Legal professional privilege is a legal immunity but it is not an independent cause of action. So ruled the full bench of the High Court last week in a joint judgment in Glencore International AG v Commissioner of Taxation  HCA 26.
Does the distinction matter?
It was probably crucial for the disappointed plaintiff, vast Swiss-British miner Glencore in its continuing tussle with the Australian Taxation Office.
As you might recall from global media coverage at the time, in 2017 millions of documents were leaked from the Caribbean-based law firm Appleby in an episode that became known as ‘the Paradise Papers.’ Appleby specialises in tax minimisation involving tax havens. Its recent clients include Glencore.
Some of Appleby’s Glencore advice and related documentation leaked its way to the ATO which took a very deep interest in it.
This ATO attention was sufficiently embarrassing for Glencore to invoke the High Court’s original jurisdiction and seek an injunction against the ATO retaining, relying upon or referring to any of the stolen Appleby documents relating to Glencore.
The High Court noted that there was no issue that the documents stolen from Glencore’s lawyers were subject to legal professional privilege. But the seven judges unanimously found that this meant only that the documents were exempt from production by court process (eg discovery or subpoena) – it did not necessarily mean that the ATO could be injuncted from using documents which had come into its possession independently of such court processes.
The Court stated [at paras 12 – 13]
Fundamentally [Glencore’s application] rests upon an incorrect premise, namely that legal professional privilege is a legal right which is capable of being enforced, which is to say that it may found a cause of action. The privilege is only an immunity from the exercise of powers which would otherwise compel the disclosure of privileged communications…
It is not sufficient to warrant a new remedy to say that the public interest which supports the privilege is furthered because communications between client and lawyer will be perceived to be even more secure. The development of the law can only proceed from settled principles and be conformable with them. The plaintiffs’ case seeks to do more than that. It 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.
Apart from there not being a cause of action, there was the further difficulty that the cat was already well and truly out of the bag in any event. Para 33:
The relief sought by the plaintiffs points to further difficulties….[including] the fact that the information the subject of the claimed privilege is now in the public domain. In the latter respect the circumstances of this case identify a particular problem were an injunction to be granted. It is that the defendants would be required to assess Australian entities within the Glencore group to income tax on a basis which may be known to bear no real relationship to the true facts.
Ouch. That sounds like there might be a nasty revised tax bill in the pipeline to Glencore.
And presumably, this means any lawyers in Australia who still believed that disclaimers at the bottom of their emails or faxes were effective no longer have any reasonable basis to argue that responsibility for observing client legal privilege rests with the recipient of such a communication rather than the sender!