Ipsofactoj.com: International Cases [2003] Part 6 Case 12 [PC]


THE PRIVY COUNCIL

Coram

Russell McVeagh

McKenzie Bartleet & Co.

- vs -

Auckland District Law Society

LORD HOPE OF CRAIGHEAD

LORD HOBHOUSE OF WOODBOROUGH

LORD MILLETT

LORD SCOTT OF FOSCOTE

LORD WALKER OF GESTINGTHORPE

19 MAY 2003


Judgment

Lord Millett

(delivered the judgment of the Board)

  1. This appeal is brought by Russell McVeagh McKenzie Bartleet & Co, an Auckland law firm, (“the firm”) and a number of its present and former partners. They appeal from a judgment of the Court of Appeal of New Zealand given on 16 October 2001 which reversed a judgment of the High Court of New Zealand (Paterson J) dated 6 July 2000. The present appeal is largely a contest between the firm and the Auckland District Law Society (“the Society”). Partners in the firm are members of the Society.

  2. The main issue is whether the Society is entitled under Section 101(3)(d) of the Law Practitioners Act 1982 (“the 1982 Act”) to require the firm to produce privileged documents for the purpose of an inquiry into allegations of professional misconduct. This turns on whether the Act, which gives the Society power to call for documents from practitioners under investigation, overrides any claim to legal professional privilege which may subsist in them. The judge held that it does not. By a majority (Gault, Keith and McGrath JJ) the Court of Appeal held that it does. Elias CJ and Tipping J dissented.[a]

    THE FACTS

  3. The facts are fully set out in the judgments below and it is unnecessary for their Lordships to rehearse them at length. The material facts may be summarised as follows.

  4. The individual appellants are legal practitioners who are or have been the subject of complaints to the Society. They include not only present and former partners in the firm but also the solicitor and senior counsel who acted for the firm in defending proceedings brought against it. These arose out of the failure of partnerships formed by the firm for clients for the purpose of investment in bloodstock. The partner in the firm who had acted in the formation and promotion of the partnerships was a Mr. Carran. Following the demise of the partnerships, proceedings against the promoters and their professional advisers were brought in the High Court of New Zealand by many of the investors. All the proceedings were ultimately settled out of court.

  5. Between 1996 and 1998 the Society received nearly 180 complaints against the firm and individual practitioners. They concerned not only formation of the partnerships but also the conduct of the firm’s defence of the proceedings which followed their failure. Their Lordships should say at once that the Society has since disposed of most of the complaints without bringing charges. Nevertheless at the end of 2001 some 39 complaints against 13 practitioners were still outstanding.

  6. The earliest of the complaints was made by Mr. McElrea, a former partner who had retired from the firm to become a District Court judge. He had been asked to contribute a substantial sum towards the settlement of the proceedings against the firm and was concerned at the prospect that its professional indemnity insurance might be invalidated by Mr. Carran’s wrongdoing. He made a confidential report to the Society under the New Zealand Law Society Code of Ethics. In it he alleged that Mr. Carran, who by then had ceased to be a partner in the firm, had been guilty of serious professional misconduct. He made no complaint against the firm itself or any other person. He invited the Society to ask the firm for copies of all relevant documents, including privileged material relating to its professional indemnity insurance. Mr. McElrea has been given leave to intervene (by written submissions only) in the present appeal in order to support the Society.

  7. The Society duly established a Complaints Committee to investigate the matters complained of and appointed Mr. Stuart Ennor QC as counsel to assist the Committee. He was a highly respected and trusted member of the bar of New Zealand. He has unfortunately since died.

  8. In March 1997 the Society wrote to the firm about the complaint which it had received from Mr. McElrea. The Society’s letter referred only to his complaint; it did not mention others which the Society had since received. For its part the firm was not then or for some time thereafter aware of any other complaints against the firm or its partners. By its letter the Society requested the firm to provide it on a voluntary basis with copies of the documents mentioned by Mr. McElrea. Their Lordships note that the Society was not yet seeking to exercise its statutory powers.  

  9. The firm replied to the Society’s request by letter dated 7th April 1997. The letter is of central importance in this case and their Lordships consider that the material parts of the letter should be set out in full. They read as follows:

    May we assure you of the firm’s willingness to assist and co-operate in the Society’s investigation in respect of Mr. Carran. 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.

  10. Mr. Ennor replied on 14th April 1997 stating that he was happy to proceed “in the first instance” as suggested in the firm’s letter.

  11. In its letter the firm had indicated that it wished to involve Mr. Anthony Lusk QC in the process of providing the material. He was the senior counsel who had appeared for the firm and its partners in the proceedings brought against them. At the time of the exchange of letters he was overseas, but on his return he and Mr. Ennor reached an agreement which supplemented the terms of the letter of 7th April.

  12. The documents were handed over to Mr. Ennor on 14th May 1997. It is common ground for the purpose of this appeal that they were all covered by legal professional privilege. In some cases the privilege was that of the firm itself or its partners; in others it was that of its clients.

  13. In September 1997 the Society provided the firm with copies of other complaints which had been made against it. Paterson J found that until then the firm was unaware of any complaint against the firm itself or any of its partners other than Mr. Carran.

  14. Subsequently, in response to a request from Mr. Ennor for further assistance, Mr. Lusk wrote on 1 April 1998 that he would have difficulty in providing it without disclosing information which he had received from Mr. Carran when interviewing him in his capacity as counsel both for the firm and for Mr. Carran personally. He pointed out that such information was subject to legal professional privilege and that neither he nor the firm could waive Mr. Carran’s personal privilege. He said that he had no doubt that Mr. Carran would never have agreed to the interviews at all or to have them recorded if there were any suggestion that the information could later be made available to the Society or become evidence against him in a disciplinary hearing conducted in public.

  15. The second respondent Mr. Gary Judd QC was appointed counsel for the Society in May 1998. He took over the investigations into the complaints, though Mr. Ennor continued to play a part for a while. Mr. Judd was given possession of Mr. Ennor’s files, though he was not at this stage advised of the arrangements between Mr. Ennor and Mr. Lusk regarding the documents which the firm had supplied.   

  16. The firm did not become aware of Mr. Judd’s involvement until June 1998. Mr. Lusk was concerned to learn that the documents had been passed to Mr. Judd and wrote on 15 July 1998 to Mr. Ennor to say that the privilege which the firm had been at pains to protect had become a significant issue. He asked for an assurance that the Society would observe the terms on which the documents had been provided.   

  17. Mr. Lusk’s letter was passed to Mr. Judd, who replied on 27 July 1998 that he had until then been unaware that the firm had “attempted to impose” any constraints in relation to the documents. As it happened, however, he had made no copies of any of them since they had come into his possession, although he had referred to them and quoted from them in his reports to the Society. He said that he considered that he “stood in the shoes of” Mr. Ennor and that like him he was happy “in the first instance” to hold the documents on the terms of the firm’s letter of 7th April 1997, that is to say that he had

    received these documents on the express basis that, in doing so, privilege (in respect of the bloodstock partnership litigation) is not waived, and that the documents will not be further copied.

  18. Mr. Lusk did not accept that Mr. Judd stood in Mr. Ennor’s shoes. The arrangements, he said, were personal to Mr. Ennor. Mr. Judd replied that if the were personal to Mr. Ennor then they did not bind him. This brought matters to a head. The firm called for the return of the documents. The Society refused to return them and served formal notices under section 101(3) of the Act, one requisitioning some of the documents already in its possession and the other requisitioning further documents to which legal professional privilege also attached.

  19. The present proceedings followed. The firm sought an order for the return of the documents already delivered. The Society resisted the claim and counterclaimed for a declaration that the firm was obliged to comply with the requisitions.

    THE CONTENTS OF THE DOCUMENTS

  20. Although the documents supplied to Mr. Ennor were in evidence before the High Court and the Court of Appeal, they were not inspected and their contents were not considered by either Court. During the trial at first instance counsel for the Society invited the Court to examine the documents or some of them in order to establish their potential relevance and evidential significance in relation to the Society’s public interest defence. The judge acknowledged that the allegations were of professional misconduct and were particularly serious. But in a mid-trial ruling he refused to inspect the documents or to permit the Society to refer to their contents. 

  21. The Society’s invitation was not repeated before the Court of Appeal but was renewed before their Lordships. For the purpose of the appeal the Society accepted that the documents are prima facie privileged, but reserved the right to challenge their status in any future application for production of particular documents. For its part the firm acknowledged that the allegations which the Society is investigating are extremely serious and that the documents are relevant to its inquiries. The principal allegations are in any case summarised in an affidavit of Mr. Lusk which is with the papers. In those circumstances their Lordships were unable to discern any advantage in examining the documents themselves or in permitting counsel for the Society to refer to them in open court, and they declined to do so.

    THE STATUTORY SCHEME

  22. Before 1935 the jurisdiction to remove the names of practitioners from the Rolls and to impose lesser sanctions for professional misconduct was vested exclusively in the Supreme Court. The investigation of complaints and the bringing of disciplinary proceedings before the Supreme Court were undertaken by the New Zealand Law Society and (after 1913) District Law Societies. Under the Law Practitioners Acts of 1935 and 1955 the Disciplinary Committee of the New Zealand Law Society was given power to impose sanctions which included striking off. Although the High Court continued to retain a concurrent disciplinary role until it was abolished by the 1982 Act, in practice it was largely replaced by the statutory regime of professional self-regulation as the means of exercising disciplinary powers over practitioners.

  23. Part VII of the 1982 Act establishes an elaborate scheme for disciplinary process against legal practitioners. Like the legislation which it replaced, it distinguishes between the investigation of complaints of the conduct of practitioners or their employees (sections 98-102) and the disciplinary proceedings which may follow (sections 103-138). A complaint by a member of the public of the conduct of a practitioner or his employee must be referred to the District Law Society of which the practitioner was a member at the relevant time (section 98). In some circumstances the Council of a District Law Society has power to initiate an inquiry of its own motion (section 99). Every complaint must be inquired into as soon as practicable by the District Law Society (section 101(1)), which may refer it to a complaints committee established for the purpose (section 100). If the Council of the District Law Society or the complaints committee concludes that the case is of sufficient gravity to warrant the making of a charge then it must bring a charge against him, in the case of a practitioner before the District Disciplinary Tribunal or the New Zealand Disciplinary Tribunal, and in the case of a person employed by a practitioner before the New Zealand Disciplinary Tribunal (section 101(2)).

  24. A District Disciplinary Tribunal may hear and determine the charge itself and impose sanctions (which do not include striking off) or in a case of sufficient gravity may refer it to the New Zealand Disciplinary Committee (section 106). The New Zealand Disciplinary Tribunal hears charges brought before it by the Council of a District Law Society or a District Complaints Committee or referred to it by a District Disciplinary Tribunal and appeals by way of rehearing from decisions of District Disciplinary Tribunals (sections 107 and 110). It has a wider range of sanctions available to it, which include striking off (section 112). Unlike a District Complaints Committee or District Disciplinary Tribunal, the New Zealand Disciplinary Tribunal sits in public (section 111).   

  25. The provisions of direct relevance to the present appeal are those in section 101 (which is concerned with the investigatory stage) and sections 126 and 127 (which are concerned with the disciplinary hearing). The critical provisions are contained in section 101(3)(d) and (e) and section 101(6). These are in the following terms:

    101.

    Inquiry by District Council or committee

    (3)

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

    (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.

    (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.

  26. Section 126(1) authorises a Disciplinary Tribunal to require any person to attend and give evidence before it at the hearing of disciplinary proceedings 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. Section 126(5) makes it an offence for a person, without lawful justification or excuse, to refuse or fail to attend and give evidence when required to do so by a Tribunal, to answer truly and fully any question put to him by a member of the Tribunal, or to produce to the Tribunal any book, document, paper or record required of him.

  27. Section 127 reads as follows:

    127.

    Immunity of witness and counsel

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

    THE DECISIONS BELOW

    Paterson J

  28. The judge held that the Act did not abrogate legal professional privilege and accordingly the firm was not obliged to produce privileged documents in response to the Society’s requisitions. He accordingly dismissed the Society’s counterclaim. As regards the documents which the firm had voluntarily supplied to Mr. Ennor he held as follows:

    1. The firm had waived privilege only for the particular and limited purpose of investigating the complaint against Mr. Carran and not for any other purpose.

    2. Under the terms on which he had received the documents Mr. Ennor was not entitled to copy them to the Committee or the Society.

    3. As counsel for the Society Mr. Judd was entitled to the benefit of the arrangements which Mr. Ennor had made with the firm and held the documents on the same terms.

    4. If the documents delivered had not been privileged, the public interest in the proper investigation of complaints against legal practitioners would have entitled the Society to retain the documents for the purposes of its investigation into all the complaints. In that event the public interest would have prevailed over the firm’s rights to the protection of information which it had supplied in confidence.

  29. The judge, however, refused to make an order for the immediate return of the documents to the firm. He held that counsel for the Committee was entitled to retain them for the limited purpose for which they had been supplied and on the terms originally agreed with Mr. Ennor.

  30. With respect their Lordships find this part of the judge’s ruling difficult to follow. It proceeded from his conclusion that the arrangements under which the documents were supplied to Mr. Ennor were not contractual, a conclusion which their Lordships find it easy to accept. This would not, of course, prevent the terms on which they were supplied from being enforceable in equity, for it is well established that a person cannot in good conscience retain possession of property which has been made available to him and disregard the terms on which he received it. But in the absence of any contractual entitlement to retain the documents the Society’s right to do so must depend on the firm’s continuing consent. Their Lordships would have been inclined to regard the Society as holding the documents to the firm’s order with power, revocable at any time by the firm, to use them in the meantime for the purpose for which they were supplied.

  31. On this footing, the Society’s consensual right to retain the documents was determined when the firm demanded their return, and the judge should have ordered that they be returned forthwith. But there has been no appeal from his refusal to do so, and their Lordships need say no more about it.

    THE COURT OF APPEAL

  32. The Court of Appeal recognised that it would be necessary to consider whether the arrangements with Mr. Ennor amounted to a general waiver of privilege in the documents which had been provided to him only if privilege was a good answer to a statutory requisition. Accordingly it treated this as raising the real issue in the case.

  33. The majority held that privilege was not a good answer to a statutory requisition, and that accordingly it was unnecessary to consider whether and to what extent privilege had been waived. However, they expressed a firm view on this issue without formally deciding it. They held that there had been a general waiver of privilege in the documents in relation to the investigation by the Complaints Committee, but not in relation to any disciplinary proceedings which might subsequently be brought before a Disciplinary Tribunal.

  34. On the main issue the majority held that the duty to comply with a requirement under section 101 during the investigative stage overrides legal professional privilege, but that section 127 preserves the privilege in relation to subsequent proceedings before a Disciplinary Tribunal. They accepted the high importance of the privilege, but considered that it was overridden by the even higher public interest in maintaining the integrity of the legal profession. As the majority put it at paragraph 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 misconduct. 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 private and public interests.

    They summed up their conclusions as follows, at paragraph 122:

    The consistent theme in the legislation is that the public interest requires ascertainment of the factual position expeditiously .... 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.

  35. On the issue of waiver the majority acknowledged that privileged material may be disclosed for a limited purpose, with the result that it can be used for that purpose but no other. They observed at paragraph 127 that Mr. Lusk was plainly concerned to maintain privilege in connection with the subsisting bloodstock litigation, and that he appreciated that he was not able to waive any privilege which Mr. Carran enjoyed. Despite this he supplied the documents to the Society without seeking Mr. Carran’s consent. They concluded that this showed that Mr. Lusk did not consider that Mr. Carran was able to claim privilege in relation to the Society’s investigation of the complaint. If Mr. Carran could not do so, nor could the other partners in the firm. The “compelling inference” in these circumstances was that Mr. Lusk’s mind was not directed at all to confining the use of the documents by the Society under its statutory powers beyond protecting rights to privilege in the bloodstock litigation. 

  36. The minority dissented. They held that privilege was a good answer to a statutory requisition and had not been waived in respect of the documents supplied to Mr. Ennor for any purpose save the limited purpose of enabling him to familiarise himself with the background to the complaint by Mr. McElrea against Mr. Carran.

    LEGAL PROFESSION PRIVILEGE

  37. An authoritative exposition of the  rationale of legal professional privilege is to be found in the speech of Lord Taylor of Gosforth CJ in R v Derby Magistrates’ Court Ex p B [1996] 1 AC 487, with whom the rest of the House agreed. Lord Taylor CJ described it in these words, at pp 507 and 508:

    The principle which runs through all these cases, and the many other cases which were cited, is that a man must be able to consult his lawyer in confidence, since otherwise he might hold back half the truth. The client must be sure that what he tells his lawyer in confidence will never be revealed without his consent. Legal professional privilege is thus much more than an ordinary rule of evidence, limited in its application to the facts of a particular case. It is a fundamental condition on which the administration of justice as a whole rests .... [It] is not for the sake of the applicant alone that the privilege must be upheld. It is in the wider interests of all those hereafter who might otherwise be deterred from telling the whole truth to their solicitors.

  38. In explaining the rationale which underpins the doctrine and its consequences, Lord Taylor CJ drew on a long and consistent line of English authority. In Bolton v Liverpool Corporation (1833) 1 M & K 88 the defendant sought inspection of the plaintiff’s instructions to counsel, though not of the advice which counsel gave. Refusing the application Lord Brougham LC said at p 94:

    It seems plain, that the course of justice must stop if such a right exists. No man will dare to consult a professional adviser with a view to his defence or to the enforcement of his rights.

  39. In Holmes v Baddeley (1844) 1 Ph 476, 480-481 Lord Lyndhurst LC said:

    The principle upon which this rule is established is that communications between a party and his professional advisers, with a view to legal proceedings, should be unfettered; and they should not be restrained by any apprehension of such communications being afterwards divulged and made use of to his prejudice. To give full effect to this principle it is obvious that they ought to be privileged, not merely in the cause then contemplated or depending, but that the privilege ought to extend to any subsequent litigation with the same or any other party or parties .... The necessary confidence will be destroyed if it be known that the communication can be revealed at any time.

    [emphasis added]

  40. In Anderson v Bank of British Columbia (1876) 2 ChD 644, 649 Sir George Jessel MR. said:

    The object and meaning of the rule is this: that as, by reason of the complexity and difficulty of our law, litigation can only be properly conducted by professional men, it is absolutely necessary that a man, in order to prosecute his rights or to defend himself from an improper claim, should have recourse to the assistance of professional lawyers, and it being so absolutely necessary, it is equally necessary, to use a vulgar phrase, that he should be able to make a clean breast of it to the gentleman whom he consults with a view to the prosecution of his claim, or the substantiating of his defence against the claim of others; that he should be able to place unrestricted and unbounded confidence in the professional agent, and that the communications he so makes to him, should be kept secret, unless with his consent .... that he should be enabled properly to conclude his litigation.

  41. In Southwark & Vauxhall Water Co v Quick (1878) 3 QBD 315, 317-318, Cockburn CJ said:

    The relation between the client and his professional legal adviser is a confidential relation of such a nature that to my mind the maintenance of the privilege with regard to it is essential to the interests of justice and the well-being of society. Though it might occasionally happen that the removal of the privilege would assist in the elucidation of matters in dispute, I do not think that this occasional benefit justifies us in incurring the attendant risk.

    [emphasis added]

  42. In Pearce v Foster (1885) 15 QBD 114, 119-120 Sir Baliol Brett MR. said:

    The privilege with regard to confidential communications between solicitor and client for professional purposes ought to be preserved, and not frittered away. The reason of the privilege is that there may be that free and confident communication between solicitor and client which lies at the foundation of the use and service of the solicitor to the client; but, if at any time or under any circumstances such communications are subject to discovery, it is obvious that this freedom of communication will be impaired. The liability of such communications to discovery in a subsequent action would have this effect as well as their liability to discovery in the original action.

    [emphasis added]

  43. The same rationale is seen as underlying the doctrine in New Zealand today. In R v Uljee [1982] 1 NZLR 561, 572 Richardson J said:

    For the focus of the solicitor and client privilege is not on the conduct of third parties at all. It is on the freedom of communication between lawyer and client. So it is on the effect on solicitor and client if that confidentiality is not assured.

  44. Some principles are well established and were confirmed by Lord Taylor CJ in R v Derby Magistrates’ Court, Ex p B at p 503G-H. First, the privilege remains after the occasion for it has passed: unless waived “once privileged, always privileged”. Secondly, the privilege is the same whether the documents are sought for the purpose of civil or criminal proceedings and whether by the prosecution or the defence. Thirdly, the refusal of the claimant to waive his privilege for any reason or none cannot be questioned or investigated by the Court. Fourthly, save in cases where the privileged communication is itself the means of carrying out a fraud, the privilege is absolute. Once the privilege is established, the lawyer’s mouth is “shut for ever”: (see Wilson v Rastall (1792) 4 Durn & E 753 at p 759 per Buller J). The Society has not alleged that any of the documents fall within the excepted category, but if any of them does it retains the right to make such a claim hereafter.

  45. It is, of course, well established that the privilege belongs to the client and not to his lawyer, and that it may not be waived by the lawyer without his client’s consent. But the privilege is available to the client whether he is a layman or a lawyer; even a lawyer – perhaps especially a lawyer – has need of the services of another lawyer if he becomes personally embroiled in legal proceedings.  

    COMPETING PUBLIC INTEREST: THE BALANCING EXERCISE

  46. The majority of the Court of Appeal of New Zealand described the present case as one which required the Court to strike a balance between competing private and public interests. That is undoubtedly the position where the claimant invokes the equitable doctrine of confidence. But it is not at all the same where he claims to withhold information on the ground of legal professional privilege. As Lord Taylor CJ observed in the passage cited from R v Derby Magistrates’ Court Ex p B [1996] AC 487, 507, 508, the privilege does not exist for his sake alone. It is

    a fundamental condition on which the administration of justice as a whole rests

    and exists

    in the wider interests of all those who hereafter might otherwise be deterred from telling the whole truth to their solicitors.

  47. The present case does not, with respect, involve a contest between competing private and public interests, but between two competing public interests of high importance: the public interest in the maintenance of the integrity of the legal profession and the public interest in the administration of justice. The former interest may be said to require that all relevant information be made available to those charged with the investigation and determination of complaints against legal practitioners. The latter requires that a lawyer must be able to give his client an absolute and unqualified assurance that whatever the client tells him in confidence will never be disclosed without his consent.

  48. The public interest in overriding the privilege could scarcely have been higher than it was in R v Derby Magistrates’ Court, Ex p B. B (the applicant) was charged with the murder of a young girl. He made a confession to the police, but afterwards he changed his story and said that his stepfather had killed the girl. B was tried and acquitted. The stepfather was then charged with the murder. At his committal for trial, B was called as a prosecution witness. In cross-examination he was asked by the defence about the instructions he had given his solicitors in relation to his original account of what had taken place. He declined to waive privilege. The stepfather then obtained from the stipendiary magistrate the issue of a witness summons requiring B’s solicitor to produce all attendance notes and proofs of evidence disclosing B’s factual instructions in defence to the charge of murder but not the advice given to him by solicitors and counsel. B applied for judicial review.

  49. Following the Court of Appeal’s decision in R v Ataou [1988] QB 798 the magistrate, (whose decision was upheld by the Divisional Court) held that the question was whether B’s interest in asserting the privilege outweighed the public interest in avoiding a miscarriage of justice by ensuring that relevant and admissible evidence should be made available to the defence in criminal proceedings. To this question there could be only one answer. Since B had been acquitted and could not be tried again, it was unlikely that disclosure could cause him significant harm. Non-disclosure, on the other hand, ran the risk of an innocent man being convicted of murder.

  50. The House of Lords overruled R v Ataou and upheld B’s claim to privilege. It expressly rejected the argument that legal professional privilege is an interest which falls to be balanced against competing public interests. Lord Taylor CJ said [1996] 1 AC 487, 508:

    the drawback to that approach is that once any exception to the general rule is allowed, the client’s confidence is necessarily lost. The solicitor, instead of being able to tell his client that anything which the client might say would never in any circumstances be revealed without his consent, would have to qualify his assurance. He would have to tell the client that his confidence might be broken if in some future case the court were to hold that he no longer had ‘any recognisable interest’ in asserting his privilege. One can see at once that the purpose of the privilege would thereby be undermined.

  51. This was to the same effect as the many passages in the authorities to which their Lordships have already drawn particular attention. To the argument that the balance between competing public interests should not be struck once and for all on a generalised basis, but should be examined individually on the particular facts of each case,  Lord Taylor CJ said at p 508

    .... if a balancing exercise was ever required in the case of legal professional privilege, it was performed once for all in the 16th Century, and since then has applied across the board in every case, irrespective of the client’s individual merits.

    Lord Lloyd of Berwick also rejected the idea that a balancing exercise was required. He explained at p 509:

    .... the courts have for very many years regarded legal professional privilege as the predominant public interest. A balancing exercise is not required in individual cases because the balance must always come down in favour of upholding the privilege ....

  52. There is authority to the same effect in New Zealand. In R v Uljee [1982] 1 NZLR 561, 576-577 McMullin J observed:

    It is not now a question of weighing the public interest in each case to see whether the rule [of legal professional privilege] should be applied. Whether the principle operates as a bar to the emergence of the truth and to the overall public detriment is not now a relevant legal consideration.

  53. The same conclusion now appears to have been reached in Australia (though as in England not until after some earlier decisions to the contrary). In Carter v Northmore Hale Davy & Leake (1995) 183 CLR 121 the High Court held that the defendant on a criminal charge cannot compel the production of privileged documents even though they may establish his innocence or materially assist his defence. In the course of his judgment Brennan J at p 128 cited with approval the observations of Mason and Wilson JJ in Waterford v Commonwealth of Australia (1987) 163 CLR 54, 64-65:

    Legal professional privilege is itself the product of a balancing exercise between competing public interests whereby, subject to the well-recognised crime or fraud exception (cf R v Bell; Ex parte Lees (1980) 146 CLR 141), the public interest in ‘the perfect administration of justice’ (per Earl of Halsbury LC in Bullivant v Attorney-General of Victoria [1901] AC 196 at 200) is accorded paramountcy over the public interest that requires, in the interests of a fair trial, the admission in evidence of all relevant documentary evidence. Given its application, no further balancing exercise is required.

    Brennan J at 183 CLR 121, 128 also approved the observations of Dawson J in his dissenting judgment in Attorney-General (NT) v Kearney (1985) 158 CLR 500 at 532:

    The policy which lies behind the doctrine views unrestricted communication between lawyer and client upon professional matters as being necessary for the proper functioning of our legal system. If inroads could be made upon the privilege in individual cases by involving a ‘higher public interest’, its application would become uncertain and the policy behind it would be effectively undermined.

  54. Their Lordships consider that the rationale of the doctrine compels this conclusion. If the lawyer is to be able to give his client an absolute and unqualified assurance that what he tells him will not be disclosed without his consent in any circumstances, the assurance must follow and not precede the undertaking of any balancing exercise.

  55. Their Lordships do not overlook the fact that a different approach has been adopted in Canada, where the Courts do conduct a balancing exercise by reference to the facts of the particular case. The common law is no longer monolithic, and it was open to the New Zealand Court of Appeal to make a deliberate policy decision to depart from the English approach on the ground that it is not appropriate to conditions in New Zealand. Had it done so, their Lordships would have respected its decision. But it did not. All the members of the Court of Appeal considered that they were applying established principles of English law. Their Lordships respectfully consider that the majority misunderstood them.

  56. In saying that the balance was struck once for all in the 16th Century, Lord Taylor CJ had in mind the case where the right to compel production of documents is a common law right. Where the right is statutory, as in the present case, the balance is struck by Parliament when enacting the statute in question. In such a case the task of the Court is not to decide where the balance should be struck in the particular case, but where Parliament has struck it.

  57. The question, therefore, is whether the 1982 Act excludes legal professional privilege either expressly or by necessary implication.

    SECTION 101(3)(d)

  58. Section 101(3)(d) does not expressly exclude legal professional privilege. The majority of the Court of Appeal held that it did so by necessary implication. Their Lordships are unable to agree. The meaning of the expression “by necessary implication” was authoritatively stated by Lord Hobhouse of Woodborough in R (Morgan Grenfell & Co Ltd) v Special Commissioner of Income Tax [2002] 2 WLR 1299, which is the most recent English decision on legal professional privilege. He said at p 1131:

    A necessary implication is not the same as a reasonable implication .... A necessary implication is one which necessarily follows from the express provisions of the statute construed in their context. It distinguishes between what it would have been sensible or reasonable for Parliament to have included or what Parliament would, if it had thought about it, probably have included and what it is clear that the express language of the statute shows that the statute must have included. A necessary implication is a matter of express language and logic not interpretation.

  59. It has been accepted in New Zealand that, if the section is capable of being interpreted on the supposition that the privilege is not abrogated by it, it should be so interpreted: see Commissioner of Inland Revenue v West-Walker [1954] NZLR 191 CA at p 213 per Gresson J. A useful test is to write in the words “not being privileged documents” and ask, not “does that produce a reasonable result?” or “does it impede the statutory purpose for which production may be required?” but “does that produce an inconsistency?” or “does it stultify the statutory purpose?”  The circumstances in which such a question would receive an affirmative answer would be rare. But a statutory right to require production of correspondence between a person and his solicitor for the purpose of obtaining legal advice, for example, would obviously be inconsistent with the existence of a right to withhold documents on the ground of legal professional privilege. And unless a taxing master could require the production of privileged documents it would be impossible for him to perform his function of taxing a solicitor’s bill of costs: see Goldman v Hesper [1988] 1 WLR 1238.   

    SECTION 101(6)

  60. Their Lordships agree with the Court of Appeal that section 101(6) is neutral on the effect of section 101(3). If section 101(3) overrides privilege, then a claim to privilege is not a lawful justification or excuse for withholding production: and if it does not, then it is.

  61. But section 101(6) is not without significance. It supplies the sanction for the obligation to comply with the requirement for production. It has two consequences.

    • The first is that failure or refusal to comply without lawful justification or excuse constitutes professional misconduct.

    • The second is that failure or refusal to comply with a requirement does not constitute professional misconduct if it has a lawful justification or excuse.

    This makes it impossible to argue that a practitioner’s membership of his District Law Society makes it incumbent on him to do everything in his power to assist it in its inquiries and to waive privilege where necessary.

    SECTION 127

  62. The majority of the Court of Appeal considered that, while section 101(3) overrides legal professional privilege at the investigative stage, section 127 preserves it for the hearing before a Disciplinary Tribunal. They relied (inter alia) on the word “proceedings” to confine the operation of the section to the hearing.

  63. Their Lordships agree that section 127 applies to the hearing and not at the investigative stage. But they do not agree that it has anything to do with the privilege now under consideration. They observe that the section is concerned only with the privileges and immunities of witnesses and counsel, and that it provides that they are to have the same immunities and privileges as if the proceedings (meaning the proceedings before a Disciplinary Tribunal) were proceedings in a court of law. A question immediately arises: what immunities and privileges are enjoyed by witnesses qua witnesses and counsel qua counsel in proceedings in a court of law which they would not enjoy in proceedings before a tribunal?  The answer is: absolute privilege in defamation and immunity from suit in respect of anything they may say in the course of the proceedings. Legal professional privilege, on the other hand, is not confined to witnesses and counsel and is not conferred on them as such; and even in the absence of statutory provision to that effect it is available in every kind of proceedings whether before a Tribunal or a court of law.

  64. Their Lordships note that the genesis of section 127 is to be found in the 1935 Act, which for the first time conferred disciplinary powers on a Tribunal. Before that Act the Supreme Court had exclusive jurisdiction to hear disciplinary proceedings against practitioners, and witnesses and counsel in such hearings enjoyed the normal immunities and privileges available to them in proceedings in a court of law. But in the absence of special provision to the contrary, they would cease to enjoy those privileges and immunities if the proceedings took place before a Tribunal. Section 127 and its predecessors became necessary when disciplinary jurisdiction was conferred on Tribunals. 

    LEGAL PROFESSIONAL PRIVILEGE: CONCLUSION

  65. Their Lordships conclude that legal professional privilege is a good answer to a requisition under the 1982 Act whether at the investigative stage or in proceedings before a Disciplinary Tribunal. This is sufficient to dispose of the Society’s counterclaim, and it becomes necessary to consider the issue of waiver in relation to the documents supplied to Mr. Ennor.

    LIMITED WAIVER

  66. The Court of Appeal rejected the Society’s contention that privilege could not be waived for a limited purpose and continue to be maintained as an objection to any wider use. The Society renewed its argument before the Board. Privilege, the Society submitted, is merely a right to resist compulsory disclosure. Once disclosure has occurred, it is no longer a question of privilege. Ex hypothesi a right to resist disclosure cannot be invoked against the person to whom disclosure has already been made. If he is to be restrained from making use of the information, it must be on the ground that the information is confidential. But the equitable right to the protection of confidential information may be outweighed by a countervailing public interest in having the information made available. In the present case the Judge held that the public interest would have prevailed over the firm’s rights to preserve confidentiality.

  67. Their Lordships agree that privilege is a right to resist the compulsory disclosure of information. It has been so characterised in numerous authorities. It is sufficient to cite a passage from the judgment of Hoffmann J in Black & Decker Inc v Flymo [1991] 1 WLR 753, 755:

    It is not possible to assert a right to refuse to disclose in respect of a document which has already been disclosed. Once the document has passed into the hands of the other party the question is no longer one of privilege but of admissibility.

  68. The Society’s argument, put colloquially, is that privilege entitles one to refuse to let the cat out of the bag; once it is out of the bag, however, privilege cannot help to put it back. Their Lordships observe that this arises from the nature of privilege; it has nothing to do with waiver. It does not follow that privilege is waived generally because a privileged document has been disclosed for a limited purpose only: see British Coal Corporation v Dennis Rye Ltd (No 2) [1988] 1 WLR 1113: Bourns v Raychem Corporation [1999] 3 All ER 154. The question is not whether privilege has been waived, but whether it has been lost.  It would be unfortunate if it were. It must often be in the interests of the administration of justice that a partial or limited waiver of privilege should be made by a party who would not contemplate anything which might cause privilege to be lost, and it would be most undesirable if the law could not accommodate it.

  69. The Society argued that, once the documents were produced to Mr. Ennor, they ceased to be privileged. Their Lordships consider that this is playing with words. It confuses the nature of the documents with the rights to which the arrangements with Mr. Ennor gave rise. The documents are privileged because they were created for the purpose of giving or receiving legal advice. If they are not produced voluntarily, production cannot be compelled. If they are produced voluntarily, the right to withhold production no longer attaches to them. In that sense the privilege may be said to be lost. But they are the same documents, and it is not inappropriate to describe them as privileged. Their inherent characteristics are the same. The policy which protected them from unauthorised disclosure is the same. The cat is still a cat. It can be put back in the bag.  

  70. There is another confusion also. The appellants want to recover the documents because they are privileged. But they do not rely on privilege to found their cause of action. A party who has parted with possession of documents may have a right to recover possession on any one of a number of grounds. He may reclaim them because they belong to him; or because he has a contractual right to recover them; or because they are confidential; or because he has parted with them for a limited purpose and equity will not permit the recipient to retain them once that purpose is fulfilled. In the present case the documents are both privileged and confidential, but the appellants do not rely on privilege or confidentiality to found their claim to recover them. They rely on the terms of the arrangements under which they were supplied and the limited purpose for which they permitted use to be made of them. Their case is that there is no legal basis on which the Society can retain and make use of the documents free from the limitations which Mr. Lusk imposed and Mr. Ennor accepted.

  71. The fact that the claim to recover the documents is made on equitable grounds does not mean that it must yield to an overriding countervailing public interest. The documents are both confidential and privileged. Whether a claim to the return of such documents is based on a common law right or an equitable one, the policy considerations which give rise to the privilege preclude the Court from conducting a balancing exercise. A lawyer must be able to give his client an unqualified assurance, not only that what passes between them shall never be revealed without his consent in any circumstances, but that should he consent in future to disclosure for a limited purpose those limits will be respected: see Goddard v Nationwide Building Society [1987] 1 QB 670, per Nourse LJ at p 685.     

    THE ARRANGEMENTS WITH MR. ENNOR

  72. The majority of the Court of Appeal accepted that it was possible to waive privilege for a limited purpose only, but held that Mr. Lusk had not done so. They considered that he had waived the privilege for all the purposes of the Complaints Committee’s investigations. They reasoned that, when reaching his agreement with Mr. Ennor, Mr. Lusk could not have believed that privilege applied in an investigation by a complaints committee or he would not have disclosed the documents to Mr. Ennor at all. He must therefore have intended to preserve privilege for a quite different reason connected with the bloodstock litigation.

  73. Their Lordships cannot accept this reasoning. It is inconsistent with the primary facts found on unchallenged evidence by Paterson J and with the express terms of Mr. Lusk’s letter, which offered to make the documents available “on the express basis that, in doing so, privilege is not waived”. The limitations which Mr. Lusk imposed were limitations on the use which Mr. Ennor might make of the documents, not on the extent of the waiver. Save in respect of the agreed use, privilege was expressly reserved. It is true that a reason for maintaining the claim to privilege was that not all the litigation relating to the bloodstock partnerships had been resolved when the letter was written. But this was not necessarily the only reason, nor would it make any difference if it were. If on the true construction of Mr. Lusk’s letter, objectively ascertained, privilege was not waived, that is the end of the matter. It does not matter what his reasons were, nor whether they were wholly logical.

    CONCLUSION

  74. Their Lordships are not disposed to leave this case without expressing their dismay that a professional body representing solicitors, who have the most solemn professional obligation to honour their undertakings, should have seen fit to argue that it was free to disregard the obligations which Mr. Ennor undertook on its behalf. The Society may wish to consider whether the most honourable course would be for it to return the documents without an order requiring it to do so.

  75. Their Lordships will humbly advise Her Majesty that the appeal should be allowed, the order of the Court of Appeal set aside, and the orders of Paterson J restored. The appellants should have their costs in the Court of Appeal and before the Board.

  76. The parties have agreed that, in the event of the appeal succeeding, certain documents should be removed from the Record and returned to the firm and that the identity of the first appellants should not be disclosed. Their Lordships order accordingly. The documents to be removed from the Record should be listed in a minute to be agreed between the parties; failing agreement either party may seek a further order from the Board.


Cases

R v Derby Magistrates’ Court Ex p B [1996] 1 AC 487; Bolton v Liverpool Corporation (1833) 1 M & K 88; Holmes v Baddeley (1844) 1 Ph 476; Anderson v Bank of British Columbia (1876) 2 ChD 644; Southwark & Vauxhall Water Co v Quick (1878) 3 QBD 315; Pearce v Foster (1885) 15 QBD 114; R v Uljee [1982] 1 NZLR 561; Wilson v Rastall (1792) 4 Durn & E 753; R v Ataou [1988] QB 798; Carter v Northmore Hale Davy & Leake (1995) 183 CLR 121; Waterford v Commonwealth of Australia (1987) 163 CLR 54; Attorney-General (NT) v Kearney (1985) 158 CLR 500; R (Morgan Grenfell & Co Ltd) v Special Commissioner of Income Tax [2002] 2 WLR 1299; Commissioner of Inland Revenue v West-Walker [1954] NZLR 191 CA; Goldman v Hesper [1988] 1 WLR 1238; Black & Decker Inc v Flymo [1991] 1 WLR 753; British Coal Corporation v Dennis Rye Ltd (No 2) [1988] 1 WLR 1113; Bourns v Raychem Corporation [1999] 3 All ER 154; Goddard v Nationwide Building Society [1987] 1 QB 670

Legislations

Law Practitioners Act 1982: s.101, s.127

Notes:-

[a] see Auckland District Law Society v Russell McVeagh McKenzie Bartleet & Co IpsofactoJ.com: International Cases [2002] Part 5 Case 4 [NZCA]


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