Jurisdiction - Hong Kong
Waiver of Privilege or Not?

2 April, 2012


In a Judgment handed down on 28 March 2012, Mr. Justice Hartmann JA determined various questions relating to legal professional privilege.
The case involved Citic Pacific. The underlying facts concern the alleged failure by Citic Pacific to make prompt or timely disclosure of huge losses it had sustained from foreign exchange trading during the 2008 crisis and, in particular, the circumstances surrounding a public announcement made at the time by Citic Pacific concerning its acquisition of an interest in two companies. The public announcement contained a statement that there were no material adverse changes to Citic Pacific's financial position since its last audited accounts. It is now known that immediately prior to issuing this public announcement at least some of the company's directors were aware of the various very significant foreign exchange losses that Citic Pacific had incurred.
Relatively soon after these circumstances came to light, the SFC began an investigation into Citic Pacific. Citic Pacific provided various documents to the SFC in connection with its investigation, including six documents which contained legal advice or a record of oral legal advice provided to the board of Citic Pacific.
The SFC then passed on these six documents to the Department of Justice ("DOJ") and the police wanted to obtain them from the DOJ. Citic Pacific claimed legal professional privilege and contended that the documents could not be reviewed by the DOJ or police and sought orders and protection from disclosure from the court.
The DOJ and police's position was essentially twofold:
  1. That as Citic Pacific had waived privilege on provision of the documents to the SFC, it had waived privilege to all and sundry and the privilege in the six documents no longer existed, and the DOJ and police could use them.
  2. The documents were the subject of the fraud exception; that is prima facie it appeared that they were part of a conspiracy to defraud, and thus the privilege in them no longer attached.


The DOJ and police succeeded in these arguments at First Instance before Mr. Justice Wright.

In the Court of Appeal, however, Mr. Justice Hartmann found against the DOJ/police, and in favour of Citic Pacific.
Most importantly from the perspective of our jurisprudence, Mr. Justice Hartmann found that the concept of a partial waiver of legal professional privilege existed in Hong Kong. This is arguably contrary to the position as it was previously understood, following a decision of Mr. Justice Keith JA in Rockefeller & Co. Inc. v Secretary for Justice [2000] 3 HKC 48. Mr. Justice Hartmann found that he was not bound by Mr. Justice Keith JA's decision, and held:
"Logic and authority dictate that, if the holder of privilege in a document voluntarily discloses that document to a specific party then, in respect of that specific party at least, privilege in the document must be lost."
Mr. Justice Hartmann posed the question that followed as:
"The question of course remains whether voluntary disclosure to one party constitutes disclosure to the whole world."
Mr. Justice Hartmann in answering this question preferred to follow the approach of the English Court (British Coal Corporation v Dennis Rye Ltd (No 2) [1988] 1 WLR 1113) and the decision of the Privy Council in B and Others v Auckland District Law Society and Another rather than that of Mr. Justice Keith JA in Rockefeller.
Mr. Justice Hartmann held that:
"In my judgment, therefore, on the basis of the authorities [the English and Privy Council authorities referred to above] which I have cited, I am satisfied that Hong Kong law incorporates the concept of partial waiver of privilege."
In addition Mr. Justice Hartmann was asked to determine the question of what was alleged to be the well-established rule that, if privileged information came into the hands of prosecuting authorities, whether through inadvertence, mistake or even surreptitious conduct by a third party, then privilege was lost and it was open to use by the authorities. In determining this question, Mr. Justice Hartmann declined to follow English case law and followed a New Zealand Court of Appeal decision R v Uljee [1982] 1 NZLR 561.
Mr. Justice Hartmann found that:
"It seems to me to be inherently contradictory to say that privilege, although a fundamental human right unassailable to competing issues of public interest, may nevertheless be lost in criminal matters without any intention on the part of the holder, indeed on no more than a whim of fate; that is, by accident or inadvertence, or even (at the outer extreme) by the surreptitious conduct of a third party. I do not accept that the Basic Law affords such frail protection. I am satisfied that, in both civil and criminal matters, privilege is not lost unless there is evidence that it has been intentionally waived by the holder of that privilege."
Finally, Mr. Justice Hartmann upheld the law in terms of what is known as the fraud exception to the rule of privilege; that if there were prima facie evidence that the documents were created for the purposes of a fraud then privilege is lost.
It is highly likely that this decision will be the subject of an application for leave to appeal to the Court of Final Appeal, and, this writer believes, highly likely to go on to the Court of Final Appeal for determination.
From a practical perspective, solicitors and their clients should take note that in the Citic Pacific case privileged documents were given to the SFC by solicitors then acting for Citic Pacific who did not state in specific terms at that time the basis upon which the documents were surrendered to the SFC (i.e. a partial waiver of privilege only). Mr. Justice Hartmann found that "Their failure to do so is troubling." Clearly the lesson here is to be very clear about the terms on which documents are provided to the authorities.


For further information, please contact:
Robert Clark, Partner, Deacons


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