Law society under fire for 'cavalier' approach

By IRENE CHAPPLE

The British Privy Council donned its velvet gloves this week to deliver a king hit to the Auckland District Law Society.

In the judgment, delivered on Monday, the Privy Council described a cavalier attitude by the law society to the crucial issue of legal professional privilege.

Legal professional privilege is a long-established plank of the relationship between lawyer and client which guards the privacy of their communications.

It is intended to allow clients to speak freely with their lawyers.

The criticisms must have stung all the more in light of the society's staunch support for the retention of New Zealand's highest court in the face of a Government push to cut ties to the Privy Council.

The council ruling was in response to an appeal from Russell McVeagh over documents being used in investment schemes dating back to the 1980s.

It overturns a 3-2 majority from the Court of Appeal and reinstates a High Court judgment that found the documents privileged.

The Court of Appeal majority had found that the Law Practitioners Act, which regulates the conduct of lawyers and under which complaints are investigated, took precedence over legal privilege.

It allowed the society to use confidential documents obtained while investigating a complaint against one Russell McVeagh partner to consider allegations against others.

The Appeal Court declared the documents should remain confidential but be available to the society's complaints committee for the investigations.

The council was unsympathetic to this approach, saying the Appeal Court had misunderstood established principles of English law.

But it saved most of its criticism for the society, which has increased levies on New Zealand lawyers to cover the cost of its investigation.

"The society's argument, put colloquially, is that privilege entitles one to refuse to let the cat out of the bag; once out of the bag, however, privilege cannot help to put it back ... it does not follow that privilege is waived generally because a privilege document has been disclosed for a limited purpose only."

It continued: "[The document's] 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."

Yesterday Russell McVeagh chief executive Gary McDiarmid said he was satisfied with the outcome.

He refused to comment on what it meant for the litigation his firm is embroiled in against the society.

The litigation stems from complaints against former Russell McVeagh partner Paul Carran, who promoted three bloodstock investment partnerships, all of which failed. This led to out-of-court payments, believed to have been up to $20 million, by the firm's partners to some of the more than 300 investors.

The Privy Council

* The judicial committee of the British Privy Council is New Zealand's highest appellate court.

* It comprises Britain's Lord Chancellor and ex Lord Chancellors, law lords, those who have held high judicial office in England, Wales, Scotland and Northern Ireland and superior court judges from Commonwealth countries, of which there are 15 at present. Members must be younger than 75.

* Appeals to the Privy Council are normally heard by five members of the judicial committee in Downing Street, London.