The Court of Final Appeal (the “CFA”) has, again, reminded us in the recent high profile case of Secretary for Justice v Florence Tsang & others that legal professional privilege (“LPP”) is an absolute right that is constitutionally enshrined.
Florence Tsang (the “Wife”) divorced property tycoon Samarthur Li (the “Husband”) in 2008. In the determination of the Husband’s assets available for distribution, the Husband and his father, Samuel Lee (the “Father”) claimed that the Father had an interest in a significant portion of the assets in question by virtue of certain share options and convertible loan arrangements.
The Wife claimed that such arrangements were fraudulent transactions between the Husband and the Father to defeat her claim for financial provisions. She sought discovery of certain documents relating to these arrangements (the “Documents”). The Husband claimed that the Documents were communications between a legal adviser and client and therefore protected by LPP.
Proceedings in the courts below
In 2010, the Honourable Mr Justice Saunders of the Court of First Instance (the “CFI”) held that the Documents were not covered by LPP, because they were intended to further criminal purposes. Accordingly, the Documents came into the Wife’s hands and were used in the financial provisions proceedings. In the financial provisions proceedings, the Wife alleged that one of the Documents was a forgery. Saunders J set aside the relevant transactions, and referred the case to the Secretary for Justice (the “SJ”) in light of his findings that the Husband and Father had likely committed the crimes of perjury, forgery and attempting to pervert the course of justice.
The SJ applied to Court for access to the Documents in relation to the alleged crimes. The Wife also wished to assist the investigation by handing over the Documents to the SJ. As the Documents were received in the discovery process, they were subject to the usual implied undertaking on the part of the Wife that they would only be used for the purposes of the financial provisions proceedings. The Wife applied to Court to be released from such undertaking. In 2013, the Honourable Mr Justice Ng of the CFI granted the SJ access to the Documents and released the Wife from her undertaking.
On appeal, The Court of Appeal:
- set aside Ng J’s order granting the SJ access to the Documents. The Court of Appeal held that the SJ could not simply rely on the ruling of Saunders J giving the Wife access to the Documents, but must himself also establish independently that LPP was inapplicable under the crime exception before he could gain access to the Documents; but
- upheld Ng J’s order releasing the Wife from her implied undertaking on grounds of public interest. The Court of Appeal held that the Father or the Husband could no longer assert LPP in relation to the Wife contrary to the ruling of Saunders J.
The SJ’s application was remitted to the CFI pending a re-hearing. However, as Ng J’s order releasing the Wife from her implied undertaking was upheld, this in effect enabled the SJ to obtain the Documents from the Wife. The Father further appealed to the CFA.
Decision of the CFA
In a unanimous decision, published on 6 November 2014, the CFA allowed the appeal and set aside Ng J’s order releasing the Wife from her implied undertaking.
Ribeiro PJ, in his judgment for the Court, noted that:
- the SJ’s application for access to the Documents and the Wife’s application to be released from the implied undertaking could not be considered separately;
- LPP is a fundamental right which the courts will “jealously protect”, and is a “necessary corollary of the right of any person to obtain skilled advice about the law” (citing the English House of Lords case of R (Morgan Grenfell & Co Ltd) v Special Commissioner of Income Tax  1 AC 563);
- in Hong Kong, LPP is constitutionally guaranteed by Article 35 of the Basic Law, which provides that Hong Kong residents shall have the right to confidential legal advice. The CFA had previously made this point in Akai Holdings Ltd v Ernst & Young (a Hong Kong firm)  12 HKCFA 649; and
- while the determination of whether to release someone from the implied undertaking in discovery involves a balancing exercise, LPP is absolute and is not susceptible to any balancing exercise.
Hence, the CFA held that it was wrong in principle to release the Wife from the implied undertaking with the consequence of enabling her to provide to the SJ the Documents for which LPP was claimed (against the SJ) and not yet ruled upon. The SJ must establish in the pending CFI re-hearing that the Documents are not protected by LPP, being documents involving the commission of a crime. That process should not be side-stepped simply by obtaining them from the Wife.
Hong Kong’s highest court has, again, confirmed the paramount importance of LPP and further cemented its place as an absolute right. As noted in Akai Holdings Ltd v Ernst & Young (a Hong Kong firm), applied in this case, Article 35 of the Basic Law provides the constitutional basis for LPP in Hong Kong. In addition, the application of R (Morgan Grenfell & Co Ltd) v Special Commissioner of Income Tax in this judgment is notable as Morgan Grenfull was one of the first cases in the UK to move to the modern approach of looking at LPP as a fundamental human right. This decision should provide welcome reassurance to clients obtaining or receiving confidential legal advice from their lawyers in Hong Kong.