Canadian courts will likely turn to a recent UK decision for guidance on solicitor-client privilege.[1] In a controversial ruling that saw a separate set of reasons from each judge of the UK Supreme Court, it was held that legal advice given by an accountant was not protected by privilege. The majority found this to be true even if that same advice, had it been given by a lawyer, would have attracted legal advice privilege (“LAP”).

Prudential is significant to anyone seeking legal advice from an accountant or any other non-legal professional. The UK principle of LAP is equivalent to solicitor-client privilege in Canada. Both principles stem from the common law and apply to all communications passing between clients and their lawyers for legal advice. The reasons in Prudential are not limited to accountants but could apply to all non-legal professionals whose functions include giving advice which might be of a legal nature.

Prudential obtains legal advice from PwC on foreign foldings

Prudential retained PricewaterhouseCoopers (“PwC”) for advice on structuring their overseas holdings. PwC recommended that Prudential implement a newly created tax avoidance scheme to reduce taxes owing. Following implementation of the scheme, the inspector of taxes served on Prudential a statutory notice for inspection to access documents related to the transactions. Prudential refused to provide the documents on the grounds that LAP applied to the communications. The inspector of taxes then sought an order to require disclosure of the disputed documents. In response, Prudential applied to the Court to challenge the validity of those notices relying largely on LAP.

The judge at first instance rejected Prudential’s application. He found that no such privilege extended to the advice because it was not given by a lawyer. However, if that same advice had been sought from or given by a legal professional then the disputed documents would have been protected under LAP. The English Court of Appeal agreed and upheld the decision. Prudential then appealed to the UK Supreme Court formerly known as the House of Lords.

Lord Neuberger’s reasons for the majority

Lord Neuberger began by finding that “it is universally believed that LAP applies only to communications in connection with advice given by members of the legal profession.”[2] For these purposes, Lord Neuberger held that the definition of members of the legal profession included “members of the Bar, the Law society, and the Chartered Institute of Legal Executives (CILEX) (and, by extension, foreign lawyers).”[3] This common understanding of LAP was confirmed by legislation, case law, various secondary materials, as well as government statements and reports. As a result, to allow Prudential’s appeal in this case would amount to extending the definition of LAP contrary to the way it was commonly understood and consistently applied.

Lord Neuberger considered several reasons in support of Prudential’s appeal and found that there existed many strong arguments for extending LAP to non-legal professionals. Although granting privilege to legal communications with accountants would conform to logic, ultimately he decided that the common law has not extended the privilege that far.

Canadian jurisprudence

Prudential is consistent with a Canadian decision of the Federal Court of Appeal decision denying solicitor-client privilege to advice given by BDO Dunwoody in relation to an interest- expense creating transaction.[4] The FCA stated that “no overriding policy consideration exists so as to elevate the advice given by tax accountants to the level of solicitor-client privilege”.[5] The FCA also held that none of the four criteria used in Canada to determine whether privilege is granted was satisfied. Known as the “Wigmore criteria” the four prongs of analysis are:

  1. The communications must originate in a confidence that they will not be disclosed.
  2. This element of confidentiality must be essential to the full and satisfactory maintenance of the relation between the parties.
  3. The relation must be one which, in the opinion of the community, ought to be sedulously fostered.
  4. The injury that would inure to the relation by the disclosure of the communications must be greater than the benefit thereby gained for the correct disposal of litigation.[6]

None of these prongs exist in the communication between a party and an accountant, even if the advice received was of a legal nature. Overall, these cases illustrate the need to exercise caution when seeking or obtaining legal advice from an accountant or other non-legal professional. Any communication between the parties may not be protected by solicitor-client privilege.


[1] R (on the application of Prudential PLC and another) v. Special Commissioner of Income Tax, [2013] UKSC 1 [“Prudential”]. Decision dated January 23, 2013.

[2] Ibid at para. 29.

[3] Ibid at para. 29.

[4] Tower v. Canada (Minister of National Revenue), [2004] 1 F.C.R. 183 (F.C.A.).

[5] Ibid at para. 38.

[6] Wigmore, Evidence (McNaughton rev., 1961) §2285 at 527.