The Common Law Crime-Fraud Exception to Confidentiality

In the Supreme Court of the Republic of the Phillipines:
TEODORO R. REGALA, EDGARDO J. ANGARA, AVELINO V. CRUZ, JOSE C. CONCEPCION, ROGELIO A. VINLUAN, VICTOR P. LAZATIN and EDUARDO U. ESCUETA vs. HON. SANDIGANBAYAN, FIRST DIVISION, REPUBLIC OF THE PHILIPPINES, acting through the PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT and RAUL S. ROCO.  G. R. No. 105938 [September 20, 1996]  .
[the full opinion is posted at  http://www.chanrobles.com/cralaw199614.htm ]

Extract from Dissenting Opinion of DAVIDE, JR., J. in which NARVASA, C.J. and REGALADO, J., concur:

The majority seeks to expand the scope of the Philippine rule on the lawyer-client privilege by copious citations of American jurisprudence which includes in the privilege the identity of the client under the exceptional situations narrated therein. . . .

Hence, I wish to repeat and underscore the fact that the lawyer-client privilege is not a shield for the commission of a crime or against the prosecution of the lawyer therefor. I quote, with emphases supplied, from 81 Am Jur 2d, Witnesses, Sections 393 to 395, pages 356-357:

Observation: The common-law rule that the privilege protecting confidential communications between attorney and client is lost if the relation is abused by a client who seeks legal assistance to perpetrate a crime or fraud has been codified. Underhill also states: 125 American Law Reports Annotated, 516-519, summarizes the rationale of the rule excepting communications with respect to contemplated criminal or fraudulent acts, thus: In Reg. v. Cox (1884) LR 14 QB Div (Eng) 153  CCR, the court said: "In order that the rule may apply, there must be both professional confidence and professional employment, but if the client has a criminal object in view in his communications with his solicitor one of these elements must necessarily be absent. The client must either conspire with his solicitor or deceive him. If his criminal object is avowed, the client does not consult his adviser professionally, because it cannot be the solicitor's business to further any criminal object. If the client does not avow his object, he reposes no confidence, for the state of facts which is the foundation of the supposed confidence does not exist. The solicitor's advice is obtained by a fraud."

So, in Standard F. Ins. Co. v. Smithhart [1919] 183 Ky 679, 211 SW 441, 5 ALR 972, the court said: "The reason of the principle which holds such communications not to be privileged is that it is not within the professional character of a lawyer to give advice upon such subjects, and that it is no part of the profession of an attorney or counselor at law to be advising persons as to how they may commit crimes or frauds, or how they may escape the consequences of contemplated crimes and frauds. If the crime or fraud has already been committed and finished, a client may advise with an attorney in regard to it, and communicate with him freely, and the communications cannot be divulged as evidence without the consent of the client, because it is a part of the business and duty of those engaged in the practice of the profession of law, when employed and relied upon for that purpose, to give advice to those who have made infractions of the laws; and, to enable the attorney to properly advise and to properly represent the client in court or when prosecutions are threatened, it is conducive to the administration of justice that the client shall be free to communicate to his attorney all the facts within his knowledge, and that he may be assured that a communication made by him shall not be used to his prejudice."

The protection which the law affords to communications between attorney and client has reference to those which are legitimately and properly within the scope of a lawful employment, and does not extend to communications made in contemplation of a crime, or perpetration of a fraud. Strong v. Abner (1937) 368 Ky 502, 105 SW (2d) 599.

The court in People v. Van Alstine [1885] 57 Mich 69, 23 NW 594, in holding not privileged, communications to an attorney having for their object the communication of a crime, said: "They then partake of the nature of a conspiracy, or attempted conspiracy, and it is not only lawful to divulge such communications, but under certain circumstances it might become the duty of the attorney to do so. The interests of public justice require that no such shield from merited exposure shall be interposed to protect a person who takes counsel how he can safely commit a crime. The relation of attorney and client cannot exist for the purpose of counsel in concocting crimes."

And in Coveney v. Tannahill [1841] 1 Hill [NY] 33, 37 Am Dec 287, the court was of the opinion that there could be no such relation as that of attorney and client, either in the commission of a crime, or in the doing of a wrong by force or fraud to an individual, the privileged relation of attorney and client existing only for lawful and honest purposes.

If the client consults the attorney at law with reference to the perpetration of a crime, and they co-operate in effecting it, there is no privilege, inasmuch as it is no part of the lawyer's duty to aid in crime he ceases to be counsel and becomes a criminal. Matthews v. Hoagland [1891] 48 NJ Eq 455, 21 A 1054.

The court cannot permit it to be said that the contriving of a fraud forms part of the professional business of an attorney or solicitor. Charlton v. Coombes [1863] 4 Giff 372, 66 Eng Reprint 751.
If the client does not frankly and freely reveal his object and intention as well as facts, there is not professional confidence, and therefore no privilege. Matthews v. Hoagland [NJ] supra. See to the same effect Carney v. United R. Co. [1920] 205 Mo App 495, 226 SW 308.

There is no valid claim of privilege in regard to the production of documents passing between solicitor and client, when the transaction impeached is charged to be based upon fraud, that is the matter to be investigated, and it is thought better that the alleged privilege should suffer than that honestly and fair dealing should appear to be violated with impunity. Smith v. Hunt [1901] 1 Ont L Rep 334.

In Tichborne v. Lushington, shorthand Notes [Eng] p. 5211 [cited in Reg. v. Cox (1884) LR 14 QB Div (Eng) 172  CCR], the Chief Justice said: "I believe the law is, and properly is, that if a party consults an attorney, and obtains advice for what afterwards turns out to be the commission of a crime or a fraud, that party so consulting the attorney has no privilege whatever to close the lips of the attorney from stating the truth. Indeed, if any such privilege should be contended for, or existing, it would work most grievous hardship on an attorney, who, after he had been consulted upon what subsequently appeared to be a manifest crime and fraud, would have his lips closed, and might place him in a very serious position of being suspected to be a party to the fraud, and without his having an opportunity of exculpating himself.  There is no privilege in the case which I have suggested of a party consulting another, a professional man, as to what may afterwards turn out to be a crime or fraud, and the best mode of accomplishing it."

In Garside v. Outram [1856] 3 Jur NS [Eng] 39, although the question of privilege as to communications between attorney and client was not involved, the question directly involved being the competency of a clerk in a business establishment to testify as to certain information which he acquired while working in the establishment, the court strongly approved of a view as stated arguendo for plaintiff, in Annesley v. Anglesea [1743] 17 How St Tr [Eng] 1229, as follows: "I shall claim leave to consider whether an attorney may be examined as to any matter which came to his knowledge as an attorney. If he is employed as an attorney in any unlawful or wicked act, his duty to the public obliges him to disclose it; no private obligations can dispense with that universal one which lies on every member of society to discover every design which may be formed, contrary to the laws of society, to destroy the public welfare. For this reason, I apprehend that if a secret which is contrary to the public good, such as a design to commit treason, murder, or perjury, comes to the knowledge of an attorney, even in a cause where he is concerned, the obligation to the public must dispense with the private obligation to the client."

The court in McMannus v. State [1858] 2 Head [Tenn] 213, said; "It would be monstrous to hold that if counsel was asked and obtained in reference to a contemplated crime that the lips of the attorney would be sealed, when the facts might become important to the ends of justice in the prosecution of crime. In such a case the relation cannot be taken to exist. Public policy would forbid it."  And the court in Lanum v. Patterson [1909] 151 Ill App 36, observed that this rule was not in contravention of sound public policy, but on the contrary, tended to the maintenance of a higher standard of professional ethics by preventing the relation of attorney and client from operating as a cloak for fraud.

Communications of a client to an attorney are not privileged if they were a request for advice as to how to commit a fraud, it being in such a case not only the attorney's privilege, but his duty, to disclose the facts to the court. Will v. Tornabells & Co. [1907] 3 Puerto Rico Fed Rep 125. The court said: "We say this notwithstanding the comments of opposing counsel as to the indelicacy of his position because of his being now on the opposite side of the issue that arose as a consequence of the communication he testifies about, and is interested in the cause to the extent of a large contingent fee, as he confesses."

The object of prohibiting the disclosure of confidential communications is to protect the client, and not to make the attorney an accomplice or permit him to aid in the commission of a crime. People vs. Petersen [1901] 60 App Div 118, NYS 941.  The seal of personal confidence can never be used to cover a transaction which is in itself a crime. People v. Farmer [1909] 194 NY 251, 87 NE 457.

[end of the extract from the opinion]