A recent decision of the Administrative Appeals Tribunal
("AAT") has confirmed that "without
prejudice" privilege applies to proceedings before the AAT.
Such communications cannot be relied upon by either party in
circumstances where privilege has not been waived and the document
is not one that must be produced as part of the Tribunal documents
(T-documents) pursuant to s 37(1) of the Administrative Appeals
Tribunal Act 1975 (Cth) ("AAT
The case of Bruse and Commissioner of Taxation 
AATA 404 involved
a dispute about whether the applicant was entitled to certain tax
deductions. A preliminary issue arose during the proceeding as to
whether the applicant could rely on a "without prejudice"
communication made by the respondent. It was conceded by the
applicant that the letter was a "without prejudice"
communication. The issues to be determined by the AAT were:
whether without "prejudice privilege" applies to
proceedingsin the AAT,
whether privilege was waived, and
whether privilege was abrogated by reason of s 37(1) of the AAT
The AAT had no hesitation in finding that "without
prejudice" privilege applies to proceedings in the AAT,
following the decision of Re Feben and Repatriation
Commission (1998) 50 ALD 600.
As to the issue of waiver, the applicant argued that by
referring to the "without prejudice" letter in a
subsequent letter (which had been included in the material provided
to the AAT), the respondent had therefore waived privilege over the
"without prejudice" letter. The subsequent letter had
"For the purposes of settling this matter, we had been
prepared to allow the applicant deductions for Mrs Jillian
Bruse's wages and car expenses to the extent contained in his
letter dated 17 August 2009. However, this proposed without
prejudice offer of settlement was not accepted by your client.
At present and on the evidence available, we do not accept that
Mrs Jillian Bruse was an employee of the applicant during the
relevant income year. Hence, the deductibility of Mrs Jillian
Bruse's wages and car expenses in respect of the Mazda will be
issues to be determined by the Tribunal."
The AAT found that privilege was not waived because firstly, the
respondent was not seeking to rely upon the content of the
"without prejudice" letter or the negotiations in order
to advance any contention in the proceedings. Secondly, the
subsequent letter was easily comprehensible without reference to
the "without prejudice" letter. The AAT went on to say
that even if the subsequent letter was not comprehensible without
reference to the "without prejudice" letter, that would
not be sufficient to outweigh the public interest in the content of
settlement negotiations being protected from production in
In relation to s 37(1) of the AAT Act (which compels a decision
maker to lodge with the AAT copies of all documents relevant to the
decision), the AAT considered whether that section operated to
abrogate the privilege which otherwise applied to the letter.
Pursuant to s 37(3), the provisions of s 37 are expressed to have
effect "notwithstanding any rule of law relating to privilege
or the public interest in relation to the production of
documents". The AAT found on the facts of this particular case
that the document in question was not one that the respondent was
compelled to produce pursuant to s 37(1), so privilege was not
abrogated by that section. The AAT did not need to decide whether
the privilege would have been lost if the document had been one
that the respondent was obliged to include in its T-documents.
For completeness, it is important to remember that an
application can be made to the AAT under s 35(2) of the AAT Act for
an order that a document which might ordinarily be subject to legal
professional privilege be treated as confidential. In this event,
such document need not be lodged and served on the other party with
the T-documents (and may never need to be if a confidentiality
order is granted).
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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This was an interlocutory decision about the appointment of a tutor for the child appellant, to carry on his proceedings.
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