Glencore International AG & Ors v Commissioner of Taxation of the Commonwealth of Australia & Ors [2019] HCA 26


In the recent case of Glencore International AG & Ors v Commissioner of Taxation of the Commonwealth of Australia & Ors [2019] HCA 26 the High Court of Australia clarified the limits of legal professional privilege, confirming that it is defensive in nature and does not on its own give rise to a cause of action through which any legal rights can be enforced.

In 2017, over 13 million confidential electronic documents were leaked to reporters from the German newspaper Süddeutsche Zeitung.  Known as the Paradise Papers, these documents were then shared with the International Consortium of Investigative Journalists ('ICIJ') together with a network of hundreds of journalists.  Some of the Paradise Papers were made public later that year.

A portion of the Paradise Papers originated from a law firm in Bermuda, Appleby, and of those documents, some related to corporate restructuring legal advice Appleby gave to the Glencore Group of Companies ('Glencore').  That advice was unquestionably privileged at the time it was given, and there was no dispute about this by the parties.

Eventually, Appleby's restructuring advice to Glencore ('Glencore Documents') came into the possession of the Australian Commissioner of Taxation (and the other defendants).  The Commissioner sought to use the Glencore Documents to assess income tax on the Australian Glencore entities.  This use of otherwise privileged information is what gave rise to Glencore's application to the High Court.

Before the High Court, Glencore sought an injunction restraining the defendants and any other officer of the Australian Taxation Office from making use of any of the Glencore Documents, as well as seeking an order requiring the defendants to deliver up any copies of the Glencore Documents they had in their possession.

The Decision

In a unanimous decision, the High Court confirmed previous decisions[1] of the Court that legal professional privilege (also known as lawyer client privilege) operates as a complete immunity from the compulsory production of the material over which it applies.

However, where that material has been disseminated beyond the lawyer and the client, legal professional privilege does not itself provide a positive right to the holder of the privilege to seek a remedy from the Court, such as, in this case, the right to seek an injunction.  Accordingly, Glencore's application for an injunction restraining the use of the Glencore Documents, as well as delivery up of those documents, failed.

Additionally, the Court recognised that it is desirable that the Commissioner assesses Glencore's tax liabilities according to the true facts.  Put another way, the Glencore Documents disclose what the true facts are, and if legal professional privilege were to prevent the Commissioner from making the assessment with reference to the Glencore Documents, it would have been done 'on a basis which may be known to bear no real relationship to the true facts.'[2]

This is not to say that the use of leaked documents over which privilege exists cannot ever be prevented.  The usual way this occurs is by commencing a claim for breach of confidence, but Glencore did not pursue that argument in this case.

Whilst a breach of confidence would have provided a basis for Glencore to obtain injunctive relief from the Court, Glencore took the position that it would not succeed in asserting a breach of confidence against the Commissioner of Taxation because there was no suggestion that the Commissioner had any involvement in that breach of confidence, and because the Glencore Documents were already in the public domain.  An action for a breach of confidence can usually only be brought against a person who has received confidential information in circumstances imparting an obligation of confidence and is using that information without permission, to the detriment of the person whose information it is.  Broadly speaking, there is no protection for confidentiality once information is in the public domain.

The result of this case therefore leaves open the possibility that in a situation where privileged documents are not in the public domain, or if the party proposing to use the privileged documents had some hand in wrongfully acquiring them, a different result might be reached.

Practical effect

The Court briefly considered the evidentiary consequences of allowing the Commissioner to rely on the Glencore Documents in the assessment of Glencore's tax liabilities,but did not provide any further commentary on this issue because, it said, admissibility was not an issue arising on Glencore's case. 

The difficulty with this outcome is that the Evidence Act 1995[3] (Cth) contains specific provisions to prevent the use in Court of evidence that is subject to legal professional privilege, or which has been improperly or illegally obtained.  Accordingly, it is conceivable that the Commissioner might rely on this decision and use the Glencore Documents to assess Glencore's tax, but then if Glencore seeks a review of that assessment by a Court, the Glencore Documents may be ruled inadmissible pursuant to the Evidence Act 1995

Key takeaways

Given the prevalence of electronic document management systems, privileged material can be quickly and anonymously disseminated worldwide, and this case is a salient reminder that document security (by both lawyers and their clients) must be given priority.  This is even more so as sensitive data breaches are not uncommon.

In the event that a data breach is detected, immediate steps need to be taken to seal that breach, and to prevent any privileged documents from being disseminated into the public domain.  This may include seeking urgent injunctive relief as soon as a data breach is detected.

Privilege and confidentiality remain strong protections, but they are not absolute.  Care needs to be used to maintain the benefits they offer.

CCK Lawyers has extensive experience acting in disputes about legal professional privilege, including acting successfully in litigation to prevent the use of improperly obtained, privileged documents.  We also have extensive experience representing taxpayers in disputes with the ATO, including successfully challenging ATO decisions in the High Court.  If you need advice about your dealings with the ATO, please contact our team on +61 8 8211 7955.

[1] See, for example, Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543.

[2] At [33].

[3] See sections 118, 119 and 138 of the Evidence Act 1995.