DR Essentials: Refresher on Privilege

The Hong Kong courts have recently considered a number of issues relating to the ambit of legal advice privilege, litigation privilege and without prejudice privilege. There are practical takeaways from these cases which in-house lawyers may find useful.

Refresher on the law on privilege

Legal professional privilege (LPP)

There are two categories of LPP. Legal advice privilege applies to confidential communications between a lawyer and his client, as well as documents generated by the client during its information gathering process, for the dominant purpose of giving and receiving legal advice. Litigation privilege applies to confidential communications and documents which come into existence for the sole or dominant purpose of actual, contemplated or pending litigation proceedings.

The touchstone for LPP is the "dominant purpose test". Any document which was produced or brought into existence for the dominant purpose of obtaining or giving legal advice, or conducting any actual or contemplated litigation, is covered by LPP.

In Citic Pacific Ltd v Secretary for Justice (No 2) [2015] 4 HKLRD 20, the Court of Appeal rejected the narrow definition of "client" adopted in the English case of Three Rivers (No 5) in defining the scope of LPP. The narrow definition in Three Rivers (No 5) confines the "client" to such employees within the corporation who were authorised to obtain legal advice. The wider test in Hong Kong extends the coverage of LPP to all documents generated by the client corporation for the dominant purpose of obtaining legal advice, without restriction to the identity of their author.

The wider scope of LPP following the Citic decision means that corporations can withhold the production of more documents in Court proceedings or from regulators and law enforcement agencies.

Without prejudice privilege (WPP)

WPP protects all communications made in a genuine attempt to settle a dispute from being referred to in court. This is to encourage parties to engage in full and frank settlement discussions, without fear that any admissions or prejudicial comments might be used in court to their detriment. This is aimed at facilitating out-of-court settlements between parties to litigation.

WPP is subject to public policy exceptions. In Crane World Asia Pte. Ltd v Hontrade Engineering Ltd [2016] 3 HKLRD 640, the Court of Appeal held that privilege does not apply to a provision in a settlement offer that a witness shall not give evidence on behalf of another party, based on the "unambiguous impropriety" exception to WPP. This is in contrast to the position under LPP, which is described as an "absolute" rule and not subject to any public policy exceptions.

Common interest privilege

Common interest privilege preserves privilege in documents or communications that are disclosed to parties with a common interest in the confidentiality of the documents or communication.

For instance, if a communication is produced by a party for obtaining legal advice or to assist in the conduct of litigation, then another party that has a common interest in the subject matter of the communication or the litigation can assert a right of privilege over that communication as against a third party. The effect is that the original disclosing party will not lose privilege as a result of its sharing with the receiving party, and the letter will also be able to assert common interest privilege in its own right.

Common interest privilege has been described as both a shield and a sword. It can be used as a sword to gain access to the privileged documents if there is sufficient common interest in such documents, or as a shield to resist the application of a third party for the production of privileged communications.

What does this means for you?

We will be exploring the issues referred to above in greater detail at our DR Essentials Breakfast Briefing on 16 March 2017. At this session Richard Keady and James Wong will provide a refresher on the law of privilege and review notable recent developments in Hong Kong, with reference to recent case law.