The law of privilege confers on persons the right to refuse to produce a document or to answer questions – including by a regulator or prosecuting authority. The two subcategories of legal professional privilege are (1) legal advice privilege and (2) litigation privilege. This chapter explains the basic principles applicable to these, having particular regard to the regulatory and investigatory context. It also addresses briefly two other types of privilege that may arise in the regulatory context, namely common interest privilege and without prejudice privilege.
This chapter also discusses certain exceptions to privilege, and the circumstances in which privilege can be lost or ‘waived’, either intentionally or inadvertently. The final section of the chapter addresses some more practical issues of how to maintain privilege in the regulatory and investigatory context.
35.2 Legal professional privilege: general principles
The relevant distinction between legal advice privilege and litigation privilege is as follows:
- Legal advice privilege is concerned with communications between lawyer and client for the purpose of giving or receiving legal advice or assistance, in both the litigation and the non-litigious context.
- Litigation privilege is concerned with communications between a client or his or her lawyer and third parties for the purposes of litigation (whether anticipated or commenced).
Notwithstanding frequent misconceptions to the contrary, litigation privilege has no application to communications between lawyer and client, even where litigation is anticipated or has actually commenced: such communications will always fall within the ambit of legal advice privilege.
Before turning to consider these two aspects of legal professional privilege separately a number of general observations should be made.
35.2.1 The need for confidentiality
Privilege requires and protects the confidentiality of documents and exchanges. Confidentiality is therefore a necessary, but not a sufficient, condition for both limbs of legal professional privilege. The question is whether a document has the necessary quality of confidence, such as to attract privilege. This is rarely problematic, as it can usually be inferred that communications between lawyers and their clients or with third parties in the context of actual or anticipated litigation have been impressed with confidence. Nevertheless, some communications may be regarded as lacking that character. Hence, in the context of legal advice privilege, the client’s identity, address or the existence of the retainer will not generally be deemed to be confidential (or, accordingly, privileged). While a lawyer will usually owe his or her client enforceable duties of confidence, for the purposes of litigation privilege, communications between a lawyer or client and a third party do not have to be ‘confidential’ in the sense that the third party is bound by equitable (or contractual) duties of confidence not to reveal the communication to anyone else. In the context of litigation privilege, the requirement of confidentiality is therefore perhaps best put in terms of the communication or other document being ‘not properly available for use’.
35.2.2 Legal professional privilege as a substantive right
Legal professional privilege is not merely an exclusionary rule of evidence, but is also a substantive right, which is afforded overriding importance within English law. The House of Lords and the Supreme Court have repeatedly emphasised its importance and its role in the administration of justice. It has been characterised as both ‘a fundamental human right’ and ‘a fundamental condition on which the administration of justice as a whole rests’.
If it were simply a rule of evidence, a client could only prevent disclosure in legal proceedings. There would be no guarantee that the same material could be kept from the police or some other agency, such as a financial regulator or prosecuting authority, with the power to compel the production of documents or information. Hence, legal professional privilege can now generally be asserted in answer to any demand for documents by a public or other authority; it is not limited to a right that may be asserted only in the context of civil or criminal proceedings.
The privilege is absolute and can only be overridden in very exceptional circumstances. Furthermore, in accordance with the aphorism ‘once privileged, always privileged’, once a client’s privilege has attached to a document or other privileged exchange, the privilege will persist, subject only to waiver or other types of loss, for the client’s benefit and that of successors in title for all time and in all circumstances.
The rationales underlying legal advice and litigation privilege are distinct:
- The interest protected by legal advice privilege is the public concern to ensure the availability of appropriate legal advice and assistance. To this end, English law recognises the need to promote absolute candour between client and lawyer, by providing that exchanges between them will not subsequently be divulged.
- Litigation privilege has often been regarded as an aspect of the right to a fair trial in England and in other common law jurisdictions. The courts have emphasised that fairness requires a private and confidential sphere of preparation for litigation. In a classic statement of this principle James LJ emphasised that ‘as you have no right to see your adversary’s brief, you have no right to see that which comes into existence merely as materials for that brief.’ Litigation privilege has therefore been characterised by Steyn LJ as an auxiliary principle buttressing the constitutional right of access to justice. In recent judgments, this rationale has been doubted, largely on the grounds that changes to English civil procedure (particularly the rules of pretrial disclosure) have introduced a culture of openness, which sits uneasily with any right to ‘secrecy’ in adversarial litigation. However, litigation privilege remains justified by the need for a zone of privacy in the preparation for litigation and remains firmly entrenched in English law as a consequence of decisions at appellate level, including the House of Lords.
35.2.4 No adverse inference can be drawn where privilege is relied on
No adverse inferences may be drawn from the assertion by a person of a claim to legal professional privilege. This is a principle that may sometimes be overlooked when an authority is seeking disclosure of privileged materials. But any responsible regulator or prosecuting authority must accept that it can neither require disclosure of privileged communications, nor rely on the regulated entity’s refusal to provide it. As Lord Scott observed in Three Rivers No. 6, the existence of legal professional privilege means that ‘cases may sometimes have to be decided in ignorance of relevant probative material.’
There is, however, some uncertainty as to whether UK prosecuting authorities can require privilege to be waived when entering into co-operation agreements with parties. In R v. George, a case against certain British Airways executives concerned with a cartel offence involving alleged collusion with Virgin Atlantic, this issue arose in circumstances where the relevant Virgin Atlantic executives had admitted the offences and were given immunity from prosecution by the Office of Fair Trading (OFT). Under the OFT’s leniency and immunity guidelines, these executives were expected to assume an obligation of continuous and complete co-operation with the OFT’s investigation and any subsequent proceedings. Owen J considered that it would be reasonable for the OFT to press for disclosure of privileged material in the hands of the Virgin Atlantic executives, as part of the OFT’s duty to obtain material held by a third party that might be capable of undermining the prosecution case, on the basis that the Virgin Atlantic executives were under a duty to give continuous and complete co-operation as a condition of leniency or immunity and failing a satisfactory response to have invoked its power to revoke the leniency agreements. By contrast, in R v. Daniels, in which a co-defendant to a murder charge had entered into an agreement pursuant to section 73 of the Serious Organised Crime and Police Act 2005 (SOCPA) under which he agreed to give assistance to the authorities, the Court of Appeal did not express a view as to whether a requirement to waive privilege could lawfully be included in a SOCPA agreement and indicated (without deciding) that, if so, an express condition would be required. The ability of a prosecuting authority to require waiver of privilege, and the circumstances in which it will be taken to have done so, therefore remains in some doubt and would appear to vary depending on the particular rules and guidelines applicable to the prosecuting authority. Since the decision in R v. George, the OFT guidance ‘Applications for leniency and no-action in cartel cases’ (the 2013 Leniency Guidance), now adopted by the CMA, has changed and no longer requires waiver of privilege as an element of co-operation. However, the CMA does not rule out enquiring as to whether a leniency applicant may be prepared to waive privilege over certain material during the course of a possible criminal cartel prosecution, although making it clear that any refusal to waive privilege will not have any adverse consequences for the leniency application and that granting such a waiver would not yield any advantage to the leniency applicant. The CMA will, unless the position is uncontroversial, instruct independent counsel to provide an opinion on whether the relevant information is privileged and will require disclosure of information not found to be privileged. It is also clear that a party’s willingness to waive privilege is a relevant factor to be taken into account by a court when considering, pursuant to section 45 and Schedule 17 of the Crime and Courts Act 2013, whether to approve a deferred prosecution agreement.
35.2.5 Privilege belongs to the client
Privilege belongs to the client and not to the lawyer or agent. Only the client can invoke the privilege. It is not open to a lawyer or other agent to do so, unless acting on behalf of the client, and the lawyer or agent cannot invoke the privilege if the client has waived it. In the case of litigation privilege, a third party with whom a lawyer or client has communicated for the purposes of adversarial proceedings may not assert the privilege of the party to the actual or prospective litigation.
35.3 Legal advice privilege
The scope of legal advice privilege was the subject of authoritative reconsideration by the House of Lords in Three Rivers No. 6. Lord Rodger defined the privilege (at paragraph 50) as extending to:
[A]ll communications made in confidence between solicitors and their clients for the purpose of giving or obtaining legal advice even at a stage where litigation is not in contemplation. It does not matter whether the communication is directly between the client and his legal advisor or is made through an intermediate agent of either.
The requirements thereby identified can be summarised as follows:
- a communication, whether written or oral;
- between a client and a lawyer (or an intermediate agent of either);
- made in confidence;
- for the purpose of giving or obtaining legal advice.
The basic concept of communication is self-explanatory. However, privilege does not arise upon the exchange of pre-existing and previously unprivileged documents: the document’s existence must be attributable to the intention to communicate. The scope of the privilege is, however, broader than references merely to ‘communications’ might seem to indicate. In addition to communications, the following documents will also (if the remaining requirements are satisfied) fall within the privilege:
- a document intended to be a communication between client and lawyer, which was never communicated;
- documents or parts of documents that evidence the substance of lawyer–client communications. This would include, for example, a written record of an oral communication or a document disseminating the contents or substance of legal advice within or even beyond the corporation receiving the advice; and
- the lawyer’s working papers, including drafts, attendance notes and
35.3.2 Between a client and lawyer
The scope of the term ‘lawyer’ for the purposes of legal advice privilege (and legal professional privilege more generally) is broad rather than formalistic, but not without limits. In R (Prudential PLC) v. Special Commissioner of Income Tax, the Supreme Court confirmed that legal professional privilege is applicable only to ‘communications in connection with advice given by members of the legal profession, which includes members of the Bar, the Law Society, and the Chartered Institute of Legal Executives (CILEX) (and, by extension, foreign lawyers)’. The privilege extends to their non-qualified employees including secretaries, clerks, trainee solicitors, pupils or paralegals acting under the direction of a lawyer. For the avoidance of doubt, under English law no distinction is made between in-house lawyers and lawyers in independent practice. However, that an individual happens to be a ‘lawyer’ in the sense required above will not suffice; in each case the relevant question is whether he or she is consulted in that professional capacity. The lawyer must also be subject to the control of the professional body and the governing rules of practice; in other words, the lawyer must have a current practising certificate. Therefore a qualified solicitor who has been struck off the roll is not a lawyer for the purposes of legal professional privilege, unless the client in good faith does not know that the solicitor has been struck off.
Subject to certain specific statutory exceptions, communications with other professionals – including, for example, patent and trade mark attorneys – will not attract legal advice privilege at common law, even where they are giving advice on strictly legal matters.
The concept of the ‘client’ in the context of corporations was the subject of appellate consideration by the Court of Appeal in Three Rivers No. 5 and has recently been the subject of further consideration by the Court of Appeal in The Director of the Serious Fraud Office v. ENRC (which is discussed later in this section). The true ratio of Three Rivers No. 5 has been the subject of controversy. In previous editions of this work, it was said that it appeared that the ‘client’ would not necessarily be the corporation itself, or its employees per se, but only those within the corporation who were authorised to communicate with and receive the lawyer’s advice. This was the interpretation of Three Rivers No. 5 adopted by the Singapore Court of Appeal in Skandinaviska Enskilda Banken v. Asia Pacific Breweries. The court in that case commented that: ‘The principle is that if an employee is not authorised to communicate with the company’s solicitors for the purpose of obtaining legal advice, then that communication is not protected by legal advice privilege.’ It went on to state that authorisation need not be express but may be implied.
However, the concept of the ‘client’ was interpreted more restrictively in two first-instance decisions of the English High Court. In The RBS Rights Issue Litigation Hildyard J held that notes of witness interviews prepared by RBS’s lawyers were not subject to legal advice privilege (although the interviewees were authorised by RBS to communicate with the lawyers), and neither were the notes subject to legal advice privilege on the basis that they comprised lawyers’ working papers. In Hildyard J’s view, the Court of Appeal in Three Rivers No. 5 established a general principle that ‘the client’ for the purposes of a lawyer–client communication subject to legal advice privilege must be someone who is authorised to seek and receive legal advice. The approach in The RBS Rights Issue Litigation was followed by Andrews J in the first-instance decision in The Director of the Serious Fraud Office v. Eurasian Natural Resources Corporation, where once again the privileged status of interview notes produced by the lawyers during the course of an internal investigation was in issue. Andrews J held that legal advice privilege attaches only to ‘communications between the lawyer and those individuals who are authorised to obtain legal advice on that entity’s behalf.’ By ‘authorised’ Andrews J meant being specifically ‘tasked’ by the corporation to obtain legal advice, a qualification not found in the judgment of the Singapore Court of Appeal in the Skandinaviska case referred to above. That interviewees were authorised to communicate with the lawyers to provide them with information or relevant facts in order for the lawyers to give advice, did not make those communications privileged. Andrews J also agreed with Hildyard J that lawyers’ notes of interviews with witnesses would not be privileged on the ground of being lawyers’ working papers, unless the notes would betray the tenor of the legal advice.
The issue came before the Court of Appeal in The Director of the Serious Fraud Office SFO v. ENRC. The Court analysed the decision in Three Rivers No. 5 and concluded as follows:
We can fully accept that the Court of Appeal could have decided Three Rivers (No. 5) on the simple basis that Freshfields’ client was the BIU (not the Bank), and the documents had been prepared by the Bank (not the BIU), so that the position of the particular Bank employee who had prepared them was irrelevant to the question of legal advice privilege. We do not, however, think that, fairly read, that was the Court of Appeal’s reasoning… . it seems to us that Longmore LJ reasoned that, because agents and employees, on authority, stood in the same position in relation to legal professional privilege, once it was established that only communications between the lawyer and the client, and not between the lawyer and an agent of the client, could attract legal advice privilege, communications between a lawyer and an employee of the client (other than employees specifically tasked with seeking and receiving legal advice) could also not be privileged. As we have said, we are not sure that it is necessary for us to determine whether this reasoning was the ratio decidendi, but if that did have to be decided, we would hold that it was.
As to whether Three Rivers No. 5 was correctly decided on this point, the Court of Appeal in ENRC held that this is a question which can only be determined by the Supreme Court. Nevertheless, the Court expressed the view that there was ‘much force’ in submissions made on behalf of ENRC and The Law Society (intervening in the appeal) that, if Three Rivers No. 5 did indeed decide that the definition of ‘client’ should be restrictively interpreted as it was in The RBS Rights Issue Litigation, then it was wrongly decided. The Court referred to the policy justification for legal advice privilege, that there is a public interest in a client being able to place all the facts before the legal adviser without fear that they may afterwards be disclosed and used to the client’s prejudice, and to the fact that large corporations need, as much as small corporations and individuals, to seek and obtain legal advice without fear of intrusion. The Court acknowledged that, in the modern world, legal advice is often sought by large national and multinational companies where the information on which legal advice is sought is unlikely to be in the hands of the main board or those it appoints to seek and receive legal advice; therefore:
If a multi-national corporation cannot ask its lawyers to obtain the information it needs to advise that corporation from the corporation’s employees with relevant first-hand knowledge under the protection of legal advice privilege, that corporation will be in a less advantageous position than a smaller entity seeking such advice. In our view, at least, whatever the rule is, it should be equally applicable to all clients, whatever their size or reach.
The Court also referred to English law being, on this issue, out of step with the international common law and remarked on the undesirability of such inconsistency. The Court concluded that:
If, therefore, it had been open to us to depart from Three Rivers (No. 5), we would have been in favour of doing so. For the reasons we have given, however, we do not think that it is open to us, so it is a matter that will have to be considered again by the Supreme Court in this or an appropriate future case.
The Court of Appeal in ENRC upheld ENRC’s claim to privilege over the relevant interview notes on grounds of litigation privilege, overturning the judgment of Andrews J at first instance, and it was therefore strictly unnecessary for it to consider the issue of who may constitute ‘the client’, which only arose in the context of the alternative claim to legal advice privilege. It might therefore be argued that the Court’s reasoning on this point is technically obiter. However, it is at the very least highly persuasive guidance as to why, in a corporate context, a restrictive approach as to who may constitute ‘the client’ for the purposes of legal advice privilege is undesirable and unworkable as a matter of policy and principle. If the issue finally reaches the Supreme Court, there is every chance that the restrictive interpretation of ‘client’ will be reconsidered but, until then, the law should be taken to be as stated by the Court of Appeal in ENRC.
The implications of a restrictive interpretation of ‘client’ in a corporate context are well rehearsed. This approach is likely to exclude the vast majority of employees within the company. A corporate entity that wishes to obtain legal advice and that needs to carry out a fact-finding investigation within the organisation to obtain the necessary information for its lawyers will not, while these decisions on the proper interpretation and application of Three Rivers No. 5 remain good law, be able to claim legal advice privilege over documents created pursuant to that fact-finding investigation (except, it seems, to the extent that the facts are known to, and obtained by the lawyers from, individuals who also happen to be authorised to seek and receive legal advice). While the rationale of legal advice privilege is, as explained in Section 35.2.3, to enable a client to provide full and frank instructions to its lawyer to enable the lawyer to provide sensible advice, it appears that (pending any clarification from the Supreme Court) a corporate client will be severely restricted in the extent to which it can gather information for its lawyer in order for the lawyer to give advice without its communications being disclosable in subsequent proceedings. It makes no difference whether information is obtained from employees by other employees of the company or by the lawyers directly.
In this regard, and as recognised by the Court of Appeal in ENRC, English law is also at odds with other common law jurisdictions. The Hong Kong Court of Appeal in CITIC Pacific v. Secretary of State for Justice recognised that a narrow definition of client was incompatible with the rationale for legal advice privilege as explained by the House of Lords in Three Rivers No. 6. The decisions in The RBS Rights Issue Litigation and, at first instance, in ENRC also seem to be doubtful in relation to the lawyers’ working papers doctrine. Notes of witness interviews that are prepared by lawyers, provided they are not verbatim transcripts, are types of document that should typically qualify as ‘lawyers working papers’, in line with the decision in Balabel v. Air India. This was the subject of argument before the Court of Appeal in ENRC. However, the Court declined to decide this issue because, in light of its findings on litigation privilege, it did not strictly arise and moreover the Court considered that it would be preferable for the matter to be addressed by the Supreme Court in the context of any future consideration of legal advice privilege.
Communication need not in all cases be direct, but may occur through an agent of the client or the lawyer. A distinction needs to be made between an agent for the purposes of communication, that is to say a mere conduit between the client and the lawyer, such as an interpreter (where intellectual input by the agent will risk destroying the privilege) and an agent for the purposes of seeking and obtaining the advice (where it will not). Communications between ‘the various legal advisers of the client’ with a view to the client obtaining legal advice or assistance will generally be privileged.
35.3.3 For the purpose of giving or obtaining legal advice or assistance
[L]egal advice is not confined to telling the client the law; it must include advice as to what should prudently and sensibly be done in the relevant legal context.
In most cases the relevant ‘legal context’ will be obvious. Where there is room for doubt, Lord Scott suggested that the court should consider whether:
- the advice sought from the lawyer relates to the rights, liabilities, obligations or remedies of the client either under private or public law; and
- the communication falls within the policy underlying the justification for legal advice privilege. In short, ‘is the occasion on which the communication takes place and is the purpose for which it takes place such as to make it reasonable to expect the privilege to apply?’
Notwithstanding the first limb of Lord Scott’s test, it appears that the ‘legal context’ is not actually confined to advice concerning the client’s legal rights and liabilities. The relevant communications in Three Rivers No. 6 involved presentational advice as to how the client (the Bank of England) could best put material before an inquiry, established by the Chancellor of the Exchequer and the Governor of the Bank, which was scrutinising the discharge of the Bank’s public duties. The House of Lords held that legal advice privilege plainly applied. Lord Rodger emphasised that privilege would similarly have applied ‘to presentational advice sought from lawyers by any individual or company who believed himself, herself or itself to be at risk of criticism by an inquiry’, emphasising that the ‘defence of personal reputation and integrity is at least as important to many individuals and companies as the pursuit or defence of legal rights whether under private law or public law’.
In substance, the test is whether the lawyer is reasonably being consulted because of his or her legal skills. This is reflected in the emphasis placed by the House of Lords on whether the lawyer is being consulted ‘qua lawyer’, or is being asked to ‘put on legal spectacles’ and whether the lawyer is being required to exercise ‘special professional knowledge and skills’. The concept of a ‘legal context’ is therefore very broad.
Once a ‘legal context’ is established, the question is whether the relevant communication falls within it. The clearest definition of the ambit of legal advice in Three Rivers No. 6 was that provided by Lord Carswell (with whom all the Law Lords expressly agreed), in the following passage:
[A]ll communications between a solicitor and his client relating to a transaction in which the solicitor has been instructed for the purpose of obtaining legal advice will be privileged, notwithstanding that they do not contain advice on matters of law or construction, provided that they are directly related to the performance by the solicitor of his professional duty as legal adviser of his client.
This passage can be regarded as an authoritative statement of the modern law. If the larger purpose of the instruction is the obtaining of legal advice, the question in respect of any given communication is simply whether it relates directly to the lawyer’s performance of his duty as the client’s legal adviser. The House of Lords expressly rejected any requirement that the communication must itself contain ‘legal advice’, in any strict sense of that phrase. Three Rivers No. 6 therefore both preserves and consolidates a line of authority that supports the attachment of privilege to documents that, while they do not contain legal advice, nevertheless form part of the ‘continuum of communications’ made for that broad purpose.
The law as stated above was given effect in the regulatory investigations context in the recent case of Property Alliance Group v. RBS. In that case RBS claimed privilege over documents prepared by its solicitors for the RBS Executive Steering Group (ESG), which had been established by RBS to oversee its response to various regulatory and criminal investigations into manipulation of LIBOR and other rates in the United Kingdom, United States and elsewhere. The claimant, Property Alliance Group (PAG), challenged RBS’s claim to privilege over these documents, contending that the role of RBS’s solicitors was not confined to the provision of legal advice but extended to the performance of administrative functions (for example, acting as the secretariat for the ESG and attending its meetings) for which privilege could not be claimed. Having inspected the disputed documents, Snowden J was ‘entirely satisfied’ that RBS’s solicitors had been engaged in a relevant legal context. He remarked that:
RBS was facing Regulatory Investigations in a number of jurisdictions that could have had (and did have) the consequence that RBS was subjected to very large regulatory penalties and consequent private actions for very significant sums of money. Dealing with, and co-ordinating the communications and responses to such regulators was a serious and complex matter upon which RBS naturally wished to have the advice and assistance of specialist lawyers. Clifford Chance were engaged to provide such advice and assistance, and (to use Lord Scott’s words), that advice and assistance undoubtedly related to the rights, liabilities and obligations of RBS, and the remedies that might be granted against it either under private law or under public law.
I am also entirely satisfied that, in the words of Taylor LJ in [Balabel] the two types of ESG High Level Documents [i.e. tabular memoranda informing and updating the ESG on the progress, status and issues arising in the regulatory investigations, and confidential notes or summaries drafted by Clifford Chance concerning the discussions between the ESG and its legal advisers at the ESG meetings] form part of ‘a continuum of communication and meetings’ between Clifford Chance and RBS, the object of which was the giving of legal advice as and when appropriate.
Snowden J also rejected an argument made by PAG that the ESG documents should be only partly redacted, so that summaries of factual information would not be withheld from inspection, finding that such an approach would be inconsistent with the dicta of Taylor LJ in Balabel. While, depending on the facts, a court might not uphold a claim to privilege in respect of the minutes of a business meeting simply because the minutes were taken by a lawyer who was present and subsequently sent them to the client, that would be because the court would have taken the view that the lawyer was not being asked qua lawyer to provide legal advice.
As to the public policy implications of his judgment, Snowden J noted (at paragraph 45) that there is a clear public interest in regulatory investigations being conducted efficiently and in accordance with law and that the public interest will be advanced if regulators can deal with experienced lawyers who can accurately advise their clients how to respond and co-operate. Such lawyers must be able to give the client candid factual briefings as well as legal advice, secure in the knowledge that any such communications and any record of their discussions and the decisions taken will not subsequently be disclosed without the client’s consent.
35.4 Litigation privilege
The leading modern statement of the scope of litigation privilege is contained in the speech of Lord Edmund-Davies in Waugh v. British Railways Board:
After considerable deliberation, I have finally come down in favour of the test propounded by Barwick C.J. in Grant v. Downs, 135 C.L.R. 674, in the following words, at p 677:
‘Having considered the decisions, the writings and the various aspects of the public interest which claim attention, I have come to the conclusion that the court should state the relevant principle as follows: a document which was produced or brought into existence either with the dominant purpose of its author, or of the person or authority under whose direction, whether particular or general, it was produced or brought into existence, of using it or its contents in order to obtain legal advice or to conduct or aid in the conduct of litigation, at the time of its production in reasonable prospect, should be privileged and excluded from inspection.’
Dominant purpose, then, in my judgment, should now be declared by this House to be the touchstone.
Litigation privilege can therefore be described as the privilege of a client to withhold from disclosure:
- oral or written communications between the client or the lawyer (on the one hand) and third parties (on the other) or other documents created by or on behalf of the client or the lawyer;
- that come into existence once litigation is in contemplation or has commenced; and
- that come into existence for the dominant purpose of obtaining information or advice in connection with, or of conducting or aiding in the conduct of, such litigation.
35.4.1 Communications or other documents
Litigation privilege will apply to communications between the client or the lawyer and third parties for the relevant purpose. In the case of client–third party communications there is no requirement that the lawyer either requests the client to contact the third party or that the communications are actually referred on to the lawyer. In fact, no lawyer need have been engaged at the time of the communication. In light of the narrow definition of ‘client’ in Three Rivers No. 5, as restrictively applied in subsequent decisions, many ‘internal’ communications within a corporation risk being characterised as communications between the client and ‘third parties’. For example, where, as in Three Rivers No. 5 itself, the corporation sets up a specific committee to deal with the relevant litigation, communications between a member of that committee and a non-committee employee of the corporation are likely to be characterised as communications between client and third party subject to whether the employee is authorised to give instructions or receive advice on behalf of the corporation.
The privilege will also cover material, aside from communications, brought into existence in furtherance of the litigation purpose. The cases have traditionally spoken in terms of granting protection to the ‘materials for the brief’. A modern restatement of this principle is that, in an adversarial system ‘each party should be free to prepare his case as fully as possible without the risk that his opponent will be able to recover the material generated by his preparations.’ As regards documents actually brought into existence by a client’s lawyer, the better view is that these are in fact protected by legal advice privilege. The ‘materials for the brief’ concept would apply to preparatory documents generated by the client that do not embody communications with third parties (such as a client’s working notes or internal oral or documentary communications). Provided the document satisfies the other requirement of litigation privilege (as to which see below), it will also apply to a document generated for the purpose of being shown to a prospective adversary in circumstances where the document has not, or not yet, been shared with that adversary.
35.4.2 Litigation commenced or in contemplation
In view of the underlying rationale of litigation privilege, the ‘litigation’ in question must be adversarial in nature. Furthermore, the litigation must be ‘reasonably in prospect’. This matter was considered by the Court of Appeal in USA v. Philip Morris Inc. In summary, it is not sufficient if there is simply a general apprehension of future litigation. The requirement that litigation be ‘reasonably in prospect’ is not satisfied unless parties seeking to claim privilege can show that they were aware of circumstances that rendered litigation between themselves and a particular person or class of persons a real likelihood rather than a mere possibility; identifying potential causes of action and defendants to possible claims falls short of the necessary threshold. By the same token, however, litigation need not be likely, in the sense of there being more than a 50 per cent chance of it occurring.
The English courts apply a common-sense approach. Hence, litigation may be considered reasonably in prospect even if the cause of action has not yet arisen or the party has not yet decided whether to take legal advice. If litigation was reasonably in prospect when the communication or document was made, it does not matter if that litigation never commences. Moreover, the litigation in which the privilege is later relied on need not concern the same subject matter or the same parties as the litigation in respect of which the privilege originally arose.
The issue of when litigation may be said to be reasonably in contemplation was the subject of extensive consideration in ENRC. In that case, the defendant, ENRC, claimed litigation privilege in respect of documents created during the course of an investigation conducted by its lawyers that was initially prompted by a whistleblower report. The documents were created against the background of an anticipated criminal investigation by the Serious Fraud Office (SFO) and during a period of engagement between the SFO and ENRC (which the SFO contended was part of a self-reporting process).
The judge at first instance, Andrews J, accepted that ENRC contemplated that it would be subject to a raid by the SFO, and that it reasonably contemplated a criminal investigation by the SFO, but found that this did not amount to anticipation of adversarial litigation.
She also rejected the submission that once ENRC contemplated a criminal investigation by the SFO, criminal prosecution was also in reasonable contemplation. In particular, she in effect drew a distinction between criminal and civil proceedings, finding that, for the purpose of a claim to litigation privilege where criminal proceedings are said to have been contemplated, the relevant party must have uncovered some evidence of wrongdoing before proceedings could be said to be in reasonable contemplation – otherwise there would be insufficient grounds for believing that a prosecution was likely. She held that unless the relevant party had uncovered evidence of wrongdoing it could not consider the evidential test for the bringing of a criminal prosecution was likely to be met. The implication of that approach seemed to be that for a party to establish that litigation was a real likelihood, it was required to adduce evidence that was itself likely to betray the privilege being asserted and would tend to be self-incriminating (because it would need to identify matters discovered during the investigation leading it to believe that prosecution was likely and not merely possible). This approach (which had been the subject of much criticism following the first-instance decision in ENRC) was firmly rejected by the Court of Appeal, which found that the contemporaneous documents demonstrated that ENRC was aware of circumstances that rendered litigation between itself and the SFO a real likelihood rather than a mere possibility (so satisfying the test in Philip Morris), although uncertainty remained as to what the internal investigation would uncover. In particular, ENRC was in receipt of a whistleblower report making serious allegations of corruption and financial wrongdoing that it had appointed lawyers to investigate, and internal emails showed that senior figures within ENRC were anticipating an SFO raid and investigation. There had also been correspondence from the SFO where the subtext, so the Court found, was the possibility, if not the likelihood, of prosecution if the self-reporting did not result in a civil settlement. The Court indicated that, while not every manifestation of concern by the SFO is likely to be regarded as adversarial:
[W]hen the SFO specifically makes clear to the company the prospect of its criminal prosecution (over and above the general principles set out in the [Self-Reporting] Guidelines), and legal advisers are engaged to deal with that situation, as in the present case, there is a clear ground for contending that criminal prosecution is in reasonable contemplation.
Further, while it cannot be assumed that, once an SFO criminal investigation is reasonably in contemplation, so too is a criminal prosecution, on the facts of ENRC the evidence pointed clearly towards the contemplation by ENRC of a prosecution if the self-reporting process did not avert it. The Court of Appeal rejected the idea that because further investigations were required before a party could say with certainty that proceedings were likely that this would prevent proceedings from being in reasonable contemplation, and it rejected the judge’s distinction between civil and criminal proceedings. Corporate parties who face the threat of SFO investigation and prosecution may take some comfort from the Court of Appeal’s guidance that: ‘It would be wrong for it to be thought that, in a criminal context, a potential defendant is likely to be denied the benefit of litigation privilege when he asks his solicitor to investigate the circumstances of any alleged offence.’
The Court of Appeal in ENRC also distanced itself from the decision of the Court of Appeal Criminal Division in R (for and on behalf of the Health and Safety Executive) v Paul Jukes. In that case, the defendant had signed a statement shortly after a fatal industrial accident accepting that he was responsible for the company’s health and safety. The Court in that case upheld the judge’s decision that the statement was not covered by litigation privilege because criminal proceedings were not in contemplation and any privilege would anyway have attached to the company, which had not asserted it. The Court in Jukes had approved of Andrews J’s distinction (at first instance in ENRC) between criminal and civil proceedings when considering whether proceedings were reasonably in contemplation. However, the Court of Appeal in ENRC held that Jukes was a decision on the facts and that the approval of Andrews J’s approach was obiter. The effect of the decision of the Court of Appeal in ENRC is such that Jukes is likely to be marginalised and its apparent endorsement of Andrews J’s approach to anticipation of litigation in a criminal context disregarded.
While the Court of Appeal’s decision in ENRC has brought useful clarity as to the circumstances in which the first limb of the litigation privilege test may be satisfied, particularly in a corporate criminal context, there still remains some uncertainty as to exactly when regulatory proceedings may be regarded as sufficiently adversarial to meet the first limb. (The adversarial nature of the contemplated proceedings in ENRC was not in doubt, and the question of what type of regulatory action may engage litigation privilege was not directly addressed in ENRC). Some guidance can be found in Tesco v. OFT, where the Competition Appeal Tribunal (CAT) was required to consider whether certain enforcement proceedings brought by the Office of Fair Trading were ‘litigation’ for the purpose of claiming litigation privilege. The decision concerned the OFT’s investigation into dairy retail price-sharing between various supermarkets and dairy processors. In September 2007, the OFT issued a statement of objections against a number of undertakings, including Tesco, alleging violation of the prohibition on anticompetitive agreements and practices. The OFT issued a supplemental statement of objections, in support of its case, in July 2009 and made its infringement decision in July 2011. On Tesco’s appeal to the CAT, the OFT sought disclosure from Tesco of records of interviews with employees of other companies allegedly involved in Tesco’s infringing conduct in the first half of 2011. Tesco resisted the application on the ground (among others) that the records were covered by litigation privilege.
The CAT refused the OFT’s application for disclosure on the primary ground that such disclosure was not necessary, relevant and proportionate. However, it also considered the application of litigation privilege, finding that at the stage when Tesco contacted the potential witnesses the ongoing proceedings could properly be characterised as ‘adversarial’. It was relevant that the statement, and supplementary statement, of objections had been issued and Tesco was contesting the allegations, that the OFT was determining Tesco’s liability for a potential breach of the Competition Act and Tesco faced the possibility of a significant fine as a result, and that the proceedings were regarded as criminal for the purposes of Article 6 of the European Convention on Human Rights. The Chairman of the Tribunal also had regard to the underlying rationale of fairness that underpins litigation privilege, finding that a fair procedure included the right of Tesco to present its case and to gather evidence, and that, as a corollary, litigation privilege applied to the relevant contacts with third-party witnesses.
The decision of the CAT confirmed that entitlement to claim litigation privilege in the context of regulatory enforcement proceedings will depend on the specific circumstances of the regulatory procedure and the stage it has reached. Passmore suggests that as a general rule one might have thought that a contested process in which the tribunal controlling the proceedings may make some sort of ruling that has mandatory consequences for a participant that are either penal (such as a prison sentence, a fine or other form of sanction such as a suspension from practice), or otherwise require the participant to do something he or she does not wish to do (such as pay damages, obey an injunction or give an undertaking not to do something), are ones in which the privilege should be available. This must be right and is consistent with the decision of the Court of Appeal in ENRC: less significant than the precise stage an investigation by a regulator has reached is whether the client was aware of circumstances meaning that it reasonably contemplated adversarial proceedings ensuing.
35.4.3 Dominant purpose
The dominant purpose for the communication or the production of the relevant document must have been either to obtain information or advice in connection with the litigation or to conduct or assist in the conduct of it. However, in keeping both with the general language adopted by Lord Edmund-Davies in Waugh’s case and the overriding rationale underlying litigation privilege, it must be understood as applying to documents and communications produced in many aspects of the litigation process.
The test of ‘dominance’ is necessarily framed at a certain level of generality. Moreover, it is accepted that in applying it, the court will have to accept that ‘human motivation is rarely linear’. A dominant purpose has been described as the ruling, prevailing or most influential purpose – in other words, a purpose that is of greater importance than any other. As a consequence, a practical approach to ascertaining the pre-eminent purpose must necessarily be adopted. In particular, it is not necessary that it be the sole purpose. By the same token, however, it will not suffice if the relevant litigation purpose is merely a secondary, or merely co-equal, purpose. The courts will examine ‘purpose’ from an objective standpoint, looking at all the relevant evidence, including evidence of the relevant person’s subjective purpose. There is sometimes scope for debate as to whether a number of related ‘purposes’ are properly to be regarded as one overall purpose or as distinct when applying the dominant purpose test. In Bilta v. RBS, the various purposes of (1) providing information to Her Majesty’s Revenue & Customs (HMRC) in accordance with RBS’s duties as a taxpayer, (2) complying with RBS’s Codes of Practice and (3) seeking to persuade HMRC to change its mind over a threatened tax assessment, were all held to be effectively subsumed within the dominant purpose of defeating the expected tax assessment. They were said to be part of the inseparable purpose of avoiding litigation if possible, such that the dominant purpose test was satisfied. Similarly, in ENRC, there was an issue as to whether it was reasonable to regard ENRC’s dominant purpose as being to investigate the facts to see what had happened and to deal with compliance and governance issues, or to defend the proceedings that were held to have been in reasonable contemplation at the time. The Court of Appeal held that:
[W]here there is a clear threat of a criminal investigation, even at one remove from the specific risks posed by the SFO should it start an investigation, the reason for the investigation of whistle-blower allegations must be brought into the zone where the dominant purpose may be to prevent or deal with litigation.
Further, the evidence showed that litigation was indeed the dominant purpose of the investigation. The Court’s reasoning suggests that, where a party commences a factual investigation related to litigation that is reasonably in contemplation, a court will be inclined to accept that the contemplated litigation is the dominant purpose of that investigation rather than, for example, a purpose of simply establishing the material facts or dealing with compliance issues. It will be different, however, if the party in question is required by a specific policy to conduct an investigation, independent of any risk of litigation: in such a situation, the satisfaction of that policy requirement will be a distinct purpose that prevents the possible litigation from being the dominant purpose.
The Court of Appeal in ENRC also considered an argument that the documents in question were not subject to litigation privilege because they were created in a period of co-operative dialogue between the SFO and ENRC and, so the SFO said, with the specific purpose of being shown to the SFO. The Court rejected this argument: the evidence did not support a finding that the documents were created with the specific purpose of being shown to the SFO, despite ENRC having stated to the SFO on a number of occasions that it intended to make ‘full and frank disclosure’ and to produce its investigation report.
The ‘dominant purpose’ issue was also considered by the Court of Appeal in Rawlinson & Hunter Trustees SA v. Akers. In that case the claimants sought disclosure from the defendants, joint liquidators of certain companies in which the Tchenguiz family had an interest, of five reports prepared by Grant Thornton LLP that, the claimants said, had played a key role in the preparation of, and informed the content of, material placed before a judge in support of the application by the SFO for search warrants of the homes and business premises of Robert and Vincent Tchenguiz. The joint liquidators resisted disclosure on the ground of litigation privilege. Tomlinson LJ explained that the identification of dominant purpose presented the biggest challenge, since ‘plainly the first duty of the liquidators was to obtain information simply to establish what if any assets or liabilities existed and what if any steps were open to the liquidators to collect in the assets or to reduce or discharge the liabilities’. The claim to privilege failed in circumstances where the evidence put forward by the joint liquidators in support of that claim failed to grapple with the need to establish which of dual or even multiple purposes was dominant. The dominant purpose must relate to the conduct of actual or contemplated litigation. This includes advice relating to avoidance of that litigation or its settlement once in train.
35.5 Common interest privilege
Common interest privilege (like joint interest privilege, which is not discussed here) can be said to be derivative insofar as it relies on establishing the existence of a primary ground of privilege (whether legal advice or litigation privilege) and then determining the circumstances in which multiple persons become entitled to assert it.
Common interest privilege arises in circumstances where party A voluntarily discloses a document that is privileged in its hands to party B, who has a common interest in the subject matter of the communication, or in the litigation in connection with which the document was produced. Where this occurs, provided disclosure is given in recognition that the parties share a common interest, the document will also be privileged in the hands of party B. Recent judicial formulation of this principle is found in the following terms:
[W]here a communication is produced by or at the instance of one party for the purposes of obtaining legal advice or to assist in the conduct of litigation, then a second party that has a common interest in the subject matter of the communication or the litigation can assert a right of privilege over that communication as against a third party.
The function of common interest privilege is not simply to prevent party A’s privilege from being waived. Where a common interest is made out, it enables party B actually to assert privilege as against a third party. Notwithstanding some terminological confusion, it seems that (unlike joint interest) common interest privilege, properly so-called, does not give party B the right to obtain disclosure of otherwise privileged documents from party A. The rationale of common interest privilege can be explained as follows:
It is the communication in confidence to another interested party [in circumstances giving rise to a common interest] that requires the privilege to be available in respect of the document in his hands, whether or not he had the right to require that the document be disclosed to him.
In other words, common interest privilege is concerned with voluntarily shared privileged information. The aspect of voluntarism is important in understanding the limitations of common interest privilege.
It ought to follow that common interest privilege can be waived by the primary privilege holder. This is the logical conclusion if common interest privilege involves the voluntary disclosure of information. It would be an undue fetter on the primary privilege holder to say that he or she cannot waive privilege without the consent of all those parties with whom he or she has chosen to share his or her advice.
Furthermore, insofar as the proper focus of the doctrine is therefore on the voluntary disclosure of privileged material by party A, it seems that the moment when a common interest must be established is when disclosure occurs.
Although the doctrine is well established, its precise scope continues to be clarified and its requirements must therefore be understood by reference to developments in the recent case law. The doctrine of common (as distinct from joint) interest privilege was first recognised by the Court of Appeal in Buttes Gas and Oil Co v. Hammer (No. 3). A number of statements in that case indicated potential limitations to the doctrine, which, subsequent applications of it have clarified, do not in fact restrict its application.
First, in Buttes Lord Denning MR described common interest privilege as being ‘a privilege in aid of anticipated litigation’. While this confirms that one core application of the doctrine will be to circumstances in which a common interest arises out of parties’ shared concerns regarding prospective litigation (discussed further below), it is now clear that the doctrine is not limited to this context. Hence in Svenska Handelsbanken v. Sun Alliance and London Insurance plc, Rix J stated that:
It seems to me that if legal advice obtained by one person is passed on to another person for the sake of informing that other person in confidence of legal advice which that person needs to know by reason of a sufficient common interest between them, then it would be contrary to the principle upon which all legal professional privilege is granted to say that the legal advice which was privileged in the hands of the first party should be lost when passed over in confidence to the second party, merely because it was not done in the context of pending or contemplated litigation.
Support for the fact that common interest privilege can apply outside the context of anticipated litigation can also be found within Commonwealth authority.
The second relevant aspect of Buttes concerns whether the parties to the common interest need to have retained the same lawyer (though not under a common retainer). Brightman LJ expressed the doctrine (at p. 267) in terms of the existence of ‘a common interest and a common solicitor’. However, it does not appear that either of the other Lords Justice viewed the existence of a common lawyer as a requirement. In some subsequent cases, deference has been paid to Brightman LJ’s comments to the extent of suggesting that, while a common lawyer is not required, the commonality of interest requires that the parties could have used the same lawyer. This has also been put in terms of the retention of separate lawyers being a prima facie indication that the parties did not have the necessary common interest.
However, even this limited expression of the need for a putative common lawyer has been criticised in the Australian authorities, in favour of a broader appraisal of common interest. This also now appears to be the approach under English law.
35.6 Without prejudice privilege
The ‘without prejudice’ rule applies to exclude all negotiations genuinely aimed at settlement from being given in evidence. As with legal professional privilege, no adverse inferences can be drawn against a party invoking the privilege. The rule has two justifications:
- the public policy of encouraging parties to negotiate and settle their disputes out of court; and
- an implied agreement arising out of what is commonly said to be the consequences of offering or agreeing to negotiate without prejudice.
The first justification is the prevailing justification and the second is now doubted and regarded as being at best of limited application. In this context, ‘settlement’ means ‘the avoidance of litigation’. Therefore, the rule is not limited to negotiations aimed at resolving the legal issues between the parties but applies to any negotiations aimed at avoiding or reducing the scope of litigation, irrespective of whether they directly address or seek to resolve the relevant legal issues.
The rule requires the existence of a dispute and an attempt to compromise it. The crucial consideration is whether in the course of negotiations the parties contemplated or might reasonably have contemplated litigation if they could not agree. The use of a ‘without prejudice’ heading on a letter is not decisive as to whether the privilege applies but does give rise to a rebuttable presumption that the document was intended to be a negotiating document. If a letter is written in reply to a letter written without prejudice or is part of a continuing sequence of negotiations, it will be privileged and cannot be given in evidence without the consent of both parties.
While there was previously some authority to suggest that the without prejudice rule only applied to prevent disclosure of ‘admissions’, it now appears to be settled that the rule is not limited in this way but that without prejudice discussions as a whole will be protected.
The without prejudice rule is subject to a number of exceptions – it will not apply in the following circumstances:
- Unambiguous impropriety: one party may be allowed to give evidence of what the other said or wrote in without prejudice discussions if the exclusion of the evidence would act as a cloak for perjury, blackmail or other ‘unambiguous impropriety’.
- Proof, interpretation and rectification of an agreed settlement: the rule will not operate to render inadmissible an actual compromise agreement.
- Misrepresentation, fraud or undue influence: evidence of without prejudice negotiations is admissible to show that an agreement apparently concluded between the parties during the negotiations should be set aside on the ground of misrepresentation, fraud or undue influence.
- Estoppel: where an estoppel founded on a statement made in without prejudice negotiations is alleged, the relevant without prejudice material will be admissible to determine the existence of the estoppel.
- Reasonableness of mitigating steps: where there is an issue as to whether a party has acted reasonably to mitigate loss in the conduct and conclusion of negotiations for a settlement the without prejudice material may be examined for that purpose.
- Delay: evidence of negotiations may be given to explain delay or apparent acquiescence.
Since the without prejudice privilege belongs to both parties, it cannot be waived without both parties’ consent, at least in the context of civil litigation. This is because it is categorised as a joint privilege. However, there is now some limited authority for the proposition that a party to negotiations with a regulatory authority may unilaterally waive without prejudice privilege in respect of communications with that authority if it subsequently puts the basis of the regulator’s decision in issue in civil proceedings.
The law took an unusual and unexpected turn in this direction with the recent decision of Birss J in Property Alliance Group Ltd v. Royal Bank of Scotland plc. The case concerned alleged LIBOR fixing by RBS employees. The claimant, PAG, had purchased interest rate swaps from RBS in 2004–2008 that had been referenced to GBP LIBOR. PAG claimed that it had entered into the swaps in reliance on certain misrepresentations to the effect that RBS was not rigging LIBOR (PAG also relied on alleged implied terms to that effect). In support of its plea that the representations were false, PAG referred to the contents of the final notice issued by the Financial Services Authority (FSA), the predecessor body to the FCA, against RBS, which had found that RBS had manipulated Swiss Franc LIBOR and Japanese Yen LIBOR, but otherwise made no findings in relation to other currency denominations. The FSA final notice had been issued following a settlement reached between RBS and the FSA.
In its defence, RBS admitted that it had manipulated Swiss Franc LIBOR and Japanese Yen LIBOR but denied any wrongdoing in relation to GBP LIBOR. In support of that denial, RBS pleaded: For the avoidance of doubt, there have been no regulatory findings of misconduct on the part of RBS in connection with GBP LIBOR.’
PAG sought disclosure of a wide range of documents over which RBS claimed both without prejudice privilege and also legal professional privilege. RBS claimed that communications passing between it and the FSA between December 2012 and January 2013 were subject to without prejudice privilege on the grounds that they recorded negotiations with a view to the settlement announced in February 2013. The FCA wrote a letter in support of RBS’s claim to without prejudice privilege on the grounds of public interest.
The judge rejected RBS’s right to withhold disclosure of these documents. He held that by pleading in its defence that the regulators had not found any misconduct relating to GBP LIBOR, RBS ‘had itself put in issue the basis on which the regulatory findings were made’, and as a result RBS had to give disclosure of the communications. The judge’s reasoning, while difficult to discern, appears to have been that communications on which the settlement was based might have been incomplete, mistaken or misleading. As he explained:
If the communications on which the Final Notice was based were false, then to allow RBS to rely on what is absent from the Final Notice but at the same time to withhold inspection of those communications would compound the falsehood. That will not do.
PAG argued that the sort of regulatory context in which the communications between RBS and the FSA took place was not within the without prejudice rule. Birss J rejected the submission that the without prejudice rule was inapplicable, finding that ‘the public policy on which the without prejudice rule is based is capable of applying in order to promote the settlement of FCA investigations’, but suggested that there is a particular kind of privilege covering settlement negotiations between firms and the FCA (and presumably therefore other regulators) that is ‘analogous with’ but ‘not identical to’ without prejudice privilege. Unlike the normal without prejudice rule (where the consent of both parties is required for any waiver of the privilege), this ‘analogous’ type of without prejudice rule could, according to Birss J, be waived unilaterally by RBS putting the basis on which a final notice was decided in issue in civil proceedings, without the consent of the FCA. This decision is difficult to understand, in particular why the judge decided he needed to fashion a new type of privilege and why this new type of without prejudice privilege is apparently capable of being waived unilaterally.
In the event, RBS applied to amend its defence so as to remove the paragraph that Birss J had held put in issue the basis of the FSA’s findings. Birss J held that by doing so RBS could prevent the waiver that had been identified in his earlier judgment from taking place. He held that it was open to a party to decide not to rely on privileged material and therefore amend the relevant pleading, in which case, if the amended pleading was permitted, no waiver would have taken place merely by virtue of having been pleaded previously. Any substantive need for RBS to appeal on the waiver aspect of the first decision of Birss J therefore fell away (and RBS’s appeal in relation to other aspects of the decision was in any event settled). The law has accordingly been left in a state of some uncertainty on this topic.
35.7 Exceptions to privilege
35.7.1 The crime-fraud exception
Aside from certain very limited statutory exceptions where privilege may exceptionally be overridden, the principal situation where communications may not be protected by privilege is the crime-fraud exception. In broad terms, this exception provides that there is no privilege in documents or communications that are themselves part of a crime or a fraud, or that seek or give legal advice about how to facilitate the commission of a crime or a fraud. This exception applies to both legal advice privilege and litigation privilege.
It is important to bear in mind the truly exceptional nature of the crime-fraud exception. A court will not lightly deprive a party of the fundamental protection of legal professional privilege, particularly where the privilege is challenged on an interlocutory application. The reason for such caution is plain: once the court determines that the veil of privilege is to be lifted, and that the privileged documents are to be disclosed, there is no return. The holder’s right to privilege will have been irretrievably destroyed.
The solicitor need not be involved in the crime or fraud for the exception to apply: the solicitor may be wholly innocent.
Notwithstanding its exceptional nature, it may be that regulators or prosecutors in certain circumstances will wish to challenge a party’s claim to privilege on the basis of this exception. To successfully challenge that claim the regulator or prosecutor will need to establish that:
- there was a specific dishonest criminal (i.e., fraudulent) purpose; and
- the privileged material was produced in furtherance of or in preparation for that purpose.
As to the evidential burden on the party invoking the exception, there must be some prima facie evidence of the crime or fraud, a mere allegation or charge of crime or fraud is not sufficient. In a case where the crime-fraud relied on is one of the issues in the action, the applicable standard is the ‘very strong prima facie case’; whereas in a case where the issue of fraud is freestanding it may be sufficient to establish a ‘strong prima facie case’.
There is some debate as to the proper scope of the exception. In the authors’ view, being an exceptional principle, the crime-fraud exception applies only in circumstances where the conduct in question amounts to a crime or a fraud (i.e., involving an element of dishonesty). There is, however, some suggestion in some texts and cases that the scope of the exception has been broadened to cases arguably not involving crime or fraud (which has also led to the exception sometimes being termed the ‘iniquity exception’).
The widening of the exception to encompass conduct falling short of dishonesty is said to emanate from the Court of Appeal’s decision in Barclays Bank v. Eustice. However, it is doubtful that Eustice should be taken as authority for extending the scope of the crime-fraud extension. Though using the language of ‘iniquity’, in the context of civil proceedings, the Court of Appeal nonetheless was clear that the impugned conduct was a type of fraud (in this case, on the creditors), within the meaning of section 423 of the Insolvency Act 1986. Equally, in JSC BTA Bank v. Ablyazov, Popplewell J characterised Mr Ablyazov’s conduct in terms of concealment and deceit, namely as dishonest and fraudulent.
Even if, contrary to the above, Eustice is understood as having extended the crime-fraud exception to conduct falling short of dishonesty, the basis for such extension is dubious, being based on an authority – Ventouris v. Mountain – that was not about the crime-fraud exception at all. Indeed in McE v. Prison Service of Northern Ireland, Lord Neuberger left open the question as to whether Eustice had been correctly decided.
A further issue that may arise is whether the dishonest purpose needs to be a purpose of the privilege holder, or whether a dishonest purpose of a third party will suffice. The decision of the House of Lords in R v. Central Criminal Court, ex p Francis & Francis, followed in BBGP Managing General Partner Limited v. Babcock and Brown, suggests that it may be sufficient if a criminal or dishonest purpose of a third party, not the privilege holder, can be established to the requisite evidential standard. However, those cases do not address the situation where the party claiming privilege is also the party against whom the criminal conduct is alleged.
While these points currently remain untested, it is suggested that the requirements for establishing the crime-fraud exception are likely to present some difficulty for regulators and prosecutors where the privilege holder is a company but where a dishonest or criminal purpose can only be established against certain individuals. In particular, it does not follow that because the criminal or fraudulent purposes of one or more individuals can be established, the necessary fraudulent purpose of the corporate is established. Whether it can be, will depend on complex issues of attribution and the doctrine of identification in the criminal context.
A case of particular interest in the regulatory context is CITIC Pacific Ltd v. Secretary for Justice and anor, in which the Hong Kong Court of Appeal considered the application of the crime-fraud exception in the context of alleged fraud and breach of listing rules by a company (CITIC) listed on the Hong Kong Stock Exchange. Hong Kong’s Securities and Futures Commission (SFC) had commenced investigating why CITIC had delayed a profit warning in October 2008, during the financial crisis. As part of its investigation into alleged ‘defalcation, fraud, misfeasance and other misconduct’ on the part of CITIC’s management, the SFC sought various documents, including privileged documents, which CITIC subsequently provided to it. The police commenced criminal investigations and CITIC learned that the SFC had passed the privileged documents to the United States Department of Justice for use in the criminal proceedings. CITIC issued an application for an order that the privileged documents be returned on the basis that privilege had been waived for the limited purpose only of the SFC investigation. The application was resisted by the Department of Justice, inter alia, on the basis that the documents were created by certain of the persons responsible for the management of CITIC for the purposes of the fraud, such that the crime-fraud exception applied.
The Court of Appeal (reversing the decision of Wright J) found that the crime-fraud exception had not been made out since there needed to be evidence of a fraudulent purpose behind the seeking and obtaining of the advice by the relevant directors of CITIC, which had not been established, for there to be the necessary causal relationship between the advice received and the fraudulent conduct.
The decision in CITIC is instructive in demonstrating a cautious approach by an appellate court to the encroachment of legal professional privilege where the crime-fraud exception is invoked by a prosecuting authority in the context of, and (presumably) in aid of, anticipated criminal proceedings.
35.7.2 Statutory and other exceptions
Previously, the courts did not require a great deal of persuasion that Parliament had intended to override legal professional privilege. That is no longer the case. For example, statutory powers requiring the production of documents would generally be deemed to exclude the right to demand documents subject to legal professional privilege. Any exception to this rule would have to be explicitly supported by primary legislation. Explicit support would require clear language or necessary implication. A necessary implication in this area is not an exercise in interpretation; it is a matter of express language and logic. A necessary implication arises only where the legislative provision would be rendered inoperative or its object largely frustrated in its practical application if the privilege were to prevail. Any curtailment of privilege could only be to the extent reasonably necessary to meet the ends that justify the curtailment.
It appears that there may be a further exception to legal professional privilege where a professional is under investigation by their regulator seeking production of documents over which the professional’s client could claim privilege, or the professional wishes to produce the documents to show the regulator that the he or she has behaved properly (i.e. ‘underlying client-privileged documents’ rather than documents over which the professional could claim his or her own privilege). Those documents may be disclosed to the regulator without the client’s consent but must not be used against the underlying client, and steps must be taken to protect the client’s confidential privileged material. The justification for the rule is that either there is no infringement of the client’s privilege where the documents may not be used against him or her, or that, if there is an infringement, it is of a technical nature that may be authorised without satisfaction of the usual ‘clear language or necessary implication’ test. This issue recently arose for consideration in The Financial Reporting Council Limited v Sports Direct International Plc, The Financial Reporting Council (FRC), which, among other things, is the regulator for statutory auditors in the United Kingdom, had used its statutory powers to seek the production of certain documents from Sports Direct for the purpose of its investigation into its statutory auditor. Sports Direct withheld the documents on grounds of legal professional privilege and the FRC challenged this, relying on the principle that it, as regulator, was entitled to obtain those documents from Sports Direct, even if they were documents over which Sports Direct had a valid claim to privilege, as long as it did not use those documents against Sports Direct. The judge considered the relevant authorities and, acknowledging that the issue was ‘difficult’, ultimately agreed with the FRC and ordered that the documents be produced. He summarised the principle as follows:
[T]he production of documents to a regulator by a regulated person solely for the purposes of a confidential investigation by the regulator into the conduct of the regulated person is not an infringement of any legal professional privilege of clients of a regulated person in respect of those documents. That being so, in my judgment the same must be true of the production of documents to the regulator by a client.
However, the principle is not without controversy, and Sports Direct were granted permission by the judge to appeal; it is expected that the question will be revisited by the Court of Appeal in the near future.
The most significant statutory exception in the regulatory context is covert surveillance under the Regulation of Investigatory Powers Act 2000 (RIPA). However, if covert surveillance is likely to result in the acquisition of knowledge of matters subject to legal professional privilege, the appropriate authorisations or approval cannot be made unless there are exceptional and compelling circumstances. Unless that risk can be entirely removed, steps must be taken to ensure that any such information will not be used for the purpose of further investigations or during the course of any subsequent criminal trials.
35.8 Loss of privilege and waiver
Although privilege, once established, will endure indefinitely, it may be lost, principally in two ways. First, the party entitled to assert privilege may waive the right. This can occur expressly, for example, by choosing to place privileged material before the court. For this purpose, the partial disclosure of a privileged document will usually involve a waiver of privilege in respect of the whole document. Waiver will also occur by necessary implication in certain proceedings (implied waiver). For example, where a client sues a lawyer, the client will be taken impliedly to waive privilege in respect of those documents arising under the retainer subject to dispute.
The second principal circumstance in which privilege will be lost is where there is a loss of confidentiality. As discussed in Section 35.2.1, the confidentiality of the communication or document is a condition precedent to its being privileged. However, the significance of this requirement should not be misunderstood. It is well established that a privileged document does not lose its quality of confidence simply because it is disclosed to persons other than the client and the lawyer. Plainly, if a document has been made available to the general public, all confidence (and with it privilege) will have been lost. However, where privileged material is disclosed to a limited number of third parties in circumstances expressly or impliedly preserving the overall confidentiality as against the rest of the world, privilege will be maintained. This point is well illustrated by an example cited with approval by the English courts:
If A shows a privileged document to his six best friends, he will not be able to assert privilege if one of the friends sues him because the document is not confidential as between him and the friend. But the fact six other people have seen it does not prevent him claiming privilege as against the rest of the world.
It has therefore been accepted that where a client disseminates a record of privileged material, either within its own corporation or to third parties, confidentiality will not necessarily be lost. It is a separate question whether the party to whom the documents are disclosed acquires a right to assert privilege by virtue of a common interest.
As noted above in Section 35.6, in Property Alliance Group Ltd v. Royal Bank of Scotland plc, it was suggested that privilege can be lost by a party putting something in issue. This aspect of the decision must be wrong: legal professional privilege is absolute unless waived or overridden by statute. There is no balancing act to be carried out with some competing public interest. It may be that the reference to putting something in issue was a confusion with the doctrine of collateral waiver. However, collateral waiver requires some form of ‘deployment’ of the privileged material, not simply that a relevant matter is put in issue.
35.8.1 Limited waiver
Limited waiver is achieved where a party discloses a privileged document, or communicates privileged information, to a limited number of third parties in circumstances expressly or impliedly preserving the overall confidentiality of the document or information as against the rest of the world. It is well established that in such circumstances the disclosing party does not lose privilege in the document.
Limited waiver may frequently arise in a regulatory context. In B v. Auckland District Law Society, in the course of investigating a complaint against a law firm, certain privileged documents had been handed over to counsel appointed by The Law Society. The letter handing over the documents stated that the documents were made available to counsel for the limited purposes of the investigation and ‘on the express basis that in doing so privilege is not waived.’ The Law Society sought to use the documents in subsequent disciplinary proceedings brought against the law firm, on the basis that the privilege had been ‘let out of the bag’. The Privy Council rejected this submission. Lord Millett held:
It does not follow that privilege is waived generally because a privileged document has been disclosed for a limited purpose only… . The question is not whether privilege has been waived, but whether it has been lost. It would be unfortunate if it were. It must often be in the interests of the administration of justice that a partial or limited waiver of privilege should be made by a party who would not contemplate anything which might cause privilege to be lost, and it would be most undesirable if the law could not accommodate it.
There was further development of the limited waiver doctrine in Berezovsky v. Hine. Mr Berezovsky’s lawyers had sent privileged draft witness statements in relation to Mr Berezovsky’s action against Mr Abramovich to solicitors acting for his friend, Mr Patarkatsishvili, in an asylum application as it was thought they might be useful. Mr Patarkatsishvili died and his estate wanted to use the statements in subsequent litigation against Mr Berezovsky. Mann J held that as the statements had been disclosed by Mr Berezovsky’s solicitors without any express limitation on their use, it was not open to Mr Berezovksy to prevent their use by the estate against him. The Court of Appeal disagreed. Lord Neuberger MR said that the statements were obviously intended to remain confidential and were disclosed for a limited and defined purpose. In explaining the nature of limited waiver and its scope, Lord Neuberger noted:
[W]here privilege is waived, the question whether the waiver was limited, and, if so, the parameters of the limitation, must be determined by reference to all the circumstances of the alleged waiver, and, in particular, what was expressly or impliedly communicated between the person sending, and the person receiving, the documents in question, and what they must or ought reasonably have understood . . . .
The limited waiver principle was also applied in CITIC Pacific Ltd v. Secretary for Justice. The Hong Kong Court of Appeal held that privilege had been waived in favour of the SFC for the purpose of its investigation only, even though at the time of the surrender of the documents to the SFC, CITIC’s solicitors provided no written document setting out specific terms as to limitation of the waiver of privilege. It was only several weeks later, in response to an enquiry from the SFC, that CITIC stated in writing what it considered the terms of limitation to have been.
Another instance of the application of the limited waiver doctrine in the regulatory context is the Property Alliance Group Ltd v. Royal Bank of Scotland plc decision. RBS claimed privilege over six documents that it had shown to various regulators and the United States Department of Justice and the Attorneys General of several US states. PAG argued that by showing those documents to third parties RBS had waived any privilege in them. The judge disagreed on the basis that the privilege had been waived for a limited purpose only (applying B v. Auckland District Law Society and Berezovsky v. Hine). Significantly, the judge held that the existence of ‘non-waiver’ agreements between RBS and the third parties – which recognised by certain ‘carve-outs’ that the regulator could use the information in a way which could in future destroy the privilege, for example, by publishing the material – did not undermine the limited nature of the waiver. Confidentiality and privilege would continue to be preserved unless some act such as publication, which would destroy the privilege, occurred.
However, while under English law voluntary disclosure to a regulator may not entail a general waiver of privilege, this may be inconsistent with the position in other common law jurisdictions.
In the case of Dechert v. ENRC, the Court of Appeal held that the respondent, ENRC, was entitled to have proceedings for the detailed assessment of the bills of its former solicitors, Dechert, held in private and that ENRC had not waived privilege by commencing assessment proceedings. The implied waiver of privilege the application for detailed assessment had entailed was limited, temporary and extended only to the opposing party and to the judge. Gloster LJ remarked that ‘the concept of limited waiver is of general application, designed to ensure that the loss of LPP [legal professional privilege] (given its fundamental importance) is limited to that which is necessary to protect other interests.’
Arguments may arise as to the scope of any limited waiver and whether any wider waiver can be inferred from the conduct of the party waiving privilege or the circumstances in which privilege was waived. The scope of the principle of inferred waiver was the subject of consideration by the Divisional Court in Belhaj v DPP. Belhaj concerned a judicial review of a decision by the Director of Public Prosecutions (DPP) not to prosecute a particular individual. While considering whether to prosecute, privileged material was passed by the government to the Metropolitan Police Service, the Crown Prosecution Service and the DPP under an express limited waiver of privilege. The claimants argued that the waiver must be taken to have extended not only to the police investigation and the decision whether to charge the relevant individual but also to any judicial review proceedings challenging that decision. The Divisional Court rejected that argument, finding that no such wider waiver could be inferred because there were no inevitable or necessary nexus between the decision of the DPP and the subsequent judicial review of the ultimate decision. The key question was whether these were discrete or composite processes. The Court found that the processes were discrete; waiver could not therefore be inferred. There remains scope for argument, on different facts, as to the extent to which a limited waiver to one person may be inferred to extend to another where that other person requires the relevant document for a purpose that is sufficiently connected to the purpose of the initial limited waiver.
35.8.2 Collateral waiver
In certain circumstances the loss of privilege in a document can lead to waiver of privilege in other material. The rationale for this is one of fairness; the court is concerned to avoid having an incomplete picture of the events in question and to avoid ‘cherrypicking’ of privileged documents by a party. Lord Bingham CJ commented in Paragon Finance v. Freshfields that: ‘While there is no rule that a party who waives privilege in relation to one communication is taken to waive privilege in relation to all, a party may not waive privilege in such a partial and selective manner that unfairness or misunderstanding may result.’ For this reason it will be more difficult to establish collateral waiver where the initial disclosure was made inadvertently.
The weight of authority suggests that some reliance must be placed on the primary material before any waiver in collateral material can be triggered. Simple disclosure and inspection of the primary material is probably insufficient. The necessary reliance has been said to be deployment of the primary material in court but the approach of the courts to the question of what this means has not always been consistent. Ultimately the touchstone is fairness, and waiver will be found where a party has crossed the line from, for example, merely referring to legal advice to actually relying on that advice in support of its position. In R v. Papachristos & Kerrison, an issue arose as to whether Innospec, a company that had pleaded guilty to corruption charges, had waived privilege in certain interview notes by providing a subsequent PowerPoint presentation to the SFO and United States Department of Justice during negotiations, thereby waiving privilege in the presentation. Innospec was not a party to the proceedings and had not sought to deploy any document before the court. It was held that there had been no sufficient deployment by Innospec of the notes in the presentation to amount to a collateral waiver of privilege in respect of the notes as opposed to the PowerPoint presentation itself.
The court determined that there had been neither express nor collateral waiver in the interview notes because the waiver that had occurred over the PowerPoint was expressly limited and was in the context of the investigatory stage of the case.
Reliance on part of a document may require disclosure of the whole. While severance may be possible if the document deals with entirely different subject matters, where the document deals with only one subject matter the court may conclude that it is or appears dangerous or misleading to allow a party to deploy part of the document and assert privilege over the remainder.
Once privilege is waived in a particular document, the waiver extends to all documents relating to the same ‘transaction’, and possibly beyond. The underlying principle applied by the courts is the need to ensure that the evidence adduced by the party claiming privilege is being presented fairly. Hence in R v. Secretary of State for Transport ex p Factortame Ltd Auld LJ said that:
In each case the question for the Court is whether the matters in issue in the document or documents in respect of which partial disclosure has been made are respectively severable so that the partial disclosed material clearly does not bear on matters in issue in respect of which material is withheld. The more confined the issue, for example as to the content of a single document or conversation, the more difficult it is likely to be to withhold, by severance, part of the document or other documents relevant to the document or conversations.
35.8.3 Inadvertent disclosure and restraining use of privileged documents
The Civil Procedure Rules (CPR) at rule 31.20 provide that, where a party inadvertently allows a privileged document to be inspected, the party who has inspected the document may use it or its contents only with the permission of the court. While the solicitor for one side does not owe a duty of care to the other party, where there is an obvious mistake the solicitor should promptly notify the other party and then, where the client wishes to use the document, make an application under rule 31.20 of the CPR to allow such use. Such use is unlikely to be allowed where the relevant party wishes to use the inadvertently disclosed document as the basis for a new claim, as distinct from the situation where a document is disclosed during litigation.
The question of what is meant by an ‘obvious mistake’ was considered by the Court of Appeal in Rawlinson & Hunter Trustees SA & Ors v. Director of the Serious Fraud Office. Moore-Bick LJ stated that, once it is accepted that the person who inspected a document did not realise that it had been disclosed by mistake, despite being a qualified lawyer, it would be a strong thing for the judge to hold that the mistake was obvious. Further, given the scale of the disclosure in the case and the range of documents involved, general assertions in correspondence that the SFO did not intend to waive privilege were not sufficient to make it obvious that any document arguably privileged must have been disclosed by mistake. On the facts, it was held that it would not have been obvious that the documents at issue in the appeal had been disclosed by mistake.
In Ford v. FSA, the claimant established that he had joint interest privilege in two documents provided to the FSA by another party with the benefit of that privilege, and referred to by the FSA in a supplementary investigation report (SIR), without his consent. It followed that the FSA had not been entitled to rely on the content of the communications in the regulatory proceedings. The claimant subsequently sought relief including:
- the quashing of the warning notice issued by the FSA’s Regulatory Decisions Committee that referred to the privileged material;
- the destruction of all copies of the privileged documents held by the FSA, together with their permanent deletion from databases and email accounts within the FSA;
- the destruction of all copies of the SIR and warning notices held by the FSA and their permanent deletion from databases and email accounts within the FSA, at least by redaction of the offending passages; and
- the redaction from all hard copy and electronic documents held by the FSA of quotations from or references to the substance of the privileged documents.
Burnett J refused to quash the warning notice, in circumstances where he found that the privileged material formed a very modest part of the overall picture painted by a detailed exposition of the facts and matters on which the FSA relied; it was ‘peripheral but not irrelevant’. Rather than equating the FSA’s reliance on the privileged material with the public law concept of taking into account an irrelevant matter, the judge held that it was more accurate to consider the error as equivalent to a judicial or administrative body acting, in part, on inadmissible evidence. The warning notice, shorn of the offending references to privileged material, was said to remain a coherent, seamless and powerful document.
However, despite the FSA’s submission that it would be sufficient to redact the privileged material from the SIR, warning notice and any other documents now to be deployed by the FSA, and to refrain from using or disseminating unredacted copies, Burnett J went further and ordered the FSA to use its best endeavours to identify and destroy such copies (both hard copy and electronic) of the privileged material that existed, together with such copies of the SIR and warning notices. In dealing with the claimant’s further request for an order that anyone who had read the privileged documents or was aware of their content should be removed from further involvement in the relevant FSA investigation, the judge held that, while the approach identified in the private law context to the question whether a lawyer in possession of privileged material should be restrained from acting is a useful guide, when the question arises in judicial review proceedings there will necessarily be a public law element in the underlying dispute. The public interest may form an important element in any discretionary decision made in judicial review proceedings. In the particular circumstances of the case, he found that the order sought would be disproportionate and contrary to the public interest.
35.9 Maintaining privilege: practical issues
At the beginning of an investigation litigation may well not yet be in prospect (in which case litigation privilege will not apply) and therefore a corporate may wish to ensure that sensitive communications are, where possible, covered by legal advice privilege. It will be much more difficult to do this in light of the recent decisions in The RBS Rights Issue Litigation and ENRC, and a corporate embarking on an internal fact-finding investigation with a view to taking legal advice should therefore be aware of the risk that documents created pursuant to that investigation will be disclosable in any subsequent proceedings.
35.9.1 Conducting interviews
The conduct of interviews with potential witnesses is clearly an area of particular sensitivity. Because of the narrow view of who may constitute the ‘client’ in Three Rivers No. 5, as applied in The RBS Rights Issue Litigation and ENRC (which, while doubted by the Court of Appeal in ENRC, still remains the law), regulators or prosecutors may attempt to challenge a claim that the notes of evidence prepared by lawyers at such interviews are protected by legal advice privilege. In a March 2016 speech to compliance professionals, Alun Milford, then General Counsel of the SFO, emphasised the importance the SFO places on witness accounts of relevant events and stated, in this context, that:
- We will view as uncooperative false or exaggerated claims of privilege, and we are prepared to litigate over them: to do otherwise would be to fail in our duty to investigate crime.
- If a company’s assertion of privilege is well-made out, then we will not hold that against the company: to do otherwise would be inconsistent with the substantive protection privilege offers. We will simply judge the question of cooperation in our normal way against our published criteria.
- By the same token if, notwithstanding the existence of a well-made-out claim to privilege, a company gives up the witness accounts we seek, then we will view that as a significant mark of co-operation: here again, to do otherwise would be inconsistent with the substantive protection privilege offers.
- For the same reason, we will view as a significant mark of cooperation a company’s decision to structure its investigation in such a way as not to attract privilege claims over interviews of witnesses.
In the first edition of this book it was suggested that, to preserve privilege when conducting interviews with potential witnesses, in the case of employees, where possible, they should be expressly authorised by the corporate to communicate with the lawyers for the purposes of receiving advice. Such practice would be consistent with the decision of the Singapore Court of Appeal in Skandinaviska Enskilda Banken v. Asia Pacific Breweries and would in principle have provided a reasonable ground for asserting privilege on the basis of that decision. The position is much more difficult in light of The RBS Rights Issue Litigation and ENRC decisions. Following those decisions, and pending any reconsideration of the issue by the Supreme Court, only documents recording communications between the client (i.e., those within the organisation who are authorised to seek advice from, or receive the advice of, the lawyers) and the lawyers will be protected by legal advice privilege. That said, it seems likely that a corporate entity may nevertheless soon seek to maintain legal advice privilege over interview notes (notwithstanding that such a claim to privilege would likely be successfully challenged at a first instance) with the benefit of the Court of Appeal’s comments in ENRC about the unworkability of a narrow definition of ‘client’ in the corporate context. However, until such a challenge (and clarification from the Supreme Court), notes of interviews with other employees or ex-employees of the client organisation, whether taken by employees or by the lawyers, will be potentially disclosable in any subsequent proceedings, unless they can be said to form part of the lawyers’ working papers. As to that, the decisions in The RBS Rights Issue Litigation and, at first instance, ENRC suggest that it will be necessary to establish in evidence that the notes, if disclosed, would betray the tenor of the legal advice. It may therefore be tempting for the lawyers to ensure that any notes recording factual information obtained from employees and ex-employees are produced so that they contain the solicitor’s commentary and advice and are not merely a recitation of facts provided by the interviewee.
Of course, all interviews conducted for the dominant purpose of anticipated litigation ought to attract litigation privilege.
Where a corporation under investigation provides oral summaries of otherwise privileged interviews to a regulator or prosecutor, it is likely that this would be held to amount to a limited waiver in respect of matters communicated to the regulator or prosecutor because the information is provided for the limited purpose of the investigation.
35.9.2 Ensuring that any waiver is limited
It is clearly very valuable for a regulated entity to be able to waive privilege vis-à-vis the regulator for a particular purpose (e.g., in connection with a specific investigation) but without waiving it more generally. As noted above in Section 35.8.1, in ENRC v. Dechert the Court of Appeal has confirmed that the concept of limited waiver is of general application, designed to ensure that the loss of legal professional privilege (given its fundamental importance) is limited to that which is necessary to protect other interests.
Although it may be possible for a regulated entity to contend that waiver of privilege was impliedly, if not expressly, limited (having regard to all the circumstances of the waiver), the safest course will always be to make clear at the time of disclosure that waiver is for a limited purpose only and confidentiality is otherwise being maintained.
However, as noted above, while it may be possible to achieve a limited waiver under English law, the waiver may not be so regarded in other jurisdictions.
35.9.3 Redaction of documents
Where only part or parts of a document are privileged, the appropriate procedure (assuming the privilege holder wishes to maintain privilege) is to disclose the document but redacting the privileged parts. Disclosure of a redacted document will not give rise to a waiver of privilege in respect of the redacted parts. Disclosure of a redacted document in this way should be distinguished from deployment of a redacted document in court. In the latter circumstance, reliance on the unprivileged part of a document may give rise to collateral waiver in respect of the privileged part, where both parts deal with the same subject matter.
Where there is a dispute as to the justification for a redaction, the court may inspect the relevant document. In civil proceedings, the court’s power to inspect documents to resolve an application for specific disclosure is found in the CPR at rule 31.19(6). However, an order for inspection by the court is usually regarded as a solution of last resort and should not be undertaken unless the court considers that there is credible evidence that those claiming privilege have either misunderstood their duty, or are not to be trusted with the decision, or there is no reasonably practical alternative.
In the criminal context, if the prosecution is asserting public interest immunity in order not to disclose material, there is a defined route to follow under Criminal Procedure and Investigations Act 1996 (CPIA 1996) and the Criminal Procedural Rules (CrimPR) at rule 15.3.
The ability of the defence to challenge the adequacy of prosecution disclosure is provided for under section 8 of the CPIA 1996 and rule 15.5 of the CrimPR, after service of the defence case statement. The court may order disclosure of further material if the defence can demonstrate that the prosecution has that material and is required to disclose it in accordance with the CPIA 1996. A criminal court also has inherent jurisdiction to ensure a fair trial and, in the event of a dispute over the justification for a redaction, a judge can always review the material if he or she considers it appropriate.
35.9.4 Substantiating a claim to privilege if challenged
If a claim to privilege is challenged by an investigating authority or regulator, and the matter comes before the court, it will be necessary for the party claiming privilege to provide evidence to substantiate its claim. The principles to be applied in assessing that evidence were set out by Beatson J in West London Pipeline v.Total UK. The judge explained that an affidavit claiming privilege ‘should be specific enough to show something of the deponent’s analysis of the documents or, in the case of a claim to litigation privilege, the purpose for which they were created. It is desirable that they should refer to such contemporary material as it is possible to do so without making disclosure of the very matters that the claim for privilege is designed to protect.’
While these principles are well established, their application may in some instances be controversial. In ENRC the first-instance court did not consider that the evidential burden has been satisfied. In particular, Andrews J was unimpressed by the explanation that had been given as to why evidence had to be adduced in the form of a witness statement from ENRC’s solicitors rather than in the form of direct evidence from individuals at ENRC responsible for giving instructions to their lawyers. (The explanation for this was that the senior officers and employees at ENRC were not willing to give evidence in circumstances where they were or might become suspects in the SFO’s investigation, without assurances that the SFO would not pursue cross-examination of those witnesses in the proceedings or seek to refer to that evidence against that witness or against ENRC in any subsequent criminal proceedings. The SFO was unwilling to give any such assurances.) This approach seemed to prejudice a corporate claiming privilege in a criminal context given that necessarily the company can only give direct evidence through its directors and employees who may themselves be at risk of investigation and prosecution.
In rejecting ENRC’s evidence, Andrews J was also influenced by what she perceived to be an absence of contemporaneous documents to support the claim. In particular, she commented that she had not been shown any records of discussions either at board level or within any group at ENRC that might have shed light on what ENRC contemplated, and why they contemplated it. She therefore considered that for the purposes of the claim to litigation privilege, ENRC had failed to establish a reasonable anticipation of litigation.
The Court of Appeal in ENRC was critical of this approach and of the judge’s failure to have proper regard to the unchallenged evidence of ENRC (put forward primarily by its solicitor) and the contemporaneous documents. Following this decision, it appears that a corporate claiming privilege will not be prejudiced if, in light of the risk of investigation and prosecution of the individual directors and employees who might otherwise give evidence, it is left with no real choice but to give evidence through its lawyers.
Furthermore, the Court of Appeal’s decision in ENRC confirms the proper approach explained in West London Pipeline, namely that the evidence in a witness statement or affidavit should be accepted unless there is good reason (e.g., the existence of contradictory contemporaneous documents) to think that the evidence is incorrect.
35.9.5 Use of independent counsel
Where there is a potential dispute concerning the application of privilege, it is reasonably common for independent counsel to be appointed to review the relevant documents. Such counsel would then be prevented from acting for either side of the relevant dispute. An appointment may be made by the court or can be made more informally by the parties themselves. This process is, for example, frequently adopted by the SFO, although parties should always ensure the genuine independence of any counsel appointed.
In R (McKenzie) v. Director of the Serious Fraud Office, the court was required to consider the procedures adopted by the SFO for dealing with potentially privileged material embedded in electronic devices seized using statutory powers or produced in response to a notice. The applicant complained that the SFO procedure was unlawful in using in-house technical staff to conduct an electronic search of the content of seized devices by reference to search terms for the purpose of isolating potentially privileged material for subsequent review by independent counsel. It was argued that this initial exercise should be contracted out by the SFO to independent IT specialists, despite the SFO having detailed procedures in place to ensure, in so far as possible, that its investigators would not gain access to any potentially privileged material before it had been reviewed by independent counsel. The applicant contended that the involvement of in-house SFO IT specialists and the uploading of the digital material, including the potentially privileged material embedded within it, onto the SFO’s digital review system unnecessarily exposed the person to whom privilege attached to an avoidable risk that privileged material may come to the knowledge of the SFO and be used to his disadvantage.
The applicant in McKenzie argued that the same approach should apply when an investigating body lawfully comes into possession of potentially privileged material as applies to a solicitor in relation to privileged material relating to a former client. The investigating body must satisfy the court with convincing evidence that there is no real risk of the privileged material being disclosed to an investigator. The court disagreed, finding that it would not be appropriate to apply the same reasoning to the relationship between a criminal investigating body and the subject of its investigation as applies in relation to a solicitor and former client. In the case of an investigating body, there is no fiduciary relationship and the body is exercising statutory powers for the public good in the investigation of suspected crime. It would therefore be imposing too onerous an obligation on the SFO to require it to demonstrate that there could be no real risk of the privileged material being read by anyone involved in the investigation; instead, the seizing authority has a duty to devise and operate a system to isolate potentially privileged material from bulk material lawfully in its possession that can reasonably be expected to ensure that such material will not be read by members of the investigative team before it has been reviewed by an independent lawyer to establish whether privilege exists. There should also be clear guidance in place so that, if an investigator does by mischance read privileged material, that fact is recorded and reported, the potential conflict recognised and steps taken to prevent privileged information being deployed in the investigation. On the facts, the SFO procedure was held to satisfy these requirements.
1 Bankim Thanki QC, Tamara Oppenheimer and Rebecca Loveridge are members of Fountain Court Chambers.
2 Common interest privilege (as with joint interest privilege) is traditionally analysed as a distinct category of privilege, although it depends on the existence of material to which either legal advice or litigation privilege applies.
3 Waugh v. British Railways Board  AC 521, 541-542, HL (per Lord Edmund-Davies). The distinction set out in Lord Edmund-Davies’ speech was applied by the Court of Appeal in Re Highgrade Traders Ltd  BCLC 151, 164-165 (per Oliver LJ); and by the House of Lords in In re L (a Minor) (Police Investigation: Privilege)  AC 16, 24-5 (per Lord Jauncey) and Three Rivers District Council and others v. Governor and Company of the Bank of England (No. 6)  1 AC 610, HL (Three Rivers No. 6), para. 65 (per Lord Carswell) and paras. 50-51 (per Lord Rodger).
4 See Thanki (ed.), The Law of Privilege (3rd edn.), para. 2.02.
5 See Thanki, paras. 1.09-1.12; Passmore, Privilege (3rd edn.), paras. 3.002-3.005.
6 Three Rivers No. 6, para. 24 (per Lord Scott).
7 Bursill v. Tanner (1885) 16 QBD 1, 4; Pascall v. Galinski  1 QB 38; R (Miller Gardner) v. Minshull St Crown Court  EWHC 3077 (Admin); R (Howe) v. South Durham Magistrates Court  RTR 4. See generally A Pugh-Thomas, ‘Who is your client?’ (1997) SJ 141(2) 44.
8 Ex Parte Campbell (1869-70) LR 5 Ch App 703, 705. However, in this case James LJ made clear that the position may be different if the client’s residence has been told to the lawyer as a matter of professional confidence. These dicta were applied in Re Arnott, ex p Chief Official Receiver (1888) 60 LT 109.
9 Levy v. Pope (1829) M & M 410; Gillard v. Bates (1840) 6 M & W 547.
10 Confidentiality in this context is properly understood in the broader sense of information that the lawyer is not at liberty to disclose and may include information about a client that is in fact in the public domain: see the decision of the House of Lords in Hilton v. BBE  1 WLR 567, para. 34.
11 ISTIL Group Inc v. Zahoor  2 All ER 252, para. 60 (per Lawrence Collins J).
12 See Bourns Inc v. Raychem Corp  3 All ER 154, 167-168, CA.
13 R v. Derby Magistrates Court, ex p B  AC 487, 507-8, HL; General Mediterranean Holdings SA v. Patel  1 WLR 272; R (Morgan Grenfell & Co Ltd) v. Special Commissioner of Income Tax  1 AC 563, para. 7.
14 R (Morgan Grenfell & Co Ltd) v. Special Commissioner of Income Tax  1 AC 563, para. 7, HL (per Lord Hoffmann).
15 R v. Derby Magistrates’ Court, Ex p B  AC 487, 507 (per Lord Taylor CJ, with whom Lords Mustill and Lloyd agreed).
16 McE v. Prison Service of Northern Ireland  1 AC 908, para. 5, HL (per Lord Phillips).
17 Calcraft v. Guest  1 QB 759, CA; R v. Tompkins (1977) 67 Cr App R 181. The party to whom the privilege belongs might, of course, apply for an injunction to restrain its use: Ashburton v. Pape  2 Ch 469, CA; Goddard v. Nationwide Building Society  QB 670, CA.
18 As Lord Scott stated in Three Rivers No. 6 (para. 25): ‘if a communication or document qualifies for legal professional privilege, the privilege is absolute. It cannot be overridden by some supposedly greater public interest. It can be waived by the person, the client, entitled to it, and it can be overridden by statute … but it is otherwise absolute. There is no balancing exercise that has to be carried out: see B v. Auckland District Law Society  2 AC 736, 756-759.’
19 For examples of its use see Calcraft v. Guest  1 QB 759, 761, CA; and Pearce v. Foster (1885) 15 QBD 114, 119, CA.
20 See Thanki, paras. 1.68-1.74.
21 See generally Thanki, paras. 1.17-1.22.
22 Pearse v. Pearse (1846) 1 De G & Sm 12, 28-9 (per James Knight Bruce V-C), (cited with approval by Lord Carswell in Three Rivers No. 6, para. 112). See also Pearce v. Foster (1885) 15 QBD 114, 119-120 (per Sir Baliol Brett MR); Re L  AC 16, 32 (per Lord Nicholls), (also cited with approval in Three Rivers No. 6, para. 112).
23 Re Saxton  1 WLR 968, 972 (per Lord Denning); Baker v. Campbell (1983) 49 ALR 385, 427 (per Brennan J).
24 Three Rivers No. 6, para. 52 (per Lord Rodger); Robert Hitchins Ltd v. ICL (CA, 10 December 1996), per Simon Brown LJ; Sumitomo Corporation v. Credit Lyonnais Rouse Ltd  1 WLR 479, para. 46, CA (per Jonathan Parker LJ).
25 Anderson v. Bank of British Columbia (1876) 2 Ch D 644, 656. See to similar effect Waugh v. British Railways Board  AC 521, 531 (per Lord Wilberforce).
26 Oxfordshire CC v. M  Fam 151, 163, CA.
27 See Secretary of State for Trade & Industry v. Baker  Ch 356, 371 (per Sir Richard Scott V-C); Visx Inc v. Nidex  FSR 91; Three Rivers No. 6, paras. 29 (per Lord Scott) and 53 (per Lord Rodger).
28 See Thanki, para. 3.153; Passmore, para. 3.022.
29 See Thanki, para. 1.25.
30 Wentworth v. Lloyd (1864) 10 HLC 589; Sayers v. Clarke Walker  EWHC Ch 60, para. 52.
31 Three Rivers No. 6 at para. 34.
32 See generally Passmore, paras. 1.077-1-085.
33 Unreported, 7 December 2009.
34 The OFT has now been superseded, along with the Competition Commission, by the Competition and Markets Authority (CMA), though regulation of consumer credit passed to the Financial Conduct Authority (FCA).
35 The case against the BA executives ultimately collapsed following the discovery of thousands of prosecution e-disclosure documents that had not been disclosed to BA or reviewed by the OFT.
36  EWCA Crim 2740.
37 2013 Leniency Guidance paras. 3.15 to 3.23.
38 Serious Fraud Office v. Rolls-Royce plc  Lloyd’s Rep FC 249 at paras. 19-21, 35-39, 121; The Director of the Serious Fraud Office v. Eurasian Natural Resources Corporation Limited  EWCA Civ 2006 at para. 117.
39 R v. Derby Magistrates’ Court, ex p B  AC 487, 504-5, HL.
40 Although the lawyer is under a professional obligation to assert the privilege on behalf of his or her client unless it has been waived: R v. Central Criminal Court, ex p Francis and Francis  AC 346, 383, HL; Bolkiah v. KPMG  2 AC 222, 235-6, HL; Nationwide Building Society v. Various Solicitors  PNLR 52, 69. The court may also intervene to prevent a third party or even the client’s lawyer making disclosure in breach of the client’s privilege: Harmony Shipping v. Saudi Europe Line  1 WLR 1380, 1384-1385, CA.
41 Re International Power Industries  BCLC 128; R v. Peterborough Justices, ex p Hicks  1 WLR 1371; Nationwide Building Society v. Various Solicitors (No. 2) The Times, 1 May 1988.
42 Lee v. SW Thames Health Authority  1 WLR 845, CA; Schneider v. Leigh  2 QB 195.
43 This requirement has been considered in Section 35.2.1.
44 Pearce v. Foster (1885) 15 QBD 114, 118-119, CA; R v. Peterborough Justices, ex p Hicks  1 WLR 1371, 1374; Ventouris v. Mountain  1 WLR 607, 616, CA (per Bingham LJ).
45 Three Rivers No. 6, para. 21.
46 Three Rivers District Council and others v. Governor and Company of the Bank of England (No. 5)  QB 1556 (CA) (Three Rivers No. 5), paras. 19, 26.
47 Bank of Nova Scotia v. Hellenic Mutual War Risks Association (Bermuda) Ltd (The Good Luck)  2 Lloyd’s Rep 540.
48 USP Strategies Plc v. London General Holdings Ltd  EWHC (Ch) 373.
49 Greenough v. Gaskell (1833) 1 M&K 98, 101-102 (entries made by the lawyer in his accounts held to be privileged); Ainsworth v. Wilding  2 Ch 315, 323 (per Stirling J) (notes or memoranda made by a lawyer are placed on the same footing as communications between lawyer and client); Balabel v. Air India  Ch 317, 323 (per Taylor LJ); Three Rivers No. 5, para. 30.
50 R (Prudential PLC) v. Special Commissioner of Income Tax  2 AC 185, para. 29, SC. On communications with foreign lawyers, see Thanki, para. 1.52.
51 Descoteaux v. Mierzwinski (1982) 141 DLR (3d) 590, 603.
52 Taylor v. Forster (1825) 2 C&P 195; Wheeler v. Le Marchant (1881) 17 Ch D 675, 682, CA.
53 This is subject to one narrow exception: the European Court of Justice has held that, as a matter of European Community law, parties to investigations into alleged breaches of Articles 81 (now 101) and 82 (now 102) of the Treaty of Rome cannot claim legal professional privilege for internal communications with employees, even if the employee is acting as an in-house lawyer: Akzo Nobel Chemicals Ltd v. European Commission, Case C550/07 P.
54 Alfred Crompton Amusement Machines Ltd v. Customs & Excise Comrs (No. 2)  2 QB 102, 129, (per Lord Denning MR) CA. This conclusion was not challenged on appeal: Alfred Crompton Amusement Machines Ltd v. Customs & Excise Comrs (No. 2)  AC 405, 430-431, HL.
55 Minter v. Priest  AC 558, 581 (per Lord Atkin).
56 Dadourian Group International and others v. Simms and others  EWHC 1784 (Ch), paras. 119-128. See also Waterford v. Commonwealth of Australia (1987) 163 CLR 54, 81-82 (per Deane J).
57 Dadourian Group International and others v. Simms and others  EWHC 1784 (Ch), para. 127. The burden is on the client to show that he or she continued to believe that the solicitor held a practising certificate at the time.
58 For example: patent attorneys (section 280, Copyright, Designs and Patents Act 1988); trade mark attorneys (section 284, Copyright, Designs and Patents Act 1988); licensed conveyancers (section 33, Administration of Justice Act 1985); authorised advocates and litigators (section 63, Courts and Legal Services Act 1990). It is clear that patent and trade mark attorneys do not attract legal professional privilege at common law: Dormeuil Trade Mark  RPC 131; Wilden Pump Engineering Co v. Fusfield  FSR 159, CA; R (Prudential plc) v. Special Commissioner of Income Tax and Pandolfo  2 AC 185, para. 68.
59 R (Prudential Plc) v. Special Commissioner of Income Tax and Pandolfo  2 AC 185. See R Pattenden, The Law of Professional–Client Confidentiality (2003), para. 16.42, for a comprehensive list of other professions to which privilege has been expressly denied, including doctors, accountants, priests, bankers, auditors and journalists.
60 See, most recently, R (Prudential PLC) v. Special Commissioner of Income Tax and Pandolfo  2 AC 185, paras. 45, 73.
61 International Business Machines Corp v. Phoenix International (Computers) Ltd  1 All ER 413, 429; Ritz Hotel Ltd v. Charles of the Ritz Ltd (No. 4) (1987) 14 NSWLR 100, 101-2.
62 Bunbury v. Bunbury (1839) 2 Beav 173; Macfarlan v. Rolt (1872) LR 14 Eq 580.
63 See Three Rivers No. 5, para. 31 (per Longmore LJ, giving the judgment of the Court of Appeal).
64 Skandinaviska Enskilda Banken AB (Publ), Singapore Branch v. Asia Pacific Breweries (Singapore) Pte Ltd  2 SLR 367, para. 42.
65 A similar approach was also taken by Chief Master March in Astex v. Astrazeneca  EWHC 2759 (Ch) and by the Divisional Court in R(AL) v. Serious Fraud Office  EWHC 856 (Admin) (although the reasoning on this issue in that case is somewhat confused, perhaps because – on the unusual facts of the case – no party was positively asserting that privilege applied to the interview notes in question).
66 The RBS Rights Issue Litigation  EWHC 3161 (Ch).
67 The Director of the Serious Fraud Office v. Eurasian Natural Resources Corporation Limited  EWHC 1017 (QB).
68 Ibid., at para. 70. Andrews J acknowledged that, in the context of a company, the person giving the instructions to the lawyers may not necessarily be the same as the person or persons who want to receive the advice. Accordingly there could be instances where particular individuals or groups are authorised to instruct the lawyers, while others individuals are authorised to receive the advice, typically a company’s board of directors (see ibid., para. 84).
69 The Director of the Serious Fraud Office v. Eurasian Natural Resources Corporation Limited  EWCA Civ 2006.
70 Ibid., at para. 81.
71 Ibid., at para. 124.
72 Ibid., at para. 127.
73 Ibid., at para. 130.
74 The issue will need to be clarified in another case as the Serious Fraud Office (SFO) has not pursued an application for permission to appeal to the Supreme Court in ENRC.
75  2 HKLRD 701.
76 In this regard there must be some doubt as to whether the court was correct in The RBS Rights Issue Litigation and in ENRC – at first instance – in stating that to qualify as lawyers’ working papers, documents must betray the trend of legal advice. That is not a requirement specified in Balabel (in which the Court of Appeal was considering a claim to privilege in respect of both communications between client and lawyer and lawyers’ working papers) nor is it required in Three Rivers No. 5 itself. In specifying that requirement Hildyard J in The RBS Rights Issue Litigation and Andrews J in ENRC relied on observations made in a different context, namely where a solicitor copies or assembles a collection of documents, and the issue is whether that selection can be said to be privileged (see Lyell v. Kennedy (No. 3) (1884) 27 Ch D 1; subsequently commented on by Bingham LJ in Ventouris v. Mountain  1 WLR 607.)
77 The Director of the Serious Fraud Office v. Eurasian Natural Resources Corporation Limited  EWCA Civ 2006, paras. 141-142.
78 See Thanki, para. 2.77.
79 Trade Practices Commission v. Sterling (1979) 36 FLR 244, para. 4.
80 Three Rivers No. 6, paras. 38, 59, 62, 111, 122.
81  Ch. 317, 330, CA.
82 Three Rivers No. 6, para. 38.
83 Ibid., para. 44.
84 Ibid., para. 58 (per Lord Rodger).
85 Ibid., para. 60 (per Lord Rodger).
86 Ibid., para. 62 (per Baroness Hale).
87 Ibid., paras. 45, 49, 61, 119.
88 Ibid., para. 111 (emphasis added).
89  1 WLR 992. See also The Director of the Serious Fraud Office v. Eurasian Natural Resources Corporation Limited  EWHC 1017 (Ch), at para. 184.
90 Property Alliance Group v. RBS  1 WLR 992, at paras. 27-28.
91 Balabel v. Air India  Ch 317 at 330F.
92  AC 521, 543-4 (emphasis added).
93 Southwark and Vauxhall Water Company v. Quick (1878) 3 QBD 315, 320 (per Brett LJ), 322 (per Cotton LJ).
94 Ibid. at 320 (per Brett LJ), 323 (per Cotton LJ).
95 Re Highgrade Traders Ltd  BCLC 151, 172 (per Oliver LJ); Buttes Gas and Oil Co v. Hammer (No. 3)  QB 223, 243 (per Lord Denning MR).
96 Southwark and Vauxhall Water Company v. Quick (1878) 3 QBD 315, 320 (per Brett LJ); Lyell v. Kennedy (No. 2) (1883) 23 Ch D 387, 404 (per Cotton LJ).
97 Three Rivers No. 6, para. 52 (per Lord Rodger).
98 See also Thanki, paras. 2.56-2.60, 3.27.
99 The Director of the Serious Fraud Office v. Eurasian Natural Resources Corporation Limited  EWCA Civ 2006, at para. 102.
100 See In re L (a Minor) (Police Investigation: Privilege)  AC 16 (HL) (litigation privilege was held to be inapplicable to the particular wardship proceedings in question, which were inquisitorial rather than adversarial in nature). The Upper Tribunal noted in LM v. London Borough of Lewisham  UKUT 204 that Re L did not decide that there is never any litigation privilege in care proceedings but that their Lordships had confined themselves to cases where the filing of a report requires the leave of the court in order that documents already filed in the proceedings may be disclosed to the expert or that the child nay be examined.
101 Hellenic Mutual War Risks Association (Bermuda) Ltd v. Harrison (The Sagheera)  1 Lloyd’s Rep 160, 166 (per Rix J); USA v. Philip Morris Inc  EWCA Civ 330, CA, para. 68; Three Rivers No. 6, para. 83 (per Lord Carswell).
102  EWCA Civ 330.
103 Ibid., para. 68.
104 Rawlinson & Hunter Trustees SA v. Akers  EWCA Civ 136, para. 24.
105 Ibid., para. 65.
106 Mayor and Corporation of Bristol v. Cox (1884) 26 Ch D 678 (per Pearson J).
107 Guinness Peat Properties v. Fitzroy Robinson Partnership  1 WLR 1027, 1035-1036 (per Slade LJ).
108 See The Aegis Blaze  1 Lloyd’s Rep 203, 204 (per Parker LJ).
109 Ibid., 210.
110 The Director of the Serious Fraud Office v. Eurasian Natural Resources Corporation Limited  EWHC 1017 (Ch), at para. 160.
111 Ibid., para. 151.
112 The Director of the Serious Fraud Office v. Eurasian Natural Resources Corporation Limited  EWCA Civ 2006, para. 96.
113 Ibid., at para. 99.
114  Lloyd’s Rep FC 157.
115  CAT 6.
116 Ibid. para. 46.
117 Passmore, para. 3-095.
118 In support of this view, see Passmore, para. 3.010.
119 See to this effect Esso Australia Resources Limited v. The Commissioner of Taxation (1999) 201 CLR 49, para. 65 (per McHugh J), para. 93 (per Kirby J).
120 JD Heydon, Cross on Evidence (8th Australian edn., 2010), 891.
121 Waugh v. British Railways Board  AC 521, 532 (per Lord Wilberforce); Rawlinson & Hunter Trustees SA & Ors v. Akers & Anr  EWCA Civ 136; Rawlinson & Hunter Trustees SA & Ors v. Director of the SFO  EWCA Civ 1129, para. 19.
122 Price Waterhouse (a firm) v. BCCI Holdings (Luxembourg) SA  BCLC 583, 591 (per Millett J).
123 Three Rivers No. 5, para. 35.
124  EWHC 3535 (Ch).
125 See also Re Highgrade Traders  BCLC 151, 173 (per Oliver LJ).
126 The Director of the Serious Fraud Office v. Eurasian Natural Resources Corporation Limited  EWCA Civ 2006, para. 109.
127 Waugh v. British Railways Board  AC 521.
128  EWCA Civ 136.
129 Ibid., para. 15.
130 The Director of the Serious Fraud Office v. Eurasian Natural Resources Corporation Limited  EWCA Civ 2006, paras. 102, 118.
131 See generally Thanki, paras. 6.18-6.24.
132 See Newcrest Mining (WA) Ltd v. Commonwealth of Australia (1993) 113 ALR 370, 372, Australian Federal Court.
133 Winterthur Swiss Insurance Company and another v. AG (Manchester) Ltd (in liquidation) and others  EWHC 839 (Comm), (12 April 2006), (The TAG Group Litigation) para. 78 (per Aikens J).
134 The fact that, independently of common interest, the disclosure of privileged material to third parties need not involve a broader loss of confidentiality or waiver of privilege is discussed in Section 35.8.
135 For support for this view see Thanki, para. 6.21 and Passmore para. 6.035. The point appears to have been misunderstood in The TAG Group Litigation, where it was held that ‘common interest privilege’ could operate as a ‘sword’ to obtain disclosure against party A as well as a ‘shield’ to deny disclosure to third parties. It seems that that case is therefore best understood as a case of joint interest privilege.
136 Ibid. 645 (emphasis added).
137 Commercial Union Assurance Co plc v. Mander  2 Lloyd’s Rep 640, 647-8.
138 See, for example, N Andrews, English Civil Procedure (2003), para. 27.63. Cf. C Tapper, Cross and Tapper on Evidence (12th edn., 2010), 445, where it is stated, without citing any authority, that common interest privilege cannot be waived by one of the parties, without the authority of the other.
139 This point has not received detailed consideration. In The TAG Group Litigation, it seems that Aikens J wrongly considered that the relevant time was when the privileged material was first created. However, insofar as he was considering the use of ‘common interest’ as a ‘sword’, it appears that his remarks should properly be understood as applying to cases of joint interest. Equally, in Robert Hitchins Limited v. International Computers Limited (10 December 1996, CA), Peter Gibson LJ appeared to consider that common interest could not be made out where such an interest did not exist at the time the material first came into being. However, as discussed below, it seems that this did not affect the result in the case, which is probably best seen as a case of common interest privilege.
140  QB 223, CA. The Court of Appeal’s decision was reversed on appeal. However, the House of Lords’ ruling (see  AC 888) left unaffected the issue of common interest privilege and the Court of Appeal’s decision continues to be seen as the seminal authority for that doctrine.
141 Donaldson LJ (at 251-252) and Brightman LJ (at 267) each spoke of ‘contemplated or pending litigation’.
142  2 Lloyd’s Rep 84 at p. 88.
143 See in particular Unilateral Investments v. VNZ Acquisitions Ltd  1 NZLR 468, 476, 478 (New Zealand High Court).
144 Donaldson LJ in fact pointed out (at pp. 251-252) that, in that particular case, the parties did not initially share a lawyer. Lord Denning also appears to have contemplated that the parties may have separate legal representation. This is implicit to his comments (at p. 243) that the parties may ‘have consulted lawyers on the self-same points’ and that each ‘can collect information for the use of his or the other’s legal adviser’.
145 See Bank of Nova Scotia v. Hellenic Mutual War Risks Association (Bermuda) Ltd (Note)  2 Lloyd’s Rep 540, 542 (per Saville J); USP Strategies plc v. London General Holdings Limited  EWHC 373 (Ch), para. 14, The Times, 30 April 2004 (per Mann J).
146 Hellenic Mutual War Risks Association (Bermuda) Ltd v. Harrison  1 Lloyd’s Rep 160, 172 (per Rix J).
147 See Bulk Materials (Coal Handling) Services Pty Ltd v. Coal and Allied Operations Pty Ltd (1988) 13 NSWLR 689, 695 (per Giles J); Network Ten Ltd v. Capital Television Holdings Ltd (1995) 35 NSWLR 275, 282, Supreme Court of New South Wales (per Giles J).
148 In Formica Ltd v. Export Credits Guarantee Department  1 Lloyd’s Rep 692, 699 Colman J framed the issue in the following terms: ‘The protection by common interest privilege of documents in the hands of someone other than the client must pre-suppose that such third party has a relationship with the client and the transaction in question which, in relation to the advice or other communications, brings that third party within that ambit of confidence which would prevail between the legal adviser and his immediate client . . . the essential question in each case is whether the nature of their mutual interest in the context of their relationship is such that the party to whom the documents are passed receives them subject to a duty of confidence which the law will protect in the interests of justice’.
149 Reed Executive plc v. Reed Business Information Ltd  1 WLR 3026, para. 36.
150 See, for example, Oceanbulk Shipping & Trading SA v. TMT Asia  1 AC 662, paras. 24 and 27.
151 Barnetson v. Framlington  1 WLR 2443, para. 24.
152 Forster v. Friedland (CA, 10 November 1992).
153 Bradford & Bingley plc v. Rashid  1 WLR 2066, para. 81.
154 Barnetson v. Framlingham Group  1 WLR 2443 (CA).
155 Thanki, paras. 7.13-7.14.
156 Dixons Stores Group v. Thames Television  1 All ER 349.
157 Oceanbulk Shipping & Trading v. TMT Asia Limited  1 AC 662, ; Somatra v. Sinclair Roche & Temperley  1 WLR 2453, para. 22.
158 See Thanki, paras. 7.32-7.41.
159 Walker v. Wilsher (1889) 23 QBD 335, at 337; Reed Executive plc v. Reed Business Information Ltd  1 WLR 3026, para. 19.
160 D Vaver, ‘Without Prejudice Communications – their admissibility and effect’ (1974) 9 UBC Law Review 85, at p. 105; Heydon, Cross on Evidence (10th edn.) .
161 Property Alliance Group Ltd v. Royal Bank of Scotland plc.  EWHC 1557 (Ch).
162 RBS relied on the doctrine of limited waiver. The part of the decision dealing with limited waiver is uncontroversial and consistent with previous authority (see Section 35.8.1).
163 Property Alliance Group Ltd v. Royal Bank of Scotland plc.  EWHC 1557 (Ch), para. 94.
164 For the same reason – namely that RBS had ‘put in issue’ the basis on which regulatory findings were made – Birss J held that RBS was not entitled to withhold from inspection the six privileged documents that it had shared with regulators (see para. 114). This aspect of the decision is discussed below at Section 35.8, but must be wrong.
165 Property Alliance Group Ltd v. Royal Bank of Scotland plc.  EWHC 1557 (Ch), para. 92.
166 Ibid., para. 96.
167 Ibid., para. 59.
168 Ibid., para. 87.
169 Ibid., para. 99.
170  EWHC 3272 (Ch), para. 69.
171 The Court of Appeal held in the recent case of R v. Brown (Edward)  1 WLR 1141 that in addition to the fraud/iniquity exception, the normally absolute rule of privilege is capable of further qualification at common law. The Court of Appeal held that it was appropriate, in what was likely to be an extremely narrow band of cases and by way of an additional common law qualification or exception to the inviolable nature of legal professional privilege, to impose a requirement that particular individuals could be present at client–lawyer discussions if there was a real possibility that the discussions were to be misused for a purpose and in a way involving impropriety amounting to an abuse of the privilege that justified interference. In this case, it was appropriate for two nurses to be present with and handcuffed to the appellant, who was in detention in a high security psychiatric hospital, when he consulted with his lawyers because there was reason to think he would otherwise take that opportunity to harm himself or others.
172 Dubai Aluminium Co Ltd v. Al Alawi  1 WLR 1964; Dubai Bank v. Galadari (No. 6) The Times, 22 April 1991; Kuwait Airways Corporation v. Iraqi Airways Company  1 WLR 2734.
173 R v. Cox and Railton (1884) 14 QBD 153 at 176.
174 Derby & Co Ltd v. Weldon (No. 7)  1 WLR 1156, 1173.
175 Banque Keyser Ullman SA v. Skandia (UK) Insurance Co. Ltd  1 Lloyd’s Rep 336, 337.
176 Butler v. Board of Trade  1 Ch 680 at 689C per Goff J: ‘What has to be shown prima facie is not merely that there is a bona fide and reasonably tenable charge of crime or fraud but a prima facie case that the communications in question were made in preparation for or in furtherance or as part of it.’
177 O’Rourke v. Darbishire  AC 581, 604, 614; Derby & Co v. Weldon (No. 7)  1 WLR 1156,1166.
178 Kuwait Airways Corporation v. Iraqi Airways Corp (No. 6)  1 WLR 2734, para. 42, per Longmore LJ.
179 Crescent Farm (Sidcup) Sports Ltd v. Sterling Offices Ltd  Ch 553, 565 (per Lord Goff); Gamlen Chemical Co (UK) Limited v. Rochem Ltd (No. 2) 7 December 1979 (CA).
180 A recent example is the decision of the Employment Appeal Tribunal in X v. Y Limited (UKEAT/0261/17/JOJ), 9 August 2018 where Slade J held that legal advice given to a company to the effect that a redundancy programme could be used to dismiss an employee who had made complaints amounted to advice given for the purpose of facilitating an iniquity such that the crime/fraud exception was engaged. This decision is currently under appeal.
181  1 WLR 1238.
182  EWHC 2788 (Comm) at para. 98: ‘The evidence establishes at least a very strong prima facie case that from the moment Mr Ablyazov engaged Clyde & Co he was bent on a strategy of concealment and deceit in relation to his assets which would involve perjury, forgery and contempt as and when such was required for that purpose.’
183  1 WLR 607.
184  1 AC 908, para. 109.
185  1 AC 346.
186  Ch 296.
187  2 HKLRD 701.
188 See, for example, R v. Inland Revenue Commissioners, ex p Lorimer  STC 751.
189 Although R (Morgan Grenfell & Co Ltd) v. Special Commissioner of Income Tax  1 AC 563, HL is regarded as the landmark ruling in this area, R v. Secretary of State for the Home Department, ex p Daly  2 AC 532, paras. 5, 31, HL is of equal significance. These cases applied the more general principle that a statute is generally not intended to override fundamental rights: R v. Secretary of State for the Home Department, ex p Simms  2 AC 115, 131, HL; McE v. Prison Service of Northern Ireland  1 AC 908, paras. 96-97, HL (per Lord Carswell).
190 R (Morgan Grenfell & Co Ltd) v. Special Commissioner of Income Tax  1 AC 563, para. 8; General Mediterranean Holdings SA v. Patel  1 WLR 272; R v. Secretary of State for the Home Department, ex p Daly  2 AC 532; Bowman v. Fels  1 WLR 3083, paras. 70-91, CA. See also Baker v. Campbell (1983) 153 CLR 52.
191 R (Morgan Grenfell & Co Ltd) v. Special Commissioner of Income Tax  1 AC 563, para. 45 (per Lord Hobhouse).
192 Daniels Corporation International Pty Ltd v. Australian Competition and Consumer Commission (2002) 213 CLR 543, para. 43 (per McHugh J).
193 R v. Secretary of State for the Home Department, ex p Daly  2 AC 532, paras. 5 (per Lord Bingham) and 31 (per Lord Cooke).
194 Though it has been argued that it is not truly an ‘exception’ because the client’s privilege in the relevant material is not infringed.
195 See Thanki paras. 4.91 to 4.96.
196 R (Morgan Grenfell & Co Ltd) v. Special Commissioner of Income Tax  1 AC 563, para. 32 (per Lord Hoffmann).
197  EWHC 2284 (Ch).
198 Ibid., see paras. 57-92.
199 Ibid., para. 84.
200 See McE v. Prison Service of Northern Ireland  1 AC 908. Other limited statutory exceptions are set out in Thanki, para. 4.90.
201 R v. Turner (Elliott Vincent)  EWCA Crim 643.
202 Great Atlantic Insurance Co. v. Home Insurance Co.  1 WLR 529.
203 See Paragon Finance v. Freshfields  1 WLR 1183. An implied waiver may, however, be limited: see Eurasian Natural Resources Corporation v. Dechert  EWCA Civ 375.
204 See (in the general context of an action for breach of confidence) Attorney-General v. Guardian Newspapers Ltd. (No. 2)  1 AC 109, 177, where Sir John Donaldson MR said: ‘As a general proposition, that which has no character of confidentiality because it has already been communicated to the world, i.e., made generally available to the relevant public, cannot thereafter be subjected to a right of confidentiality: O. Mustad & Son v. Dosen (Note)  1 WLR 109. However, this will not necessarily be the case if the information has previously only been disclosed to a limited part of that public.’
205 USP Strategies v. London General Holdings  EWHC (Ch) 373, para. 19 (per Mann J); Gotha City v. Sotheby’s  1 WLR 114, CA, para. 119 (per Staughton LJ).
206 Gotha City v. Sotheby’s  1 WLR 114, CA; USP Strategies v. London General Holdings  EWHC (Ch) 373.
207  EWHC 1557 (Ch).
208 Gotha City v. Sotheby’s  1 WLR 114); Nederlandse Reassurantie Groep Holding NV v. Bacon & Woodrow and others  1 All ER 976; USP Strategies plc v. London General Holdings  EWHC 373.
209 B v. Auckland District Law Society  2 AC 736.
210 Ibid., para. 68.
211 Berezovsky v. Hine  EWCA Civ 1089.
212 Ibid., para. 29.
213  2 HKLRD 701, discussed at Section 35.7.1.
214  EWHC 1557 (Ch).
215 Ibid., at para. 113.
216 CJQ 324, Case Comment by James Hayton.
217  3 Costs LO 327.
218 Ibid., para. 52.
219  EWHC 513 (Admin).
220 See, in this regard, Scottish Lion Insurance v. Goodrich Corporation  CSUH 18 and FRC v. Sports Direct International Plc  EWHC 2284 (Ch), paras. 43-56.
221 Nea Karteria Maritime Co v. Atlantic & Great Lakes Steamship Corporation (No 2)  Com LR 138; Paragon Finance v. Freshfields  1 WLR 1183.
222  1 WLR 1183 at 1188.
223 Nea Karteria Maritime Co v. Atlantic & Great Lakes Steamship Corporation (No 2)  Com LR 138; General Accident Fire and Life Corp v. Tanter  1 WLR 100.
224 Compare, for example, MAC Hotels Limited v. Rider Levett Bucknall UK Limited  EWHC 767 (TCC) in which HHJ Havelock-Allan QC found that collateral waiver could occur by referring to and relying on privileged material in a witness statement served in support of an (as yet unheard) interlocutory application with the approach of Hobhouse J in General Accident Fire and Life Corp v. Tanter  1 WLR 100, holding that there was no collateral waiver where a privileged note of a conversation was used in cross-examination but before the author of the note was called and before it had been formally admitted in evidence.
225 Mid-East Sales v. Engineering & Trading Co PVT Ltd  EWHC 892 (Comm).
226 Unreported Southwark Crown Court, 13 May 2013.
227 Great Atlantic v. Home Insurance  1 WLR 529.
228 Thanki, paras. 5.129-5.133.
229 (1997) 9 Admin LR 591 at 599.
230 Al-Fayed v. Commissioner of Police of the Metropolis  EWCA Civ 780, para. 16.
231 Fadairo v. Suit Supply UK Lime Street Ltd  ICR D11 (EAT) (Singh J).
232  EWCA Civ 1129.
233  EWHC 2583 (Admin) (establishing that two of the documents referred to by the FSA in their supplementary investigation report were subject to joint interest privilege);  EWHC 997 (Admin) (concerning the remedies sought by the claimant in relation to the use of the privileged documents by the FSA).
234 Alun Milford, General Counsel, SFO, Speech at the European Compliance and Ethics Institute, Prague, 29 March 2016.
235 In such a case it would seem very likely that a leap-frog certificate would be granted to enable the issue to be determined by the Supreme Court, bypassing the Court of Appeal.
236  3 Costs LO 327, para. 52, per Gloster LJ.
237 GE Capital Corporate Finance Group v. Bankers Trust Co  1 WLR 172.
238 West London Pipeline v. Total UK  2 CLC 258, para. 86(4)(c).
239  2 CLC 258.
240 Ibid., at para. 53. It was also noted (at paras. 65 and 86) that an affidavit is generally to be treated as conclusive unless it appears that the deponent has mischaracterised documents or it is reasonably certain from the evidence before the court that it is incorrect or incomplete on material points.
241 Similarly, in The RBS Rights Issue Litigation, Hildyard J did not consider that the evidence adduced by RBS was sufficient to make good RBS’s claim that the interview notes comprised the lawyers’ working papers as the evidence amounted to no more than a ‘conclusory assertion’. As in ENRC, it is not easy to see what further evidence RBS could have adduced in support of the contention that disclosure of the notes would betray the trend of legal advice, without revealing the very matters over which RBS was seeking to claim privilege.
242 The Director of the Serious Fraud Office v. Eurasian Natural Resources Corporation Limited  EWHC 1017 (QB) at para. 46.
243 See, in particular, The Director of the Serious Fraud Office v. Eurasian Natural Resources Corporation Limited  EWCA Civ 2006 at paras. 92-93.
244  EWHC 102 (Admin).