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.

• LPP may be used as a shield to resist production of documents, for example, to a regulator or Court if compulsory powers of production are exercised. 
• LPP is not a sword – it is not a legal right that gives rise to a cause of action (in this instance, to seek an injunction restraining the Commissioner from retaining or relying on the documents in its consideration of Glencore’s taxation affairs). 
• Where documents are subject to LPP, an equitable injunction may restrain an apprehended breach of confidential information with respect to those documents. That is, the common law in Australia already provides established avenues by which aggrieved parties can obtain relief, without the need to resort to the creation of a new ‘actionable’ right by way of claim for privilege. As Glencore’s documents were already in the public domain and there was no allegation concerning the Commissioner’s conduct or knowledge it was faced with difficulties in meeting the requirements for such relief, and indeed Glencore did not seek an injunction on the basis of a breach of confidentiality. 
• The central policy rationale for LPP is that it promotes the public interest by assisting and enhancing the administration of justice by facilitating the representation of clients by legal advisers, and encourages full and frank disclosure of all relevant circumstances to the lawyer. Courts are concerned to protect the confidentiality of lawyer-client communications. 
• The policy and public interest considerations underlying LPP secures an immunity from disclosure of privileged communications, nothing more. Policy considerations at play when material, like Glencore’s privileged documents, is stolen or its confidentiality is otherwise compromised, do not “justify an abrupt change [of the law] which abrogates principle in favour of a result seen to be desirable in a particular case.”

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”.

To read more articles such as this, please register for KPMG Tax Now.