Legal professional privilege doesn’t apply where privileged material obtained by unauthorised means

Legal professional privilege (LPP) is a fundamental aspect of the lawyer-client relationship. The purpose of the privilege is to protect the confidential character of communications or documents created when a client seeks legal advice. The scope of applicability has been well defined for some time, however a recent case before the High Court has provided further guidance as to whether LPP can be enforced as a cause of action.

The case of Glencore International AG v Commissioner of Taxation [2019] HCA 26 concerned global mining group Glencore which had obtained legal advice from a firm based in Bermuda in relation to a restructure of its Australian operations. The documents created as a result were stolen from the firm’s electronic file management system and provided to the International Consortium of Investigative Journalists. These documents, amongst many others, formed what was known as the “Paradise Papers”. The Commissioner of Taxation subsequently came into possession of a copy of these documents.

Upon discovering the Commissioner’s possession of the documents, Glencore asserted LPP and requested the Commissioner return the documents and provide an undertaking that they would not be referred to or relied upon. The Commissioner declined these requests. Glencore subsequently brought proceedings seeking:

  • An injunction in equity restraining the use of the documents; and
  • An order for the return of the documents.

The Commissioner argued LPP did not extend to an actionable right by Glencore to bring proceedings for injunctive relief. Alternatively, the Commissioner argued he was not refrained from using the documents and was entitled and obliged by section 166 of the Income Tax Assessment Act 1936 (Cth) to use the documents in his possession. The matter was settled on the first basis and it was unnecessary to consider the alternative argument.

The High Court unanimously dismissed Glencore’s claim. The High Court acknowledged that while LPP is an important immunity it is not a legal right on which a cause of action can be based. In effect, LPP is a shield not a sword.

Despite this, a party may be able to rely upon LPP when seeking an injunction to restrain a breach of an obligation of confidentiality. This line of argument was not open to Glencore as the documents were already in the public domain as a result of the leak. This does give rise to the unfortunate inference that stolen documents may in some cases be admissible in court. The High Court acknowledged this inconsistency but did not address how this would be remedied. This will likely be reconciled with reference to established laws of evidence; however, it remains a live issue for now.

James Conomos is the Managing Director of James Conomos Lawyers where he practices in the areas of insolvency, bankruptcy and commercial litigation. If you or your business needs assistance navigating a legal dispute, please do not hesitate to contact him.

3004 8201  |      |  jim@jcl.com.au