In the most recent chapter of the Dawson-Damer trust litigation, the Court of Appeal has held that a law firm acting for the defendant trustee in the underlying proceedings must comply (in part) with a subject access request made by the claimant beneficiaries, despite its claims to legal professional privilege in some of the documents, thereby overturning a High Court decision to the contrary: Ashley Judith Dawson-Damer (Appellant/Claimant) v (1) Piers Dawson-Damer (2) Adelicia Dawson-Damer (Claimants) & Taylor Wessing LLP (Respondents/Defendant) and Taylor Wessing LLP (Appellant/Defendant) v (1) Ashley Judith Dawson-Damer (2) Piers Dawson-Damer (3) Adelicia Dawson-Damer (Respondents/Claimants) [2020] EWCA Civ 352.

The decision is of interest to data protection specialists and trust specialists alike, and also provides clarity in relation to the application of joint interest privilege in relation to a trust governed by foreign law. It establishes two separate points:

  1. Joint interest privilege may preclude a trustee (or its legal advisors) relying on legal professional privilege (“LPP”) to avoid having to comply with a beneficiary’s subject access request (or to avoid giving disclosure in legal proceedings). The privilege arises as a matter of procedural law rather than trust law, meaning that its scope should be determined under English law, regardless of the law which governs the trust instruments.
  2. The appropriate test for whether or not data is recorded as part of a “relevant filing system” under section 1(1) of the Data Protection Act 1998 (the “Act”) includes a requirement that the data is retrievable because it is structured by specific criteria which relates to individuals. Whether or not the data is retrievable more generally is not on its own an element of assessing a “relevant filing system”.

Relevant Law

Under section 7 of the Act, an individual can make a subject access request to a data controller requesting details of any personal data that the data controller holds in relation to the individual. If the data controller fails to comply, section 7(9) of the Act provides that the party that has made the request can apply to court for an order requiring her or him to comply.

The data controller is only obliged to disclose data covered by the Act. Section 1(1) of the Act provides a detailed definition of the meaning of “data”, which includes the requirement that it is recorded as part of a “relevant filing system”.

There is an exemption from the data controller’s obligation to comply with the request, under paragraph 10 of schedule 7 of the Act, where the personal data consists of information in respect of which a claim to LPP could be maintained in legal proceedings (the “LPP Exemption”).

“Joint interest privilege” is a doctrine of English law which prevents a party from asserting LPP against a third party, where that third party has a joint interest in the subject matter of the privileged communications at the time they are made. It is long established under English law that joint interest privilege arises between a trustee and beneficiary, on the basis that advice taken in order to administer a trust is an expense to be borne by the trust and not the trustee.

Joint interest privilege is sometimes referred to as “joint privilege”, and that is the terminology used in the court’s judgment in the present case (though the court also recognises the use of the alternative term “joint interest privilege” in this context). However, it is not to be confused with the privilege which arises where two clients jointly instruct the same solicitor, which is also commonly referred to as joint privilege. For that reason, the alternative term “joint interest privilege” is used in this blog post.

Background

The claims that underpin this appeal relate to trust funds deriving from a settlement in the Bahamas which was established in 1973, for the benefit of biological descendants (and their spouses) of a Mr Skelton’s grandson. In 1992, a resettlement was effected and four new discretionary trusts were set up for the benefit of the various beneficiaries. A Bahamian company, Grampian Trust Company Limited, was appointed as the trustee for all four new discretionary trusts (the “Trustee”). The law firm Taylor Wessing had acted for the Trustee since its incorporation in 1992.

The Trustee later appointed funds from one of the discretionary trusts to be held principally in favour of one of the beneficiaries and his children. Beneficiaries of one of the other discretionary trusts (Ashley Dawson-Damer, Piers Dawson-Damer and Adelicia Dawson Damer, together the “Claimants”) then issued proceedings in the Supreme Court of the Bahamas, bringing claims to challenge these appointments. The trial of these claims is yet to occur.

The Claimants made subject access requests to Taylor Wessing pursuant to the Act. Taylor Wessing refused to provide certain data relating to its client, the Trustee, to the Claimants on the basis that LPP applied to the data. Following this refusal, the Claimants made an application to the High Court for relief under section 7(9) of the Act. The High Court in 2015 dismissed the application, and the Claimants appealed the decision to the Court of Appeal in 2017. At that time, the Court of Appeal found that the subject access requests were valid and that Taylor Wessing’s efforts to comply with the requests had been inadequate. See our post on this decision for further information.

One of the issues determined by the Court of Appeal was that the LPP Exemption applies only to documents which are subject to LPP for the purposes of English law. It does not apply simply because a trustee could refuse to disclose documents to the beneficiaries under Bahamian trust law.

As a consequence of the Court of Appeal’s decision in 2017, the matter was remitted back to the High Court to decide the remaining issues, primarily: whether some of the hard copy paper files that Taylor Wessing holds were part of a “relevant filing system”, and whether the documents in question were in fact covered by the LPP Exemption.

The remitted issues were dealt with at a hearing in the High Court before Mr Andrew Hochhauser QC in 2019, in which he held (amongst other things) that certain paper files stored by Taylor Wessing did constitute a “relevant filing system” for the purposes of the Act, and that some of the data covered by the subject access requests was protected by LPP.

Taylor Wessing appealed the finding in relation to the “relevant filing system” while the Claimants appealed the finding in relation to the LPP Exemption.

Decision

The Court of Appeal (Floyd, Newey and Arnold LJJ) unanimously allowed both appeals.

The Legal Professional Privilege Issue

The key issue before the High Court had been whether Taylor Wessing could rely on the LPP Exemption against the Claimants, or whether it was prevented from doing so by the doctrine of joint interest privilege. (It was accepted that the LPP Exemption applied to documents created after the dispute arose in February 2014, as there was no joint interest from that point.)

Taylor Wessing maintained that, although the application of LPP had to be determined as a matter of English law (in accordance with the Court of Appeal’s 2017 decision) joint interest privilege was dependant on the beneficiary’s rights in the trust. As the trust was governed by Bahamian law, the Bahamian Trust Act 1998 applied which provided that the Trustee was not compelled to produce the requested documents to the Claimant, and so joint interest privilege would not arise under English law.

The High Court concluded that joint interest privilege would normally arise in the circumstances under English trust law, but it agreed with Taylor Wessing that, as Bahamian law applied to the trust, there could be no joint interest privilege over the requested documents. Accordingly, Taylor Wessing was entitled to rely on the LPP Exemption as against the Claimants.

The Court of Appeal disagreed with the High Court’s approach, on the basis that the question of whether joint interest privilege exists in the circumstances is an issue of procedural law rather than trust law. This reasoning was supported by the following:

  1. Courts have distinguished disclosure in litigation from a beneficiary’s rights under trust law (for example, arising from the decision in Schmidt v Rosewood) in a number of authorities; and
  2. Joint interest privilege applies in circumstances outside of trusts, such as between a company and its shareholders.

Consequently, the Court of Appeal found that the scope of joint interest privilege in this case should be determined under English law rather than Bahamian law. The Bahamian Trust Act was therefore of no significance. Joint interest privilege applied to the documents, and the LPP Exemption could not be relied on.

The ‘Relevant Filing System’ Issue

The Court of Appeal then moved on to consider whether certain documents were part of a “relevant filing system” for the purposes of section 1(1) of the Act. The documents in question were 35 paper files held by Taylor Wessing, which were held in chronological order and by reference to the Trustee as opposed to the beneficiaries.

The High Court decision had held that the requirements for a “relevant filing system” were that the data must be structured by reference to specific criteria, must be related to individuals, and the specific criteria must enable the data to be easily retrieved. However, the High Court then took a wide interpretation of these requirements and found that the paper files clearly related to trusts in which one or all of the Claimants were potential beneficiaries and that this was sufficient.

The Court of Appeal considered a number of English and European authorities, and found in favour of Taylor Wessing that the 35 files were not a “relevant filing system” for the purposes of the Act. Relying on the CJEU case of Tietosuojavatuutettu, the Court of Appeal stated that the key questions to be asked when deciding if there is a “relevant filing system” should be the following:

  1. Are the files a “structured set of personal data”?
  2. Are the data accessible according to specific criteria?
  3. Are the criteria related to individuals?
  4. Do the specific criteria enable data to be “readily” retrieved?

The Court of Appeal differed from the High Court’s decision in respect of the fourth question, on the basis that the structure of the files did not provide ready access to the data, as it would require the use of trainees or skilled lawyers to turn the pages of the files to identify the data. There needed to be a causative link between the criteria identified and the ability to retrieve the data, rather than the data being capable of being retrieved in a more general sense.

 

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