RMBSA CORPORATE SERVICES LTD AND ANOTHER v. SECRETARY FOR JUSTICE AND ANOTHER

CACV 96/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 96 OF 2009

(ON APPEAL FROM HCMP NO. 1412 OF 2008)

----------------------

----------------------

----------------------

J U D G M E N T

---------------------- 

Hon Tang VP:

1.  This matter concerns documents seized as a result of a search warrant issued by a magistrate on 12 April 2006 under the Mutual Legal Assistance in Criminal Matters Ordinance, Cap. 525.

2.  Previous judicial review proceedings brought by the plaintiffs were unsuccessful and ended when the Court of Final Appeal refused leave to appeal.

3.  The present proceedings were brought on 28 July 2008.  The first order sought by the Originating Summons was:

“1. that the Court do (i) inspect and examine the materials seized by officers of the 2nd Defendant at the premises occupied by both the 1st and 2nd Plaintiffs on 12th April 2006 (‘the seized material’), and (ii) determine whether the seized material or any parts thereof, is or are subject to legal professional privilege ('LPP');”

4.  On 17 November 2008, by a Notice of Appointment to hear Originating Summons, the plaintiffs sought directions for various issues to be determined including whether LPP claimed by the plaintiffs should be judged under the Hong Kong law of LPP or the Philippines law of LPP.

5.  After a contested hearing at which counsel for the defendants contested the relevance of the filing of further expert evidence on the Philippines law of LPP, on 16 December 2008, Wright J made the following order:

“3. the Plaintiffs be at liberty to file and serve expert evidence on or before 16 February 2009 as regards the meaning, scope and extent of legal professional privilege under Philippine law and whether the seized materials referred to in the Originating Summons or any of them are protected by legal professional privilege under Philippine law;” (the Order)

6.  The plaintiffs’ expert report (“the Report”) was filed on 13 March 2009 (after extensions of time). This was given by Mr Hector L. Hofilena, a retired Associate Justice of Court of Appeals in the Philippines.  The Report was made in Manila, Philippines and dated 11 March 2009.  At its end (page 22) under:

“V.    Grounds for objecting to the seizure of particular documents”,

it stated:

“(5) Attached hereto as Annex ‘A’ hereof, are specific objections to the seized documents involved in this matter.”

7.  The Report was filed on 13 March 2009 and as filed contained Annex A.  But the copy which was served on the defendants on the same day did not contain Annex A.  On 16 March 2009, the plaintiffs’ solicitors Messrs. Jonathan Rostron (“JR”) informed the Department of Justice, upon enquiry, that the omission was deliberate.  By letter dated 20 March 2009, JR informed the Department of Justice that the reason for the omission:

“… is that our expert has expressed the view that even a description of the documents as provided in ‘Annex A’ may be considered to be privileged under Philippine law.”

8.  There is a Supplemental Opinion dated 26 March 2009 explaining why Annex A should not be disclosed.  It seems to be asserted that disclosure of Annex A might result in the loss of LPP under the law of Philippines. 

9.  The Department of Justice was not satisfied with the plaintiffs’ stance and by a letter dated 23 March 2009, they requested the court to determine the matter.  In that letter they said:

“3. One of the purposes of the directions Order is to enable the Court, should it find that Philippine law of legal privilege applies, to then inspect the documents and adjudicate the claim based on the expert evidence filed by both sides in relation to the particular documents or classes of documents seized. If the Defendants are unable to see the contents of Annex ‘A’ and have the opportunity to respond, the Court will be deprived of full evidence on the issue.

4.  We do not see why Annex ‘A’ should be withheld from the Defendants when it has been filed with the Court. As the time under which the Defendants are to file their expert report is running and there is a need to resolve this matter expeditiously, we are writing to the Court to request an urgent mention before the trial judge so that the Court can make a determination on the issue. …”

10.  Following a hearing on 31 March 2009.  Wright J decided that Annex A should be served on the defendants forthwith.  This is what the learned judge said:

“2. The Plaintiffs brought the proceedings which gave rise to the order made on 16 December 2008.  They requested that they be at liberty to file and serve expert evidence regarding the meaning, scope and extent of legal professional privilege under Philippine law and whether the seized materials referred to in the originating summons, or any of them, are protected by legal professional privilege. 

3.  They could have filed and served that expert report in a format other than that in which it has been generated.  The fact that the Plaintiffs’ expert chose to do it in the format which he has, which contains an annexure which, in general terms, identifies groups of documents, was his decision.  He being an expert, it must be that he knows the consequences of disclosing the identity of documents and he must be taken, in the circumstances, to have followed the course he did deliberately. 

4.  It seems to me untenable to suggest that the Defendant should not have the annexure to the expert report. 

5.  The two questions I am going to be asked at trial are, firstly, whether legal professional privilege of the Philippines or Hong Kong applies to the documents and, secondly, whichever system of law applies to them, which of the documents, if any, are privileged. 

6.  The Defendants obviously are entitled to be placed in a position to deal with the Plaintiffs’ contentions properly.  To deny them a copy of, effectively, the second leg of the expert’s opinion would be to place them at a completely unacceptable disadvantage, given that that is the format in which the Plaintiffs’ expert has chosen to prepare his report.”

11.  Mr McCoy, SC, who appeared for the defendants on the appeal, submitted that the plaintiffs, having applied for and then successfully obtained the order, has become bound to serve the whole of the expert’s report.  He said:

“They agreed by the Order they procured thereby to waive the privilege in whatever they permitted their expert to file in court, as they knew they were bound to serve the same documentation on the Respondents.”

12.  With respect, I do not agree.  Suppose, when serving the report the plaintiffs had made an express claim to LPP in relation to Annex A, it is difficult to see how the service of the report on the respondents with Annex A deliberately omitted should have been a waiver of LPP, if any.  Here, there was no express claim of LPP to Annex A in the Report, but the deliberate omission of Annex A has the same effect.

13.  Mr McCoy submitted that we are concerned not with the question of waiver but with the fact that by the order the appellants had agreed to file and serve expert evidence.  But the order had not ordered and could not order the appellants to waive any LPP.  I do not believe the fact that Annex A was contained in the Report and there was no express claim to LPP under the law of the Philippines in respect of Annex A in the Report resulted in a waiver of LPP, if any. 

14.  Nor would the supply of Annex A to the court in the circumstances of this case amount to a waiver of privilege.  Indeed, Mr McCoy has not so contended.  He referred us to Great Atlantic Insurance Co v Home Insurance Co. [1981] 1 WLR 529.  There, privilege was held to have been waived in respect of the entire memorandum after counsel had read two paragraphs of it in open court.  It has no application here.

15.  It is said the defendants has been put in an untenable position of disadvantage because it had been deprived of Annex A.  I agree with Mr Philip Dykes, SC that it is in the nature of claims to privilege against disclosure, that the court may have to look at the documents which are not made available to the other side.  Shun Tak Holdings v. Commissioner of Police [1994] 2 HKC 363 at 373G-382B is such a case.  The material supplied may include specific comments on the documents for the assistance of the court.  In Shun Tak Holdings, Kaplan J said:

“Mr Huggins QC repeated an offer which had been previously made to the effect that if, on perusing any of these documents, I should be in a state of uncertainty, he would be pleased to attend before me to explain precisely why the claim to LPP had been made. I was not at all happy at the prospect of an ex parte communication of this nature but Mr Schapel sensibly recognised that I might require assistance and that in those circumstances, he did not object.

On Friday, 29 July 1994, I asked Mr Huggins QC to appear before me to clarify the claim for privilege in relation to some documents and I was satisfied with the explanation he gave. In fact, most of the documents that I queried had already been handed back to the police because it was obvious that they were not covered by privilege.”

16.  In Shun Tak Holdings, counsel for the Commissioner of Police did not object to the ex parte communication.  The power of the court to receive such communication does not depend on the agreement or non objection by the opposing party.

17.  For these reasons, I would allow the appeal.

Hon Cheung JA:

18.  I agree with the judgment of Tang VP. 

19.  Despite the extremely persuasive submission of Mr. McCoy S.C., I think it would be too simplistic to say that the plaintiffs, by obtaining the second part of the order of 16 December 2008, must necessarily have agreed to waive LPP even before disclosure of that part of the expert report which addresses the issue why LPP should be attached to the documents under Philippine law.  This would be contrary to the stand of the plaintiffs who maintain a claim to LPP and whose purpose of seeking the order is to ensure that their claim on LPP is being upheld.

20.  In my view the purpose of the second part of the order is to assist the Court to determine whether LPP applies to the documents seized.  The issue then becomes whether by agreeing to the order, the plaintiffs could no longer be allowed to seek a variation of the order so that Annex A need not be disclosed to the defendants.  If upon obtaining legal advice, the plaintiffs became aware that a disclosure of the nature of the document to the defendants would constitute a waiver of LPP under Philippine law, then they would have to take steps to ensure this would not happen, otherwise it would defeat the very purpose of their application in the first place.  This they could do either by an appeal or by seeking a variation of the order before the Judge.  They chose the latter course.  I do not regard that to be technically not permissible.

21.  To withhold Annex A from being disclosed to the defendants is the only practical way of preserving LPP until the matter is finally determined by the Judge.  The issue then boils down to whether the withholding is unfair to the defendants who would not be able to have their input to the matter.  However, bearing in mind that the Judge when examining the documents himself has the power of asking the plaintiffs alone to assist him (see Shun Tak Holdings v. Commissioner of Police [1994] 2 HKC 363 at 380-381) then the withholding of Annex A from the defendants is not something that can be categorized as being prejudicial to the defendants.  On that basis, the Judge should have allowed the plaintiffs not to disclose Annex A to the defendants.

Hon Tang VP:

22.  The appeal is allowed and we make an order nisi that the costs of the appeal be borne by the defendants, such costs to be taxed if not agreed.  As for the costs of the hearing before Wright J on 31 March 2009, we order nisi that they be in the cause of the action.