Privilege – The Iniquity of It

Written by Warren Ganesh, Senior Consultant, Smyth & Co in association with RPC

The volume of texts and case law on legal professional privilege is an industry in itself. Older lawyers in the office testify to a time when the subject was more straightforward. Today, in an environment of increasing regulatory oversight affecting a global village like Hong Kong, issues of privilege (and the relevant applicable law) crop-up with more frequency. Witness the increasing complexity of the so-called crime or fraud exception to privilege.

The exception is not truly an exception. Something said or done in furtherance of a crime is not privileged (Hong Kong Solicitors’ Guide to Professional Conduct, 8.01 commentary, para 9). The books refer to fraud or illegality (for example, “The White Book 2014”, O. 24/5/23 commentary), leading common law cases refer to “criminal purposes or objects” (for example, R v Cox and Railton (1884) 14 QBD 153) and Solicitors’ Practice Direction P (AML) refers to “the intention of furthering a criminal purpose”.

The vocabulary at times becomes more esoteric. In the landmark case of Re Prudential Plc [2013] UKSC 1 (at para 17), Lord Neuberger (President of the UK Supreme Court) referred in passing to the crime or fraud “exception” as a communication “prepared for, or in connection with, a nefarious purpose”.

The most recent common law exposé (persuasive in Hong Kong) refers to the “iniquity exception”; JSC BTA Bank v Ablyazov & Ors [2014] EWHC 2788 (Comm) at para 76 (among others). The English court refers to something more than the “ordinary run of cases” before privilege is lost because of a criminal purpose* (ie, something that takes the “communication” outside the normal course of a professional engagement (in the context of legal advice privilege) or is equivalent to fraud or deception in litigation (in the context of litigation privilege)).

While the bank’s application for disclosure succeeded, it is important to stress there was no suggestion of any wrongdoing (or knowledge of such) on the part of the respondents’ lawyers.

In short, privilege should not be jeopardised because a solicitor is engaged by a client who puts forward an account of events which the client knows to be untrue (although, that could have repercussions for any statement of truth on a pleading or witness statement in civil proceedings in Hong Kong).

Lawyers in all common law jurisdictions need to be alive to any inroads into legal professional privilege (see Hong Kong Lawyer, May 2013, pages 46–49). For example, in Three Rivers District Council & Ors v Governor & Co. of the Bank of England (No. 6) (“Three Rivers”) [2004] QB 916, the English Court of Appeal (led by the then Master of the Rolls) got into a terrible muddle over legal advice privilege and came close to equating it with litigation privilege; until the House of Lords, as it then was, restored some normality (Three Rivers [2005] 1 A.C. 610).

Lawyers have sometimes got exercised over less. It was the best of times and the strangest of times in the village.

* The distinction can be a fine one. Witness the financier’s attorney in the Film “Arbitrage” (2012) – does the attorney go too far?