High Court confirms legal professional privilege is a shield, not a sword

Legal professional privilege is a shield, not a sword; ‘an immunity from the exercise of powers which would otherwise compel the disclosure of privileged communications’[1] and not a ‘legal right which is capable of being enforced’ that may ‘found a cause of action’.[2]

That is the summary of the High Court of Australia’s decision in Glencore International AG & Ors v Commissioner of Taxation of the Commonwealth of Australia & Ors [2019] HCA 26 (Decision) in which multinational commodity trader and miner, Glencore, failed to have legally privileged documents, that came into the hands of the Australian Taxation Office (ATO), returned to Glencore and not relied upon.

The key legal question for the court was to determine whether a regulator, like the Commissioner of Taxation, could use privileged material that had been distributed into the public by a third party.

Facts

The plaintiffs were four companies in the global Glencore group. In around October 2014, the plaintiffs’ Australian lawyers engaged an incorporated law practice in Bermuda, Appleby (Bermuda) Limited (Appleby), to provide legal advice on a corporate restructure of Australian entities within the Glencore group. The resulting legally privileged documents were then stolen (Glencore documents) from the electronic file management system of Appleby amongst the documents colloquially known as the ‘Paradise Papers’ that were subsequently disseminated and given global media coverage.

By November 2017, the ATO had obtained copies of the Paradise Papers. After becoming aware that the Glencore documents were in the defendants’ possession, the plaintiffs asserted that those documents were created for the sole or dominant purpose of Appleby providing legal advice to the plaintiffs and subject to legal professional privilege. The plaintiffs requested that the defendants (the Commissioner, the Second Commissioner and the Deputy Commissioner of Taxation) return the Glencore documents and provide an undertaking that they would not be referred to or relied upon. The defendants declined to accede to those requests.

The plaintiffs brought proceedings in the original jurisdiction of the High Court, seeking:

• an injunction in equity’s auxiliary jurisdiction restraining the defendants’ use of the Glencore documents; and
  
• an order for the delivery up of the Glencore documents.

The plaintiffs’ claim required that they have an actionable legal right arising out of the legally privileged nature of the Glencore documents. In response, the defendants submitted that no cause of action had been disclosed by which the plaintiffs were entitled to the relief sought.

Decision

The High Court ruled unanimously in favour of the defendants in dismissing the relief sought. The Decision clarifies that legal professional privilege operates as a means of defensively resisting the compulsory production of information, but does not provide a positive right entitling the holder of the privilege to a remedy, such as an injunction restraining the use of legally privileged material.

The Court reiterated, however, that a person may be able to rely on the confidential nature of legally privileged material to found an injunction to restrain a breach of an obligation of confidentiality and protect the confidentiality of material.[3] It appears, however, that this avenue was not open to Glencore given that the Glencore documents are in the public domain.[4]

The Decision also provides a useful commentary on the history and public policy underpinning legal professional privilege. The Court explained that the history of legal professional privilege ‘was a response to the exercise of powers by the State to compel disclosure of confidential communications between lawyer and client’,[5] and that the doctrine ‘permitted a witness not to answer questions in court; it provided a lawyer or client with an excuse not to comply with court processes and protected them from liability for contempt’.[6]

The Court also made a number of observations about the manner in which the body of common law is developed. It emphasised that the law develops through the application of settled principles to new circumstances, by reasoning from settled principles to new conclusions or determining that a category is not closed. Further, the law must develop in coherence with the body of law to which it relates.[7]

A key takeaway?

Legally privileged material must be treated confidentially. In the event that there is an inadvertent or unauthorised disclosure of legally privileged material, it is important that the privilege-holder take immediate steps to protect the confidential nature of that material including to seek urgent injunctive relief to restrain actual or apprehended breaches of confidence.

In the age of electronic document management, increasingly frequent data and privacy breaches, and social media, swift and coordinated incident response is critical.

See also: High Court to decide groundbreaking privilege case.

For further information, please contact one of our team members.

_References: _{[1] Glencore International AG & Ors v Commissioner of Taxation of the Commonwealth of Australia & Ors [2019] HCA 26 at [12].[2] Ibid.[3] Glencore International AG & Ors v Commissioner of Taxation of the Commonwealth of Australia & Ors [2019] HCA 26 at [39].[4] Glencore International AG & Ors v Commissioner of Taxation of the Commonwealth of Australia & Ors [2019] HCA 26 at [7].[5] Glencore International AG & Ors v Commissioner of Taxation of the Commonwealth of Australia & Ors [2019] HCA 26 at [15].[6] Glencore International AG & Ors v Commissioner of Taxation of the Commonwealth of Australia & Ors [2019] HCA 26 at [16].[7] Glencore International AG & Ors v Commissioner of Taxation of the Commonwealth of Australia & Ors [2019] HCA 26 at [40].}

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