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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:-


The consequence of extending LAP to legal advice provided by professionals other than lawyers was hard to assess;


The extension would lead to uncertainty in the application of the existing privilege rule, which is clear and well-understood, and would be an extension beyond what had for a long time been understood to be the limits of LAP;


 Extending LAP is a question of policy to be considered by the legislature, not the judiciary;


 Parliament had in fact extended LAP on three occasions to certain other professions, including patent attorneys and trademark agents, but had not chosen to extend LAP to accountants giving tax advice. This suggested that it was inappropriate for the Court to extend the law relating to LAP.


Where a common law rule was valid in the modern world, but had an aspect or limitation that appeared to be outmoded, it was by no means always right for the courts to modify the aspect or remove the limitation.

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

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