by Emi Cheng, Associate Solicitor

In the recent case of Goldlion Properties Ltd & Others v Regent Enterprises Ltd¹ the Court ordered discovery of certain legal advice referred to by the Defendant in its evidence. The case involved the breakdown of an Agreement for Sale and Purchase of a hotel wherein the Plaintiff had paid a deposit but the Defendant failed to complete the Sale.

In its defence, the Defendant submitted that they had obtained legal advice and based on that legal advice, had decided not to proceed with the Sale.

Deputy High Court Judge Saunders found that the Defendant’s conduct in this case was a “clear example of cherry picking by taking a portion of the advice out of context” and by “exposing portions of the advice it has received in order to justify the position it has taken, the Defendant has deployed [emphasis added] the advice in its defence.”

What is the significance of the word “deployed” in this context?

First, let us examine the position on legal professional privilege.

Legal Professional Privilege - what exactly does it cover?

The purpose of legal professional privilege, in summary, is to encourage a litigant to confide in his/her legal advisers without the fear of having the communications disclosed.

Communications made to and from a legal adviser (which, in this context, includes Barristers, Solicitors and legal executives) for the purposes of obtaining legal advice, are generally protected from disclosure in the course of legal proceedings.

This general rule is subject to the following principles²:-

1. the legal adviser must be acting in his/her capacity as a legal adviser i.e. communication between friends would not be covered unless the “friend” was acting in his/her professional capacity;
   
2. where the information provided amounts to some fraudulent or illegal purpose;
   
3. when the privilege is waived by the client and the client permits disclosure;
   
4. where the communication is made for the purpose of being repeated to another party.
   

Waiver of privilege will not be inferred lightly; the general rule is that a document once privileged is always privileged. For example, privilege does not cease in respect of communications between a legal adviser and a client relating to an action which is not ultimately proceeded with nor does it cease upon the death of a client as the deceased’s privilege can be claimed by his successor in title.³

So when is privilege - in particular, legal advice - waived?

The Courts have taken the view that where a legal advice is referred to in an Affidavit, a distinction must be made as to whether or not the contents of the legal advice is being relied upon or the effect of it.

At first sight, it would appear that such distinction is rather artificial and difficult to comply with in practice.⁴ One has to bear in mind that under the Rules governing Civil Procedure in Hong Kong, a deponent to an Affidavit must always identify the source and grounds of his information which he/she intends to rely upon for the evidence to be admitted as admissible. Further, one has to question what good it would do to simply refer to legal advice (for example, who provided the legal advice and when it was provided) and not refer to its contents.

The cases however seem to indicate that where an Affidavit quotes the contents of the legal advice or summarises them, then the Courts would be more inclined to conclude that the Affidavit has “deployed” the advice.

The rationale behind this is summarized in the decision of Mr Justice Mustill in the case of Nea Karteria Maritime Co., v. Atlantic & Great Lakes Steamship Co⁵ where he stated:

So if a deponent decides to quote and/or summarise the legal advice in his/her evidence, then he/she would have been taken to waive the privilege accorded to that document, otherwise it would be unjust for the opposing party to have a glimpse of what the legal advice was about and not have the opportunity to review the whole advice.

This principle has been followed in the recent decision of Goldlion (mentioned above) and other authorities decided in England.⁶

In conclusion, it is quite clear that clients and legal advisers must make a conscious decision as to whether or not to rely upon the contents of the legal advice to advance their claim/defence with the risk that it may need to be disclosed to the other party, or to simply rely upon the “effect” (albeit a limited one at that) of the legal advice or to delete reference to the legal advice in its entirety.

1. [2005] HKEC 518
   
2. Halsbury’s Laws of Hong Kong Volume 5(1) Paragraphs [90.0581] and [90.0582]
   
3. Haslbury’s (as above) [90/0595]
   
4. Matthews and Malek on Discovery 1992 Edition Paragraph 9.15
   
5. [1981] Com LR 138
   
6. e.g. Great Atlantic Insurance Co v. Home Insurance Co and others [1981] 2 All ER 485 and Derby & Co Ltd v. Weldon and others (No 10) [1991] 2 All ER 908