I thought that during an AFR the PIC was determined by whether the pilot under observation was current or not. In days gone by the ATO on IFR renewals used to say I was in command if I was current and could log it as such, if he needed to take over it would revert to a dual experience, at which point I had failed the check. In any case the PIC needs to be determined before flight, that is definitely a rule, the instructor/check pilots needs to make it clear who is in command, and what is expected of the candidate. That is, are they expected to be in command, or act in command, or expect to be under instruction/training.