ARX v Comptroller of Income Tax: Legal Professional Privilege & In-House Counsel

In ARX v Comptroller of Income Tax, the Singapore Court of Appeal addressed whether legal professional privilege extended to communications with in-house counsel before 2012 and the circumstances under which privilege may be impliedly waived. The court dismissed the appeal, holding that the legal advice was protected by privilege and no applicable exception to privilege existed. The court clarified the scope of its decision and the important points of principle in relation to legal professional privilege.

1. Case Overview

1.1 Court

Court of Appeal of the Republic of Singapore

1.2 Outcome

Appeal Dismissed

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Singapore Court of Appeal judgment on legal professional privilege for in-house counsel and implied waiver. Appeal dismissed.

1.7 Decision Date

29 September 2016

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
The Comptroller of Income Tax	Respondent	Government Agency	Appeal Dismissed	Won	Alvin Yeo of WongPartnership LLP
ARX	Appellant	Corporation	Appeal Dismissed	Lost	Davinder Singh of Drew & Napier LLC

3. Judges

Judge Name	Title	Delivered Judgment
Chao Hick Tin	Judge of Appeal	No
Andrew Phang Boon Leong	Justice of the Court of Appeal	Yes
Quentin Loh	Judge	No

4. Counsels

Counsel Name	Organization
Alvin Yeo	WongPartnership LLP
Davinder Singh	Drew & Napier LLC

4. Facts

The Appellant restructured its Singapore operations, incorporating a new subsidiary, AQQ.
The Respondent paid approximately $9.6m in tax refunds to the Subsidiary between 2005 and 2007.
The Respondent concluded the restructuring was a tax avoidance arrangement.
The Respondent issued additional notices of assessment to recover the refunds, but this was set aside by the court.
The Respondent commenced a suit on 1 April 2014 to recover the tax refunds based on unjust enrichment, fraudulent misrepresentation, and conspiracy.
The Respondent sought legal advice from its Law Division on 3 April 2008 regarding the tax avoidance arrangement.
The Appellant sought production of the legal advice to demonstrate the suit is time-barred.

5. Formal Citations

ARX v Comptroller of Income Tax, Civil Appeal No 189 of 2015, [2016] SGCA 56

6. Timeline

Date	Event
2002-01-01	Significant changes were introduced to Singapore’s tax regime.
2005-01-01	The Respondent paid approximately $9.6m to the Subsidiary in tax refunds.
2007-07-01	Audit of the Subsidiary commenced.
2008-03-24	Latest documents provided by the 1st Defendant.
2008-04-03	Advice was received from the Law Division [of Inland Revenue Authority of Singapore].
2008-04-07	Respondent became satisfied that the Corporate Restructuring and Financing Arrangement was a tax avoidance arrangement.
2014-04-01	The Suit commenced to seek recovery of the tax refunds.
2014-06-06	The Respondent filed an application to serve his writ out of jurisdiction on the Appellant.
2014-06-09	Application to serve writ out of jurisdiction granted.
2014-07-31	Affidavit affirmed by Ms Ong Swee Took.
2014-08-28	Ms Ng affirmed an affidavit.
2014-09-09	The Appellant served a notice demanding production of the Advice.
2014-09-23	The Appellant filed Summons No 4769 of 2014 to seek production of the Advice.
2014-10-09	Appellant was granted leave to appeal.
2015-08-06	Christina Ng Sor Hua’s affidavit confirmed that the respondent will only rely on the fact of legal advice having been obtained on 3 April 2008, and not on the substance or content of that advice.
2016-05-12	Hearing date.
2016-09-30	Judgment Date.

7. Legal Issues

Legal Professional Privilege
- Outcome: The court held that the legal advice was protected by privilege and no applicable exception to privilege existed.
- Category: Substantive
- Sub-Issues:
  - Implied Waiver of Privilege
  - State of Mind Exception
- Related Cases:
  - [2014] 2 SLR 847
  - [2015] 2 SLR 54
  - [2007] 2 SLR(R) 367
  - [1972] 2 QB 102
  - (1987) 71 ALR 673
  - [1999] 1 SCR 565
  - [2013] 2 WLR 325
  - [2016] 2 SLR 442
  - [2008] 2 SLR(R) 239
  - [2003] 3 WLR 859
  - [1993] 1 WLR 94
  - (1884) 26 Ch D 724
  - (1986) 69 ALR 31
  - [2003] EWCA Civ 901
  - [1981] Com LR 138
  - [1981] 1 WLR 529
  - [2009] ICR 479
  - [1999] 1 WLR 1183
  - (1999) 168 ALR 86
  - [1983] 4 WWR 762
  - [1980] 3 WLR 668
  - [2014] EWHC 892 (Comm)
  - (2004) 210 ALR 220
  - (1998) 156 ALR 634
  - [2003] FCA 384
  - (2006) 229 ALR 304
  - [2012] NSWSC 58
  - [2014] BCSC 1190
  - [2008] EWHC 3079 (TCC)
  - [2005] 3 NZLR 757
  - [2014] HKCFI 453
  - [2009] IESC 18
  - [1999] VSC 131
  - [2013] QSC 82
Time Bar
- Outcome: The court did not make a definitive ruling on whether the claim was time-barred, as it was not the subject of the appeal.
- Category: Substantive

8. Remedies Sought

Recovery of Tax Refunds

9. Cause of Actions

Unjust Enrichment
Fraudulent Misrepresentation
Conspiracy by Unlawful Means

10. Practice Areas

Commercial Litigation
Tax Litigation

11. Industries

Taxation
Legal Services

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Comptroller of Income Tax v AQQ	Court of Appeal	Yes	[2014] 2 SLR 847	Singapore	Cited as the prior legal proceeding to which the current suit is a sequel; the court refers to the facts and decision in this case to provide context for the current appeal.
Sinwa SS (HK) Co Ltd v Nordic International Ltd and another	Court of Appeal	Yes	[2015] 2 SLR 54	Singapore	Cited for the principle that the making of “no order” amounted to a dismissal of the application.
Skandinaviska Enskilda Banken AB (Publ), Singapore Branch v Asia Pacific Breweries (Singapore) Pte Ltd and other appeals	Court of Appeal	Yes	[2007] 2 SLR(R) 367	Singapore	Cited for the principle that sections 128 and 131 of the Evidence Act cover both legal advice privilege as well as one element of litigation privilege.
Alfred Crompton Amusement Machines Ltd v Customs and Excise Commissioners (No 2)	English Court of Appeal	Yes	[1972] 2 QB 102	England and Wales	Cited as the leading decision on the common law rule protecting confidential communications with in-house legal counsel.
Waterford v Commonwealth of Australia	High Court of Australia	Yes	(1987) 71 ALR 673	Australia	Cited as an example of the common law rule protecting confidential communications with in-house legal counsel in the context of legal officers in government employment.
R v Campbell	Supreme Court of Canada	Yes	[1999] 1 SCR 565	Canada	Cited as an example of the common law rule protecting confidential communications with in-house legal counsel.
Regina (Prudential plc and another) v Special Commissioner of Income Tax and another (Institute of Chartered Accountants of England and Wales and others intervening)	UK Supreme Court	Yes	[2013] 2 WLR 325	United Kingdom	Cited for the principle that privilege only attaches to communications between a client and a legal professional.
HT SRL v Wee Shuo Woon	Court of Appeal	Yes	[2016] 2 SLR 442	Singapore	Cited for the principle that there can be no privilege without confidentiality.
Law Society of Singapore v Tan Guat Neo Phyllis	Court of Three Judges	Yes	[2008] 2 SLR(R) 239	Singapore	Cited for the principle that the Evidence Act only codified the law of evidence existing at the time of its enactment; therefore, new rules of evidence can be given effect to only if they are not inconsistent with the provisions of the Evidence Act or their underlying rationale.
B and others v Auckland District Law Society and another	New Zealand Privy Council	Yes	[2003] 3 WLR 859	New Zealand	Cited for the principle that privilege is understood as “a right to resist the compulsory disclosure of information”.
Lillicrap and another v Nalder & Son (a firm)	English Court of Appeal	Yes	[1993] 1 WLR 94	England and Wales	Cited as an example of implied waiver of privilege where a client sues his solicitor.
Roberts v Oppenheim	English Court of Appeal	Yes	(1884) 26 Ch D 724	England and Wales	Cited for the principle that not all references to legal advice in court documents would amount to a waiver of privilege.
Attorney General for the Northern Territory v Maurice and others	High Court of Australia	Yes	(1986) 69 ALR 31	Australia	Cited for the principle that deponents are often called to give details of the source of their information and beliefs as a pro forma requirement in an affidavit or deposition, and it was thought that compliance with such procedural requirements could never give rise to a waiver.
Dunlop Slazenger International Ltd v Joe Bloggs Sports Ltd	English Court of Appeal	Yes	[2003] EWCA Civ 901	England and Wales	Cited for drawing a distinction between cases of “deployment” (which results in an implied waiver of privilege) and cases where there had been a mere “reference” to the privileged document (where there is no waiver).
Nea Karteria Maritime Co Ltd v Atlantic & Great Lakes Steamship Corpn and others	English High Court	Yes	[1981] Com LR 138	England and Wales	Cited for the principle that where a party is deploying in court material which would otherwise be privileged, the opposite party and the court must have an opportunity of satisfying themselves that what the party has chosen to release from privilege represents the whole of the material relevant to the issue in question.
Great Atlantic Insurance Co v Home Insurance Co and others	English Court of Appeal	Yes	[1981] 1 WLR 529	England and Wales	Cited as a paradigmatic case of implied waiver where the selective disclosure of privileged material was not permitted as it was “unfair or misleading” and risked leaving the court and the other party with a partial and misleading picture of the purport of the document.
Brennan and others v Sunderland City Council and others	United Kingdom Employment Appeal Tribunal	Yes	[2009] ICR 479	United Kingdom	Cited for the principle that fairness is the theme that runs through the authorities on implied waiver in all its various forms.
Paragon Finance plc (formerly National Home Loans Corporation plc) and others v Freshfields (a firm)	English Court of Appeal	Yes	[1999] 1 WLR 1183	England and Wales	Cited for the principle that mere unfairness, in the sense of a disadvantage accruing to one side due to the withholding of information on the ground of privilege, can never be the touchstone by which the court determines whether there has been an implied waiver of privilege.
Mann v Carnell	High Court of Australia	Yes	(1999) 168 ALR 86	Australia	Cited for the principle that waiver of legal professional privilege by imputation or implication of law is based on notions of fairness.
S & K Processors Ltd and another v Campbell Ave Herring Producers Ltd and others	Supreme Court of British Columbia	Yes	[1983] 4 WWR 762	Canada	Cited for the principle that waiver of privilege is ordinarily established where it is shown that the possessor of the privilege knows of the existence of the privilege and voluntarily evinces an intention to waive that privilege.
Buttes Gas and Oil Co and another v Hammer and another (No 3)	English Court of Appeal	Yes	[1980] 3 WLR 668	England and Wales	Cited for the principle that the mere reference in a pleading to a document does not constitute an automatic waiver of privilege over that document.
Mid-East Sales Limited v United Engineering & Trading Company Limited, The Islamic Republic of Pakistan	English High Court	Yes	[2014] EWHC 892 (Comm)	England and Wales	Cited as a contrasting case where disclosure would have been necessary in the interest of fairness and consistency.
Bennett v Chief Executive Officer, Australian Customs Service	Federal Court of Australia	Yes	(2004) 210 ALR 220	Australia	Cited for the principle that even though the reference might on one reading be seen as being limited only to the effect of the advice, it clearly constituted an implied waiver of privilege and disclosure was necessary.
Telstra Corporation Ltd and another v BT Australasia Pty Ltd and another	Federal Court of Australia	Yes	(1998) 156 ALR 634	Australia	Cited for the principle that where a party pleads that he or she undertook certain action “in reliance on” a particular representation made by another, he or she opens up as an element of his or her cause of action, the issue of his or her state of mind at the time that he or she undertook such action.
DSE (Holdings) Pty Ltd v Intertan Inc	Federal Court of Australia	Yes	[2003] FCA 384	Australia	Cited for the principle that the doctrine of issue waiver, as it emerged from Telstra and the decisions which preceded it, had always been confined only to circumstances in which “a positive case [had been] raised by the holder of the privilege”.
Commissioner of Taxation v Rio Tinto Ltd	Full Court of the Federal Court of Australia	Yes	(2006) 229 ALR 304	Australia	Cited for the principle that the “governing principle” was whether the “privilege holder had directly or indirectly put the contents of an otherwise privileged communication in issue in litigation, either in making a claim or by way of defence”.
In the matter of Idoport Pty Ltd (in liq) (recs apptd); National Australia Bank Limited (& Ors) v John Sheahan (& Ors)	New South Wales Supreme Court	Yes	[2012] NSWSC 58	Australia	Cited as an example of the DSE-Rio Tinto approach towards issue waiver being consistently applied across the various Australian states.
Camosun College v Levelton Engineering Ltd	Supreme Court of British Columbia	Yes	[2014] BCSC 1190	Canada	Cited for the proposition that “where a party relies on the postponement provisions for limitation, it automatically puts its state of mind as to its legal knowledge into issue”.
Farm Assist Ltd (in Liquidation) v Secretary of State for Environment, Food and Rural Affairs	English High Court	Yes	[2008] EWHC 3079 (TCC)	England and Wales	Cited for the principle that English law had never recognised such a broad exception to privilege.
Shannon v Shannon	New Zealand Court of Appeal	Yes	[2005] 3 NZLR 757	New Zealand	Cited as an example of a jurisdiction that has rejected the state of mind exception in the broad form as it was articulated in Telstra.
Chinachem Financial Services v Century Venture Holdings Ltd	Hong Kong Court of First Instance	Yes	[2014] HKCFI 453	Hong Kong	Cited as an example of a jurisdiction that has rejected the state of mind exception in the broad form as it was articulated in Telstra.
Redfern Limited v Larry O’Mahony and others	Supreme Court of Ireland	Yes	[2009] IESC 18	Ireland	Cited as an example of a jurisdiction that has rejected the state of mind exception in the broad form as it was articulated in Telstra.
Australian Hospital Care (Pindari) Pty Ltd v Duggan (No 2)	Supreme Court of Victoria	Yes	[1999] VSC 131	Australia	Cited for the principle that in order for privilege to attach to documents produced by in-house counsel, the party asserting privilege has the burden of proving that the requirements of independence and confidentiality had been satisfied.
Aquila Coal Pty Ltd v Bowen Central Coal Pty Ltd	Supreme Court of Queensland	Yes	[2013] QSC 82	Australia	Cited for the principle that there ought not to be any presumption that in-house counsel lacked independence.

13. Applicable Rules

Rule Name
Rules of Court (Cap 322, R 5, 2014 Rev Ed)

14. Applicable Statutes

Statute Name	Jurisdiction
Evidence Act (Cap 97, 1997 Rev Ed)	Singapore
Income Tax Act (Cap 134, 2008 Rev Ed)	Singapore
Limitation Act (Cap 163, 1996 Rev Ed)	Singapore
Application of English Law Act (Cap 7A, 1994 Rev Ed)	Singapore
Legal Profession Act (Cap 161, 2009 Rev Ed)	Singapore

15. Key Terms and Keywords

15.1 Key Terms

Legal Professional Privilege
In-House Counsel
Implied Waiver
State of Mind Exception
Tax Avoidance Arrangement
Corporate Restructuring
Additional Assessments
Limitation Act
Evidence Act
Confidential Communications
Independence
Fairness
Consistency

15.2 Keywords

Legal Professional Privilege
In-House Counsel
Waiver
Tax
Singapore

17. Areas of Law

Area Name	Relevance Score
Legal Professional Privilege	95
Civil Procedure	80
Evidence	75
Income taxation	60
Tax Avoidance	50
Fraud and Deceit	40
Misrepresentation	35
Administrative Law	30
Contract Law	20
Corporate Law	15

16. Subjects

Evidence Law
Tax Law
Civil Procedure
Legal Ethics