ROCKEFELLER & CO. INC. v. THE SECRETARY FOR JUSTICE AND ANOTHER

HCMP 2344/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 2344 OF 2000

____________

____________

_______________

J U D G M E N T

_______________

1. This is an application, made in miscellaneous proceedings commenced for the purpose, for injunctive relief. It comes in the middle of a voire dire which I am holding in a prosecution against Mr Kevin LEE Kwok Wing. He faces a number of counts of accepting an advantage as an agent, offering an advantage to an agent, conspiracy to accept advantages as an agent and conspiracy to defraud.

2. All of these offences are alleged to have occurred at a time when Mr Lee was in the employ of Rockefeller & Co. (Far East) Ltd, a Hong Kong company which has since been dissolved but which was at the time wholly-owned by Rockefeller & Co. Inc., an American company. I will refer to the Hong Kong company as "Far East" and to the American company as "Inc.".

3. There came a time when Far East and Inc. began to fear that what they believed that Mr Lee had done would expose them or at least one of them to civil proceedings by others; and they then conducted an internal investigation into Mr Lee's conduct. It is Inc. which now seeks injunctive relief. Such relief relates to documents generated by the internal investigation into Mr Lee's conduct.

4. The precise injunctive relief sought is set out as follows in the latest draft order handed to me, which I set out with a verbal qualification made by counsel for Inc.:

"1. Mr Lee whether by himself, his servant or agent or otherwise howsoever be and is hereby restrained from using the privileged documents [more particularly specified in S33(4) Notice of the Securities and Future Commission (with the exception of category (c), (d) and (e)) as exhibited in "JCYM-1" to the Affidavit of Jonathan Chi Ying Mok dated 12 May 2000 in High Court Criminal Case No. 234 of 1998 unless with the leave of the Court;

2. All documents referred to in paragraph 1 of this Order, in the possession of the Secretary for Justice or Mr Lee or their servants or agents or otherwise, be returned forthwith to Rockefeller;

3. The Secretary for Justice and Mr Lee do pay Rockefeller's costs."

5. The verbal qualification is the addition of categories (c) and (e) as categories to be excepted from the order. The s. 33(4) Notice had required production of:

"...all records and documentation obtained in the course of the internal investigation, commissioned by Rockefeller & Co. (Far East) Limited, into the conduct of Mr Kevin Lee Kwok Wing. In particular, such records should include:-

a) all statements and records of interview conducted with Kevin Lee and all other staff of Rockefeller & Co. (Far East) Limited;

b) any tape recordings or contemporaneous notes of all such interviews referred at a);

c) any reports or opinions provided by the forensic accounting team seconded from KPMG Peat Marwick in Hong Kong;

d) copies of all documents, including bank records, relied upon in both the course of conducting the interviews referred to at a) and b), and preparing any reports referred to at c); and

e) any reports submitted by Cleary, Gottlieb, Steen and Hamilton, and/or Johnson Stokes & Master to either Rockefeller & Co. (Far East) Limited and/or Rockefeller & Co., Inc."

6. As I have indicated, the relief sought by Inc. is limited to categories (a) and (b) and does not extend to categories (c), (d) and (e).

7. The prosecution do not propose to use any of the above-mentioned documents. Those documents have however been provided by the prosecution to Mr Lee as unused material. Mr Lee's stance is that he neither opposes nor supports Inc's application, but that if he is prevented from using such material, he would be unable to have a fair trial, and would have to consider seeking a stay of the prosecution.

8. I think that it is useful to begin by referring to two decisions of the House of Lords, R v. Derby Magistrates Court ex parte B [1995] 3 WLR 681 and Re L [1997] AC 16, and the decision of the High Court of Australia in Carter v Northmore Hale Davy & Leake (1995) 183 CLR 121.

9. The facts of each House of Lords case may be taken from its headnote. In the Derby Magistrates Court case:

" In 1978 the applicant went for a walk with a 16-year-old girl, who was later found murdered. The applicant was arrested and made a statement to the police admitting being solely responsible for the murder. Shortly before his trial at the Crown Court for murder he retracted that statement and alleged that although he had been at the scene of the crime his stepfather had killed the girl. The applicant was acquitted. In 1992 the stepfather was charged with the girl's murder and committal proceedings were commenced before the stipendiary magistrate. The applicant gave evidence for the prosecution and repeated his allegation that his stepfather had murdered the girl. Counsel for the stepfather, in cross-examining the applicant, asked about the instructions he had initially given to his solicitors when admitting to the murder. The applicant declined to answer on the grounds of legal professional privilege. An application was thereupon made on behalf of the stepfather, pursuant to section 97 of the Magistrates' Courts Act 1980, for a witness summons directed to the applicant's solicitors requiring production of the attendance notes and proofs of evidence disclosing the relevant instructions. The stipendiary magistrate held that the documents were "likely to be material evidence" within section 97 and, having weighed the public interest in protecting solicitor and client communications against the public interest in securing that all relevant evidence was available to the defence, issued the summons. A second summons to like effect directed to the applicant himself was later issued. The applicant obtained leave to seek judicial review of the stipendiary magistrate's decisions, but the Divisional Court dismissed the applications."

10. In Re L:

" In 1993 L., who was then aged two, was admitted to hospital in an unconscious state having consumed a quantity of methadone. L.'s parents were registered heroin addicts who were receiving methadone on prescription. The mother's explanation was that the child had accidentally drunk the substance from a beaker left carelessly in the kitchen. Having obtained an emergency protection order from the magistrates' court, the local authority instituted care proceedings in the county court pursuant to section 31 of the Children Act 1989. The mother was given leave by the district judge to disclose the court papers to a consultant chemical pathologist, who was to give her an independent opinion as to whether L.'s medical condition when admitted to hospital was consistent with the mother's account of events. The district judge's order required the report to be filed with the court and thereby made available to the other parties. The mother's solicitors thereafter filed the report without any attempt to vary the terms of the order. The area police authority, having learnt of the report's existence, issued a summons in the High Court for leave to be given sight of the report to assist in their investigation as to whether a criminal offence had been committed. The judge held that she had jurisdiction to order disclosure to non-parties and, having balanced the importance of confidentiality in care proceedings against the public interest in the administration of justice and held that the interests of the child lay in the police making an informed decision as to whether a prosecution should follow, exercised her discretion in favour of making an order for disclosure. The Court of Appeal, dismissing the mother's appeal, held that she could not resist disclosure on grounds of legal professional privilege or privilege against self-incrimination."

11. How each of those two cases was decided, unanimously in the first case and by a majority of 3:2 in the second case, may also be taken from its headnote. In the Derby Magistrates Court case:

" On the applicant's appeals:-

Held, allowing the appeals, (1) that the use which could be made in criminal proceedings of a witness's previous inconsistent written statements was governed by sections 4 and 5 of the Criminal Procedure Act 1865, which presupposed that the statements were already available to the cross-examiner to put to the witness so that if he denied making them or denied their inconsistency they could then become admissible evidence; that where the cross-examiner did not have the previous statements to put to the witness they could not be admitted under the Act of 1865 and as such did not meet the requirement of section 97 of the Magistrates' Courts Act 1980 that they were "likely to be material evidence;" that the objection to material not being admitted unless it was already available to the cross-examiner was in accordance with the principle that section 97 could not be used to obtain discovery; and that, accordingly, since the documents sought by the stepfather could not have been admitted under the Act of 1865 and since, further, the object of his application had been to discover what the applicant had said to his solicitor, the conditions for the issue of a witness summons under section 97 had not been satisfied (post, pp. 684D-E, 687G-688A, G-H, 689B-C, 697B, 698B-C).

(2) That, in any event, a witness summons could not be issued under section 97 of the Magistrates' Courts Act 1980 to compel the production of documents subject to legal professional privilege which had not been waived, since the principle that a client should be free to consult his legal advisers without fear of his communications being revealed was a fundamental condition on which the administration of justice as a whole rested; that notwithstanding the public interest in securing that all relevant evidence was made available to the defence, legal professional privilege was to be upheld in all cases as the predominant public interest, even (Lord Nicholls of Birkenhead dubitante) where the witness no longer had any recognisable interest in preserving the confidentiality; and that, accordingly, the applicant had been entitled to claim legal professional privilege (post, pp. 684D-E, 695E-F, 696C-D, H-697A, B, D, G-H, 700B-C, 701B-C)."

12. In Re L:

" On the mother's appeal:-

Held, dismissing the appeal (Lord Mustill and Lord Nicholls of Birkenhead dissenting), that in relation to legal professional privilege a distinction was to be drawn between legal advice privilege, which attached to all communications between legal advisers and their clients and which was absolute, and litigation privilege, which attached only to the written reports of third parties commissioned by the client for the purpose of legal proceedings and which was a component of the courts' adversarial procedure; that since proceedings under Part IV of the Children Act 1989 were investigative and non-adversarial in nature and placed the welfare of the child as the primary consideration, litigation privilege was by necessary implication excluded from the terms and overall purpose of the Act and did not extend to reports obtained by a party to care proceedings which could not have been prepared without the leave of the court to disclose documents already filed; that the question whether an order for disclosure would infringe the privilege against self-incrimination did not arise, since the filing of the report by the mother when aware of its contents and without asserting a claim to privilege amounted to a waiver; and that, accordingly, since the report was not protected by legal professional privilege or privilege against self-incrimination, and since there were no grounds for interfering with the judge's exercise of her discretion, the order for disclosure would be upheld (post, pp. 24G-25B, G, 26G-H, 27D, G-H, 29B-C, 30A-B, E, 37E)."

13. As to what the High Court of Australia held in Carter's case, the headnote reads:

" A person who has in his possession or power documents which are subject to legal professional privilege which is not waived cannot be compelled to produce them on subpoena issued on behalf of an accused person in criminal proceedings even though they may establish the innocence of the accused or may materially assist his defence.

So held, by Brennan, Deane and McHugh JJ, Toohey and Gaudron JJ dissenting."

14. Mr Clive Grossman SC for Inc. has made it clear that the legal professional privilege which Inc. claims is the sort described in Re L as legal advice privilege which attaches to all communications between legal advisers and their clients, rather than the sort described in that case as litigation privilege. In other words, Inc. relies on the sort of privilege which arose in the Derby Magistrates Court case. Mr Grossman adds, however, that the communications involved in the present case were in contemplation of litigation arising out of Mr Lee's conduct.

15. In order for there to be legal advice privilege there has to be communications between client and legal adviser. Since this is Inc.'s application and it is Inc. who asserts the existence of privilege, it is for Inc. to establish the existence of client-legal adviser communications with itself i.e. Inc. as the client.

16. There is no doubt that there were communications with legal advisers. But was Inc. the client making the communications contained in the documents in question? The documents sought by the s. 33(4) Notice were, the Notice states in terms, documents obtained in the course of an internal investigation commissioned by Far East into the conduct of Mr Lee. So it was an internal investigation commissioned by Far East into the conduct of an employee of Far East's; and the Notice also states in terms that the documents sought were ones relating to interviews of that employee, namely Mr Lee, and other employees of Far East's. It does not appear therefore that Inc. was the client making the communications.

17. Mr Grossman says that Far East and Inc. are one and the same. But I must say at once that it is not the law that a company and the person, whether human or corporate, who owns all the shares in that company are generally regarded as one and the same; and no authority has been cited to me showing that they are regarded as one and the same for the purpose of creating legal professional privilege.

18. It is not for me to take either an approach which is strict towards Inc. or an approach which is lenient towards Inc. My task is simply to analyse the legal position from a neutral standpoint. Doing so, I am not persuaded that these communications were made by Inc. as the client. A company acts through human agents. The human agents making these communications were the interviewees. They were the employees of Far East not Inc.; and they were making these communications in an internal investigation commissioned by Far East. The company for which they were agents in making these communications was Far East not Inc. Even for these reasons alone, there is no privilege available to Inc.

19. I will, however, continue. Although Mr Grossman relies on legal advice privilege rather than litigation privilege, he does say that the communications in question were in contemplation of litigation. But that cannot help Inc. if, as I hold, Inc. was not the client making the communications. In any event, there are also other difficulties in Inc.'s way. There is no evidence as to what might be the basis of any litigation against Inc. as opposed to Far East which was the employer of Mr Lee and the other interviewees.

20. Then there is the following point which I propose to note without resolving. I introduce this point by referring to the headnote in Waugh r. British Railways Board [1980] AC 521. The headnote deals with the facts as follows:

" The plaintiff's husband was employed by the defendant railways board. In a collision between Iocomotives, he received injuries from which he died. The practice of the board when an accident occurred was that on the day of the accident a brief report was made to the railway inspectorate, soon afterwards a joint internal report ("the joint inquiry report") was prepared incorporating statements of witnesses, which was also sent to the inspectorate, and in due course a report was made by the inspectorate for the Department of the Environment. The heading of the joint inquiry report stated that it had finally to be sent to the board's solicitor for the purpose of enabling him to advise the board. The plaintiff brought an action against the board under the Fatal Accidents Acts, alleging that the collision had been caused by their negligence, and sought discovery of, inter alia, the joint inquiry report. The board, who denied negligence and alleged that the collision had been caused or contributed to by the deceased's own negligence, refused to disclose the report on the ground, as stated in an affidavit sworn on their behalf, that one of the principal purposes of preparing it had been so that it could be passed to their chief solicitor to enable him to advise the board on its legal liability and, if necessary, conduct their defence to the proceedings, and that it was accordingly the subject of legal professional privilege. On an interlocutory application by the plaintiff for discovery of the report, the master ordered discovery, but an appeal by the board from his order was allowed by Donaldson J., and the Court of Appeal by a majority (Eveleigh L.J. and Sir David Cairns, Lord Denning M.R. dissenting) dismissed an appeal by the plaintiff from Donaldson J.'s order."

21. As to what was decided, the headnote says:

" On appeal by the plaintiff:-

Held, allowing the appeal, that the due administration of justice strongly required that a document such as the internal inquiry report, which was contemporary, contained statements by witnesses on the spot and would almost certainly be the best evidence as to the cause of the accident, should be disclosed; that for that important public interest to be overridden by a claim of privilege the purpose of submission to the party's legal advisers in anticipation of litigation must be at least the dominant purpose for which it had been prepared; and that, in the present case, the purpose of obtaining legal advice in anticipation of litigation having been no more than of equal rank and weight with the purpose of railway operation and safety, the board's claim for privilege failed and the report should be disclosed (post, pp. 531A-B, H-532B, 533B-D, 534F-G, 535B-C, 537E-G, 538A-B, 543C-545A, D-F).

Birmingham and Midland Motor Omnibus Co. Ltd. v. London and North Western Railway Co. [1913] 3 K.B. 850, C.A.; Ankin v. London and North Eastern Railway Co. [1930] 1 K.B. 527, C.A. and Ogden v. London Electric Railway Co. (1933) 49 T.L.R. 542, C.A. overruled.

Anderson v. Bank of British Columbia (1876) 2 Ch.D. 644, Sir George Jessel M.R. and C.A. and Grant v. Downs (1976) 135 C.L.R. 674 considered.

Per curiam. The fact that the report stated on its face that it had finally to be sent to the board's solicitor for the purpose of enabling him to advise it cannot be conclusive as to the dominant purpose for which it was prepared (post, pp. 531A, 538A-B, 539E-G, 545E-F)."

22. In all the circumstances, including the fact that several other Far East employees in addition to Mr Lee himself were interviewed, I would have liked detailed evidence on whether there was any purpose for the communications equal or even greater than the purpose of assessing or resisting claims. It seems inherently likely that a company which suspected its employees of having behaved improperly would want to check its system with a view to guarding against such conduct in future. If that was the case here then the claim of privilege might fail for, quite apart from any other reason, the reason that the purpose of assessing and resisting claims was not the dominant purpose of the communications. Here I note the point in the Secretary for Justice's skeleton argument that "the documents are not privileged because they are not documents which came about as a result of communications between solicitor and client for the purpose of providing legal advice" and that the exercise was "merely ... a fact gathering exercise." This point is one which I leave open.

23. A second point which I leave open is whether privilege could arise so as to apply against someone like Mr Lee who is not a stranger to the matter said to have given rise to privilege, who was the subject of the internal investigation in which the allegedly privileged documents were created, who was interviewed in the course of that internal investigation, and whose statements made when interviewed are among the documents said to be privileged.

24. I turn now to the question of wavier. The argument on waiver is put as follows in the Secretary for Justice's skeleton argument: "... even if legal professional privilege applied, the appellant has waived privilege by providing the documents to the Securities and Futures Commission."

25. I will refer to the Securities and Futures Commission as "the SFC".

26. The letter dated 10 December 1996 from Inc. and Far East's solicitors to the SFC reads:

"As an investigator appointed under s33(1) of the Securities and Futures Commission Ordinance (Cap 24) you have served the above Notice requiring production of various documents. Rockefeller & Co., Inc. and Rockefeller & Co. (Far East) Limited (collectively called "R&Co.") have agreed to provide appropriate documents in compliance with the Notice. It is agreed that the investigation and production of these documents is in the joint interests of the Securities and Futures Commission ("SFC") and R&Co. in obtaining a full understanding of the facts for their mutual benefit.

Documents were provided to the SFC on 6th December 1996 and there is to be ongoing disclosure. In order to protect the confidentiality of the documents, and to maintain the attorney-client and work-product privileges which apply to them, R&Co. hereby expressly reserves its right to assert with respect to all such documents:

(1) that the delivery of the information contained in the documents and any underlying materials to the SFC does not in any way constitute a waiver either in whole or in part of attorney-client privilege or work-product protection;

(2) that their delivery to the SFC does not and will not in any way constitute a waiver of any confidentiality claim R&Co. may have in any subsequent or unrelated criminal or civil proceedings with respect to the information contained in the documents and their underlying materials.

This letter in no way inhibits or restricts the SFC's use of the documents and underlying materials in the discharge of its regulatory responsibilities. In this regard such documents and underlying materials my be used in the SFC's interviews as part of its investigation and enquiries and be disclosed to those persons specified in section 59 of the Securities and Futures Commission Ordinance (Cap 24).

The SFC undertakes that in accordance with the provisions of section 59 of the Securities and Futures Commission Ordinance (Cap 24) the documents and any underlying materials will be kept confidential.

By its execution below, the SFC acknowledges that R&Co. is producing the documents in compliance with the Notice and in reliance upon the terms of this letter."

27. In so far as any privilege may have arisen in the first place, that letter would, despite disclosure of the documents, operate to preserve privilege in them where any civil claims are concerned. I think that the cases of British Coal Corp. v. Dennis Rye Ltd [1988] 1 WLR 1113 and Downey v. Murray [1988] 13 N.I.J.B. 84 show that much. But would the letter operate to preserve privilege despite disclosure in circumstances like the present? The reservation numbered (2) in the letter uses the expression "any subsequent or unrelated criminal or civil proceedings". The expression is not clear. The present criminal proceedings against Mr Lee are subsequent but not unrelated.

28. The letter also says that it "in no way inhibits or restricts the SFC's use of the documents and underlying materials in the discharge of its regulatory responsibilities" and that the "SFC undertakes that in accordance with the provisions of section 59 of the Securities and Futures Commission Ordinance (Cap. 24) the documents and any underlying materials will be kept confidential".

29. So the confidentiality is to be in accordance with s. 59. But the confidentiality provided for in subsection (1) of that section is expressly made subject to certain rights to make disclosure as provided for in subsection (2). In particular, subsection (2)(b) provides that the SFC may disclose information "with a view to the institution of, or otherwise for the purposes of, any criminal proceedings or any investigation, whether under the relevant Ordinances or otherwise, in Hong Kong". That is the precise disclosure which the SFC has made in the present case. The purposes of criminal proceedings include fairness to the accused, and such fairness includes supplying unused material to the accused. All of that is clear law.

30. By virtue of s. 56(3) and (4) of the Securities and Futures Commission Ordinance, legal professional privilege is a ground for refusing to produce documents under a s. 33(4) Notice. Nevertheless there was no refusal here. The chose made was to make disclosure. So there was a waiver here. Such waiver was made subject to a certain reservation. But for the reasons which I have given, that reservation did not extend to the disclosure made in the present case. So if Inc. had any privilege in the first place, such privilege would have been waived in so far as is material in the present case.

31. Accordingly I dismiss Inc.'s application on the grounds (i) that it had no privilege as claimed and (ii) that if it had, then it would have waived the same in so far as is material in the present case.

32. Now I will hear the parties on costs.

[After argument, costs were awarded in favour of the Secretary for Justice and Mr Lee against Inc., with a certificate for two counsel as far as Mr Lee is concerned.]