Maintaining the privilege: Procedure & Practice Privilege

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This article was first published in the New Law Journal: www.newlawjournal.co.uk


In Brief

  • Communications remain privileged even if the corporate privilege holder has been dissolved.
  • Leaked email alleged to reveal dishonest conduct is not precluded from being privileged by the iniquity exception.
  • A legal note partly read out in court by counsel may retain privilege.

At the end of 2018, the Court of Appeal in SFO v ENRC overturned a first instance decision that denied a claim for litigation privilege over legal and forensic documents generated as part of an internal corruption investigation. The judge at first instance found that ENRC did not contemplate criminal prosecution even though the SFO had commenced an investigation into the company. Interestingly, the judge went on to hold that even if a prosecution had been in contemplation, none of the documents had in fact been created for the dominant purpose of litigation; and litigation privilege does not extend to documents created in order to obtain legal advice as to how best to avoid anticipated litigation including regulatory or criminal proceedings. The Court of Appeal disagreed; they found that ENRC did contemplate prosecution and that prosecution was certainly in contemplation when the SFO contacted ENRC. The Court of Appeal also held that documents created to avoid litigation were as protected as those created to contest litigation.

The decision was a welcome departure from the perceived tendency by the English courts to restrict the scope of privilege. This article surveys the key cases on privilege since ENRC and considers whether a more pragmatic and generous approach to privilege can be discerned.

Key cases

  • Emails between board members discussing a commercial settlement proposal are not privileged (WH Holding v E20 Stadium LLP [2018] EWCA Civ 2652).
  • Communications remain privileged even if the corporate privilege holder has been dissolved (Addlesee v Dentons Europe LLP [2019] WLR 1255).
  • Leaked email alleged to reveal dishonest conduct is not precluded from being privileged by the iniquity exception (Shell International Limited v Curless [2020] IRLR. 36).
  • A legal note partly read out in court by counsel may retain privilege (SL Claimants v Tesco PLC [2019] EWHC 3315 (Ch)).
  • It is not possible to rely on someone else's privilege to support an injunction for the non-use of documents (HML PM Ltd v Canary Riverside Estate Management Ltd [2019] EWHC 3496 (QB)).
  • Legal advice privilege attaches to communications created for the dominant purpose of giving or receiving legal advice (The Civil Aviation Authority v Jet2.com Ltd [2020] EWCA Civ 35).

Obtaining information or advice

WH Holdings Ltd v E20 Stadium LLP: The ink had barely dried on the ENRC judgment, when the Court of Appeal confirmed in a subsequent case that ENRC had not extended the scope of litigation privilege beyond the ordinary categories.

In WH Holdings, West Ham United challenged E20's claim of privilege over emails between E20 board members discussing a commercial proposal to settle a dispute about seat allocation at the London Olympic Stadium. The judge at first instance upheld E20's claim that the documents were privileged on the basis that ENRC had expanded the scope of 'conducting' litigation beyond obtaining information or advice to also encompass discussing settlement proposals.

West Ham United's appeal on this point was allowed. The Court of Appeal held that it was a fallacy to treat condition (b) in Lord Carswell's formulation of litigation privilege (ie, the reference to 'conducting that litigation', please see the 'Privilege refresher' box on next page) as extending the preceding general principle that documents must be created for the purpose of 'obtaining information or advice' in connection with the conduct of litigation. Instead, condition (b) introduces the 'sole or dominant' qualification. ENRC merely confirmed that conducting litigation includes avoiding or compromising it; the first instance judge 'was wrong in thinking that ENRC had gone any further'. In particular, the ENRC judgment did not remove the 'obtaining information or advice' requirement so that litigation privilege might attach to purely commercial discussions.

Once privileged, always privileged

Addlesee v Dentons Europe LLP: In Addlesee, the Court of Appeal considered a novel question: is legal advice privilege lost if there is no one to assert it? The question arose because investors in an allegedly fraudulent scheme marketed by a dissolved Cypriot company sought disclosure of privileged documents held by the company's lawyers.

The court said no: once privilege has attached to a communication, it will only cease if waived by someone entitled to waive it (or is overridden by statute). The focus is therefore on the act of waiving privilege, not asserting it. The existence of the privilege does not depend on someone being able to assert it. To hold otherwise would undermine the essential rationale for privilege—that clients must be sure that what they tell their lawyer in confidence will never be revealed without their consent.

The iniquity exception

Shell International Limited v Curless: In Shell, the Court of Appeal was asked to consider the 'iniquity exception', which precludes privilege from arising where communications are made in furtherance of crime or fraud. Mr Curless commenced an unlawful discrimination claim against Shell after he was made redundant alleging that the true reason for the dismissal was his disability. Mr Curless relied on an email from Shell's in-house counsel, leaked to Mr Curless, and a conversation between Shell's external lawyers which he overheard at a pub on Chancery Lane.

To meet Shell's unsurprising privilege claim, Mr Curless submitted that the iniquity exception applied. The Court of Appeal concluded that the email contained the sort of advice which employment lawyers give day in, day out about redundancy; it was not advice to act in an underhanded way. Accordingly, it was privileged. Mr Curless sought to rely on the conversation as an aid to interpret the email. The court rejected this use as the email preceded the conversation and involved different people. Although unnecessary to decide, the court considered it unsettled whether the iniquity exception is limited to dishonesty or extends to any 'sufficiently iniquitous' conduct.

Information in a document and the document itself

SL Claimants v Tesco PLC: In Tesco, aggrieved investors sought to recover losses relating to the acquisition of shares in Tesco in alleged reliance on Tesco's published information. The investors sought disclosure of an internal legal note over which Tesco asserted privilege. The investors said confidentiality (and therefore privilege) had been lost when part of the note (about three of the nine pages) had been read out and discussed in related criminal proceedings.

The judge accepted Tesco's inventive argument that there is a distinction between the information in a document and the document itself, and that loss of confidentiality in some of the former does not necessarily cause loss of confidentiality in the latter—it is a matter of degree. Here, the references to some information in the note during the criminal proceedings did not require the disclosure of the note to enable the public to understand those proceedings (in accordance with the principle of open justice). Therefore, confidentiality in the note itself was not lost.


Privilege refresher

Three Rivers DC v Governor and Company of the Bank of England (No 6) [2005] 1 AC 610, (Lord Carswell).

There are two types of legal professional privilege in England: legal advice privilege and litigation privilege.

  • Legal advice privilege covers confidential communications passing between lawyer and client for the purpose of seeking and furnishing legal advice, whether or not in the context of litigation.
  • Litigation privilege covers confidential communications between lawyers, clients and third parties for the purpose of obtaining information or advice in connection with existing or contemplated litigation but only when the following conditions are satisfied: (a) litigation must be in progress or in contemplation; (b) the communications must have been made for the dominant purpose of conducting that litigation; and (c) the litigation must be adversarial, not investigative or inquisitorial.

The client

HML PM Ltd v Canary Riverside Estate Management Ltd: During the course of a residential property management dispute, a 'Mr Smith' sent documents to the parties and court. HML (the management company) said they were confidential and, in some cases, privileged. HML sought an injunction to restrain the defendants (the property owner and head lessor) from using the documents.

HML's application failed at the first hurdle—standing. Given the litigation concerned the personal appointment of Mr Coates (a director and employee of HML) as manager of the property, he had sought the legal advice and therefore owned the privilege in that advice. While there may be occasions when a person may or must assert another person's privilege as a shield to resist disclosure (eg, the lawyers in Addlesee), a person cannot assert another's privilege as a sword to compel the non-use of documents where no other right (eg, enforcing a duty of confidence) exists to support the injunction.

Notably, the Australian High Court recently held in Glencore International AG v Commissioner of Taxation [2019] HCA 26 that even a person's own privilege operates only as an immunity from compulsory disclosure; it is not an actionable right which, alone, supports an injunction for the non-use of documents. This was said to be consistent with English law.

Dominant purpose test

The Civil Aviation Authority v Jet2.com Ltd: In judicial review proceedings against the aviation regulator, Jet2.com sought disclosure of drafts of the regulator's letters to Jet2.com which the regulator had given to the press. The regulator claimed the drafts were protected by legal advice privilege. The High Court rejected this claim on the basis that they were not created for the dominant purpose of seeking legal advice.

The regulator appealed on the point of whether the dominant purpose test applied to legal advice privilege (as it does to litigation privilege). Although this had been doubted in obiter in the ENRC appeal, the Court of Appeal held that the dominant purpose test did indeed apply to legal advice privilege. This expressly brings England into line with other common law jurisdictions such as Australia.

The decision is also instructive on the very practical issue of whether emails sent simultaneously to lawyers and non-lawyers will be privileged. The court agreed that where a multi-addressee email (which should be regarded as comprising separate bilateral communications) seeks both legal and non-legal (eg, commercial) advice or input, those communications with the lawyer will be privileged: otherwise, they will not be privileged, unless the dominant purpose of the communications with non-lawyers is to instruct the lawyer (or those communications might realistically disclose legal advice).

This means that, conceivably, the same multi-addressee email that is privileged and protected from disclosure in the hands of a lawyer, will be disclosable in the hands of a non-lawyer.

A trend?

Since ENRC there have been several pragmatic and generous decisions protecting privilege in unusual circumstances:

  • the dissolution of the privilege holder;
  • leaked emails and conspicuous pub chatter; and
  • the collateral deployment of a privileged note.

These cases demonstrate that privilege is a fundamental right which English courts continue resolutely and robustly to protect. If a document satisfies Lord Carswell's formulation of privilege in Three Rivers (No 6)(as refined for litigation privilege in ENRC and WH Holdings and for legal advice privilege in Jet2.com) English courts will be reluctant to order its disclosure. In cases of uncertainty or finely-balanced arguments, English law will tend to prefer an outcome that maintains privilege.