Limited waiver in Hong Kong?
No partial waiver as matter of fact
Crime/fraud exception to legal professional privilege


In a recent application to the High Court, a company - CITIC Pacific Limited - failed to secure the return of certain privileged documents which had been provided to the Securities and Futures Commission (SFC) and separately seized by the police. The judge refused the application on the basis that, as a matter of fact, the company had unconditionally surrendered privileged materials to the SFC, free from any claim of legal professional privilege. Moreover, he considered that he was entitled to draw the inference of dishonesty, such that the materials in question were created to facilitate or further a crime and were thus denude of privilege.

The case is particularly interesting because the judge questioned whether, as a matter of law, a limited or partial waiver of legal professional privilege is possible. He did not reach a final view on this point because of his finding that there had been an unconditional waiver.


In October 2008 the SFC took the unusual step of announcing publicly that it was investigating the affairs of CITIC Pacific Ltd. This statement on CITIC Pacific was issued following public outcry over a US$2 billion foreign currency trading loss that the company had suffered. Specifically, there was a concern that the company, which is listed on the Hong Kong Stock Exchange, had:

  • withheld the news of its losses from investors for several weeks after the board first became aware of them; and
  • stated in a circular, reporting an unrelated transaction involving a subsidiary, that the company's directors were unaware of a material adverse change in the group's general financial condition.

As a part of the SFC investigation the company was asked to produce certain records and documents. Under the Securities and Futures Ordinance, a person receiving such a request is required to comply; failure to do so is a criminal offence. However, the ordinance specifically excludes the need to produce documents which are protected by legal professional privilege.

Notwithstanding the ability to withhold such privileged material, the documents that the company provided to the SFC included documents that were protected by legal professional privilege. There was later a dispute on the facts as to the company's intentions with regard to the limited use of the privileged materials at the time that they were handed over to the SFC.

Several months after the SFC investigation, a police investigation took place. The police seized hundreds of thousands of documents and other materials, including over 100 computer hard drives. At that point the company made a blanket claim, asserting that both the privileged materials and the materials seized by the police were subject to legal professional privilege.

The decision on March 18 2011 concerned whether privilege had been waived, as well as the operation of the so-called 'crime/fraud exception' for documents that are purportedly protected by privilege. The court gave another decision in respect of the contents of the privileged materials, but this is not publicly available.

Limited waiver in Hong Kong?

The company argued that the principle of disclosure of privileged documents for a limited purpose is well established. The judge disagreed and thought that the only authority to which both parties referred - Rockefeller and Co Inc v Secretary for Justice(1) - was inconclusive. In Rockefeller the SFC had sent certain documents to the secretary for justice. The documents in question had been obtained under a similar power (under the old Securities and Futures Ordinance) to that exercised against the company under the current ordinance. In a letter with which the documents were submitted, the company purported to impose a condition on the extent to which it was prepared to waive privilege. It subsequently became necessary for the disclosed documents to be made more widely available (to the accused) as unused material in the course of criminal proceedings. An application was made to stop the onward disclosure of the documents as unused material. Each of the justices of appeal gave a separate judgment for denying the injunction sought.

Vice President Godfrey accepted that the letter with which the documents were handed over to the SFC waived Rockefeller's claim to confidentiality only to the limited extent expressly stated. Nonetheless, he reluctantly denied the injunction sought on the basis that the documents were already in the hands of the accused and that, on balance, the accused's right to use the material in the defence of criminal proceedings outweighed the plaintiff's right to confidentiality.

Justice of Appeal Rogers seemed to accept the possibility of waiver on limited terms, although on the facts he held that the onward disclosure to the relevant authorities (and ultimately the accused) was permissible under the terms of the letter in question.

In CITIC the company relied on these two judgments in its application as authority for the assertion that a partial waiver of privilege is possible. However, the judge questioned this interpretation. Considering the two judgments, the judge found that their conclusions had been reached on the basis that the documents in question were confidential, rather than because they were protected by legal professional privilege. All three judgments in Rockefeller turned on a balancing exercise between restraining disclosure and making such documents available for a fair criminal trial. The judge in CITIC observed that such a balancing exercise would not have been necessary if the documents in question were privileged, since asserting a sustainable claim of privilege would provide a complete answer to requirements for disclosure.

The judge also observed that Justice of Appeal Keith (in Rockefeller) thought that partial waiver of legal professional privilege was "conceptually unsound". This position was adopted by the defendants in CITIC, which contended that it is impossible to waive legal professional privilege partially, and that once a document is disclosed to a third party, privilege is lost entirely.

The judge in CITIC did not reach a formal decision on the question of whether a limited waiver of privilege is possible, deciding instead that a formal decision was unnecessary.

No partial waiver as matter of fact

The judge rejected the company's contention that it had intended only a limited waiver of privilege in relation to the privileged materials at the time that they were handed over to the SFC. The company's position had been that the SFC had informed the company that it was conducting an investigation regarding the matters set out in the directions to investigate, and that the company (through its lawyers) had stated that it would cooperate with the SFC in its investigations. The necessary implication was that the privileged materials were surrendered subject to the limitation that they could be used only within the scope of the SFC's investigation.

The judge distinguished the case of British Coal Corporation v Dennis Rye Ltd,(2) on which the company had sought to rely. In this case the plaintiff's documents, created for the purpose of civil proceedings between the parties, were handed to the police to assist in an investigation which ultimately resulted in criminal charges being brought against the defendants. The documents were later supplied to the defendants by the police before the criminal trial. After the defendant was acquitted, the plaintiff applied in the civil proceedings for the return of the documents. The court granted the order.

The judge in CITIC considered that British Coal was clearly distinguishable, as the documents in that case were created for the purpose of the civil action and thus enjoyed privilege from discovery in that action, irrespective of having found their way to the defendants only as a result of a criminal procedural practice whereby documents were made available to the defendants.

The judge considered that the company had been acting through lawyers at all material times. Section 380 of the ordinance preserves privilege and was regarded by the judge as a provision of which the company's internal and external lawyers must have been aware when handing over the privileged materials. In any event, the company was not obliged to hand over privileged materials and the judge found that the company had made a conscious decision not to exercise its right.

Accordingly, on the facts, documents which were protected by legal professional privilege had been surrendered unconditionally to the SFC, free of any claim of privilege. The judge also found that if he were wrong on this view, objectively there were no implied conditions attached to the surrender of the documents. He also rejected the notion of 'revival' of legal professional privilege - that is, the partial reinstatement of legal professional privilege after it is said to have been voluntarily surrendered - on the basis that this is contrary to the fundamental nature of privilege. However, the judge specifically left open the question of whether confidentiality can be negotiated subsequent to the surrender of privilege.

Crime/fraud exception to legal professional privilege

The English law position - that privilege does not exist where a lawyer is consulted for advice in contemplation of the commission of an offence - applies in Hong Kong. In order to decide whether the privileged materials were denude of professional legal privilege as a result of the crime/fraud exception, the judge applied the test proposed in R v Gibbins,(3) which asks two questions:

  • Was there a prima facie case of fraud made out on the papers?
  • If so, was the disputed document produced prima facie to facilitate or further the fraudulent process?

The court in R v Gibbins held that both questions should be decided on the basis of probability, rather than beyond reasonable doubt.

In CITIC the judge considered that the fact that the company's financial position had been concealed from its investors as well as its lenders entitled him to infer dishonesty on the part of the company. As such, a prima facie case of conspiracy to defraud was made out on the papers, as well as offences under Section 21 of the Theft Ordinance (Cap 21). The judge held that the privileged materials were produced to facilitate or further those processes; therefore, privilege did not attach to them.

The company is understood to have been given leave to appeal.


As this case demonstrates, companies should think twice before disclosing privileged materials to the SFC or any other law enforcement entity. If documents must be disclosed, this should be done under written cover, making clear the conditions on which the disclosure is being made. The conditions should specify whether third-party disclosure and use is permissible. However, the recipient of privileged materials may be under a further duty of onward disclosure to a third party. In such cases, attempts to preserve privilege may be unsuccessful.

For further information on this topic please contact Kasin Chan at Simmons & Simmons by telephone (+852 2868 1131), fax (+852 2810 5040) or email ([email protected]).


(1) [2003] 3 HKLRD 351.

(2) [1988] 1 WLR 1113.

(3) [2004] EWCA Crim 311.