When privileged documents are stolen and disseminated: an analysis of the High Court’s decision in Glencore

In Glencore International AG v Commissioner of Taxation [2019] HCA 26, the High Court considered whether Glencore could restrain the Commissioner of Taxation from making use of certain privileged documents.  Interestingly, the privileged documents in question were stolen as part of a cyberattack from Glencore’s solicitors and disseminated amongst the “Paradise Papers”.

Background

Solicitors acting for the Glencore group, Appleby, provided legal advice with respect to a corporate restructure of Australian entities within the Glencore group. As part of this process, the Glencore group created documents for the sole or dominant purpose of the provision of that advice (the Glencore documents).There was no issue about the Glencore documents being the subject of legal professional privilege.[1]

The Glencore documents were stolen from Appleby’s electronic file management systems in a cyberattack and provided to the International Consortium of Investigative Journalists. They were amongst the “Paradise Papers” that were disseminated in November 2017. The existence of the Paradise Papers received global media coverage and the High Court assumed the documents were in the public domain.

As the Glencore group believed the Commissioner of Taxation (Commissioner) had obtained copies of the Glencore documents, it asked the Commissioner to return the documents and provide an undertaking that they would not be referred to or relied upon. The basis for the request was that the documents were subject to legal professional privilege.

The Commissioner did not accede to those requests,[2] so the Glencore group sought an injunction restraining the Commissioner from making any use of the Glencore documents or any information contained in, or which may be derived from, those documents. The injunction was sought pursuant to equity’s auxiliary jurisdiction. As such, the Glencore group needed to establish that it had an “actionable legal right” against the Commissioner.[3]

The key issue

As the Glencore documents were already in the Commissioner’s possession, the Glencore group was required to identify a juridical basis upon which the Court could restrain the Commissioner’s use of the documents.[4]

Relevantly, the Glencore group did not make allegations of wrongdoing against the Commissioner (e.g. no allegations of apprehended breach of confidentiality or invasion of privacy). Rather, it argued that the existence of legal professional privilege itself, being a fundamental common law right, entitled it to an injunction.

Glencore group’s arguments

The Glencore group focused on policy of the law upon which legal professional privilege is based. In doing so, it referred to the rationale for legal professional privilege: that it furthers the administration of justice through the fostering of trust and candour in the relationship between lawyer and client. It argued that the recognition of an actionable right to restrain the use of and recover privileged documents would advance this policy.[5]

Moreover, it argued that the provision of a remedy may 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.[6]

Decision

The High Court rejected Glencore group’s arguments. The Court relevantly stated:[7]

“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. The privilege is only an immunity from the exercise of powers which would otherwise compel the disclosure of privileged communications…” (emphasis added)

The Court noted that Glencore group was effectively seeking the creation of a new actionable right or remedy,[8] and did not consider the fact that communications between client and lawyer would be perceived as being even more secure was sufficient to warrant a new actionable right or remedy. The Court believed that if Glencore group’s argument were to succeed, the nature of legal professional privilege would be transformed “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.“[9]

Accordingly, the proceeding was dismissed with costs.

Effect of the decision

The effect of the decision is that the Commissioner is not required to return the Glencore documents, and may rely on the documents to make an assessment about Glencore group’s taxable income.

Notwithstanding this, it should be noted that the admissibility of the Glencore documents is a separate issue that was not conclusively determined. The Court briefly made reference to sections 118, 119 and 138 of the Evidence Act 1995 (Cth), which deal with questions of admissibility,[10] but noted that “the plaintiffs’ case does not depend on questions of admissibility” and hence did not further consider whether the documents would be admissible.[11]

As such, while the Commissioner may use the Glencore documents to make an assessment about Glencore group’s taxable income, it is unclear whether the ATO could admit the documents into evidence in a later court proceeding.

Key takeaway

Though legal professional privilege is a substantive right founded upon a matter of public interest, it is not an actionable right and the existence of legal professional privilege alone does not allow a privilege-holder to injunct another party from using documents that are in the public domain. As the Court helpfully summarised:[12]

If one asks what this “right” gives to a person, the answer could be stated as “a right to resist the compulsory disclosure of information” or “the right to decline to disclose or to allow to be disclosed the confidential communication or document in question”…

Knowing that stolen privileged documents which have entered the public domain may be used and relied upon by regulators and other parties could embolden cybercriminals seeking to infiltrate law practices and other professional services firms. This case should therefore serve as an important reminder to legal practitioners and any other holders of privileged material to be vigilant when keeping privileged material secure.

[1] Glencore International AG v Commissioner of Taxation [2019] HCA 26 at [5].

[2] Section 166 of the Income Tax Assessment Act 1936 (Cth) 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“. See [4].

[3] Note 1 at [8].

[4] Ibid at [5].

[5] Ibid at [10].

[6] NB: Whereas the basis for an injunction is usually the need to protect the confidentiality of a privileged document, here the basis of the Plaintiffs’ case for the grant of relief was not confidentiality – noting the documents were in the public domain.

[7] Note 1 at [12].

[8] Ibid at [13] and [40].

[9] Ibid at [13].

[10] These sections respectively relate to the non-admissibility of documents subject to advice privilege, litigation privilege, or documents improperly obtained.

[11] Note 1 at [20].

[12] Ibid at [22].