Precious privilege
15/09/2010

The Advocate General of the European Court of Justice (ECJ), in advising the Court on its approach in Akzo Nobel Chemicals Ltd v Commission of the European Communities, recently advanced the view that communications between parties and their in-house lawyers should not be afforded the protection of legal professional privilege from disclosure during competition investigations by the European Commission.

The rationale behind the Advocate General’s stance on the matter is to be found in the view that in-house lawyers, despite the professional ethical obligations associated with their membership of a Bar or Law Society, do not enjoy a comparable degree of independence from their employers as that which external lawyers do from their clients, and that they are therefore less likely to effectively manage conflicts of interest between their professional obligations and the intensions of their client than external lawyers would be. The economic dependence of in-house lawyers on their employers and their tendency to identify more strongly with their employer’s corporate policy and strategy than would be the case with external lawyers are emphasized in support of the view. The Advocate General further maintains that the “susceptibility” of in-house lawyers to abuses of legal professional privilege, such as in a company’s internal legal department becoming a convenient storage vault for documents reflecting illegal activities, should caution against the extension of the privilege to communications with them.

Under South African law, legal professional privilege is not merely regarded as a principle of evidence but as a fundamental right which can only be relaxed with the greatest circumspection. This stems from a recognition by our courts, most notably by the Appellate Division in S v Safatsa, 1988 1 SA 868 (A), that the optimal functioning of an adversarial legal system is premised upon the notion of freedom of consultation between lawyers and their clients, which would not otherwise exist if either could be compelled to disclose the details of their exchanges for purposes of giving or receiving advice.

This privilege, however, does not automatically extend to every communication between a client and his legal advisor. Rather, legal professional privilege has to be claimed and only exists in respect of communications between a client and his legal adviser which have been made in confidence for the purpose of advice or litigation and which are directed towards a lawful end.

The advent of South Africa’s Constitutional dispensation precipitated a balancing by our Courts of the right of privilege with the constitutional right of the individual to information. Unlike the contrasting right of access to information, the right to privilege is not constitutionally enshrined and is founded instead in our common law, where our rules of legal professional privilege emanate directly from the English rules on the subject. Despite this, our Courts have thus far been loath to compromise on an individual’s right to privilege and have sought only to refine its application by requiring it to be claimed in respect of specific documents as opposed to in a general blanket fashion.

In addition to withstanding Constitutional scrutiny, the right of privilege is also recognised by the the Promotion of Access to Information Act 2 of 2000, which was enacted for purposes of giving effect to the aforesaid right to access to information. The Act specifically upholds privilege, firstly, by excluding the application of the Act to pending litigation, where the rules of discovery remain unchanged, and secondly, by expressly prohibiting access to privileged records.

The recognition of privilege as a reasonable limitation of the right to access to information was affirmed in Jeeva and Others v Receiver of Revenue, Port Elizabeth and Others 1995 2 SA 433 (SE). In addition to the recognition of legal professional privilege in the context of pending litigation, our courts have acknowledged the extension of this protection to prevent the seizure of privileged documents by warrant (Bogoshi v Van Vuuren NO & Others, Bogoshi & Another v Director Office for Serious Economic Offences & Others 1993 2 SACR 98 (T); Thint (Pty) Ltd v National Director of Public Prosecutions and Others CCT 89/07; Zuma and Another v National Director of Public Prosecutions and Others CCT 91/07).

Our courts have expressly extended the recognition of legal professional privilege to include communications with in-house counsel. In Mohamed v President of South Africa and Others 2001 2 SA 1145 (C), Hoffman AJ endorsed the dictum of Lord Denning in Alfred Crompton Amusement Machines Limited v Commissioner of Customs and Excise (No 2) [1972] 2 All ER 353 (QB) in finding that legal professional privilege can lawfully be claimed in respect of communications with internal legal advisors where they amount to the equivalent of an independent external legal advisor’s confidential advice. Hoffman AJ emphasized that in order for legal professional privilege to apply in such instances, the party claiming privilege would have to prove not only compliance with the requirements ordinarily applicable in respect of legal professional privilege, but also that the communications in question were made in the legal advisor’s capacity as such, as opposed to in a general commercial or managerial capacity.

Whereas the extension of the protection of legal professional privilege to communications with internal legal advisors may otherwise give rise to the concerns emphasized in the Advocate General’s opinion on the Akzo matter, it is a trite principle of the South African law of privilege that it does not extend to communications which have been made by a party for purposes of committing a crime or fraud, irrespective of whether or not the legal advisor was aware of such intention. This principle, which also emanates from English law, was applied in the English cases of O’Rourke v Darbishire 1920 All ER 1 and Bullivent v A-G for Victoria 1901 All ER 2 812, where the approach of the Courts was to regard the privilege as being d efeated only once there was at least prima facie proof that the communications in question were intended to obtain advice to facilitate a dishonest purpose.

Furthermore, communications with in-house lawyers are only privileged where they are confidential and given specifically to obtain advice or with litigation in mind. It would therefore be a far cry for the ambit of protection afforded by this right to allow for internal legal departments to develop into impenetrable cesspits of covert communications.

The South African rules relating to privilege would therefore appear to anticipate and circumvent the miscarriage of justice and abuse of process which would otherwise arise were in-house lawyers able to withhold incriminating information on the strength that it is privileged, in that such communications would, in any event, not fall within the purview of the privilege’s protection. At most, there may be scope for our common law to be developed to provide for legal professional privilege, particularly in respect of communications with in-house legal advisors, to be quashed where it can be proved, on a prima facie basis, that the communications in question were geared towards obtaining advice on activities which, although not strictly speaking criminal or fraudulent in nature, nonetheless constitute sanctionable offences under the laws of South Africa.

In determining whether privilege in a document would be lost by virtue of having been created for the purposes of a crime or fraud, a Court has an inherent discretion to examine the document. The Court in South Africa Rugby Football Union v President of South Africa 1998 4 SA 296 (T) held, however, that this discretion should be exercised with circumspection and only in special cases where there is some reason to doubt the privilege. A party wishing to challenge prejudice would therefore have to provide “some colour to the charge” even if only to move a Court to exercise its discretion to inspect the document (O'Rourke v Darbishire, (1920) A.C. 581, 604).

(The ECJ, which tends in the majority of instances to find in accordance with the view of the Advocate General, is expected to rule on the Akzo matter in October this year.)

Andrew Molver is a professional assistant and Jac Marais a senior associate in Adams and Adams: Commercial, Property and Litigation Department.
Jac Marais
Senior Associate
jac-m@adamsadams.co.za
Andrew Molver
Professional Assistant
andrew-m@adamsadams.co.za