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Hong Kong – Safeguard Your Privilege: Lessons From 2014.

21 January, 2015

 

In 2014, the law of privilege was considered from various angles, with the year closing on a Court of Final Appeal decision emphasising the primacy of legal professional privilege (“LPP“) as an absolute right guaranteed by the Basic Law of Hong Kong. 


While the cases outlined below generally provide comfort that the law of privilege in Hong Kong holds strong, we offer a few practical points to help safeguard the privilege of legal advice:

 

  • be aware of whom you show your legal advice to, both inside and outside of your organisation; not everyone in your organisation will be considered the “client” for the purposes of LPP.
  • be aware of long tails of emails; when sharing any communications from your lawyer, ensure that you are not inadvertently sharing inappropriately.
  • involve lawyers at the beginning so that privilege is on the agenda at an early stage.

 

The Court of Final Appeal 


In Secretary for Justice v Florence Tsang Chiu Wing1, the CFA reversed the decision of the Court of Appeal, which had released a party to litigation from her implied undertaking not to use documents obtained by discovery for a purpose outside of the proceedings in which they were disclosed. The CFA held that to do so would amount to side-stepping the right to protection of LPP. 


The application related to the extraneous use of documents obtained through the discovery process in matrimonial proceedings. The husband asserted that the documents were privileged. At first instance, the court ruled that privilege did not apply since the documents involved the commission of a crime and granted a third party, the Secretary for Justice (“SJ“), access to the documents. On appeal, the Court of Appeal overruled the order granting access and required the SJ to establish the crime exception independently. However, the Court of Appeal also released the wife from her implied undertaking to only use the documents for the proceedings in which they were disclosed, which effectively allowed her to hand over the documents to the SJ.


The CFA reversed the order releasing the wife from her implied undertaking. The protection of LPP should not be side-stepped. LPP is an absolute right enshrined in the Basic Law.

While the Court has an inherent jurisdiction to grant or restrict access to any document used in proceedings, the Court’s discretion is subject to privilege, which is absolute. Legal professional privilege is not subject to any balancing exercise between competing interests of open justice or harming legitimate interests.


Inadvertent Waiver Of Privilege

In Chinachem Financial Services Ltd v Century Venture Holdings2, the Court of First Instance refused to find that LPP had been waived impliedly, where a document had inadvertently found its way into the possession of the other party. 


The court looked at several English decisions and found that in contrast to the approaches taken in Australia and the US, the test in English law was based neither on general principles of fairness nor on relevance. Although relevance was a necessary precondition for disclosure, it was not sufficient for a finding of waiver. Under English law, there is no general implied waiver of privileged material merely because a state of mind or certain actions are in issue; the court will only find a waiver if the party deploys the contents of the legal advice in the litigation. 


The Court rejected the Australian approach and adopted the English position in order to avoid any inroad into the right of legal professional privilege in Hong Kong. The importance of privilege could be seen in Article 35 of the Basic Law. Moreover, privilege had long been recognised by the Hong Kong Courts as a fundamental human right3, the waiver of which would not be lightly inferred.

 

Developments In English Law


In a contrasting decision, in Rawlinson and Hunter Trustees, Vincent Tchenguiz and others v Director of Serious Fraud4, the English Court of Appeal considered itself bound to apply established principles summarised in Al Fayed v Commissioner of Police for the Metropolis5, that if documents are inadvertently allowed to be inspected by the other party, in general it will be too late to claim privilege and seek an injunction. Where justice required, for example where there was fraud or where the documents have been made available as a result of an obvious mistake, the courts could intervene. However, on the facts of the case, the documents were found not to have been made available as the result of an ‘obvious mistake’.


The English Court applied the principles on legal professional privilege from Al Fayed because it considered itself bound by the decision. However, Longmore LJ suggested, obiter, that if the UK Supreme Court were to be presented with another case where privileged documents had been inadvertently disclosed, they should find instead that the courts should ordinarily permit the correction of such a mistake and order the return of the documents.


Back To Hong Kong


While in Chinachem, the Hong Kong Court chose to follow the English position, the hard-line approach taken in Tchenguiz is unlikely to be followed in Hong Kong, where our Courts appear to afford greater protection to privilege, in line with the obiter approach recommended by Longmore LJ. 


In Citic Pacific6, a 2012 Court of Appeal case establishing that Hong Kong law recognised a partial waiver of privilege, the court preferred not to follow English authority on the point of whether inadvertent disclosure is admissible once in the hands of the prosecution. Instead, the Court of Appeal turned to a New Zealand decision, B v Auckland District Society7, in considering that privilege is not to be balanced against competing public interests no matter how compelling they may be, and is not lost unless there is evidence it has been intentionally waived by the holder of the privilege. 


Auckland District Society was also cited with approval by the CFA inFlorence Tsang Chiu Wing, quoting Lord Millett’s feline metaphor in relation to losing LPP because of “letting the cat out of the bag”,


“… The policy which protected them from unauthorised disclosure is the same. The cat is still a cat. It can be put back in the bag.”


E-discovery And Privilege


It is worth noting that the new Practice Direction on electronic discovery (PDSL1.2) contains clause C.6 which states that parties undergoing electronic discovery should endeavour to agree that discovery is undertaken without prejudice to the entitlement to subsequently claim privilege over any inadvertently disclosed information. This retention of privilege is in-line with the current Hong Kong position regarding inadvertently disclosed documents.


Takeaway Points


While the doctrine of legal professional privilege is still absolute in Hong Kong, one must take care with one’s privileged information to ensure that it remains so.

 

(Click here to download the Hogan Lovells’ guide: Ten Rules for Retaining Privilege.)

 

End Notes:

 

1  FACV Nos. 5&6 of 2014

 

2  [2014] 2 HKLRD 557


3  See e.g. the Court of Appeal’s decision in Citic Pacific Limited v Secretary of Justice[2012] 2 HKLRD 701

 

4  [2014] EWCA Civ 1129

 

5  Al Fayed v Commissioner of Police for the Metropolis [2002] EWCA Civ 780

 

6  Citic Pacific Limited v Secretary of Justice [2012] 2 HKLRD 701 


7  [2003] 1 AC 735

 

Hogan Lovells

 

For further information, please contact:

 

Allan Leung, Partner, Hogan Lovells

allan.leung@hoganlovells.com

 

Timothy Hill, Partner, Hogan Lovells

timothy.hill@hoganlovells.com

 

Mark Lin, Partner, Hogan Lovells

mark.lin@hoganlovells.com

 

Damon So, Partner, Hogan Lovells

damon.so@hoganlovells.com

 

Chris Dobby, Partner, Hogan Lovells

chris.dobby@hoganlovells.com

 

Patrick Sherrington, Partner, Hogan Lovells

patrick.sherrington@hoganlovells.com

 

Danny Leung, Hogan Lovells

danny.leung@hoganlovells.com

 

Hogan Lovells Dispute Resolution Practice Profile in Hong Kong

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