No lawyer? No Privilege!

The scope of Legal Professional Privilege ("LPP"), the doctrine that protects from disclosure, communications between clients and lawyers, made for the purpose of seeking and giving legal advice, has been considered and, in some cases refined, in a number of decisions in Hong Kong and other common law jurisdictions over the last decade. The latest such decision comes from the English Supreme Court in R v Special Commissioner of Income Tax [2013] UKSC 1, and concerned an attempt to widen the scope of LPP to include advice sought from and given by non legal professionals, namely tax accountants.

Prudential Plc was requested by the Special Commissioner of Income Tax ("HMRC") to provide various documents in relation to a marketed tax avoidance scheme. Prudential asserted that some of the documents related to tax advice given by its accountants and argued that such documents did not need to be disclosed, as they were protected by a category of LPP, legal advice privilege ("LAP"). Prudential challenged the HMRC's request for these documents by way of judicial review proceedings, but the English High Court and, on appeal, the Court of Appeal, both held that LAP is restricted to advice sought from or given by members of the legal profession and not accountants.

Prudential appealed to the Supreme Court and advanced its case by arguing, amongst other points, that LAP should be based on the function of the communication (i.e. a request for or provision of legal advice) rather than the status of the advisor, and that given that LAP was a common law right created by judges which should be applied and, if necessary, extended so as to accord with the principles underlying and justifying the right, LAP should attach to accountant-client communications concerning legal advice.

The Supreme Court dismissed Prudential's appeal in a 5:2 majority decision. The Court noted that it was universally believed that LAP only applied to communications in connection with advice given by members of the legal profession, and ought not to be extended to communications in connection with advice given by other professionals, even where that advice was legal advice that the professional was qualified to give.

The Court acknowledged that Prudential's argument was a strong one in terms of logic: LAP was conferred for the benefit of clients, and served to protect the client and not the legal profession, and it was hard to see why the scope of LAP should be restricted to communications with legal advisers who happened to be lawyers. The Court nevertheless concluded that, as a matter of policy, LAP at common law should be restricted to communications between a qualified lawyer and his or her client and could not be claimed over communications between a tax accountant and his or her client, for the following reasons:-

Whilst this judgment is not binding on the Hong Kong courts, and it remains to be seen whether a similar challenge to the scope of LPP will be mounted here, it does re-state the current position under Hong Kong law. Clients need to be cautious of the fact that any legal advice which they may obtain from professionals other than qualified lawyers will not be protected by LAP.

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Richard Hudson

Partner | Litigation and Dispute Resolution

Email or call +852 2825 9680