Queensland Law Society

Glencore International AG v Commissioner of Taxation [2019] HCA 26

Glencore International AG v Commissioner of Taxation [2019] HCA 26

Catchwords

Legal professional privilege – privilege as an actionable legal right – privilege as a cause of action – privilege as an immunity ­– injunctive relief in equity’s auxiliary jurisdiction.

Executive summary

Glencore International AG (‘plaintiffs’) brought proceedings in the original jurisdiction of the High Court of Australia (‘Court’) seeking an injunction to restrain, among others, the Commissioner of Taxation (‘defendants’) and officers of the Australian Taxation Office from using documents described as ‘the Glencore documents (‘documents’) or any information contained in, or which may be derived from, those documents. The plaintiffs also sought delivery up of the documents. The plaintiffs’ claim was grounded in the documents being the subject of legal professional privilege.

Ultimately, the Court upheld the defendants’ demur and dismissed the plaintiffs’ claim on the basis that the case seeks to transform the nature of privilege from an immunity to an ‘ill-defined’ cause of action.

Background

The plaintiffs brought proceedings in the original jurisdiction of the Court seeking an injunction to restrain the defendants and any other officer of the ATO from making use of the documents. The plaintiffs also sought an order for delivery up of the documents.

The plaintiffs contended that the documents were created for the sole or dominant purpose of the provision by Appleby (Bermuda) Limited (‘Appleby’), an incorporated law practice in Bermuda, of legal advice to the plaintiffs with respect to the corporate restructure of the Australian entities within the Glencore Group. The managing partner of Appleby said that the documents formed part of other documents colloquially described as the ‘Paradise Papers’. The Paradise Papers were stolen from Appleby’s electronic file management systems and provided to the International Consortium of Investigative Journalists. Following this, the Paradise Papers were disseminated further, receiving global media coverage, and were subsequently obtained by the defendants.

The plaintiffs asserted that the documents were subject to legal professional privilege and asked the defendants to return them and to provide an undertaking that they would not be referred to or relied upon. The plaintiffs submitted, inter alia, that:

  1. The High Court decision of Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission[1] (‘Daniels Corporation’) was not to be understood as confining the scope of privilege when their Honours Gleeson CJ, Gaudron, Gummow and Hayne JJ described legal professional privilege as ‘an important common law immunity’.[2]
  2. The scope of legal professional privilege should be broadened to reflect principles of public policy. The plaintiffs contended that the rationale for legal professional privilege was to further the administration of justice through fostering trust and candour in relationships between lawyer and client, and the recognition of an actionable right to restrain the use of and recover privileged documents advances this policy.
  3. It is unsound for legal professional privilege to be recognised as a fundamental right in circumstances where confidentiality provides the only basis for its enforcement. If the case of Lord Ashburton v Pape is to be understood to hold that an injunction will only be granted on the basis that documents are confidential rather than privileged, there is a gap in the law.[3]

The defendants demurred to the plaintiffs’ assertion, submitting principally that no cause of action was disclosed by which the plaintiffs were entitled to the relief sought. The defendants raised an alternative ground of objection founded in statute, however the Court found no need to consider the point.[4]

Issue

Can legal professional privilege be enforced as a cause of action?

Issue considered

The Court noted that there was no issue with respect to the documents being the subject of legal professional privilege and, therefore, them being exempt from production by court process or statutory compulsion. However, it was noted that, in the circumstances, such declaration would not assist the plaintiffs as the documents were already in the possession of the defendants and may be used in the connection with the exercise of their statutory powers.[5]

The plaintiff’s first submission was not accepted by the Court as it rested upon an incorrect premise that legal professional privilege is a legal right capable of being enforced.[6] Referring to decisions of the Privy Council and House of Lords, the Court noted that the right given to a person by legal professional privilege is ‘a right to resist the compulsory disclosure of information’[7] or ‘the right to decline to disclose or to allow to be disclosed the confidential communication or document in question’.[8] In line with the statement made by their Honours in Daniels Corporation, legal professional privilege can be understood as a ‘freedom from the exercise of legal power or control, which is to say [it is] an immunity’.[9] The Court held that their Honours’ characterisation of privilege as an immunity provided by the common law was an application of the principle of legality to the construction of statutes which may have the effect of abrogating ‘important common law rights, privileges and immunities’.[10] It was concluded that privilege is only an immunity from the exercise of powers which would otherwise compel the disclosure of privileged communications.[11]

The Court rejected the plaintiffs’ second submission, finding it insufficient to warrant a new remedy on the basis that the scope of privilege should be broadened to reflect principles of public policy.[12] The Court emphasised that, while privilege promotes the public interest in keeping communications between a lawyer and their client secret for purposes of full and frank disclosure, there is another, more general public interest that lies in the fair conduct of litigation. That general public interest requires all relevant documentary evidence to be available to parties in a proceeding. Consequently, the law has struck a balance between the two competing interests, where the public interest supporting privilege is paramount to the more general public interest.[13] However, in striking the balance between the two competing interests, the law was concerned not with furthering a client’s personal interest in preventing the use of a client’s communications, but rather with enhancing the administration of justice, the policy of which is sufficiently secured by the grant of an immunity from disclosure.[14] Following this, the Court concluded that there was unlikely to be a warrant for providing anything more than an immunity from disclosure.[15]

With respect to the plaintiffs’ third submission, the Court held that there was no substance to it. It was noted that, although there has been discussion about the differences in reporting of a passage in Lord Ashburn v Pape, the differences concern whether the injunction made was intended to prevent privileged material being adduced in further proceedings, not the basis upon which the injunction was granted, namely the confidentiality of privileged material.[16]

Ultimately, the Court emphasised that the development of the law can only proceed from settled principles and in this context the plaintiffs’ submissions sought to transform the nature of privilege from an immunity into an ‘ill-defined’ cause of action.[17] Subsequently, the Court ordered that the defendants’ demurrer be upheld and the plaintiffs’ proceeding be dismissed.[18]

 

Liam O'Shaughnessy

Ethics Clerk

As approved by Grace van Baarle, Manager, Ethics Solicitor, QLS Ethics and Practice Centre



[1] (2002) 213 CLR 534.

[2] Ibid 553 [11], see also 563 [44] (McHugh J).

[3] [1913] 2 Ch 469.

[4] Ibid [14].

[5] Glencore International AG v Commissioner of Taxation [2019] HCA 26, [5].

[6] Ibid [12].

[7] B v Auckland District Law Society [2003] 2 AC 736, 761 [67], cited in Glencore International AG v Commissioner of Taxation [2019] HCA 26, [22].

[8] Three Rivers District Council v Governor and Company of the Bank of England [No 6] [2005] 1 AC 610, 646 [26] (Lord Scott of Foscote), cited in Glencore International AG v Commissioner of Taxation [2019] HCA 26, [22].

[9] Glencore International AG v Commissioner of Taxation [2019] HCA 26, [22].

[10] Daniels Corporation (2002) 213 CLR 543, 533 [11], cited in Glencore International AG v Commissioner of Taxation [2019] HCA 26, [25].

[11] Glencore International AG v Commissioner of Taxation [2019] HCA 26, [12].

[12] Ibid [13].

[13] Ibid [29].

[14] Ibid [31]-[32]

[15] Ibid [32].

[16] Ibid [35].

[17] Ibid [13], [40].

[18] Ibid [43].