Article published – Dealing with the COVID-19 pandemic: are your emails privileged?

The COVID-19 pandemic has brought with it huge challenges for businesses. While the focus has been on keeping business going, rather than the prospect of litigation in the future over decisions taken now, it seems inevitable that litigation will follow such a major disruption of the global economy.

Given that documents created now will be highly relevant in any such litigation, Anna Pertoldi has published a post on Practical Law’s Dispute Resolution blog which considers what will and will not need to be disclosed, and in particular, what documents will be privileged. Click here to read the post (or here for the Practical Law Dispute Resolution blog homepage).

Article published – Legal advice privilege: a dominant purpose test, but to what end?

The Court of Appeal’s recent decision in The Civil Aviation Authority v The Queen on the application of Ltd [2020] EWCA Civ 35 found that legal advice privilege (LAP) is subject to a “dominant purpose” test, and also considered how LAP applies in the context of multi-addressee emails which include both lawyers and non-lawyers as recipients.

Julian CopemanAnna Pertoldi and Maura McIntosh have published an article in PLC Magazine which considers the decision and its implications. Click here for a copy of the article, which first appeared in the March 2020 issue of PLC Magazine: Or click here for our previous blog post on the decision.

Court of Appeal finds regulator cannot demand production of client’s privileged documents unless statute overrides privilege

In a judgment handed down this morning, the Court of Appeal has held that an audit client was not required to hand over its privileged documents in response to a notice from its auditor’s regulator requiring the production of documents in connection with an investigation into the auditor’s conduct: Sports Direct International Plc v The Financial Reporting Council [2020] EWCA Civ 177.

The court overturned the High Court’s judgment in this case, which had found that the audit client’s privilege would not be infringed by requiring production (see our blog post on the first instance decision here).

The decision is helpful in reinforcing the protection of privilege in the regulatory context, whether the privilege belongs to the person who is subject to a regulatory investigation or a client of that person. In either case, privilege will be a defence to a notice requiring production of documents under a regulator’s statutory powers, unless the statute overrides privilege either expressly or by necessary implication.

The decision also confirms that privilege cannot be claimed for non-privileged documents merely because they are attached to privileged communications. The court rejected an attempt to distinguish between a non-privileged attachment and the communication of that attachment between lawyer and client. Continue reading

Our new Commercial Litigation Podcast Series

We have today launched our new series of commercial litigation update podcasts, looking at developments in civil procedure that will be of interest to in-house lawyers and others who deal with litigation in the English courts.

In this first episode we look at recent developments in disclosure and privilege. This episode is hosted by Anna Pertoldi, who is joined by Maura McIntosh and Chris Cox.

Our podcast is available on iTunes, Spotify and SoundCloud and can be accessed on all devices. A new episode will be released every couple of months. You can subscribe and be notified of all future episodes.

You can find links to our blog posts on the cases covered in this podcast below:

And here is a link to our most recent webinar on the disclosure pilot in the Business and Property Courts: The Disclosure Pilot – 10 months on: how is PD51U working in practice?

Anna Pertoldi
Anna Pertoldi
+44 20 7466 2399
Maura McIntosh
Maura McIntosh
Professional support consultant
+44 20 7466 2608
Christopher Cox
Christopher Cox
Senior associate
+44 20 7466 2203

Court of Appeal confirms instructions to law firm relating to escrow monies were privileged

The Court of Appeal has upheld a High Court decision which rejected an application for disclosure of documents containing a client’s instructions to its lawyers regarding the holding and transfer of escrow monies, in circumstances where the law firm had provided a confirmation to a counterparty as to the nature of its instructions:  Raiffeisen Bank International AG v Asia Coal Energy Ventures Ltd [2020] EWCA Civ 11. Our blog post on the first instance decision is here.

The decision confirms that where a client authorises a lawyer to make a statement to a third party as to the instructions he or she has received from the client, this does not, without more, give rise to a loss of confidentiality in the documents which contain or evidence the instructions. The question is whether the client has authorised the lawyer to disclose the underlying communications. This may of course be a fine line in some cases.

The Court of Appeal also held, by reference to Australian authority, that privilege will be waived if the client “puts in issue” the content of the instructions to the lawyer. This shows that privilege may be waived where a party puts the content of a privileged communication directly in issue, for example by alleging that a lawyer acted without the client’s authority in agreeing a settlement. This is in addition to the more familiar situation where a party deploys its privileged material in legal proceedings such that the principle of collateral waiver (or the “cherry picking rule”) comes into play. In practice, however, the two scenarios are likely to be closely linked: where a party puts its privileged communications directly in issue, it would seem inevitable that the communications will also be relied on in support of its case. Further, it is clear from previous authority that privilege will not be waived merely by putting in issue a matter to which a privileged communication is relevant, as opposed to putting in issue the content of the communication itself.

The Court of Appeal’s decision also helpfully illustrates the breadth of the communications that can be protected by legal advice privilege. The privilege covers the continuum of communications between solicitor and client, so long as they are directly related to the solicitor’s performance of his professional duty as legal adviser. There is no requirement to separate out communications which contain actual instructions or advice and those which do not. That remains the case despite the subsequent decision of the Court of Appeal in CAA v [2020] EWCA Civ 35 (on which we reported here) which found that legal advice privilege is subject to a “dominant purpose” test, ie that the dominant purpose of the relevant communication was to give or obtain legal advice in a broad sense. Continue reading

Court of Appeal finds legal advice privilege is subject to a “dominant purpose” test

In a decision handed down earlier this week, the Court of Appeal has found that legal advice privilege (LAP) is subject to a “dominant purpose” test, ie that in order to benefit from LAP it is necessary to show that the dominant purpose of a communication was to give or obtain legal advice: The Civil Aviation Authority v The Queen on the application of Ltd [2020] EWCA Civ 35.

That has long been the case for litigation privilege, where it is essential to show that a communication or document was prepared for the dominant purpose of contemplated litigation, but the question of whether LAP is subject to a dominant purpose test has been far more controversial. Whilst the judge at first instance had found that there was such a test, leading textbooks and obiter comments by the Court of Appeal in SFO v ENRC [2018] EWCA Civ 2006 (considered here) suggested there was no such test. The application of a dominant purpose test in connection with LAP has often been viewed as inconsistent with the broad protection afforded under the LAP head, which covers the whole continuum of communications between lawyer and client which take place in a relevant legal context, as confirmed by the House of Lords in Three Rivers No 6 [2004] UKHL 48 (and applied for example in the RBS v Property Alliance Group decision considered here).

There is however good news from the perspective of those seeking to obtain the protection of LAP for lawyer/client communications to seek or obtain legal advice. Despite finding in favour of a dominant purpose test for LAP, the Court of Appeal’s decision in this case does not significantly narrow down the protection of LAP as it was previously understood. The decision is clear that, where a lawyer is instructed in a relevant legal context, most communications between lawyer and client will be privileged. That is because, once there is a relevant legal context: (i) legal advice is widely defined, in that it is not limited to what the law is, but includes what should prudently and sensibly be done in the relevant legal context; and (ii) the protection includes communications aimed at keeping both lawyer and client informed so that advice may be sought and given as required. A particular document will not be privileged if it falls outside that legal context (and equally, part of a document will not be privileged if that part falls outside the legal context, assuming the parts can be separated out), but in general terms the protection of LAP should remain broad. Against that background, the dominant purpose test arguably does not add very much to the previous understanding of when LAP applies.

The decision also discusses the application of LAP in the context of emails sent to multiple addressees, including both lawyers and non-lawyers, particularly in an in-house setting. Unfortunately, the Court of Appeal’s discussion of this important area is not easy to follow.

  • The decision says that if the dominant purpose of the multi-addressee email is to settle the instructions to the lawyers, then (subject to the principle set out in Three Rivers No 5 – as to which see below) it will be privileged, whereas if the dominant purpose is to seek commercial views from the non-lawyer addressees, then it will not be privileged, even if a subsidiary purpose is simultaneously to obtain advice from the lawyer addressee(s).
  • That may be taken to suggest that, in the Court of Appeal’s view, the multi-addressee communication must be viewed as a whole and its overall purpose determined. However, shortly afterward, the decision states that the court’s “preferred view” is that each communication between the sender and each recipient should be considered separately, since LAP essentially attaches to communications and “it is difficult to see why the form of the request (in a single, multi-addressee email on the one hand, or in separate emails on the other) in itself should be relevant as to whether the communications to the non-lawyers should be privileged”.
  • Similarly, in the context of a meeting attended by lawyers and non-lawyers (where, the court said, the same principles should apply): “Legal advice requested and given at such a meeting would, of course, be privileged; but the mere presence of a lawyer, perhaps only on the off-chance that his or her legal input might be required, is insufficient to render the whole meeting the subject of LAP so that none of its contents (including any notes, minutes or record of the meeting) are disclosable.”

Overall, therefore, the analysis would appear to be that combining a privileged communication to a lawyer with a non-privileged communication to a non-lawyer (in a single email or in the same meeting) will not give the protection of privilege to the otherwise non-privileged communication.

The decision does contain some helpful discussion of the very narrow approach to who is the “client” for the purpose of LAP under English law, following the Court of Appeal decisions in Three Rivers No 5 and SFO v ENRC. Like the Court of Appeal in ENRC, the court said that if it had been free to do so it would have been “disinclined” to follow that approach. This adds to the weight of criticism of the Three Rivers No 5 approach at Court of Appeal level. However, any change to the law on that point will have to await a Supreme Court decision.

Intriguingly, there is some suggestion in the CAA v decision (including the discussion of multi-addressee emails referred to above) that the Court of Appeal was inclined to consider internal communications between non-lawyers to be privileged where they are for the dominant purpose of instructing the lawyer. It is not, however, clear precisely what scenario the court had in mind. In general, communications between non-lawyers will not be privileged under the LAP head (given that only lawyer/client communications are protected) save to the extent that they evidence the content of a privileged communication (or as the court put it in this case, if they “might realistically disclose” legal advice). Presumably the Court of Appeal’s comments need to be understood in that context. Continue reading

Court of Appeal confirms “once privileged, always privileged” unless privilege is waived – even if there is no longer anyone who can assert the privilege

The Court of Appeal has confirmed that the documents of a dissolved company remain privileged, regardless of whether there is anyone who can assert the company’s privilege: Addlesee v Dentons Europe LLP [2019] EWCA Civ 1600.

The decision establishes that, once a privileged communication comes into existence, that privilege is absolute and remains intact unless and until it is waived by a person entitled to do so. This illustrates the strength of the principle “once privileged, always privileged”, which is based on the public policy underlying privilege – that is, the need for a client to be confident, when consulting a lawyer, that the privileged communications will never be disclosed without the client’s consent.

Although the point was not in issue in the present case, the decision may be said to bolster the protection given to documents in a litigating party’s possession which are subject to a third party’s privilege – so for example where the litigating party has received the documents under a limited waiver of privilege. The reasoning in this case would appear to suggest that the court must respect the privilege unless and until the privilege holder has waived it, regardless of whether it has come forward to assert it.

It is worth noting that the Court of Appeal states in its judgment that it is concerned only with legal advice privilege, rather than litigation privilege. The decision may therefore leave open an argument that the position is different for documents subject to litigation privilege – although the court does note that the two forms of privilege have a common purpose, though their scope is different. Continue reading

Disclosure Pilot: High Court clarifies transitional operation and considers privilege claims

The High Court has confirmed that the Disclosure Pilot operating in the Business and Property Courts since 1 January 2019 applies to all proceedings currently on foot in those courts (apart from those specifically excluded), regardless of whether orders for disclosure were made prior to that date. Accordingly, any applications for further orders regarding disclosure will be dealt with under the new rules contained in Practice Direction 51U (PD51U): UTB LLC V Sheffield United Ltd & others [2019] EWHC 914 (Ch). 

With regard to privilege challenges, the decision suggests that the wording of the new rules gives added force to the general rule that judges should be cautious about agreeing to inspect documents in order to test whether privilege has been properly asserted (although in some cases, such as here, it may still be considered appropriate).

The decision is also an interesting example of a case where privilege was claimed in respect of communications with a lawyer who was also acting as the client’s “man of business”, alongside his legal role. It illustrates that the existence of such dual roles will not preclude claims of privilege over those communications that satisfy the test of having been made in a relevant legal context. However, it will be necessary to satisfy the court that those carrying out the disclosure review exercise were astute to the need to distinguish such communications from those that took place in a business advisory context, which will not be privileged. Continue reading

High Court upholds claim to privilege in respect of underlying instructions to law firm relating to escrow monies

The High Court has rejected an application for disclosure of documents containing the underlying instructions to a law firm acting for a party funding a transaction, in circumstances where the law firm provided a confirmation to the seller as to the nature of its irrevocable instructions regarding escrow monies: Raiffeisen Bank International AG v Asia Coal Energy Ventures Ltd [2019] EWHC 3 (Comm).

The court rejected an argument that the instructions were not confidential, or that privilege had been waived, because the client had authorised the law firm to state what instructions it had been given. The judge emphasised that underlying instructions do not cease to be confidential just because the client authorises the solicitor to divulge information it has received in confidential communications from the client. The question is whether the client has given the solicitor authority to disclose the underlying communications.

Caution is needed however. It may be difficult to distinguish between cases where the client has given the solicitor authority to disclose the underlying communications and cases where it has merely authorised the solicitor to divulge information received from the client without disclosing the underlying communications. Particular care should also be taken where a party is considering referring to lawyer/client communications in the context of legal proceedings. If the court finds that the underlying privileged material is being deployed in the proceedings it may order those communications to be disclosed along with any other documents relevant to that issue, under the principle of collateral waiver or the “cherry picking rule”.

The decision also illustrates the broad protection which can be afforded to lawyer/client communications under the head of legal advice privilege. The privilege is not limited to requests for legal advice or the provision of advice, but will include the entire continuum of communications between solicitor and client relating to a transaction in which the solicitor has been instructed, provided that they are directly related to the solicitor’s performance of his professional duty as legal adviser. Here that principle meant that instructions regarding the holding and transfer of escrow monies were privileged, even if they did not contain advice on matters of law. Continue reading

Information gathering by in-house lawyer in order to obtain external advice may not be protected by legal advice privilege

In a recent decision, the High Court has held that an in-house lawyer’s communications with an employee of the business, who was accepted to be her in-house “client” for some purposes, were not protected by legal advice privilege where those communications were to seek and obtain information to provide to external solicitors in order to obtain their legal advice: Glaxo Wellcome UK Ltd v Sandoz Ltd [2018] EWHC 2747 (Ch). In doing so, Chief Master Marsh applied the narrow interpretation of “client” established by the notorious Three Rivers No 5 decision as recently confirmed by the Court of Appeal (albeit with reluctance) in the ENRC case (considered here).

Significantly, the decision illustrates that an individual can be a lawyer’s “client”, and therefore entitled to communicate information to the lawyer under protection of privilege, for one purpose but not others.

The decision underlines the importance of considering, in any given context, who is likely to be considered the lawyer’s “client” for that particular purpose. Where an external lawyer is advising, and the in-house lawyer is the relevant “client” for that purpose, the in-house lawyer’s internal information gathering exercise may not be privileged (unless litigation privilege applies, as in that context a lawyer/client communication is not essential). The position may be different where the in-house lawyer’s advice is sought in addition to that of the external lawyer.

The decision also contains important messages as to how evidence should be presented in supporting a claim to privilege. Continue reading