Court of Appeal uphelds Legal Professional Privilege

In a recent grounds of judgment, the Court of Appeal upheld the decision of the High Court in finding that information pertaining to law firm’s client accounts are protected by the veil of legal professional privilege and that such right can only be waived by the Client.

I have previously covered the grounds of judgment by the Learned High Court Judge here but it is worth analysing the difference in the mode of interpretation by the Court of Appeal.


The Inland Revenue Board of Malaysia (“IRB”) sought to obtain information pertaining to law firms client accounts. The Malaysia Bar (or Bar Malaysia) vide a judicial review application sought several declaratory orders from the court of law to find that such information were privileged.

The reason for the audit by the IRB was that the IRB alleged that law firms may be understating their income by “hiding” monies in the law firm’s client accounts.

Decision of the High Court:

The High Court found in favour of Bar Malaysia on the following grounds:

1. Privilege is absolute unless it is waived by the privilege holder or falls within the proviso to s 126 of the Evidence Act 1950 (“EA”) and it therefore affords protection to clients and not to lawyers;

2. It is not open for the defendant to have any access to the clients’ account with a view to checking whether the law firms have understated their income without having any reasonable suspicion of any misconduct or criminal conduct on the part of the law firms;

3. The defendant cannot be allowed to use the Income Tax Act 1967 (“ITA”) as an instrument of fraud purportedly to fish for information on the clients of the law firms;

4. The non-obstante nature of s 142(5)(b) of the ITA ought to be read in accordance with the actual words of Parliament;

5. S 142(5)(b) of the ITA, at most, only has the effect of removing privilege in respect of any book, account, statement or other record prepared or kept by ‘practitioners’ such as tax accountants and tax agents with a view to taxing their clients and it does not extend to ‘advocates and solicitors’;

6. In s 142(5)(b) of the ITA, Parliament had clearly used different words as it recognised that ‘practitioner’ and ‘advocate and solicitor’ are different persons;

7. S 142(5)(b) of the ITA does not oust the common law on privilege; and

8. Based on the clear and express language in s 126 of the EA, it cannot be disputed that s 126 of the EA is the specific provision which governs matters pertaining to privilege. The defendant has misunderstood and misapplied the Latin maxim of generalia specialibus non derogant.

Decision of the Court of Appeal

Instead of focusing on whether Section 142(5) of of the ITA oust the privilege under the common law, the Court of Appeal did an in depth excursus on the limitations and interpretation of Section 142(5) of the ITA and the EA.

The questions of law posed by the IRB in this instant case are as follow:

a. Whether Section 142(5) of the ITA 1967 overrides the Solicitor-Client Privilege as provided under section 126 of the EA 1950.

b. Whether the Client’s Account under the Legal Firm’s name and administered by the Firm falls within the ambit of Privilege under section 126 of the EA 1950 as section 126 of the EA 1950 provides Privilege only for communications between solicitors and client.

c. Whether the word “practitioner” in section 142(5)(b) of the ITA 1967 refers to and includes “advocate and solicitor” or it merely refers to other practitioners such as tax agent and accountant.

The IRB argued that since Section 142(5)(a) states that “except provided in paragraph (b)”, Section 142(5)(b) purportedly excludes the application of the said subsection from the EA. in other words, Section 142(5)(b) of the ITA overrides the EA, and hence privilege. Since Section 142(5)(b) employs the words “notwithstanding any other written law”, Section 142(5)(b) overrides Chapter IX of Part III of the EA, and along it, section 126 of the EA.

Bar Malaysia on the other hand argued that privilege cannot be abrogated save by clear and unequivocal language, which is absent in this instant case.

The Court of Appeal started with an analysis of Section 142(5)(a) and found that a part of the EA was singled out as being unaffected by the ITA but also that the same part of the EA may only be affected “as provided in paragraph (b)”.

The Court of Appeal then dissected Section 142(5)(b) of the ITA into three partes, ie: as a non obstante provision, subject matter of the provision and circumstances in which privilege from disclosure may not be invoked, and against whom.

The Court of Appeal noted the differences in the use of the word “practitioner” and “advocate in solicitor” within the ITA. It held that there is no reason to equate “practitioner” with the term “advocate and solicitor” when the term “practitioner” is specifically used in section 142(5)(b) instead of, and after the express use of, the term “advocate and solicitor”. Similarly, the concluding words of Section 142(5)(b) were “any other person” instead of “advocate and solicitor”.

Although the use of the word “practitioner” may be intended to cast a wider net, the Court of Appeal held that the use of two different terms in the same provision would imply that the narrower term would have been carved out of the wider term and excluded.

As such, the Court of Appeal upheld the finding of the High Court that Section 142(5)(b) ITA precludes ITA claim to any privilege from disclosure that are “prepared or kept by” any practitioner or firm of practitioners and the term “practitioner” does not include “advocate and solicitor”.

Client accounts are trust accounts and the monies are not the advocate and solicitors’. The privilege accorded under Section 126 is an ancient and important one. This privilege must remain as close to absolute if possible. The removal of this privilege must be manifest by clear and unambiguous language and anything less will not do.

However, the Court of Appeal noted that if there is basis for the IRB to rely on provisos under Section 126 of the EA i.e. for illegal purpose, the IRB may still do so. If the IRB cannot establish that the proviso under Section 126 applies, it will endure against the IRB.

Finally, the Court of Appeal held that financial information such as data contained in any document and kept in respect of the client’s account for the advocate’s employment would be protected. Hence, client’s account and information falls within the ambit of Section 126 of the EA.


“Privilege is absolute until waived” remains steadfast and the principles enunciated by the Federal Court in the seminal decision of Dato’ Au Ba Chi v Koh Keng Kheng [1989] 3 MLJ 445. Therefore, unless the IRB can prove any of the exceptions under the EA, the privilege accorded to solicitor-client relationship still stands and even information pertaining to clients account are protected.

The case is now pending before the Federal Court.

Author: sophiachoy

Dispute resolution by day, planning what to eat by night. Talk to me about tax at

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