Hong Kong court applies narrow view of "client" for privilege purposes

The much discussed decision of the English Court of Appeal in Three Rivers District Council v Bank of England [2003] EWCA Civ 474 led to a risk that not all employees of a company or organisation will be considered part of the "client" for the purposes of legal advice privilege. There is however little subsequent guidance in the English case law as to whether, and if so when, such a narrow interpretation of "client" might be applied in other cases. It is therefore noteworthy that the Hong Kong Court of First Instance has applied the decision to restrict the "client", on the facts of the case before it, to the group legal department (comprising two in-house lawyers) and the Board of Directors of the relevant organisation: CITIC Pacific Limited v Secretary for Justice and anor (unrep, 19/12/2011, HCMP767/2010).

Background

In Three Rivers the court took a restrictive view of who from within a client organisation constitutes the "client" for the purposes of assessing the application of legal advice privilege, which protects from disclosure lawyer/client communications for the purposes of giving or obtaining legal advice. The court held that, on the rather peculiar facts of that case, the "client" did not encompass all employees of the Bank of England but was limited to a particular group of three individuals (the Bingham Inquiry Unit) who were given specific responsibility for coordinating communications with the Bank's external lawyers.

So far as we are aware, however, there has been no subsequent case in which the English court has taken such a narrow view of the "client" for the purposes of privilege. Further, the Court of Appeal's decision was given less than an enthusiastic reception by the House of Lords in a later judgment on a different point in the Three Rivers case  (see [2004] UKHL 48); although their Lordships declined to express an opinion on the issue, as it did not arise for consideration in the appeal, Lord Carswell stated that he was "not to be taken to have approved of the decision" and reserved his position on its correctness. There had therefore been some speculation that the Court of Appeal's decision on the "client" point might be limited to its own particular facts.

Judgment

In CITIC, the Hong Kong court took the view that the group legal department was the "client" of the external legal advisers on the basis that it "comprised the persons, or was the entity, delegated, either expressly or by implication, to instruct/communicate with the plaintiff's legal advisers". The remaining employees of CITIC therefore fell to be regarded as "third parties" for the purposes of privilege, so that communications with or by such employees would not be privileged, even if intended for submission to the legal advisers and/or prepared at the request of the plaintiff or the legal advisers. The court accepted, however, that members of the Board of Directors of CITIC were not to be regarded as "third parties" for these purposes, as it was clear that the group legal department acted under the direction of the Board.

Appeal pending

We understand that the court's decision has been appealed, and that judgment on the appeal is awaited. Although this decision is not binding before the English courts (and nor will any decision of the appeal court),  it will nonetheless be of concern to commercial clients in perpetuating the uncertainty caused by the Three Rivers decision for commercial organisations which can only act through their employees and, potentially, increasing the risk that a restrictive view of the "client" will be applied in future cases.