s length consideration that ought to have been paid” for certain supplies made by Alcoa.

(5) In November 2018, AGS was “formally retained to represent the ATO in its dealings with Alcoa in the context of the audit, and in any proceedings arising out of or connected with the matters the subject of the audit”.

(6) On 14 December 2018 and 15 February 2019, Alcoa responded to the position paper.

(7) On 5 April 2019, the ATO issued Alcoa with a notice pursuant to s 353-10 of Sch 1 to the Taxation Administration Act 1953 (Cth) requiring Alcoa to produce certain documents. Those documents were provided by Alcoa on 10 May 2019.

(8) In May 2019, AGS “formally engaged an industry expert to provide a report to assist AGS and Counsel in providing legal advice to the ATO in connection with the audit and for use in any litigation between Alcoa and the ATO arising out of the subject of the audit”.

(9) In August and October 2019, Alcoa provided further information to the ATO, including a Counsel opinion in relation to some of the issues arising out of the audit.

(10) On 18 December 2019, the ATO issued a SOAP in relation to the audit. The SOAP included as Appendix C a document entitled “Economist Report Alcoa of Australia Report on Alumina Pricing” prepared by the ATO’s Economist Practice.

23 The May 2019 contract between the expert and AGS (as the Customer) was relevantly expressed as follows (noting that any claim for privilege in respect of this document was expressly waived by the Commissioner):

The Supplier agrees to perform the following services in relation to the Matter:

a.     providing oral or written advice to the Customer and the Australian Taxation Office (including the Commissioner of Taxation) from time to time in the form of expert opinions on issues arising in the Matter for the purposes of the Customer (and barristers briefed by the Customer in the Matter) providing legal advice to the Australian Taxation Office (including the Commissioner of Taxation) and for use in anticipated litigation;

b.     reviewing and commenting on documents prepared by the Customer or other persons from time to time;

c.     preparing a report or reports to the Customer and the Australian Taxation Office (including the Commissioner of Taxation) setting out an opinion on questions within the relevant field of expertise, including a report or reports for use in connection with the Proceedings;

d.     analysing relevant documents;

e.     attending any meetings when required, including in connection with the Proceedings;

f.     attending the Proceedings to give evidence; and

g.     such additional services as requested in writing by the Customer from time to time, which must be performed by the Supplier in accordance with any such request,

(together the “Services”).

….

In this clause C.A.2:

“Matter” means the dispute between the Australian Taxation Office (including the Commissioner of Taxation) and Alcoa of Australia Ltd.

“Proceedings” means any proceedings arising in the course of the Matter, including proceedings in a court, tribunal or before a mediator, arbitrator or conciliator.

24 The Tribunal found (at TR [30]) that at least from December 2018 (and therefore prior to the date range relevant to the documents in issue), when Alcoa responded to the ATO’s position paper, litigation was reasonably anticipated because “[b]y that stage Alcoa had engaged lawyers and had clearly rejected the ATO’s claims” and “by that stage, the ATO had been seeking advice from counsel and had engaged [AGS] to advise on issues for the anticipated litigation”.

25 The ATO audit team was assisted by members of the Tax Counsel Network and the ATO’s Economist Practice. The Tribunal accepted evidence that the Economist Practice provided “input to the advice that counsel was asked to provide” (TR [36]).

26 The Tribunal made its findings in relation to legal professional privilege by reference to four categories.

Category 1: Documents in Relation to Industry Expert (Identified at [29]–[45] of the Second Affidavit of Ms Harako)

27 The documents in this category claimed to be exempt recorded communications relating to:

(a) the identification and engagement of the industry expert, Mr Bodner;

(b) drafts of the expert report; and

(c) finalisation of the expert report.

28 The Tribunal found that the industry expert, Mr Bodner, had been engaged to assist with the provision of advice to the ATO by AGS and Counsel in relation to the audit. More specifically, the Tribunal found (at TR [40]) that:

(1) On 1 August 2019, AGS wrote to Mr Bodner requesting expert advice in a written report concerning the arm’s length consideration (as defined in Div 13 of Part III of the Income Tax Assessment Act 1936 (Cth)) in respect of Alcoa’s supplies of alumina. AGS requested that the report be prepared in compliance with the Federal Court Harmonised Expert Witness Code of Conduct.

(2) On 30 October 2019, AGS made a similar request of Mr Bodner. That request was in the following terms (noting again that the Commissioner has expressly waived any claim for legal professional privilege in respect of this document):

We ask that you prepare a written report, in compliance with the Harmonised Expert Witness Code of Conduct (see Appendix A), addressing the following question:

“What would in your opinion have been the arm’s length consideration in respect of the supplies of alumina referred to in Appendix B to this letter which were made by Alcoa of Australia Limited (AoA) to Alumet Limited, and to AA Alumina Chemicals Limited, under the Agreements referred to Table 1, below.”

(3) Mr Bodner communicated with AGS in relation to the preparation of his report and AGS responded to Mr Bodner in accordance with the ATO’s instructions.

(4) Mr Bodner provided his report on 15 June 2020.

29 The Tribunal found that:

(1) The ATO had engaged AGS and Counsel to provide advice and assist with legal questions arising under the transfer pricing legislation.

(2) AGS then sought expert assistance with respect to those legal questions.

(3) AGS was seeking assistance from the expert so that AGS could give advice to the ATO in relation to the audit and the SOAP. The legal issues were complex and involved advice from Counsel.

30 The Tribunal (at TR [43]) accepted that it was the lawyer (AGS) and not the client (the ATO) who was seeking the expert opinion in order to address the legal issue.

31 The Tribunal (at TR [43]) concluded that the dominant purpose of the communications between AGS and the expert was to enable AGS and Counsel to give legal advice. The communications between AGS and the expert were privileged, as were any other documents that disclosed those communications. Internal ATO emails generated for the dominant purpose of obtaining legal advice from AGS would also be privileged where those internal communications fell within the class of documents identified by Lockhart J in Trade Practices Commission v Sterling [1979] FCA 59; 36 FLR 244 at 246 as:

Notes, memoranda, minutes or other documents made by the client or officers of the client…of communications which are themselves privileged, or containing a record of those communications, or relate to information sought by the client’s legal adviser to enable him to advise the client or to conduct litigation on his behalf.

32 The Tribunal (at TR [44]) also found that documents “relating [to]” the identification and engagement of an industry expert took place “within the legal context of the complex issues arising from the transfer pricing legislation for which it was appropriate to engage expert assistance”. The Tribunal concluded that the following communications were made for the dominant purpose of obtaining or giving legal advice:

(a) internal ATO emails generated for the dominant purpose of providing instructions to AGS “so that they can provide advice about engaging and dealing with an expert”;

(b) communications between the ATO and the expert as well as communications between AGS and the expert.

33 The Tribunal found that the drafts of the expert report and “the documents relating thereto” were communications which “took place within the legal context of the transfer pricing legislation for which it was appropriate to engage legal assistance”. The Tribunal (at TR [45]) found that the following communications (including attachments thereto) were generated for the dominant purpose of enabling AGS to provide legal advice or to obtain legal advice:

(a) communications relating to conferences held between AGS, Counsel, the ATO and Mr Bodner;

(b) draft reports provided to AGS; and

(c) comments on those draft reports made by the ATO.

34 The Tribunal (at TR [47]) found that the draft reports were often attached to privileged communications so would themselves attract privilege or would be privileged on their own because the various iterations of the report would reveal the privileged communication as the advice could be inferred from an analysis of the passages in the drafts compared to the final version.

35 The fact that the final report of Mr Bodner was not ultimately attached to the SOAP did not mean that the communications were not privileged.

Category 2: Emails Between the ATO and AGS (Identified at [46]–[48] of the Second Harako Affidavit)

36 This category of documents comprised two sub-categories:

(a) emails, including attachments, dated between 22 August 2019 and 17 December 2019. The attachments included drafts of the SOAP and drafts of the expert report (see TR [50]);

(b) emails, including attachments, dated between January 2019 and March 2020, comprising emails sent internally between ATO staff, forwarding other emails and attachments which themselves were confidential communications between the ATO and AGS (see TR [51]). Included in the attachments were drafts of the SOAP, drafts of the expert report, opinions of Counsel and AGS instructions to Counsel.

37 In relation to the first sub-category, the Tribunal (at TR [50]) found that:

(a) some of the emails were confidential communications between the ATO and AGS and related to advice received from Counsel about the draft SOAP and the expert report;

(b) other emails were internal ATO emails which forwarded emails between the ATO and AGS. The Tribunal found that it was “apparent from the emails and their attachments that the advice being received was reflected in the various iterations of the draft SOAP and draft expert report”;

(c) the application of the transfer pricing legislation and the determination as to whether Alcoa’s dealings were at arm’s length involved complex questions of both law and fact and would be informed by the opinion of an expert;

(d) the advice being sought in relation to the audit was not only of a commercial nature.

38 The Tribunal accepted the evidence of Ms Harako that in transfer pricing matters, there are legal as well as economic issues. The Tribunal found that the expert advice being sought and obtained was “in relation to the drafting of the SOAP and the expert report in the legal context of the transfer pricing legislation”. Based on its review of the documents in the first sub-category, the Tribunal found that the dominant purpose of the documents was the obtaining or giving of legal advice related to the drafting of the SOAP and that those documents were subject to an exemption on the basis of legal professional privilege (TR [50]).

39 In relation to the second sub-category, the Tribunal found that the documents record or contain privileged communications and were exempt on the basis of legal professional privilege (TR [51]).

Category 3: Internal ATO Emails (Identified at [49]–[50] of the Second Harako Affidavit)

40 This category of documents comprised emails, including attachments, dated between 1 March 2019 and 4 March 2020.

41 Based on its review of the documents, the Tribunal found that the documents were internal confidential communications between ATO officers for the purpose of providing instructions to or obtaining legal advice from AGS and Counsel in relation to the audit. Some of the communications in this category of emails disclosed legal advice previously obtained from AGS and / or Counsel. The Tribunal found that the internal emails were privileged (TR [53]).

Category 4: ATO Documents Including Case Status Reports, Draft Economist Practice Reports and Draft SOAPs (Identified at [51]–[53] of the Second Harako Affidavit)

42 This category of documents included:

(a) internal ATO emails (and attachments) dated between 26 February 2019 and 20 February 2020. The attachments comprised advice from Counsel;

(b) internal ATO “DC Case Status Reports” prepared periodically for the purpose of “callover[s] conducted by the Deputy Commissioner in relation to the Alcoa audit”;

(c) drafts of the Economist Practice report which were not attached to other privileged communications. The drafts were dated 12 December to 18 December 2019; and

(d) drafts of the SOAP dated 6 September, 14 October, 4 December and 16 December 2019.

43 Based on its review of the emails, the Tribunal (at TR [57]) found that the redacted parts of the documents claimed to be exempt in part, and the whole of documents claimed to be exempt in full, contain references to legal advice and the disclosure of the redactions would reveal or tend to reveal a privileged communication. The advice from AGS and Counsel would be revealed either directly or through inference if the documents were disclosed.

44 Insofar as the “DC Case Status Reports” were concerned, the Tribunal (at TR [58]) found that the reports contained numerous references to advice from or engagement with Counsel. The Tribunal found that the reports had been redacted in so far as they record the giving of and the substance of legal advice provided to the ATO by AGS or Counsel. The Tribunal concluded that the redacted sections were subject to legal professional privilege.

45 The Tribunal reviewed the drafts of the Economist Practice report, the final version of which was attached to the SOAP. The Tribunal (at TR [59]) found that legal advice had been sought “as part of the process of drafting the [Economist Practice] report”. The redacted parts of the draft reports were contained in the body of the draft or as a comment recorded to the side of the body of the document. Based on its review, the Tribunal found that the redacted parts recorded advice from Counsel.

46 The Tribunal reviewed the drafts of the SOAP over which an exemption had been claimed. The Tribunal (at TR [60]) found that in the period leading up to 18 December 2019, Counsel was reviewing drafts of the SOAP and was providing advice on its contents. The Tribunal (at TR [63]) found that the redacted passages in the drafts of the Economist Practice report and in the drafts of the SOAP had been altered when compared to the final version. The Tribunal found that those alterations themselves could reveal some confidential privileged communication. The Tribunal found that the redacted passages of the drafts of the Economist Practice report and of the draft SOAP either record advice from legal counsel or the advice could be inferred from an analysis of the passages in the drafts compared to the final version. The Tribunal concluded that the documents were subject to legal professional privilege.

Waiver

47 Alcoa submitted to the Tribunal that privilege in some of the documents had been expressly waived. The Commissioner had advised Alcoa in a letter from AGS dated 4 May 2022 that the Commissioner had decided to waive the claim for legal professional privilege over certain documents and that it would prepare a further revised schedule of exempt documents. Alcoa submitted that the Commissioner had expressly waived legal professional privilege over documents that were listed in a document provided to Alcoa on 3 June 2022 and lodged with the Tribunal on 14 June 2022, notwithstanding that not all the documents in that schedule were disclosed to Alcoa. By letter dated 8 July 2022, the Commissioner advised that he proposed to release to Alcoa documents identified, upon a consent direction being made under s 26(1)(b) of the Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act). That consent direction was made on 19 July 2022.

48 The Tribunal (at TR [64]) found that there was no waiver until the documents were released in accordance with the consent direction. Prior to that date, the Commissioner had done no more than give indications about the extent of the proposed waiver. The Tribunal concluded that there was no unfairness to Alcoa in those circumstances.

49 Alcoa submitted to the Tribunal that there had been an implied waiver because the substance of the 12 December 2019 draft expert report of Mr Bodner had been disclosed. The Commissioner had disclosed documents that state that an industry expert had indicated that the arm’s length consideration was in a particular range and this was the answer to the sole question which Mr Bodner had been asked to address:

(1) The Commissioner had disclosed the 12 December email that had stated that “we are aware that an Industry Expert has indicated an appropriate pricing range is 11%–14% of LME” and Mr Bodner’s final report, although not finalised until 15 June 2020, contains a similar pricing range. Alcoa had submitted, and the Tribunal found, that the reference to “an Industry Expert” in that email was a reference to Mr Bodner.

(2) The 12 December draft Economist Practice report disclosed to Alcoa contained two side comments referring to the “11–14% range” which had not been redacted. Those comments had been redacted in all other versions of the Economist Practice report disclosed to Alcoa. Ms Harako did not raise an issue of inadvertent disclosure when she was cross-examined on those comments. It was not until re-examination that Ms Harako said she maintained privilege over the information and that she was surprised that the comments had not been redacted.

50 The Tribunal (at TR [71]) found that the conduct of the Commissioner in disclosing the 12 December email and disclosing the comments in the 12 December draft Economist Practice report, “together with the answers under cross examination” amounted to conduct that was inconsistent with the maintenance of confidentiality over “the conclusion in the draft Bodner reports” and that “fairness dictates in these circumstances that the privilege over the draft Bodner reports has been waived”. The Tribunal considered that a “further circumstance of relevance, although not determinative of the issue” was that privilege had been waived over Mr Bodner’s final report dated 15 June 2020 which had the same stated conclusion as that disclosed by the documents dated 12 December 2019.

51 The Tribunal concluded (at TR [72]) that “it followed” from those findings that the Commissioner:

has waived privilege over each draft of the Bodner expert report existing at around the time of the communication dated 12 December 2019. The waiver would extend to any other document over which the claim for privilege rests on the communication of matters set out in those draft Bodner reports. As a matter of fairness, the waiver would extend to any draft of the Bodner report provided between 26 November and 20 December 2019.

the appeal and Cross-Appeal

52 The Commissioner appeals the decision of the Tribunal in relation to waiver. Alcoa cross-appeals the Tribunal’s decision that legal professional privilege applied to the documents.

53 An “appeal” to this Court from a decision of the Tribunal lies only on a question of law: AAT Act s 44. The parties’ identification of the question of law evolved somewhat during the course of the hearing. Both parties were requested to provide further written submissions precisely identifying the questions of law they contend arise and the errors of law said to have been made by the Tribunal.

54 Because the issue of waiver arises only if the documents are subject to legal professional privilege, it is convenient to deal with the cross-appeal first.

The Cross-Appeal

55 Legal professional privilege applies to confidential communications made for the dominant purpose of giving or obtaining (including preparation for obtaining) legal advice or the provision of legal services, including legal representation in litigation or other proceedings: Singtel Optus Pty Ltd v Robertson [2024] FCAFC 58 at [24] (Murphy, Anderson and Neskovcin JJ).

56 The identification of the dominant purpose of a communication is a question of fact: AWB Ltd v Cole (No 5) [2006] FCA 1234; 155 FCR 30 at [44(2)] (Young J); AWB Ltd v Cole [2006] FCA 571; 152 FCR 382 at [102] (Young J); Singtel at [25]. Alcoa cannot succeed in an appeal on a question of law by submitting that a different finding as to dominant purpose ought to have been made. For Alcoa to succeed, it is necessary for it to identify an error of law in the process by which the Tribunal made its factual finding.

57 By its further submissions, Alcoa identifies the question of law as:

Whether the Tribunal, in reaching its conclusion on the dominant purpose for the communications claimed to be exempt under s 42 of the FOI Act, constructively failed to exercise its jurisdiction on review by failing to address a central and distinct question raised by Alcoa’s submissions based on the evidence before the Tribunal. The relevant question not addressed was whether the evidence disclosed multiple purposes for which the various documents referred to in paragraphs 32 to 43 of Ms Harako’s affidavit of 6 September 2022 were brought into existence and, in circumstances where those purposes included purposes other than obtaining legal advice (non-advice purposes), whether one or more of those non-advice purposes was of at least equal weight to the purpose of obtaining legal advice such that the dominant purpose test could not be satisfied.

58 Essentially, the contention is that the Tribunal erred in law by failing to consider a submission put to it and thereby failed to perform its review function. Alcoa contends that it had submitted to the Tribunal that there were multiple purposes for the creation of the relevant documents and the evidence led by the ATO was not sufficient to show that the legal advice purpose was “dominant” but rather was of equal weight to those other purposes. Alcoa claims that this submission was not dealt with by the Tribunal.

59 Alcoa accepts that one of the submissions it made to the Tribunal was that AGS was acting as a mere conduit for the ATO and that the communications with Mr Bodner were being routed through AGS so as to attract privilege. Alcoa accepts that this submission was addressed by the Tribunal. Alcoa contends that it made a separate and distinct submission that there were multiple purposes for the creation of the relevant document and the evidence was not sufficient to show that the legal advice purpose was dominant. It was this separate submission that is claimed not to have been dealt with by the Tribunal.

60 I accept that Alcoa made a submission to the Tribunal that the expert report was obtained for purposes in addition to the obtaining of legal advice and had submitted that the evidence did not establish that the legal advice purpose was dominant. I do not accept that the Tribunal did not address that submission.

61 In its reasons, the Tribunal recorded Alcoa’s contention that the Commissioner had failed to satisfy the onus of establishing that the dominant purpose of each communication was the obtaining of legal advice at TR [38]. The Tribunal further recorded (at TR [38] and TR [42]) that Alcoa had contended that the dominant purpose of the communications with the expert was for the Commissioner to obtain factual information relating to the determinations and assessments, which Alcoa had contended were administrative tasks.

62 The Tribunal considered but rejected Alcoa’s contention. It found (at TR [43]) that the dominant purpose of the communications with Mr Bodner and the communications relating to and leading up to the identification of Mr Bodner as an appropriate expert, was to enable AGS and Counsel to give legal advice. The Tribunal accordingly did not accept that there were multiple purposes of equal weight. It made a positive finding that the dominant purpose was the obtaining of legal advice based on the chronology of events, the context in which the report from Mr Bodner was being sought (described as a “legal context of addressing the complex question of arm’s length consideration” as defined in Div 13 of Part III of the Income Tax Assessment Act 1936 (Cth)), and the terms of the letter of instruction to Mr Bodner. It is noted that the burden of proving that a communication was made for the dominant purpose of giving or obtaining legal advice might be discharged by evidence as to the circumstances and context in which the communication occurred or by reference to the nature of the documents supported by argument or submissions: Singtel at [25]. The onus may thus be discharged otherwise than by direct evidence of the person who made the communication: AWB Ltd v Cole (No 5) at [44(1)].

63 Alcoa draws the Court’s attention to evidence before the Tribunal which Alcoa contends was relied upon to establish the existence of the non-advice purpose and which was not separately and specifically addressed by the Tribunal in its reasons. The failure to specifically address this material is said to demonstrate a failure by the Tribunal to address Alcoa’s submission in relation to multiple purposes.

64 It was not necessary for the Tribunal to separately address each of the factual submissions made by Alcoa in support of its contentions relating to multiple purposes in order for the Tribunal to discharge its review function. As the High Court explained in Plaintiff M1/2021 v Minister for Home Affairs [2022] HCA 17; 275 CLR 582 at [24] (Kiefel CJ, Keane, Gordon and Steward JJ), the Tribunal was required to read, identify, understand and evaluate the submissions made to it but the Tribunal can sift them, attributing whatever weight or persuasive quality is thought to be appropriate. As the Full Court said in Minister for Home Affairs v Buadromo [2018] FCAFC 151; 267 FCR 320 at [48]–[49] (Besanko, Barker and Bromwich JJ) (cited in Minister for Immigration, Citizenship and Multicultural Affairs v JSMJ [2023] FCAFC 77; 297 FCR 630 at [42] (Collier, Halley and Meagher JJ)):

[48]    Generally, an obligation to give reasons does not require a “line-by-line refutation of the evidence of the claimant either generally or in those respects where there is evidence that is contrary to findings of material fact made by the tribunal”. The tribunal must give the reasons for its decision, not the sub-set of reasons why it accepted or rejected individual pieces of evidence (Re Minister for Immigration and Multicultural Affairs; Ex parte Durairajasingham [2000] HCA 1; (2000) 74 ALJR 405 at [65]–[67] per McHugh J).

[49]    It is generally not essential for a tribunal or other primary decision-maker to refer to every piece of evidence or contention advanced by a claimant. [Applicant WAEE v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCAFC 184; (2003) 236 FCR 593 at [46]–[47]].

65 Alcoa acknowledges that its submissions to the Tribunal did not address particular communications. Nonetheless, Alcoa seeks to draw the Court’s attention to examples of descriptions of specific documents which it says illustrate a failure by the Tribunal to address its claims of multiple purposes. The examples are of documents in respect of which Alcoa contends, based on the description in the schedules of documents in dispute, “appear to be file notes prepared by ATO officers and other internal ATO communications relating to the ATO’s own enquiries being made to engage an expert outside the ‘legal context’ of the engagement of the AGS and, relevantly, before Mr Bodner was formally engaged by the AGS in May 2019”.

66 The submission proceeds on a false premise. The Tribunal (at TR [44]) did not accept that these communications were being made outside the “legal context”. The submission ignores the findings of the Tribunal (at TR [44]) that the communications made with respect to the identification of an industry expert to be briefed by AGS were communications made for the dominant purpose of providing instructions to AGS.

67 For legal professional privilege to attach to a confidential communication, it is both necessary and sufficient that the communication came into existence for the dominant purpose of the client seeking and obtaining legal advice from the client’s lawyer: State of New South Wales v Betfair Pty Ltd [2009] FCAFC 160; 180 FCR 543 at [29] (Kenny, Stone and Middleton JJ). Communications made in preparation of the obtaining of legal advice and made in the course of formulating instructions to legal advisors may have the dominant purpose of seeking and obtaining legal advice and accordingly may be subject to legal professional privilege: Betfair at [32].

68 The Tribunal was satisfied that the internal ATO communications or the ATO communications with experts were communications made for the dominant purpose of providing instructions to AGS and gave reasons for making that finding. The Tribunal thereby discharged its review function.

69 Alcoa submits that the Tribunal did not address evidence that suggested that drafts of Mr Bodner’s report were being obtained for an additional “non-advice purpose”, being that “the ATO [Economist Practice] could use it for the purposes of the audit as forming the basis for the SOAP” and “in preparing drafts of the SOAP and [Economist Practice] Report”.

70 As explained at [64] above, it was not necessary for the Tribunal to specifically address each submission made by Alcoa or to specifically address each piece of evidence that might point away from the factual finding reached by the Tribunal. The Tribunal made a finding of fact and gave reasons for that finding. The Tribunal (at TR [45]) found that the drafts of the report and the communications relating to those drafts were made for the dominant purpose of enabling AGS to give legal advice. It made that finding based on the “legal context” in which the communications were made, the chronological sequence of the communications and the parties to the communications. The finding was made after receiving detailed oral submissions on the documents in a closed hearing to which Alcoa was not a party.

71 Alcoa’s submission conflates the purpose of communications about, and the preparation of, drafts of expert reports with the intended use of the final report. The evidence of Ms Harako was that no decision had been made about the use of a final report at the time each relevant communication was made. That decision as to how to use the final report and whether the final report would be disclosed would be made at a later time.

72 It would be hardly surprising for an administrator (or a taxpayer) to wait to consider the content of a report before making a final decision as to whether the final report would be provided to the other side. Until it is provided, its provision to the other side is no more than a possibility and is not determinative of the purpose for which the draft reports of Mr Bodner were being prepared: Australian Securities and Investments Commission v Macleod [2024] FCAFC 174; 307 FCR 332 at [102] (Burley, Anderson and Meagher JJ); Cantor v Audi Australia Pty Ltd [2016] FCA 1391 at [112] (Bromwich J).

73 Even if it were intended that Mr Bodner’s final report would be part of the basis of the SOAP to be disclosed to Alcoa, it does not follow that all communications and drafts of Mr Bodner’s report were not made for the dominant purpose of obtaining or providing legal advice; nor does it follow that the disclosure of the drafts would not result in the disclosure of legal advice. As was explained by White J in New Cap Reinsurance Corp Ltd (in liq) v Renaissance Reinsurance Ltd [2007] NSWSC 258 at [29]:

The dominant purpose for which a final expert’s report or final witness statement is brought into existence would presumably be for the purpose of being laid before the Court as the witness’ evidence. Prima facie, it would not be privileged (Attorney-General (NT) v Maurice [[1986] HCA 80; 161 CLR 475] at 480). However, draft reports, and notes used in preparing a report, may stand at a different position, particularly where the expert has been retained by the party’s solicitors and it is expected that the party’s lawyers will advise on the contents of, and settle the form of, the report. There is nothing improper in such a course.

74 Alcoa submits that the ATO would have pursued advice from an industry expert completely independently of the legal advice because the ATO did not internally have sufficient specialist industry knowledge necessary to enable it to form the necessary views. That submission is not accepted. The fact that it may be possible to conceive of circumstances in which advice from an industry expert may have been sought by the ATO outside of the obtaining of legal advice does not answer the question of the dominant purpose of the communications in fact made to the industry expert in fact engaged. For example, the fact that a taxpayer might engage a valuer to assist the taxpayer’s legal advisers in providing advice on the strength of the position that a taxpayer is considering adopting in the preparation of its return does not mean that communications with that valuer in the course of that engagement would not be privileged simply because the taxpayer might have chosen to engage a valuer outside of the obtaining of legal advice. Each communication must be assessed by reference to the purpose or purposes for which it was in fact made. The Tribunal (at TR [43]) found that in the present case, it was the lawyer and not the client seeking the expert opinion to enable the lawyer to provide legal advice.

75 It should be borne in mind that the references to legal advice and legal context were used by the Tribunal in light of the breadth of what may be encompassed by “legal advice”. “Legal advice” extends to “professional advice as to what a party should prudently or sensibly do in the relevant legal context; but it does not extend to advice that is purely commercial”: BWO19 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2020] FCAFC 181; 283 FCR 299 at [62] (Rangiah, Derrington and Abraham JJ); AWB Ltd v Cole (No 5) at [44(7)]. In the context of a potential tax dispute, legal advice will invariably extend to advice on forensic decisions to be made in adopting a position or pursuing a particular course of action. That proposition applies to both the Commissioner and taxpayers, in equal measure.

76 Alcoa relies upon the language used by the Tribunal in its description of Alcoa’s contention to support its submission that the Tribunal failed to consider a claim that there were multiple purposes of equal weight. The Tribunal (at TR [42]) described Alcoa’s contention as being that “the dominant purpose of these communications was for the [Commissioner] to obtain factual information relating to the determinations and assessments” rather than a contention that such a purpose was an “equal” purpose.

77 Alcoa’s submission is not accepted. It relies upon a reading of the Tribunal’s reasons with an eye keenly attuned to error, contrary to Minister for Immigration and Ethnic Affairs v Wu Shan Liang [1996] HCA 6; 185 CLR 259 at 272 (Brennan CJ, Toohey, McHugh and Gummow JJ). It cannot be said that, in the circumstances of this case, in concluding that the dominant purpose of the communications was for the obtaining or provision of legal advice, the Tribunal did not resolve the issue of multiple purposes.

78 The expert report of Mr Bodner was commissioned by AGS in circumstances where Counsel had been engaged to provide advice and in a matter that was anticipated to be disputed by the taxpayer if assessments were issued. Obtaining legal advice in the context of a matter that is anticipated will be contested will often involve advice on prospects and the legal strength of the position proposed to be adopted. Advice from Counsel on matters such as prospects or forensic decisions to be made in the preparation of a case that may be headed for dispute will involve a consideration of the evidence that may be available to be adduced. The provision of prospective or available evidence for the review and opinion of Counsel is an intrinsic part of obtaining legal advice.

79 The ground for the cross-appeal is not made out.

The Appeal

80 The issues on appeal concern waiver.

Principles Relating to Waiver

81 In the context of the FOI Act, the test for waiver is the common law test and not the application of s 122 of the Evidence Act 1995 (Cth): Osland v Secretary, Department of Justice [2008] HCA 37; 234 CLR 275 at [49] (Gleeson CJ, Gummow, Heydon and Kiefel JJ).

82 Waiver is a conclusion of law to be drawn when the necessary facts are established. The principles were articulated by the High Court in Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd [2013] HCA 46; 250 CLR 303 at [30]–[31] (French CJ, Kiefel, Bell, Gageler and Keane JJ) in the following terms:

[30]    According to its strict legal connotation, waiver is an intentional act done with knowledge whereby a person abandons a right (or privilege) by acting in a manner inconsistent with that right (or privilege). It may be express or implied. In most cases concerning waiver, the area of dispute is whether it is to be implied. In some cases waiver will be imputed by the law with the consequence that a privilege is lost, even though that consequence was not intended by the party losing the privilege. The courts will impute an intention where the actions of a party are plainly inconsistent with the maintenance of the confidentiality which the privilege is intended to protect.

[31]    In Craine v Colonial Mutual Fire Insurance Co Ltd [[1920] HCA 64; 28 CLR 305], it was explained that “‘[w]aiver’ is a doctrine of some arbitrariness introduced by the law to prevent a man in certain circumstances from taking up two inconsistent positions ... It is a conclusion of law when the necessary facts are established. It looks, however, chiefly to the conduct and position of the person who is said to have waived, in order to see whether he has ‘approbated’ so as to prevent him from ‘reprobating’”. In Mann v Carnell [[1999] HCA 66; 201 CLR 1], it was said that it is considerations of fairness which inform the court’s view about an inconsistency which may be seen between the conduct of a party and the maintenance of confidentiality, though “not some overriding principle of fairness operating at large”.

83 The High Court in Craine was considering the doctrine of waiver in the context of non-compliance with a condition in an insurance policy, with the issue in that case being resolved by the doctrine of estoppel and not waiver. The High Court’s full explanation of the legal doctrine of waiver in Craine at 326 was as follows (citations omitted):

“A waiver must be an intentional act with knowledge”. First, “some distinct act ought to be done to constitute a waiver”; next, it must be “intentional”, that is, such as either expressly or by imputation of law indicates intention to treat the matter as if the condition did not exist or as if the forfeiture or breach of condition had not occurred; and, lastly, it must be “with knowledge”… “Waiver” is a doctrine of some arbitrariness introduced by the law to prevent a man in certain circumstances from taking up two inconsistent positions. It is a conclusion of law when the necessary facts are established. It looks, however, chiefly to the conduct and position of the person who is said to have waived, in order to see whether he has “approbated” so as to prevent him from “reprobating”—in English terms, whether he has elected to get some advantage to which he would not otherwise have been entitled, so as to deny to him a later election to the contrary. His knowledge is necessary, or he cannot be said to have approbated or elected.

84 Where imputed waiver is concerned, the element of intention does not depend upon the subjective intention of the holder of the privilege: Mann v Carnell at [29]. The intention is imputed from the objective actions and conduct of the holder of the privilege (including agents and representatives). A voluntary act of disclosure of the content of a privileged communication may be seen to be an act inconsistent with the maintenance of confidentiality but the inconsistency will not be an act of “approbation” if it cannot be concluded that the act was done in order to confer an advantage on the person who is said to have waived the privilege. The advantage in this context refers to an advantage in the nature of a forensic advantage. As the Full Court said in Macleod at [150]:

The unfairness that informs inconsistency is forensic unfairness as between the privilege holder and the privilege challenger.

85 Waiver reflects a judgment that the conduct of the party entitled to the privilege is inconsistent with the maintenance of the confidentiality which the privilege is intended to protect: Osland at [45]. The conclusion about whether the conduct as found is relevantly inconsistent with the maintenance of the privilege is a conclusion of law which involves questions of fact and degree: Expense Reduction at [31]. It may therefore be said that a question of waiver involves a mixed question of fact and law. It is the inconsistency, informed by considerations of fairness, which gives rise to waiver.

86 Whilst waiver does not involve a question of fairness at large, considerations of fairness having regard to advantages sought to be obtained, are part of the process of forming a judgment of whether the conduct of a party amounts to waiver: Mann v Carnell at [29].

Grounds of Appeal

87 By his notice of appeal, the Commissioner contends that the Tribunal “misapplied legal principles governing legal professional privilege” in two ways:

(a) in concluding that the disclosure of the 12 December email and the comments in the 12 December draft Economist Practice report gave rise to a waiver of legal professional privilege; and

(b) in determining that any waiver by the Commissioner affected all of the documents relating to the preparation of Mr Bodner’s report, including all drafts of Mr Bodner’s report and all other documents relating to the preparation of an industry expert report.

88 Having regard to the contentions sought to be raised, by phrasing his grounds of appeal in terms of a misapplication of fundamental legal principle, the Commissioner does not clearly delineate questions of law from questions of fact. The question of whether the facts were correctly found will usually involve a question of fact, subject to legal unreasonableness. The application of law to facts as found will usually involve a question of law.

89 Following the request of the Court to clarify the questions of law sought to be raised, the Commissioner filed further submissions. The Commissioner submits that in order to draw the legal conclusion of waiver, it was necessary for the Tribunal to make findings of fact about:

(a) whether any disclosure of privileged information in each of the 12 December email and the 12 December draft Economist Practice report was inadvertent; and

(b) how such disclosure, even if not inadvertent, was “plainly inconsistent” with the maintenance of confidentiality so as to give rise to waiver of privilege.

90 Insofar as the first of those matters is concerned, a finding as to whether disclosure was made inadvertently is a finding of fact about the conduct of a party. In this case, it is an inference of fact to be drawn from the evidence.

Failure Relating to Findings of Fact

91 The Commissioner submits that the Tribunal failed to make necessary findings of fact as to whether the disclosure of the privileged information was inadvertent. In so failing, it is said that the Tribunal made an error of law. Although the Commissioner describes the error of law as a “misapplication of legal principles relating to waiver”, it may perhaps be more accurate to describe a failure to make necessary findings of fact (if it occurred) as a failure to complete its statutory review task, having regard to the issues the Tribunal was required to determine.

92 In the present case, the Tribunal rejected the contention that there had been an express waiver. It formed its conclusion that waiver had occurred on the basis of an imputed waiver (TR [66]). The issue of imputed waiver is not resolved by an examination of the subjective understanding of Ms Harako. But as Expense Reduction demonstrates, an inadvertent act of disclosure ordinarily does not amount to waiver.

93 The Court in Expense Reduction held that an inference ought to be drawn that the documents in issue were mistakenly included in the non-privileged section of a list of documents. The evidence that had been accepted was that the clients’ instructions had been to claim privilege in respect of all documents to which it attached and that those reviewing the documents believed that they would not have made an error in deciding whether the documents were privileged. From that point, it was not necessary to prove a continuing intention to show that a reviewer formed an intention with respect to each document at the time it was listed.

94 The Tribunal in the present case was required to make a finding as to whether there was an intention to claim privilege over the two documents such that it might be said that the disclosure of the documents was inadvertent. The Tribunal was not satisfied that the Commissioner had formed an intention to claim privilege in respect of the two documents. The findings made in respect of the intention to claim privilege over each of the two documents should be analysed separately.

12 December Email

95 It was not contended before the Tribunal that the disclosure of the 12 December email was inadvertent. The disclosure of that email was an intended act.

96 If there was inadvertence, it was not in the act of disclosure but in failing to appreciate that, properly understood, the document contained privileged information. The Tribunal found that as a matter of fact, the reference in the 12 December email to “an industry expert” was a reference to Mr Bodner. The evidence of Ms Harako was that she had not understood the reference in that email to “an industry expert” to be a reference to Mr Bodner. It is submitted that unless the Tribunal made a finding that Ms Harako’s evidence was not truthful, it necessarily followed that Ms Harako (as the individual who reviewed the privilege claims for the purposes of the Tribunal proceedings) had not appreciated that the 12 December email contained privileged information and that therefore it had not been appreciated that a claim for privilege had to be made in respect of that part of the document. It is submitted that it necessarily followed that the disclosure of privileged information was inadvertent.

97 The Commissioner’s contention is that Ms Harako had not intended to waive privilege by the intentional disclosure of the 12 December email. However, in the contest of imputed waiver, a person can waive privilege without intending that consequence. It is not necessary that waiver of privilege be the intended result of the conduct. The law recognises the inconsistency and determines its consequences, even though such consequences may not reflect the subjective intention of the party who has lost the privilege: Osland at [33].

98 There was no need for the Tribunal to make any findings about whether it believed Ms Harako’s evidence of her intentions in relation to the disclosure of the 12 December email. Ms Harako was responsible for the review of documents as part of the Tribunal proceedings. She was not responsible for the review of and disclosure of documents prior to the Tribunal proceedings. The 12 December email was disclosed prior to the commencement of the proceedings. Ms Harako’s subjective intention in relation to the consequences of disclosure of the 12 December email is not relevant to the question of waiver. There was no failure by the Tribunal to make a necessary finding of fact of the kind contended for by the Commissioner in respect of the 12 December email.

Comments Recorded on 12 December Draft Economist Report

99 The 12 December draft Economist Practice report disclosed to Alcoa contained two side comments referring to the “11–14% range” which had not been redacted. It had been contended before the Tribunal that the disclosure of the two comments in the 12 December draft Economist Practice report was inadvertent because such comments had been redacted in all other versions of the draft Economist Practice report disclosed to Alcoa (TR [70]).

100 Although the Tribunal made no express finding about whether the disclosure was inadvertent, read as a whole, the reasons of the Tribunal contain an implicit finding that the Commissioner had not intended to maintain confidentiality over those comments. The Tribunal’s reasons record:

[70]    …The [Commissioner] contends that this was an inadvertent disclosure and that there was no intention to waive privilege over the draft Bodner reports. However, I note that the comments were put to Ms Harako under cross examination and she raised no issue at the time about the disclosure. Ms Harako accepted in cross examination that the reference in the comments to an expert report was a reference to Mr Bodner’s report. It was not until re-examination that Ms Harako said that she maintained privilege over the information in the comments and that she was surprised that the comments had not been redacted.

101 The Tribunal made an assessment of the conduct of the Commissioner based on the totality of the evidence before it. That assessment was a factual finding. The question is not whether the Court agrees with the factual finding made by the Tribunal. Subject to legal unreasonableness, an error in a factual finding is not an error of law.

102 As Mortimer CJ said in Minister for Immigration, Citizenship and Multicultural Affairs v Lieu, by her Litigation Representative Nguyen [2023] FCAFC 57; 297 FCR 162 at [82] (citations omitted):

Legal unreasonableness involves a “necessarily stringent” test. It involves a conclusion by the Court on review that “that ‘no sensible [Tribunal] acting with due appreciation of its responsibilities’ could have taken” the decision that was made, or exercised the power in the way it was exercised.

103 The Commissioner submits that Ms Harako’s failure to object immediately when questioned was not capable of supporting a finding that the disclosure was deliberate.

104 However, the Tribunal (at TR [71]) reached its conclusion about waiver not on the basis of a failure by Ms Harako to object immediately but on the basis of the “respondent’s conduct of disclosing the 12 December email and disclosing the comments in the draft [Economist Practice] Report of the same date together with the answers under cross-examination”. The Tribunal took into account the failure by Ms Harako to object at any point during her cross-examination and took into account the terms of her responses to questions put to her in cross-examination.

105 The Commissioner submits that:

(a) it was not put to Ms Harako in cross-examination that the disclosure was reflective of an intentional decision to release the information in the comment;

(b) Ms Harako stated expressly in re-examination that she was surprised by the disclosure and regarded it as inadvertent; and

(c) a conclusion of deliberate disclosure was inconsistent with all of the other objective indicators in relation to the position adopted by the Commissioner about the comment.

106 Ms Harako’s evidence in re-examination, as footnoted in the Tribunal’s reasons, was:

SENIOR COUNSEL FOR THE COMMISSIONER: In giving your evidence yesterday, Ms Harako, did you seek to maintain privilege over the draft versions of the Bodner report, and their contents?---I do, yes.

And so, in giving your evidence yesterday, did you seek to maintain privilege over the information in the comments on this page?---I do, yes.

When you first learned of the absence of redaction over those comments in that particular - pardon me, when did you first learn of the absence of redaction over those comments in that particular version of the document?---It was after I’d sworn the affidavit, and I was provided with additional documents prior to the hearing.

And what was your reaction on learning of that absence of redaction?---I was quite surprised, yes.

And why was that?---Because I would have made a - well if it were me, I would have considered that piece of information to be privileged.

So far as you’re concerned, was the absence of the redaction of those comments in this FOI proceeding deliberate or inadvertent?---I would say it is inadvertent.

107 The responses in re-examination revealed that Ms Harako was aware of the absence of the redactions prior to the Tribunal hearing and therefore prior to cross-examination. Her failure to object during cross-examination was to be considered in that context. The responses also revealed that Ms Harako did not make the decision to disclose the comments – she gave evidence about “if it were me” what she “would have considered”. Any evidence she could have given about intentional disclosure at the time the information was released would have been necessarily speculative. Ms Harako’s oral evidence in re-examination did not compel the Tribunal to conclude that the disclosures made were inadvertent.

108 The Tribunal expressed its conclusion having recorded that the comments were redacted in the other versions of the Economist Practice report. Its use of the word “However” in TR [70] reflects a weighing by the Tribunal of the counter-considerations. The mere fact that a consideration pointed against the factual conclusion reached by the Tribunal does not demonstrate an error of law in the making of that factual finding.

109 Having regard to the stringency of the test for legal unreasonableness, the Court is not satisfied that the findings about the inadvertence of the disclosure of the comments in the draft Economist Practice report were legally unreasonable.

110 The Commissioner has not demonstrated an error of law relating to the Tribunal’s findings of fact.

111 However, the issue of intention is not determinative of the issue of waiver in the present case. The findings of intention only went to the disclosure of the documents being the 12 December email and the comments in the margin of the 12 December draft Economist Practice report. The consequences of those disclosures for the privilege over the draft report of Mr Bodner referred to in those comments is a further matter.

Failure to Apply Correct Legal Principle

112 The Commissioner contends that the Tribunal erred in law in concluding that privilege had been waived by reaching a conclusion that was not open to it on the facts and circumstances as established before the Tribunal. It was contended that the conclusions reached by the Tribunal that there had been a waiver and the extent of any such waiver were the result of a failure to apply the correct legal principle.

113 Alcoa had submitted to the Tribunal that:

(a) the substance of the draft report of Mr Bodner had been disclosed;

(b) having produced Mr Bodner’s final report, privilege over all the drafts of Mr Bodner’s report ought to be treated as having been waived.

114 The Tribunal (at TR [67]) summarised the principles it considered applicable to the question of waiver:

The High Court in Mann v Carnell [1999] HCA 66 at [29] said that disputes as to implied waiver usually arise from the need to decide whether the particular conduct is inconsistent with the maintenance of the confidentiality which the privilege is intended to protect. The judgment of that conduct is to be made in the context and circumstances of the case and in light of any considerations of fairness arising from that context or those circumstances. If the gist or conclusion of the legal advice is disclosed then there is a waiver in respect of the whole of the advice.

115 The following principles are relevant in the present case:

(1) An intentional act of disclosure will not necessarily amount to imputed waiver: Osland.

(2) Disclosure of part may require disclosure of the whole of the communication. Disclosure of a conclusion expressed in legal advice, without disclosing the reasons may result in waiver of privilege over the whole of the advice depending upon a consideration of the whole of the context in which that occurs: Osland at [27], [32].

(3) The purpose for which disclosure is made is highly relevant. To deploy the substance or effect of a privileged communication for forensic or commercial purposes is inconsistent with the maintenance of the confidentiality that attracts legal professional privilege: Bennett v Chief Executive Officer of the Australian Customs Service [2004] FCAFC 237 at [68] (Gyles J); Macleod at [136].

(4) The conduct in making the disclosure is to be considered in context, which includes the nature of the matter in respect of which the advice was received, the evident purpose of the party in making the disclosure, and the legal and practical consequences of limited rather than complete disclosure: Osland at [46].

116 From an examination of the Tribunal’s reasons as a whole, it is apparent that the Tribunal proceeded on the basis of a general and absolute rule that disclosure of the substance of advice results in a waiver over the whole of the advice. As the decision of the High Court in Osland demonstrates, there is no such general principle. The Tribunal misdirected itself as to legal principle and erred in law.

117 Furthermore, the conclusion of the Tribunal (at TR [71]) that fairness dictated that privilege over all the drafts of Mr Bodner’s report had been waived proceeded on a misunderstanding of the nature of the unfairness to which the legal doctrine of waiver is directed. The Tribunal did not identify any advantage sought (either as a matter of subjective intent or as a matter of conclusion to be drawn from the objective facts and circumstances) to be obtained by the Commissioner through the disclosures made. The 12 December email and the comments in the margin of the 12 December draft Economist Practice report were disclosed in response to an FOI request. There was no intention to obtain a forensic advantage through that disclosure of the kind identified in Macleod. There is no unfairness because although disclosed, the conclusions expressed by Mr Bodner in his 12 December draft have not been used against Alcoa.

118 The Tribunal (at TR [67]) cited the Full Court decision in Bennett in support of the proposition that if the gist or conclusion of the legal advice is disclosed then there is a waiver in respect of the whole of the advice. In Bennett, Gyles J (with whom Tamberlin J agreed) stated at [65]:

The voluntary disclosure of the gist or conclusion of the legal advice amounts to waiver in respect of the whole of the advice to which reference is made including the reasons for the conclusion. The primary judge was in error in drawing a distinction between conclusion and reasoning in the context of such a disclosure.

119 However, that statement needs to be read subject to the following. First, Gyles J went on at [68] to state that:

The test [as expounded in Mann v Carnell] looks to inconsistency between the disclosure that has been made by the client on the one hand and the purpose of confidentiality that underpins legal professional privilege on the other. It is not a matter simply of applying general notions of fairness as assessed by the individual judge. The authorities to which I have referred show that it is well established that for a client to deploy the substance or effect of legal advice for forensic or commercial purposes is inconsistent with the maintenance of the confidentiality that attracts legal professional privilege.

120 The statement at [65] in Bennett thus needs to be understood in the context of the reasons as a whole. It is not disclosure of the substance per se that is conclusive of inconsistency but disclosure and deployment of the substance of legal advice for forensic or commercial advantage which gives rise to the necessary inconsistency. As Tamberlin J observed, on the facts in Bennett, it was apparent that the substance and effect of the advice was being communicated by the solicitors for the Australian Customs Service in order to emphasise and promote the strength and substance of the case to be made against Mr Bennett. Having disclosed and used the substance of the advice in that way, it would be inconsistent and unfair to seek to maintain privilege in respect of the relevant parts of that advice which pertain to the expressed conclusion: Bennett at [6].

121 Second, the statement from Bennett predates and must be read as subject to the High Court’s decision in Osland. The High Court in Osland at [34] endorsed the reasoning of Maxwell P in the Court of Appeal, where his Honour explained that, although what Gyles J said in Bennett may have been apposite to the facts of the particular case, it did not express a rule of general application. It was more accurate to say, as Tamberlin J said, that disclosure of a conclusion expressed in legal advice, without disclosing the reasons, may or may not result in waiver of privilege depending upon a consideration of the whole of the context in which that occurs.

122 It follows from Osland that a judgment that conduct of the party entitled to the privilege is inconsistent with the maintenance of the confidentiality which the privilege is intended to protect must be made in the context and circumstances of the case and in light of any considerations of fairness arising from those circumstances. Relevant circumstances include the nature of the matter in respect of which the advice was received, the evident purpose of the making of the disclosure that was made, and the legal and practical consequences of limited rather than complete disclosure.

123 The disclosure of the gist of advice will be relevantly inconsistent with the maintenance of privilege over the whole of the advice where the holder of the privilege seeks to make use of the gist of the advice and the opposing party may be misled by an inaccurate perception of the nature of the advice received: Maurice at 488. The disclosure of conclusions or the gist of advice without disclosure of the reasoning will be unfair where, for example, the conclusions are relied upon to strengthen or as a support for a position adopted by the party to bolster the party’s bargaining power or to gain some forensic advantage related to litigation.

124 The disclosure of the 12 December email and the comments in the 12 December draft Economist Practice report occurred by reason of and in response to a FOI request. That request related to the preparation of a SOAP by the Commissioner. The SOAP did not rely upon the conclusions of Mr Bodner. In disclosing the 12 December email and the 12 December draft Economist Practice report, the Commissioner was not seeking to obtain a commercial or forensic advantage. There was no legal consequence to Alcoa from the limited disclosure of the conclusions of Mr Bodner as at a point in time. Neither were there any practical consequences.

125 Alcoa submits that there were statements in the final Economist Practice report that were misleading. The final Economist Practice report included a statement that a detailed report from an independent expert “may assist in confirming” volume of supply was relevant to determining arm’s length consideration. Mr Bodner’s final report provided no support for such a suggestion. The logical connection between this submission and any alleged unfairness arising from the disclosure of the 12 December email and the comments in the margin of the 12 December draft Economist Practice report is not apparent.

126 The Commissioner in the present case waived privilege over the final report of Mr Bodner and chose to provide it to Alcoa even though the final report of Mr Bodner fell outside the scope of the FOI request (because the final version of the report was obtained after the date of the FOI request).

127 The circumstances in which the disclosure of a final report results in a waiver of privilege attaching to communications between solicitors and the expert, including drafts prepared for the purpose of obtaining legal advice, has been the subject of a number of authorities.

128 In Australian Securities and Investments Commission v Southcorp Ltd [2003] FCA 804; 46 ACSR 438, Lindgren J (at [21]) set out a series of principles his Honour recorded as not being in dispute in that case. Those principles included:

Ordinarily disclosure of the expert’s report for the purpose of reliance on it in the litigation will result in an implied waiver of the privilege in respect of the brief or instructions or [briefing documents or copies of those documents made for the purposes of forming part of confidential communications between the client’s lawyers and the expert witness], at least if the appropriate inference to be drawn is that they were used in a way that could be said to influence the content of the report, because, in these circumstances, it would be unfair for the client to rely on the report without disclosure of the brief, instructions or documents.

129 However, as was explained by White J in New Cap Reinsurance at [45], there are “many cases in which it has been held that privilege in material provided to an expert is not lost merely because the expert is called or the expert’s report is served”.

130 The disclosure of a final report without disclosing drafts may be unfair if the disclosure of the final report is intended to create an impression that the conclusions were the product of the independence and expertise of the expert but where the formulation of the substantive opinions has in fact been the product of or affected by the influence of others. As White J explained (at [53]):

The question is not merely whether it could be said that the privileged materials were used in such a way that they could be said to influence the content of the report, but whether it could be said that they influenced the content of the report in such a way that the use or service of the report would be inconsistent with maintaining the privilege in those materials, such as, where it would be unfair for the party to rely on the report without disclosure of those materials.

131 There must be more than an allegation of such influence. There must be an indication in the evidence that such influence has occurred. The mere fact that there have been communications between lawyers and an expert will not be sufficient to indicate such influence. As Ball J explained in Traderight (NSW) Pty Ltd v Bank of Queensland Ltd [2013] NSWSC 211 at [23]:

…It is common for a party’s legal advisors to communicate with an expert retained by the party for the purpose of giving instructions and commenting on the form of the expert’s report. In some cases, those advisors may test tentative conclusions that the expert has reached and in doing so may cause the expert to reconsider his or her opinion. In some cases, the legal advisors may suggest wording to be included in the report which expresses in admissible form an opinion stated by the expert in an inadmissible form. The court depends heavily on the parties’ legal advisors to assist experts to address properly the questions asked of them and to present their opinions in an admissible form and in a form which will be readily understood by the court. Equally, the court depends heavily on the parties’ legal advisors to ensure that any opinion expressed by an expert is an opinion the expert holds for the reasons that the expert gives and that the expert otherwise complies with the Expert Witness Code of Conduct. That requirement is reinforced by the acknowledgment that the expert is required to give concerning the code. The fact that legal advisors have communicated with an expert and provided comments on drafts of a report in a way which is consistent with discharging the first obligation is not a reason of itself for supposing that they have failed to discharge the second.

132 In the present case, Mr Bodner’s final report was disclosed by the Commissioner but not relied upon by the Commissioner. There was no forensic advantage obtained or sought to be obtained by the Commissioner from Mr Bodner’s report. There was no reference by the Commissioner to Mr Bodner’s report in a manner which sought to use the existence of Mr Bodner’s report to leverage the Commissioner’s position either commercially or forensically.

133 The fact that privilege had been waived over Mr Bodner’s final report was of no relevance to the issue of unfairness in the circumstances of this case. The disclosure of Mr Bodner’s final report did not confer a forensic advantage on the Commissioner in circumstances where Mr Bodner’s final report was not relied upon by the Commissioner and did not form a basis for the conclusions expressed by the Commissioner in the SOAP or the basis for the Div 13 determinations in fact made. There was no forensic unfairness in maintaining privilege over the drafts of Mr Bodner’s report and the communications relating thereto in the circumstances.

134 The Full Court in Macleod held at [150] that mere relevance of the withheld material does not by itself establish an inconsistency necessary to give rise to implied waiver. In the present case, it is observed that the material withheld in this case bore no relevance to the substantive tax issues in dispute. Although it is submitted by Alcoa that the material may have relevance to penalties or general interest charges, that relevance is not readily apparent. Assuming there is a tax shortfall, penalties turn on the objective reasonableness of the position adopted by the taxpayer and the taxpayer’s conduct; they do not depend on what advice if any was obtained by the Commissioner.

135 The conclusion reached by the Tribunal (at TR [71]–[72]), having proceeded from an incorrect understanding of legal principle, was the product of an error of law. There is no evidentiary foundation from which it may be open to conclude that the Commissioner obtained a forensic advantage from the disclosure of the 12 December email and the comments in the 12 December draft Economist Practice report.

136 It follows that the Tribunal erred in law in failing to identify the correct legal principle. The error led to the failure to apply the correct legal principles to the facts it had found. It was not open to the Tribunal to reach a conclusion that the conduct of disclosing the 12 December email and disclosing the comments in the 12 December draft Economist Practice report together with Ms Harako’s responses under cross-examination amounted to conduct inconsistent with the maintenance of the privilege over the entire draft of Mr Bodner’s report without considering the evident purpose of that disclosure. Much less was it open to the Tribunal to conclude that “fairness” dictated that privilege over all drafts of Mr Bodner’s report had been waived.

137 As a further observation, it is completely unclear how disclosure of the 12 December email and the 12 December draft Economist Practice report could result in a waiver of privilege over communications made after that date.

138 The Commissioner’s appeal is allowed, with costs. The Tribunal erred in law and there being no basis on which it is open to conclude that the disclosures made resulted in a waiver of the drafts of Mr Bodner’s report and associated documents, the decision of the Tribunal with respect to the documents referred to in [38]–[43] of the Second Harako Affidavit is set aside.

Associate:

Dated:    19 June 2025