Prince Jafri v KPMG

Posted on 18/11/1998 · Posted in Expert Witness

Use of an accountant in possession of confidential or privileged information of the other side

The Defendant was KPMG, a firm of chartered accountants. The Claimant was Prince Jefri, a son of the Sultan of Brunei. The Defendant was retained by one of the Claimant’s companies and was asked to carry out an investigation in connection with litigation. The investigation involved carrying out activities usually performed by solicitors. By May 1998 KPMG was no longer working on anything for the Claimant. KPMG was later instructed to provide assistance in an investigation that was partially adverse to the Claimant’s interests. KPMG undertook not to use or disclose any information they held on the Claimant.

The House of Lords stated that a fiduciary could not act at the same time both for and against the same client. Solicitors and auditors were in totally different positions, although even where auditors acted for both sides they were required to keep confidential information to themselves.

Where intervention was sought by a former client the position would be different. Accountants were equated to solicitors. The fiduciary relationship of solicitor and client ends with the termination of a retainer, although there is a continuing duty to preserve confidentiality. A solicitor or other person in possession of confidential and privileged information should not act in any way that might appear to put that information at risk of coming into the hands of someone with an adverse interest. The court should intervene unless it is satisfied that there is no risk of disclosure.

On the facts the judges were not satisfied that the heavy burden of showing no risk was met.

Link: Prince Jafri v KPMG [1999] AC 222 (HL)

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