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30 July 2015

Hong Kong Court of Appeal widened scope of

legal advice privilege by opting for broader
definition of client


Citic Pacific Limited v Secretary for Justice & Commissioner of

Police CACV 7/2012
In a welcome judgment delivered on 29 June 2015, the Hong Kong Court of
Appeal (CA) rejected the narrow definition of client for the purpose of legal
advice privilege as laid down by the English Court of Appeal in Three Rivers
District Council v Governor and Company of the Bank of England (No 5)
[2003] QB 1556 (Three Rivers (No 5)). Instead, the CA opted for a more
liberal approach which, in essence, defines a client for the purpose of legal
advice privilege as simply a corporation and its employees who could be
regarded as being authorised to act for the corporation in the process of
obtaining legal advice. A claim of legal advice privilege may therefore be
made over a wider range of communications between the client and its legal
advisers, as well as documents generated during the information gathering
process, potentially shielding them from discovery in litigation or production
during an investigation.

A quick recap of the

proceedings below ............ 1
CAs rejection of the narrow
definition of client and
the dominant purpose test 2
The whole process of
seeking and giving legal
advice should be protected2
Proper procedure for
effective disposal of LPP
claims ................................ 2
Practical points ................. 3

A quick recap of the proceedings below

The Court of First Instance (CFI) in December 2011 applied Three Rivers
(No 5) in rejecting Citic Pacific Limiteds (Citic) claim of legal advice privilege
over certain documents seized by the police under search warrants. The
records were in relation to losses which Citic had suffered from forex
investments. The CFI concluded that, following Three Rivers (No 5), the
client of Citics external lawyers was its Group Legal Department, while
other Citic employees could only be considered as third parties. As a result,
communications, whether sent directly from such third party employees to
the external lawyers or through the Group Legal Department to the external
lawyers, would not be protected by legal advice privilege.
When this case came before the CA, the focus of the appeal was confined to
the proper approach to the definition of a client for the purpose of legal
advice privilege.

CAs rejection of the narrow definition of client and the

dominant purpose test
After considering a long line of authorities from various jurisdictions, the CA
decided that the Three Rivers (No 5) narrow definition of client should not
be adopted as the proper limit for legal advice privilege in Hong Kong. The
CA made a distinction between: (i) documents which were generated in the
course of a transaction or event (which are not protected by legal professional
privilege (LPP)), where knowledge acquired from such documents can be
the subject of interrogatories; and (ii) the processing of such knowledge and
the reduction of such knowledge into a documentary form for the purpose of
seeking legal advice (whether for litigation or non-litigious purpose). Crucially,
the CA held that Hong Kong should adopt the dominant purpose test as
expounded by Tomlinson J in Three Rivers (No 5) in setting the proper limit
for legal advice privilege i.e. if a document comes into existence as part of the
continuum of communication between a lawyer and a client with a dominant
purpose of getting legal advice, it should be protected by legal advice
privilege. The CA considered that the dominant purpose test is capable of
effectively screen out unmeritorious claims for LPP.

The whole process of seeking and giving legal advice

should be protected
As is often reiterated by the Hong Kong courts in previous cases, LPP is a
fundamental right entrenched in Art 35 of the Basic Law, which the courts will
jealously protect. The CA has developed this point further by explaining that
it is meaningless to have a right to confidential legal advice if the protection is
confined to communications setting out the legal advice. Lawyers need to
have the relevant information from their clients before proper advice can be
given. Thus, it is a necessary incidence of the right to confidential legal
advice that the whole process is protected by privilege so as to safeguard the
confidentiality. Hence, documents which contain factual information, staff
statements, interview notes, or other preparatory materials, could be

Proper procedure for effective disposal of LPP claims

Incidentally, the CA has voiced its dissatisfaction with the procedure adopted
in handling the LPP claims in this case. It was of the view that the court
should not be asked to examine documents on its own without proper
assistance from the parties, who should be able to offer some understanding
of the context in which the disputed documents were created. It then
proceeded to lay down the steps that parties should follow in future LPP

the person claiming LPP (the Claimant) should identify the

materials over which the claim is made, specify whether it is
claiming legal advice privilege or litigation privilege, and
provide a supporting statement or affirmation. Any blanket
claim of LPP is objectionable and will be rejected by the court;


the Claimant should seriously consider giving a limited

waiver for an independent person to inspect the disputed
materials to see whether any concession can be made;


the Claimant and the law enforcement agency should actively

consider instructing an independent LPP Lawyer to resolve
any disputed LPP claim, while reserving their right to seek
directions from the court. The CA has given further guidance
on the instruction of such an LPP Lawyer, as well as the steps
to follow where any LPP claim remains unresolved despite the
retention of the LPP Lawyer.

Practical points
This judgment is welcome news to companies which may find themselves the
subject of investigation or parties of litigation, particularly where an internal
investigation needs to be conducted. It is now clear that internal documents,
including preparatory materials, staff statements and interview notes created
by a companys employees in different departments or at various levels of the
corporate structure for the dominant purpose of getting legal advice would be
protected by legal advice privilege. The same applies to communications
between the companys employees with external legal advisers, as long as
the communications also satisfy the dominant purpose test. In this regard,
careful consideration should be given to the scope of engagement with
external counsel, so that communications could be structured in a way that
meets the dominant purpose threshold.
The CA has helpfully recognised that where information is required to be
gathered by the management from employees, it is unlikely that a restricted
group of employees (e.g. within the Group Legal Department) would always
be best qualified to contribute towards the information gathering process, or
the giving of suitable instructions to the companys lawyers. Companies
therefore will no longer be burdened with the task of formulating an artificial
client for the purpose of seeking and obtaining legal advice, which has
created much legal uncertainty.
It is likely that regulators and law enforcement agencies will now face greater
difficulties in challenging claims of legal advice privilege and limited waiver of
privilege. However, it remains to be seen whether the CA decision
represents settled law, pending any potential appeal to the Court of Final

For further information
please contact:
Melvin Sng
(+852) 2901 5234
Marc Harvey
(+852) 2842 4122
Jelita Pandjaitan
(+65) 6692 5881
Gavin Lewis
(+852) 2901 5388

Author: Wings Turkington

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