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

HCMP1412/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1412 OF 2008

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RULING

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1. These proceedings have their origin in a request by the Government of the Republic of the Philippines made pursuant to an agreement between it and the Hong Kong Special Administrative Region of the People's Republic of China (the Treaty) concluded by virtue of the provisions of the Mutual Legal Assistance in Criminal Matters Ordinance, Cap. 525 (the Ordinance).

2. In connection with a criminal investigation in the Philippines said to emanate from acts of corruption connected with the construction and operation of a new terminal at the international airport in Manila, the Department of Justice received a request for assistance in January 2006. An application was made, pursuant to s. 12 of the Ordinance, to a magistrate for the issue of a search warrant relating to two British Virgin Island corporations. The Independent Commission Against Corruption was required to execute the search warrant at the offices of the 1^st plaintiff.

3. It was known that the 1^st plaintiff’s offices were shared with the 2^nd plaintiff, which is a Philippines-based law practice registered and practicing as foreign lawyers in Hong Kong, advising on Philippines law. It appears that the documents and records in the possession of the two plaintiffs were not clearly separated in the premises (see the judgment of Stock VP in CACV327/2006 §§32 and 37-42).

4. The search warrant was executed on 12 April 2006: under its authority a number of documents were seized. Thereupon the 2^nd  plaintiff, purporting to act on behalf of clients, indicated that objection was taken to the seizure of all of the documents on the ground that they all would be subject to legal professional privilege according to Philippines law. The documents were consequently sealed without inspection by the ICAC: they remain so sealed.

5. The plaintiffs then attacked the validity of the search warrant. This took the form of a judicial review which was heard in early August 2006. Hartmann J handed down his judgment on 10 August 2006 (HCMP1412/2008) in which he dismissed the application and ordered the plaintiffs to pay the defendants’ costs. The plaintiffs appealed that decision. The appeal was heard on 14 November 2007: the Court of Appeal handed down its judgment on 14 February 2008 (CACV327/2006) in which it dismissed the appeal and ordered the plaintiffs to pay the defendants’ costs.

6. Both in the hearing of the application before Hartmann J and in the appeal reference was made to the claim of legal professional privilege although, at that stage, that did not form the basis of the proceedings.

7. On 28 July 2008 the plaintiffs instituted the present proceedings in which they sought, inter alia, an order that this court inspect the seized documents and determine whether they are subject to legal professional privilege; an injunction over the use of any document or information pending inspection as well as a prohibition against sending documents out of the jurisdiction of this court; surrender of any documents subject to privilege.

8. On 6 December 2008 I made an order for directions which included an order allowing expert evidence to be filed in respect of the law in regard to legal professional privilege as applied in Philippines and a direction to determine, as a preliminary issue, whether the laws of Hong Kong or the laws of the Republic of the Philippines relating to legal professional privilege applied to the seized documents. It was contemplated at that time that once the applicable regime had been determined the documents would then be inspected by this court for the purposes of determining which were and which were not protected.

9. The plaintiffs provided evidence by their selected expert which, without oversimplification, asserted that every document seized would be subject to legal professional privilege if Philippines law were to apply to them.

10. He went substantially further than it appears even the plaintiffs anticipated as he expressed the view that the mere fact of inspection by this court, purely for the purpose of determining whether or not the documents were privileged, would have the effect, according to Philippines law, of breaching that privilege. This was contrary to the relief claimed. I find that an extraordinary proposition as, taken to its logical conclusion, it would mean that no document ever need see the light of day and the mere assertion of privilege decides the claim, which would fundamentally undermine a court’s ability to regulate proceedings before it. However it is not relevant to the issue which I need determine at this stage.

11. As a consequence, at the request of the plaintiffs, and without objection by the defendants, on 4 November 2009 I ordered that inspection of the documents stand over.

12. For the purpose of this ruling I assume, obviously without hearing oral evidence, that the plaintiffs’ expert is correct at least insofar as his assertion that every document would be covered is concerned. At the risk of stating the obvious, the plaintiffs assert that it is Philippines law which governs the issue of privilege whilst the defendants contend that it is Hong Kong law. In my judgment, the defendants are correct.

13. It is uncontroversial that if a document is subject to legal professional privilege it is protected from seizure and/or disclosure to any third party.

The Ordinance

14. The plaintiffs directed a substantial part of their argument towards the provisions of s. 10 of the Ordinance which relates to "Requests to Hong Kong for taking of evidence, etc.", a section which falls under Part II of the Ordinance, which is entitled "Assistance in relation to taking of evidence and production of things". The request in this matter, however, was not made under s. 10 but under s. 12 which is expressed as relating to "Requests to Hong Kong for search and seizure" and falls under Part III of the Ordinance, styled as "Assistance in relation to search and seizure".

15. Section 12 provides, in its relevant portions:

1) Where-

(a) a criminal matter involving an external serious offence has commenced in a place outside Hong Kong;

(b) there are reasonable grounds to believe that a thing (including a thing belonging to a class of things) relevant to the criminal matter is located in Hong Kong; and

(c) an appropriate authority of that place requests the Secretary for Justice to arrange for the issue of a search warrant under this section in relation to that thing, the Secretary for Justice may nominate in writing an authorized officer to apply to a magistrate for the search warrant so requested. (Amended L.N. 362 of 1997)

(2) Where an authorized officer... has reason to believe that the thing to which the request relates is...-

...; or

(e) upon or in any premises,

the relevant officer may-

(i) lay before a magistrate an information on oath setting out the grounds for that belief; and
(ii) apply for the issue of a warrant under this section.

(3) Where an application is made under subsection (2), the magistrate shall, subject to subsection (4), issue a warrant authorizing an authorized officer (whether or not named in the warrant), with such assistance, and by such force, as is necessary and reasonable to do such of the following as are specified in the warrant-

(a)…;

(b) to enter upon land, or upon or into premises, specified in the warrant;

(c) to search any such land or premises for the thing; and

(d) to seize any thing found in the course of any such search that the relevant officer believes, on reasonable grounds, to be relevant to the criminal matter in the place outside Hong Kong concerned.

(4) A magistrate shall not issue a warrant under this section unless-

(a) …; and

(b) the magistrate is satisfied that there are reasonable grounds for issuing the warrant.

(5) ...

(6) ...

(7) Where an authorized officer... seizes wholly or partly because he believes the thing on reasonable grounds to be relevant to the criminal matter in the place outside Hong Kong concerned, the authorized officer shall deliver the thing into the custody and control of the Commissioner.

(8) Where a thing is delivered into the custody and control of the Commissioner under subsection (7), the Commissioner shall arrange for the thing to be kept for a period not exceeding one month from the day on which the thing was seized pending a direction in writing from the Secretary for Justice as to the manner in which the thing is to be dealt with (which may include, subject to subsection (11), a direction that the thing be sent to an appropriate authority of a place outside Hong Kong).

(9) ...

(10) …

(11) The Secretary for Justice shall not give a direction under subsection (8) that the original of a thing be sent to the appropriate authority of a place outside Hong Kong unless-

(a) the appropriate authority of the place has, not more than 1 month after the thing was seized, given the Secretary for Justice a notice in writing setting out the grounds on which the original of the thing is required for the purposes of the criminal matter concerned in that place; and

(b) in any case where the Secretary for Justice is of the opinion, after considering all the circumstances, that the original of the thing should be returned to Hong Kong upon the conclusion of the proceedings relating to that criminal matter, the appropriate authority has given an unqualified undertaking to the Secretary for Justice that the original of the thing will be so returned.

16. Section 2(10) of the Ordinance is in these terms:

“(10) Subject to subsection (11), nothing in this Ordinance shall require the disclosure of any items subject to legal privilege within the meaning of section 13.”

thus preserving to documents seized under s. 12 the benefit of legal professional privilege as defined in s. 13, which reads as follows:

“"items subject to legal privilege" means-

(a) communications between a professional legal adviser and his client or any person representing his client made in connection with the giving of legal advice to the client;

(b) communications between a professional legal adviser and his client or any person representing his client or between such an adviser or his client or any such representative and any other person made in connection with or in contemplation of legal proceedings and for the purposes of such proceedings; and

(c) items enclosed with or referred to in such communications and made-

(i) in connection with the giving of legal advice; or

(ii) in connection with or in contemplation of legal proceedings and for the purposes of such proceedings,

when they are in the possession of a person who is entitled to possession of them, but excluding, in any case, any communications or item held with the intention of furthering a criminal purpose.”

17. That definition, in my judgement, would be an accurate statement of the concept of legal professional privilege as it is understood and applied in Hong Kong. Section 13 contains no provision, or language, which suggests that any law other than Hong Kong law should be considered when determining whether a document seized under s. 12 is subject to privilege, not does s. 12.

18. The plaintiffs’ submissions in regard to s. 10 highlight the fact that that section contains the following provision:

“(7) For the purposes of this section, a person who is required to give evidence, or produce a thing, for the purposes of a criminal matter in a place outside Hong Kong, is not compellable to answer a question, or produce a thing, that the person is not compellable to answer or produce, as the case may be, in the criminal matter in that place.”

19. That the legislature saw fit to incorporate provisions of this nature in s. 10, s. 10(7) including but not being limited to the production of a document protected by legal professional privilege, yet to omit it from s. 12 is a clear indication that the legislature intended that such provision would not apply to documents seized under s. 12.

20. The plaintiffs contend that the seized documents are also protected by virtue of the provisions of the Treaty, which is contained in Mutual Legal Assistance in Criminal Matters (Philippines) Order, Cap. 525. They make reference specifically to art VIII entitled "Obtaining of evidence, articles and documents" and in particular to paragraph 5 thereof which, the plaintiffs contend, provides a form of "double protection" in the sense that a person required to give evidence, which includes producing documents, may decline to do so where the law of either the requesting party (Philippines) or the requested party (Hong Kong) would permit him to do so.

21. However, that submission pays no regard to the provisions of art XVII which is entitled "search and seizure" and is worth reproducing in full:

“(1) The Requested Party shall insofar as its law permits carry out requests for search, seizure and delivery of any material to the Requesting Party provided the request contains information that would justify such action under the law of the Requested Party.

(2) The Requested Party shall provide such information as may be required by the Requesting Party concerning the result of any search, the place of seizure, the circumstances of seizure, and the subsequent custody of the property seized.

(3) The Requesting Party shall observe any conditions imposed by the Requested Party in relation to any seized property which is delivered to the Requesting Party.” [emphasis supplied]

22. The Treaty thus, in effect, repeats the position under the Ordinance of drawing a distinction between the giving of evidence and production of documents where privilege conditions are specifically preserved, on the one hand, and the searching for and seizure of documents on the other. It follows that the Ordinance and Treaty are consonant with one another.

23. Moreover, the reference in art XVII (1) to the search, seizure and delivery of seized material being carried out "insofar as the requested party's law permits", in my opinion, clearly invokes the domestic law of the requested party in those proceedings. It would be artificial then to exclude from those proceedings the decision as to which documents are covered by privilege by applying the law of the requesting party.

The Legal Practitioners Ordinance

24. Some further, albeit limited, support is to be found in s. 39A(2) of the Legal Practitioners Ordinance, Cap. 159, that being the Ordinance under which the 2^nd Plaintiff is registered in Hong Kong. It provides:

“Solicitor-client privilege exists between a foreign lawyer and his client to the same extent as the privilege exists between a solicitor and his client.”

25. Although of minimal relevance in respect of proceedings of this nature, it is plain that the legislature perceived the need to delineate the extent of legal professional privilege where foreign lawyers practising in Hong Kong are concerned and stipulated it as existing to “the same extent” as between a Hong Kong solicitor and his client, thereby intentionally extending that protection if the protection afforded in the foreign lawyer’s home country was less than that afforded in Hong Kong or limiting it to the same as that available in Hong Kong if, in the foreign lawyer’s home country, it would have been greater.

26. I recognise, of course, that that provision applies only to proceedings brought in Hong Kong but it is not without significance that the legislature found it necessary to enact the provision in this form: it is consistent with the approach adopted in the Ordinance and the Treaty.

Choice of the lex fori

27. The plaintiffs accept that the English courts have construed, and continue to construe, the effect of legal professional privilege by reference to the lex fori, on the basis that the privilege is a procedural right.

28. The application of domestic law to the issue of privilege is well-illustrated in Lawrence v Campbell (1859) 4 Drewry 458, in which an issue arose as to non-production of confidential communications between a Scotch solicitor and law agent practising in London, although not admitted as an English solicitor, and his client in Scotland. The Vice Chancellor said, at p. 188:

"A question has been raised as to whether the privilege in the present case is an English or Scottish privilege; but sitting in an English Court, I can only apply the English rule as to privilege, and I think that the English rule as to privilege applies to a Scotch solicitor and law agent practising in London, and therefore the letters in question are privileged from production."

29. The plaintiffs contend, however, that other jurisdictions now regard the right not merely as procedural but as substantive: by way of illustration they refer to the Australian decision of Baker v Campbell (1983) 153 CLR 52; the Canadian decision of Descôteaux et al v Mierzwinski 1982 1 SCR 860; the decision in the United States of  Republic Gear v Borg-Warner Corporation 381 F 2 551 (2nd Circuit).

30. The plaintiffs further refer to the observations of Hartmann J in the earlier appeal proceedings between these parties in HCMP1412/2008 as well as the judgement of Bokhary PJ in Akai Holdings Ltd (in liquidation) v Ernst & Young [2009] 2 HKC 245, contending that these decisions indicate that Hong Kong courts now recognise legal professional privilege as a substantive right, particularly one protected by the provisions of art 35 of the Basic Law as extended by art 41.

31. They submit further that, as a consequence, the traditional view that establishment of a claim to legal professional privilege should be determined according to the lex fori is no longer a valid approach; that given its “recognition” by the Hong Kong courts as a substantive right in the domestic context, it is axiomatic that similar recognition must be afforded it in the context of private and public international law.

32. The words of Lord Scott of Foscote in Three Rivers DC v Bank of England (no 6) [2004] 3 WLR 1274 at §26 are worth recalling in this context:

“…legal advice privilege gives the person entitled to it the right to decline to disclose or to allow to be disclosed the confidential communication or the document in question. There has been some debate as to whether this right is a procedural right or a substantive right. In my respectful opinion the debate is sterile. Legal advice privilege is both. It may be used in legal proceedings to justify the refusal to answer certain questions or to produce for inspection certain documents. Its characterisation as procedural or substantive neither adds to nor detracts from its features.”

33. The plaintiffs suggest that the extension of the applicability of legal professional privilege is demonstrated by the judgment of Allsop J in the Federal Court of Australia in Kennedy v Wallace [2004] FCA 337, where, at §§198 to 208 he discusses the application of legal professional privilege involving foreign lawyers. It is to be noted that the remainder of the court expressed their "... general agreement..." with his observations and that Allsop J himself recognised his views as "... not necessary for the disposition of the appeal on the view that [he took] of the facts...". I see no necessity in the circumstances to burden this judgment by quoting his views.

34. As pertinent as Allsop J’s observations may well be in modern times, I see nothing in them nor, with respect, in the Hong Kong authorities to which I was referred, that changes the basic principle enunciated in Lawrence v Campbell.

Obtaining information via "the back door"

35. The plaintiffs suggest that to allow the Philippines authorities to obtain evidence simply because the documents have been seized in Hong Kong, when those same documents would not have been available to the authorities because they would not have been subject to seizure due to the existence of legal professional privilege had they been present in the Philippines, would be to allow the Philippines to obtain evidence by a “backdoor route”. That does not seem to me to be either an appropriate description or a persuasive argument.

36. First, the documents could have been retained in the Philippines and not transmitted to a jurisdiction with a lower domestic level of protection - consequently, if the Philippines authorities obtain information which they otherwise might not have been able to access, it is the conduct of the plaintiffs’ clients themselves which gave rise to that situation; secondly, whether documents which would not be covered by that privilege in Hong Kong are, as a matter of fact, subject to it in the Philippines is a matter which still could, and should, be determined by the courts of the Philippines or by whatever procedure exists there. I can conceive of no reason why documents which are seized in Hong Kong cannot be transmitted under seal to enable this to occur.

Conclusion

37. The documents which are claimed to enjoy legal professional privilege were present in this jurisdiction presumably with the consent of the clients now claiming privilege. They were seized in this jurisdiction. That seizure was effected under Hong Kong legislation which resulted in the issue of a search warrant by a Hong Kong magistrate.

38. The determination as to whether legal professional privilege applies to some or all of the documents inevitably falls to be decided, in my judgment, on the basis of Hong Kong law.

39.  There will be an order nisi, returnable within 14 days, that the plaintiffs pay the defendants costs, as taxed or agreed.