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

By Kaelin Govinden

Legal advice privilege covers communications between lawyers and their clients whereby legal advice is sought or given. The requirements to claim legal advice privilege are as follows –

• the legal adviser must have been acting in a professional capacity at the time;
• the adviser must have been consulted in confidence;
• the communication must have been made for the purpose of obtaining legal advice;
• the advice must not facilitate the commission of a crime or fraud; and
• the privilege must be claimed (see Thint Holdings (Southern Africa) (Pty) Ltd and Another v National Director of Public Prosecutions; Zuma v National Director of Public Prosecutions 2009 (1) SA 141 (CC)).

The concept of what falls within the expression ‘legal advice’ for the purposes of legal advice privilege goes not only to advice on the law, but also advice as to what should prudently and sensibly be done in the relevant legal context, including advice as to how a client’s position or case should best be presented.

On 17 March 2014 the Western Cape High Court handed down judgment in the matter of A Company and Others v Commissioner, South African Revenue Service 2014 (4) SA 549 (WCC) and in the process re-examined the ambit of legal advice privilege. The applicants, three companies in a group of companies, had applied for a declaratory order that certain content of two fee notes (invoices) rendered by their attorneys to the first applicant was subject to legal professional privilege, more particularly legal advice privilege. Copies of the invoices had been supplied to the Commissioner of the South African Revenue Service but the applicants had redacted (blacked out) what they considered subject to the claim of privilege. The application by the companies for declaratory relief had been brought in the context of the Commissioner’s insistence on being provided with unexpurgated copies of the documents concerned. The applicants’ replying affidavit clarified that the claim was not based on the documents per se being privileged but that ‘certain of the contents of the disputed invoices [were] privileged, to the extent that they set out the nature of the advice sought by the applicants from their attorneys and/or the advice given by those attorneys’.

The High Court, per Binns-Ward J, had to consider the following issues:

• whether the ambit of the legal professional privilege extended to the blacked out parts of an otherwise unprivileged document that had been disclosed;
• since disclosure of part of a privileged document may constitute an implied or imputed waiver of the whole, whether a lawyers’ fee note qualified by its nature and as a general rule as a privileged document; and
• what was the appropriate manner of asserting the claimed privilege.

Applying the reasoning of a line of English case law in the local context, the High Court came to the conclusion that attorney’s fee notes were not amenable to any blanket rule that would characterise them as privileged communications per se. The court held as follows at para 30 – 31:

‘Fee notes are not created for the purpose of the giving of advice and are not ordinarily of a character that would justify it being said of them that they were directly related to the performance of the attorney’s professional duties as legal adviser to the client. They are rather communications by a lawyer to his or her client for the purpose of obtaining payment for professional services rendered; they relate to recoupment for the performance of professional mandates already completed, rather than to the execution of the mandates themselves. … It is, however, readily conceivable … that attorneys’ fee notes might contain references to legal advice sought and given in the course of a narration of the services in respect of which the fees had been raised.’

The matter in respect of which legal advice privilege may be claimed was ‘the actual communications between the client and the lawyer involved in the seeking and giving of the advice … or references in other documents that would disclose their content or from which their content might be inferred.’

The court held at 550 C – D: ‘Thus, where a fee note set out the substance of the privileged communications in respect of the seeking or giving of legal advice, or contained sufficient particularity of their substance to constitute secondary evidence thereof, those parts, but not the document as a whole, would be amenable to the privilege. The test was whether, upon an objective assessment, the references disclose the content, and not just the existence, of the privileged material.’

In respect of the appropriate manner of asserting the claimed privilege, Binns-Ward J concluded by explaining that the privilege should be asserted by blacking out the information, so as to disclose those parts of the document that were not subject to the privilege and covering up those that were, and that the party asserting the legal professional privilege should generally be able to provide a rational justification for such claim without needing to disclose the content or substance of the matter in respect of which the privilege is claimed.

• Cliffe Dekker Hofmeyr acted on behalf of the applicant in this case.

Kaelin Govinden LLM (UKZN) (Howard College) is a candidate attorney at Cliffe Dekker Hofmeyr in Cape Town.

This article was first published in De Rebus in 2014 (Nov) DR 39.