Read the full judgment text of CACV 60/2011 on BabelCite. This Court of Appeal judgment was delivered on 28 March 2012 before Hartmann JA, Kwan JA and Harris J.
Civil appeal – legal professional privilege – partial waiver – fraud exception – appeal from HCMP 767/2010 – Citic Pacific Limited listed on Hong Kong Stock Exchange – September 2008 financial crisis – Citic exposed to foreign exchange losses – six-week delay in publishing profit warning on 20 October 2008 estimating losses of approximately HK$15 billion – SFC investigation commenced under Securities and Futures Ordinance Cap 571 – notice served on Citic under s.179 requiring production of records – six documents containing or recording legal advice from Mayer Brown JSM surrendered to SFC – Citic contended waiver of privilege was partial – limited to SFC investigation – documents subsequently passed to Department of Justice – police commenced criminal investigation in March 2009 – Citic sought orders for return of documents or declaration that privilege retained for purposes other than SFC investigation – first instance judge (Wright J) found full waiver of privilege and held fraud exception applied – whether Hong Kong law recognises concept of partial waiver of legal professional privilege – held yes – once privileged document disclosed for limited purpose privilege not lost generally – British Coal Corporation v Dennis Rye Ltd (No 2) and Lord Millett's dictum in B v Auckland District Law Society approved – Rockefeller & Co Inc v Secretary for Justice distinguished as ratio concerned confidentiality not privilege – whether privilege can be lost in criminal proceedings through accident, inadvertence, or surreptitious conduct of a third party – held no – English authorities in Calcraft v Guest, Butler v Board of Trade and R v Tompkins not followed – R v Uljee adopted – privilege is fundamental human right protected by Article 35 of Basic Law – waiver not lightly inferred – whether waiver in this case was absolute or partial – held partial – probabilities support Citic's contention that waiver was for SFC investigation only – no police investigation in contemplation at time of surrender in October 2008 – SFC's subsequent letter dated 30 April 2009 confirming partial waiver supported Citic's position – Citic's letter of 26 November 2008 treated as true statement of original understanding rather than tactical device – whether fraud exception to privilege applies – held does not apply – strong prima facie case of conspiracy to defraud not established – evidence of bank loans between 25 September and 14 October 2008 too thin to demonstrate dishonest concealment – 16 September 2008 announcement not clearly indicative of wilful concealment – legal advice obtained by company and debated by full Board of 16 or 17 directors – inherently unlikely that advice was sought to facilitate conspiracy – subsequent dishonest conduct does not retroactively strip away prior privileged relationship absent fraudulent purpose in seeking advice – appeal allowed – declarations made that Citic waived privilege only for SFC investigation and that SFC may deliver documents to Secretary for Justice for purpose of legal advice to SFC – privilege retained for all other purposes and persons – costs of appeal and at first instance awarded to Citic on order nisi basis.
Legal issues: Whether Hong Kong law recognises partial waiver of legal professional privilege · Whether privilege can be lost in criminal proceedings through accident, inadvertence, or surreptitious conduct · Whether Citic's surrender of documents to the SFC amounted to an absolute or partial waiver of privilege · Whether the fraud (crime/fraud) exception to legal professional privilege applies
Outcome: Appeal allowed. The court declared that Citic had waived privilege in the six documents only for the purpose of the SFC's investigation and for no other purpose; that the taking of legal advice was integral to that investigation and the SFC may deliver the documents to the Secretary for Justice for that purpose only; and that for all other purposes and in respect of all other persons, Citic retained privilege.