Hong Kong law and English law have over recent years diverged on the meaning of “client” for the purposes of asserting legal advice privilege. Practitioners and businesses in Hong Kong need to be aware that communications involving an in-house lawyer and their “client” may not be privileged under English law as it now stands, whereas they would be privileged under Hong Kong law. While the narrow English interpretation has not been adopted by the Hong Kong Courts, any Hong Kong-based client who could potentially become involved in English litigation (whether through an English business/subsidiary or in relation to an English law governed contract) should be aware of the developments on legal advice privilege in the English Courts. Privilege is determined by the law of the forum of the litigation under both English and Hong Kong law.
The recent English High Court decision in Glaxo Wellcome UK Ltd v Sandoz shows the potential holes in what businesses would usually consider to be privileged in-house communications. The English Court held that an in-house lawyer’s communications with an employee of the business, who was accepted to be her in-house “client” in these circumstances, were not protected by legal advice privilege where the purpose of those communications was to seek and obtain information to provide to external lawyers in order to obtain their legal advice. In doing so, the English Court applied the narrow interpretation of “client” established in the notorious Three Rivers No 5 decision, as recently confirmed by the English Court of Appeal in the ENRC case.
This decision confirms that (under English law) an individual may be a lawyer’s “client” and therefore entitled to communicate information to the lawyer under the protection of privilege for one purpose but not for others. In equivalent circumstances in Hong Kong, the broader meaning of “client” would potentially make all such communications privileged.
The ENRC case confirmed that legal advice privilege is limited to communications between a lawyer and those tasked with seeking and receiving advice on behalf of the client company, as interpreted in Three Rivers No 5. The Court recognised that this narrow approach (defining the specific individuals within the organisation) puts large corporations at a disadvantage and means that English law is out of step with international common law on this issue.
This narrow position was confirmed in Glaxo Wellcome UK which provides a significant illustration of how the English Court’s interpretation impacts in practice. The in-house lawyer in question was employed by a company in the Sandoz group, the fourth defendant to the action (Defendant). The claimants challenged a claim to legal advice privilege made by the Defendant in respect of two documents:
- An email from the in-house lawyer to an employee of the Sandoz group (Employee) seeking information to provide to their external lawyers for the purpose of the external lawyers giving legal advice; and
- An email from the in-house lawyer to the Employee seeking information to provide to their external lawyers for the purposes of giving them legal advice, along with an email providing the information requested.
The English High Court found that the two emails were not protected by legal advice privilege for the following reasons:
- The external lawyers provided legal advice to the second defendant, not the Defendant who employed the in-house lawyer and the Employee;
- There was nothing to indicate that the Employee was authorised to seek legal advice from external lawyers acting for the second defendant;
- It seemed more likely that the in-house lawyer was given the task of obtaining legal advice from the external lawyers and she was obtaining information for that purpose; and
- In gathering information, the Employee would not be subject to legal advice privilege. The Employee’s communications to provide information would not be privileged unless he was the client for the purposes of him obtaining legal advice.
The English Court concluded that, on these facts, the Employee was not the client and therefore the communications in question were not protected by legal advice privilege.
HONG KONG POSITIION
The Hong Kong Court of Appeal’s (CA) judgment in Citic Pacific Limited v Secretary for Justice and Commissioner of Police set a new precedent in Hong Kong for legal advice privilege. The Court expressly disagreed with the restrictive definition of a “client” adopted by the English Court of Appeal in Three Rivers No 5, taking a more liberal approach in interpreting who the “client” is for the purpose of legal advice privilege. The CA held that the client is simply the corporation and the question is which employees should be regarded as being authorised to act for it in the process of obtaining legal advice. The CA also adopted a broader test for legal advice privilege than had previously applied, resulting in legal advice privilege no longer being restricted to communications between a lawyer and a client. In contrast to England, this privilege now also extends to cover internal confidential documents of a client organisation which had been produced with the dominant purpose that the document (or its contents) is to be used to obtain legal advice.