Glencore International AG v Commissioner of Taxation

The High Court unanimously allowed a demurrer and dismissed a proceeding by the plaintiffs whereby the plaintiffs, Glencore International AG (‘Glencore’) sought to invoke the Court’s jurisdiction under s 75(iii) of the Constitution to compel the defendants, the Australian Taxation Office (‘ATO’) to return certain documents (the ‘Glencore documents’) to them and to restrain the defendants’ further use of them.

The Glencore documents were created for the sole or dominant purpose of legal advice to Glencore with respect to the corporate restructure of Australian entities within the Glencore group. The advice was provided by Appleby (Bermuda) Limited (“Appleby”), an incorporated law practice in Bermuda. The Managing Partner of Appleby said that the Glencore documents were amongst documents colloquially described as the “Paradise Papers” which were stolen from Appleby’s electronic file management systems and provided to the International Consortium of Investigative Journalists. Glencore said that the ATO had obtained copies of the Paradise Papers, asserted that the Glencore documents are subject to legal professional privilege and sought an injunction requiring the ATO to return them and to provide an undertaking that they would not be referred to or relied upon. The ATO did not accede to those requests. Instead it argued that there was no cause of action entitling Glencore to relief, or that they were required to retain and use the documents for the purposes of s 166 of the Income Tax Assessment Act 1936 (Cth) (‘ITAA36’), which provides that the Commissioner must make an assessment of the taxpayer’s returns from the taxpayer’s returns “and from any other information in the Commissioner’s possession.”

The High Court held at [5] that it was clear that the Glencore documents were the subject of legal professional privilege, and that documents which were subject to legal professional privilege were exempt from production by court process or statutory compulsion. However, a declaration to this effect would not assist Glencore, because once the documents were in the ATO’s possession, they could be used in connection with the statutory powers under the ITAA36. Glencore would have to identify a juridical basis for an injunction to restrain the ATO’s use.

The High Court noted at [6] that it was well known that equity would restrain an apprehended breach of confidential information, including where the documents were subject to legal professional privilege. Moreover, and injunction could be issued against third parties if their conscience was affected. However, at [7] the High Court noted that it would be difficult for Glencore to mount such an argument given that first, the information was no longer confidential and secondly, there had been no allegation as to the ATO’s conduct or knowledge in relation to the documents. The High Court seemed to say that s 166 of the ITAA36 seems to act as a bar to relief, but that it was not necessary to discuss this further as Glencore did not advance its case on that basis. Tantalisingly, the High Court also noted at [7] that Glencore did “not seek to expand any area of the law such as unjustified invasion of privacy.” Instead, they used legal professional privilege as the basis for the issue of an injunction.

As the High Court explained at [8] – [11], Glencore attempted to argue that legal professional privilege entitled them to an injunction, and accepted that in order to establish this, they were required to have an actionable legal right. While they conceded that the High Court in Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission [2002] HCA 49 had described legal professional privilege as an immunity, they argued that the rule of law required an actionable right to restrain the use of and ensure the recovery of documents subject to legal professional privilege. Moreover, they argued that there was a gap in the law if injunctions were granted only when documents were confidential rather than privileged.

At [12] – [14], the High Court rejected Glencore’s submission on the basis that legal professional privilege was only an immunity and did not give rise to an enforceable cause of action. In making this conclusion, it referred to several other matters:

  • The history of the privilege, including the fact that it was related to the privilege of a witness to refuse to answer questions (at [15] – [18]);
  • The fact that legal professional privilege only gives rise to relief which enables someone not to produce documents in legal action (at [19]);
  • The fact that it has long been held in Australian law that legal professional privilege is an immunity and does not give rise to enforceable rights, despite the fact that it has sometimes been described as a ‘fundamental right’ (at [21] – [26]);
  • The public interest policy behind the privilege was the enhancement of the administration of justice by facilitating the representation of clients by legal advisers (at [27] – [28]). However, there was another more general public interest, being the fair conduct of litigation, against which legal professional privilege had to be balanced (at [29] – [30]).

Finally the Court also discussed the possibility of other relief at [31] – [42]. They said that it would be particularly problematic if the ATO were required to assess the income tax liability of the Glencore group on a basis which bears no relationship to the true facts (at [34]). The only judicial basis for relief regarding the use of privileged material was in equity, for breach of confidentiality. There was no reason to extend actions for recovery of privileged material beyond situations where there had been a breach of confidence, and assertions that other jurisdictions including England and Singapore had granted injunctions on bases other than breach of confidence was incorrect (see [37] – [39]).

The court concluded at [40] – [42]:

The plaintiffs’ case for the grant of relief on a basis other than confidentiality is simply this: that any furtherance of the public interest which supports the privilege is sufficient to warrant the creation of a new, actionable right respecting privileged documents. This is not how the common law develops. The law develops by applying settled principles to new circumstances, by reasoning from settled principles to new conclusions, or determining that a category is not closed. Even then the law as developed must cohere with the body of law to which it relates.

Policy considerations may influence the development of the law but only where that development is available having regard to the state of settled principles. Policy considerations cannot justify an abrupt change which abrogates principle in favour of a result seen to be desirable in a particular case.

In the absence of any further facts it is not possible to say whether the plaintiffs are without any possibility of a remedy. But if there is a gap in the law, legal professional privilege is not the area which might be developed in order to provide the remedy sought.


High Court Judgment [2019] HCA 206 14 August 2019
Result Demurrer upheld, proceeding dismissed
High Court Documents Glencore International v Commissioner of Taxation
Full Court Hearing [2019] HCATrans 82 17 April 2019

One thought on “Glencore International AG v Commissioner of Taxation

  1. I have to admit I am losing faith a little in quantum meruit.

    I am not sure how to pronounce it and besides, for any of us, give us what we deserve and who shall ‘scape whipping?

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