There are two bases on which privileged material can be shared with third parties without losing privilege against the rest of the world, though only the second aspect (confidentiality) is essential:

  1. Common interest privilege
  2. Confidentiality

Section 1:

COMMON INTEREST PRIVILEGE

This allows privileged communications to be shared with others who have a common interest in the subject matter of the communication without losing privilege. The common interest must exist at the time the privileged communication is shared. Confidentiality must also be maintained (though a duty of confidentiality may be implicit – see further below). Common interest privilege applies whether what is shared is subject to legal advice privilege or litigation privilege in the hands of the original party.

Although the boundaries of common interest privilege are less than clear in the case law, there are a number of established situations where a sufficient common interest has been held to exist, including insurer / insured, company / shareholder, and principal / agent.

Common interest privilege was first recognised in Buttes Gas and Oil Co v Hammer (No 3) [1981] QB 223 (CA). Its practical significance is now greatly reduced, however, given the more recent line of authority which establishes that privileged communications can be shared with third parties on confidential terms without losing privilege as against the rest of the world (see below).

Perhaps the main distinction is that, where common interest privilege is available, both the original privilege holder and the party with whom the communication is shared are able to assert privilege in their own right. However, even if there is no common interest privilege, it seems there is no need for the original privilege holder actually to come forward to assert the privilege – see “Court of Appeal confirms ‘once privileged, always privileged’ unless privilege is waived – even if there is no longer anyone who can assert the privilege” (8 October 2019). But the party with whom the communication is shared cannot assert privilege if the original party chooses to waive it. In contrast, in the case of common interest privilege, it is not clear whether all privilege holders must agree to a waiver of privilege or whether the original party can waive the privilege unilaterally. If the former, then that would provide a practical distinction between the two scenarios. It seems there may also be a distinction in terms of the ability to restrain the use of privileged documents in another party’s possession – see “Court of Appeal finds one defendant cannot claim litigation privilege over text messages, despite accepting other defendants can do so“.

Section 2:

CONFIDENTIALITY

Privilege as against the rest of the world

As noted above, a party is entitled to share its privileged communications with others on confidential terms without losing privilege as against the rest of the world. So for example the courts have held that a party did not lose privilege where its legal advice was shared with the auction house from which a party had purchased a painting whose ownership was in dispute (Gotha City v Sotheby’s [1998] 1 WLR 114 (CA)).

In that case, there was no express duty of confidence on the part of those with whom the privileged communications were shared. The court was prepared to proceed on the basis that there were implied obligations of confidentiality. Clearly, however, where a party wishes to share a privileged communication with a third party without losing privilege, it is advisable to put in place an express confidentiality / non-waiver agreement.

It should be noted that these principles relate to copies or reports of the privileged communication itself. Any subsequent discussion as to what should be done in light of advice received (either within a client organisation, or between the client and a third party) will not be privileged – unless it reveals the nature of the advice sought or received.

In Property Alliance Group Limited v The Royal Bank of Scotland PLC [2015] EWHC 1557 (Ch), the High Court confirmed that the principle of limited waiver can apply where privileged documents are provided to a regulator, despite the existence of “carve-outs” allowing the regulator to share the material with other third parties or to make it public – see “Important High Court decision on waiver of privilege and without prejudice protection” (12 June 2015).

It is generally not advisable to copy privileged communications too widely, as this will increase the risk that the advice will be circulated inappropriately and that confidentiality, and therefore privilege, will be lost. Where privileged documents are disclosed inadvertently, however, it may in some circumstances be possible to obtain an injunction to prevent further disclosure or use of the documents by their recipient – see “High Court restrained use of privileged documents disclosed inadvertently” (22 November 2011) on the High Court decision in London Borough of Redbridge and another v Johnson [2011] EWHC 2861 (QB).

Privilege as against the recipient

In most cases, where a privileged document is shared with a third party, it will not be possible to assert privilege against that party in the event of a future dispute.

However, in some circumstances, it is possible to disclose privileged material to a third party for a limited purpose while retaining the ability to assert privilege even against that party should a dispute arise in future. In Berezovsky v Hine [2011] EWCA Civ 1089 the Court of Appeal held that a claimant was entitled to assert privilege in a draft witness statement relating to separate litigation, despite having previously copied the draft to the defendant in the instant proceedings. On the facts, the court was satisfied that disclosure to the defendant was restricted to particular purposes, and that use for any other purpose was prohibited. See “Court of Appeal on limited waiver of privilege” (1 November 2011) for more on the decision.

In that case, the Court of Appeal was prepared to proceed on what it said must have been the obvious intentions of the parties, even though there was no express restriction imposed on the recipient of the privileged material. In such circumstances, however, a party would be well advised to ensure that the disclosure is accompanied by a statement (and ideally an agreement from the third party) not only that the disclosure is on confidential terms and there is no intention to waive privilege, but also setting out the specific purpose for which disclosure is made and providing that the use of the material for any other purpose is prohibited.

Collateral waiver

A party who deploys privileged material in legal proceedings may find that the waiver extends further than it intended. This is known as the principle of “collateral waiver” or the cherry-picking rule. It is designed to prevent a party choosing to rely on favourable aspects of its privileged material while hiding behind the privilege to avoid having to disclose less favourable aspects.

This principle has been applied in numerous decisions, for example:

Note that the principle of collateral waiver only comes into play where privileged material is deployed in proceedings; it has no application outside that context, and mere disclosure is not sufficient if there is no reliance: see Belhaj v Director of Public Prosecutions [2018] EWHC 514 (Admin) considered in “A reminder that inadvertent disclosure of privileged material will not engage the cherry picking rule” (4 April 2018).

Where the principle applies, the collateral waiver will extend only to documents which go to the same issue for which privilege was originally waived: see Fisher v HMRC [2012] UKFTT 335 (“Waiver of privilege: deployment and cherry-picking” 9 July 2012) and Holyoake v Candy [2017] EWHC 387 (Ch) (“High Court decision illustrates limits of the cherry-picking rule” 13 September 2017). Nonetheless, privilege should never be waived lightly, as the precise impact of the waiver will often be difficult to predict in practice.

Note: Content up to date as at 22 April 2021

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