Glencore International AG v Commissioner of Taxation

• Jurisdiction: Australia Federal only
• Judge: Kiefel CJ,Bell,Gageler,Keane,Nettle,Gordon,Edelman JJ.
• Judgment Date: 14 August 2019
• Neutral Citation: [2019] HCA 26
• Court: High Court
• Docket Number: S256/2018
• Date: 14 August 2019

[2019] HCA 26

HIGH COURT OF AUSTRALIA

Kiefel CJ, Bell, Gageler, Keane, Nettle, Gordon and Edelman JJ

S256/2018

Glencore International AG & Ors

Plaintiffs

and

Commissioner of Taxation of the Commonwealth of Australia & Ors

Defendants

Representation

I M Jackman SC with T L Phillips for the plaintiffs (instructed by King & Wood Mallesons)

S P Donaghue QC, Solicitor-General of the Commonwealth, with M J O'Meara for the defendants (instructed by Australian Government Solicitor)

Privilege — Legal professional privilege — Where documents identified by plaintiffs as having been created by law practice for sole or dominant purpose of provision of legal advice to plaintiffs — Where privileged documents stolen from electronic file management system of law practice and disseminated — Where documents obtained by defendants — Where defendants refused to return documents to plaintiffs and provide undertaking not to refer to or rely upon documents — Where plaintiffs sought injunctive relief in equity's auxiliary jurisdiction solely on basis of legal professional privilege — Where plaintiffs did not seek injunctive relief on basis of confidentiality or other area of law — Where defendants demurred on basis that no cause of action disclosed — Whether legal professional privilege operates only as immunity or is also actionable legal right — Whether policy considerations justify creation of new actionable right in respect of documents subject to legal professional privilege.

Words and phrases — “actionable legal right”, “basis for relief”, “breach of confidence”, “cause of action”, “common law right”, “confidentiality”, “development of the law”, “immunity”, “injunction”, “legal professional privilege”, “policy of the law”, “public interest”, “remedy”.

ORDER

• 1. The demurrer be upheld.

• 2. The proceeding be dismissed with costs.

1 Kiefel CJ, Bell, Gageler, Keane, Nettle, Gordon and Edelman JJ. The plaintiffs are companies within the global Glencore plc group (“the Glencore group”). In these proceedings, brought in the original jurisdiction of this Court, they seek an injunction restraining the defendants – the Commissioner, the Second Commissioner and the Deputy Commissioner of Taxation – and any other officer of the Australian Taxation Office from making any use of documents described as “the Glencore documents” or any information contained in or which may be derived from those documents. The plaintiffs also seek an order for the delivery up of the Glencore documents.

2 In the plaintiffs' amended statement of claim the Glencore documents are identified as documents which 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 Australian entities within the Glencore group. The Managing Partner of Appleby says that the Glencore documents are amongst documents colloquially described as the “Paradise Papers” which were stolen from Appleby's electronic file management systems and provided to the International Consortium of Investigative Journalists. It may be assumed that the documents have been further disseminated. The existence and content of the Paradise Papers has received global media coverage.

3 The plaintiffs say that the defendants have obtained copies of the Paradise Papers. The plaintiffs have asserted that the Glencore documents are subject to legal professional privilege and have asked the defendants to return them and to provide an undertaking that they will not be referred to or relied upon. The defendants have not acceded to those requests.

4 The defendants demur to the plaintiffs' amended statement of claim. The principal ground for the demurrer is that no cause of action is disclosed by which the plaintiffs are entitled to the relief sought. Alternatively, the defendants contend that they are entitled and obliged to retain and use the documents in question by reason of and for the purposes of s 166 of the Income Tax Assessment Act 1936 (Cth) (“the ITAA”). That section relevantly provides that the Commissioner must make an assessment of a taxpayer's taxable income from the taxpayer's returns “and from any other information in the Commissioner's possession”.

5 There is no issue about the Glencore documents being the subject of legal professional privilege. Decisions of this Court hold that documents which are subject to legal professional privilege are exempt from production by court process or statutory compulsion 1. A declaration to this effect would not assist the plaintiffs. The Glencore documents are in the possession of the defendants and may be used in connection with the exercise of their statutory powers unless the plaintiffs are able to identify a juridical basis on which the Court can restrain that use.

6 It is well known that equity will restrain an apprehended breach of confidential information and will do so with respect to documents which are the subject of legal professional privilege and which are confidential 2. Equity will restrain third parties if their conscience is relevantly affected 3.

7 There may be difficulties for the plaintiffs in meeting the requirements for such relief, given that the Glencore documents are in the public domain and there being no allegation concerning the defendants' conduct or knowledge. The defendants point to s 166 of the ITAA as a bar to relief in this respect. It is not necessary to give this question further consideration. The plaintiffs do not seek an injunction on the ground of confidentiality. They do not seek to expand any area of the law such as any tort of unjustified invasion of privacy 4. They claim that legal professional privilege is itself sufficient for the grant of the injunction sought.

The plaintiffs' case

8 The plaintiffs take as their starting point that legal professional privilege has been recognised by decisions of this Court as a fundamental common law right 5. They seek an injunction in equity's auxiliary jurisdiction and accept that this requires that they have an actionable legal right.

9 In Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission 6, legal professional privilege was described as “an important common law immunity”. This description may be thought to detract somewhat from the plaintiffs' claim to a legal right which entitles them to an injunction. But the plaintiffs contend that those words were expressed tentatively and are explicable by reference to the facts of that case. They contend that Daniels Corporation is not to be understood as confining the scope of the privilege, and that no decision of this Court has held that the privilege operates only as an immunity.

10 The plaintiffs submit that the scope of the privilege should reflect the policy of the law upon which it is based. The rationale for legal professional privilege is the furtherance of the administration of justice through the fostering of trust and candour in the relationship between lawyer and client. It should be understood to have its basis in the rule of law 7. The recognition of an actionable right to restrain the use of and recover privileged documents advances this policy, the plaintiffs contend.

11 The plaintiffs contend that the provision of a remedy may also be seen as necessary because it is unsound for the privilege to be recognised as a fundamental right but for confidentiality to provide the only basis for its enforcement. If Lord Ashburton v Pape 8 is to be understood to hold that an injunction will be granted on the basis that documents are confidential rather than privileged, there is a gap in the law. The plaintiffs submit that decisions of courts in other common law jurisdictions have recognised the existence of general law rights which may support an injunction 9. They reinforce the recognition by the law of the importance of protecting privileged communications obtained by impropriety.

The demurrer must be upheld

12 The plaintiffs' argument cannot be accepted. Fundamentally it rests upon an incorrect premise, namely that legal professional privilege is a legal right which is capable of being enforced, which is to say that it may found a cause of action 10. The privilege is only an immunity from the exercise of powers which would otherwise compel the disclosure of privileged communications, as Daniels Corporation holds.

13 It is not sufficient to warrant a new remedy to say that the public interest which supports the privilege is furthered because communications between client and lawyer will be perceived to be even more secure. The development of the law can only proceed from settled principles and be conformable with them 11. The plaintiffs' case seeks to do more than that. It seeks to transform the nature of the privilege from an immunity into an ill-defined cause of action which may be brought against anyone with respect to documents which may be in the public domain.

14 The demurrer should be upheld on the first ground. There is no need to consider the alternative ground concerning s 166 of the ITAA.

The historical operation of the privilege

15 Holdsworth 12 regarded the privilege as belonging to the same order of ideas as the privilege to refuse to answer questions the answer to which could expose a witness to injury. The view of Holdsworth and of Wigmore 13 that legal professional privilege arose as a response to the Statute of Elizabeth 1562–1563 14 appears now to be contested 15. It is suggested that it may have arisen gradually as part of the larger body of law relating to testimonial compulsion 16. Whatever its exact origin, there does not seem to be any dispute that it was a response to the exercise of powers by the State to compel disclosure of confidential communications between lawyer and client 17.

16 The description of the...