Prince Jefri Bolkiah v KMPG (a firm)
House of Lords (Lord Browne-Wilkinson, Lord Hope of Craighead, Lord Clyde, Lord Hutton and Lord Millett) 18 December 1998
WHERE A firm of accountants had provided litigation support services to a former client, and in consequence had in its possession information which was confidential to him, the court would intervene to prevent it from undertaking work for another client with an interest adverse to that of the former client unless it was satisfied that there was no risk of disclosure of the confidential information.
The House of Lords allowed the appeal of Prince Jefri Bolkiah against the decision of the Court of Appeal (Law Report, 22 October 1998) that he was not entitled to an injunction to prevent KPMG from carrying out an investigation for the Brunei Investment Agency ("BIA").
KPMG had been auditors of the BIA since its establishment in 1983. Prince Jefri had for many years had been chairman of the BIA until, in March 1998, he fell out of favour with his brother, the Sultan, and was removed from that position.
Between 1996 and 1998 KPMG had been retained on behalf of Prince Jefri to undertake a substantial investigation in connection with major litigation ("the Manoukian litigation") in which he was personally involved.
That had involved the forensic accounting department of KPMG in the provision of extensive litigation support services. They were entrusted with or acquired extensive confidential information concerning Prince Jefri's assets and financial affairs.
The Manoukian litigation was settled in March 1998, and thereafter no work was undertaken on the project. In June 1998 the government of Brunei appointed a task force to investigate the activities of the BIA, and KPMG's forensic accounting department was approached with a view to assisting the task force in investigations ("Project Gemma") in connection with the withdrawal of assets from the BIA.
It became clear that that assignment was in part at least adverse to Prince Jefri's interests, but KPMG accepted the appointment, having issued instructions that a "Chinese wall" should be put in place within the forensic accounting department.
Gordon Pollock QC, Richard Meade and James Collins (Lovell White Durrant) for Prince Jefri; David Donaldson QC, Ali Malek QC and David Quest (Stephenson Harwood) for KPMG.
Lord Millett said that the controlling authority on the issues raised in the case was the decision of the Court of Appeal in Rakusen v Ellis, Munday and Clarke  1 Ch 831, which was authority for two propositions:
(i) that there was no absolute rule of English law that a solicitor might not act in litigation against a former client;
(ii) that the solicitor might be restrained from acting if it were necessary to avoid a significant risk of the disclosure or misuse of confidential information belonging to the former client.
It was conceded by KPMG that an accountant who provided litigation support services of the kind provided to Prince Jefri had to be treated for present purposes in the same way as a solicitor.
The basis of the court's jurisdiction to intervene on behalf of a former client was the protection of confidential information: the duty was to keep the information confidential, not merely to take all reasonable steps to do so.
The test in Rakusen imposed an unfair burden on the former client, exposed him to a potential and avoidable risk to which he had not consented, and failed to give him a sufficient assurance that his confidence would be respected. The case for a strict approach was unanswerable. The court should intervene unless satisfied that there was no risk of disclosure, and it was not so satisfied in the present case.
There was no rule of law that Chinese walls or similar arrangements were insufficient to eliminate the risk, but an effective Chinese wall needed to be an established part of the organisational structure of the firm, not created ad hoc.