Tan Chong Kean v Yeoh Tai Chuan & Anor [2018] 2 MLJ 669

Case Review: Tan Chong Kean v Yeoh Tai Chuan & Anor [2018] 2 MLJ 669

Court: Federal Court (Putrajaya)

Judges: Richard Malanjum CJ, Zainun Ali, Aziah Ali & Prasad Abraham FCJJ

Date of Judgement: 18 December 2017

Topic: Legal Advice Privilege

Facts

1.     This is an appeal case against the decision of the learned judge in the Court of Appeal (Putrajaya) to set aside the judgement and orders made against the Appellant.

2.     The Appellant (‘Tan’), and Bukit Gambier, a party in this case, entered into a joint venture to develop a plot of land (‘the project’).  The first Respondent (‘Yeoh’), a lawyer who co-owned a private practise with the second Respondent, encouraged the Appellant to persuade the shareholders of Bukit Gambier to sign three trust deeds (‘the trust deeds’), in which the Appellant was the beneficiary, in order to safeguard his interests in the business.

3.     The Appellant followed the advice given to him, and the Respondents’ firm created the trust deeds under his express direction that they maintain their anonymity and be destroyed once the project was over.

4.     The Appellant assumed that all copies of trust deeds had been destroyed when Bukit Gambier finished the project.  Later, to his surprise, he learned that the Respondents had used copies of the trust deeds to support their request for a third-party notice to be issued against him in a lawsuit where Bukit Gambier was suing the Respondents for failing to pay the remaining purchase price for a property they had purchased in the project.

5.     The Appellant was made a third party with the intention of recovering unpaid legal fees the Appellant owes the Respondents, including those for the creation of trust documents.

6.     In the trial, the Respondents were sued by the Appellant in the High Court for violating Section 126 of the Evidence Act of 1950 (“Act 56”) for revealing the trust deeds without his express consent.

7.     The Respondents disputed violating Section 126 of Act 56 and asserted that the Appellant had explicitly or tacitly surrendered the trust deeds’ confidentiality when he revealed their existence in a different Court matter before a Magistrate’s Court.  However, the Appellant denied violating the said provision.

Issue 1.     Whether a breach of Section 126 of Act 56 on legal advice privilege by a solicitor gives rise to a cause of action against him by the Appellant to obtain injunction to restrain any disclosure of confidential information by him?
Ratios

1.     In deciding the issue, the Federal Court has explicitly stated the provision of Section 126 (1) of Act 56-

No advocate shall at any time be permitted, unless with his client’s express consent, to disclose any communication made to him in the course and for the purpose of his employment as such advocate by or on behalf of his client, or to state the contents or condition of any document with which he has become acquainted in the course and for the purpose of his professional employment, or to disclose any advice given by him to his client in the course and for the purpose of such employment

Provided that nothing in this section shall protect from disclosure —

(a) any such communication made in furtherance of any illegal purpose;

(b) any fact observed by any advocate in the course of his employment as such showing that any crime or fraud has been committed since the commencement of his employment

2.     To simplify the above-mentioned provision, it is clear that in order for it to be applicable in the case, the following pre-requirements must be present and as such:

(a) There must be an existence of a solicitor-client relationship between the parties; and

(b) There must be an existence of communication in any manner or any subject made by the client to the solicitor in the course and for the purpose of employment of the solicitor and/or advice given by the solicitor to client.

3.     The Federal Court further deliberated the codified provision that there is an exception to the general rule in which the privilege should be waived only with the express consent given by the client, but not to the extent that it covers the communication between the client and the solicitor that is for the furtherance of any illegal purpose, fraud or crime in the course of solicitor’s employment.

4.     In light of this matter, the Federal Court cited an English common law principle in the case of Berd v Lovelace (1576) 21 ER 33, in which it simplistically justifies the rationale behind the principle is to safeguard an individual’s access to the justice system with complete disclosure of all necessary information to his legal adviser that is free from any hindrance in the form of fear that any disclosure by him of any communication may prejudice him in the future.

5.     The Federal Court also supported the above-mentioned case with a recent Canadian case of Canada (Attorney General) v Federation of Law Societies of Canada [2015] 1 SCR 401 where the Supreme Court Judge delivered that-

Lawyers must keep their clients’ confidences and act with commitment to serving and protecting their clients’ legitimate interests. Both of these duties are essential to the due administration of justice…

…The expectation of privacy in solicitor-client privileged communications is invariably high regardless of the context and nothing about the regulatory context of the Act or the fact that a regulatory agency undertakes the searches diminishes that expectation. …Solicitor-client privilege must remain as close to absolute as possible. There must be a stringent norm to ensure protection and legislative provisions must interfere with the privilege no more than absolutely necessary

6.     Nearer home in the Singapore case of In Matter of Lee Wah Cane Furniture Pte Ltd (1984) 1 MLJ 156 cited by learned counsel for the Plaintiff the Court acknowledged the sanctity of client legal privilege.  In this case, it was held that in law, a Court order could not be sustained which compelled a solicitor to disclose or be examined on information obtained while acting for a client.

7.     A solicitor may assist in providing information which he has become acquainted in the course of his professional employment so long as it is ‘within his capacity and within the bounds of professional privilege’ unless he has been expressly instructed or authorised by his client to do so.

8.     Returning to the present case, considering the pre-requirements that had been laid down by the Federal Court to be proved, the Appellant and the Respondents clearly had a client-solicitor relationship when the trust deeds were prepared and the Appellant had instructed the Respondents that the trust deeds should remain confidential and should be destroyed when the development of the land was completed by Bukit Gambier.

9.     However, the Respondents’ claim that there was no disclosure of the trust deeds to a third party and there were no documents were used and filed in Court in the Respondents’ application for the third-party notice.

10.  In the final findings of the Federal Court, it was clear that the Respondents utilised the trust deeds for their own advantage.  The Respondents used them to seek for indemnity from the Appellant by way of a third-party notice application in relation to a monetary claim made against them by Bukit Gambier.

11.  The claim by the Respondents that there was no disclosure of the trust deeds to a third party is also contrary to the fact that indeed those documents were used and filed in Court in relation to application by the defendants for third party notice.

Decision

1.  There was a breach of Section 126 of Evidence Act 1950 on legal advice privilege by the solicitors (Respondents) to his client (Appellant).

2.     The Court ordered an injunction to restrain the Respondents from any disclosure of confidential information by them and use of the trust deeds in their possession.

Key Take Away

1.     As a rule of thumb, the privilege accorded by Section 126 of Act 56 should belong to the client and not to the solicitor.  Such provision also dictates that an express consent must be given by a client before the client’s legal privilege is considered waived.

2.     Thus, a solicitor is legally obliged to protect not only any form of information he had obtained from the client but also all advice he had given to the client made in the course of his employment as a lawyer.

3.     It has also been proved by the Federal Court that a breach of Section 126 of Act 56 is tantamount to breach of a principle of fundamental justice and as such it would entitle an aggrieved party to commence an action for an order to “safeguard the confidentiality of the client-solicitor communication”.

4.     However, it must be noted that the privilege does not cover any communication between the client and the solicitor that is for the furtherance of any illegal purpose, fraud or crime as observed by the solicitor in the course of his employment.

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