Hong Kong: Disciplinary Procedures & Privilege

Two recent English decisions highlight the particular challenges when managing legal professional privilege in the context of resolving employee issues. We consider these decisions and how the principles may apply in Hong Kong in relation to dominant purpose, waiver and iniquity and the lessons that they provide to employers in the context of employee investigations and disciplinary actions. Continue reading

UK: information gathering by in-house lawyer in order to obtain external advice may not be protected by legal advice privilege

The High Court has ruled in Glaxo Wellcome UK Ltd v Sandoz Ltd that an in-house lawyer’s communications with an employee of the business, who was accepted to be her in-house “client” for some purposes, were not protected by legal advice privilege where those communications were to seek and obtain information to provide to external solicitors in order to obtain their legal advice.  For further information see our litigation blog post here.

UK: Court of Appeal ruling on scope of protection for internal investigations

The Court of Appeal has handed down its eagerly awaited decision in The Director of the Serious Fraud Office v Eurasian Natural Resources Corporation Ltd. The High Court had found that notes of interviews with employees were not protected by litigation privilege, given that the employer’s purpose was to investigate allegations made by a whistleblower and, in its view, this failed the dominant purpose test. Employers will welcome the Court of Appeal ruling that the purpose of investigating allegations made by a whistleblower was part and parcel of preventing or defending litigation and therefore sufficient to meet the dominant purpose test. It also considered that documents prepared in order to avoid or settle contemplated litigation were covered by litigation privilege.

In relation to legal advice privilege, the Court of Appeal considered itself bound by Three Rivers No 5 to find that the privilege is limited to communications between a lawyer and those tasked with seeking and receiving advice on behalf of the client company. However, the court said that, if it had been open to it to depart from Three Rivers No 5, it would have been in favour of doing so – but this is a matter for the Supreme Court.

The decision is considered further in our litigation blog post.  The SFO has since decided not to appeal the case further.

UK: No privilege for advice on how to “cloak” dismissal on basis of discrimination as dismissal for redundancy

The Employment Appeal Tribunal in X v Y Ltd has ruled that an email containing advice from an in-house lawyer was not protected by privilege due to the “iniquity principle”, as there was a strong prima facie case that it advised on how to “cloak” as dismissal for redundancy the claimant’s dismissal resulting from allegations of disability discrimination and victimisation.  Relevant passages in the claimant’s claim should therefore not have been struck out.

It is well established that the iniquity principle prevents the application of legal professional privilege where advice is given for the purpose of facilitating crime or fraud. Fraud for these purposes has been interpreted to include “sharp practice”, or conduct which commercial people would say was a fraud, or which the law treats as entirely contrary to public policy. It would not normally include conduct which merely amounts to a civil wrong, ie a tort, nor does it cover conduct which amounts to a breach of fundamental human rights.

In the present case, an employee who had raised allegations of disability discrimination was made redundant as part of a wider redundancy exercise amongst the legal department.  The EAT found on the facts that the advice in question went beyond pointing out the risk of claims if the claimant were selected for redundancy, and (on a strong prima facie case) was to be interpreted as advising that the genuine redundancy exercise could be used as a cloak to dismiss the claimant to avoid his continuing complaints and difficulties with his employment which he alleged were related to his disability.  As such, the advice was an attempt to deceive both the claimant and, ultimately, an employment tribunal. Continue reading

UK: Employee documents created using employer’s IT systems may not be privileged against the employer

Simpkin v The Berkeley Group Holdings plc highlights the potential benefits for employers of a clear and comprehensive IT policy, referred to in the employment contract and signed by an employee, which provides that emails and documents sent using the employer’s IT system are the employer’s property and will be subject to monitoring. The employer had such a policy in Simpkin and the High Court ruled that an employee who created and stored documents on the employer’s IT system had no reasonable expectation of privacy. As a result, documents and emails he sent from the employer’s system to his home email were not confidential or privileged as against the employer.

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UK: Privilege – High Court confirms legal advice privilege can include lawyer’s summary of facts

A High Court decision has confirmed that the protection of legal advice privilege is not restricted to actual legal advice. The privilege will protect other information communicated from the lawyer to the client (or vice versa) to enable the lawyer to advise and the client to make informed decisions in a relevant legal context. This may include references to matters in the public domain or to meetings and correspondence that would not, in themselves, be privileged.  See the HSF Litigation blog post here for further details. (Property Alliance Group Limited v The Royal Bank of Scotland Plc)

Australia: Employee investigation reports not always privileged

In brief

  • A recent decision of the Federal Circuit Court serves as an important reminder for employers to ensure that lawyers are properly engaged and that employers receive advice relating to the maintenance of privilege over documents.
  • In the case of Bartolo v Doutta Galla Aged Services Ltd [2014] FCCA 15171 (Doutta Galla), the Federal Circuit Court ordered an employer to provide a dismissed employee with a confidential investigation report prepared by a law firm which detailed the findings of an investigation into the employee’s alleged conduct.
  • The Federal Circuit Court found that legal professional privilege attaching to the investigation report had been waived when the employer set out the reasons for the employee’s dismissal in its defence to adverse action proceedings instituted by the employee. These reasons included the Board of the company recommending that the employee be dismissed based on the findings of the investigation.
  • This decision reinforces the principles underpinning the doctrine of legal professional privilege and the circumstances in which the privilege may be waived. It also emphasises the importance of employers exercising caution when dealing with privileged documents and responding to any legal proceedings, particularly in the context of adverse action claims where a reverse onus will apply.

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UK: Handy client guide to privilege

Herbert Smith has published a client guide to legal professional privilege under English law, comprising:

  • A decision tree: intended as a quick reference to help determine which documents can legitimately be withheld on grounds of privilege; and
  • Practical tips for maintaining privilege: aimed at minimising the risks of unhelpful, non-privileged material being produced.

Click here for a link to the online materials.