Glencore International AG & Ors v Commissioner of Taxation of the Commonwealth of Australia & Ors [2019] HCATrans 82 (17 April 2019)

Last Updated: 17 April 2019

[2019] HCATrans 082

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S256 of 2018

B e t w e e n -

GLENCORE INTERNATIONAL AG

First Plaintiff

GLENCORE INVESTMENT PTY LTD

Second Plaintiff

GLENCORE AUSTRALIA HOLDINGS PTY LTD

Third Plaintiff

GLENCORE INVESTMENT HOLDINGS AUSTRALIA LTD

Fourth Plaintiff

and

COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA

First Defendant

NEIL OLESEN, SECOND COMMISSIONER OF TAXATION

Second Defendant

MARK KONZA, DEPUTY COMMISSIONER OF TAXATION

Third Defendant

KIEFEL CJ
BELL J
GAGELER J
KEANE J
NETTLE J
GORDON J
EDELMAN J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON WEDNESDAY, 17 APRIL 2019, AT 10.48 AM

Copyright in the High Court of Australia

____________________

MR I.M. JACKMAN, SC: May it please the Court, I appear with my learned friend, MS T.L. PHILLIPS, for the plaintiffs. (instructed by King & Wood Mallesons)

MR S.P. DONAGHUE, QC, Solicitor-General of the Commonwealth of Australia: May it please the Court, I appear with my learned friend,
MR M.J. O’MEARA, for the defendants. (instructed by the Australian Government Solicitor)

KIEFEL CJ: Yes, Mr Jackman.

MR JACKMAN: The principal question which arises in these proceedings, your Honours, is whether legal professional privilege is a selfsufficient basis for an injunction to restrain the use of privileged documents and for an order for delivery up of those documents. The demurrer expressly assumes that the relevant documents are still privileged – that is, legal professional privilege still attaches to the relevant documents and there has been no waiver of privilege.

We take as our starting point, which should be uncontroversial in our respectful submission, the proposition that legal professional privilege is a fundamental common law right, the rationale for which lies in the public policy in favour of access to legal advice uninhibited by any apprehension of subsequent disclosure of those communications.

In support of that starting point, can I ask your Honours to go in the joint bundle of authorities to volume 2 at tab 17, which is the decision of Daniels Corporation v ACCC, and specifically behind tab 17 if your Honours would go to paragraph 9. At paragraph 9, under the subheading “Legal professional privilege” their Honours said:

It is now settled that legal professional privilege is a rule of substantive law –

with reference to Attorney-General v Maurice:

which may be availed of by a person to resist the giving of information or the production of documents which would reveal communications between a client and his or her lawyer made for the dominant purpose of giving or obtaining legal advice or the provision of legal services, including representation in legal proceedings.

We draw attention to the fact that the word “only” did not appear in the second line after the word “may” and it was natural enough in a case concerning section 155 of the Trade Practices Act, compulsory provision of documents under statutory notices, for their Honours to have expressed themselves in the language of resisting the giving of information. But nothing in paragraph 9 or elsewhere in this judgment said that that is the only scope of legal professional privilege and, importantly for our purposes, their Honours reaffirmed the proposition that privilege is a “rule of substantive law”. Paragraph 10

EDELMAN J: Just before we move from paragraph 9, do you accept that the reference to communications between a client and his or her lawyer, in paragraph 9, should be read as confidential communications?

MR JACKMAN: Confidential at the time of the communication

EDELMAN J: Yes.

MR JACKMAN: but not necessarily at the time that the question of “privilege” arises. They must be confidential at the time of the communication. If they are communications in a press conference they would not be privileged, there would be a waiver of any privilege which might otherwise have attached. But the communications need not remain confidential for the privilege still to apply. That is a proposition I will return to in due course, because it is an important plank of our argument. In paragraph 10, their Honours, said:

Being a rule of substantive law and not merely a rule of evidence, legal professional privilege is not confined to the processes of discovery and inspection and the giving of evidence in judicial proceedings. Rather -

privilege also applies to:

investigatory procedures of the kind for which s 155 of the Act provides.

In paragraph 11, their Honours said:

Legal professional privilege is not merely a rule of substantive law. It is an important common law right or, perhaps, more accurately, an important common law immunity. It is now well settled that statutory provisions are not to be construed as abrogating important common law rights -

and so on. I will return to that proposition later in the argument, dealing with section 166. But dealing first with the first sentence of paragraph 11, the use of the word “perhaps” is, in our submission, appropriately tentative language and again, its use – the use of the idea of a common law immunity is, in our submission, appropriate for the specific context the court was dealing with, namely, resisting compulsory production under a section 155 notice. But we submit the High Court did not say that the privilege can only operate defensively, in other words, as a shield and not as a sword.

KIEFEL CJ: But in the case law to date, the privilege has always been considered in the context of production of documents, has it not?

MR JACKMAN: Yes.

KIEFEL CJ: So their Honours are there, as you say, referring to the common law immunity from production of documents.

MR JACKMAN: Indeed, but they are not saying that the privilege is confined to resisting compulsory production of documents and in our submission the reference to an important common law right is an indication that there is nothing in principle against the proposition that privilege is a selfsufficient basis for obtaining a positive remedy such as an injunction or an order for delivery up.

KIEFEL CJ: Just to be clear, the remedy you are seeking you are seeking from the common law. There is no suggestion, I do not think, in your pleadings that you are placing any reliance upon the area of confidence and breach of confidence. You are not suggesting that.

MR JACKMAN: That is right; we are not.

KIEFEL CJ: In fact, that is the difficulty that has led you to seek a remedy elsewhere.

MR JACKMAN: We do not make allegations of an equitable action to restrain a breach of confidential information. We rely upon the common law right of legal professional privilege and we seek an injunction which would be equity acting in the auxiliary jurisdiction to safeguard, protect and enforce that right.

KIEFEL CJ: Do you acknowledge that, for the common law to provide a remedy, it would have to amount to a right for a remedy to be given?

MR JACKMAN: Yes.

KIEFEL CJ: Anything less, the common law would not extend a remedy.

MR JACKMAN: That is so and that is why we take as our starting point in the argument that legal professional privilege is a common law right – not just a common law right but a fundamental or important one and, indeed

GORDON J: At the moment, though, it is a right against compulsion of production.

MR JACKMAN: That may be the received wisdom but there is no reason to limit the scope of the right to resisting compulsory production, in our submission. It is a right which requires appropriate remedies to enforce it.

KIEFEL CJ: It is not so much expanding the remedy, though, which might have been in the area of confidential information. You are seeking to expand the notion of something into a right.

MR JACKMAN: The way we put it is we are trying to bring the law into line with its underlying rationale. I am going to be taking your Honours presently to statements in two of this Court’s decisions as to that underlying rationale in aid of the proposition that there is a gap between the received wisdom as to the content of the law and the full scope of that underlying rationale.

GAGELER J: Mr Jackman, is it meaningful to speak of you pursuing a cause of action? Are you asking for a new tort?

MR JACKMAN: I am not asking for a new tort and whether it is a cause of action is rather beside the point. There is certainly a strain of thinking in equity that equity does not proceed on causes of action. Equity proceeds on a set of facts and awards an appropriate remedy for that particular set of facts. The words “cause of action” are more appropriate for a strictly common law claim and remedy. Now, privilege is recognised as a common law right and we submit that that itself is sufficient to generate the remedy of an injunction - whether one calls it a cause of action or not is really beside the point.

KIEFEL CJ: But in tort you would have to have a wrong, would you not?

MR JACKMAN: Quite, quite.

KIEFEL CJ: So which area are we in?

MR JACKMAN: We are seeking equitable remedies, inequities or auxiliary jurisdiction to protect the common law right.

GORDON J: At the moment, I think you have agreed with me, up until now that right has been a right to prohibit or an answer to compulsory production.

MR JACKMAN: Yes.

GORDON J: You do not seek that?

MR JACKMAN: No, because the Commissioner, through his own means, has obtained these documents.

GORDON J: He has the documents.

MR JACKMAN: The Commissioner could never have compelled production of the documents, but having received them, the Commissioner does not need to seek production from us.

GORDON J: No.

MR JACKMAN: Therefore, the question of resisting compulsory production does not arise.

GORDON J: I am just not quite clear yet what the basis is or the need for to extend what up until now has been an immunity from production to address something else when you have, at least on the face of it, relief in terms of confidence claims in equity, which you do not rely upon at that level. You have admissibility provisions for the admissibility of the evidence at trial, so there are answers at that level. So what is it we are trying to address that the common law does not currently address?

MR JACKMAN: What we are addressing is a gap between the scope of legal professional privilege, which is an absolute safeguard over a subsequent disclosure, with those branches of law that your Honour has referred to. There may never be legal proceedings, so questions of admissibility or questions such as case management processes à la expense reduction may never arise. The law of confidential information is confined to the various ingredients of such a cause of action including, in particular, the need to prove that the information by its nature is still confidential, that is, has not entered into the public domain.

There is an obvious problem where, for example, computer hackers have obtained privileged information, published them on a website, which is then accessed by the mass media which then communicates those privileged communications to the whole world. Indeed, the world can access the website in the first place. Information is then available to every newspaper reader and television watcher in the country.

Now, that is a major limitation on the reach of an action to protect confidential information. But, in our submission, it does not inhibit the court from granting an injunction to restrain the use of privileged information in circumstances where there has been no waiver of privilege – that is, no voluntary act by the privilege holder to give up the privilege which that privilege holder has as an absolute right.

EDELMAN J: But the example that you give – assuming that there is a gap that is disclosed by that example – that is a gap in relation to the law of confidential information, not in relation to the privilege or the immunity concerning legal professional privilege. So, if there were such a gap that needed to be redressed then one might consider, perhaps, expanding the duty of confidence to a sphere such as the Americans have of privacy. But it would not lead to the consequence that the immunity or the privilege needs to be altered, would it?

MR JACKMAN: It would be a very bold step to expand the law of confidential information to matters that are very much in the public domain and are common knowledge among a vast number of members of the public.

GORDON J: The Singaporean court seemed to be able to address it.

MR JACKMAN: The Singaporean court said that even – we are talking about the Wee decision?

GORDON J: Yes.

MR JACKMAN: In that case, the court said even though documents were available on a website, that website was somewhat hard to obtain and it was like looking for a needle in a haystack even if you got hold of access to the website and, therefore, the court was content to apply the law of confidential information, apparently in a traditional way. That places great strains on the law of confidential information because the court purported to be applying orthodoxy. In fact, it was rather straining principles of confidentiality in order to grant an injunction in that case.

We submit a far more intellectually satisfactory approach is simply to recognise the right to the protection of privileged information and to grant an injunction on that basis alone, rather than straining the law of confidential information beyond the bounds of the way in which it has been treated.

EDELMAN J: So you would say then, for example, that the advances in England – not so much straining the duties of confidence, but in cases like Campbell v MGN, where a right of privacy is effectively recognised by adaption or development of the duty of confidence, that that is not a legitimate step to take or certainly it would not be a more legitimate step than altering the privilege.

MR JACKMAN: The difficulty with expanding other branches of law to deal with what are simply infringements of privilege is that that fails to recognise the special status which privilege has in our law. Privilege is fundamentally – legal professional privilege is fundamentally from other confidential relationships – doctor and patient, priest and penitent, accountant and client.

This is one reason why I want to start with the rationale for legal professional privilege because that rationale indicates the special status of privilege which does not apply to other relationships. It is a far more satisfactory approach in terms of overall coherence of the law for the law of privilege to develop a complete suite of remedies rather than other bodies of law being adapted – perhaps, strained – in that adaption to cope with what is a unique problem to privileged communications.

NETTLE J: Mr Jackman, can I just ask you, the new legal right for which you contend which equity would aid, you say, is what - a legal right to prevent a third party using legally professional privileged information?

MR JACKMAN: With respect, it is not a new legal right. It may be a new remedy for a legal – for a wellestablished legal right.

NETTLE J: I am sorry, I put it badly. Does the legal right constitute a right to prevent a third party using the privileged information?

MR JACKMAN: Yes.

NETTLE J: There is a legal right to prevent it, you say?

MR JACKMAN: Yes.

NETTLE J: Does it sound in damages if it is breached?

MR JACKMAN: Well, we seek an injunction.

NETTLE J: I understand that.

MR JACKMAN: Damages would ordinarily be a somewhat academic remedy and I

NETTLE J: Well, hardly. It might cause you great damage.

MR JACKMAN: Indeed, but rather better than allowing the damage to occur is to restrain it.

NETTLE J: I am just testing to see whether it is a legal right. Would it sound in damages?

MR JACKMAN: There is no reason in principle why damages would not be available, but it is not the burden of my argument because we are not seeking damages. We are seeking an injunction so that may be a matter for another case.

KIEFEL CJ: You are saying the nature of the right does not necessarily comprehend injury. Rather, the nature of the right is that it calls for enforcement because of the nature of the right – a primary right.

MR JACKMAN: We need not prove, in our submission, that we have been made worse off financially as a result of the infringement of our privilege. It is infringement of a privilege itself and by itself which justifies the remedy of injunction.

NETTLE J: If it went to trial at law, could a court order that the information not be used, at law?

MR JACKMAN: Yes, in our submission.

NETTLE J: An injunction at law, as it were.

MR JACKMAN: Well, the injunction is probably equity acting in the auxiliary jurisdiction to protect a legal right.

NETTLE J: Well, if the legal right is to prevent, then the remedy at law is an injunction at law to prevent, is it not?

MR JACKMAN: Whether it is at law or in equity does not matter. We prefer to cast it as equity acting in the auxiliary jurisdiction.

NETTLE J: I understand that.

MR JACKMAN: We are certainly content with the proposition that the remedy is one which is available at law.

NETTLE J: So not necessarily damages are recoverable but there would be, at trial, if successful, an order at law that the information not be used.

MR JACKMAN: That is so.

NETTLE J: All right, thank you.

MR JACKMAN: We do not dismiss the possibility that damages might be an alternative remedy in an appropriate case, but it is not remedy we are seeking in this case. I do not propose to argue for a remedy in damages. That would be a matter for another case.

NETTLE J: No, I do not suggest that. I have just been rattling on about it because of Lenah Game Meats.

MR JACKMAN: Of course, damages might be available in lieu of an injunction but there are many ways in which an appropriate remedy might be cast. But the remedy that we seek here is an injunction to restrain use, together with orders for delivery up of the privileged documents.

KIEFEL CJ: Mr Jackman, I hesitate to keep you from actually proceeding with your argument further, but could I just clarify. I am just concerned with this elision between right and remedy. The description of the right here, if one puts aside the remedy you seek to enforce the right, the right that you are speaking of is one that persons not use information imparted between client and lawyer?

MR JACKMAN: That is so. The injunction itself can be found in the demurrer book on page 86. Prolixity has perhaps never been an obstacle to the drafting of injunctions, but the essence of the injunction in paragraph 14(1) is to restrain the use of the socalled “Glencore Documents”.

KIEFEL CJ: That is because they contain information of the kind accorded by the privilege.

MR JACKMAN: Yes, they contain privileged information, yes.

GAGELER J: Mr Jackman, I am sorry, I will not go over this any more, apart from this question. The right is not a right of property, as I understand you to put it.

MR JACKMAN: I do not put it as a proprietary right.

GAGELER J: Is the best you can do the way you formulate it in paragraph 2 – it is a positive right entitling the holder of the privilege to claim the remedy?

MR JACKMAN: Yes.

GAGELER J: Thank you.

MR JACKMAN: I was dealing with the fundamental nature of what this Court recognised in Daniels as a common law right and so fundamental is the right that legal professional privilege protects communications that might establish the innocence of a person charged with a criminal offence – which takes me to Carter v Northmore Hale in volume 1 of the joint book of authorities at tab 14.

Carter v Northmore Hale contains a number of strong and eloquent – if I may say so – statements as to the underlying rationale for legal professional privilege. Can I begin at page 127, in the judgment of Justice Brennan? At about point 7 on the page, his Honour said:

In my opinion, the basic justification for allowing the privilege is the public interest in facilitating the application of the rule of law.

Administration of the law is not the function of the courts alone. The law is administered more frequently and more directly by legal advisers than it is by judges. Legal professional privilege ensures that the law’s writ can run effectively whenever a legal problem arises or a person seeks to chart a course of conduct in conformity with the law.

Over the page, at about point 3, his Honour refers to the:

public interest in having available all evidence relevant to the issues in litigation. And that public interest encompasses the public interest in achieving fairness in the trial of a person charged with a criminal offence.

Pausing there, there is an echo of that proposition in the Commissioner’s argument that the Commissioner should be entitled to make decisions with the benefit of all the relevant material, including a taxpayer’s privileged documents. Going on, however, Justice Brennan says:

Although the public interest in having all relevant evidence available is, to an extent, defeated by the privilege, there is no occasion for the courts to undertake a balancing of public interests: the balance is already struck by the allowing of the privilege.

Then, going to page 130, at about point 7 on the page, just after the reference to D v NSPCC, his Honour said:

But if the purpose of the privilege is to facilitate the application of the rule of law in the public interest, it is not possible to allow the interest of an individual accused to destroy the privilege which is conferred to advance that public interest.

Going to Justice Deane’s judgment at page 132, in the middle of the page, his Honour refers to:

Legal professional privilege has been accepted by the common law as “unquestioned” since at least the secondhalf of the sixteenth century. By the late eighteenth century, when the common law accompanied the first European migrants to this country, the modern rationale of the privilege, as the client’s and not the attorney’s privilege, had been recognised and firmly established. That modern rationale was concisely identified by Dean Wigmore.

“In order to promote freedom of consultation of legal advisers by clients, the apprehension of compelled disclosure by the legal advisers must be removed: hence the law must prohibit such disclosure except on the client’s consent.”

In accordance with it, the privilege extends to protect the client, as well as the legal adviser, from being compelled to disclose confidential communications about legal matters.

Then on 133, at point 4 on the page:

Where legal professional privilege attaches, there is no question of balancing the considerations favouring the protection of confidentiality against any considerations favouring disclosure in the circumstances of the particular case. The privilege itself represents the outcome of such a balancing process and reflects the common law’s verdict that the considerations favouring the “perfect security” of communications and documents protected by the privilege must prevail.

That language of “perfect security” is taken from the judgment of Knight Bruce VC which is then extracted and your Honours will see at the top of page 134 the reference italicised to “a condition of perfect security”. Then at page 145 in the judgment of Justice Toohey, his Honour says at point 2 on the page:

The privilege has been described as an important element in the protection according to law of the privacy and liberty of the individual which is an essential mark of a free society, as of fundamental importance to the protection and preservation of the rights, dignity and equality of the ordinary citizen under the law and as no less fundamental than the right which supports the privilege against self-incrimination.

There is a reference to Justice Cooke in New Zealand describing:

legal professional privilege in criminal matters as involving “a strong sense that any person charged or in peril of a charge has a fundamental human right to professional advice”. Canadian decisions have identified the privilege as a fundamental civil and legal right.

Finally, in the judgment of Justice McHugh at page 161, his Honour said at point 2 on the page:

Now that this Court has held that legal professional privilege is not a rule of evidence but a substantive rule of law, the best explanation of the doctrine is that it is “a practical guarantee of fundamental, constitutional or human rights”. By protecting the confidentiality of communications between lawyer and client, the doctrine protects the rights and privacy of persons including corporations by ensuring unreserved freedom of communication with professional lawyers who can advise them of their rights under the law and, where necessary, take action on their behalf to defend or enforce those rights. The doctrine is a natural, if not necessary, corollary of the rule of law and a potent force for ensuring that the equal protection of the law is a reality.

Then his Honour goes on to point out that the application of the doctrine:

does not depend upon balancing it against other rights that are grounded in the public interest. Not even the public interest in courts having all relevant evidence before them has been considered sufficient to override the public interest in maintaining the unqualified operation of the privilege.

Then his Honour quoted from Justice Deane in Attorney-General v Maurice:

“Its efficacy as a bulwark against tyranny and oppression depends upon the confidence of the community that it will in fact be enforced. That being so, it is not to be sacrificed even to promote the search for justice or truth in the individual case or matter and extends to protect the citizen from compulsory disclosure of protected communications or materials to any court or to any tribunal or person with authority to require the giving of information or the production of documents or other materials.”

Finally in his Honour’s judgment at page 167 at point 2, his Honour Justice McHugh said:

In my opinion, to uphold the appellant’s claim would interfere with the operation of the doctrine of legal professional privilege in ways that are altogether hostile to its rationale. Established principle unquestionably requires rejection of the appellant’s contention that the Court should hold that documents that may assist the furtherance of an accused person’s defence must be produced to the court notwithstanding that they are the subject of legal professional privilege.

That, in our submission – in fact, all of those judgments reflect an orthodox approach to common law reasoning, namely, to identify the rationale for a particular rule of law or body of law and then to examine whether the law is properly aligned with that rationale. As Justice McHugh says at page 167 that is fundamentally the reason for rejecting the argument in that case concerning the interests of an accused seeking to establish his or her innocence when charged with a criminal offence and it is entirely orthodox reasoning to identify the rationale and then to ensure that the law properly aligns with that rationale so that the fundamental nature of the privilege in the present case can be enforced with perfect security.

KEANE J: Yet you do not suggest that the alignment of the rationale with the rule of law has produced a tort of privacy, for example.

MR JACKMAN: No, a tort of privacy would apply well beyond the realms of legal professional privilege.

KEANE J: A tort of privacy peculiar to communications between solicitor and client.

MR JACKMAN: It may be open to the court to hold that there is such a tort, but there is no reason to express it in terms of privacy. All that one needs to do is to recognise the need to protect privileged communications in respect of which there has been no waiver of privilege. It is overly cumbersome, in our submission, to use the law of tort to that end. One simply recognises the fundamental common law right and one moulds an appropriate remedy to enforce and protect that right.

EDELMAN J: If one gets rid of the language of a privilege – what you are talking about is it is a real duty not to use the information and it is a real right to ensure that the information is not being used.

MR JACKMAN: Yes.

EDELMAN J: Then you really are talking about a tort concerned with private information that is provided for the purposes of legal proceedings.

MR JACKMAN: One can treat it as a tort, although it is not necessary to do so. It is not necessary to cast the defendants in the present case as wrongdoers because legal professional privilege operates as a matter of the public policy of the rule of law and it is in the interests of safeguarding that policy that an appropriate range of remedies, in our submission, must be available to ensure that privileged material is not used by third parties.

KIEFEL CJ: In this case, if one was to attempt to approach it as a common law tort rather than a statutory tort action of privacy you might have difficulties with respect to damages, namely, causation.

MR JACKMAN: There could be and those difficulties do not arise in our case where we are simply seeking an injunction.

KIEFEL CJ: The financial outcomes might not be attributable to someone seeing the information passing between the solicitors but because of other reasons.

MR JACKMAN: I take your Honour’s point. Yes, indeed. Now, can I ask your Honours to go back in the same volume to Baker v Campbell to identify similar passages in Baker v Campbell which explore the rationale for privilege and once again use that orthodox technique of bringing the law into line with its underlying rationale. In Baker v Campbell, in what was perceived at the time to be a major step, namely to extend privilege beyond traditional quasijudicial proceedings, but entirely consistently with the underlying rationale for the law - Baker v Campbell is at tab 10. Can I ask your Honours to go first to page 85, and I want to go each of the four judgments in the majority in that case. At page 85, Justice Murphy at about point two on the page, said:

Its rationale is no longer the oath and honour of the lawyer as a gentleman . . . It is now supported as a “a necessary corollary of fundamental, constitutional or human rights” -

with reference to:

Reg. v Uljee, Cooke J. referred to “a strong sense that any person charged or in peril of a charge has a fundamental human right to professional advice – which may not be effectively given if facts are withheld”.

Then at page 89, in the first full paragraph at point three on the page, his Honour said:

The client’s legal privilege is essential for the orderly and dignified conduct of individual affairs in a social atmosphere which is being poisoned by official and unofficial eavesdropping and other invasions of privacy. The individual should be able to seek and obtain legal advice and legal assistance for innocent purposes, without the fear that what has been prepared solely for that advice or assistance may be searched or seized under warrant.

Going to page 93, in the judgment of Justice Wilson

GAGELER J: Mr Jackman, I am sorry, the passages that you have read from Justice Murphy’s judgment rely heavily upon United States material, secondary materials mainly. Do I take it that you gain no assistance from the American case law for your argument?

MR JACKMAN: That is so. Whatever assistance there may be in the outcome of cases is in such a heavily constitutionalised setting that we are not putting that body of law forward as being analogous to the decision which is required in the present case.

GAGELER J: Thank you.

MR JACKMAN: On page 93, at about point 7 on the page, Justice Wilson said:

But confidentiality alone cannot supply the reason for the privilege. Originally it may have done so, in common with the protection which the law at that time afforded to other confidential relationships. In the sixteenth and seventeenth centuries the privilege was based in the duty of the solicitor to respect professional confidences. It was a matter of honour and consequently the privilege belonged to him rather than to the client . . . The public interest, not merely the protection of confidentiality, became the reason for the rule. Thereafter, the only profession to have the privilege of nondisclosure was the legal profession.

Over at page 95, point 4 on the page:

The multiplicity and complexity of the demands which the modern state makes upon its citizens underlines the continued relevance of the privilege to the public interest. The adequate protection according to law of the privacy and liberty of the individual is an essential mark of a free society and unless abrogated or abridged by statute the common law privilege attaching to the relationship of solicitor and client is an important element in that protection.

It is not only a matter of protection of the client. The freedom to consult one’s legal adviser in the knowledge that confidential communications will be safeguarded will often make its own contribution to the general level of respect for and observance of the law within the community -

In the judgment of Justice Deane - can I take your Honours to page 113. At the foot of 113, his Honour said:

The explanation of legal professional privilege was initially seen, when the doctrine was recognized during the reign of Elizabeth 1, as being the professional obligation of the barrister or attorney to preserve the secrecy of the client’s confidences . . . From at least the eighteenth century however, it has been generally accepted that the explanation of the privilege is to be found in an underlying principle of the common law that, subject to the abovementioned qualifications, a person should be entitled to seek and obtain legal advice in the conduct of his affairs and legal assistance in and for the purposes of the conduct of actual or anticipated litigation without the apprehension of being thereby prejudiced -

Finally, at page 115, at the foot of the page:

Once one recognizes that the principle underlying legal professional privilege is that a person should be entitled to seek and obtain legal advice without the apprehension of being prejudiced by subsequent disclosure of confidential communications and that the privilege is not confined to such communications as are made in the course of or in anticipation of litigation but extends generally to confidential communications of a professional nature between a person and his lawyer made for the purpose of obtaining or giving legal advice, common sense points to a conclusion that the principle should not be seen as restricted to compulsory disclosure in the course of such proceedings.

Again, identifying the rationale and then bringing the content of the law into line with that rationale, even though that gave “privilege” a wider operation than the received wisdom in 1983 had suggested.

Finally, in the judgment of Justice Dawson at page 128, a passage which is particularly emphatic about the special significance of the legal setting rather than other confidential or private settings – at point 2 on page 128, Justice Dawson said:

Whilst legal professional privilege was originally confined to the maintenance of confidence pursuant to a contractual duty which arises out of a professional relationship, it is now established that its justification is to be found in the fact that the proper functioning of our legal system depends upon a freedom of communication between legal advisers and their clients which would not exist if either could be compelled to disclose what passed between them for the purpose of giving or receiving advice. This is why the privilege does not extend to communications arising out of other confidential relationships such as those of doctor and patient, priest and penitent or accountant and client . . . The restriction of the privilege to the legal profession serves to emphasize that the relationship between a client and his legal adviser has a special significance because it is part of the functioning of the law itself. Communications which establish and arise out of that relationship are of their very nature of legal significance, something which would be coincidental in the case of other confidential relationships. It has been found necessary that professional guidance in the complex processes of the law should be uninhibited by the possibility that what is said to enable advice to be sought or given might later be used against the person seeking the advice.

Finally, within Justice Dawson’s judgment at page 132, his Honour said, in the middle paragraph on the page:

To view legal professional privilege as being no more than a rule of evidence would, in my view, be to inhibit the policy which supports the doctrine. Indeed, now that there appears to be a tendency to compel the disclosure of evidence as an adjunct to modern administrative procedure . . . it may well be necessary to emphasize the policy lest it be effectively undermined. For there can be no doubt that freedom of communication between a legal adviser and his client may be greatly diminished by a requirement that the instructions or the advice be disclosed with the consequence that the information might eventually be used in some action against the client, whether in administrative or judicial proceedings.

Hence the need for a complete scope to legal professional privilege to maintain the perfect security of communications between lawyer and client – again, bringing the law into line with its underlying rationale.

In essence, what we are contending is that the gaps in the law where confidential information may be of little or no avail, particularly in circumstances where through no act whatsoever of the privilege holder the material has entered into the public domain in a widespread way through websites and mass media, there should be protection by way of injunction against use, even though the law of confidential information may be of little or no avail in that particular setting.

Now, the difficulties in this area, as a matter of authority, stem from two decisions of the English Court of Appeal which have vexed lawyers for the last century or so, being Calcraft v Guest and Ashburton v Pape. A useful starting point for the examination of that body of case law and why it requires reevaluation is the English Court of Appeal’s decision in Goddard v Nationwide Building Society, which did reconcile those cases at a technical level but, at the same time, recognised the unsatisfactory nature of that reconciliation and, in effect, invited review, which has never taken place in the UK by the House of Lords or, for that matter, by the Supreme Court.

Now, Goddard is in volume 3 of the bundle at tab 28. May I ask your Honours to turn to page 679. At letter D there is reference in the judgment of Lord Justice May to the defendant’s contention:

that even though communications between solicitor and client are confidential, nevertheless if a document, original or copy containing or evidencing them, comes into the hands of a third party, even by dishonesty–which of course is not alleged in the instant case–then that third party is entitled to use that original or copy document as evidence in litigation between himself and the erstwhile client –

Now, Calcraft v Guest, which is the fons et origo of that proposition was of course decided well before legal professional privilege was recognised as a fundamental common law right. It was also decided well before principles concerning illegally or improperly obtained evidence were developed, hence the disinterest which the court in Calcraft v Guest showed towards the means of procurement and the dishonest or surreptitious means adopted being treated as irrelevant. It has an air of anachronism when measured against the modern statements of the law of privilege which do recognise privilege as a fundamental common law right.

Then the countervailing case, referred to at letter E, is Ashburton v Pape. If one goes to the top of the next page, 680, Lord Justice May refers to the unfortunate aspect of Ashburton v Pape, that one important sentence has been differently reported, a matter which was taken up by Mr Tapper and Mr Heydon in the articles referred to and they are in the joint bundle of authorities at tabs 58 and 57 respectively. But, putting that matter aside, his Lordship said at about letter B:

I think that the ratio of the decision in Lord Ashburton v Pape was founded upon the confidential nature of the content of the letters written by Lord Ashburton to Nocton –

the solicitor:

The Court of Appeal was concerned to protect that confidence, in the same way –

That is no differently from the way:

the courts protect the trade secrets of an employer against the unauthorised use of them by an employee, both while he remains such as well as after he has left the employment.

That immediately jars with the reasoning in this Court’s decisions in Baker v Campbell and Carter v Northmore Hale which emphasise the special place which communications between lawyer and client have and the privilege which is given to those communications is not extended to other confidential information relationships.

The proposition is that the injunction granted in Ashburton v Pape was not one which sprang from privilege but simply one which sprang from confidential information and, to be fair to Lord Justice May, that has developed into the received wisdom as to the ratio of Ashburton v Pape, which discounts or treats as irrelevant the special status of lawyer/client communications. Over the page at 681, his Honour returns to Calcraft v Guest and just below letter D, his Honour pointed out that two questions arose in that case:

First, were the original documents privileged from production; second, even if they were could the appellant give secondary evidence of them?

As to the first question, the Court of Appeal held:

once privileged, always privileged and that the then owner of the fishery was entitled to refuse to produce the originals. On the second question, however, the court held that secondary evidence of the documents was admissible.

His Lordship quotes from Lord Lindley, saying at letter F:

“Where an attorney intrusted confidentially with a document communicates the contents of it, or suffers another to take a copy, surely the secondary evidence so obtained may be produced. Suppose the instrument were even stolen, and a correct copy taken, would it not be reasonable to admit it?”

The question is designed to be rhetorical but it strikes the modern reader as anachronistic, not only because his Lordship is turning a blind eye to improperly obtained evidence, if not illegally obtained evidence, but also because it is not reflective of the modern expressions of the “rationale of privilege” as an absolute safeguard, a perfect security against a later disclosure of communications in order to ensure that in lawyer/client communications there is no apprehension of such later disclosure. Then at the very foot of that page, secondlast line, his Lordship said:

the decision in Calcraft v. Guest . . . might have been thought to have been good authority for the admission in Pape’s bankruptcy proceedings of secondary evidence of Lord Ashburton’s letters to Nocton, his solicitor. However, the court distinguished the earlier authority on the basis that whereas in it the question of the admission of secondary evidence arose incidentally, in Lord Ashburton v Pape . . . this issue of admissibility was the principal, indeed the sole, issue in the case.

Then there is an extract from the judgment of the Master of the Rolls and Lord CozensHardy, of course, had been the successful leading counsel in Calcraft v Guest, and his Lordship is quoted as saying:

“The rule of evidence as explained in Calcraft v. Guest merely amounts to this . . . by improper means, and even, it may be, by criminal means. The court in such an action is not really trying the circumstances under which the document was produced. That is not an issue in the case and the court simply says ‘Here is a copy of a document which cannot be produced; it may have been stolen, it may have been picked up in the street, it may have improperly got into the possession of the person who proposes to produce it, but that is not a matter which the court in the trial of the action can go into.’ But that does not seem to me to have any bearing upon a case where the whole subjectmatter of the action is the right to retain the originals or copies of certain documents which are privileged.”

Now, although Ashburton v Pape has been taken to stand for the proposition that one needs to make out the ingredients of confidential information in order to get an injunction, that very last sentence uses the word “privileged” rather than the word “confidential”. One of the submissions that we put - it is in our written submissions in paragraph 41 - is that there has been a misreading of Ashburton v Pape over the years and a case that is open to being read as authority for the proposition that the existence of privilege is enough to get an injunction has been read instead as a case simply about common or garden variety confidential information that might have arisen in any setting, not just the legal setting.

Now, his Lordship goes on to quote from the other judgments in Ashburton v Pape, which I will not go through now. But over the page at 683, letter D, his Lordship confessed very frankly, that his Lordship did:

not find the decision in Lord Ashburton v. Pape logically satisfactory, depending as it does upon the order in which applications are made in litigation. Nevertheless I think that it and Calcraft v. Guest . . . are good authority for the following proposition. If a litigant has in his possession copies of documents to which legal professional privilege attaches he may nevertheless use such copies as secondary evidence in his litigation: however, if he has not yet used the documents in that way, the mere fact that he intends to do so is no answer to a claim against him by the person in whom the privilege is vested for delivery up of the copies or to restrain him from disclosing or making any use of any information contained in them.

Again, that proposition uses the word “privilege”, not the language of “confidential information”, but it has been taken as meaning the general law of confidential information, not the particular law of legal professional privilege. Now, Lord Justice Nourse at page 684, just below letter C, refers to the question confronting the Court:

in a simple and straightforward manner, with the task of reconciling the decisions of this court in Calcraft v. Guest . . . and Lord Ashburton v. Pape -

The Court of Appeal could not do other than attempt to reconcile them, being the same court that had decided those two cases. His Lordship said:

I agree that those decisions are authority for the proposition which May L.J. has stated. However unsatisfactory its results may be thought to be, that proposition must hold sway unless and until it is revised by higher authority.

Regrettably, as far as we can tell, the issue simply has not arisen either in the House of Lords or the Supreme Court in the 30odd years that have followed, despite the encouragement which Lord Justice Nourse was giving to such a reevaluation.

GAGELER J: Mr Jackman, there is a reference to Butler v Board of Trade. Are you going to go to that at some stage?

MR JACKMAN: I was not proposing to do so. It is broadly to the same effect as Goddard v Nationwide. It is an earlier decision by a single judge but broadly to the same effect of reconciling Calcraft v Guest and Ashburton v Pape.

GAGELER J: Was it correctly decided, on your submission?

MR JACKMAN: We would submit not because in our submission privilege itself is a selfsufficient basis for an injunction. One does not have to resort to the law of confidential information and Calcraft v Guest should simply be overruled. As to whether Mr Justice Goff, sitting at first instance, was able to do that, that is another question, but if this Court was deciding Butler v Board of Trade, then this Court, in our submission, would have been in error by adopting the reasoning of Mr Justice Goff.

I do not want to be overly critical of either a single judge or an intermediate appellate court for first of all trying to reconcile those two vexed cases and in later cases, including cases in this country, intermediate appellate courts following what has become that conventional reconciliation of the cases.

But we are now in the High Court, the counterpart to the court that Lord Justice Nourse would have liked to have seen engage in a reevaluation and this Court is certainly not bound by any decision that has considered Calcraft v Guest and Ashburton v Pape and whether they should be reconciled or simply regarded as wrong or anachronistic.

GORDON J: Do you accept that Justice Gummow’s reconciliation of them in Propend was consistent with what happened in Goddard with Lord Justice May?

MR JACKMAN: Yes, I do, and I am going to come in particular to that. It creates problems of its own, but I do accept – and his Honour gave reference to Goddard v Nationwide and appears to have seen himself as adopting that reconciliation, yes. At the foot of page 684, Lord Justice Nourse says:

The crucial point is that the party who desires the protection must seek it before the other party has adduced the confidential communication in evidence or otherwise relied on it at trial.

That has become the conventional view of how one reconciles these cases. At letter C, his Lordship said:

the right of the party who desires the protection to invoke the equitable jurisdiction does not in any way depend on the conduct of the third party into whose possession the record of the confidential communication has come. Thus, several eminent judges have been of the opinion that an injunction can be granted against a stranger who has come innocently into the possession of confidential information . . . This view seems to give effect to the general rule that equity gives relief against all the world, including the innocent, save only a bona fide purchaser for value without notice.

The Commissioner, in this case, does rely upon that reasoning to say, in effect, there is no gap in the law because you can run around restraining strangers from using the material. The problem with that is that, in a world of computer hacking where the fruits of the hacking are then published on a widespread basis, both on a website and through the mass media, the information has lost its status as confidential information.

So, the law of confidential information is of little or no avail, quite apart from the discretionary nature of the equitable remedy. But it is cold comfort to a privilege holder in the position of my client to be told that strangers can be restrained under the law of confidential information when the information has been published on a widespread basis and is very much in the public domain. At about letter F, your Honours will see – this is a paragraph, again, dealing with Ashburton v Pape. At letter F, there is a sentence:

The injunction is granted in aid of the privilege which, unless and until it is waived, is absolute.

Again, that could have been taken as an indication that it is privilege which alone gives – is sufficient to give rise to the injunction. One does not have to resort to confidential information that the case has not been treated in that way and the law, in our submission, would be in a more satisfactory state if the case had been read, faithfully, to that sentence – namely, the injunction is granted in aid of the privilege which, unless and until it is waived, is absolute – which, in essence, is the submission that we put to this Court. Then, your Honours will see at letter G, reference to:

public policy may nevertheless preclude a party who has acted improperly in the proceedings from invoking the rule of evidence –

which is really anticipating the yet to be developed law or the nascent law of illegally or improperly obtained evidence which, in this country, we look to Bunning v Cross and now section 138 of the Evidence Act for.

Your Honour Justice Gordon raised Justice Gummow’s decision in Propend, which is where I want to go to next, in volume 2, at tab 15. It is significant because it is the one High Court judgment which does deal with the issue posed by Calcraft v Guest and Ashburton v Pape. At tab 15, can I begin at page 564. We emphasise that the issue that his Honour deals with at pages 564 through to 566 was an issue that was not argued and there is no support in the other judgments of the Court for the view that Justice Gummow expresses. Can I take up at the foot of page 564, which begins very favourably for the argument that we wish to put. In the last paragraph on the page:

Finally, legal professional privilege being more than an aspect of procedural law, it is then a question of identifying its true character. Views differ as to whether the privilege is to be characterised as “a practical guarantee . . . of fundamental constitutional or human rights”, “a substantive rule of law”, or one of those traditional common law rights which is not to be abolished or cut down otherwise than by clear statutory provision.

That is the range of options. For our part we do not mind which of those characterisations is adopted. They all support our proposition that privilege is a fundamental common law right. One might be forgiven for thinking, if one paused there, that it is a right that has to be protected by adequate remedies. Then, in the next paragraph, his Honour does refer to various torts which would be committed by an officer executing a search warrant in excess of the authority conferred by the search warrant and then his Honour says:

However, the privilege itself is not to be characterised as a rule of law conferring individual rights, breach of which gives rise to an action on the case for damages, or an apprehended or continued breach of which may be restrained by injunction.

We ask ourselves why not, especially given the strength of the statements at the foot of the previous page, and the answer seems to lie in what follows, namely, our hands are tied by the legacy of Ashburton v Pape and Calcraft v Guest. His Honour then goes on in the next paragraph, to say:

It is true that if the use of privileged documents by the defendant is, or is a consequence of, a breach of confidence owed the plaintiff, then there may be an equity to protect that confidence.

The language of possibility is appropriate because of course the equitable remedy is discretionary. Footnote (272) does include within it reference to Goddard v Nationwide, so his Honour saw himself, evidently, as adopting the way that Goddard v Nationwide had dealt with these troublesome cases. His Honour goes on then to refer to Ashburton v Pape and Calcraft v Guest and then, over the page, his Honour says:

The distinction between these authorities may be seen to lie in the character of the privilege as a bar to compulsory process for the obtaining of evidence rather than as a rule of inadmissibility.

Now, we make several submissions about that sentence. The first is the language is tentative: “may be seen”. The second is that while privilege is certainly a bar to compulsory process for the obtaining of evidence, the two possibilities that are referred to do not exhaust the range of possibilities, and his Honour does not appear to be saying – at least he does not say so explicitly, that privilege can only operate as a defensive measure to compulsory production.

Further, we submit that the reference to the character of the privilege takes ones back to the question of characterisation at the foot of page 564, where the privilege is described in very strong and absolute terms which, in our submission, do not justify taking a view that privilege can only ever be a bar to compulsory process and not something else if the circumstances which explain and justify the privilege require it.

Now, can I leave Propend and turn to the latest in what has been a series of Australian intermediate appellate decisions which follow that approach that is the Goddard v Nationwide approach, which Justice Gummow was adopting in Propend. I want to focus on the last of them which Federal Commissioner of Taxation v Donoghue, which your Honours will find in volume 3 at tab 26. Can I start at paragraph 52 in the joint judgment of Justices Kenny and Perram. In paragraph 52, their Honours say:

With respect to the trial judge, whilst it is easy enough to see why privilege might be viewed as a bar to inspection

that is inspection by the Commissioner of documents which had been handed over by a disgruntled law clerk, so the Commissioner did not need to use compulsory processes. The Commissioner could never have compelled production but received these documents from a disgruntled law clerk and that is the inspection being referred to. It said:

this was not a correct view. The common law of legal professional privilege operates as an immunity from the exercise of powers requiring compulsory production of documents or disclosure of information.

Well, it certainly does that, but that does not exhaust its scope in our submission:

It is not a rule of law conferring individual rights, the breach of which may be actionable.

Well, it is a law conferring rights. We know that from what Justice Gummow said at the foot of page 564 and what this Court has said in Baker v Campbell and Carter v Northmore Hale. It is an open question, in our submission, whether the breach of those rights is actionable in particular ways by the grant of an injunction:

Consequently, no action lies against a party who receives documents which are privileged merely because those documents are privileged.

We say that is fundamentally wrong in principle and that the rationale for legal professional privilege points in directly the opposite direction. Then their Honours quote from Justice Gummow in Propend, but it might be noted that the extract does not pick up what was said at the foot of page 564, that is the fundamental legal right that one has in legal professional privilege. Then, I will not go through the extract, but at paragraph 53, their Honours said:

Four judges of the High Court adopted the same reasoning in Daniels . . . at [10].

Now, the High Court in Daniels did no such thing. The High Court did not say that privilege is only ever an immunity which only operates defensively to compulsory production. That was the context of Daniels v ACCC but nowhere in that judgment does the High Court say that privilege itself cannot give rise to an injunction to restrain the use of privileged documents and can only ever be used defensively to resist compulsory production. Then their Honours say:

It follows that the common law of privilege is silent when the question which arises does not concern compulsory production.

That does not follow from Daniels which said no such thing.

KIEFEL CJ: Mr Jackman, just returning to what Justice Gummow said in Propend, do you understand Justice Gummow to be referring to two different kinds of common law rights, in the first instance in the passage at the bottom of 564 upon which you particularly rely human right or a traditional common law right which cannot be abolished except in clear terms, on the one hand and, on the other, a right, breach of which gives rise to a cause of action for damages referred to at 565? Do you understand them to be two distinct kinds of rights recognised by the common law?

MR JACKMAN: Well, that latter passage at 565 goes on to talk about restraint by injunction as well. There is no such thing, in our submission, as a common law right that does not generate a remedy.

KIEFEL CJ: No, but the first kind of right, which Blackstone might have described as a primary right, might be enforced, but an action on the case requires damage. I think his Honour is saying that other kind of right which requires damage because it depends upon injury is a separate kind of right. All I am really trying to

MR JACKMAN: Well, one can read that sentence as meaning that it is not a tort and the reference to action on the case might suggest that. That only deals with the damages aspect. It does not deal with the following words:

or an apprehended or continued breach of which may be restrained by injunction.

In our submission, there cannot be a common law right which does not give rise to a remedy to protect and enforce that right.

KIEFEL CJ: Yes, but what I am saying is the remedies may be different and the remedies may depend upon the nature of the right. The common law might recognise different kinds of rights.

MR JACKMAN: Undoubtedly.

KIEFEL CJ: That is all.

MR JACKMAN: Undoubtedly, there are different remedies for different rights. But, there is absolutely no reason, in our submission, why the right that subsists in legal professional privilege should not be protected by an injunction because the rationale for privilege is to ensure, to guarantee that there will be perfect security over the communications absent a waiver and an injunction is the only remedy which can guarantee that in circumstances where we are not dealing with compulsory disclosure because the third party has already obtained – by some other means – the document in question.

Or, to put it slightly differently, there is no reason, in the present case, why the Commissioner should not be restrained from using privileged documents in circumstances where the Commissioner could never have compelled their production. The right requires an adequate suite of remedies in order to ensure the very thing which gives rise to the right in the first place.

EDELMAN J: If an analogy were to be sought for your argument then the analogy might better be seen with something like the older views of breach of fiduciary duty rather than the tort, so with the idea that the duty might not sound in compensation for any loss but that it is prophylactic and designed to prevent people from acting in a particular way.

MR JACKMAN: Yes, although those statements tend to be made in cases concerning pecuniary remedies, specifically in a count of profits or constructive trust. One rarely has occasion to seek an injunction to restrain a breach of fiduciary duty because it usually happens before one knows about it in the same way that one would not get injunctions to restrain negligence because it has happened before you can go to court to stop it.

There may be a similar path of reasoning but we would not accept it as an appropriate analogy as such. In fact, in our submission, the law of legal professional privilege is unique. It does not have analogies from other branches of the law. It is unique for a

EDELMAN J: But you are not talking about a privilege. You are talking about a real duty to do something. It is a duty not to use documents.

MR JACKMAN: I am talking about a right because that is how the High Court talks about privilege, as a substantive right, a common law right.

NETTLE J: What is the correlative duty?

MR JACKMAN: If one wants to cast it in Hohfeldian terms, there would be a correlative duty. But, there are lots of problems with Hohfeld, not least the fact that even as his most loyal admirers recognised, he used legal language in quite artificial ways which neither practitioners nor judges adopt.

NETTLE J: If you go to Kocourek, is it a zygnomic right or is it a mesonomic right for which you contend?

MR JACKMAN: It is simply a right, and a fundamental right. No further categorisation is necessary. The High Court in Baker v Campbell and the other cases does not make further refined distinctions because the right is so general and absolute that it is not susceptible to being whittled down by fine distinctions. The language of immunity or the language of privilege should not distract us into a rather artificial Hohfeldian analysis when the High Court has said, unequivocally – and, in our respectful submission, correctly – that privilege is a common law right. I was in paragraph 53 of their Honours’ reasoning. Moving to paragraph 54 their Honours refer to Justice Gummow noting in Propend that:

privileged documents will often be confidential.

Their Honours there refer to Coco v Clark and Mr Justice Megarry’s famous identification of the three elements, the first of all being that the information must have the necessary quality of confidence about it – that is, it cannot be information in the public domain which is known to average newspaper readers, television watchers, people who have a curiosity on the internet to find and identify this information.

KEANE J: Mr Jackman, insofar as your argument seeks to avoid that problem or the problem here where the world does know this information, so you cannot invoke confidentiality as a basis for relief, you root your argument in considerations of the due administration of justice. Is there not a problem that the administration of justice would be a bit of a joke if the Court was confined to information that the whole world knows is either wrong or inadequate in coming to its decisions?

MR JACKMAN: This, in effect, is the problem which confronted the Court in Carter v Northmore Hale. Why should privilege be used where it might prevent an innocent person from establishing his or her innocence when confronted with a criminal charge? Why should not the public interest in a fair criminal trial trump privilege? The answer is it does not. The trump card is on the side of legal professional privilege and there is no balancing exercise that comes into play between privilege and other aspects of the due administration of justice.

Legal professional privilege is the absolute trump card and has to be for fear of inhibiting lawyer/client communications with the prospect of subsequent disclosure. So in our submission, the same analysis that this Court brought to bear in Carter v Northmore Hale, as surprising as that may be to a lay person, applies to the problem your Honour raises.

GORDON J: Of course that has been modified to some extent by statute now and modified to some extent by other matters dealing with improperly obtained evidence.

MR JACKMAN: Yes, but those matters, in our submission, should not prevent there being a proper and full suite of remedies available to protect privileged information in circumstances where those other legal resources simply are not available.

GORDON J: I do not quite understand that. I think back to where - I still quite do not understand yet what the gap is. You say there is not a suite of remedies. The suite of remedies seems at the moment to be quite broad and available which covers different times and different circumstances, I accept, but when you have an immunity from production at one end, you have breach of confidence where information has been disclosed and then you have admissibility questions, I am still yet not quite clear what the gap is.

MR JACKMAN: The gap is illustrated in this judgment, in Donoghue. If your Honours go to paragraph 62, the latter part of paragraph 62, where their Honours said:

It is, therefore, not the case that by dealing with the claim for breach of privilege his Honour must have dealt with the claims for breach of confidence by a fortuitous sidewind. Issues which arose for consideration in a claim for breach of confidence which did not arise in considering a claim for privilege included the need for evidence about the confidential nature of the material in issue and the various discretionary reasons which might exist for refusing relief. The latter included at least, significant questions about public policy and clean hands.

Their Honours are identifying there the ways in which you might have a perfectly good claim for legal professional privilege which has not been waived, and yet you just cannot prove the ingredients of an action for confidential information. That is the gap that ought to be filled if the statements of this Court are to be taken at full value about the absoluteness of the privilege and the need to ensure perfect security from subsequent disclosure.

The gap concerning proving the confidential nature of the material in issue is very much concerned in the present case and it will be a gap in the law that arises in almost every case where there is some computer hacking and the hacker then publishes, for the world to see, privileged communications that have been obtained and those communications then end up in the public domain. In our submission, there is no reason why the privilege holder should not have an injunction to restrain the use of those documents.

BELL J: Just taking you back to your answer to Justice Keane, did the English court take a different approach in the ISTIL Group Inc v Zahoor litigation of considering the balance of the public interest in maintenance of the privilege on the one hand and the public interest in the proper administration of justice on the other?

MR JACKMAN: I would like to take that on notice. But if that is what the English court said, then it is contrary to Carter v Northmore Hale. The balancing has already been done and there is no room for now balancing legal professional privilege against the rights of a potentially innocent accused.

BELL J: It is somewhat different in the circumstance posed by Justice Keane where the court is being required in relation to material which is in the public domain to act on a position known to be not the correct position, as distinct from preserving the privilege notwithstanding an accused’s argument that it may block his or her defence.

MR JACKMAN: Our case does not involve that particular problem because there is no subsequent litigation at this stage. We are seeking to restrain the Commissioner, in the Commissioner’s private deliberations, about tax to be paid by my client from using privileged material. Now, the present case does not raise a problem of subsequent litigation being tried on a basis that the public knows to be only partially true.

KEANE J: But if your argument is right, you have to meet that problem.

MR JACKMAN: Yes. We submit, that the problem was met and answered by this Court in Carter v Northmore Hale.

KEANE J: The case was not concerned with information known to the whole world. That would tend to falsify the determination by a court made in ignorance of it.

MR JACKMAN: The High Court was not shy in pointing out the consequence of the reasoning in that case, namely, that a potentially innocent accused may not be able to establish his or her innocence.

KEANE J: In a case – in a case concerned with compulsory production.

MR JACKMAN: Indeed.

KEANE J: Yes.

MR JACKMAN: But in terms of balancing of different aspects of the administration of justice we submit that the reasoning in Carter applies to the problem that your Honour raises, and the balancing has been done and the trump card lies with privilege. Can I just complete what I wanted to go to in Donoghue paragraph 55 then proceeds with a

GORDON J: I thought you were up to 62.

MR JACKMAN: I jumped ahead in order to answer your Honour’s question.

GORDON J: I see.

MR JACKMAN: I am now retreating and going back to paragraph 55, which begins with a faithful adherence to Ashburton v Pape. It is, as I submitted before, only one available reading of Ashburton v Pape, namely that the heart of the matter was the claim for confidential information. It is not the only reading and there are passages that do indicate that privilege itself may have been a selfsufficient basis for an injunction. Their Honours then conclude in paragraph 57 that:

Accordingly, it is orthodox that where privileged documents are disclosed to third parties the right to restrain their use or to compel their return is grounded in equity rather than the common law of privilege.

There is reference then to the intermediate appellate decisions which affirm that proposition. While we acknowledge that that is the received wisdom, we submit it is a shortcoming in the law because it is an area where the – if that is right, the content of the law falls short of the rationale for the privilege as this Court has expounded. It does lead to a kind of conundrum that we find in paragraph 62 in the earlier part of the paragraph, where their Honours say:

The distinction between the two sets of principles

That is privileged and confidential information:

is not merely technical, it is substantial. One is an immunity which gives rise to no rights which can be breached; the other a right to approach a court of equity for discretionary relief.

Then their Honours say:

One is a fundamental common law right; the other an incident of the law of intellectual property -

which leaves the reader in the position of seeing that privilege is a fundamental common law right but it appears to be somewhat empty rhetoric because that right does not give – privilege does not give rise to rights which can be breached, which, in our submission, is internally inconsistent.

If it is a right, and it is, then it must be capable of being breached. The reference to privilege as a fundamental right is not empty rhetoric. It is deliberate and has been used by this Court on previous occasions to bring the law into line with its rationale, despite the received wisdom at the time. Any right, in our submission, must be given adequate means of enforcement and remedy and no less so if it is described as a fundamental right.

Now, in our submission, the principal approach is to recognise privilege as a fundamental common law right which is a selfsufficient basis for an injunction. This Court took one significant step towards the end of ensuring that privilege has an adequate range of remedies for its enforcement in Expense Reduction and in Expense Reduction this Court rejected the reasoning of the New South Wales Court of Appeal to the effect that the law of confidential information was the only way to obtain an order restraining the use of privileged documents and, of course, the Court found

KIEFEL CJ: Is that right or did the court just say it was not necessary to resort to it because of the powers available to the court under its own processes?

MR JACKMAN: Well, the argument that was put, which supported the Court of Appeal’s decision, was that confidential information was the only way of getting an injunction to restrain the use of privileged material and that, whether explicitly or implicitly, must have been rejected because the court found an alternative basis in case management principles.

Now, the case management principles are not available in the present case because there is not a case; we are talking about the kind of administrative action which Baker v Campbell expanded the law of privilege to cover. We are not talking about judicial or quasijudicial proceedings which have case management principles that can be adopted.

BELL J: Important to the analysis in Expense Reduction was the circumstance that discovery is a courtordered and supervised procedure and the sort of satellite litigation that one saw there was inconsistent with case management principles. I appreciate that your case has nothing to do with case management but the matter I raise with you is the conceivable relevance of Expense Reduction analysts to the proposition that you seek to advance.

MR JACKMAN: Well, one might have thought that the party on the receiving end of the documents might have voluntarily returned them in Expense Reduction but, of course, they did not, and although discovery is a compulsory process one has a right to withhold privileged documents which mistakenly was not exercised. Now, a parallel with the present case is that my client has done nothing voluntarily to allow these documents to get into the Commissioner’s hands. We certainly have not waived privilege and this demurrer is being conducted on the basis that there is no waiver of privilege but there was no voluntary conduct at all on our part, which enabled the Commissioner to get hold of these documents.

In Expense Reduction there was a kind of voluntary conduct but it was vitiated by the mistaken nature of that conduct and the claim for privilege was overlooked. But our case is even stronger. There is no conduct at all on our part, not even a mistaken exercise of a right or nonexercise of a right, as occurred in that case and our argument does take the law one step further than Expense Reduction because we do not have context of case management principles.

We submit that that step is available in terms of orthodox common law reasoning to align the law with its underlying rationale, which should recognise privilege as a selfsufficient reason for an injunction in the absence of a waiver. It is not a radical departure from principle, contrary to the defendant’s written submissions, and it is one which accords with what we submit is the mainstream of academic opinion.

There is a great deal of writing that we could go to. I want to take your Honours to four aspects of that academic writing. If your Honours would go to volume 5 of the joint book of authorities, beginning at tab 60. Tab 60 is the Australian edition of Zuckerman on Civil Procedure and the authors, your Honours will see from the cover page, include Professor Andrew Higgins, who I am going to come to separately - but if your Honours go through to page 711, paragraph 16.116, at the foot of page 711, the authors say after reviewing Ashburton v Pape and Calcraft v Guest:

The law on the use of privileged material that has been disclosed by mistake or without authorisation is unnecessarily complex, doctrinally questionable and in the process of reform. The supposed basis for this jurisdiction to grant an injunction restraining the use of privileged communications is that while privilege has been lost through disclosure the material is still confidential; hence the court can intervene in its equitable jurisdiction just as it would to restrain breaches of confidence. However, the fact that privileged communications are confidential does not fully account for the court’s power to restrain the use of privileged communications in legal proceedings because confidentiality does not confer, and has never conferred, immunity from disclosure in legal proceedings. What supports the court’s power to restrain the use of privileged communications in legal proceedings is the principle at the foundation of legal professional privilege: that clients must be able to communicate with their lawyers safe in the knowledge that, unless they waive the privilege, what they say to their lawyers will not be used against them.

The authors then go on to consider Expense Reduction Analysts which, in our submission, leaves unresolved the gap where case management principles cannot be invoked in order to restrain the use of privileged material. If your Honours then go back to tab 59, there is a chapter by Professor Zuckerman in the book edited by Mr Turner. If your Honours turn, in that book chapter, to page 487, Professor Zuckerman says at the last paragraph on 487:

To make communications for taking legal advice and for preparing litigation inviolable it is not enough to protect them by an immunity rule and by equitable protection of confidentiality. The secure space needs to be protected from other incursions besides the process of disclosure. Lord Hoffmann pointed out . . . that the concern that may inhibit frank communication by a client to his lawyer is not so much that the matter communicated may be disclosed but that the matter may then be used to the detriment of the client. The very considerations that support the rule that the client and his lawyer must not be compelled to reveal these communications also support a principle that what the client tells his lawyer in private should not be used to the client’s detriment in any legal context.

Security of communications for obtaining legal advice or for preparing for litigation can only be obtained by a rule that prevents protected communications from being used against the interests of the person entitled to a secure space.

If your Honours then go back to tab 56 – and we made available to your Honours’ associates some papers which were inadvertently left out of tab 56. They are in the index but if your Honours go to page 224 in the additional pages, paragraph 7.162 in Professor Higgins’ book begins by saying:

The law in this area is unsatisfactory –

with a footnote reference to the Australian edition of Cross on Evidence:

in that the level of protection afforded to a privilege holder is lessened merely because the material has been disclosed by mistake, or through no fault of their own. This does not accord with the rationale for privilege–to provide the client with a guarantee that their confidential legal material will not be disclosed without their consent, and is an unacceptable state of affairs if law makers acknowledge that the privilege is a fundamental right, and waivers of fundamental rights must be unequivocal.

The tendency of courts to apply the rules on breach of confidence in applications to restrain the use of privileged material overlooks the fact that the material in question is confidential because it is privileged, and lawyerclient communications are quite different from other categories of confidential information such as personal data or commercial secrets. The status of privileged material, and the protection granted to privilege holder, should not change merely because the material is no longer confined to the privilege holder’s private and secure sphere.

Of course equity will not act in vain. Thus granting injunctions to restrain disclosure of documents that have already entered the public domain would be academic. However it is submitted that there is utility in granting injunctions preventing use of privileged material –

which is what we seek:

against the privilege holder, where they have not waived the protection of privilege. The doctrinal basis for such orders, it is suggested, is not in the law of confidence but by expanding the rights attaching to legal professional privilege. Those rights should include not only an immunity against compulsory disclosure but also an immunity from use of the privileged statements against the privilege holder.

If we really must adhere to the language of immunity, as the Commissioner’s written submissions seem to insist upon, then Professor Higgins’ analysis tends to suggest that the word “immunity” is sufficiently flexible to support an injunction. A better choice of language is the language of rights, in our submission, à la the High Court in Baker v Campbell and Carter v Northmore Hale, but if we are confined to the language of immunity there is no reason why that also should not support an injunction.

Finally, can I ask your Honours to go to tab 57, which is the 1974 article by Mr Heydon concerning Calcraft v Guest and the socalled third party exception. If your Honours go through to page 605 below the subheading “The Calcraft Doctrine and the Rationale of the Privilege”, Mr Heydon asks:

Does the rationale of the legal professional privilege demand that it be destroyed by eavesdroppers and thieves?

We would answer, well, of course not. Mr Heydon then goes on to explore the rationale for the privilege. At the foot of that page he wrote:

Lawyerclient relations would be full of “reserve and dissimulation, uneasiness, and suspicion and fear” without the privilege; the confidant might at any time have to betray confidences.

That is further explored on the next page. At the foot of page 606 it is said:

In the light of this general policy, the third party exception to legal professional privilege seems unjust in several ways. The exception –

In effect, Calcraft v Guest:

arose in an age when eavesdropping and the purloining and intercepting of communications was difficult, rare and unfavoured. Similarly, the Law Reform Committee –

This is writing in 1967:

felt that though the exception was bad there was no urgent need to change it, because “the circumstances envisaged seldom occur in practice, and in civil proceedings professional etiquette would militate against unfair advantage being taken of them.”

That does read anachronistically in the present day. Even writing in 1974 in the Cold War era, Mr Heydon writes:

Both points are now suspect. For example, though formerly eavesdropping could be guarded against by a proper choice of meeting place and a simple inspection of it, there are now a variety of very efficient mechanical eavesdropping devices. It is not enough to say that the client should take reasonable precautions against disclosure, because even if he does he will not be safe.

That is all the more true, in our submission, in the present electronic age and, in our submission, that third party exception, Calcraft v Guest, together with the interpretation of Ashburton v Pape which is the received wisdom that one needs to resort to the law of confidential information to get an injunction, effectively living fossils, they were born of a different era, well before the recognition of privilege as a fundamental common law right and should now be put to rest as unfortunate aspects of our legal history, in our respectful submission.

That leaves me to deal with the argument concerning section 166. Your Honours will find that in volume 1 of the joint book of authorities. It is slightly different from the way that it was couched and quoted in Donoghue’s Case, the version which is behind tab 1 of volume 1 of the joint book was last amended in 2013 from the returns and from any other information in the Commissioner’s possession or from any one or more of these sources.

One can see from that language the Commissioner is not bound to use all of the materials in his possession. He has a discretion to use any one or more of the sources, any of the information in his possession. The Commissioner must make an assessment of various things and paragraph (c) is the matter that was introduced in 2013. It does not matter much for present purposes.

The essential point is that it is a provision expressed with the same generality that one finds in, for example, Baker v Campbell dealing with section 10 of the Crimes Act or Daniels dealing with section 155 of the Trade Practices Act. There is no expressed intention of abrogating legal professional privilege. Indeed, there is no reference to privilege at all.

Can I take up Donoghue’s Case again, which also had a section 166 issue in it? That is volume 3 at tab 26. If your Honours go to paragraph 75, again in the joint judgment of Justices Kenny and Perram, their Honours there refer to:

The trial judge conceptualised Mr Donoghue’s claim for privilege as giving rise to a right in Mr Donoghue to prevent the use of the documents and a correlative duty on the parole of Mr Main not to use them . . . At [133] he reasoned, in an apparently orthodox fashion that s 166 would not be interpreted in a way which infringed legal professional privilege without clear words or necessary implication –

with reference to Daniels and Baker v Campbell:

Correctly, with respect, he concluded that such clarity of expressed intention could not be located in the text of s 166.

So far, so good, but paragraph 76 then says:

The incorrectness of this otherwise impeccable reasoning emerges because the issue of privilege could only arise in the context of a power of compulsory product and s 166 is not such a power.

Now, if their Honours were wrong in that proposition and privilege arises in contexts beyond those involving compulsory production, then their Honours’ reasoning concerning section 166 falls away and their Honours would implicitly have found that section 166 did not abrogate the privilege.

Now, can I take your Honours back to Baker v Campbell and the way in which the matter was dealt with by the majority in that case. The question – that is volume 1, tab 10 the question for the majority was simply whether section 10 of the Crimes Act clearly expressed an intention to override legal professional privilege.

The Crimes Act, of course, had been enacted in 1914, but the majority did not address the construction of the statute by reference to the law of privilege in 1914, which would have been confined to traditional quasijudicial proceedings. Rather that kind of reasoning appears only in the minority, and I will take your Honours to that. But the majority reasoned, in a far more straightforward way, namely, did the statute clearly express an intention to override privilege. The reasoning can be found, at first, at page 90 in the judgment of Justice Murphy. At the foot of page 90, point 8 on the page:

Contrary to what was held in O’Reilly the privilege should apply to any form of compulsory seizure or production of documents, unless Parliament unmistakably excludes or confines it. There is not the slightest indication that Parliament intended to do so.

The question in the case stated –

concerning section 10 and answered that question, no. At page 96 in the reasoning of Justice Wilson, at point 9 on the page:

It is now necessary to decide whether resort to the privilege has been abrogated by s.10(b) of the Crimes Act. The principle is clear. A statute will not be construed to take away a common law right unless a legislative intent to do so clearly emerges whether by express words or necessary implication -

Here, we have a perfectly general law and after the extract from Bishop of Salisbury, his Honour said:

I do not think there can be any doubt about the matter. The statute does not evince any intention to oust the privilege. Indeed, I do not think that a contrary view was advanced by counsel for the defendant.

At page 116, in the judgment of Justice Deane, at point 7 on the page:

It is a settled rule of construction that general provisions of a statute should only be read as abrogating common law principles or rights to the extent made necessary by express words or necessary intendment.

Going over the page, at the foot of page 117, the last paragraph:

s. 10 contains no express reference to communications between a person and his legal advisers. It neither expressly includes them in, nor expressly excludes them from, the things to which it refers. There is nothing in either s. 10 or in any other provisions of the Act which indicates either that the Parliament directed its attention to the particular matter of modifying or destroying the confidentiality of relevant communications between a person and his legal advisers or that there existed a legislative intention to modify the common law principle that the confidentiality of such communications should be preserved. In accordance with the ordinary principles of construction, the section should be construed as not including, in the things which it authorizes to be inspected or seized, documents whose confidentiality would be protected in the courts of the land by the doctrine of legal professional privilege . . . The consequence of that construction of the section is that the search warrant in the present case should be read as not referring to documents to which legal professional privilege attaches.

Finally, in Justice Dawson’s reasons at page 123, halfway down the page:

Section 10 of the Crimes Act extends the ambit of search warrants but the general words of the section take no account of any specific immunity, such as that conferred by legal professional privilege. If that privilege has an application outside judicial or quasijudicial proceedings, there can be no real doubt that the general words of s. 10 are not sufficient to curtail the privilege. Of course, if the legislature were to see the need to achieve that result it could do so by express words, but the Court should not assist that result by reading that intention into the general words of the statute.

It is only in the dissenting judgments of the Chief Justice and Justice Brennan that one finds any reasoning that treats as relevant what the perceived state of the law was in 1914. Those passages can be found in the Chief Justice’s judgment at page 68 at point 6 on the page:

At the time that the Crimes Act was enacted, it had not been held or suggested that the rules governing legal professional privilege were other than rules relating to the giving of evidence and the production of documents in the course of legal proceedings . . . The rule of construction that the Parliament is presumed not to intend, by merely general words, to derogate from an existing privilege recognized by the common law does not assist in answering the present question, since the common law did not recognize legal professional privilege except in legal proceedings. It would seem to me impermissible to hold that the existing rules as to legal professional privilege should be given an entirely new operation, for the very purpose of reading down the words of a statutory provision.

Similarly, in Justice Brennan’s reasoning at page 106, at the foot of the page, the last line:

when the Commonwealth Parliament enacted s. 10 . . . it can hardly be taken to have intended that that section would be read subject to the Canadian doctrine of privilege, now newly restated. There is no warrant for expanding the common law scope of the provision in this country in order to provide a foundation for reading down statutes conferring powers of a kind not previously qualified by the privilege.

Those minority dissenting reasons and the reasons of the majority are not concerned with what the state of the law may have been in 1914. It is an issue which arose again in Daniels in volume 2 – if I can ask your Honours to go to tab 17 and to pick up the reasoning in the joint judgment, first of all, at paragraph 11. I stopped earlier at the second sentence, but the second sentence expresses the principle in Potter v Minahan:

statutory provisions are not to be construed as abrogating important common law rights, privileges and immunities in the absence of clear words or a necessary implication to that effect . . . It is a rule which, subject to one possible exception, has been strictly applied by this Court since the decision in Re Bolton; Ex parte Beane

and there is a list of them, and:

The possible exception to the strict application of that rule was the decision in Yuill –

in 1991. If your Honours then go through to paragraph 19, their Honours deal with Yuill, which:

was not concerned with section 155

but the power under the Companies Code, 1981 Companies Code:

to require the production of company book was subject to legal professional privilege.

In paragraph 20, their Honours note Baker v Campbell which was 1983:

had not been decided when the Code was enacted in 1981 and, at that time, it was generally accepted that, in accordance with the decision of this Court in O’Reilly v State Bank of Victoria Commissioners, legal professional privilege could only be availed of in judicial and quasijudicial proceedings. It was primarily that consideration that led Brennan J to conclude in Yuill that legal professional privilege could not be claimed in answer to the requirements of s. 295(1) of the Code, his Honour taking the view that the Code was to be construed in light of the law as it was understood when enacted.

Then going through to paragraph 27 their Honours deal with section 155 and point out that:

it is similar to the search warrant provision in s 10 of the Crimes Act . . . Given the generality of the words of s 10 . . . and their similarity to the words of s 155(2), it is difficult to see any basis upon which that subsection can be construed, consistently with Baker v Campbell and Propend, as authorising entry to premises for the purpose of inspecting and copying material to which legal professional privilege attaches.

We would respectfully submit that the language of section 166 falls into a similar category of generality of words. Then if your Honours go finally to paragraph 35, their Honours say that:

s 155 cannot be construed, consistently with the rule expressed in Potter v Minahan, as impliedly abrogating legal professional privilege . . . it may be that Yuill would now be decided differently.

In our submission, Yuill would be decided differently. It is the one outlier, and in our submission there is nothing in section 166 which can be taken as a special expression of an intention to abrogate legal professional privilege in the administrative setting in which we find ourselves. Unless there is anything further on which I can assist, your Honours, those are our submissions.

KIEFEL CJ: Yes, thank you, Mr Jackman.

GAGELER J: There is a question I wanted to ask you. You took us to Professor Zuckerman’s writing in Mr Turner’s book, tab 59, and you took us to page 488.

MR JACKMAN: Yes.

GAGELER J: I think you read, at least I marked a sentence that says:

Security of communications for obtaining legal advice or for preparing for litigation can only be obtained by a rule that prevents protected communications from being used against the interests of the person entitled to a secure space.

That seems to be a slightly narrow, but perhaps for your purposes, sufficient formulation of a right – but somewhat narrower than the way in which you have been putting it, I think.

MR JACKMAN: Because it introduces the concept against the interests of the person.

GAGELER J: Yes, and it is not confined to keeping things confidential. It seems to be a different formulation, I think.

MR JACKMAN: It is certainly sufficient for our purposes and we embrace it. The injunction that we seek in the present case rather presupposes that the Commissioner is threatening to use the privileged material against our interests and that would be a reasonable inference to draw in the circumstances, particularly in circumstances where our requests to recover that material have been refused by the Commissioner. So it does not sound like he wants to lessen our tax. But that sentence is certainly sufficient for our purposes, although I accept that I put the matter in slightly broader way than that sentence conveys.

BELL J: Just while we are on Professor Zuckerman’s article, if one goes over to page 454, one sees the professor embracing a commentary by Dr Macnair as to the:

danger that the secure space for legal advice may be used to cloak in secrecy matters which should be disclosable.

There is then reference not only to the advice privilege accorded to public servants in some circumstances but also to corporations.

MR JACKMAN: Sorry, I missed the page.

BELL J: I am sorry, it is page 454.

GORDON J: I think it might be 494.

BELL J: I am sorry; it is 494. My apologies.

MR JACKMAN: I see. At the top of the page reference

BELL J: It is really Professor Zuckerman’s embrace it would seem, from the middle of 494 to the concluding sentence. It seems to be a comment about public policy in relation to advice privilege being in all circumstances nondisclosable, particularly one would think with respect to public servants; I think that is developed further in the article but he includes corporations.

MR JACKMAN: Well, it is certainly contrary to the primary theme of Professor Zuckerman’s writing which is the absoluteness of the need to guarantee the secure space.

BELL J: The secure space, exactly, and he seems to be contemplating that in some circumstances there may be policy considerations about the secure space in the context of advice privilege available, particularly to public servants.

MR JACKMAN: Yes, the potential for an exception would be confined, it seems, to governmental officers claiming the privilege rather than governmental officers invading the privilege. If it is read in that way then we have nothing to say about it but it is, in our submission, not a recognised exception to the law of privilege, not something which we advocate.

BELL J: I understand, but in the context of the Court being invited, as it were, to extend the law, one might consider

MR JACKMAN: We would submit there is no scope for whatever public policy considerations may be brought to bear - in the field of revenue law there is no public policy which would be sufficient to override the absoluteness of a claim for legal professional privilege.

BELL J: But your contention is wider than the circumstances of this case in revenue law.

MR JACKMAN: It is and again we refer to Cater v Northmore Hale, but if there are competing public policies at stake, there is no balancing exercise which is now called for because the balancing has already been done in the formulation of the law of privilege.

KEANE J: You do not actually plead that the Commissioner intends to use this information to make an assessment that is adverse and incorrect.

MR JACKMAN: No, we do not. We do not know what the Commissioner’s state of mind is.

KEANE J: No. So insofar as the safe space that Professor Zuckerman speaks of, you are not really in a position, are you, to say that your injunction is necessary to protect you against use against your interest? Your claim is to prevent any use at all?

MR JACKMAN: Our claim is to prevent any use at all and it is justified simply by the fact that privilege attaches to the documents and has not been waived. We know that the – the pleading does make allegations concerning our attempts to recover the Glencore documents and the refusal by the Commissioner to return them – that is paragraphs 11 and 12 – which is sufficient, in our submission, to justify the injunction because there is a threat by the Commissioner to use them otherwise

KEANE J: Even if he uses them to get the actual right result?

MR JACKMAN: Again, as Carter v Northmore Hale indicates, the public policy in favour of getting a right result or using material that is available, is not absolute. It is qualified by what is an absolute public
policy – namely, the sanctity of privileged documents. But, in our submission, what we allege in paragraphs 11 and 12, on top of the allegation as to the privilege subsisting in the documents is sufficient for an injunction to restrain use, even though it certainly has not got to the point of an actual threat of issuing amended assessments.

KIEFEL CJ: Thank you, Mr Jackman.

MR JACKMAN: May it please the Court.

KIEFEL CJ: Would the parties be assisted by the Court shortening the luncheon adjournment or do we not need to do that?

MR DONAGHUE: Your Honour, I anticipate I will be about an hour and a half. So, I would have thought we will finish comfortably within the day.

KIEFEL CJ: We will be right, thank you. The Court will adjourn till 2.15.

AT 1.02 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.15 PM:

KIEFEL CJ: Yes, Mr Solicitor.

MR DONAGHUE: Thank you, your Honour. Your Honours, in the highly litigated area of legal professional privilege, the plaintiff has not been able to take the Court to a single authority in any court anywhere that has held or even suggested that common law legal professional privilege gives rise to the entitlement to injunctive relief to restrain the use of privileged documents. The reason they have not been able to take your Honours to any court even suggesting that is that it has never been understood as giving rise to a right of that kind. Legal professional privilege confers an immunity from compulsory production of privileged documents and nothing else.

While our friends seek to build their case upon legal professional privilege, in substance, in our submission, what they invite this Court to do is to create something entirely new, something in the nature of a cause of action although our friends prefer to formulate it as an equitable injunction in aid of a common law right. In our submission, the common law right as it has developed the immunity from compulsory production is not fit for the purpose for which the plaintiffs now seek to deploy it for three main reasons. The first is that at common law as an immunity from compulsory production, legal professional privilege creates a bright line, you either can compel the production of documents or you cannot, depending on whether or not the privilege applies and, in that context, a bright line is obviously appropriate and there is no call for any discretionary judgment to be made.

But, the position is different where the information the subject of privilege has already been disclosed – is already in the hands of a third party, perhaps an innocent third party who acquired the documents at a time when they did not know that they were privileged, might have had them in their possession for quite some time, might have used them for a variety of purposes, might have disclosed them to others.

In that kind of situation, our friends say if the document was privileged when created and that privilege was never waived, then they have a nondiscretionary entitlement to an injunction preventing the use and requiring the return of the information. And, not only do they have that nondiscretionary entitlement, but if your Honours turn to the demurrer book at page 86 where the injunction sought is set out, you will see in the last couple of lines of paragraph 14(1), that not only is the injunction sought to restrain the:

use in any way whatsoever of the Glencore Documents –

that is the fourth line down, but the last three lines:

or any information contained within or derived from the Glencore Documents or copies thereof.

So this is a nondiscretionary entitlement to restrain the use not only of the information that may have been in the hands of the third party and been used for a considerable period, but also to restrain the use of any information derived therefrom.

So if one takes an example in the context of the respondent in this case, the Commissioner here has had this information for some 18 months. If the Commissioner had used some of that information to go and get a copy of a document that is contained within the privileged material of a nonprivileged client assume for the sake of argument there is a statement of account or something of that kind in the documents the Commissioner goes and gets that document from some other source, our friends would have it, not only are they entitled to the privileged document back, but they are entitled to restrain the Commissioner relying upon the document derived there from the original and so the Commissioner is now to assess tax on a basis that prevents him or her from having regard to the true position revealed by the document.

That is just one example but it is easy to multiply the complexities that might arise where information is already in the hands of a party and that kind of issue is familiar in the context of breach of confidence actions and falls to be played out in the application of those wellsettled principles, which include of course the discretion to refuse relief. Our friends just wipe away that body of law and say, if the communication was privileged when it was made and they have never waived the privilege, that is all they need. That is the first problem.

The second problem is that the focus of the action, unlike legal professional privilege, which is on the confidential communication rather than the information at the heart of the communication, it seems that the action now involves a change in that focus so that the focus is on restricting use of the information itself, which ties into the point that I just made.

The third issue is that there are other uncertainties associated with this new cause of action in tort or however else it be characterised. Your Honours raised the question of damages and our friends said, well, we do not need to go there but left open the notion that that remedy would attach.

It is totally unclear, if we are in the territory of a new tort, what the wrong at the heart of this tort is, because if the elements of the action are just common law legal professional privilege, there is no wrong there, in the conventional principle. So your Honours are being asked to add something as an additional ingredient, but the nature of that something is unclear.

EDELMAN J: Well, in Campbell v MGN, the House of Lords described a wrong as – certainly Lord Nicholls described it as a right not to have private information misused and then I think seemingly recognised that there are sort of pockets of such a privacy right. Is what the plaintiff is urging not really just to seize upon the rationale for legal professional privilege and develop from that an allied type of right not to have private information provided for the purposes of legal proceedings misused?

MR DONOGHUE: Well, private, if private at the time of the communication.

EDELMAN J: Yes.

MR DONOGHUE: But, avowedly, one of the main changes that they seek – one of the main developments your Honours are being asked to recognise is a cause of action that gives rise to an entitlement to restrain the use of information in the public domain.

EDELMAN J: Well, that has happened in almost every jurisdiction in the world that has developed limited wrongs based upon a tort of privacy.

MR DONOGHUE: Yes, indeed, but that is not what your Honours are being asked to do here, and I understood that to be the weight of a question your Honour asked our friends this morning is that if the relief was to be developed in a way that deals with the problem of computer hackers who steal information and put it into the public domain, then no doubt that is a case that may come before this Court at some time and will warrant careful attention, but it is not this case because the relief here is not in the body of law that would answer that problem.

EDELMAN J: Well, if one strips the labels “privilege” from what really is a submission about a real right, a claim right, why is that not a submission that is asking for a claim right not to have private information that was obtained in the – or created in the course of communication for legal proceedings misused?

MR DONOGHUE: Your Honour, the only case that we understand we are here to meet is that with common law legal professional privilege and nothing more, other than absence of waiver, there is an entitlement to relief. Perhaps one could build a case of the kind that your Honour is putting to me, but there would need to be other ingredients in the cause of action, and they just have not been raised so we cannot meet them, because we do not what they are.

EDELMAN J: Then you have questions of knowledge and so on.

MR DONOGHUE: Yes, precisely, and one would expect – indeed, I do not need to add to that.

GORDON J: Well, you have to also develop what is private.

MR DONOGHUE: Yes.

GORDON J: So there are always factual inquiries.

MR DONOGHUE: Indeed. My answer is that I cannot meet that case, because that is not the case that is being advanced against us. The real foundation of the case being advanced against us seems to rest ultimately on the use that this Court has made of the word “right” or “substantive right” to describe legal professional privilege, and we do not quibble with the notion that legal professional privilege is a substantive right in the quite specific way in which the Court has used that word, in cases such as Baker v Campbell and Daniels, which is not, in our submission, to convert a concept with a long history operating only as an immunity from compulsory production into something new.

Your Honours and the court before you have used the word, in our submission, for two related purposes: one is to draw a distinction with the law of evidence, so it is used in Baker v Campbell to say privilege is not a rule of evidence, it is a substantive rule of law, it is a substantive right. Why? Because it was needed to be held to apply beyond just judicial proceedings where the laws of evidence apply and your Honours will see that usage in the Daniels passage I will come to shortly. The other related usage is to identify legal professional privilege as a principle that engages the presumption of legality, or the principle of legality, rather. So, that usage of the word, in our submission, does not carry with it or does not do the work that our friends are seeking to have it do.

Insofar as there was very strong reliance this morning upon the idea that there is no room for balancing in this area and the reliance in particular on Carter v Northmore Hale I will not take your Honours to that case but we make this point about it. Carter in saying no balancing is saying there is no room on a case by case basis to decide whether the interest of a particular accused in establishing his or her innocence outweighs the interest underlying legal professional privilege. We accept that is so. Carter was not saying that in actually formulating – and the reason for that is the balancing is done by the rule, the parameters of legal professional privilege reflect the balance.

But Carter does not deny that in defining the rule itself there is a balance to be struck between competing public interests and that is something that this Court has always understood and can I illustrate it by one passage in Grant v Downs which your Honours have in volume 3 behind tab 30 [1976] HCA 63; (1976) 135 CLR 674 and the relevant passage is at 685 in the middle of the page in the joint judgment of Justices Stephen, Mason and Murphy.

This passage was either quoted or cited in almost all of the judgments, perhaps all of the judgments in Baker v Campbell, reflecting the rationale for the privilege and it is similar in its substance to some of the passages my friends took your Honours to, but if you – just working the way through the paragraph, the rationale for the privilege:

according to traditional doctrine, is that it promotes the public interest because it assists and enhances the administration of justice –

We accept that and it is then their Honours explain over the next sentence how it does that, facilitating full and frank disclosure:

The existence of the privilege reflects –

I emphasise the next words:

to the extent to which it is accorded, the paramountcy of this public interest over –

another public interest, the:

general public interest, that which requires –

the interests of all relevant documents to be made available in the evidence. At the end of that paragraph, their Honours note, having given the traditional justification for the privilege:

None the less there are powerful considerations which suggest that the privilege should be confined within strict limits.

The public interest rationale set out there and relied on by our friends is important. It does justify privilege. But, it is logically erroneous to say that because there is an important public interest, a rule that acknowledges that public interest must be developed to the full extent possible to protect that interest, irrespective of what is on the other side of that line or of the other side of that balance.

The fact that the line was drawn – where it was in Grant v Downs – and then it was moved, somewhat, by the Court in Esso – reflects a judgment by the Court as to where that line should be drawn between competing public interests. But, it does not suggest that the law is – waiver would maximise the public interest underpinning legal professional privilege. In substance, what the plaintiff asks your Honours to do is to radically move the line by reforming the law of legal professional privilege so that many things that would not previously have been done in order to advance the public interest underlying the privilege would now be able to find legal protection.

As we understand it, there are two main differences that would arise. I will not dwell on these because I think they have come out – at least, the first has come out fairly clearly. The first is that it would become possible – as it is not now possible – for the plaintiff to restrain the use of privileged information even when it is no longer confidential. Our friends, frankly, accepted that. Their argument is that a privileged communication reproduced in full on the internet, published on the front page of a newspaper, must not be used, that they have a legal enforceable right to prevent use.

So, presumably, that means if it is in the hands of another newspaper, that newspaper could not publish something that had already appeared in the public domain, a matter with significant implications for free speech, in this country about which one might expect other people would wish to be heard. It would mean that an administrator in possession of the information could not make an administrative decision based on information that everybody knew to be true.

How that would advance the public interest in people seeking the advice of their lawyers in full and frank disclosures is not clear. By the time the information is on the front page of the newspaper, one would have thought that that has served as a significant discouragement to the full and frank disclosure to legal advisors or, at least, that the cat is out of the bag but that is the consequence of the argument.

The second main difference which has received less emphasis is that, at present, equity will restrain the use of privileged information in the hands of a third party but only in circumstances where that third party acquired the information in circumstances affecting the conscience of the third party. So they have to, for example, know that the information was obtained in breach of confidence. I will not take your Honours to it but there is a useful discussion of that in Johns v Australian Securities Commission and Justice Gaudron’s judgment is cited in our submissions but it is [1993] HCA 56; (1993) 178 CLR 408, the relevant passage at the bottom of 459 over onto 460, reflecting the existing equitable principle, citing Moorgate Tobacco.

Our friends do not need that element of affecting the conscience of the third party; they just say, “If it is privileged and privilege has not been waived, that is all we need”. So, again, that is a redrawing of the line.

Our submission is that, at face, the existing boundaries of legal professional privilege of equitable breach of confidence are principles that have been worked out by the courts over a very long time, over a succession of cases where many minds have examined the questions and have balanced the competing interests in the way that the existing doctrine reflects and that the Court should pause very long before substantially shifting those lines in circumstances where, in answer to your Honour Justice Gordon’s questions, really there has not been a clear identified deficiency in the way the law already deals with these points.

It deals with some of them quite differently from the way they have been dealt with in the past, so Calcraft v Guest would not now be decided as it was then but that is not because one needs to develop the law as the plaintiff seeks in this case; it is because Bunning v Cross and section 138 of the Evidence Act have responded to the problem identified in that case.

Because of the redrawing of the balance and the potential for that to impact significantly on public interests, including free speech and accurate decisionmaking by administrators, our submission is that, if the law is to be developed in this area in the way that some of the academic writing has urged, in the absence of an urgent imperative to do so, that task should be left to the legislator when other people who might be affected by a development of that significance would have a full opportunity to have an input into that law reform process.

Your Honours, I propose in my remaining submissions to deal with three things. First, the settled line of authority which we submit points unanimously against what your Honours are being asked to do. Second, to briefly touch upon the ways that the law already adequately protects the public interests underlying the professional privilege. Third, very briefly, to touch upon some of the comparative jurisprudence, although I will do that quite briefly and then I will turn to the second ground of the demurrer.

In terms of existing authorities, I propose to take the Court to a number and I do not want to labour the point but, in our submission, the authorities are very clear that legal professional privilege operates in answer to obligations of compulsory disclosure. And some of these authorities usefully illustrate the availability of equitable relief in appropriate cases.

The oral outline we have handed up suggests that I was to take your Honours to three High Court cases and three intermediate court cases. I will not take your Honours to all of them. The first case on the list is Propend and I do not think I need to take your Honours back to Propend. You have been taken to the passages upon which we rely. I make just this point about Propend. The plaintiff said that Propend did not say that legal professional privilege is only a bar to compulsory process. In our submission, at about point 3 on page 565 in a passage that were taken to when Justice Gummow expressly says:

the privilege itself is not to be characterised as a rule of law conferring individual rights, breach of which gives rise to an action on the case for damages, or an apprehended or continued breach of which may be restrained by injunction.

His Honour said exactly that. He said precisely that legal professional privilege does not operate in the way sought in this case and that is how his Honour has been understood in some of the lower court authorities which I will come to shortly.

Can I ask your Honours to go back to Daniels and, indeed, to some of the same passages you have already been taken to in Daniels, at volume 2, tab 17[2002] HCA 49; , (2002) 213 CLR 543. So in paragraph 9 the first sentence, it is said to be:

settled that legal professional privilege is a rule of substantive law –

but it is not left hanging as to the nature of the rules of substantive law. It is a rule of substantive law that has a particular effect:

which may be availed of by a person to resist the giving of information or the production of documents –

Now, it is true that it does not use the word “only”, but what the Court is doing is describing the effect of privilege at common law in circumstances where no one has ever suggested it does anything other than the thing stated in that sentence. It is “a rule of substantive law” of a particular kind “to resist the giving of information”.

In paragraph 10 the substantive law versus rule of evidence distinction is drawn in the context of emphasising that the privilege:

is not confined to . . . discovery and inspection –

in a court and to:

giving of evidence in judicial proceedings –

Footnoting Baker v Campbell, and making good, in my submission, the work, or at least a significant part of the work, that the Court is having the rule of substantive law concept do in describing the effect of the privilege. Then in the next sentence after footnote (48) their Honours return to the nature of the privilege:

in the absence of provision to the contrary –

so they are accepting abrogation of privilege is possible. And I interpolate there, that possibility is damaging to the notion of perfect security that underpins part of the plaintiffs’ case. There is never perfect security that legal professional privilege communications will remain confidential. There is a set of rules designed – common law rules and now in the Evidence Act, rules designed to protect that but there is always the possibility that Parliament will balance the public interest differently in particular cases. One sees as a clear example of that the Royal Commissions Act (Cth) which authorises royal commissions to override privilege in certain cases in section 6AA. So:

in the absence of provision to the contrary, legal professional privilege may be availed of to resist the giving of information –

So, again, describing it in the same way as in paragraph 10. Then in paragraph 11, again:

not merely a rule of substantive law.

It is more than that:

It is an important common law right or, perhaps, more accurately, an important common law immunity.

Why is the Court saying that? Because, as the balance of the paragraph goes on to make clear, the point that is being made is that the principle of legality is engaged in relation to laws that might override or limit the privilege.

In our submission, the words “perhaps, more accurately, an important common law immunity” are an implicit acknowledgment of a Hohfeldian type analysis. The distinction is being drawn between a claim right and a privilege or an immunity, a privilege being the negation of a duty, an immunity being a freedom from power. Both of those formulations are apt where we are talking about a principle of law that is directed to limiting coercive powers of compulsion.

So the Court was situating its analysis within that framework entirely consistently with paragraphs 9 and 10, describing the rule as a rule about resisting compulsory disclosure. In our submission, to say there is no such thing as a right without a remedy, as our friend said this morning, is to ignore the complexity of the notion of a right.

It may be that there is no such thing as a right which is without any legal consequence, but there is such a thing as a right to resist something being done and the remedy in that situation would be a remedy that would, if it were necessary, enforce the immunity from the legal obligation. So if someone tries to use a compulsive power to seize privileged documents, one can go to court and say, “I am immune from the exercise of that coercive power”, but the remedy in that circumstance goes no further than enforcing the immunity that the law confers.

GORDON J: Would you accept that Justice McHugh at 44 is dealing with exactly the same idea and concept?

MR DONAGHUE: I do, your Honour. I was about to mention that to your Honours. In my submission, there is no material distinction between his Honour’s analysis there and that of the plurality. So Daniels, in our submission, far from supporting our friend’s case, points in the opposite direction.

The other case that we submit is perhaps of some assistance to your Honours is not a legal professional privilege case but a case about socalled spousal immunity. The case in question is the Australian Crime Commission v Stoddart, volume 1, tab 6 (2011) 244 CLR 544. In this case, the Court held by majority, Justice Heydon dissenting, that the common law did not recognise the existence of a privilege against spousal incrimination. It so held in circumstances where intermediate appellate courts – the Queensland Court of Appeal and the Full Federal Court – had held to the contrary.

Your Honour the Chief Justice might remember one of those cases in which your Honour sat at first instance and reached the opposite conclusion. Stoddart in this Court reflects the view that your Honour took on that occasion. The discussion that may be of assistance to your Honours starts on page 622 in the joint judgment of Justices Crennan, Kiefel and Bell where again perhaps with an implicit nod to Hofeld at paragraph 180, the joint judgment says:

It is necessary to be clear about what it is the first respondent claims as a “privilege”, not the least because the term is sometimes used in a sense which does not correspond with that of a privilege in the strict sense, namely a substantive right or immunity of a witness which is provided by law.

Then in 181 it is said that the respondent claims a privilege in that sense:

claims that the common law long ago created a right of a fundamental nature which entitled a spouse to refuse to answer questions

That is an example of the fact that the word “right” can be used, accurately used, to refer to what is in substance an immunity or a privilege, as is pointed out in 180. So it is not being suggested, and it would be a surprising development for it to be said, “Well, a spouse can sue his or her partner to prevent them from saying something to the authorities”. That is not what was being talked about when it is said that there was a right of that kind.

EDELMAN J: Well, that was Hohfeld’s entire point in his article, that the word “right” is used to encompass the whole spectrum of juridical relations.

MR DONOGHUE: Absolutely, your Honour, and that is really why we say for our friends to build their case on the fact that legal professional privilege has been said by this Court to be a right is to miss an important point because that does not deny the longrecognised status of the law. At 182 in the joint judgment, there is a discussion of the principle of legality, in familiar terms, which refers in the middle of that paragraph to it being:

a working hypothesis, known to both the Parliament and the courts

Then in the last sentence:

It would appear to accord with that principle and hypothesis that the fundamental right, freedom, immunity or other legal rule which is said to be the subject of the principle’s protection, is one which is recognised by the courts and clearly so.

I note that now, just because I am here in this case, but I will come back to that on the second ground of the demurrer. Then over the page at 186, Justices Crennan, Kiefel and Bell refer to, by contrast with the spousal privilege:

A true privilege, such as legal professional privilege, operates as a substantive rule of law and not as a rule of evidence.

The same analysis as in Daniels:

It enables a person, who is otherwise competent and compellable . . . to refuse to answer a question . . . A privilege has been described as relating to an area of interrogation.

So your Honour’s analysis there is totally consistent with our submission as to the proper understanding of Daniels. And finally, your Honours, can I invite you to turn to the end of the judgment at paragraph 232, on page 637, where your Honours pick up an observation of Justice Oliver Wendell Holmes concerning the creation of legal doctrine, which is said to be apposite here:

He spoke of a statement of principle occurring only after a series of determinations on the same subject matter and by a process of induction and went on to say:

“And this statement is often modified more than once by new decisions before the abstracted general rule takes its final shape. A well settled legal doctrine embodies the work of many minds, and has been tested in form as well as substance by trained critics whose practical interest it is to resist it at every step.”

That, we submit, is an apt description of the settled understanding of legal professional privilege. And what your Honours are being asked to do is to set aside that work of many minds tested over a long period of time and to go in a very different direction.

GAGELER J: Mr Solicitor, you are referring to Hohfeld and you were referring to Holmes, but you also get no assistance from anything that has been written in the American context about this precise issue?

MR DONOGHUE: Your Honour, the frank answer to that question is, it not having been deployed against us, we have been content to rely upon the clear position in Australia and the United Kingdom, so I do not know whether we could get anything from them.

Your Honours, in terms of intermediate court authority in Australia, I will only take you to two but could I ask your Honours to note there is a long list of relevant cases that are set out in paragraph 12 of our submissions. One that your Honours might find of some assistance is the New South Wales Court of Appeal’s judgment in the Expense Reduction Case, obviously overturned in this case but there is a discussion at paragraphs 70 to 82 where the Court collect numerous statements in this Court to the effect that legal professional privilege is an immunity so that is a convenient reference.

In terms of cases that I take your Honours to, could I start with Cowell v British American Tobacco, which is in volume 2 at tab 16. I do not believe that this case is reported. It is a decision of Chief Justice Warren, Justice Chernov and your Honour Justice Nettle, as you then were, dealing with a complicated case arising in the – against the background of the proceedings that Ms McCabe had brought against British American Tobacco.

The trial judge had found that legal professional privilege had been waived, and struck out the defence in that case, making findings due to a deliberate document destruction strategy that had been engaged in to subvert discovery, his Honour had found. The Court of Appeal overturned that decision and ordered a new trial and then sometime later, a former partner of Clayton Utz who had acted for British American Tobacco gave some documents to Slater and Gordon, who acted for the applicant, and the proceeding involved an attempt to restrain the use of those documents.

At paragraph 15 of the judgment, there is a reference to the equitable jurisdiction that can be used to restrain confidential information improperly obtained and to Lord Ashburton v Pape, So, I just note this as one of the cases that recognises that that is the accepted – presently accepted means of bringing an action to recover privileged documents. The main reason I go to this case is paragraph 32 on page 16, where halfway through that paragraph there is a line that begins “although”:

although it is now accepted that legal professional privilege is more than just a rule of evidence or procedure, it is clear that it is not to be characterised as a rule of law conferring individual rights sounding in damages or an injunction to restrain an apprehended or continued breach

citing Justice Gummow in Propend:

Consequently, once information in a privileged document has come into the hands of a party to litigation, even as a result of compulsive process which is later reversed, the fact that the document was and remains privileged does not of itself prevent that party from making use of the information.

In our submission, that is a very clear and accurate statement of the existing law. The fact that the document is privileged does not prevent its use once it is in the hands of a third party. It is about resisting production. Then in the paragraphs that follow, the court goes on to acknowledge that “equity will intervene” in certain circumstances and that there is – but I do not need to take your Honours through those passages.

Next, if your Honours could turn to the judgment of your Honour Justice Gordon, when on the Federal Court, in AWB v ASIC which is in volume 1 at tab 8. This was a case where ASIC was using coercive powers under its statute to examine AWB employees in circumstances where the ASIC Act did not abrogate legal professional privilege, but where the entitlement to claim or waive privilege rested with AWB itself not the particular employees who were being examined by ASIC, and where ASIC had declined a request to allow lawyers for AWB to be present at the examination for the purpose of making privilege claims. At paragraph 17, your Honour Justice Gordon identified the issue at the heart of the dispute:

concerns what occurs if an examinee or witness inadvertently, or deliberately, discloses material in which AWB claims privilege when AWB has not been provided with an opportunity –

to resist. At paragraph 29, at the top of page 588, your Honour accepted the contention that:

although ASIC cannot compel the production of legally privileged communications of a person (ie the ASIC Act does not override or abrogate legal professional privilege), that does not mean that ASIC cannot receive such communications under any circumstances. As ASIC contended, legal professional privilege affords a person immunity from compulsory disclosure of its privileged communication (Daniels).

Then, at 34, most relevantly:

However that may be, the fact of the matter is that ASIC now has possession of information which, at least in theory, could be subject to a valid claim of privilege by AWB. The question then is whether ASIC is entitled to make use of that information, notwithstanding the possible privilege claim, and the answer to that question is yes.

Your Honour picks up the passage from Cowell v British American Tobacco that I just went to. In addition to those cases, Federal Commissioner of Taxation v Donoghue in the Full Federal Court is also squarely relevant. Your Honours have been taken through virtually all of the passages I was intending to take your Honours to in that case.

That is the case, FCT v Donoghue, that the plaintiff relied upon when commencing proceedings in this Court to say the case should stay in this Court because they were doomed to fail in a lower court and that was, we submit, a fair assessment of the position because the issues that were addressed in FCT v Donoghue are essentially the same as the issues that are arrived at in this case and, in essence, our friends just say that case is wrong.

In our submission, the discussion that you see in the judgment of Justices Kenny and Perram, with whom Justice Davies agreed, is a correct exposition of the principles one takes from the cases including the cases that I have just taken your Honours quickly through.

So, in our submission, there is nothing in any of the Australian authorities that would lend support to the idea that privilege is anything more than an immunity and that where one wants to bring a cause of action to recover privileged documents it should be done in equity. You see that in Donoghue at paragraph 57, in Propend in Justice Gummow’s judgment at 565, Cowell v BAT in the passages I have just mentioned in your Honour Justice Gordon’s judgments at paragraph 40 which I did not read but it is to the same effect.

All of that is reflective of the body of jurisprudence that has its root in Lord Ashburton v Pape which I do not need to take your Honours back – or I do not need to take your Honours to. Our friends, both in writing and this morning appear to put in issue the jurisprudential foundation for the relief granted in Lord Ashburton v Pape. They say, well, it should have been understood as privilege rather than equity.

I note without needing to take your Honours to it that at paragraph 23 of this Court’s judgment in Expense Reduction, your Honours described Lord Ashburton as “one of the leading authorities with respect to the equitable jurisdiction relating to confidential information”. So, that is certainly how this Court has understood Lord Ashburton v Pape previously.

Otherwise, in my submission, that case, Expense Reduction, does not help in resolving the issues raised in this case. It does not suggest that there is some role for an expanded cause of action grounded in legal professional privilege. To the contrary, the case is expressly grounded in the supervisory powers of the Court with respect to production under discovery.

In paragraph 58 of the reasons the Court says that the case management powers obviated the need to resort to the more complex questions concerning the grant of relief in equity, in an equitable jurisdiction. So the alternative, as it seems to have been perceived by the Court in Expense Reduction was the traditional equitable action rather than in the expanded notion of the common law.

As to some of the other problems that underlay the old law and our friend’s reliance on Calcraft v Guest, as I have already submitted, in our submission, the law in Australia has responded to the extent that that case identifies a problem in a way that did not and does not require development of the law concerning privilege because there is clearly now, both at common law and in the Evidence Acts, a power to exclude improperly obtained evidence. So we are unable to see how any deficiency arising from those cases would lead your Honours to develop a cause of action of the kind now claimed.

As to the comparative position, in our submission the law is exactly the same as I have just summarised it in England, in New Zealand and it appears to be the same in Singapore. I will not take your Honours through any of the cases except one, the decision of the Privy Council on appeal from New Zealand in B v Auckland District Law Society, which is in volume 1 behind tab 9.

This was a case where a law firm had agreed to give some documents to the relevant law society which was conducting an investigation on a limited basis on the express condition that there was no waiver of privilege. Your Honours see that at paragraph 9. Then subsequently the law society refused to return the documents that had been provided on that basis claiming that the statute under which it was acting overrode legal professional privilege. So the main issue in the case was about whether or not the statute did or did not override privilege and your Honours do not need to concern yourselves with that.

If you turn to paragraph 66 on page 761, there is a heading “Limited waiver” and it is noted that there was a submission made on behalf of the society, bearing in mind that the law society had the information because it had been given the information on the basis of this condition as to limited use. So there was no question of needing at that point to compel the provision of the material. The law society renewed its argument that privilege:

is merely a right to resist compulsory disclosure. Once disclosure has occurred, it is no longer a question of privilege. Ex hypothesi a right to resist disclosure cannot be invoked against the person to whom disclosure has already been made.

In responding to that at paragraph 67, their Lordships on the Privy Council agreed that:

privilege is a right to resist the compulsory disclosure of information. It has been so characterised in numerous authorities.

Their Honours quote Lord Hoffmann, then Justice Hoffmann in Black & Decker:

“It is not possible to assert a right to refuse to disclose in respect of a document which has already been disclosed. Once the document has passed into the hands of the other party the question is no longer one of privilege but of admissibility.”

The society’s argument, put colloquially, is that privilege entitles one to refuse to let the cat out of the bag; once it is out of the bag, however, privilege cannot help to put it back.

Their Lordships observed that this arises from the nature of privilege, nothing to do with waiver. So to the extent that our friends are suggesting that the key here is that privilege attaches and that it has not been waived, that notion did not commend itself to the Privy Council. The reason that you could not put the privileged cat back in the bag was not to do with waiver, it was to do with the nature of privilege as an immunity from compulsory production.

Now, there then goes on to be a discussion of equitable principles, in effect, and the Privy Council was, as the judgment goes on, very critical of the law society for having refused to return the documents, given the circumstances in which it had obtained them. But none of that meant that there was a capacity based on privilege itself to bring an action for the return of the documents.

I will not detain your Honours with any of the other comparative cases. There has been mention of the Singapore case, which is in volume 5 behind tab 52. That is a WikiLeaks dump of documents on the internet case, where it was still analysed as a – privileged documents on the internet analysed in equity. So really, in our submission, consistently one sees privilege analysed, as this Court has analysed it, as an immunity from compulsory production and there are not even rumblings or murmurs upon which an extension of the law could be built.

Can I deal briefly with the second ground, or perhaps not too briefly, but fairly quickly with the second ground of the demurrer which I emphasise arises only if your Honours reject the arguments we have just been putting. But in the event that your Honours did so, the premise would be that there is a common law action of some kind that entitles the plaintiff to the return of documents, but that common law action, in our submission, obviously then needs to be analysed against the statutory scheme which governs the activities of the Commissioner and in particular, against section 166.

But before coming to 166, in our submission the starting point is that it is well settled, and I think your Honour Justice Keane was putting this to my friend this morning, that the obligation to pay tax itself and the amount of tax one is obliged to pay arises by force of the Tax Act. It exists as a quantifiable liability by force of the Act itself and nothing that the Commissioner does creates that liability.

In order to recover or to facilitate the recovery of that tax, the Act then imposes an obligation on the taxpayer to disclose all of the relevant taxable facts to the Commissioner, in particular by lodging annual returns, and further returns if they are needed – these are sections 161, 161AA and 162. It is then within that context that, if your Honours turn to the Tax Act, which is in volume 1, tab 1, you see that the tax liability already existing, and the taxpayer having been required to provide relevant information, the Act imposes upon the Commissioner a duty:

From the returns, and from any other information in the Commissioner’s possession:

to make an assessment of the amount of taxable income. Now, our friend I think said that that is a discretion, to have regard to the “any other information”. That would be, in our submission, a surprising state of affairs. If one tests it by saying if the Commissioner chose to have regard to some facts but not other facts where the other facts are facts that would reduce the liability of the taxpayer, one can readily see that it would be said you cannot do that. You have to have regard to all of the information in order to make an accurate assessment.

So we submit that this is fairly clearly a duty to have regard to all of the information that is available to the Commissioner for the purpose of making as accurate an assessment as possible of the liability that the Tax Act has imposed.

KIEFEL CJ: All relevant information from any source?

MR DONAGHUE: All information from any source that is in the possession of the Commissioner.

GORDON J: There is a whole lot of authority about the way in which that works which might cut across some of it – the breadth of that proposition, is there not?

MR DONAGHUE: I was about to take your Honours to Denlay v Federal Commissioner of Taxation, which your Honour Justice Keane might recall. It is a case in which your Honour presided in the Federal Court. Can your Honours go to volume 2, tab 18. Denlay is not a case about legal professional privilege but it is a case about information that was stolen from the taxpayer. The taxpayer challenged an assessment on the basis that the Commissioner:

had used information obtained by his officers in contravention of s 400.9 of the Criminal Code Act 1995 (Cth) (the Criminal Code), being data that had been stolen and copied by a third party overseas.

I think the third party was actually sent to gaol overseas. It had been stolen in Liechtenstein and, as a result of the theft of the information, the third party was punished. But the information was nevertheless passed on to the Commissioner and it was claimed in this case that to use that information in circumstances where the Commissioner knew that it had been obtained in that way involved conscious maladministration under the Act, such that any resulting assessment fell within the Futuris principles. That argument was rejected by the Full Court.

If your Honours turn to paragraph 81, at the bottom of 433, the Court rejected the idea that to use the information involved conscious maladministration. In the specific context of section 166, at paragraph 81, their Honours said:

We are unable to interpret s 166 . . . in the way urged . . . Section 166 imposes a duty upon the Commissioner. The interpretation of s 166 urged by the taxpayers would limit the performance of that duty to cases where the Commissioner is able to satisfy himself that his officers had not infringed any law in the gathering of the available information.

One might equally say “is able to satisfy himself that the information in question is not subject to legal professional privilege” which may be difficult if it has come to the Commissioner in innocent circumstances. Going about eight lines down one would require:

A clear expression of legislative intention so to qualify the duty imposed on the Commissioner . . . to relieve him of his duty under s 166. We are unable to see that such a limitation is consistent with the unqualified language in which the duty is cast upon the Commissioner and the high importance of making an assessment based on the information available to the Commissioner.

Then in 82, in the middle of the paragraph - so, in effect, in the early part of 82 the Court says, well, if someone breaks the law, then they will meet the consequences of breaking the law. If tax officers act unlawfully, then they can be punished for acting unlawfully. But that does not mean that the Commissioner cannot use the information in making the assessment.

It is an entirely different thing to say that the interest of the Australian community in the making of taxation assessments based on the most accurate information available, an interest embodied in s 166 of the ITAA 1936 should be defeated by a default on the part of the Commissioner’s officers.

So, that was what I was relying on in the answer that I gave. Those two paragraphs were relied upon by the Full Court in the FCT v Donoghue Case that you have already been taken to. If your Honours could just go briefly back to that – it is volume 3, tab 26. If your Honours go to page 334, at the beginning of the discussion you see a quote from 166 in paragraph 71 and then in 73, near the bottom of the page:

we do not accept that s 166 is confined in its operation merely to permitting the Commissioner to have access to confidential information which he has received without notice of its confidential nature. Such a limited scope for the operation of s 166 was expressly rejected by the Full Court of this Court in Denlay.

Those two paragraphs are set out. Then, at 74, the Court concludes:

This requires the conclusion that s 166 not only permits but requires the Commissioner to act upon the information which he has in his possession regardless of how he came to have it. Section 166 exhibits a policy which explicitly privileges the need to have accurate assessments made on the information available over other private law rights. It did not matter in Denlay that the information might have been unlawfully obtained . . . The combined effect of Denlay and Awad is that the Commissioner is not only entitled, but obliged, to use information which is in his possession even if he knows it is subject to a claim for breach of confidence and even if he knows it is privileged.

So, in our submission, that passage is authority for the proposition that even if there be privileged material in the Commissioner’s possession now, section 166 of the Act not only entitles but obliges the Commissioner to use that information for the purpose of making an accurate assessment. Part of the reason for that, and our friend took you to these passages, is that because privilege is just about compulsory disclosure, it is not speaking to the operation of 166 at all.

In concluding my submissions, I need to deal with, I suppose, the counterfactual that your Honours might have held contrary to paragraph 76 that privilege is not just about disclosure and that it might give additional rights and there then becomes a question of the intersection between the common law rights thereby recognised and the operation of 166.

Our submission is that, in the event that your Honours took that step, you would be taking a step which, for the reasons I have already developed, is not a step that has been foreshadowed anywhere or that has been taken anywhere else. While, of course, that does not prevent your Honours taking the step, it does mean that to suggest that it was a working hypothesis of the Parliament that it would need to make it very clear if it overrode this right that no one ever knew existed – has a high level of artificiality about it.

That is really the kind of reasoning that one saw, I accept in dissent, reflected by, in the judgments of Justice Gibbs and Justice Brennan in Baker v Campbell. Their reasoning is, in my respectful submission, persuasive. It is true – and your Honours were taken through the other passages in the majority reasons – that the majority did not adopt that analysis.

But importantly, in my submission, you saw in the passage from Justice Wilson you were taken to, I will not go back to it but this is in Baker at 97, point 4, Justice Wilson said the principle of legality should be applied and he did not understand the contrary to have been argued. So, it looks like in Baker there was no argument put to the effect of the correctness of the position that Justice Gibbs and Justice Brennan adopted in that case.

What in my submission lends weight to the analysis of their Honours in dissent is the approach that this Court took in a different context in Bropho and I hope your Honours have been handed Bropho v Western Australia [1990] HCA 24; (1990) 171 CLR 1. This is a case, as your Honours will recall, about the presumption about when a statute will bind the Crown and it involved a significant change in the law in that respect.

If your Honours turn to page 22 in the joint reasons of six members of the Court, you will see the way the Court dealt with the fact that it was changing the ground rules, if you like, about the circumstances in which Parliament should – or what Parliament needed to do in order to manifest an intention to bind the Crown. So, on page 22 in the first full paragraph:

It follows from what has been said above that considerations of principle preclude recognition of an inflexible rule that a statute is not to be construed as binding the Crown or Crown instrumentalities or agents unless it manifests a legislative intent so to do either by express words or by “necessary implication” . . . That being so, earlier judicial statements to the effect that it must be manifest from the very terms of the statute itself that it was the legislative intent that the general words of a statute should bind the Crown . . . should be read as applying to the context of the particular statutory provisions involved in the cases . . .

The effect of the foregoing is not to overturn the settled construction of particular existing legislation. Nor is it to reverse or abolish the presumption that the general words of a statute do not bind the Crown . . . It is simply to recognize that a stringent and rigid test for determining whether the general words of a statute should not be read down so as to exclude the Crown is unacceptable.

Then, over the top of the next page, their Honours acknowledged that before this case the principle was that set in the Province of Bombay Case requiring:

the tests of “manifest from the very terms of the statute” and “purposes of the statute being otherwise wholly frustrated” . . . That being so, it may be necessary, in construing a legislative provision enacted before the publication of the decision in the present case, to take account of the fact that those tests were seen as of general application at the time when the particular provision was enacted.

So, the Court recognised that in the context of a presumption of interpretation that where a significant shift was occurring that changed the terms of the working understanding between the courts and the Parliament, that might need to be taken into account in the application of the doctrines.

Your Honours, and I hope I am not stretching too far here in the passage in Stoddart I read earlier, likewise said the principle of legality applies to fundamental rights, clearly understood, as such. Our submission is that it cannot be expected that Parliament would have made it any clearer than it already is in section 166 that the Commissioner is to use all relevant information in order to make accurate assessments in the public interest that it was already made, having regard to the fact that it could not have excluded expressly a principle that did not exist at the time that provision was enacted.

So it would, in my submission, be consistent with the analysis in Bropho and with the dissenting analysis in Baker to give effect to section 166 in accordance with its terms, in the way it was done in Donoghue, even if your Honours are against us on the first ground. Your Honours, unless there are any questions, those are my submissions.

KIEFEL CJ: Thank you, Mr Solicitor. Reply, Mr Jackman.

MR JACKMAN: Can I take your Honours back to B v Auckland District Law Society in volume 1 at tab 9. My learned friend took your Honours to paragraph 68 and referred to:

The Society’s argument, put colloquially, is that privilege entitles one to refuse to let the cat out of the bag; once it is out of the bag, however, privilege cannot help to put it back.

That was the argument that was put, but the argument was rejected. If your Honours go to paragraph 69, the argument is stated again that:

once the documents were produced to Mr Ennor, they ceased to be privileged. Their Lordships consider that this is playing with words. It confuses the nature of the documents with the rights to which the arrangements with Mr Ennor gave rise. The documents are privileged because they were created for the purpose of giving or receiving legal advice. If they are not produced voluntarily, production cannot be compelled. If they are produced voluntarily, the right to withhold production no longer attaches to them. In that sense the privilege may be said to be lost. But they are the same documents, and it is not inappropriate to describe them as privileged. Their inherent characteristics are the same. The policy which protected them from unauthorised disclosure is the same.

Then returning to the metaphor in the society’s argument:

The cat is still a cat. It can be put back in the bag.

That is, one does not lose privilege simply because of disclosure and they can be put back in the bag; it is not lost for all time. And in that sense, the reasoning of the Privy Council, in our submission, supports our argument in this case.

NETTLE J: Mr Jackman, what about the next paragraph:

The appellants want to recover the documents because they are privileged. But they do not rely on privilege to found their cause of action.

MR JACKMAN: Yes, that is because they relied on – that is explained a little more just before letter E:

the appellants do not rely on privilege or confidentiality to found their claim to recover them. They rely on the terms of the arrangements under which they were supplied –

That is the express basis on which they were supplied to Mr Ennor. So, the case ultimately does not tell us a great deal about privilege or confidentiality because the – as paragraph 70 indicates, the appellants were not relying on privilege to found their claim to recover the documents. They were relying upon the express undertaking of the law society representative.

So, in light of the terms of that undertaking, there was no need to make a direct resort to the law of privilege, but paragraph 69 does speak to the law of privilege and privileged documents can be put back in the bag, is the thrust of paragraph 69. The case is significant for another reason and that is that the Privy Council followed what this Court said in Carter v Northmore Hale concerning the role of competing public interests and that appears beginning at paragraph 46.

Continuing through paragraph 47, the case was described as one between two competing public interests of high importance and the resistance to undertaking a balancing exercise is illustrated quite starkly in paragraph 48 by reference to the Derby Magistrates Court decision which is an alarming set of facts in which, despite the very strong public interest
against allowing the claim for privilege, that claim was upheld. Continuing through paragraph 51, the quotation from Lord Taylor:

“if a balancing exercise was ever required in the case of legal professional privilege, it was performed once and for all in the 16th century, and since then has applied across the board in every case, irrespective of the client’s individual merits.”

There is reference also in paragraph 52 to the New Zealand case of R v Uljee. R v Uljee does represent a difference with New Zealand law because that case explicitly refused to follow Calcraft v Guest in a way that I am not aware of any Australian decision having done.

Then in paragraph 53, there is reference to Carter v Northmore Hale to the same effect, that the Court does not engage in a balancing exercise, through to paragraph 54. Paragraph 54 returns to a question of common law technique, which is at the heart of our argument:

Their Lordships consider that the rationale of the doctrine compels this conclusion.

That is, one looks to the rationale in order to see what the content of the law ought to be and for all the debate that one can engage in at the formal level of the classification of rights à la Hohfeld or other formal classifications that one might be attracted to, they do not say anything about the substantive law of rights in question. One does not learn anything about the substantive law by applying Hohfeld’s formal classification of rights.

In fact, one needs to know what the law is before one can embark on the exercise that Professor Hohfeld thought might be a good idea, despite all of the artificiality of language which it involves. The important question here is not how one classifies rights, privileges or immunities at a formal level.

The important question here is what is the rationale behind legal professional privilege? And once one recognises the very strong statement for the need under the rule of law for uninhibited access to legal advice, one then asks oneself, well, does the substantive content of the law align with that rationale? And the burden of our argument is that in some significant respects it does not, which is a legacy of case law decided over 100 years ago that now ought to be reevaluated by this Court. May it please the Court.

KIEFEL CJ: Thank you. The Court reserves its decision in this matter, and adjourns to 2.15 pm on Monday 6 May in Canberra.

AT 3.25 PM THE MATTER WAS CONCLUDED