Update, 24 September 2018: See now Financial Reporting Council Limited v Sports Direct International Plc  EWHC 2284.
Update, 13 May 2012: See now Finlayson v Legal Practitioners Conduct Board  SASC 77.
Original post: Rosemary Pattenden’s The Law of Professional-Client Confidentiality is one of those books which, until now, I would like to have but could not bring myself to shell out for. Just now, I spent $134 on a second-hand copy, and here’s why. In a web-based update for the book is a reference to B v Auckland District Law Society  UKPC 38 which I wish I had known about earlier, like when I was arguing whether the Legal Profession Act, 2004 abrogates by necessary intendment legal professional privilege over client documents which the Legal Services Commissioner purported to compel the client’s solicitor to produce as part of a disciplinary investigation of a complaint by a non-client, namely the client’s opponent in litigation. All this time I have been languishing in the darkness of ignorance of the Privy Council’s view that a New Zealand statute not dissimilar to the Legal Profession Act, 2004 did not impliedly abrogate privilege in the way the last Legal Services Commissioner believed the 2004 Act did. Of course, every statute is different, and the question is always one of statutory construction. But the New Zealand provision was pretty bog ordinary, and the resolute interpretation of the Commonwealth’s highest court is a promising place for the analysis to start from the point of view of clients.
The legal regulator received nearly 180 complaints about one of New Zealand’s big three firms, in relation to one series of bloodstock partnerships promoted by the firm, which went spectacularly bad (I remember a high flying New Zealander I bumped into on a beach in Samoa chewing my ear off about the affair upon learning that I was a solicitor; to read more see Anthony Molloy QC‘s Thirty Pieces of Silver). The regulator exercised powers under s. 101(3) of the Law Practitioners Act 1982 (NZ), which said it:
‘(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.’
The Privy Council said there was no balancing exercise between a lawyer’s right to defend himself and the public policy which informs the privilege. The boundaries of legal professional privilege are already the result of a balancing of competing public interests. It is fundamental to the administration of justice generally that clients be entitled to be candid with their lawyers. If it were known that lawyer-client confidence was subject to any investigation into the lawyers’ conduct, the necessary confidence would be diminished. The Act did not expressly abrogate the privilege, and it was not the case that, logically, there was no way the Act could work without reference to privileged documents.
Furthermore, the court held that when the firm had earlier provided papers to the regulator in response to an invitation to do so voluntarily, that was not the end of the story, as it would have been had the law been so simple as that once the cat is out of the bag, it cannot be put back in. The Privy Council said:
’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  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)  1 WLR 1113: Bourns v Raychem Corporation  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.’
But the Law Society had the documents, and the solicitors wanted them back. How to achieve it? The Privy Council provides the answer. To understand, it is necessary to know that the earlier voluntary provision of the documents which became controversial had been upon terms, namely:
‘on the express basis that, in doing so, privilege is not waived, and that the documents will not be further copied by [the QC whom the legal regulator appointed to investigate the complaints]’.
The Court said:
’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  1 QB 670, per Nourse LJ at p 685.’