Ipsofactoj.com: International Cases [2002] Part 5 Case 4 [NZCA]


COURT OF APPEAL, NEW ZEALAND

Coram

Auckland District

Law Society

- vs -

Russell McVeagh

McKenzie Bartleet & Co

ELIAS CJ

GAULT J

KEITH J

TIPPING J

McGRATH J

16 OCTOBER 2001


Judgment

Elias CJ

(dissenting)

  1. Legal professional privilege protects from disclosure confidential communications between a client and his legal adviser for the purpose of legal advice. Such protection is essential if advice is to be candidly informed and given. Where the advice is sought in connection with litigation, the privilege is an important part of the fundamental right of unimpeded access to the courts. Even where litigation is not immediately in prospect, the privilege recognises the public benefit in legal professional assistance if members of the community are to avoid disputes and order their affairs lawfully. As such, it supports the principle of legality upon which our society is organised. Legal professional privilege is subject to exceptions. It does not protect advice for purposes of fraud or illegality. And it may be limited by legislation. In the absence of express statutory language, such an important protection could be displaced only by statutory implication which, as a matter of interpretation of the statute, is clearly necessary. Since the propositions do not appear to be contentious, I do not attempt any review of the case law which supports them. Sufficient authority for present purposes is to be found in R v Uljee [1982] 1 NZLR 561; Commissioner of Inland Revenue v West-Walker [1954] NZLR 191; R v Home Secretary, exparte Leech [1994] QB 198, 210 per Steyn LJ; R v Secretary of State for the Home Department, exparte Daly [2001] 3 All ER 433, 438-439 per Lord Bingham (approving exparte Leech).

  2. The principal question raised by the appeal is whether the common law legal professional privilege of solicitors who seek legal advice in litigation to which they are parties is removed by the Law Practitioners Act 1982 for the purposes of an investigation of a complaint of professional misconduct. No provision of the Act expressly requires that result. I do not consider that the Act, properly construed, removes the privilege as a matter of necessary implication. For reasons which are slightly different to his, I agree with the provisional conclusion of Tipping J on the point. I would decide the appeal on that basis. Since I have also had the advantage of reading in draft the judgment of McGrath J which fully traverses the background and sets out the legislation, I can be brief in explaining why.

  3. On the second question raised by the appeal, I agree with Tipping J and for the reasons he gives that Paterson J was correct to hold on the facts that privilege in the documents, if established, was not waived by Russell McVeagh.

  4. The Auckland District Law Society relies upon the power given by s101(3) of the Act to compel production for inspection of documents in the possession or control of the solicitors complained against. This power is invoked both as an answer to the claim by Russell McVeagh for return of documents said to be privileged and as authority for the Society’s counterclaim for a declaration that Russell McVeagh is required to produce the documents. In both the claim and counterclaim s101(3)(d) is relied upon as a statutory override of the common law legal professional privilege.

  5. The documents in issue are said to have been created for the purposes of obtaining legal advice from and representation by counsel in legal proceedings to which the firm was a party. The documents have not been inspected by the Court. Whether the claim of legal professional privilege is validly made and whether it is subject to any common law exception (such as fraud or, arguably, because the documents themselves constitute the misconduct in issue) remains to be determined in the High Court.

  6. Section 101(3)(d) may be invoked by a District Committee inquiring into a complaint made under s98 or investigating professional misconduct of its own motion under s99. It empowers the District Council or its complaints committee to "require the production for inspection .... of any books, documents, papers, accounts, or records that are in the possession or under the control of the person complained against .... and that relate to the subject-matter of the inquiry". The sanction for failure to comply with a requirement of the District Council of committee for production under s101(3)(d) is provided by s101(6):

    Every practitioner shall be guilty of misconduct in his professional capacity who, without lawful justification or excuse, refuses or fails to comply with any lawful requirement of a District Council or committee under this section.

  7. In my view, far from excluding the protection of legal professional privilege by necessary implication, s101(6) preserves it. "Lawful justification or excuse" as a matter of ordinary use of language must include any justification or excuse recognised by law. Legal professional privilege is a lawful justification or excuse for refusing to comply with compulsory disclosure unless the compulsory disclosure regime expressly or by necessary implication excludes it. Some support for this view can be found in Taylor v New Zealand Poultry Board [1984] 1 NZLR 394, 404 per Cooke J and in Corporate Affairs Commission of New South Wales v Yuill (1991) 172 CLR 319, 338-339 per Gaudron J and 347-348 per McHugh J (both dissenting).

  8. There is no express exclusion of legal professional privilege. The judgment of the majority finds an implied exclusion in the provisions of s127 which is said "to express the entire coverage area of preserved privileges". This conclusion is apparently based on the principle of construction that express reference in one provision limits the scope of another more general provision to exclude the subject expressly dealt with. Further support is gained from the legislative history.

  9. In my view, s127 does not deal exclusively with the scope of privilege in respect of evidence or disclosure under the legislation. It is, rather, principally concerned with the privileges and immunities which protect judicial process.

  10. By common law those who participate in judicial proceedings (as witnesses, counsel, judges, jurors, or solicitors) are protected from civil actions arising out of pleadings, evidence, statements or submissions. In defamation claims, for example, statements in court proceedings have absolute privilege. Witnesses, parties, and solicitors are privileged from arrest on civil process while attending court. A witness is protected from civil proceedings in respect of the evidence given in court and this immunity is not confined to actions for defamation.

  11. Such immunities and privileges are to be distinguished from evidentiary privilege, which is the right to refuse to disclose evidence relevant to the determination of an issue in court. They arise when application has been made to a court and protect all stages of the proceedings. They are based upon the public interest in the administration of justice.

  12. The immunities and privileges which protect judicial process have been extended beyond courts to other tribunals acting judicially. Such extension has sometimes been achieved by the common law, but is often expressly provided for in the statutes setting up the tribunals and conferring their functions.

  13. Section 127 is such express provision for the purposes of disciplinary proceedings under the Law Practitioners Act. It deals with the immunities and privileges of witnesses and counsel in proceedings. Sections 137 and 189 provide wider protection for Tribunals, Law Societies and others in inquiries, investigations and proceedings.

  14. The inclusion of s127 does not indicate a limit to the circumstances in which evidential privilege can be claimed under s126 of the Act. It is directed at a different concern, as indeed the heading to the section ("Immunity of witnesses and counsel") suggests. There is no necessary implication from the inclusion of s127 in the Act that legal professional privilege does not justify resistance to the compulsory disclosure provisions contained in s101(3) or s126(1). Indeed, ss126(5) and 101(6) are to opposite effect in their recognition of lawful justification or excuse as a ground for resisting compulsion.

  15. Evidential privilege is in my view preserved by s126(5) in the case of witnesses in disciplinary proceedings under the Act and it is preserved by s101(6) in respect of compulsory disclosure in inquiry into a complaint. There is no occasion to read down the wide reservation provided for in both subsections for "lawful justification or excuse" to exclude claims of evidentiary privilege on the basis that the subsections, unlike s127, do not explicitly refer to "privilege". If s127 were intended to cover the entire scope of privilege under the Act, then the privileges against self-incrimination and other privileges recognised by law would be excluded from "lawful justification or excuse" even though they clearly are justifications or excuses recognised by law.

  16. A witness in disciplinary proceedings would be able, on the reasoning of the majority judgment, to claim privilege under s127, although not under s126. That is an awkward interpretation of the provisions, read in context. Section 126 is explicitly concerned with evidence in the Tribunal, as its heading indicates. It is to be expected that a reservation of justification to resist the compulsion provided in the section for evidence and production of documents would be contained within s126 itself. That is what s126(5) provides. In my view it is artificial to say that s126(5) allows all other lawful justifications apart from those to which the label "privilege" is attached and that the right to resist on the basis of "privilege" (whether against self-incrimination or on the basis of legal professional privilege) is to be found in s127. Section 127 is not principally directed at matters of evidence and evidentiary privilege. It also deals with the distinct and important concern of immunities in proceedings. It is not redundant if claims of evidential privilege are "lawful justification" under s126(5).

  17. On the reasoning of the majority, a practitioner whose conduct is being inquired into under s101 would not be entitled to assert any privilege, not even that against self-incrimination. That is a conclusion I would come to with the greatest reluctance. A privilege against self-incrimination is an important plank of our system of criminal justice, affirmed in the case of those charged with offences by the New Zealand Bill of Rights Act 1990. The Serious Fraud Office Act 1990 does abrogate the privilege for the purposes of investigation under that Act. Parliament has however limited the subsequent evidential use that can be made of statements obtained by compulsion to those cases where the person interviewed gives evidence inconsistent with the statement (s28). Compared to such careful and specific legislation, it is unlikely that Parliament would sweep away the privilege here by a general allusion to privilege in s127.

  18. I agree with Tipping J that if privilege can be reasserted at a Tribunal hearing to prevent production of privileged material in evidence (as the majority would have it under s127, and as I believe under s126), there is no convincing reason for lifting privilege at the stage of an inquiry into a complaint. The suggestion that it would allow the Society to follow up other trails which could lead to admissible evidence strikes me as stretched. If Parliament had intended to make such provision for investigation, it could have done so explicitly as it has done in the Serious Fraud Office Act. The existence of a policy argument that such power to override privilege might be useful is not a reason to adopt a strained interpretation of the legislation.

  19. I do not accept that privilege cannot be available as a defence to s87. Section 87, too, employs the language of "lawful justification or excuse" to excuse failure to comply with ss 83 and 85 of the Act. Those sections permit the Council to take possession of a solicitor’s records and documents and to require production of business or accounting records relating to trust accounts. I agree with Tipping J that in the light of its policy and purpose the Act does not permit lawyers to assert the privilege of the client to thwart investigation. And I agree that the privilege attaches only to good faith communications for the purpose of the lawyer obtaining legal advice about his personal circumstances or litigation in which he is a party. Proper invocation by a lawyer of the privilege available to all other clients does not impede the proper application of the Act in the protection of the public interest.

  20. I consider that the legislative history provides no support for an interpretation that the words "lawful justification or excuse" in ss101(6) and 126(5) do not include claims of privilege. Indeed, the inclusion in the earlier legislation of provisions equivalent to s126(5) as well as to s127 seems to me to point the other way. As already indicated, those two sections can be seen to preserve evidential privilege as a lawful justification (s126(5)) and to grant immunities and privileges appropriate for judicial proceedings (s127).

  21. The Law Practitioners Acts of 1935 and 1955 contained no power of compulsory disclosure before disciplinary proceedings. Before enactment of the 1982 Act, the role of the District Council and its Committee was adjudicative only. There was no separate provision for investigation before proceedings were initiated by application, charges, inquiry, or investigation. "Inquiries" and "investigations" under the older legislation were adjudicative processes resulting in disciplinary outcomes. It was therefore appropriate to apply to those proceedings the immunities and privileges provided by s127 and its precursors in the 1935 and 1955 Acts, ss11 and 45 respectively. Powers to compel evidence and production of documents were conferred only as part of the adjudicative function. Section 126 of the 1982 Act is equivalent to s10 of the 1935 Act and s44 of the 1955 Act. Both earlier sections protect the witness upon "lawful justification". For the reasons already given, I consider that those earlier provisions, as is the case with s126, provided protection for evidential privilege as well as other lawful justifications.

  22. It is unnecessary to decide whether the immunities and privileges provided under s127 in protection of proceedings are available in inquiries under s101. That turns upon what is meant by "proceedings under this Part of this Act". Section 101 is contained in the same part of the Act as s127. Although in the past common law immunities have turned on whether the function being exercised is judicial (see, for example, Royal Aquarium and Summer and Winter Garden Society Ltd v Parkinson [1892] 1 QB 431; Lincoln v Daniels [1962] 1 QB 237), the law is evolving and the common law immunities may extend to processes of investigation which precede judicial proceedings (see, for example, X v Bedfordshire County Council [1995] 2 AC 633, 755 per Lord Browne-Wilkinson). In the case of s127, the question is one of statutory interpretation in which the common law protections are part of the context. The formal procedures provided by s101 and the developing common law may indicate that inquiries under s101 are "proceedings" for the purposes of the immunities and privileges provided by s127. On the other hand, the language of s127, with its reference to "witnesses and counsel" and its location among sections dealing with hearings before the Tribunal, may point in another direction. The evolution of s127 through earlier legislation, as discussed by Tipping J, would also have to be considered although the adjudicative nature of the investigations under the earlier legislation may mean that no consistency of the meaning of "proceedings" can be expected.

  23. For these reasons, I would dismiss the appeal. The majority are however of contrary opinion.

    DISPOSITION

  24. In accordance with the judgment of Gault, Keith and McGrath JJ, the appeal is allowed and orders are made in the terms in that judgment (see paras [133] to [135]).[a]

    McGrath JJ

    (delivered the majority judgment of the court)

    INTRODUCTION

  25. There are two stages to the disciplinary process under the Law Practitioners Act 1982 for dealing with complaints about the conduct of legal practitioners. The first stage is investigative and the second adjudicative. During the investigative stage a District Law Society, or a committee on its behalf, endeavours to ascertain whether the conduct complained of is of such gravity as to require charges to be brought against the practitioner. During the adjudicative stage a disciplinary tribunal determines whether or not the practitioner is guilty of misconduct, and, if so, what penal orders should be made. This appeal is concerned with the scope of the protection against compulsory disclosure of information given by legal privilege to practitioners who are subject to the disciplinary process. The focus is on legal professional privilege but the concern extends to litigation privilege. The appeal is concerned in particular with privilege during the investigation stage.

  26. While the disciplinary regime is created by statute the privilege concerned is sourced in the common law. Its foundation lies in the importance of all members of the public, including lawyers, being free to seek independent legal advice, uninhibited by concerns that what is then communicated may later have to be disclosed. But the effectiveness of the statutory regime regulating the conduct of barristers and solicitors is also a matter of great public importance which goes to the needs of the administration of justice. The issue whether the privilege gives protection against compulsory disclosure of information in the course of the statutory disciplinary process for law practitioners accordingly gives rise to a tension between important principles and values.

  27. The law firm, Russell McVeagh, and its partners at the relevant time, (respondents in the appeal) sought in the High Court an order for the return of certain documents from the first appellant, the Auckland District Law Society (the Auckland Society), and the second appellant (Mr. Judd) who was its counsel. It was alleged that the documents contained confidential and privileged information. Russell McVeagh had provided the documents to Mr. Stuart Ennor, now deceased but at the time counsel instructed by the Auckland Society, on the understanding that there would be certain restrictions on the use of the information contained in the documents. Russell McVeagh claim that an agreement to this effect was breached. Having unsuccessfully sought the return of the documents from the Auckland Society, the respondents issued these proceedings.

  28. The Auckland Society rejects the contention it breached the agreement, and argues that it is entitled to hold the documents concerned under its powers to compel production under the Law Practitioners Act 1982. That is because it is investigating certain complaints against members of the legal profession to which it contends the documents are relevant. The Auckland Society, by counter-claim, sought a declaration that Russell McVeagh was required to produce the documents to the Auckland Society or to its complaints committee ("the committee") either under the original agreement made, or by virtue of the statutory powers under the Law Practitioners Act 1982 or because any privilege had been waived, or because it was in the public interest to do so.

  29. The proceeding was heard in the High Court by Paterson J (CP M1539SD99, 5 May 2000). He decided that Russell McVeagh need not have provided the documents, which were subject of legal privilege and thereby protected from compulsory disclosure requirements. The Auckland Society was bound to hold them for the purposes originally agreed and otherwise to respect their confidentiality. They could not be used to investigate the complaints subsequent to the one in respect of which they were handed over. The Auckland Society appealed against this judgment.

    THE FACTS

  30. Three special partnerships were formed for the purpose of bloodstock investment, between 1985 and 1987. The solicitor for the promoter of each of the partnerships was Mr. Carran who was a partner of Russell McVeagh. Following failure of the partnerships, proceedings were issued in the High Court against the promoters and professional advisers to the promoters. In all proceedings Russell McVeagh was either an original defendant or was subsequently joined. All proceedings were ultimately settled out of court in 1996.

  31. As a result of the partnership failures the Auckland Society received several written complaints against Russell McVeagh or partners the first being a complaint from Mr. Hatton, on 3 August 1996 which was expressed to be against the firm. As a result, on 13 October, a former partner of Russell McVeagh, Mr. McElrea, who is a District Court Judge, provided the Auckland Society with a confidential report under Rule 6.03 of the New Zealand Law Society Code of Ethics. In this report Mr. McElrea alleged improper conduct by Mr. Carran, who by then had ceased to be a partner at Russell McVeagh. We refer to it as the McElrea complaint. The report suggested that the Auckland Society request from Russell McVeagh copies of all relevant documents, including privileged documents, relating to the professional indemnity insurance cover of the firm.

  32. A third complaint, known as the Otto complaint, was received by the Society on 13 March 1997. It was made against the firm and unnamed partners. A fourth complaint, the Molloy complaint, was received on 21 May 1998 from Mr. Molloy QC. Serious allegations were contained in the Molloy complaint against a number of partners and former partners of Russell McVeagh which concerned the establishment of the bloodstock partnerships but also traversed wider grounds, including the conduct of the subsequent litigation.

  33. On 25 November 1996 the complaints committee was set up by the Auckland Society to investigate the complaints received against Russell McVeagh and various partners. Mr. Ennor was appointed as counsel advising the complaints committee.

  34. The Auckland Society wrote to the partners of Russell McVeagh on 19 March 1997 concerning the McElrea complaint and requested copies of the documents concerning professional indemnity insurance that Mr. McElrea had referred to in the report accompanying his complaint. Russell McVeagh was aware of that report. The letter of 19 March referred only to the McElrea complaint and did not mention the Hatton or Otto complaints. To assist the Auckland Society with its investigations, Russell McVeagh expressed willingness to provide it with certain documents subject to certain restrictions on their use. Arrangements for the documents to be provided were subsequently made between counsel acting for Russell McVeagh, Mr. Lusk QC, and Mr. Ennor. Alleged breaches of this agreement by the Auckland Society have led to the current proceedings.

  35. In a letter to the Auckland Society of 7 April 1997 in response to that of 19 March Russell McVeagh stated:

    May we assure you of the firm’s willingness to assist and cooperate in the Society’s investigation in respect of [Mr. X]. There are, however, preliminary issues which need to be dealt with which we outline in this letter.

    .... there is still litigation on foot against the firm in respect of the bloodstock partnerships. For this reason, the confidentiality of all of the information held by the firm is very important. A number of the documents which the firm can produce are privileged in this litigation.

    We understand that the Society has appointed Mr. Ennor to investigate the complaint. We propose that we should make the privileged documents available to Mr. Ennor on the express basis that, in doing so, privilege is not waived, and that the documents will not be further copied by Mr. Ennor. Could you please advise whether the Society is prepared to deal with the privileged documents in that way.

  36. At that time Mr. Lusk was overseas. Russell McVeagh indicated in its letter of 7 April that they wished to have him involved in the process of providing the information, and suggested that on his return Mr. Lusk contact Mr. Ennor. The letter then concluded:

    In the meantime, could you please confirm that the Society will accept the arrangements we have suggested in respect of the privileged documents.

  37. Mr. Ennor’s firm replied on 14 April 1997:

    We are happy for the matter to be approached in the first instance as you have suggested in your letter of 7 April.

  38. When he returned Mr. Lusk and Mr. Ennor reached an arrangement in terms of this exchange of letters. Mr. Lusk gave evidence that the arrangements were made with Mr. Ennor, to provide the information to him, in order to assist him to understand the correct factual background to the McElrea complaint. He said that he made the arrangement personally with Mr. Ennor, which meant that he and Russell McVeagh were willing to make the information available to Mr. Ennor because of the trust and confidence they had in him. He said the arrangement were not intended to extend beyond Mr. Ennor to any other counsel who might replace him. Such replacement was neither discussed or contemplated.

  39. The terms of the arrangement on Mr. Lusk’s evidence were as follows:

    1. Privilege was not waived in the documents or information;

    2. The documents were not to be further copied by Mr. Ennor;

    3. The documents and information were not to be further distributed by Mr. Ennor;

    4. Mr. Ennor would not refer any of the information to the Auckland Law Society without prior consultation with Mr. Lusk regarding the putting in place of appropriate protections.

    In addition there was a clear understanding that Mr. Ennor and Mr. Lusk would discuss any issues which arose concerning the documents and information.

  40. On 14 May 1997 the documents were handed over to Mr. Ennor. The following day Mr. Ennor wrote to Mr. Lusk seeking clarification regarding certain matters and concluded this letter:

    May I retain the two red ring-binders in the meantime.

    On 23 May 1997 Mr. Lusk replied:

    Those two binders were intended to be your copies to be retained by you. Our request at this stage is that you do not distribute further copies of that material. Our sensitivity, as I have mentioned to you, is in relation to the outstanding claim of Equiticorp. That arises only from the Ermine matter. If you need for professional reasons to refer some of our material to your Council Committee, could I ask you before doing so to identify what it is so that I can see whether there is a potential sensitivity, and we can then discuss if some protections can be put in place.

  41. On 18 June 1997 Mr. Ennor invited comment from Mr. Lusk on the extent of his references to the material provided to him in a draft report Mr. Ennor had prepared for the complaints committee in respect of Mr. Carran. Mr. Ennor agreed to contact Mr. Lusk first, if he felt the need to, or was requested to provide the committee with copies of material in the ring-binders. Mr. Lusk replied indicating he had no objection to what Mr. Ennor proposed to tell the committee based on the material provided.

  42. On 23 September 1997 Auckland Law Society provided copies of the McElrea, Hatton and Otto complaints to Russell McVeagh. Paterson J found that until then Russell McVeagh was unaware of the terms of the Hatton complaint or that it was against the firm as well as Mr. Carran. The Judge also found that on 14 April 1997, when the documents were handed to Mr. Ennor, there was no suggestion from Mr. Ennor that the documents would be used for purposes beyond the investigation of Mr. Carran.

  43. At this point the issue of privilege first arose. On 12 March 1998 Mr. Ennor requested further assistance from Mr. Lusk who, on 1 April 1998, advised that he would have difficulty responding to this request without disclosing certain information which he had received from Mr. Carran. Mr. Lusk pointed out he was acting as counsel for Russell McVeagh, and on this basis he said he could not waive Mr. Carran’s privilege.

  44. In mid May 1998 Mr. Judd QC was appointed counsel for the Auckland District Law Society. He took over the investigations resulting from the bloodstock litigation, although Mr. Ennor still continued to have a role. Mr. Judd was instructed to consider all four complaints. He received Mr. Ennor’s files which included the ring-binders of documents handed over to him by Russell McVeagh. Mr. Ennor did not at the time advise Mr. Judd of the arrangements made in April 1997 with Mr. Lusk.

  45. On 22 May 1998 Mr. Judd reported to the committee concerning one of the documents received by Mr. Ennor from Russell McVeagh. It was a copy of a memorandum prepared by counsel acting for Russell McVeagh for their insurers F.A.I. Insurance Ltd. Mr. Judd quoted extensively from this memorandum in a letter to the society dated 25 May 1998. The memorandum was headed:

    Privileged Memorandum of Counsel prepared for Davenports, Solicitors for Justicia Mutual Association Inc, FAI Insurance Ltd & others - professional indemnity insurers of Russell McVeagh McKenzie Bartleet & Co/re: Buckingham Enterprises Ltd & Co: claim by Leitch & others; Wicklow Bloodstock (Nos 2-5) Partnership: Claim by Davis and others,

    Against Russell McVeagh McKenzie Bartleet & Co.

    This use of one of the documents is said in the litigation to be in breach of the arrangements of April 1997 and to entitle Russell McVeagh to require their return.

  46. On 25 May 1998, under s99 of the Law Practitioners Act 1982, the Auckland Society resolved to conduct its own investigation into the matters arising from the bloodstock partnerships litigation. The resolution was passed by the Society on the advice of Mr. Judd which in turn was based on the information he had derived from the documents originally provided to Mr. Ennor.

  47. It was not until 27 June 1998 that Russell McVeagh learned of Mr. Judd’s involvement and at this point there was correspondence between the Auckland Law Society, Russell McVeagh and its solicitors. On 14 July 1998 Mr. Lusk learned that Mr. Judd held the documents handed over in April 1997. He wrote the next day to Mr. Ennor advising that the privilege which Russell McVeagh at that time had intended to protect was now an issue. He asked that the Auckland Society observe the terms on which the documents had been provided.

  48. On 25 July 1998 Mr. Judd accepted that he would stand in the shoes of Mr. Ennor. He noted that he was happy "in first instance" to hold the documents on the basis set out in letter 7 April 1997 from Russell McVeagh. The letter observed that the bloodstock litigation was over, and that he would notify Mr. Lusk before making a copy of any documents. The Auckland Law Society and Mr. Judd did not however accept that the documents were held subject to Russell McVeagh’s restrictions nor that they were to be returned to Russell McVeagh.

  49. On 30 April 1999 Russell McVeagh made a complaint about the Auckland Society to the New Zealand Law Society concerning the retention and misuse of their documents. At this point litigation was threatened.

    HIGH COURT DECISION

  50. Paterson J found that under the arrangement made by Mr. Lusk and Mr. Ennor, which in the Judge’s view was not a contractual arrangement, the documents were provided on the following basis:

    1. Privilege was not waived in the documents or information;

    2. The documents were not to be further copied;

    3. The documents and information were not to be further distributed;

    4. Counsel would not refer any of the information to the Society without prior consultation with Mr. Lusk regarding the putting into place of appropriate protections.

  51. His Honour went on:

    The prohibition on copying and distributing the information as well as the requirement on Mr. Ennor to discuss any proposed reference of information to the Society, indicated that Mr. Ennor was only able to use the information in a limited manner. Mr. Ennor himself recognised this restriction when on 18 June 1997 he forwarded to Mr. Lusk extracts from a draft report to the Committee and asked Mr. Lusk to comment on "the extent of my references to the material you have provided to me." He noted that if the Committee requested him to provide copies of the material he would make contact with Mr. Lusk first. While the arrangement was made to enable Mr. Ennor to understand the correct factual background to the (McElrea) complaint, the arrangement did not expressly provide that the Society could use the documents as evidence in bringing disciplinary proceedings against Mr. X. The documents could only be used for that purpose if, either a new arrangement was entered into between the Society and Russell McVeagh or the Society had a legal right to obtain the documents against the wishes of Russell McVeagh.

  52. The Judge then dealt with the issue of whether Mr. Ennor had been entitled, as plainly he thought, to hand over the copies of the documents in the ring-binders to Mr. Judd. That possibility had not been addressed in April 1997. His Honour held that the Auckland Society had accepted the terms on which Russell McVeagh proposed that the documents be made available. Information was provided to the complaints committee in accordance with those terms because of Mr. Lusk’s agreement. But an objective interpretation of the arrangement entitled Mr. Ennor to pass the documents to Mr. Judd who was then required to hold them on the same terms as had Mr. Ennor. Mr. Judd was not permitted to make information from the documents available to the complaints committee without prior consultation with Mr. Lusk, but there was no right of veto held by Russell McVeagh.

  53. An important issue addressed by Paterson J was whether legal professional privilege was overridden by the Law Practitioners Act. The Auckland Society had argued that the broad powers in s101(3) to compel production of documents and giving of information did abrogate the privilege claimed by Russell McVeagh in this case. The Judge considered the leading case of Commissioner of Inland Revenue v West-Walker [1954] NZLR 191 where wide general language in taxation legislation, conferring similar powers on the Revenue, was held not to extinguish legal privilege. Paterson J referred to s101(6) of the Law Practitioners Act which creates an offence of failing to comply with such requirements to produce documents "without lawful justification or excuse." That phrase, in his view, could cover a claim for privilege which was the legal basis given for non-compliance.

  54. He saw as neutral s127 of the Law Practitioners Act, which gives witnesses and counsel in legal proceedings the same privileges and immunity in relation to disciplinary proceedings as they if they were proceedings in a Court of Law. Here, on the one hand, Parliament had not expressly stated that privilege was abrogated in a section which addressed privilege. On the other, he acknowledged that it might be argued "that s127 was necessary because other legal privilege was abrogated by the Act".

  55. Paterson J reasoned that the West-Walker case had clearly stated the common law rule concerning legal privilege many years prior to enacting the Law Practitioners Act in 1982. In light of that, if Parliament had wished to abrogate the privilege it could and should have done so by making express provision. It was also difficult to see why the purpose of the Law Practitioners Act should abrogate the privilege in respect of disciplinary proceedings, when it would remain available to a practitioner who was subject to criminal prosecution. While recognising there were strong public policy considerations that suggested the Act should override privilege, Paterson J concluded it had not been abrogated, either expressly or by necessary implication. Overseas decisions proceeding on a different basis did not apply in New Zealand.

  56. Paterson J then considered and rejected an argument for the Auckland Society that the privilege had been waived. In the present case the disclosure of documents to Mr. Ennor was for a limited and specific purpose concerning an investigation of the conduct of Mr. Carran. No waiver could be imputed in those circumstances in relation to complaints against the firm generally or persons other than Mr. Carran. He also rejected a submission that even if the documents were privileged such privilege was irrelevant to the claim for breach of confidence.

  57. Finally, Paterson J addressed the cause of action for breach of confidentiality. He held that the information given to Mr. Ennor was of a confidential nature. It was provided in circumstances importing an obligation of confidence, so that the Auckland Society was not able to take improper advantage of possession of the information. Mr. Judd’s letter concerning the FAI report was in breach of the confidentiality obligation first because extracts had been copied and secondly because there had been no prior consultation.

  58. But for the privilege attached to the documents, the public interest in investigation of complaints would have allowed the Auckland Society to retain the documents for the purpose of wider investigations. That was because the public interest would override the obligation of confidence. The privilege which he had upheld, however, overrode the public interest defence. It had not been waived other than for the specific limited purpose of the complaint against Mr. Carran.

  59. Accordingly Russell McVeagh had provided confidential material which, because of the privilege, it need not have provided. The Auckland Society and the complaints committee could not exercise powers to compel production of the documents because of the privilege. It followed that, it could not use them in its investigation of Russell McVeagh, and practitioners other than Mr. Carran in relation to the McElrea complaint. The documents could be retained but only to provide information for the purpose of that particular area of investigation, concerning which there had been a limited waiver of privilege, but not otherwise.

    SUBMISSIONS ON APPEAL

  60. Mr. Harrison QC for the appellants contended the appeal raised two broad issues of principle. The first was whether the right of a legal practitioner personally to claim privilege, in relation to communications in the course of obtaining legal advice, was lost on voluntarily handing over privileged material to a District Law Society for purposes of a disciplinary investigation. The second issue of principle was whether the Law Practitioners Act 1982, the Rules made under it and the public interest, together or separately, override the legal professional privilege which otherwise would be available to a law practitioner under investigation.

  61. The submissions on the first issue of principle challenged Paterson J’s finding concerning the nature and effect of the arrangement between the Auckland Society and Russell McVeagh. Paterson J held that the limited scope of the arrangement was to provide Mr. Ennor with background information on the bloodstock transactions, for the purposes of the complaint against Mr. Carran. This had also been the basis of the Judge’s further finding that there had been only a limited waiver of privilege when the documents were made available. The appellants also put in issue whether it was open to Russell McVeagh to waive privilege only for a specific purpose, and in a specific context, without waiving it generally. Finally, the appellants submitted there was an implied imputed general waiver of privilege in the circumstances in favour of the Auckland Society.

  62. On the second issue of principle the appellants contended that Paterson J’s finding that the right to privilege prevailed over the powers of a District Law Society to compel production of documents was wrong. Mr. Illingworth argued that the principles arising from the West-Walker decision did not apply to legal professional discipline under the Law Practitioners Act 1982.

  63. In the course of his oral argument Mr. Harrison sought to meet the concern that if they did not have legal professional privilege law practitioners would be inhibited in taking legal advice concerning their own professional conduct. He made a concession. He accepted that the 1982 Act would not abrogate the privilege in those circumstances. He suggested that the scope of s101(6), which recognises the defence of lawful justification or excuse, might let in the privilege, to cover such communications. Mr. Mathieson supported this approach. We understood them to draw a distinction between material evidencing the conduct under investigation by a District Law Society and communications obtaining and receiving advice concerning the propriety of that conduct. The latter would, according to the concession, be the subject of a privilege enjoyed by law practitioners as clients.

  64. Mr. Craddock QC and Mr. Latimour, for the respondents, supported the findings of Paterson J on the terms of the April 1997 arrangement. They also contended the Judge was correct to find there was a breach of obligations of confidentiality in relation to the documents which bound the Auckland Society and its counsel. Finally, they supported the Judge’s conclusion that the documents were privileged and that the privilege was neither overridden by the statute nor waived.

  65. The respondents submissions emphasised that the documents were provided specifically to Mr. Ennor. They were not to be further copied nor distributed by him. They were accordingly not provided to the Auckland Society at all. Furthermore they were provided solely for the purposes of consideration of the McElrea complaint against Mr. Carran and could not be used outside that context. The analysis of the parties’ rights and obligations, Mr. Craddock contended, must proceed from that basis. Russell McVeagh had not waived privilege, beyond the confined scope of the terms of the arrangement and was within its rights to insist that they be observed.

  66. Three relationships giving rise to privilege were identified in Mr. Latimour’s submissions for the respondents. Russell McVeagh practitioners who were subject to investigation were in a situation in which they were clients entitled to both solicitor client privilege and litigation privilege. The privilege was jointly enjoyed with their insurers for whom the legal advisers at the time were also acting. The original clients at the time of the bloodstock transactions also had rights to privilege which Russell McVeagh must uphold unless they were waived.

  67. In supporting the High Court’s conclusion that privilege was not overridden or abrogated by s101 the appellants’ submissions relied on the fundamental importance of the privilege and the consistent rejection of the argument that it was overridden in several New Zealand cases since West-Walker was decided "all involving statutes regulating matters of greater or at least equal importance as the Law Practitioners Act." They also assert that had it been intended to override the privilege the legislature would not have enacted ss101(6) or 127.

  68. Mr. Mathieson QC made submissions on behalf of Mr. McElrea which we agreed to hear regarding him as a person sufficiently interested in issues raised in the appeal. Mr. McElrea is both a complainant and a former partner in Russell McVeagh.

  69. Mr. Mathieson argued there was a distinction reflected in the 1982 Act between the investigation of complaints against a practitioner and the process following the making of charges. He argued that:

    Any disciplinary proceedings are referred to as "proceedings". These are certainly not a mere continuation of the complaints investigation. It is only proceedings to which the separate rule in s126 about production of books, documents and papers etc applies. It is only proceedings in which witnesses and counsel have the immunities referred to in s127. It follows that s127 is irrelevant to the earlier investigation phase, as is s126. It also follows that the Court would be entirely justified in emphasising that Russell McVeagh’s claim that legal professional privilege has been breached at the investigation stage, and the legal issue which that generates, is to be sharply distinguished from the operation of legal professional privilege during the hearing of the prosecution of disciplinary proceedings.

    and later that:

    Parliament cannot have intended that relevant documents be shielded from the investigation so that it would be wholly or partly frustrated."

  70. Mr. McElrea is a District Court Judge, but his status is not relevant to any aspect of the proceeding or this appeal. His name was suppressed when we commenced hearing the appeal. Since the hearing, as earlier foreshadowed, Mr. Mathieson on his behalf has asked that the suppression order be lifted.

  71. The issues in the appeal relate to specific documents which are listed in a schedule to the amended statement of claim. The documents concern the bloodstock transactions and litigation arising from them. There is also some correspondence between Mr. Ennor and Mr. Lusk. No documents appear to be concerned with legal advice concerning the conduct of practitioners who are parties to this appeal. Against that background we turn to consider the statutory provisions regulating conduct of law practitioners and the impact they have on the common law privilege.

    DISCIPLINE OF LAW PRACTITIONERS:

    The Legislative History

  72. The origins of statutory provisions for discipline of the legal profession go back to the Supreme Court Ordinances of 1841 and 1844. These gave the Supreme Court authority to remove the names of practitioners from the Rolls "upon reasonable cause" and also to impose lesser sanctions. The lack, however, of a designated body to bring instances of irregular conduct to the attention of the Courts presented difficulties. This was addressed when the New Zealand Law Society (the Law Society) was incorporated by the New Zealand Law Society Act 1869. The bringing and conduct of disciplinary proceedings seems to have been the primary purpose of formation of the Law Society, although that was not expressly stated in the Act. In 1878 express statutory provision was made for disciplinary functions to be exercised by District Law Societies. (Portrait of a Profession (1969) R B Cooke QC ed pp143 to 149; Discipline within the New Zealand Legal Profession (6 VUW Law Review (1971-1973) 337, 340-341, W R Flaus)).

  73. The Law Practitioners Amendment Act 1913 conferred an express power on the Law Society to investigate charges of professional misconduct against any practitioner and to prosecute those in breach of statutes, rules or regulations relating to practice of law. The Act did not, however, spell out the procedure to be followed and conferred no power to require information (s2(c) and (d)). These powers were continued in the Law Practitioners Act 1931 (s63(2)(b) and (c)). The 1931 Act also first stated the general functions of the Law Society, so far as are relevant to professional conduct, to be:

    63.

    (1)

    The general functions of the Society shall be to promote and encourage proper conduct amongst the members of the legal profession; to suppress illegal, dishonourable, or improper practices; to preserve and maintain the integrity and status of the legal profession; to provide opportunities for the acquisition and diffusion of legal knowledge; to consider and suggest amendments of the law; to provide means for the amicable settlement of professional differences; and generally to protect the interests of the legal profession and the interests of the public in relation to legal matters.

    The Law Society had the power under s63(2)(d) to institute proceedings against practitioners. District Law Societies were given the same powers (s57(1)). Until 1935, however, the Court continued to have the exclusive power of discipline itself.

  74. The Law Practitioners Amendment Act 1935 established a Disciplinary Committee of the Law Society to be appointed by the Council of the Law Society. The Disciplinary Committee was given power to inquire into charges of professional misconduct made against practitioners by the Law Society or any District Law Society. On their application, and following such inquiry, the Disciplinary Committee was empowered to strike off the names of practitioners from the rolls of barristers and solicitors (s4(1)). Powers of suspension from practice, imposition of financial penalties, censure and to order payment of costs were also given to the Disciplinary Committee (s3). Although the disciplinary powers of the Court were retained the statutory provision for professional self regulation through the separate roles of the Law Societies and the Disciplinary Committee became predominant in the regulation of professional conduct of legal practitioners. This continued under substantially the same structure under the Law Practitioners Act 1955. The 1955 Act was repealed and succeeded by the Law Practitioners Act 1982 which is the current statute.

    The Law Practitioners Act 1982

  75. Under the 1982 Act, subject to a provision for conscientious objection, the New Zealand Law Society consists of all practitioners who hold current practising certificates as barristers or solicitors. Practitioners are also all members of the District Law Society of the district where they practise or principally practise (ss3 and 23).

  76. Section 4 of the 1982 Act states the general functions of the Law Society, the first being to promote the interests of the legal profession and the interests of the public in relation to legal matters. The Act then states public interest functions in the same terms as in the previous legislation:

    4.

    General functions of Society

     

    (1)

    The general functions of the Society shall be-

     

    (a)

    .....

    (b)

    To promote and encourage proper conduct among the members of the legal profession:

    (c)

    To suppress illegal, dishonourable, or improper practices by members of the legal profession:

    (d)

    To preserve and maintain the integrity and status of the legal profession:

  77. The 1982 Act also retains the power for the Law Society to institute prosecutions against practitioners, or others, for breach of any statute, rules, or regulations relating to the practice of law (s5(2)(d)). This is linked to the Law Society’s power to make rules for the effective exercise of its functions and powers and in particular regulating professional practice, conduct and discipline (s17(2)(d)). The Law Society ceased to have the adjudicative power, exercised by its disciplinary committee, to investigate charges of professional misconduct against practitioners, no doubt reflecting the establishment of separate disciplinary tribunals by the Act to exercise functions previously undertaken by the Disciplinary Committee of the Law Society. Under the 1982 Act the Councils of the District Law Societies have the same powers as the New Zealand Law Society with exceptions that are not relevant to this appeal (s29).

  78. Part VII of the 1982 Act set out a more elaborate scheme for discipline in the legal profession. The disciplinary process may be initiated either by a complaint by a member of the public, or, of its own initiative, by the decision of a District Council to cause an investigation to be made (ss 98 and 99). An inquiry into a complaint must follow as soon as practicable (s101(1)). The inquiry may be undertaken by either the District Council or, as is generally the case, a committee which it appoints (s100). For convenience in discussing the legislation we shall refer to such inquiries as being undertaken by a complaints committee. The statute is specific as to the procedure to be followed by a complaints committee in its inquiry into a complaint. Section 101 of the 1982 Act in its present form provides:

    101.

    Inquiry by District Council or committee

     

    (1)

    Every such complaint or matter (in this section referred to as the complaint) shall be inquired into as soon as practicable by the District Council or, if it is referred to a complaints committee, by that committee.

     

    (2)

    If in the opinion of the District Council or committee the case is of sufficient gravity to warrant the making of a charge, the District Council or committee shall-

    (a)

    Where the complaint is against a practitioner, make a charge against him before either the District Disciplinary Tribunal or the New Zealand Disciplinary Tribunal:

    (b)

    Where the complaint is against a person employed by a practitioner, make a charge against him before the New Zealand Disciplinary Tribunal.

     

    (3)

    In the investigation of the complaint the District Council or, as the case may be, the complaints committee-

    (a)

    Shall send particulars of the complaint to the person complained against, and invite him to make a written explanation in answer to the complaint:

    (b)

    May require or permit the person complained against to appear before it to make an explanation in answer to the complaint:

    (c)

    May make, or on behalf of the District Law Society employ any person to make, such inquiries relevant to the complaint as the District Council or committee considers necessary:

    (d)

    May require the production for inspection by the District Council or committee or any person so employed by it of any books, documents, papers, accounts, or records that are in the possession or under the control of the person complained against or, as the case may require, his employer and that relate to the subject-matter of the inquiry:

    (e)

    May require the person complained against and, if the case so requires, his employer to give all information in relation to any such books, documents, papers, accounts, or records that may be reasonably necessary for the purposes of the inquiry.

     

    (4)

    Subject to this section, the District Council or committee may follow such procedure in inquiring into the complaint as it thinks fit.

     

    (5)

    On completion of the inquiry, the District Council or committee shall-

    (a)

    Notify the complainant and the person complained against of its conclusions and of any action taken or to be taken by it as a result of the inquiry; and

    (b)

    Where the complaint relates to the operation of a solicitor’s trust account or to the audit of any such account, notify the Joint Audit Board of the complaint, its conclusions, and of any action taken or to be taken by it as a result of the inquiry.

     

    (5A)

    Where the Joint Audit Board is notified of a complaint and other information under subsection (5)(b) of this section, the Joint Audit Board may disclose any of that information to the Law Society inspectorate established under section 88A of this Act and to any auditor of a solicitor’s trust account, except that the Joint Audit Board may not disclose the name of, or any other identifying information about, the solicitor, the solicitor’s firm, or the auditor to whom the inquiry related.

     

    (6)

    Every practitioner shall be guilty of misconduct in his professional capacity who, without lawful justification or excuse, refuses or fails to comply with any lawful requirement of a District Council or committee under this section.

  79. To summarise, if following investigation the case is considered by a complaints committee to be of sufficient gravity, a charge or charges must be made either to the appropriate District Law Practitioners Tribunal or to the New Zealand Law Practitioners Disciplinary Tribunal, established under the Act (s101(1) and (2)). The person the subject of complaint may be required to appear before the complaints committee to make an explanation in answer to the complaint and may also be required to produce for inspection any books, documents, papers, accounts or records in his or her possession or control that relate to the subject matter of the inquiry. The person the subject of complaint may also be required to give all information concerning such items reasonably necessary for the purposes of the inquiry (s101(3)(b), (d) and (e)). These powers and duties are reinforced by the stipulation that practitioners are guilty of professional misconduct if they refuse or fail "without lawful justification or excuse" to comply with lawful requirements of the committee under the section concerned (s101(6)).

  80. The principal function of the New Zealand Law Practitioners Disciplinary Tribunal is to hear and determine charges laid with it against practitioners in accordance with the above provisions or referred to it because of the gravity of the case by a District Disciplinary Tribunal. The New Zealand Tribunal also hears appeals brought against District Tribunal decisions (s110, s106(2)).

  81. The orders which the New Zealand Tribunal is empowered to make, after inquiry into a charge and a finding that a practitioner is guilty of misconduct in a professional capacity or other improper conduct specified in the Act, include striking a practitioner’s name off the roll of practitioners and suspension of a practitioner from practice (s112). The powers also include making of orders as to the manner of future practice by a practitioner which may include a requirement that the practice be available for inspections (s112(2)(f) conferring the District Tribunals’ power under s106(4)(g) on the New Zealand Tribunal).

  82. The Act also confers a power on both the New Zealand and District Tribunals to compel persons to attend and give evidence, and creates an offence of failure to comply with such requirements in the following terms:

    126.

    Evidence

     

    (1)

    A Tribunal, by notice in writing signed by a member or by the secretary of the Tribunal, may require any person to attend and give evidence before it at the hearing of any proceedings under this Part of this Act, and to produce all books, documents, papers, and records in that person’s custody or under his control relating to the subject matter of the proceedings.

     

    ....

     

     

    (5)

    Every person commits an offence against this Act who, without lawful justification or excuse, refuses or fails-

    (a)

    To attend and give evidence when required to do so by a Tribunal; or

    (b)

    To answer truly and fully any question put to him by a member of the Tribunal; or

    (c)

    To produce to the Tribunal any book, document, paper, or record required of him.

    It is followed by a provision protecting privileges and immunities which we shall shortly consider.

  83. Powers are also given to District Councils under Part V of the 1982 Act to intervene in solicitors’ practices in certain circumstances. These were originally introduced in the 1955 Act. The powers arise where a District Council is satisfied there is reasonable cause to believe a practitioner or employee is guilty of theft, or of improper conduct in relation to money or other property of a client. They also arise where a practitioner is bankrupt or unable properly to administer a trust account due to physical or mental disability, or where a practitioner has died. In those circumstances the District Council can take over the practitioner’s trust bank account, take possession of records or documents in the practice, intercept mail addressed to the solicitor’s office and enter the premises, by force if necessary to search for and remove records and documents (ss81 to 83). It is an offence to fail to produce records or documents or to give information that is required under these provisions, to which there is a defence of lawful justification or excuse (s87(b)). It would, however, be inconsistent with the purpose of the powers of intervention under Part V of the 1982 Act for that defence to extend to claims to legal privilege or client confidentiality. Instead the Act curtails communication of information demanded. The Act also expressly permits a person appointed to examine accounts of a firm of solicitors, to communicate matters first to the appointing Council, secondly in giving evidence before a Disciplinary Tribunal and thirdly to the Police, but to no-one else (s85(6) to (10)).

  84. These provisions lay down a scheme for regulation of legal practice in New Zealand by institutions of the profession in the public interest. Underpinning the roles in the scheme of the New Zealand Law Society and the District Societies, are their broad statutory functions and powers. The Law Society effectively sets the standards required of law practitioners in practice of law by making rules governing professional practice. The District Societies, their councils and complaints committees as their delegates, help maintain those standards, in particular by inquiring into complaints and bringing charges where the gravity of the conduct disclosed so warrants. The independent tribunals, comprised largely of legal practitioners but with some lay membership hear and determine such charges. The overall purpose of the scheme is the protection of the public, and the maintenance of the integrity of a profession central to the administration of justice. This is done through close regulation of the manner of legal practice. The provision for investigation of complaints as a preliminary to discipline of practitioners is a central part of the regulatory framework of the scheme. So is the provision for an inspectorate. (See Solicitors’ Trust Account Regulations 1998: S.R. 1998/16 Part 2).

  85. The statutory provisions separate the two stages of investigation of complaints and hearing of charges. In the first stage the role of a complaints committee is to investigate complaints in order to ascertain whether the public interest requires the laying of a charge or charges. To facilitate that investigation the Act confers information gathering powers on complaints committees and imposes duties of co-operation on practitioners who may be required to assist the committee in its investigation, even if their conduct is the subject of inquiry, by providing information. The Act also requires that a practitioner be given an opportunity to make a written explanation concerning the complaint. The first stage of the statutory process concludes with the decision of the complaints committee whether or not to charge the practitioner before one of the Tribunals which turns on the gravity of the case.

  86. At the second stage the Tribunal concerned hears the charge or charges and determines whether the practitioner is guilty. If so, the Tribunal will then determine an appropriate penalty. The Tribunal conducts a public hearing and must observe the principles of natural justice. The role of the District Society or complaints committee at this stage is to prosecute the charge before the Tribunal. The procedure accordingly takes on an adversarial aspect but it is not of a criminal character and the principal purpose of this stage, like the first, remains that of protection of the public interest. The statutory procedural provisions differ for each stage reflecting their distinctive character but in both stages it is a theme of the Act that the requirements of the public interest may prevail over the ordinary rights of practitioners.

  87. The present case concerns the scope for legal practitioners to claim privilege in the course of investigations under the 1982 Act. Section 127, which is located amongst the provisions in the Act which deal with procedure at hearings before the Tribunals, provides:

    127.

    Immunity of witnesses and counsel

    Witnesses and counsel shall have the same privileges and immunities in relation to proceedings under this Part of this Act as if they were proceedings in a Court of law.

  88. The language and positioning of s127 indicates privilege may be claimed only in relation to "proceedings under [Part VII] of this Act…" On its ordinary meaning "proceedings" would appear to refer only to proceedings brought before the two Tribunals and not to the earlier investigative stage which culminates in such charges. The reference to witnesses and counsel tends to confirm this. The extent to which s127 maintains the right to claim privilege, on this basis, does not extend to the investigative stage. By comparison the protection given under ss137 and 189 is wider both in terms of the persons concerned and the activity covered.

  89. This view of the scope of s127 is reinforced by a consideration of its legislative history. When establishing the Disciplinary Committee the 1935 amending Act conferred on it the power to compel persons to attend and give evidence before the Disciplinary Committee and to produce documents. This was reinforced by an offence provision (s10). The Act also provided for protection of privilege in s11 as follows:

    11.

    Witness and counsel shall have the same privileges and immunities in relation to applications and inquiries under the foregoing provisions of this act as if they were proceedings in a court of law.

    (emphasis added)

    The "applications" referred to were applications to the Court or the Disciplinary Committee by the Law Society to strike a practitioner off the roll (s4). The "inquiries" were inquiries by the Disciplinary Committee into charges of professional misconduct under the Act (s3(1) and (2)). Section 11 of the 1935 Act maintained the right to claim privilege in those circumstances. No equivalent provision was made in relation to the prior investigative stage.

  90. The 1955 Act also empowered the Disciplinary Committee to require persons to attend and give evidence at its hearings and to produce books and documents and created an offence of refusing or failing to do so "without lawful justification". Section 45, when enacted in 1955, in substance repeated the protection given to witnesses and counsel in relation to "applications and inquiries" - being applications to the Court or inquiries of the Disciplinary Committee (or its delegate) under s34. Initially it did not extend the protection to cover the investigation stage.

  91. As indicated, at this time the Societies did not have power to compel production of evidence during the investigation stage. Nevertheless, in 1965, the protection of privileges and immunities under s45 was extended to cover "investigations" of charges of professional misconduct by the Societies in the exercise of the power to investigate under s114(2)(c) (s3(1) Law Practitioners Amendment Act 1965). In this way the power to claim privilege in the course of investigations was given by statute where it had not previously existed.

  92. In 1968 a further amendment to the 1955 Act conferred on the Councils of District Law Societies the option of exercising a summary disciplinary power, instead of bringing charges before the Disciplinary Committee. Following its investigation, and after affording the practitioner an opportunity to be heard, if the Council was of the opinion that a practitioner was guilty of misconduct, instead of making a charge, it could impose a limited financial penalty, censure the practitioner, and or order payment of a limited sum in respect of costs. (s108(3) and (4)). Section 45 was at the same time amended to give protection for privileges and immunities in this summary process. Until it was repealed in 1982 s45 then read:

    45.

    Immunity of witnesses and counsel

    Witnesses and counsel shall have the same privileges and immunities in relation to applications and inquiries under this Part of this Act, proceedings under subsections (3) and (4) of section 108 of this Act (as inserted by section 9 of the Law Practitioners Amendment Act 1968), and investigations under paragraph (c) of subsection (2) of section 114 of this Act, as if they were proceedings in a Court of law.

  93. This incremental pattern of development of s45 in the 1955 Act strongly suggests Parliament saw the section as at all times stating the full scope of the protection of privilege in the two stages of the disciplinary process. What was not expressly covered by the statute was outside the area in which privilege could be claimed. Furthermore, after the 1968 amendment, s45 drew a distinction between the new summary process open to District Councils, which the amendment characterised as "proceedings" and the "investigations" of District Councils under s114(2)(c). The choice of the term proceedings reflected the adjudicative elements of the new process under s108(3) and (4), namely the opportunity to be heard, the determination of questions of guilty of misconduct and its gravity, and, if appropriate, the imposition of penal orders instead of making a charge.

  94. When the 1982 Act was passed it maintained the basic structure of separate investigative and hearing processes. It also conferred on complaints committees the power to compel production of documents during the investigative stage. Section s127 was enacted as the successor to s45 as the provision which preserved immunities and privileges. It is expressed to apply only to "proceedings under this part of this Act as if they were proceedings in a Court of law". Read in its historical context s127, like s45 before it, in our view seems clearly intended to express the entire coverage area of preserved privileges. If that is accepted privilege is not maintained beyond the scope of "proceedings" and both the legislative history of s127 and the ordinary meaning of the term confirm that "proceedings" does not encompass what takes place prior to the bringing of charges before the Tribunal.

  95. What we have said to date can be summarised by saying that the history of the legislation regulating professional conduct of law practitioners, the development of functions and powers of the Law Society and the District Societies over the years, the present statutory structure with its separation of the investigative from adjudicative stage, and the language used to express the protection of privilege (in particular by reference in s127 to "proceedings") and the powers of intervention in legal practices together strongly suggest that the scheme of the statute is that application of legal privilege is excluded other than during the adjudicative stage when it is explicitly included. Section 127 then confers the privilege once a "proceeding" under the Act exists. That stage is reached when a charge has been made.

  96. This is entirely consistent with the purpose of the 1982 Act which is to protect the public who deal with legal practitioners and the wider public interest of maintaining appropriate standards in a profession whose integrity is central to the administration of justice. The issue nevertheless arises whether the principle of statutory interpretation whereby a general Act does not repeal the common law unless some provision specifically indicates that intent requires a different interpretation. This principle is said, on the basis of the decision in Commissioner of Inland Revenue v West-Walker [1954] NZLR 191 CA, to be at its strongest when the effect of the statute would be to deny legal privilege.

    THE WEST-WALKER CASE

  97. In Commissioner of Inland Revenue v West-Walker [1954] NZLR 191 Fair J said (pp 206-20):

    A general Act must not be read as repealing the common law relating to a special and particular matter unless there is something in the general Act to indicate an intention to deal with that special and particular matter.

    See also Hay J at p 218 and North J at p 221 to the same effect.

  98. Later Fair J added that, as legal professional privilege was grounded in public policy, to interpret a statutory provision as denying it would require "very clear language" (p207 lines 45 & 50). The intent of that public policy was, he said, of course to encourage the public to seek independent legal advice unimpeded by fear of disclosure (p208 line 12). This approach was reiterated in the judgments of the other members of the Court. In particular Gresson J said at p213:

    In my opinion, this common-law right has been left untouched by the statute. If the Legislature had meant to alter this common-law right, it is to be expected that it would have done so expressly - plainly and unambiguously. Certainly it has not done so expressly, and I do not think it can be said to have been done by necessary implication. The section is capable of being interpreted on a supposition that the common-law right or privilege was not to be abrogated by it; and, in my opinion, it should be so interpreted.

    The importance of this passage lies in the recognition that the language, object and scheme of the Act, read together, may as a matter of necessary implication preclude the application of the privilege. This aspect of this important passage in the judgment is sometimes overlooked.

  99. Finally the judgment of Fair J at p 209 emphasised that in the statutory context with which West-Walker was concerned, namely tax legislation:

    .... there do not seem any sufficient grounds for considering that the maintenance of the privileges under consideration here would stultify, or indeed, very materially impede the effect of the far-reaching and unusual powers conferred in the revenue authorities.

    See North J to the same effect at p 221.

    DOES THE ACT EXCLUDE LEGAL PRIVILEGE?

  100. The strength of legal privilege reflects its importance in terms of public policy as the judgments in West-Walker bear out. That strength indeed was sufficient in that case to create an exception to the apparent meaning of the statutory language by necessary implication (R v Uljee [1982] 1 NZLR 561, 570-571, per Richardson J). Over the years since West-Walker was decided, however, particular passages from its judgments have been invoked to emphasise the strength of the privilege in a way that at times seems to suggest they carry a mystical quality. In particular it is sometimes suggested specific statutory language is required to exclude application of the privilege. But as decisions of this Court and in overseas jurisdictions make plain, and in accordance with basic principles of statutory interpretation, the scheme and purpose of an Act or its special statutory features of themselves may preclude in whole or in part application of the privilege. This has for example recently been stated in New Zealand in the context of the role of counsel for the child in access proceedings where special statutory features precluded full application of legal privilege: R v H [2000] 2 NZLR 257, 263 CA. A similar view was taken in Re L (A Minor) [1997] AC 16 where litigation privilege was held to be excluded by necessary implication from the terms and overall purpose of the Childrens Act 1989 (UK) at p27 per Lord Jauncey of Tullichettle. See also the decision of the High Court of Australia on exclusion by necessary implication of legal professional privilege in the Companies Code: Corporate Affairs Commission v Yuill (1991) 172 CLR 319 at pp 332-333 per Dawson J; Toohey J concurring.

  101. Of course the strength of the privilege does call for strength in the statutory implication that is said necessarily to displace it. Statutory limitation of legal professional privilege by necessary implication is rare: R v Secretary of State for Home Department, exparte Leech [1994] QB 198, 212 per Steyn LJ. As Lord Steyn has also said of necessary implication, in a different context, to do that there must be "concrete terms which provide a consistency of theme": B (A Minor) v DPP [2000] 2 WLR 452, 466. We must now consider whether that is so in the legislation concerned.

  102. Central objects of the 1982 Act are the promotion of the interests of the public and the protection of the public. They are achieved through a scheme of professional self-regulation which includes provision for discipline of practitioners, and, if necessary and appropriate in terms of the Act, intervention in their practices. The statutory regime is long established, with structures, functions and powers that have been carefully elaborated over the years to meet the developing public interest needs. Full and effective investigation of complaints of misconduct, by or on behalf of the Law Society or District Societies, is at the heart of that scheme.

  103. When a complaints committee inquires into a complaint it is able to compel a practitioner to attend in person to provide an answer to the complaint and to produce documentation concerning matters relating to the inquiry. These inquisitorial powers are conferred by Parliament because of the importance of the public interests involved, and because such powers are an expeditious and effective means of investigation of complaints. It is inherent in these powers that there is an obligation on every practitioner to be open with the inquiry concerning the conduct in issue. The nature of these powers and duties is an important indicator suggesting legal privilege may be excluded by the Act.

  104. It is also inherent in an investigation of a complaint of improper conduct by a law practitioner that it will involve inquiry into the affairs of clients. The documentary records held by any legal practitioner who is the subject of complaint will generally contain much information that is privileged. Claims to privilege by the practitioner, unless waived by the client, could be encountered at every point. If that were permitted it would obviously thwart the exercise of the statutory powers of inquiry in a way that would seriously impede their effectiveness. Mere delay in ascertaining the nature of problems in a legal practice which are exemplified by a complaint would also have that result. The incentives the Act provides for proper conduct would then be reduced. This is another important indicator that legal privilege is not protected at this stage of the process.

  105. These factors, on their own, nevertheless may not have been enough to displace legal privilege from s101 inquiries as there is force in the contention of Mr. Craddock that the statute governing every person having statutory responsibility for investigating and taking action against prohibited conduct could to some extent be said to be thwarted by the preservation of the right to claim legal privilege. He supported this submission by arguing that if the legislature had intended to override the privilege it would not have enacted ss101(6) and 127 of the 1982 Act. In our view however these provisions, correctly understood, are consistent with and support the contention that legal privilege is displaced by necessary implication during the investigative stage.

  106. A person who is the subject of a requirement to produce documents or give information under s101(3)(d) or (e) does not necessarily have an absolute obligation to do so. Not all failures to supply are professional misconduct. Under s101(6) it is an answer to a charge of refusal or failure to comply with a requirement that there is "lawful justification or excuse". Counsel for the respondents submitted this formula implicitly encompasses legal privilege.

  107. Lawful justification or excuse is well established as a defence that is available generally under the criminal law. It is expressed for example in s20 of the Crimes Act 1961. It is also expressed in many statutory provisions creating regulatory offences. Historically, at least, there was a clear distinction between the concepts of justification or excuse according to whether the law treated the conduct concerned as justifiable or as merely excusable. Where the general defence is successfully raised the accused is entitled to an acquittal. (Smith & Hogan Criminal Law, 8ed 1996, Butterworths p193).

  108. We accept that the formula "lawful justification or excuse" is capable of letting in the privilege: Taylor v NZ Poultry Board [1984] 1 NZLR 394, 404 per Cooke J. The different question in this case, however, is whether the formula implies that legal privilege is preserved, or at least not excluded, and so may be claimed to justify or excuse non compliance with a requirement under s101. We have already pointed out it is provided for under s87 in circumstances where privilege cannot be available (see para [83] above). In our opinion the express provision for the general defence of itself indicates nothing in relation to preservation of privilege. It is also expressed in s126 in relation to the adjudicative stage. Had it been as broad a provision as the appellants contend there would have been no need for s127 to be enacted expressly preserving privilege and immunities.

  109. The defence would operate also where circumstances of incapacity, unforeseen delay, lack of time or inability to access mislaid material genuinely prevent compliance. In our view "excuse" under s101(6) is probably directed to such physical or practical impediments to compliance, as Dawson J suggested was the case with "reasonable excuse" in the statute considered in Corporate Affairs Commission v Yuill at p336. See also Controlled Consultants v Commissioner for Corporate Affairs (Vic) (1985) 156 CLR 385, 391-392 (Gibbs CJ, Mason and Dawson JJ; Brennan J concurring); J Leffers, Punitive Privilege Claims as Reasonable Excuse Defences (1986) 16 FLR 350, 357-358. The two cases also show that a privilege may be excluded by necessary implication notwithstanding a reasonable excuse provision in the legislation. In our view that must also be the case with the "lawful justification or excuse" defence under s101(6) of the 1982 Act.

  110. There is scope also for the general defence to a charge to operate without covering privilege, for example in the case of a requirement to provide information that does not "relate to the subject-matter of the inquiry," or was not "reasonably necessary" for its purposes. Section 101(3)(d) and (e) sets those important limits to the power and a person required to provide information which is outside of them would be lawfully justified in refusing to comply. So would a person required to provide information which was outside the scope of what was reasonably required in the circumstances or was an abuse of power: Green v Housden [1993] 2 NZLR 273, 283, 284 CA; NZ Stock Exchange v Commissioner of Inland Revenue [1992] 3 NZLR 1, 6-7 PC.

  111. In our view s101(6) is neutral on the question of whether the privilege is preserved at the investigative stage and offers no guidance to whether it is excluded as a matter of necessary implication.

  112. Section 127 addresses privilege generally but, in our opinion, for reasons already set out in this judgment, it preserves privilege in terms which cover only the adjudicative stage. The real issue is what is the underlying position in relation to privilege, covering areas such as s101 inquiries, on which the Act is silent. One difficulty with the proposition that the common law privilege implicitly applies is that it may make s127 redundant, as that and other privileges and immunities could also apply implicitly at the adjudicative stage. The proposition is also inconsistent with the careful framing of s127 and its predecessors over the years. The legislative history here strongly indicates the statutory provisions preserving privilege were always designed to cover the entire ground over which legal privilege would lie (see paras [89] to [96] above).

  113. This also answers Mr. Craddock’s contention that the impediments to the objects of the 1982 Act, if privilege applies during investigations, are no different from those under other Acts providing for investigation and prosecution of prohibited conduct which do not exclude privilege (see para [105] above). In our view the specific application of s127 to the adjudicative stage gives textual support to a necessary implication that privilege is displaced at the investigative stage.

  114. Finally, Mr. Craddock argued that if the privilege were abrogated by "the simple expedient of someone making a complaint to the District Law Society" there would be serious implications. First, practitioners would be inhibited about taking legal advice when concerned over a matter of their own professional conduct. Secondly, the relationship of trust and confidence would be undermined. Thirdly, clients warned of the risks of compulsory disclosure would become circumspect in what they told their lawyers as would lawyers in what they recorded of what they were told.

  115. As earlier mentioned Mr. Harrison conceded, in the course of his oral argument, that privilege applied at the investigation stage to communications by a lawyer as a client, who is obtaining advice from another lawyer in situations where advice was sought in relation to the client law practitioner’s conduct. The claim to privilege with which we are concerned relates entirely to communications by or to legal advisers with parties to the bloodstock litigation. There is no indication advice was being sought in respect of their professional conduct as practitioners. We are accordingly satisfied that none of the documents in issue in this appeal are covered by Mr. Harrison’s concession. It is accordingly not necessary for us to decide whether the concession is made on a correct legal premise and it would be inappropriate to do so. We can nevertheless make some observations.

  116. If Mr. Harrison’s concession is rightly made the privilege is not overridden for the lawyer who is a client seeking advice concerning professional conduct. Mr. Harrison suggested that s101(6) can produce that result. That proposition is arguable although it will be apparent from our view of the scope of the lawful justification and excuse defence that there are difficulties with it. It may also be arguable that the same outcome can be reached by another route. The necessary implication of abrogation, for example, may fall short of excluding privilege in any situation where a lawyer is a client seeking advice from another lawyer concerning professional conduct.

  117. As well, it should be borne in mind that the powers of District Law Societies to compel production of information are statutory powers and, accordingly, subject to judicial review (see para [110] above). In Green v Housden [1993] 2 NZLR 273 CA this Court indicated that powers to compel production of information under the Inland Revenue Acts, in anticipation of a hearing concerning a taxpayer’s liability for income tax, have to be used for the purposes for which they were conferred and their exercise must not exceed what is reasonably required. The Court indicated that to require production of a tax adviser’s documents in the circumstances would be an abuse of power. It is unnecessary for us to traverse the possibilities further in this case.

  118. As to the concern that if the privilege is not available during the investigation stage communication between clients and their legal practitioners may be inhibited, we accept that the ability of a client to consult his or her lawyer in confidence is of great importance. In R v Derby Magistrates’ Court exparte B [1996] AC 487, 507, Lord Taylor CJ described it as "a fundamental condition on which the administration of justice rests". But that is of course, also the case with the integrity of the practising legal profession. We must bear in mind we are considering provisions of an Act specifically concerned with maintaining that integrity.

  119. At times very important principles and values must accommodate other important principles and values, which are in tension with them. It seems that is what has happened under the 1982 Act. This in our view would explain why Parliament excluded the privilege during the investigation stage of the complaint process, while preserving it at the stage of adjudication of whether or not a practitioner is guilty of unprofessional conduct. It would also explain why privilege remains fully available to a law practitioner who is subject to a criminal investigation and later a prosecution. Parliament in such situations recognises the need to strike a point of compromise and balance between competing public and private interests.

  120. We regard as particularly apt in the context of the statute presently being considered the observations in the judgment of this Court in Crisford v Haszard [2000] 2 NZLR 729, 733:

    As it was put in Guardian Royal Exchange Assurance of New Zealand Limited v Stuart [1985] 1 NZLR 596 at p604, there is no readily discernible reason for attaching any lesser significance to the social policies underlying the disclosure of documents relating to any question in the proceedings when balancing those public interest considerations against the public interest considerations served by legal professional privilege.

  121. We return to our conclusion that if legal privilege applies during the investigative stage of the statutory process that would thwart the exercise of the powers of inquiry into complaints against law practitioners seriously impeding their effectiveness. This was clearly of concern to Paterson J, who considered that public policy concerns suggested the Act should override privilege but did not consider the Act did so. The frustration of the statutory policy if the privilege is allowed, distinguishes the position under the 1982 Act from the taxation legislation considered in West-Walker, where the Court took the view that maintaining the privilege would not stultify the statutory powers. This reflects the different purposes underlying the powers to compel provision of information under the taxation statutes and those regulating conduct of legal practitioners.

  122. The consistent theme in the legislation is that the public interest requires ascertainment of the factual position expeditiously, usually by a complaints committee, after which statutory powers of intervention and disciplinary proceedings may follow. That can only be achieved by recognising that the scheme and purpose of the disciplinary provisions of the 1982 Act preclude general application of legal privilege. It meets the high test for exclusion by necessary implication. Privilege is overridden by the statute but only to the limited extent that communications are relevant to the investigation. We emphasise that beyond the confined area which may properly be subject of an investigation into a particular complaint of professional misconduct the privilege remains. But within that confined area the Act "enables the Law Society for the public good to hold an investigation even though it involves getting information as to clients’ affairs" - (Parry-Jones v The Law Society [1969] 1 Ch 1, 8, per Denning MR.). While direct use of that material will at times be restricted by claims for privilege at the hearing of a subsequent charge before a Disciplinary Tribunal the inquiry will nevertheless, as Mr. Mathieson observed, properly assist the complaints committee to work out who should be approached for information and statements that can provide admissible evidence.

  123. The overall effect of this conclusion is that legal professional privilege and litigation privilege are excluded by the 1982 Act from the investigative process covered by s101, subject to one reservation. The reservation concerns the position where a lawyer, who is a client of another lawyer, consults the other lawyer concerning the professional propriety of the first lawyer’s conduct in circumstances in which there has been, or may imminently be, a complaint to a District Law Society concerning that conduct. Since counsel for the appellant conceded that legal privilege applied in those circumstances it is inappropriate for us to decide the position.

    WAIVER

  124. Paterson J found that the disclosure of the documents in issue to Mr. Ennor was for a limited and specific purpose concerning the complaint received in relation to Mr. Carran. In his view no waiver of privilege could be imputed in those circumstances by other partners, or Russell McVeagh as a firm.

  125. We have concluded privilege is generally excluded by the statute at the investigation stage, albeit without excluding the possibility that some residual area of protection may be available covering communications by a legal practitioner, seeking personal legal advice, in connection with conduct the subject of a complaint.

  126. We are also of the view none of the documents in issue in the appeal are covered by any such residual area. The claim to privilege with which we are concerned relates entirely to communications to or by legal advisers with parties to the bloodstock litigation. There is no indication that advice was being sought at that stage in respect of professional conduct as practitioners. Accordingly it is strictly unnecessary for us to consider the alternative argument that privilege has been waived.

  127. In case, however, the question should become relevant we will indicate why we have reservations about the High Court’s finding there was no waiver of any privilege in relation to investigations generally under the 1982 Act once the documents were handed to Mr. Ennor. We accept that, in principle, privileged material may be disclosed for a limited purpose in the sense that use could be for that purpose but no other. In the present case, however, neither Mr. Lusk nor Mr. Ennor turned their minds to rights to privilege in an investigation which went beyond the conduct of Mr. Carran. Mr. Lusk was certainly concerned to maintain privilege in the bloodstock litigation as his correspondence with Mr. Ennor makes plain. He was not of course able to waive any privilege which Mr. Carran enjoyed. Significantly Mr. Lusk provided the documents to the Auckland Society without seeking the consent of Mr. Carran, against whom he knew a complaint had been made under the 1982 Act. Objectively, this strongly indicates that Mr. Lusk did not consider Mr. Carran was able to claim privilege in relation to the Auckland Society’s investigation of the complaint. If Mr. Carran could not do so, nor could other partners in Russell McVeagh. The compelling inference in the circumstances is that Mr. Lusk’s mind was not directed at all to confining the use of the documents by the Auckland Society under its statutory powers beyond protecting rights to privilege in the bloodstock litigation. It would follow that disclosure was not for any limited purpose in so far as the exercise of disciplinary powers was concerned.

  128. We are also inclined to think it is artificial, when considering the purpose of the request for disclosure of the documents, to distinguish between partners in a firm where complaints received relate to a series of connected incidents. An investigation under s101 into an initial complaint, concerning one practitioner, is not an exercise which can be regarded as confined. That is readily demonstrated in the present case where it seems that one element of a subsequent complaint concerns an alleged failure by others themselves to disclose improper conduct by their former partner.

  129. Accordingly if, contrary to our view, the documents were privileged from disclosure to the Auckland Society when sought by Mr. Ennor, that privilege would have been waived in relation to any use by the Auckland Society for the purposes of exercising its powers under the 1982 Act.

    OUTCOME OF THE APPEAL

  130. Paterson J’s decision hinged on his view that privilege had not been abrogated by the Act in the investigative stage. He reached that conclusion with some reluctance. As a result of the High Court judgment the Auckland Society and its complaints committee could not compel production of the documents because of privilege. Accordingly, in the absence of waiver, it could not use them other than in relation to the McElrea complaint against Mr. Carran. Our conclusion is that there is no privilege in relation to the inquiry being undertaken by the complaints committee and no impediment to its power of requisition of the documents. While they remain confidential (subject to any future orders of the Court) they will be available to the complaints committee for the purposes of statutory investigation. The Auckland Society and complaints committee may deal with them accordingly subject only to the statutory restraints.

  131. It is accordingly unnecessary to determine in this proceeding wider questions raised in the appeal including the full scope of the arrangement of 7 April 1997.

    CONCLUSION AND ORDERS OF COURT

  132. Since the preparation of this judgment we have had the opportunity of considering in draft the judgment of Tipping J. We consider that in light of the argument we heard it was entirely appropriate for us to consider whether privilege existed at the investigative stage. We point to our summary of the arguments in support of the appeal set out earlier in the judgment.

  133. By a majority the appeal is accordingly allowed. The appellants are entitled to declarations, on their counterclaim, for the production of requisitioned documents. Leave is reserved to apply further to this Court if issues arise as to the terms of appropriate orders. Leave is also reserved to apply to the High Court if issues arise concerning particular documents.

  134. The Court takes the view that the orders made in the High Court and continued at the outset of the hearing on a provisional basis suppressing publication of the names of Mr. McElrea and Mr. Carran should not continue in force. The decision is taken after having considered written requests on behalf of Mr. Carran that suppression of his name continue, and Mr. McElrea that in his case it cease (see para [70] above). Those name suppression orders made in this Court and previously in the High Court are accordingly lifted.

  135. The appellants are entitled to costs in the sum of $15,000 and reasonable disbursements including the travel and accommodation expenses of two counsel. Mr. McElrea should also receive costs which, because he appeared by leave, we fix at $5,000 together with reasonable disbursements. In each case disbursements are to be fixed by the Registrar if necessary. Costs in the High Court should now be fixed by that Court in light of this judgment.

    Tipping J

    (dissenting)

  136. The reasoning in the judgment delivered by McGrath J, in which Gault and Keith JJ have joined, strongly suggests, indeed in places appears to hold, that, despite Mr. Harrison’s concession, the effect of the Law Practitioners Act 1982 (the Act) is to remove legal professional privilege altogether when complaints against practitioners are being investigated, as opposed to prosecuted, under the Act. Yet the judgment also leaves open, almost as an aside, the possibility that there may be some such privilege. That possibility appears inconsistent with the reasoning in the rest of the judgment which proceeds essentially on a combination of two points. The first is the ambit of s127, which is said to be limited to the prosecution stage, and the second is the history of how privilege has been dealt with under earlier legislation when compared with its treatment under the Act. McGrath J’s reasoning is also said to accord with public interest considerations. In spite of his having left open the possibility of there being some undefined privilege at the investigation stage, I can only view the reasoning in McGrath J’s judgment as leading inexorably, as a matter of logic, to the conclusion that there is no scope for privilege at that stage.

  137. I am unable to commit myself to the view that there is no privilege at the investigation stage. I have four reasons. First, I am not convinced that the Act, either in itself or in the light of its predecessors, speaks with sufficient clarity to justify the proposition that legal professional privilege is totally abrogated at the investigation stage. Second, the appellant Society did not argue for such a conclusion, let alone on the basis now suggested. It conceded that there was some defined privilege at the investigation stage. Third, on the premise, which I do not accept, that the documents in issue necessarily fall outside the Society’s concession, it is unnecessary to consider whether that concession was wrongly made, as is the effect of McGrath J’s reasoning. Fourth, there is the significant point, consequential on point two, that no argument was directed to the proposition that no privilege existed in any form at the investigation stage. This was because such argument was irrelevant in the light of the Society’s concession that some privilege existed at that stage. The total absence of privilege was simply not an issue, and no counsel suggested that Mr. Harrison’s concession had been wrongly made. It is a very large leap from Mr. Mathieson’s submission that s127 has no relevance at the investigation stage, a submission which may well not be correct, to say that this lack of relevance together with the legislative history (which no counsel addressed) results in Parliament being deemed to have taken away all privilege at the investigation stage.

  138. Mr. Craddock naturally argued on the basis that at least the conceded privilege existed and, in a sense, endeavoured to build from that starting point. It is therefore difficult to reach a conclusion on the premise that the starting point was erroneous. I am not prepared to reach that conclusion, if at all, without the respondents, and indeed the appellants, having had the opportunity to address it. There are therefore both substantive and procedural reasons why I am not prepared to commit myself to the view espoused by McGrath J. I will expand a little on my substantive concerns but not to any great extent because of my view that no firm conclusion should be reached on the total abrogation of privilege issue for the reasons already given.

  139. Legal professional privilege is a vital adjunct to an important human right, namely the right to obtain legal advice. That right is itself an element of the right of all persons in all circumstances to be treated according to law. Authority for this view comes from the unanimous decision of the House in Lords in Exparte Daly [2001] UKHL 26. Lord Bingham, delivering the leading speech, described as a fundamental right, the right of a prisoner to communicate confidentially with a legal adviser under the seal of professional privilege. The immediate point is that Lord Bingham said, rightly in my respectful view, that such rights as that in issue may be curtailed only by clear and express words and then only to the extent necessary to meet the ends which justify the curtailment.

  140. In the present case I can find no clear and express words having the effect of entirely abrogating legal professional privilege at the investigation stage of a complaint against a lawyer. The presence of subs(6) in s101, allowing that there may be justification or excuse for withholding information from a District Law Society, to my mind points in the other direction. Nor can s101(6) easily stand with the view that although there are no clear and express words there is a clear and necessary implication to the same effect: for that, albeit rare, possibility see Exparte Leech [1994] QB 198 endorsed in Exparte Simms [2000] AC 115, and see also Exparte Pierson [1998] AC 539, 575 per Lord Browne-Wilkinson. The points which McGrath J makes about s101(6), and indeed generally, do not persuade me that there is an implication of total abrogation of legal professional privilege at the investigation stage, which implication is so clear and so compellingly necessary that Parliament must be taken to have intended this result without having expressly said so.

  141. Nor does the invocation of the public interest carry the force ascribed to it. The privilege will attach only to communications which have been made between the lawyer under investigation (lawyer A) and another lawyer (lawyer B). To qualify for privilege the communication must have been made in good faith for the purpose of seeking or giving advice about lawyer A’s personal circumstances or about litigation in which lawyer A is personally involved. The privilege must not be abused, for example by using it to try to launder documents, nor can it be invoked for the purpose of concealing any misconduct which might be involved in the communication itself.

  142. Analogies with the ordinary fraud exception will be appropriate. When these features are borne in mind I doubt that bona fide and legitimate use of the privilege will significantly inhibit the investigation of a complaint. All that will be unavailable to the investigators will be written or oral communications between lawyer A and lawyer B. Lawyer A must be the client of lawyer B. Clearly lawyer A cannot invoke his or her own client’s privilege and shelter behind that to avoid supplying information to the investigating society. In that case the privilege belongs to the client, not to the lawyer, albeit the lawyer has an obligation to maintain confidence, unless released from that obligation by the client. There must be at least implicit release if the client is the complainant. If a third party is the complainant, the obligations of confidentially which lie on the Law Society investigators, will sufficiently protect the client.

  143. I therefore agree that in the light of its policy and purpose the Act does not allow lawyers to shelter behind their own client’s privilege at the investigation stage. But when the lawyer under investigation is the bona fide client of another lawyer, I consider it is highly arguable that legal professional privilege exists and can be maintained on both sides in respect of qualifying communications. I do not see that conclusion as being contrary to the public interest. If there was no such privilege, lawyers alone among the professions would have no ability to obtain privileged legal advice or legal assistance when under investigation, and may be inhibited from seeking advice or assistance earlier if they were at risk of having the seal of privilege broken, as regards communications with their own bona fide legal adviser.

  144. I can see no compelling public interest which justifies that conclusion. While I appreciate that there is some basis in the legislative history to take the view to which McGrath J is attracted, there is nothing in the contemporary documents or in Hansard at the time when the 1982 Act was being considered by Parliament, to suggest that such a radical change was being effected. What is more, the legislative history can be viewed as involving no more than a structural re-arrangement in the 1982 Act, more precisely separating investigation from prosecution than hitherto, without any necessary implication that privilege was not to apply at the investigation stage.

  145. Whatever it may say as to the investigation stage, s127 undoubtedly prevents evidence of a privileged communication being given to support a prosecution, unless appropriate consents are given. What then, it might be asked, is the point of lifting the seal of privilege at the investigation stage? It can only be to allow the investigators to follow a possible trail to admissible evidence of which they would not have been aware had they been unable to gain access to the privileged communication. That seems a relatively remote prospect.

  146. It is in any event desirable to examine s127 in more detail as I consider it may well be the key to resolving the legislative history issue. It is in the following terms:

    127.

    Immunity of witnesses and counsel

    Witnesses and counsel shall have the same privileges and immunities in relation to proceedings under this Part of this Act as if they were proceedings in a Court of law.

  147. The predecessor to s127 in the 1955 Act was s45 which, as from 1968 until its repeal by the 1982 Act, was in these terms:

    45.

    Immunity of witnesses and counsel

    Witnesses and counsel shall have the same privileges and immunities in relation to applications and inquiries under this Part of this Act, [proceedings under subsections (3) and (4) of section 108 of this Act (as inserted by section 9 of the Law Practitioners Amendment Act 1968)], [and investigations under paragraph (c) of subsection (2) of section 14 of this Act], as if they were proceedings in a Court of law.

  148. Subsections (3) and (4) of s108, which are referred to in s45, were concerned with investigations of complaints against any member of a District Law Society. They provided:

    108.

    Functions and powers of District Law Societies

     

    ....

     

     

    (3)

    When, on investigating a complaint against any member of a District Law Society, the Council of that Society is of opinion, after affording him a reasonable opportunity of being heard, that he is guilty of professional misconduct or conduct unbecoming a barrister or a solicitor, but that the case is not of sufficient gravity to warrant the making of a charge before the Disciplinary Committee under section 34 of this Act, the District Council may, if it thinks fit, but subject to the right of appeal conferred by section 112 of this Act, do one or more of the following things:

    (a)

    Order him to pay to the District Law Society such sum by way of penalty, not exceeding two hundred dollars, as the District Council thinks fit:

    (b)

    Censure him:

    (c)

    Order him to pay to the District Law Society such sum, not exceeding one hundred dollars, as the District Council thinks fit in respect of the costs and expenses of and incidental to the investigation.

     

    (4)

    Any sum ordered by a District Council to be paid by way of penalty or costs or expenses under the provisions of subsection (3) of this section shall be deemed to be a debt due from the person ordered to pay it to the District Law Society, and shall be recoverable accordingly in any Court of competent jurisdiction.

  149. It should be noted that s45 of the 1955 Act dealt with four different types of process: applications (to strike off), inquiries (into charges by the Disciplinary Committee), proceedings (in the sense of investigation of complaints), and investigations (under paragraph (c) of subsection (2) of s114, namely investigations by District Law Societies into charges of professional misconduct or conduct unbecoming). The reference in s45 to s14 is a misprint for s114 in the 1968 reprint.

  150. Those who drafted s127 of the present Act obviously decided that all these processes, to the extent they remained relevant, could be comprehended within the single concept of proceedings. It follows that when they used the word proceedings in s127 the drafters probably intended that it was to include the concept of a District Law Society’s investigation of a complaint against a member. That was the connotation of the same word, i.e. the word proceedings, in s45 of the 1955 Act. It would be strange indeed if the word proceedings used in s127 against the background of s45, upon which s127 was based, did not include the meaning which the very same word conveyed in s45. That word cannot logically be restricted by the penal consequences to which subs (3) and (4) of s108 were directed. Indeed s102 of the present Act involves the potential for a costs award against a practitioner the subject of an investigation under s101.

  151. I am therefore of the view that proceedings for the purposes of s127 may well include investigations by District Law Societies of complaints pursuant to their powers and duties under s101. There is no real lack of consistency, on this view, in the use of the word proceedings elsewhere in Part VII (see for example s126) because in some contexts the meaning must necessarily be more confined. The proper connotation of the word proceedings in s127 does not, however, seem to me to admit of much doubt. It is capable of including investigations into complaints and seems to have been used as encompassing that wider sense. This means that when facing such an investigation by a District Law Society under s101, a practitioner can invoke privilege as if the practitioner were a witness in a Court of law. That privilege must include legal professional privilege (both for advice and for litigation) along the lines which I formulate later in this judgment.

  152. The statutory history of s127, far from pointing to an intention to abrogate legal professional privilege at the investigation stage, actually supports its retention at that stage and cannot be regarded as abrogating the availability of legal professional privilege when a practitioner is faced with a requirement under s101. The invocation of such privilege must amount to lawful justification or excuse for refusing to comply with such requirement. This view of the matter has a degree of consistency with the stance which the appellant Society took in the concession which Mr. Harrison made on its behalf, albeit the basis for the concession was not spelled out in this degree of detail. Whatever else may be said, the background to s127 makes it difficult to conclude that by clear and necessary implication the Act abrogates privilege at the investigation stage; that is the central thesis with which, as at present advised, I cannot agree.

  153. I express these views to demonstrate that the point is clearly arguable in the opposite sense to the reasoning in McGrath J’s judgment. I will say no more because a final conclusion should not be reached until the point is squarely on the table and is fully argued. Not until then would it be appropriate to come to any such conclusion and decide whether the Society’s concession went too far or indeed, as I am inclined to think, did not go far enough.

  154. As I understood the compass of the argument, it was directed to how wide an accepted privilege at the investigation stage should be held to be. I consider it is necessary to address that issue both because that was the issue raised by the parties and because McGrath J appears to accept that, notwithstanding the logical consequence of his view of the legislative history and s127, there may be some privilege at the investigation stage.

  155. Subject to further argument about whether the Act does in fact totally abrogate legal professional privilege at the investigation stage, I would hold that legal professional privilege exists at that stage on the following basis:

    1. Privilege may be claimed by the lawyer under investigation (lawyer A) only for communications made in good faith between lawyer A and another lawyer (lawyer B) when lawyer A is a client of lawyer B and when the communication is made either for the purpose of obtaining advice from, or the giving of advice by, lawyer B in relation to lawyer A’s personal circumstances, or when lawyer B is acting for lawyer A in litigation in which lawyer A is personally involved (advice and litigation privilege respectively).

    2. Lawyer A’s privilege does not depend on a complaint against lawyer A being imminent, anticipated or actually made. It covers all communications made between lawyer A and lawyer B which qualify on the basis referred to at step (1).

    3. The need for there to be good faith in the communications between lawyer A and lawyer B means that lawyer A will not be entitled to claim privilege if the communication:

      1. is itself part of a transaction alleged to constitute misconduct, or

      2. is effected for the purpose of seeking to cloak with privilege documents or any other material or information which but for the communication would not be privileged, or

      3. is relevant to lawyer A’s state of mind when engaging in conduct which is alleged to amount to misconduct, or

      4. is otherwise covered by or sufficiently analogous to the common law fraud exception so as to justify the withholding of privilege.

    4. Lawyer A does not, however, have any privilege or immunity in relation to communications made between lawyer A and his or her own client; nor may lawyer A invoke or seek to rely on the privilege of such clients to resist disclosure when under investigation.

    5. In cases which qualify for privilege as set out above, there is lawful justification or excuse for lawyer A and lawyer B to decline to disclose the communication, be it oral or written, to the District Law Society. In cases which do not qualify, there is no such lawful justification or excuse and disclosure must be made.

    PARTIAL WAIVER

  156. As I cannot be sure from their description whether the documents in issue, which the Court has not seen, fall within or outside the privilege, as I would for present purposes define it, the next issue is whether it is possible to make disclosure of privileged communications or documents but with a reservation as to the use which may be made of them by the person to whom they are disclosed. My uncertainty about the documents in issue derives in significant part from the fact that Russell McVeagh was itself implicated personally as a party to the bloodstock litigation and was thereby in a position in which it may be necessary to examine in what capacity it was party to relevant communications.

  157. At one level, as Mr. Harrison suggested, the concepts of disclosing but reserving the right not to disclose appear self contradictory. Privilege is a right to refuse disclosure that would otherwise be obligatory. How then can you disclose while reserving your right not to do so? But in reality it is usually more the making of some use of the disclosed information which the holder of the privilege wishes to prevent rather than not disclosing at all. The right to withhold necessarily carries with it the right to prevent use. There is in reality therefore no necessary inconsistency in agreeing to disclose while at the same time reserving privilege in relation to the use that can be made of the disclosed material. In such circumstances the purpose of the exercise is clearly to prevent use, either absolutely or according to the tenor of the reservation. There does not seem any reason of principle why the common law right to withhold privileged information cannot be waived subject to conditions. This is often referred to as partial waiver. On this basis it cannot logically be said that every disclosure automatically and inevitably constitutes a full waiver. That depends on the terms of the disclosure.

  158. Recent English authorities supporting this view are British Coal Corp v Dennis Rye Ltd [1988] 3 All ER 816 (CA), and Bourns Inc v Raychem Corp [1999] 3 All ER 154 (CA). In British Coal, Neill LJ at 821 g proceeded on the basis that there may be disclosure with an express reservation of privilege. The documents handed over could be used for one purpose but not another. His Lordship indicated that even in cases of inadvertent disclosure the Court may in certain circumstances intervene to protect the privilege. In the Bourns case, Aldous LJ cited the British Coal case as authority for the proposition that it is possible to waive privilege for a specific purpose and in a specific context only – see 161 f. At 196 c his Lordship indicated that if someone is offered privileged information subject to limitations, they have an option either to refuse the offer or accept it subject to the limitations, in which event they are bound by those limitations.

  159. Another English case to the same effect is Goldman v Hesper [1988] 1 WLR 1238 per Taylor LJ at 1244: and see generally Colin Passmore’s Privilege published by CLT Professional Publishing (1997) at 178ff and the same author’s Privilege Update, Parts 2 and 3 in NLJ Practitioner of 1 December 2000 and 16 February 2001. There is a decision of the High Court of Australia which Passmore suggests is to the contrary effect. The case is Goldberg v Ng (1995) 185 CLR 83. The High Court (Deane, Dawson and Gaudron JJ, Toohey and Gummow JJ dissenting) is said to have interpreted British Coal narrowly and to have declined to follow Goldman v Hesper. Their Honours upheld the decision of the New South Wales Court of Appeal (Mahoney and Clarke JJA, Kirby P dissenting) whose judgment is discussed by Passmore in his book at 180. The author prefers the English cases. He suggests, at 181, that the real issue is the existing confidentiality in the disclosed materials and that provided the information is supplied on confidential terms, and remains confidential to the disclosing party and the recipient, privilege should be maintainable. I find that view persuasive; a fortiori, when the disclosure is made on terms, as happened here, expressly stating that privilege is not waived by the disclosure, and substantial restrictions are placed on the use which can be made of the disclosed material. Passmore’s view is also consistent with the approach of this Court in R v Uljee [1982] 1 NZLR 561 in which a person who had overheard a privileged communication was required not to disclose it unless privilege was expressly waived.

  160. I consider that Passmore has overstated the suggested difference, in the present context, between Goldberg v Ng on the one hand and British Coal and Goldman v Hesper on the other. These two English cases are cited with others in footnote 27 of the majority’s judgment in Goldberg in support of the view that it is possible in law to have what their Honours describe as a limited waiver. Toohey J refers to the British Coal case and to Goldman v Hesper at 107 and 108 in a way which indicates that His Honour accepted their conclusions. At 121 Gummow J mentions the English decisions on a basis which supports their general tenor, albeit His Honour suggests, with some force, that there is a stronger underpinning for their rationale than the traditional "rule of evidence" approach to privilege. The basis is that privilege is a fundamental right and not just a rule of evidence. Thus although the Judges in Goldberg v Ng differed in their approach to imputed or implied waiver, and whether those concepts applied in the particular case, they were all of the view that it is possible in law to have a partial or limited waiver of privilege. The question whether, and if so, how the concepts of implied or imputed waiver apply to the present case were deferred for further argument and thus it is not appropriate, at this stage, to examine the differences of view in the High Court of Australia in this respect.

  161. Mr. Harrison’s contrary argument was based substantially on cases of inadvertent disclosure, starting with Calcraft v Guest [1898] 1 QB 759. Two New Zealand cases have doubted the correctness of an absolute rule that inadvertent disclosure destroys privilege: see Uljee (supra) and Corporate Group Holdings Ltd v Corporate Resources Group Ltd [1991] 1 NZLR 115 per Hillyer J. It is also difficult to reconcile the apparent absoluteness of the Calcraft line of cases with what was said by Neill LJ in British Coal as noted above. In any event inadvertent disclosure can be distinguished from a case involving a deliberate disclosure on stated terms.

  162. Furthermore, Calcraft v Guest must be read in conjunction with Ashburton v Pape [1913] 2 Ch 469. Calcraft’s case was concerned with privileged documents and Ashburton with confidential documents. Calcraft is usually cited for the proposition that once privileged documents have been disclosed, they may be used in evidence whatever the circumstances of the disclosure. Ashburton substantially modified the effect of that proposition by holding that equity could restrain the use to which the law allowed the disclosed documents to be put, provided equitable intervention took place before the documents were deployed in evidence. Equity looks to the circumstances in which the documents came to be disclosed and will restrain their use in evidence, and indeed in other ways, if such use would, in the light of those circumstances, be inequitable. It is no longer necessary to try to reconcile the two decisions; the former being the common law approach, and the latter the approach of equity. The equitable rule was formulated to alleviate the rigours of the common law and must be regarded as prevailing today. Hence I am satisfied that the Courts should recognise the concept of partial waiver; i.e. disclosure on terms which restrict the use which may be made of the privileged material.

  163. Mr. Harrison cited the case of Paragon v Freshfields [1999] 1 WLR 1183, 1188 B-C; albeit in a slightly different context. That case recognises the concept of a partial disclosure with the consequential issue being the scope of the waiver. Mr. Harrison also cited the decision of Henry J in Harbour Inn Seafoods Ltd v Swizterland General Insurance Co Ltd [1990] 2 NZLR 381, 384 in which the Judge held that you could have partial waiver in the sense of a waiver as regards X but not as regards Y. That too suggests the law is not and should not be that once there has been any form of disclosure, it is deemed to be a total waiver irrespective of the terms of the disclosure: see also the later decision of the same Judge in C C Bottlers Ltd v Lion Nathan Ltd [1993] 2 NZLR 445. I am therefore of the view that the appellant’s contention that the disclosure to Mr. Ennor destroyed privilege for all purposes cannot be sustained. To accept it would be unduly rigid and would unhelpfully stultify sensible cooperation of the kind intended here. It is therefore necessary to consider the effect of the terms upon which the disclosure was made.

    THE TERMS OF THE ARRANGEMENT

  164. The issue which has arisen between the parties on this aspect of the case can be shortly stated. The Society contends that properly construed the arrangement between Russell McVeagh and Mr. Ennor meant that privilege was being maintained by Russell McVeagh only in relation to its involvement in the bloodstock litigation. The corollary, so the Society argues, is that privilege was not being maintained as against the Society and was thus waived in this respect, either from the outset or once the bloodstock litigation had been settled. It should be recalled again here that Russell McVeagh was a party in its personal capacity to that litigation. Litigation as well as advice privilege could therefore apply. It is helpful to refer to the text of the crucial letter written by Russell McVeagh to the Society on 7 April 1997:

    .... there is still litigation on foot against the firm in respect of the bloodstock partnerships. For this reason, the confidentiality of all of the information held by the firm is very important. A number of the documents which the firm can produce are privileged in this litigation.

    We understand that the Society has appointed Mr. Ennor to investigate the complaint. We propose that we should make the privileged documents available to Mr. Ennor on the express basis that, in doing so, privilege is not waived, and that the documents will not be further copied by Mr. Ennor. Could you please advise whether the Society is prepared to deal with the privileged documents in that way.

    (emphasis added)

  165. The letter in which this was said was written in reply to the Society’s letter to Russell McVeagh of 19 March 1997. In that letter the Society had referred solely to Mr. McElrea’s complaint about Mr. X. The Hatton and Otto complaints which the Society had received on 3 August 1996 and 13 March 1997 were not mentioned. Before talking about privilege, Russell McVeagh had in its letter expressed a willingness to cooperate in the investigation of Mr. X, its former partner.

  166. The letter expressly states that privilege was not waived. Mr. Harrison emphasised, however, that this statement immediately followed the reference to some of the documents being "privileged in this litigation", i.e. the bloodstock litigation in which Russell McVeagh was personally implicated. There had of course been the earlier reference to the confidentiality of all the documents being very important. Russell McVeagh was therefore telling the Society that all the documents were confidential and some of them were privileged. The context for both these statements was that there was "still litigation on foot against the firm in respect of the bloodstock partnerships". The Society therefore argues that it is a natural and logical inference that Russell McVeagh was reserving privilege because of and in relation to the bloodstock litigation. The Society points out that there is no suggestion in the letter that the reservation of privilege went wider than that.

  167. While partial waiver, as has been discussed, is possible in law, voluntary disclosure of privileged documents will, prima facie, amount to a general waiver. The party seeking to retain privilege in such circumstances must demonstrate the extent to which privilege is reserved. The Society’s case is that the only extent which can be clearly discerned from the terms of the crucial letter, is that privilege was being retained solely as regards the bloodstock litigation. The documents were being made available to the Society’s counsel to assist in his investigation of the complaint against Mr. X. The question of an investigation on a wider basis than that was not mentioned and so, the Society contends, it is not appropriate to hold that privilege was being reserved beyond the bloodstock litigation. Against that, however, there is force in Mr. Craddock’s point that the simple statement "privilege is not waived" is not qualified and the earlier reference to the bloodstock litigation represented the reason for the retention of privilege and did not represent any cutting back of the otherwise general extent of the reservation. I interpolate here that Mr. Ennor’s reply to the letter of 7 April agreed to proceed as proposed "in the first instance". I agree with the Judge that the words "in the first instance" cannot alter the basis on which Russell McVeagh was supplying the documents. These words simply foreshadowed that at a later stage things might change, but any such change would have needed Russell McVeagh’s agreement.

  168. Another factor which must be borne in mind is that privilege, once established, is not limited to the immediate context in which it has arisen. This is what is meant by the phrase: once privileged always privileged. Thus privilege does not cease with the cessation of the circumstances which gave rise to its existence. When lawyer A ceases to be a client of lawyer B or the litigation in which the privilege arose is concluded, that fact obviously does not remove the privileged status of bona fide communications which have passed between them. The privilege attaches to the communication and, if it is made in a privileged setting, it remains privileged. If that were not so the utility of privilege might be significantly reduced. By the same token a statement that privilege is not waived must ordinarily mean that the maker of the statement is preserving privilege on a basis which is not limited to the immediate circumstances in which it arose. It is therefore inherently unlikely that a statement expressly reserving privilege was intended to reserve privilege only during the currency of its immediate purpose, the more so when it is borne in mind that the privilege attaches to the communication.

  169. I do not consider that the terms of the letter leave the essential issue open to much doubt, but I will nevertheless consider the matter on a wider basis. Russell McVeagh was making the documents available to counsel representing its District Law Society to assist in an investigation into the conduct of a former partner. If some of the documents were privileged as regards Russell McVeagh, they must also have been privileged as regards Mr. X, on account on his having been a partner in the firm at the relevant times. Mr. X was entitled to that privilege as much as any other partner. Russell McVeagh could not in the circumstances waive his privilege and it is reasonable to infer they must have been aware of that. Later letters from Mr. Lusk to Mr. Ennor of 16 June 1998 and 15 July 1998 make reference to this dimension. Equally the Society through its very experienced counsel, Mr. Ennor, must have been aware that if Russell McVeagh had privilege, Mr. X would have had privilege in the documents too. The Society could hardly have construed Russell McVeagh’s letter as a waiver of privilege on behalf of Mr. X after he had left the firm. Looked at in this way, it is difficult to see why Russell McVeagh would be waiving privilege for all purposes other than the bloodstock litigation, albeit that was obviously the immediate focus of their attention.

  170. Documents made available to a District Law Society in the course of an investigation must, as earlier noted, be used by the Society solely for the purpose of the investigation. They cannot voluntarily be used or disclosed for any other purpose. Russell McVeagh’s only logical concern as regards the bloodstock litigation, would have been lest some other party in the litigation might subpoena Mr. Ennor, or someone from the Society, to produce the documents in case they might be shown to be adverse to Russell McVeagh’s interests. This possibility presupposes the awareness of such other party that the documents had been supplied to Mr. Ennor. This seems a fairly remote possibility unless there was some improper conduct on the part of those investigating the complaint. The point is that the risk to Russell McVeagh’s interests in the bloodstock litigation of disclosure of the documents to the Society does not seem great, albeit the immediate focus of the letter of 7 April is clearly on that risk.

  171. I do not regard Mr. Lusk’s oral evidence as taking the matter any further. He simply confirmed the essence of the arrangement as apparent from its written terms. Both the words themselves in their context, and the circumstances as would have been apparent to the parties, suggest an intent to retain privilege for all purposes. The ultimate question is what the parties intended in relation to privilege by the arrangement into which they entered. While the context is of course important, the dominant words in Russell McVeagh’s letter are, in my views, the words ".... on the express basis that, in doing so [making the documents available], privilege is not waived ...."

  172. I am satisfied, after full consideration of the competing submissions, that the Judge was correct when he viewed the arrangement as amounting to a general reservation of privilege. For the reasons given I do not consider the dominant words are limited by their context. They should be allowed in these circumstances to speak for themselves. How else could Russell McVeagh reserve privilege for all purposes other than Mr. Ennor’s intended use of the documents? In respect of that use the Judge made a clear finding to which I refer in the next paragraph and which I would not disturb. My view is reinforced by the embargo on Mr. Ennor further copying the documents.

  173. My ultimate conclusion is therefore that Russell McVeagh’s privilege in the documents was waived only for the limited purpose of enabling Mr. Ennor to familiarise himself with the very complex background to the complaint against Mr. X. As Paterson J put it, the documents were made available for inspection by Mr. Ennor and not by the Society. They were made available only for the purpose of Mr. McElrea’s complaint against Mr. X. That was the compass of the Society’s expressed wish to see the documents. It would in this light be unreasonable to take the view, against Russell McVeagh’s clear statement that privilege was not waived, that the firm had effectively made a general waiver, save for the immediate purposes of the bloodstock litigation. It is a clear inference from the circumstances that Russell McVeagh was intending to make the documents available to Mr. Ennor only for the purposes of enabling him to understand the background to Mr. McElrea’s complaint against Mr. X. The Society’s failure to mention the other two complaints, which it had by then received, does not give it a secure basis for suggesting that Russell McVeagh should have expressly referred to any other complaints, actual or potential, if it wished to reserve privilege as regards them.

  174. There is in the end no sufficient reason to read the crucial letter as waiving privilege on any wider basis than is inherent in the arrangement made, namely that Mr. Ennor would be able to examine the documents but would not copy them to anyone else. The combination of circumstances which attended the making of the arrangement can only mean that, by saying it was not waiving privilege, Russell McVeagh was making it clear that the privileged documents were to be viewed solely by Mr. Ennor and were to be used by him solely for the purpose of familiarising himself with the circumstances which lay behind the complaint made by Mr. McElrea against Mr. X. Any greater use of the privileged documents by Mr. Ennor and now by Mr. Judd, amounts to a breach of the arrangement. Such greater use cannot be compelled by the Society because Russell McVeagh has retained privilege in the documents. In saying that, I am assuming that the documents are truly privileged and that no fraud or other analogous exception to that privilege exists.

    SUMMARY

  175. It is convenient by way of summary to set out the four issues which, during the hearing, counsel accepted required determination on the appeal. On each issue I set out my conclusions in summary form.

    1. Is the Society empowered by the Law Practitioners Act 1982 to compel production of documents otherwise the subject of legal professional privilege?

      No. This answer is subject to the caveat that the issue whether the Act totally abrogates privilege at the investigation stage is reserved for final determination after full argument.

    2. Is partial waiver possible in law?

      Yes

    3. What was the effect of the arrangement between Russell McVeagh and Mr. Ennor?

      It amounted to a partial waiver enabling Mr. Ennor to familiarise himself with the background to the complaint by Mr. McElrea against Mr. X. Subject to that, Russell McVeagh retained privilege in those documents for which a valid claim to privilege existed.

    4. Could the Society legally bind itself to accept such retention of privilege in the light of its statutory duties?

      As is inherent in the answer to the first issue, the answer is yes but subject to the same reservation.

    CONCLUSION/FORMAL ORDERS

  176. I would deliver this judgment on an interim basis in the light of the fact that it was agreed at the hearing that the question of imputed or implied waiver should be reserved for further consideration. If the Society wishes to pursue that question, a further fixture should be arranged, at which any other outstanding issues can be addressed. So far, I regard the contentions advanced by the Society as having failed. I would uphold Paterson J’s decision. Subject to the need for a further hearing, and what may transpire if any such hearing is required, my view is that the appeal should be dismissed, with consequential orders as to costs, and the matter remitted to the High Court for any further determinations that may be necessary consequent upon this judgment. However the orders of the Court are those set out in the judgment of the majority (see paras [133] to [135 ] herein).


Cases

R v Uljee [1982] 1 NZLR 561; Commissioner of Inland Revenue v West-Walker [1954] NZLR 191; R v Home Secretary, exparte Leech [1994] QB 198; R v Secretary of State for the Home Department, exparte Daly [2001] 3 All ER 433; Taylor v New Zealand Poultry Board [1984] 1 NZLR 394; Corporate Affairs Commission of New South Wales v Yuill (1991) 172 CLR 319; Royal Aquarium and Summer and Winter Garden Society Ltd v Parkinson [1892] 1 QB 431; Lincoln v Daniels [1962] 1 QB 237

X v Bedfordshire County Council [1995] 2 AC 633; R v H [2000] 2 NZLR 257 CA; Re L (A Minor) [1997] AC 16; B (A Minor) v DPP [2000] 2 WLR 452; Controlled Consultants v Commissioner for Corporate Affairs (Vic) (1985) 156 CLR 385; Green v Housden [1993] 2 NZLR 273, CA; NZ Stock Exchange v Commissioner of Inland Revenue [1992] 3 NZLR 1; R v Derby Magistrates’ Court exparte B [1996] AC 487; Crisford v Haszard [2000] 2 NZLR 729; Parry-Jones v The Law Society [1969] 1 Ch 1; Exparte Pierson [1998] AC 539; British Coal Corp v Dennis Rye Ltd [1988] 3 All ER 816 (CA); Bourns Inc v Raychem Corp [1999] 3 All ER 154 (CA); Goldman v Hesper [1988] 1 WLR 1238; Goldberg v Ng (1995) 185 CLR 83; Calcraft v Guest [1898] 1 QB 759; Corporate Group Holdings Ltd v Corporate Resources Group Ltd [1991] 1 NZLR 115; Ashburton v Pape [1913] 2 Ch 469; Paragon v Freshfields [1999] 1 WLR 1183; Harbour Inn Seafoods Ltd v Swizterland General Insurance Co Ltd [1990] 2 NZLR 381; CC Bottlers Ltd v Lion Nathan Ltd [1993] 2 NZLR 445

Legislations

Law Practitioners Act 1931: s.63

Law Practitioners Act 1982: s.11, s.45, s.101, s.126, s.127

Solicitors’ Trust Account Regulations 1998: S.R. 1998/16 Part 2

Authors and other references

R B Cooke QC, ed: Portrait of a Profession (1969)

Colin Passmore’s Privilege CLT Professional Publishing (1997), 178ff

W R Flaus: "Discipline within the New Zealand Legal Profession", 6 VUW Law Review (1971-1973)

Smith & Hogan: Criminal Law, 8ed 1996, Butterworths

Representations

R E Harrison QC and G M Illingworth for the Appellants (instructed by Glaister Ennor & Kiff, Auckland)
R J Craddock QC, B R Latimour and A L Ringwood for the Respondents (instructed by Bell Gully, Auckland)
D L Mathieson QC for F W M McElrea (instructed by Sellar Bone & Partners, Auckland)

Notes:-

[a] The law firm appealed against this decision. The Privy Council (Lord Hope of Craighead, Lord Hobhouse of Woodborough, Lord Millett, Lord Scott of Foscote and Lord Walker of Gestingthorpe) on 19 May 2003 allowed the appeal: see Russel McVeagh McKenzie Bartleet & Co v Auckland District Law Society @ IpsofactoJ.com: International Cases [2003] Part 6 Case 12 [PC]


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