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Comment & Opinion

Privilege: Lessons from recent key cases

Privilege is an important legal right which entitles an individual or party to withhold protected communications from disclosure to a court or third party. The ability to claim privilege is particularly vital in the context of investigations and managing disputes. But law and practice in this area is constantly evolving. In this article, Gwendoline Davies highlights lessons from recent case law on privilege, and offers some practical advice.

An image of an old key, lying on a wooden table. A visual metaphor for security relevant to the topic of this article, legal privilege.

Types of privilege

There are various different forms of privilege, each of which can arise in different circumstances: legal advice privilege, litigation privilege and without prejudice privilege. (Legal professional privilege is an over-arching term.)

Legal advice privilege covers confidential communications between a lawyer and client, but there are some essential factors which must exist for legal advice privilege to apply: confidentiality; the document must pass between a qualified lawyer and his or her client [1]; the communication must be for the dominant purpose of giving or receiving legal advice in a relevant legal context; and privilege must not have been lost or waived, even inadvertently.

Litigation privilege enables [potential] litigants to investigate [potential] disputes and take advice without fear that their research will be disclosable in any proceedings. Again, confidentiality is essential, but this time the communication may be between a lawyer and client; a lawyer and a third party; or the client and a third party. Litigation must be pending, reasonably contemplated or existing, and litigation must be the dominant purpose behind the making of the document/communication.

Another key point arises, in respect of both legal advice and litigation privilege, from the 2022 case of University of Dundee v Chakraborty [2]. That is, when considering whether privilege can be claimed, a document or communication should be judged at the point of creation.  A non-privileged document cannot attain privilege at a later stage, even if it then becomes the subject of legal advice/litigation.

So, having summarised the basics, what lessons can be learned from recent authorities on privilege?

 

Privilege: recent developments

Privilege within a foreign disclosure process

The concept of privilege is one that varies greatly in terms of significance across the different parts of the world. So what happens when a document is privileged in one jurisdiction, but not in another? The court in the 2022 case of Suppipat v Siam Commercial Bank Public Company Ltd [3] held that “the fact that under foreign law the document is not privileged or that the privilege that existed is deemed to have been waived is irrelevant.  The crucial consideration is whether the document and its information remain confidential in the sense that it is not properly available for use.  If it is, then privilege in [England and Wales] can be claimed and that claim, if properly made, will be enforced.”

Is confidentiality equated to privacy in the context of privilege?

Another 2022 case, Jinxin Inc v Aser Media PTE Ltd & Ors [4], noted an important distinction between confidentiality (as required to establish privilege) and privacy. The Commercial Court highlighted that confidentiality and privacy rest on different legal foundations and protect different interests.  Jinxin went on to clarify that the test for confidentiality in this context is not (as was previously thought) whether there was a reasonable expectation of privacy. Rather, the correct test is: whether the information had been imparted in circumstances importing an obligation of confidence, taking into account the particular information, the people viewing it and the proposed use. That is seemingly a much more stringent test and a crucial hurdle to overcome when attempting to establish privilege.

However the Jinxin case also has another aspect to it which is helpful in light of the fact that, even where efforts are made to keep a document strictly confidential within a closed and minimal ‘circle’, that is not always possible. Jinxin confirms that access to privileged communications by IT staff, or the existence of policies which permit a company to monitor employees’ communications, or separate ownership of servers, for example, do not necessarily or inevitably point to a lack of confidentiality, and therefore preclude privilege.

What about waiver?

There is a widely perceived notion that reference in a disclosable document or pleading to the mere fact or effect of privileged material will not amount to a waiver, whereas a reference to its content will. However, in the 2020 PCP v Barclays [5] case, the High Court confirmed that whether it is a reference to content or merely to fact or effect – is only one consideration. You also need to ask whether the party who is potentially waiving privilege is relying on the allusion in some way to support or advance its case. If it is, then waiver may occur.

In 2021, following PCP, the claimant in Scipharm SARL v Moorfields Eye Hospital Foundation Trust [6] was ordered to disclose its lawyers’ attendance notes on the basis that the notes were merely impliedly mentioned in the claimant’s witness statement and that the claimant had therefore waived privilege. Although the witness statement made no specific reference to the particular attendance notes, the content of the notes was alluded to and, crucially, was relied upon in the claimant’s witness statement.

Earlier this year, Mond v Insolvency Practitioners Association [7] considered the implications of exhibiting or making reference/allusion to only a small amount of privileged material.  Mr Mond’s witness statement had included a small amount of privileged material, which he argued waived privilege only to that limited extent, for a specific purpose, and no further.  However the judgment is a reminder of the ‘cherry-picking principle’ (also known as collateral waiver). That is, waiver of any amount of privileged material may result in a court or tribunal ordering disclosure of more, or even all, privileged material relating to the same issue or transaction so as not to present an unfair or misleading picture. A person cannot, therefore, ‘cherry-pick’ which items of privileged material to waive without risking waiver overall.

These cases are all recent examples suggesting it’s now more important than ever to ensure that any allusions or references to privileged material should be treated with extreme caution, or there could be a risk of privilege being waived.

Will disclosure in error waive privilege?

Linked to waiver, what happens if privileged material is disclosed in error? The basic premise is that parties can assume that the disclosure process has been carried out correctly, and therefore that all materials disclosed were intended to be disclosed. The very recent case of Flowcrete UK Ltd & Ors v Vebro Polymers UK Ltd & Ors [8] confirms that there are certain circumstances in which a court can intervene to limit or prevent the use of privileged documents which have been disclosed in error. That includes where disclosure was procured by fraud or, as was argued in this case, where disclosure was due to an obvious mistake. In the case of mistake, the disclosing party must establish first that the disclosure was in error and then that the mistake was obvious.  An additional factor likely to be relevant is the length of time passing between the inadvertent disclosure and the disclosing party requesting return/non-use of the inadvertently disclosed material. A party disclosing in error should act as soon as the mistake is discovered.

Without Prejudice privilege: Key clarifications

Without prejudice privilege enables parties to negotiate with a view to settling their disputes without fear that any concessions made in negotiations will be used against them if/when settlement is not achieved. For a communication to attract without prejudice privilege there must be a real issue in dispute between the parties and the communication form part of a genuine attempt to negotiate a resolution. The 2022 Employment Appeal Tribunal case of Scheldebouw v Evanson [9] clarifies the former point. The employee was informed that there was no longer a requirement for their role. The employee didn’t object and negotiations ensued regarding the terms of the employee’s termination. In a subsequent, separate claim advanced by the employee for unlawful deductions from wages, the employer argued that documents and information relating to the termination discussions attracted ‘without prejudice’ protection. The tribunal disagreed. Those negotiations were not in relation to the attempt to settle a dispute. There is a crucial distinction between negotiations per se, and negotiations which attempt to settle a dispute. WP privilege only arises in the case of the latter.

A recent Competition Appeal Tribunal case, Sportradar AG v Football DataCo Ltd [10] considers ‘contemplation of litigation’ in the context of without prejudice privilege, as opposed to in the context of litigation privilege. The case notes that the overarching purpose of WP privilege is to facilitate settlement negotiations, which is generally to be encouraged. The threshold to determine ‘contemplation of litigation’ is therefore lower in the case of WP privilege than it is under the litigation privilege test.

Finally, it is the substance of the communication that matters – not whether or not the document, meeting or phone call has been labelled or stated to be ‘without prejudice’. In Jones & Ors v Lydon & Ors [11], every communication in a chain of correspondence had been labelled ‘without prejudice’ except the final e-mail. It was argued that, as a result, the final e-mail was openly made and was disclosable and could be relied upon in court. The court disagreed. Failure to label the final e-mail did not mean that it wasn’t protected by the without prejudice privilege that applied to the whole of the preceding chain. The case confirms that a departure from without prejudice communication in genuine settlement negotiations requires a clear statement of intent to that effect.

Understanding and preserving privilege: How we can help

An understanding of the basic principles of, and the subtleties associated with claiming, privilege is essential [12]. Without it, privilege protection of all kinds can be lost or waived, often with devastating results. For legal and practical advice or training in relation to the various types of privilege, including how to protect privilege and how to safely conduct investigations if/when issues or disputes or regulatory/compliance requests arise, please contact Gwendoline Davies or any member of Walker Morris’ Commercial Dispute Resolution team.

 

[1] ‘client’ in this context, is very narrowly defined – it only covers those members of an organisation who are actually charged with instructing lawyers.  In a purely internal context, this would mean those members of an organisation charged with instructing in-house counsel.

[2] [2022] EAT 150

[3] [2022] EWHC 381 (Comm)

[4] [2022] EWHC 2856 (Comm)

[5] PCP Capital Partners v Barclays Bank plc [2020] EWHC 1393 (Comm)

[6] [2021] EWHC 2079 (Comm)

[7] [2023] EWHC 477 (Ch)

[8] [2023] EWHC 22 (Comm)

[9] [2022] EAT 157

[10] 1342/5/7/20

[11] [2021] EWHC 2322 (Ch)

[12] See Walker Morris’ more detailed note on privilege for further information.