Bolkiah (Prince Jefri) v KPMG

An accountant providing litigation support services is subject to the same confidentiality principles as a solicitor. A former client must establish that the firm possesses confidential information which is or may be relevant to a new matter involving an adverse interest. The evidential burden then shifts to the firm.

The court should restrain the firm unless satisfied that there is no real risk of disclosure or misuse. The risk need not be substantial, although a fanciful or theoretical risk is insufficient. Commercial balancing cannot dilute this unqualified duty without the former client’s consent. Information barriers may eliminate the risk, but their effectiveness requires clear and convincing evidence. An established institutional barrier is materially more reliable than an arrangement erected ad hoc within a single department.

KPMG provided extensive forensic accounting and litigation support services to Prince Jefri through Project Lucy. It thereby acquired substantial confidential information about his assets and financial affairs. After that work ended, KPMG accepted instructions from the Brunei Investment Agency to trace and recover assets through Project Gemma. The new assignment was adverse to Prince Jefri, and some of his confidential information was or might be relevant to it.

Pumfrey J restrained KPMG from continuing Project Gemma because its ad hoc information barrier did not remove the risk of inadvertent disclosure. A majority of the Court of Appeal discharged the injunction after balancing the competing interests and asking whether there was a real or appreciable risk of disclosure.

The central issue before the House in Bolkiah (Prince Jefri) v KPMG [1999] 2 AC 222 was when a professional firm possessing a former client’s relevant confidential information may act for a client with an adverse interest.

1. Disposition. Lord Millett delivered the leading speech, whose reasons were expressly adopted by Lord Browne-Wilkinson, Lord Hope of Craighead, Lord Clyde and Lord Hutton. The House unanimously allowed the appeal and granted an injunction restraining KPMG from continuing Project Gemma.
2. Basis and scope of the jurisdiction. Per Lord Millett, the jurisdiction at the suit of a former client protects confidential information. It does not enforce an enduring fiduciary prohibition against conflicting interests. Once the retainer ends, the fiduciary relationship ends, but the duty of confidence survives. That duty is unqualified and prohibits unauthorised use as well as communication. Lord Hope further emphasised that an accountant providing litigation support must protect the former client against careless, inadvertent and negligent disclosure in the same way as a solicitor.
3. Conditions for intervention. Per Lord Millett, the former client must establish that the firm possesses information confidential to him, without his consent to disclosure, and that the information is or may be relevant to a new matter in which another client’s interest is or may be adverse. The burden is not heavy. Possession and relevance may be inferred, but knowledge is not automatically imputed between partners.
4. Degree of risk. Once those matters are established, the evidential burden shifts to the firm. The court should intervene unless satisfied that there is no real risk of disclosure or misuse. The risk need not be substantial, but it must be more than fanciful or theoretical. The supposed reasonable-probability-of-real-mischief threshold associated with Rakusen v Ellis, Munday and Clarke [1912] 1 Ch 831 was disapproved. The balancing approach taken in Russell McVeagh McKenzie Bartleet v Tower Corporation was also rejected. Commercial inconvenience is relevant to whether the former client consented, not to reducing the duty of confidence.
5. Protective measures. There is no rule that an information barrier can never eliminate the risk. The firm must, however, produce clear and convincing evidence that its measures are effective. Lord Millett approved the formulation in Macdonald Estates v Martin (1990) 77 D.L.R. (4th) 249, substituting effective measures for merely reasonable measures. An effective barrier ordinarily needs to be an established part of the firm’s organisational structure. KPMG’s barrier was created ad hoc within one department whose members regularly shared expertise and moved between projects. It did not eliminate the risk of inadvertent disclosure.
6. Application. KPMG had not discharged the heavy burden of showing that Prince Jefri’s confidential information could not unwittingly reach the Project Gemma team. Nor could KPMG release itself from its duty by deciding that its former client ought to disclose the information. The duty continued unless Prince Jefri consented or the court relieved KPMG from it at the suit of the Brunei Investment Agency.

1. House of Lords: In Bolkiah (Prince Jefri) v KPMG [1998] UKHL 52, reported at [1999] 2 AC 222, the House unanimously allowed the appeal and restored injunctive protection against KPMG’s continued work on Project Gemma.
2. Court of Appeal: The majority discharged the injunction. It adopted a real-or-appreciable-risk inquiry and balanced protection of the former client against the inconvenience and expense caused to KPMG and the Brunei Investment Agency.
3. High Court: Pumfrey J granted an injunction restraining KPMG from continuing work on Project Gemma or work covering the same subject matter. He held that the ad hoc information barrier did not adequately address accidental, inadvertent or negligent disclosure.