|Can Law Enforcement Agency Compel Disclosure of Confidential Communications with Lawyer?|
Recent cases in the Hong Kong Courts illustrated important principles on legal professional privilege (“LPP”). This newsletter aims to provide a general discussion of the LPP, in particular when investigations are being carried out by the Securities and Futures Commission (“SFC”), in light of recent decided cases in the Hong Kong Courts.
LPP is a long established rule in common law which is enshrined in the Basic Law.
There are two types of LPP:-
(i) litigation privilege: it protects all documents and communications which were brought into existence for the dominant purpose of assisting a person in connection with litigation in which the person is involved, including communications between a client and third parties; and
(ii) solicitor-client privilege: it protects all documents and communications made in confidence between a lawyer in his professional capacity and his client for the purpose of giving or seeking legal advice even at a stage when litigation is not in contemplation.
An interesting aspect of LPP is “immunity”. Immunity is expressly preserved by section 380(4) of the Securities and Futures Ordinance (Cap 571) (“SFO”). Section 380(4) of the SFO reads: -
“[N]othing in this Ordinance affects any claims, rights or entitlements which would, apart from this Ordinance, arise on the ground of legal professional privilege.”
This express preservation of LPP in the SFO is to be contrasted with the absence of other fundamental protections normally available to a person under investigation by the SFC, such as the right to silence. For example, unlike an investigation by the police or the Independent Commission Against Corruption (“ICAC”), a person under investigation by the SFC has no right to silence and only has a limited right against self-incrimination.
Scope of LPP
Under Hong Kong law, legal advice privilege applies equally to communications between a client and their external lawyer and their in-house lawyer, provided the in-house lawyer is acting in his professional capacity as a legal adviser.
It should be further noted that LPP only applies to communications between a qualified lawyer and his client, and not to communications between other non-legally qualified professional advisers and their clients.
In addition, where communications which would otherwise be protected by LPP have been made in furtherance of a fraudulent device, a party is not entitled to assert LPP as a ground for refusing to disclose such communications in circumstances where the party seeking disclosure is able to establish a strong prima facie case of fraud.
Partial wavier of LPP
Presently, the principle of disclosure of documents for a limited purpose is still uncertain.
In Rockefeller and Co Inc v Secretary for Justice & Another  3 HKLRD 351, the Plaintiff, Rockefeller & Co Inc (“Rockefeller”), disclosed documents protected by LPP to the SFC pursuant to a written agreement. Rockefeller said its intention was not to waive any confidentiality or privilege in the documents. The SFC disclosed the documents to the ICAC and the ICAC gave the documents to the Secretary for Justice. The Secretary for Justice eventually released the documents to the accused person in criminal proceedings pursuant to her duty to disclose ‘unused material’. Rockefeller applied for injunctive relief to prevent the accused person from using the documents on the basis that the documents had only been disclosed to the SFC for a limited purpose.
While the Court of Appeal concluded that the accused person was entitled to the documents, thecase does not provide a settled answer to this area of law. In particular, it is unclear from Rockefeller whether it is possible to partially waive LPP or whether once a document is exposed to a third party, the LPP is lost in its entirety.
The comments of Keith JA in Rockefeller in relation to the issue of partial waiver of LPP were discussed in James Daniel O’Donnell (In his capacity as an investigator directed by the Securities and Futures Commission under s 182(1) of the Securities and Futures Ordinance) v Lehman Brothers Asia Ltd. (In Liq) (HCMP 1081/2009, unreported) (“Lehman Brothers case”).
Keith JA was of the view that partial waiver of LPP was ‘conceptually unsound’ and he did not see how it would be possible to produce documents which are protected by LPP whilst at the same time claiming that the privilege in them is not being waived. The liquidators in the Lehman Brothers case were concerned that if they were to disclose the minibond documents in order to assist the SFC in its investigations, all LPP in the minibond documents may be waived and potential third party adversaries might also gain access to the same. In the absence of well-established legal guidance as to whether a partial waiver of LPP was possible, the liquidators, acted on legal advice, declined to disclose the minibond documents to the SFC. The Court endorsed the same.
The issue of waiver was further discussed in a recently decided case CITIC Pacific Ltd. v Secretary for Justice and Commissioner of Police  HKCU 563 (“CITIC case”). Wright J delivered his judgment not based on the answer regarding whether it was possible as a matter of law to relinquish partially one’s right to invoke LPP, but found that CITIC Pacific Ltd. agreed to hand over the material to the SFC unconditionally. Free of any claim of LPP and in respect of the material, a prima facie case of the existence of both a conspiracy to defraud and offences pursuant to section 21 of the Theft Ordinance (Cap 210) has been made out on the papers. Therefore, LPP was not available.
Remarks and conclusion
The Lehman Brothers case and the CITIC case provided authority for a valid claim to LPP when regulatory investigations are carried out under the SFO.
The law and procedure on this subject are very specialized and complicated. This article is just a very general outline for reference and cannot be relied upon as legal advice in any individual case. If any advice or assistance is needed, please contact our solicitors.
Please contact members of our Litigation & Dispute Resolution Practice Group:
Head of Litigation & Dispute Resolution
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Published by ONC Lawyers © 2011