The High Court delivered a unanimous judgment on Wednesday 14 August in proceedings regarding legal professional privilege (LPP) between Glencore International AG & Ors and the Commissioner of Taxation.
Glencore had sought an injunction against the Commissioner to prevent the use of certain documents (including legal advice obtained by Glencore) that had been stolen from a law firm and provided to the Commissioner.
The facts of the case were not in dispute. In about October 2014, Glencore’s Australian legal advisers engaged Appleby, an overseas law firm to provide legal advice. In November 2017, the Commissioner had obtained documents known as the “Paradise Papers”. These included documents held by Appleby that were created for the dominant purpose of Appleby providing legal advice. Neither directly nor indirectly, had Glencore instructed, consented to or authorised to release or publish the documents. Upon becoming aware that the privileged documents were in the possession of the Commissioner, Glencore asserted that the documents are subject to LPP and had requested the Commissioner return them and provide an undertaking that they not be referred to or relied upon. The Commissioner refused those requests.
The High Court unanimously dismissed Glencore’s application for an injunction.
It is noted that the Commissioner put an argument that section 166 of the Income Tax Assessment Act 1936 (which provides that the Commissioner may use any information in his possession to make an assessment of tax) was a complete ‘defence’ to any injunction brought by a taxpayer. The High Court was explicit in its judgment that its decision does not rest on consideration of the extent to which the Commissioner may rely on section 166. Indeed, the judgment is clear that ‘it is not necessary’ to give this question further consideration, so no commentary or guidance is provided in the judgment. Although, the Court did note that the fact that, were an injunction to be granted, the Commissioner would be required to assess the group to tax on a basis which may be known to bear no real relationship to the true facts as “a further difficulty” with the relief sought.
Taxpayers may find the outcome concerning as their ability to use LPP as a shield may effectively be abrogated in circumstances where third parties wrongfully procure and disseminate privileged and confidential material publicly and to revenue authorities. The High Court makes it clear that remedies are available to taxpayers in these circumstances, just not remedies founded in the doctrine of LPP and to the extent that there is a “gap in the law”, LPP “is not the area which might be developed in order to provide the remedy sought”.
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