We have for some time now heard comments emanating from the Commissioner of Taxation about their concerns that legal professional privilege (LPP) may be being misused by taxpayers to prevent the Commissioner gaining access to documents in an effort to conceal contrived tax arrangements or frustrate their inquiries. 

The Commissioner has signalled to the community that it intends challenging the improper reliance by taxpayers on LPP. A recent example of this is the High Court case in Glencore International AG v Commissioner of Taxation (Glencore Case).  This case involved Glencore seeking to prevent the Commissioner retaining and relying upon documents it had obtained as a result of having access to stolen documents which became known as the “Paradise Papers”.  Glencore asserted that the Commissioner was required to return and could not rely upon any of these documents on the basis that they were documents between Glencore and its lawyers and therefore were subject to LPP. 

The case centred on what rights arise if LPP applies as there was no dispute between the parties that the documents actually qualified for LPP.  There was also no question as to any impropriety on the part of the Commissioner in accessing these documents.  The Court concluded that, as the documents were already in the public domain, in order for Glencore’s case to succeed, it was necessary to establish that LPP itself “is a legal right which was capable of being enforced, which is to say that it may found a cause of action”.[1]  In this regard, the High Court stated that:

[The Plaintiffs’ argument] seeks to transform the nature of privilege 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.

The High Court went on to say, after analysing the existing case law: [2]

What cannot be discerned from these cases is that the “right” spoken of in connection with the privilege is an actionable right.  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”, as the Privy Council and House of Lords respectively have held.  So understood it is a freedom from the exercise of legal power or control, which is to say an immunity…

The High Court concurred with McHugh J’s view of privilege in Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543 at 563 as “a person’s immunity from compulsion to produce documents that evidence confidential communications about legal matters between lawyers and clients”.[3]

So, fundamentally, the High Court indicated that LPP (properly applied) can be relied on to stop or prevent access to certain confidential communications between lawyers and their clients.  However, once such information is in the public domain and has been accessed without any degree of impropriety, as was the case in the Glencore situation, the immunity arising under LPP no longer has any application and does not give rise to an actionable right to compel the holder of that material to return it or ignore its existence.

This case clearly determines some of the boundaries of the reliance that can be placed on the notion of LPP.  However, there are likely to be further areas of challenge which surface around whether LPP actually applies in various situations.  It has to be remembered in the Glencore case, it was actually conceded by the parties that the documents were in fact subject to LPP.  There is a whole realm of other situations where the Commissioner is questioning the availability of LPP in the first place.  We are likely to see further action by the Commissioner in continuing to challenge the boundaries of LPP in the near future – so, watch this space.


[1] Glencore Case page 4 paragraph 12

[2] Glencore Case pages 8 and 9 paragraph 22

[3] Glencore Case page 9 paragraph 24