Canada: UK Supreme Court Declines To Recognize Legal Advice Privilege For Accountants

Last Updated: January 29 2013
Article by Brandon Kain

Most Read Contributor in Canada, September 2018

In a watershed ruling that is sure to have implications throughout Canada, the UK Supreme Court has held that legal advice (or "solicitor-client") privilege does not attach to communications between accountants or other non-legal professionals and their clients. The decision in Prudential holds this to be the case even where the communications involve legal advice which the professional person is qualified to give, and that advice is given in circumstances where it would be privileged were it provided by a lawyer.


Prudential arose from a judicial review application in which the appellants challenged the validity of statutory disclosure notices issued to them by an inspector of taxes. The notices required the appellants to disclose certain documents in connection with a series of tax avoidance transactions that had been designed and implemented for them by the accounting firm PricewaterhouseCoopers ("PwC"). The appellants argued that the documents were exempt from disclosure, on the ground they related to the seeking and giving of legal advice by PwC in connection with the transactions.

The judicial review application was dismissed by Charles J. at first instance. He found that even though the disputed documents would have attracted legal advice privilege ("LAP") and thus been excluded from disclosure if the advice had been provided by a member of the legal profession, no such privilege attached even to identical advice provided by a professional who was not a qualified lawyer. Charles J.'s ruling was affirmed by the Court of Appeal.

The Decision

The UK Supreme Court dismissed the appellants' appeal. Six sets of reasons were given by the seven-member panel, with Lord Neuberger delivering the leading judgment for the majority (concurred in by Lords Hope, Walker, Mance and Reed), and Lord Sumption writing a powerful dissent (concurred in by Lord Clarke).

Lord Neuberger began by briefly reviewing the key features of LAP, and observed that "it is universally believed that LAP applies only to communications in connection with advice given by members of the legal profession". (para. 29)  He defined "members of the legal profession" for this purpose to include "members of the Bar, the Law Society, and the Chartered Institute of Legal Executives (CILEX) (and, by extension, foreign lawyers)".  According to Lord Neuberger, allowing the appeal would involve a considerable extension of LAP beyond its currently understood limits, since it would mean that legal advice by accountants and other non-legal professionals would be covered.

At the same time, Lord Neuberger acknowledged that the argument for allowing the appeal was a "strong one", and that the principled arguments for restricting LAP to communications with lawyers were "weak".  In particular, he found that the "close connection" between courts and lawyers was exaggerated: the appeal functions of judges in the disciplinary procedures of lawyers were no greater than in relation to that of other professions, and every professional person involved in litigation (not simply lawyers) owed a duty to the court. As well, the principled restriction of LAP to lawyers was undermined by the extension of LAP to foreign lawyers "without (it would seem) regard to their particular national standards, regulations or rules with regard to privilege". (para. 45)

In the end, however, Lord Neuberger concluded that while extending LAP to non-legal professionals would accord with logic, " 'the life of the [common] law has not been logic', as Oliver Wendell Holmes, Jr. observed on the first page of The Common Law (1881)... the life of the common law 'has been experience' ". (para. 47)  And experience showed that the restriction of LAP to legal professionals was explained by the fact that "until the last century, (i) it was very rare for any professional person other than a lawyer to give legal advice, and (ii) the connection between the legal profession and the courts was thought to be of greater significance than it is now". (para. 48)  While this did not preclude the Court from modifying the common law rule, three reasons persuaded Lord Neuberger that such reform should be left to Parliament:

... First, the consequences of allowing Prudential's appeal are hard to assess and would be likely to lead to what is currently a clear and well understood principle becoming an unclear principle, involving uncertainty. Secondly, the question whether LAP should be extended to cases where legal advice is given from professional people who are not qualified lawyers raises questions of policy which should be left to Parliament. Thirdly, Parliament has enacted legislation relating to LAP, which, at the very least, suggests that it would be inappropriate for the court to extend the law on LAP as proposed by Prudential. (para. 52)

Writing in dissent, Lord Sumption would have proposed a new rule whereby LAP would extend to any legal advice given by a person whose profession ordinarily includes the giving of legal advice:

In my opinion the law is that legal professional privilege attaches to any communication between a client and his legal adviser which is made (i) for the purpose of enabling the adviser to give or the client to receive legal advice, (ii) in the course of a professional relationship, and (iii) in the exercise by the adviser of a profession which has as an ordinary part of its function the giving of skilled legal advice on the subject in question. ... (para. 114)

However, the risk of uncertainty created by Lord Sumption's new rule proved too great for the majority to accept. Lord Neuberger noted that there would be difficulties in identifying what amounted to a "profession" for this purpose (e.g., town planners), which would necessitate inquiries into the qualifications, standing, rules and disciplinary procedures of particular groups of people. He also observed that there was no clear test for deciding whether a profession is one which "ordinarily includes the giving of legal advice", nor for whether that question should be asked of the profession generally, a particular branch of it or the particular member at issue. Lord Reed encapsulated the majority's concerns in his concurring judgment:

...[T]he privilege must be capable of being relied upon if it is to serve its purpose of enabling clients and their legal advisers to communicate with each other with complete candour. It is therefore highly desirable that the privilege should, as far as possible, be based upon a principle which is clear, certain and readily understood. The existing common law principle meets those requirements. The variety of possible formulations of an extended common law principle, and the consequent scope for debate as to whether particular professional persons, in particular situations, would or would not fall within its scope, would detract from the certainty and clarity which presently exist. (para. 100)

Potential Significance

The decision in Prudential will be great practical and doctrinal importance for several reasons.

First, as a practical matter, parties should be mindful that their communications with non-lawyer accountants could be disclosed to revenue authorities even where they involve the giving or seeking of legal advice. This applies not only in the United Kingdom by virtue of Prudential, but in Canada as well. In Tower v. Canada (M.N.R.), 2003 FCA 307, the Federal Court of Appeal confirmed that there is no class or case-by-case category of "accountant-client privilege". The U.S. Supreme Court also rejected a federal accountant-client privilege in Couch v. United States, 409 U.S. 322 (1973) and United States v. Young, 465 U.S. 805 (1984). As a result, businesses on both sides of the Atlantic should be wary of engaging in legal communications with accountants that may prejudice them in future tax litigation.

Second, however, the Court in Prudential did not reject the traditional exception to the prohibition upon accountant-client privilege that has been recognized by Canadian courts outside the context of litigation privilege, being where an accountant acts as a channel of communication between lawyer and client in relation to the giving or seeking of legal advice (e.g., as a messenger, translator or amanuensis). Additionally, some Canadian cases suggest the possibility of a further exception where a non-legal professional, though not acting as a channel of communication, nonetheless performs some other function which is essential to the existence or operation of the solicitor-client relationship (e.g., where the client authorizes them to direct a solicitor to act on the client's behalf). In such circumstances, the Ontario Court of Appeal has indicated that communications with the non-legal professional in furtherance of their essential function may still be protected by solicitor-client privilege: General Accident Assurance Co. v. Chrusz (1999), 45 O.R. (3d) 321 (C.A.). While the parameters of this latter exception remain uncertain, it seems unlikely that Prudential will preclude its application in Canada.

Third, the reasons in Prudential are not limited to accountants alone, but extend to all non-lawyer professionals whose function involves the provision of legal advice. As a result, the decision would appear to foreclose the possibility of LAP being extended to communications with any non-lawyer absent a statutory exception (or a miscellaneous common law exception such as the two noted immediately above). The Supreme Court of Canada appears to have endorsed a similar approach in L.L.A. v. A.B., [1995] 4 S.C.R. 536, where L'Heureux-Dubé J. (concurring) said:

... The solicitor-client class privilege, for example, involves definite actors: one is a qualified lawyer and the other is the client. In that regard, John Sopinka (of this Court), Sidney N. Lederman and Alan W. Bryant, in The Law of Evidence in Canada (1992), remark at p. 649: ["]The protection [of the privilege], however, does not extend to communications with persons who are not duly qualified legal advisers even though the advice they might give is legal in nature.["] (para. 70)

Finally, Prudential is noteworthy for the high degree of caution with which the majority approached the question of whether to expand the scope of LAP. Lord Neuberger's reasons suggest that courts should be reluctant to obfuscate this "clear and well understood principle" by adding new common law refinements to it, and emphasize the primacy of Parliament in developing this policy-laden branch of the law. These sentiments echo the U.S. Supreme Court's observation that "[a]n uncertain privilege, or one which purports to be certain but results in widely varying applications by the courts, is little better than no privilege at all" (Upjohn, at 393), and underscore the Supreme Court of Canada's statement that "solicitor-client privilege must be as close to absolute as possible" (R. v. McClure, [2001] 1 S.C.R. 445 at para. 35). The end result is likely to be a re-entrenchment of traditional privilege principles, coupled with a growing judicial reluctance to entertain modifications of the doctrine in the future. Whether this approach to privilege will indeed be as "prudential" as the majority suggests remains to be seen.

Case Information

R (on the application of Prudential plc) v. Special Commissioner oftarget=_blank Income Tax, [2013] UKSC 1

Date of Decision: January 23, 2013

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions