Longin Investment Ltd v. Johnson Stokes & Master (A Firm)

1994 No. A4149

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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BETWEEN

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Coram: The Hon. Mr. Justice Stone in Court

Dates of hearing: 12 - 24 February 1997

Date of Delivery of Ruling: 19 February 1997

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R U L I N G

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1.  I do not intend to give a detailed ruling in this case. The point before the Court is one of some very real complexity and it has arisen, unfortunately, right in the middle of the trial. For the moment I make no comment about that. I will doubtless hear submissions in the fullness of time. Let me, however, concentrate on the particular point at issue. It is a discovery point.

2.  The Defendant's solicitors, Messrs. Herbert Smith, on behalf of the Defendant Johnson Stokes & Master have, in my view perfectly properly, through their counsel Mr. Faulkner, taken a point on legal professional privilege attaching to JSM' s erstwhile clients Mr. Iwasawa and Trizone Ltd.

3.  As a result of a line of questioning which arose yesterday between Mr. Barlow, counsel for the current Plaintiff, and Mr. Francis CHAN, the erstwhile solicitor of JSM, it became clear that there were a number of documents, the existence of which did not immediately appear on the face of the list of documents in this case, but for which legal professional privilege was claimed.

4.  Mr. Faulkner, whose submissions as always are of great assistance to the Court, went out of his way to tell the Court that he felt bound to take the point on behalf of Messrs. Iwasawa and Trizone, but that it was their privilege and he could not concede, as he otherwise may have wished to do, the production of documents which came into existence in the underlying action when Mr. Francis CHAN of JSM was advising Mr. Iwasawa. As to these documents, the industry of Mr. Faulkner's instructing solicitors produced a list of the same for which the privilege point has now been taken.

5.  The more one looks at the cases, in this area the more complex the issue is. Had the matter arisen in the context of the normal interlocutory process, I dare say it would have been a day's argument with the assistance of skeleton arguments, possibly more, and certainly not something to be ruled on without further thought.

6.  The crux of the point is this: is legal professional privilege immutable forever and a day? I do not think so. Mr. Barlow, who has argued with great skill on the point, accepts the broad underlying principle, reiterated in the cases, of the public interest and the preservation of legal professional privilege. He points out, however, that the privilege in this case arises not in this action but in the underlying proceedings. He points me to the content of Mr. Francis CHAN's witness statement, where paradoxically many of the documents which have now been discovered in the 4th Supplemental List of Documents are actually referred to in some detail. He argues implied waiver. I think there may be something in this point, although I have not had a chance fully to reflect on this interesting submission in an application which, through no fault of his, has been made on the hoof, as it were.

7.  I am much influenced by the words of Lord Bingham in Ventouris v. Mountain [1991] 1 WLR, 611 at "h", to the effect that, "Our system of civil procedure is founded on the rule that the interests of justice are best served if parties to litigation are obliged to disclose and produce for the other party's inspection all documents in their possession, custody or power relating to the issues in the action" , and that, of course, legal professional privilege is a necessary exception. Mr. Iwasawa and Trizone are clearly not parties to this action, they were parties to the underlying action .

8.  So far as I am able to see on a very short perusal of a very complex area, the statement of the immutable supremacy of legal professional privilege appears in cases in which the matter is the crux of the issue in those particular proceedings. R. v. Derby Magistrates' Court ex parte B, [1995] 4 All ER 526 (HL) is a classic example where the supervening principle of the absolute and permanent nature of the privilege was held to hold sway over any other consideration.

9.  This is not such a case, however. The privilege we have been talking about in this case is a privilege relating to instructions the existence of which have throughout been referred to in Mr. CHAN's witness statement, and which, more to the point, existed and came into being in the underlying action.

10.  I have read with great interest during the luncheon adjournment, the speech of Lord Nicholls in R. v. Derby Magistrates' Court ex-parte B, op.cit. It was of course obiter because the situation he canvassed, at 545h to 546g, namely the very last part of his speech, simply did not arise for direct consideration in that case. But what he does there talk about is the concept of a "spent privilege."

11.He says as follows at 546b:

"Non-availability of the privilege where the client no longer has an interest to protect would not depend upon carrying out any form of balancing exercise, weighing one interest against another.

It would depend on proof that no rational person would regard himself as having any continuing interest in protecting the privilege of confidentiality in the originally privileged material. In other words, the privilege has become spent."

12.  The concept of the privilege becoming "spent" is reinforced by the waiver of the privilege with regard to the contents of what I will call the conveyancing file in this case, which waiver was rehearsed in a letter from Messrs. Herbert Smith to Messrs. Deacons of the 10th of April, 1995.

13.  I cannot, in all honesty, see that Mr. Iwasawa and/or Trizone, in all the particular circumstances of this case, has or can have any residual interest that is necessary to be protected, bearing in mind the principle, which is very much the golden thread in our civil procedure, of the importance to be attached generally to legal professional privilege.

14.  Indeed, Mr. Barlow may be right in his alternative submission that if the matter were to be tested by the issue at this stage of a subpoena duces tecum to Mr. Iwasawa and Trizone, quite possibly in the circumstances they could be required to produce the documents for the Court. But all this is hypothesis.

15.  At the end of the day, I have a situation before me which has arisen at mid-trial whereby documents in underlying proceedings are inferentially referred to in a witness statement, and where the point is (quite properly) taken by those instructing Mr. Faulkner, and by Mr. Faulkner on behalf of JSM' s erstwhile client, but where, in truth and in fact, the Defendant in these proceedings, Messrs. JSM, has no personal interest in keeping these documents out.

16.  This has been a stimulating argument, and on the short exposure to the authorities I have had, I am by no means certain that the legal analysis is correct, although I tend to think it is. In any case, if I be wrong, I hope that I have been wrong clearly.

17.  So I am going to order, and now so do, that the documents which have been itemised in the list of documents handed to Mr. Barlow this morning by Mr. Faulkner, pursuant to my earlier order that this should occur, be disclosed to the Plaintiff, in short order. Whether this can be achieved this afternoon or not is a matter of mechanics.

18.  This has been a troubling matter and in many ways an argument that strikes at the very root of the way we conduct civil litigation. This is also a very sensitive case where serious allegations are being made against a reputable firm of solicitors in town by, in effect, another reputable firm. On reflection, I consider that the interests of justice are best served by the order I have now made.

Mr. Barry Barlow instructed by Messrs. Deacons Graham & Jones, for the Plaintiff

Mr. Raymond Faulkner instructed by Messrs . Herbert Smith, for the Defendant