Update on the High Court's decision in Glencore v Commissioner of Taxation

The High Court of Australia today handed down an important, unanimous judgment on legal professional privilege. The Court confirmed that while legal professional privilege can immunise parties from having to produce privileged communications outside the lawyer-client relationship, it is not a legal right on which a cause of action can be based.

The case of Glencore International AG v. Commissioner of Taxation concerned an application by Glencore to injunct the ATO from using certain ‘Paradise Papers’ that were leaked to the international press in 2017. Those papers recorded legal advice Glencore received on a large restructure it undertook in 2014. Glencore sought to prevent the ATO from using the papers on the basis that they were legally privileged and that legal professional privilege founded a basis for an injunction. The ATO denied that legal professional privilege was a proper basis for an injunction, and asserted that it had statutory powers to use the documents as they were already in its possession.

The High Court agreed with the ATO that legal professional privilege was an immunity, but not a legal right that could found the basis for an injunction. A claim based on an apprehended breach of confidence could operate to support an injunction, but breach of confidence was not argued by Glencore here because the papers were already in the public domain. There was no allegation that the ATO had itself engaged in breach of confidence in accessing the papers.

As a result of this decision, the ATO will now be free to use the leaked Paradise Papers (which were stolen from Glencore’s advisers) to investigate whether or not Glencore has breached its tax obligations.

The immediate lesson from the case is that once privileged documents have been disclosed by way of hacking or theft (or other similar means), affected parties will need to rely on arguments based on breach of confidence (if available), not legal professional privilege, in order to try to restrict the use of those documents.

A link to the full decision can be found here.