In a decision handed down today concerning an attempt to restrain the use of privileged documents which had been leaked, the High Court has found that:
- legal professional privilege can only be used to resist the production of documents and their use as evidence in court proceedings, but cannot be used as a basis to restrain the use of documents more generally; and
- once documents have left the control of the party with the claim for privilege, arguments or causes of action other than legal professional privilege (such as a breach of confidence) would need to be considered to prevent their use by regulators and others.
In November 2017, the International Consortium of Investigative Journalists, in conjunction with 96 global media outlets, published 13.4 million leaked documents from the records of Bermuda law firm Appleby in what became known as the ‘Paradise Papers’ scandal.
The leaked documents included legal advice provided by Appleby to Glencore in relation to the restructure of Glencore’s Australian subsidiaries. Some of the documents were obtained by the ATO, which indicated in meetings with Glencore that it was relying on the documents in connection with its investigations into whether Glencore was in breach of the anti-avoidance provisions in the Income Tax Assessment Act 1936 (Cth) (ITAA).
In September 2018, four Glencore subsidiaries filed a writ of summons in the High Court seeking an injunction to restrain the ATO’s use of the Appleby documents on the basis of legal professional privilege.
The key issue to be resolved by the High Court was whether legal professional privilege operates only defensively as a means for resisting compulsory production or whether it also provides a positive right enabling the privilege holder to restrain the use of privileged documents in the manner sought by Glencore.
The High Court’s decision
The High Court identified that the characterisation of legal professional privilege as an ‘immunity’ in Daniels Corporation is correct and that privilege is, in essence, a right to resist compulsory production or a right to decline to disclose confidential communications. The Court could find no basis in precedent for legal professional privilege to be considered a ‘positive’ right serving as a basis for other remedies.
Put another way, the privilege is only a ‘shield’ against compulsory production.
The Court identified that an injunction would normally be used to prevent confidential material entering the public domain in the first place. In this case, the Court identified that the privileged documents were already in the public domain and the effect of the injunction would be to prevent reliance by the Commissioner on publicly available information to perform his statutory functions (specifically, section 166 of the ITAA).
In practice, the decision means that the traditional interpretation of legal professional privilege as an immunity against production continues to hold true. It means that legal professional privilege cannot be used to require another party to take (or not take) certain actions.
The High Court identified that Glencore did not seek an injunction on the ground of confidentiality, or to expand any other areas of the law such as the tort of ‘unjustified invasion of privacy’. There was accordingly no alternative but to dismiss Glencore’s application.