Recent years have seen the English courts make a number of significant rulings in the law governing the application of legal professional privilege.
Whilst the pace slowed slightly this year, 2022 has seen the courts hand down interesting decisions concerning: the use of privileged documents lawfully obtained in foreign proceedings; the privilege attaching to the identity of individuals instructing a solicitor; the specificity required for a claim to be reasonably in contemplation; the limits of without prejudice privilege; and the use of privileged documents by a solicitor in litigation against their former client (technically a 2021 case, but delivered shortly before the winter holiday and interesting enough to justify inclusion).
This post provides an overview of the most important privilege decisions so far this year, noting the key takeaways for practitioners.
English law of privilege trumps, even where the document has been obtained abroad
Suppipat v Siam Commercial Bank Public Company Ltd addressed the difficult issue of what happens when a privileged document is lawfully obtained through a foreign discovery process.
The defendant applied to restrain the use of a legal opinion and related emails which the claimant had obtained from a third party pursuant to a subpoena issued by a Thai court without notice to the defendant to the English proceedings. The relevant question was whether the documents remained privileged despite their having been lawfully obtained by the claimant. This gave rise to complicated issues as to which of Thai or English law applied to the claim that privilege had been lost.
While the issues were somewhat difficult, the court had no problem finding that the legal opinion and related documents remained privileged and that their use should be restrained. In particular, the court held:
- In English litigation, all issues concerning the application of legal professional privilege, are to be resolved by applying English law. This includes the determination as to whether a document and its contents are privileged and whether that privilege has been lost, for example because the document is no longer confidential.
- Applying English law, the question of whether privilege has been lost is to be tested by asking whether the document and its information remain confidential in the sense that they are “not properly available for use” in the English proceedings. Privilege was not lost simply because a foreign court applying its own law had decided that it had been.
- The power to prevent the deployment of privileged documents comes from the equitable jurisdiction to restrain a breach of confidence. The party seeking to prevent the use must show that: (i) the documents were privileged from disclosure; and (ii) the party seeking to introduce the document owed a duty of confidence to the party to whom the privilege belonged. That duty comes into existence whenever a person comes into possession of obviously confidential information or information known to be confidential, even if it was received innocently and outside the context of any relationship with the person concerned. This may (but will not invariably) include situations where the document was obtained through a lawful foreign process, particularly where the party asserting the privilege was not party to those foreign proceedings.
At each stage of the analysis, the court was at pains to point out the status of legal professional privilege as a fundamental principle of public policy which the courts shall not interfere with lightly.
The court took an obviously dim view of the approach of the claimant in obtaining the documents through proceedings without notice to the defendant and without fully or frankly explaining how the claimants came to know of the existence of the materials in a way that enabled them to identify the material in the application for the subpoenas.
Identity of individuals providing instructions to a solicitor not generally privileged
Loreley Financing (Jersey) No 30 Ltd v Credit Suisse Securities (Europe) Ltd concerned an application for information as to the identity of the individuals providing instructions to the claimant’s solicitors. This information was said to be relevant to an issue of when the claimant (a shell company) could reasonably have known about the otherwise time-barred claim.
The court rejected the argument that the identity of those providing instructions to their solicitors in respect of a litigation is protected simply because it falls within a “zone of privacy” around the preparation of that party’s case. While the court accepted that privilege could attach to the identity or contact details of individuals instructing lawyers, this will only be the case where that privilege will be undermined by disclosure of the identity. Such circumstances are likely to be rare. In the present case, the court found that there was no evidence that the privilege attaching to the content of the advice would be undermined and thus held that the information regarding identity was not protected by privilege.
The court also found obiter that there was nothing inherently wrong with an approach that recognised that the communications could be covered by both litigation and legal advice privilege, although it concluded that the point was irrelevant as the same principle applies to both kinds of privilege.
Knowledge of a specific claim is necessary to support an assertion of litigation privilege
Kyla Shipping Co Ltd v Freight Trading Ltd concerned the question of whether litigation was sufficiently in prospect to support an assertion of litigation privilege.
The dispute was between a majority and minority shareholder who had fallen out over the failure of the company to issue a dividend. The majority shareholder instructed accountants to look into historical transactions with the engagement intended “to make good any legitimate grievance that might exist, for the sake of providing ballast in the correspondence with [the minority shareholder]”, as was explained in a witness statement from one of its solicitors. The issue was whether the documents produced in relation to this engagement were covered by litigation privilege.
Accepting that the instruction of the expert was to support a potential mismanagement claim by the majority shareholder against the minority shareholder, Charles Hollander QC (sitting as a High Court Judge) nonetheless held that this claim did not appear to have reached a stage where it was possible to say that litigation was in reasonable prospect.
The mere fact that the parties were at odds and the majority shareholder was in search of a claim did not mean that litigation was in reasonable contemplation. Rather, it appeared that the court considered the expert to have been appointed with the intention of rooting around to dig up some kind of a claim, without the majority shareholder knowing what that claim might be. There may have been smoke, but the majority shareholder needed to show there was fire.
This decision serves as a powerful warning of the risk that documents created at an early stage of a dispute could end up being disclosable, even where some kind of litigation appears likely. The judgment is rife with references to the paucity of the evidence and it should also serve as a reminder of the need to put proper evidence before the court to support any assertion of privilege.
Without prejudice privilege not undermined where negotiations included legal and non-legal disputes
In Sportradar AG v Football Dataco Ltd, the Chair of the Competition Appeal Tribunal held that an email was covered by without prejudice privilege despite it addressing a range of issues, only one of which involved a legal dispute (over the existence of an indemnity). In particular, the Chair found:
- The email was part of a negotiation which was genuinely aimed at settlement of, among other things, the indemnity issue as is clear from the fact that a settlement of these issues was reached.
- The importance of the indemnity issue as compared to the other issues was irrelevant provided that the negotiation was a genuine attempt to resolve a dispute. There was no principled basis to assess the primacy of each issue. Introducing this as a consideration would undermine the policy rationale of encouraging parties to settle their disputes.
- The application of a header which said “Private & Confidential / Without Prejudice” was a strong indication that it was created in an attempt to settle matters in dispute, but is not determinative.
- The email was, in its totality, part of a negotiation genuinely aimed at resolving a dispute between the parties and the privilege applied to the whole document which could not be salami sliced between the parts that addressed the indemnity dispute and those that did not.
Court confirms a high bar for solicitors to use otherwise privileged documents against former clients
Finally, Candey Ltd v Bosheh highlights the high bar which a party has to meet to rely on the iniquity exception, which provides that privilege will not apply to communications made in furtherance of fraud, crime or some other breach of a duty of good faith or other conduct that is contrary to public policy or the interests of justice.
This decision arose in a litigation between a firm of solicitors (Candey) and a former client. Candey had acted for that client in a fraud claim in which he was a defendant. That claim was settled in a manner that deprived Candey of any fees under the terms of the conditional fee arrangement (CFA) which the parties had agreed. Following the settlement, Candey sued the former client on the basis that his settlement was fraudulent and breached an implied duty of good faith. They argued that they should be entitled to make use of privileged documents created in the course of their former engagement on the basis that they fell within the “iniquity exception”, in that they were tied up in the former client’s alleged fraud.
Following the well-known Abylazov decision, the judge (Clare Ambrose QC) identified the key question as being whether the matter fell outside of the “ordinary course of professional engagement of a solicitor”. The judge found that they clearly did not. A solicitor taking on a client accused of fraud cannot rely solely on the client’s views as to the merits of his case or his credibility, loyalty or motivations. In the ordinary run of a professional relationship a client may be lying. The solicitors were not taken by surprise by the fraud of which it now complained; it was the very case they had agreed to defend. The judge was not swayed by the argument that solicitors acting under a CFA take on special risks which required a different standard to be applied. Rather, she found that solicitors that choose to work on a CFA do so knowing the inherent risks and accepting the potential rewards, including a success fee.
