Hong Kong Court of Appeal rejects narrow interpretation of “client” and adopts broader test for legal advice privilege

In a decision handed down yesterday, the Hong Kong Court of Appeal (HKCA) has rejected the narrow view adopted by the first instance court as to who from within a client organisation constitutes the "client" for the purposes of considering whether legal advice privilege applies: Citic Pacific Limited v Secretary for Justice and Commissioner of Police (unrep, 29/06/2015, CACV 7/2012).

The first instance judgment (considered here) had restricted the “client” to the group legal department and Board of Directors of the relevant organisation, applying the English Court of Appeal's much discussed (and much criticised) decision in Three Rivers District Council v Bank of England [2003] EWCA Civ 474. The Three Rivers decision has caused difficulties for corporates, as it leads to a risk that some employees may not be considered part of the “client” for the purposes of legal advice privilege. This means that communications or documents prepared by those employees will not be privileged, even if intended for submission to the legal advisers (unless for the purposes of contemplated litigation). The HKCA rejected that approach, saying 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.

As well as rejecting the narrow view of "client", the HKCA has adopted a "dominant purpose" test for legal advice privilege. This means that (under Hong Kong law) legal advice privilege is no longer restricted to communications between a lawyer and a client, but will protect internal confidential documents of the client organisation which are produced for the dominant purpose that they or their contents be used to obtain legal advice. This brings Hong Kong's position in line with other major jurisdictions such as Australia, Singapore and the US - though notably not England and Wales.

Although not directly relevant here, the HKCA's decision seems likely to add to the view that the Court of Appeal's decision in Three Rivers is ripe for review, as the courts of so many common law jurisdictions have failed to see the benefit of the Court of Appeal's approach. For the moment, however, corporates should exercise caution: the Three Rivers decision remains binding under English law and could be applied in any given case to limit who within an organisation qualifies as the "client" for the purpose of legal advice privilege. Further, English law does not, at present, apply the dominant purpose test to legal advice privilege: the privilege can apply only to confidential communications between lawyer and client (directly or through an agent). For more information on the HKCA's decision, see this post on our Asia Disputes Notes blog. For more information on the position under English law, see our Handy client guide to privilege, including this section on lawyer/client communications.