Australian High Court Rejects Glencore Suit to Bar Australian Tax Office from Using Paradise Papers Documents

On August 14, in Glencore International AG v. Commissioner of Taxation, the Australian High Court unanimously dismissed a civil action by companies within the multinational commodities trading and mining firm Glencore, which had sought to enjoin the Australian Tax Office (ATO) from making any use of certain Glencore-related documents that were among the so-called “Paradise Papers” (“Glencore documents”) and to compel the ATO to deliver up the Glencore documents.

Glencore had alleged that the Glencore documents were documents stolen from the Bermuda law firm Appleby, which Appleby had created for the purpose of providing Glencore with legal advice.  Accordingly, Glencore “asserted that the Glencore documents are subject to legal professional privilege and have asked the defendants to return them and to provide an undertaking that they will not be referred to or relied upon.”

The High Court first declared that “[t]here is no issue about the Glencore documents being the subject of legal professional privilege.”  Since the ATO obtained the Glencore documents as a result of the Paradise Papers’ public disclosure, the Court stated that those documents “are in the possession of the defendants and may be used in connection with the exercise of their statutory powers unless the plaintiffs are able to identify a juridical basis on which the Court can restrain that use.”

The High Court, however, made clear that under Australian law, documents which are subject to legal professional privilege are exempt from production only if they are sought “by court process or statutory compulsion.”  Although Glencore argued that the legal professional privilege was “a fundamental common law right” for which it could sue the ATO, the Court held that it was not a legal right which is capable of being enforced, but “only an immunity from the exercise of powers which would otherwise compel the disclosure of privileged communications.”  In its view, Glencore’s argument “seeks to transform the nature of the 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 further stated that actions for the recovery of privileged material were confined to situations where there may be a breach of confidence, and “the basis for an injunction is the need to protect the confidentiality of the privileged document.”  As the ATO had not sought to breach attorney-client confidentiality, the court dismissed Glencore’s argument for further expanding the scope of the privilege, holding that “[p]olicy considerations cannot justify an abrupt change which abrogates principle in favour of a result seen to be desirable in a particular case.”

Note:  This decision establishes an important precedent in Australian law.  It also could prove to be influential with courts in other common-law countries, as they address whether law enforcement agencies in those countries may use “Panama Papers” or “Paradise Papers”-type leaked documents to prosecute cases against individuals or companies.  But because the details of attorney-client privilege law can vary substantially from country to country, it is far from certain that Glencore will be the final word on the subject.

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