Privilege in the public domain – the Glencore decision

This is my first privilege blog for far too long, but then I have been finishing the next edition of my book: the manuscript is with Sweet & Maxwell and I hope that Edition 4 will be available in time for Christmas 2019. So, a reasonable excuse for my silence.

Here is a terrific a case with which to resume blogging, the High Court of Australia’s decision of August 2019 in Glencore International AG v Commissioner of Taxation [2019] HCA 26. This is an important decision from Australia’s highest court. Set against the context of a clients’ privileged materials having entered the public domain as the result of the activities of unidentified hackers, Glencore examines the nature of privilege and most importantly the rights that it does and does not carry with it.

Let’s look at the context first. I have written here before about the interplay between confidentiality and privilege and what happens when privileged materials are wrongfully accessed and then made available on social media. Hitherto, Courts in London and Singapore (see Lachaux v Independent Print Ltd [2017] EWCA Civ 1327 and Wee Shuo Woon v HT SRL [2017] 2 SLR 94.) have striven to find that the materials concerned are still confidential such that the court can use its injunctive powers to restrain the improper or unauthorised use of another’s privileged materials. Absent such relief, it has been the case since the still controversial decision in Calcraft v Guest [1898] 1 QB 759 that a recipient of another’s privileged materials is entitled to use them, however obtained, including as evidence in court proceedings, unless steps are taken quickly to restrain such use.

However, the Court’s jurisdiction to restrain such use is traditionally derived, not from the status or nature of privilege, but from its equitable jurisdiction – first deployed in Lord Ashburton v Pape [1913] 2 Ch 469 –¬ to prevent a misuse of another’s confidential information. Accordingly, it is that continuing confidentiality, which is an essential ingredient of the privilege, which provides the basis upon which the common law courts will act to prevent privileged material being misused by a third party. In Glencore, that essential ingredient of confidentiality was missing, such that the claimants unsuccessfully resorted to the novel argument that it is the privilege alone that allows the court to provide a remedy against using privileged material that has entered the public domain without its owner’s agreement.

The facts here were that the plaintiffs, companies within the global Glencore plc group, sought an injunction restraining the Australian tax authorities from making any use of "the Glencore documents". These were documents which were created for the sole or dominant purpose of providing Bermudan legal advice to the plaintiffs with respect to the corporate restructure of Australian entities within the Glencore group. The Glencore documents were amongst documents known as the "Paradise Papers" which had been stolen from a Bermudan law firm’s electronic file management systems and provided to the International Consortium of Investigative Journalists. The High Court thought it could be assumed that the documents had been further disseminated, the existence and content of the Paradise Papers having received global media coverage.

Believing that the tax authorities had obtained copies of the Paradise Papers, the Glencore entities sought their return and an undertaking that they would not be referred to or relied upon. The defendants refused, and in the ensuing proceedings argued that the plaintiffs had not disclosed any cause of action by which they were entitled to the relief sought. The problem Glencore faced in invoking the Court’s equitable jurisdiction to restrain such use was that, while there was no dispute that the Glencore documents were the subject of legal professional privilege, they were also in the public domain and thus no longer confidential; furthermore, there was no allegation concerning the defendants' conduct or knowledge in relation to the Glencore documents which otherwise allowed the court’s equitable jurisdiction to be invoked. Seemingly recognising this, the plaintiffs did not seek an injunction on the ground of confidentiality; nor did they seek to expand any area of the law such as any tort of unjustified invasion of privacy.

Instead, they argued that the importance of legal professional privilege within the Australian legal system, and its centrality to the rule of law, was of itself sufficient for the grant of the injunction they sought. Focussing on the fact that legal professional privilege is recognised in Australia, and elsewhere, as a fundamental common law right, the plaintiffs submitted that the scope of the privilege should reflect the policy of the law upon which it is based, and thus its rationale, namely the furtherance of the administration of justice through the fostering of trust and candour in the relationship between lawyer and client. Accordingly, they contended that the recognition of an actionable right to restrain the use of privileged documents advanced this policy. That, it was argued, was necessary because “it is unsound for the privilege to be recognised as a fundamental right but for confidentiality to provide the only basis for its enforcement.” To this end, they argued that if “Lord Ashburton v Pape is to be understood to hold that an injunction will be granted on the basis that documents are confidential rather than privileged, there is a gap in the law.”

The High Court disagreed, since “fundamentally” this rested upon the incorrect premise that privilege is a legal right which is capable of being enforced by founding a cause of action. That was to ignore that privilege is only an immunity from the exercise of powers which would otherwise compel the disclosure of privileged communications. What could not be discerned from the case law (including senior English decisions) was that the "right" spoken of in connection with the privilege is an actionable right. As the High ||Court put it, 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." So understood, privilege is a freedom from the exercise of legal power or control, that is, an immunity.

As for the policy considerations underpinning privilege, the High Court noted that these promote the important public interest in assisting and enhancing the administration of justice by facilitating the representation of clients by legal advisers. This is similarly achieved by keeping secret the clients’ communications: thereby the client is encouraged to make full and frank disclosure of all relevant circumstances to his lawyer, knowing that they are otherwise immune from production. Noting that this public interest is paramount to the more general public interest in promoting the fair conduct of litigation, which requires that all relevant documentary evidence is otherwise made available to a court, the High Court said:

“In striking the balance between the two competing public interests, the law was not concerned to further a client's personal interest in preventing the use which might be made by others of the client's communications if they obtained them. In providing an immunity, the law's purpose was to enhance the administration of justice. And in settling the conditions which must be present for the privilege to operate, it defined the boundaries of the privilege. It is the policy of the law that the public interest in the administration of justice is sufficiently secured by the grant of an immunity from disclosure.”

Noting that 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, and that the development of the law can only proceed from settled principles and be conformable with them, the High Court was concerned that:

“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.”

That gave rise to difficulties, not least the fact that the information the subject of the claimed privilege was now in the public domain. As to this, the circumstances of this case identified a particular problem were an injunction to be granted, namely 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. In conclusion, the High Court held:

“On the present state of the law, once privileged communications have been disclosed, resort must be had to equity for protection respecting the use of that material. Although the policy upon which legal professional privilege is founded is not irrelevant to the exercise of that jurisdiction, the juridical basis for relief in equity is confidentiality. … 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.”

Comment

This is a traditional exposition of the manner in which the Court will exercise its equitable jurisdiction to protect the misuse of privileged information. In some respects, it is surprising that the importance of privilege did not persuade the High Court to consider a remedy to aid Glencore, who after all were the victims of another’s (probably illegal) actions. On the other hand, perhaps recalling the futility of the Spycatcher litigation all those years ago, the fact that the Glencore documents were so freely available – that is in the public domain - even to the tax authorities, meant that there was no purpose in forcing those authorities to close their eyes to what the world at large knows, or at least can get to know. This was a case concerned with the use of the hacked materials by the Australian tax authorities in making an essentially administrative decision about Glencore’s tax position. It was not a case about the use of such materials in court proceedings – where the claimants would have been the victims of another’s illegal act – that is a possible distinction but frankly not one that would have obviously seen the High Court anymore sympathetic to Glencore’s predicament. In the result, confidentiality is the key to the exercise of this aspect of the Court’s equitable jurisdiction and without it there is no judicial remedy. I consider this case represents English law.