Glencore International AG v Commissioner of Taxation
High Court of Australia · 2019
Glencore International AG v Commissioner of Taxation [2019] HCA 26
Privileged advice is stolen from a Bermuda law firm, published worldwide, and reaches the tax office. The client asks a court to stop the Commissioner using it. What can it ask the court for, and on what footing?
What happened?
The plaintiffs were companies in the Glencore group. They brought proceedings in the High Court's original jurisdiction against the Commissioner, the Second Commissioner and the Deputy Commissioner of Taxation, seeking an injunction restraining the defendants and any other officer of the Australian Taxation Office from making any use of the "Glencore documents", and an order for their delivery up ([1]). The plaintiffs said the documents had been created for the sole or dominant purpose of Appleby (Bermuda) Limited, an incorporated Bermuda law practice, giving them legal advice on a corporate restructure of Australian entities in the group ([2]). Appleby's Managing Partner said they were among the "Paradise Papers", stolen from Appleby's electronic file management systems and provided to the International Consortium of Investigative Journalists; the Court said it might be assumed that they had been further disseminated ([2]).
The plaintiffs alleged that the defendants had obtained copies, and that the defendants had not acceded to requests to return them and to undertake not to refer to or rely on them ([3]). The defendants demurred. Their principal ground was that no cause of action was disclosed; their alternative ground was that s 166 of the Income Tax Assessment Act 1936 (Cth) entitled and obliged them to retain and use the documents ([4]). The Court noted that there was no issue about the documents being subject to privilege ([5]).
What did the Court decide?
The Court ordered that the demurrer be upheld and the proceeding dismissed with costs ([43]; Orders). It upheld the demurrer on the first ground and did not consider the alternative ground concerning s 166 ([14]). The Court gave one joint judgment, beginning at [1].
Proposition
What is the principle?
Privilege is not a cause of action. The plaintiffs sought an injunction in equity's auxiliary jurisdiction and accepted that this required an actionable legal right ([8]). The joint judgment said their argument "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", and continued: "The privilege is only an immunity from the exercise of powers which would otherwise compel the disclosure of privileged communications, as Daniels Corporation holds" ([12]). The Court read the statement in Daniels Corporation that the privilege is "an important common law immunity" as a considered correction of a possible misunderstanding, not a tentative remark ([23], [25]), and treated Gummow J's view in Propend and Brennan J's in Carter as consistent with it ([26]). It said that in providing an immunity the law's purpose was to enhance the administration of justice, not to further a client's personal interest in preventing others from using communications they obtained ([31]), and that there is unlikely to be a warrant for anything more than an immunity from disclosure ([32]).
The plaintiffs argued that the public interest behind the privilege called for a remedy. The Court said that was not sufficient to warrant a new remedy, and that the plaintiffs' case sought to transform 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" ([13]). The common law develops by applying settled principles to new circumstances, and "Policy considerations cannot justify an abrupt change which abrogates principle in favour of a result seen to be desirable in a particular case" ([40]-[41]). Its conclusion: "if there is a gap in the law, legal professional privilege is not the area which might be developed in order to provide the remedy sought" ([42]). The decision was on a demurrer, the plaintiffs did not claim on confidentiality, and the Court said that "In the absence of further facts it is not possible to say whether the plaintiffs are without any possibility of a remedy" ([42]).
What relief after disclosure rests on. The joint judgment said that "On the present state of the law, once privileged communications have been disclosed, resort must be had to equity for protection respecting the use of that material", and that the policy of the privilege "is not irrelevant to the exercise of that jurisdiction", but "the juridical basis for relief in equity is confidentiality" ([34]). It said Lord Ashburton v Pape was decided on the confidentiality of the privileged material ([35]). It held that Expense Reduction Analysts concerned documents mistakenly provided in discovery, where the court's case management powers were sufficient to make the necessary orders, and did not stand for a broader proposition allowing the privilege to be asserted in order to obtain relief in the nature of an injunction ([36]). The English and Singapore decisions the plaintiffs cited each concerned whether documents had retained the necessary quality of confidentiality, and none supported injunctions "on the basis only of the wrongfulness associated with its taking" ([37]-[39]); for an equity to arise the person to be restrained must have an obligation of conscience ([39]).
The Court said that equity will restrain an apprehended breach of confidence as to confidential privileged documents, and will restrain third parties whose conscience is relevantly affected ([6]). It observed that there might be difficulties for the plaintiffs in meeting those requirements, because the documents were in the public domain and no allegation was made about the defendants' conduct or knowledge, but found it unnecessary to consider the question further because the plaintiffs did not seek relief on that ground ([7]).
Why does this case matter?
A problem question about leaked, stolen or wrongly obtained privileged material invites a one-step answer: the client's privilege has been infringed, so a court will stop the other side using the documents. Examiners reward the student who asks what the client would actually plead and what facts that claim needs, and Glencore is the High Court decision that tests the one-step answer.
The case also shows how a pleading choice can shape an outcome. A scenario in which the documents are already widely published is a prompt to ask who now holds them and what that person knows, which are questions the Court noted but did not reach ([7]).
Exam and application relevance
When the scenario involves privileged documents in the hands of someone who obtained them outside discovery or a compulsory process, separate two questions: whether the documents are privileged, and what the claimant can ask a court to do about their use. Glencore is authority on the second question for a claim pleaded on privilege alone: the joint judgment held that privilege does not found an injunction or delivery up ([12], [42]). Then examine the facts the Court said bore on an equitable claim: whether the documents have kept the quality of confidentiality, and whether the person to be restrained has an obligation of conscience ([7], [37], [39]).
Cite the case for what it decided, and for its limit. Whether relief on the ground of confidentiality would have been available against the Commissioner was not decided ([7]), and the Court said it was not possible to say on the pleaded facts that the plaintiffs had no possibility of a remedy ([42]). The reasoning on Expense Reduction Analysts ([36]) is relevant where a question mixes mistaken disclosure in discovery with a claim to enforce privilege more widely.
Check your understanding
1. The plaintiffs accepted that an injunction in equity's auxiliary jurisdiction required an actionable legal right ([8]). What premise in their argument did the joint judgment identify as incorrect, and how did it describe the privilege instead ([12])? 2. Which earlier decisions did the joint judgment rely on to show that the privilege had been described as an immunity ([23]-[26]), and how did it answer the suggestion that the description in Daniels Corporation was tentative ([25])? 3. What did the Court say Expense Reduction Analysts decided, and what did it say that case does not stand for ([36])? 4. At [7] the Court noted difficulties for the plaintiffs in a claim on a different footing. Which facts did it mention, and why did it decline to consider them further? 5. How many sets of reasons were there, and which Justices joined in them?