The recent judgment by the Court of First Instance provides a useful reminder of the principles of the two categories of legal professional privilege (LPP), litigation privilege and legal advice privilege.  

Background

The plaintiff was under an investigation by the Securities and Futures Commission as a result of the company’s delay in disclosing substantial losses from foreign trading contracts. The investigation led to the seizure of thousands of documents and files, which the company argued were all subject to LLP and should therefore be protected from disclosure.

The court restated the law on LLP and made a finding on whether each of the documents in question was entitled to privilege.

Litigation privilege

Litigation privilege protects documents and/or communications from disclosure if they are brought into existence for the sole or dominant purpose of actual or contemplated litigation.

The court emphasised that “litigation must be a real likelihood rather than a mere possibility” before a claim for litigation privilege could succeed. It was held that the seizing of documents marked only the beginning of the investigation, which could not be regarded as being at a stage where litigation was “in real prospect”, and accordingly, the documents were not covered by litigation privilege even though some were marked as “prepared in contemplation of litigation”.

Legal advice privilege

Legal advice privilege applies to communications made in confidence between a client and a lawyer for the purpose of giving or obtaining legal advice, notwithstanding whether or not litigation is in contemplation. Legal advice, in this context, is not confined to advising on legal issues, but also includes advice as to what should prudently and sensibly be done in the relevant legal context.

The court referred to the landmark case in the area, Three Rivers District Council v Bank of England (No 5) [2004] 3 WLR 1274 which set out the restrictive definition of “client” for the purpose of legal advice privilege. It was decided in Three Rivers that “client” was only limited to those employees in the legal department delegated with the task of instructing or communicating with the company’s external lawyers, while all the other remaining employees in the company would be regarded as “third parties”.

Applying the law laid down in Three Rivers, the court ruled that the communications made with or by employees other than those employed in the plaintiff’s in-house legal department would not be privileged, even if those communications were intended for submission to the legal advisors or prepared at the request of the plaintiff or its legal advisors.

It should also be noted that in-house legal advisors, at times, carried out other managerial or administrative duties. In such circumstances, communications made by them in that capacity would not be protected by privilege.

Categories of documents not subject to LLP

The court ruled on the following categories of documents which could not be protected by LLP, documents:

  1. unrelated to legal advice, containing a reference only to the fact that legal advice was being sought/obtained, or working drafts without input of legal advice;  
  2. relating to the gathering of information from other employees not belonging to the legal department;
  3. relating to the gathering/receipt of information from, or provision to third parties external to the plaintiff;  
  4. including disclosure of legal advice circulated to employees outside the legal department, to third parties external to the plaintiff in circumstances which constituted a waiver of LLP, or documents generated as a result of or amended consequently upon the legal advice;  
  5. not generated or created by the plaintiff, with the result that the plaintiff was not entitled to assert privilege.

Comments

This case succinctly summarises Hong Kong’s approach on LLP. It can be seen from the judgment that the application of LLP is restrictive. In a medico-legal contect, hospitals and medical clinics should take note that any correspondence, document or report produced for the purpose of investigations and/or inquiries may not be able to invoke litigation privilege. Before a claim for this class of privilege can succeed, litigation must have already been commenced or there must be a real likelihood of litigation.

As for legal advice privilege, protection from disclosure can easily be lost if privileged documents are sent to employees not regarded as a client. In order to benefit from this category of privilege, it is advisable for hospitals and medical clinics to identify from the very beginning employees in their organisation as a client. Then communication containing legal advice should only go through the client for the purpose of claiming legal advice privilege.