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M5: Privilege
No adverse inference
"[52] It follows that, in my judgment, the claim for privilege is properly made. In that event I refuse to draw any adverse inference from the fact that Techint has claimed it. The privilege exists for good reason; the exceptions have been developed to protect others in cases where such protection is needed. If adverse inferences are drawn in cases where the privilege, not the exception, applies then it will undermine the privilege itself. Thus to draw such an inference would be contrary to the very public interest the privilege is intended to serve." (China National Petroleum Corporation v. Fenwick Elliott Techint International Construction Company [2002] EWHC 60 (Ch)).
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Confidentiality is a pre-condition of privilege
“[The claimants] have had the attendance notes…since May 2013. On top of that, [the defendant] has recently included the relevant documents in his list of documents. In the absence, therefore, of a successful application for injunctive relief, I should have thought that the bundles for the forthcoming trial should include the documentation…In such circumstances, it is hard to understand how any claim to privilege could be sustained: ‘confidentiality is a precondition for privilege’ (Thanki, at paragraph 5.01).” (Birdseye v. Roythrone & Co [2015] EWHC 1003 (Ch), §46).
Document in the open (loss of privilege unless impropriety)
“HMRC produced two authorities, namely R v Tompkins and ITC Film Distributors and Others v Video Exchange Ltd & Others. The parties were agreed on the general legal principle that the general proposition is that once a document is in the possession of another party or is out in the open then the privilege is lost and if it is relevant it is admissible. However, [the taxpayer] argued that although ITC confirmed the decision in R V Tompkins it was stated that “…but that case proceeded on the footing that the document in question they had came into the possession of the prosecution fortuitously. The relevance of possible impropriety was not discussed”. Mr Bridge’s view was that since the document had been found following the issue of a search warrant under Section 8 of the Police and Criminal Evidence Act, clearly the document should have been “blue bagged”. That had not happened and therefore there had been a breakdown in the proper management of handling of a document which on its face was properly privileged and should have been the subject of proper treatment as a privileged document. We have absolutely no evidence as to precisely what had happened after this document, together with the million or so other documents seized in Operation Apparel, was released to HMRC. We decided that there was no impropriety, that the document had been released into the public domain and that it should be admitted in evidence. Mr Bridge requested a full reasoned decision in regard to propriety. At that juncture Mr McGuiness said that he did not insist on the documentation being led in evidence and withdrew. There is therefore no requirement for a reasoned decision since it has no import in this appeal.” (Aircall International Ltd v. HMRC [2016] UKFTT 406 (TC), §649).
No waiver by disclosing to third party on condition of confidentiality
“The authorities demonstrate that if the person entitled to assert the privilege provides the documents concerned to a third party on terms that they be kept confidential then the third party will be obliged to maintain privilege.” (Garvin Trustees Ltd v. The Pensions Regulator [2014] UKUT B8, §26, Judge Herrington)
Query whether this applies to litigation privilege
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See Thanki: The Law of Privilege §3.34
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Matters that are not usually confidential
Identity of the client and existence of retainer
"[21] It follows, in my judgment, that the identity of the person contacting the solicitor is not information subject to legal professional privilege and the telephone numbers of the brothers, equally, are not covered by this protection; neither are the dates when one or either of those men phoned the office. Moreover, the record of appointments in the office diary and attendance notes, insofar as they merely record who was speaking to the solicitor and the number they were calling from, fall within the same category. Other details contained within the attendance notes may well be covered by legal professional privilege depending on what, if anything was discussed." (R (oao Miller Gardner Solicitors) v. Minshull Street Crown Court [2002] EWHC 3077 (Admin), Rose LJ)
Waiver by sending to the other party
“It follows, in my view, that it was open to Mr Doubleday to waive privilege in the Roythornes files on his own and that he in fact did so when his solicitors sent the file to Mossop & Bowser in May 2013.” (Birdseye v. Roythrone & Co [2015] EWHC 1003 (Ch), §38).
Collateral waiver
"[113] The starting point is to ascertain "the issue in relation to which the [voluntarily disclosed material] has been deployed", known as the "transaction test" (General Accident Fire and Life Assurance Corporation Limited v Tanter [1984] 1 WLR 100 at 113D per Hobhouse J), waiver being limited to documents relating to that "transaction" subject to the overriding requirement for fairness. The "transaction" is not the same as the subject matter of the disclosed document or communication, and waiver does not apply to all documents which could be described as "relevant" to the issue, in the usual, Peruvian Guano sense of the term as used in disclosure (Compagnie Financière et Commerciale du Pacifique v Peruvian Guano Company (1882) 11 QBD 35).
[114] In Fulham Leisure Holdings Limited v Nicholson Graham & Jones [2006] EWHC 158 (Ch); [2006] 2 All ER 599 at [18], having reviewed the relevant authorities, Mann J described the approach thus:
"18. What those citations show is that it is necessary to bear in mind two concepts. First of all, there is the actual transaction or act in respect of which disclosure is made. In order to identify the transaction, one has to look first at what it is in essence that the waiving party is seeking to disclose. It may be apparent from that alone that what is to be disclosed is obviously a single and complete 'transaction' – for example, the advice given by a lawyer on a given occasion…. [O]ne is in my view entitled to look to see the purpose for which the material is disclosed, or the point in the action to which it is said to go…. Mr Croxford [Counsel for the claimant, which sought to rely on LAP] submitted that the purpose of the disclosure played no part in a determination of how far the waiver went. I do not agree with that; in some cases it may provide a realistic, objectively determinable definition of the 'transaction' in question. Once the transaction has been identified, then those cases show that the whole of the material relevant to that transaction must be disclosed. In my view it is not open to a waiving party to say that the transaction is simply what that party has chosen to disclose (again contrary to the substance of a submission made by Mr Croxford). The court will determine objectively what the real transaction is so that the scope of the waiver can be determined. If only part of the material involved in that transaction has been disclosed then further disclosure will be ordered and it can no longer be resisted on the basis of privilege.
19. Once the transaction has been identified and proper disclosure made of that, then the additional principles of fairness may come into play if it is apparent from the disclosure that has been made that it is in fact part of some bigger picture (not necessarily part of some bigger 'transaction') and fairness, and the need not to mislead, requires further disclosure. The application of this principle will be very fact sensitive, and will therefore vary very much from case to case…."
The purpose of the voluntary disclosure, which has prompted the contention that privilege in other material has been collaterally waived, is therefore an important consideration in the assessment of what constitutes the relevant "transaction" (see also Dore v Leicestershire County Council [2010] EWHC 34 (Ch) at [18]-[19] also per Mann J).
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[119]...In my view, the purpose and nature of the voluntary disclosure are crucial; and, in this case, I consider Morris J unfortunately failed properly to take these matters into account. As the judge accepted, the disclosure was not in respect of any legal advice; and so it could not be said that there was any risk of the email presenting a partial or selective disclosure of legal advice and thus there was no risk of unfairness that might have been caused by such partial disclosure. The purpose of the email was modest: it was intended to show that (in Mr Moriarty's words) the language used by Mr Haines in his email of 18 January 2018 was "not reflective of any part of the approach taken by the CAA"; or, perhaps more accurately, that not all of the executives at CAA shared the approach suggested by Mr Haines' earlier email. It cannot be right that such a modest voluntary disclosure could result in the collateral waiver (and thus the forced disclosure by the CAA) in respect of all the internal communications relating to the drafting of the 1 February 2018 letter, including those that expressly reveal legal advice from the CAA's lawyers; nor is that what the law (or fairness) requires." (Civil Aviation Authority v. Jet2.com Limited [2020] EWCA Civ 35)
Waiver by relying on the substance of privileged advice
“[The third defendant], [the claimant] said, did not just indicate that he had received advice from Roythornes, but set out the substance of the advice, relied on it by way of defence to the allegations made against him and offered to provide the documents in question…In short, it seems to me that privilege would have been waived by [the third defendant] if it had not already been waived by [the fourth defendant].” (Birdseye v. Roythrone & Co [2015] EWHC 1003 (Ch), §40…44).
Fundamental question is fairness/prevention of cherry picking
“In our view the fundamental question is whether, in the light of what has been disclosed and the context in which disclosure has occurred, it would be unfair to allow the party making disclosure not to reveal the whole of the relevant information because it would risk the court and the other party only having a partial and potentially misleading understanding of the material. The court must not allow cherry picking, but the question is when has a cherry been relevantly placed before the court?” (Brennan v Sunderland City Council [2009] ICR 479, §63, Elias J)
Waiver not easily established
“Having said that, we do accept that the authorities hold fast to the principle that legal advice privilege is an extremely important protection and that waiver is not easily established. In that context something more than the effect of the advice must be disclosed before any question of waiver can arise.” (Brennan v Sunderland City Council [2009] ICR 479, §66, Elias J)
Must disclose content rather than effect of advice
“To say no more than that "I am acting on the advice of my solicitors and counsel" will not ordinarily justify further disclosure of the advice or of the circumstances in which any new witness statement came to be drafted.” (D (A Child) [2011] EWCA Civ 684, §24, Ward LJ).
“Typically, as we have seen, the cases attempt to determine the question whether waiver has occurred by focusing on two related matters. The first is the nature of what has been revealed; is it the substance, the gist, content or merely the effect of the advice?” (Brennan v Sunderland City Council [2009] ICR 479, §64, Elias J)
But caution about distinguishing content and effect
We would not, therefore, adopt in quite such stark terms the contents/effects distinction which Mr White submits represents the law. Plainly the fuller the information provided about the legal advice, the greater the risk that waiver will have occurred. But we do not think that the application of the waiver principle can be made to depend on a labelling exercise, particularly where the categories are so imprecise. The concepts shade into each other, and do not have the precision required to justify their employment as rigid tests for defining the scope of waiver.” (Brennan v Sunderland City Council [2009] ICR 479, §65, Elias J)
Must rely on disclosed content
“In our view the authorities demonstrate that reliance is necessary and there is currently no indication that the Council has any intention of relying on the advice.” (Brennan v Sunderland City Council [2009] ICR 479, §69, Elias J)
Exhibiting to witness statement without referring to it not reliance
“The disputed material was put before the court as an exhibit to a lengthy witness statement. The legal advice has not been specifically referred to in the pleadings nor in the witness statements themselves and in our view the mere reference to the advice - even to the content of it - was not in the circumstances sufficient to constitute a waiver of privilege. The council is not seeking to rely upon the advice to justify the reason why it decided to implement pay protection for a period of four years…We should emphasise that the situation would change if the material were subsequently to be relied upon by the council.” (Brennan v Sunderland City Council [2009] ICR 479, §§69…70, Elias J)
No need for the person to understand that privilege was being waived
“Once it has been conceded that in the circumstances of this case there has been a waiver, then it matters not whether it was a waiver by the solicitor on behalf of the client or in addition to the waiver by the client herself. Here the waiver was made by the client for it is the words of her witness statement which lose her the protection of professional privilege. The effect of those words, objectively construed, prevails notwithstanding the fact that they were drafted by the solicitor and not withstanding the fact, moreover, that neither she nor her advisers appreciated the consequence those words would have.” (D (A Child) [2011] EWCA Civ 684, §18, Ward LJ).
“I do not accept that privilege can be waived only where the person entitled to it is aware of his rights. Thanki, "The Law of Privilege", 2nd ed., is correct, I think, that the "basic position in England is that once the substance of privileged material is divulged to one's opponent, even by accident and even where there is no implication of an intention to waive, privilege is prima facie lost" (paragraph 5.02)…In the Great Atlantic case, privilege in the whole of a memorandum was held to have been waived as a result of the plaintiffs' counsel reading out part of it during his opening, notwithstanding that, as Templeman LJ said at 537, "[t]he plaintiffs and all their legal advisers never intended to waive any privilege." (Birdseye v. Roythrone & Co [2015] EWHC 1003 (Ch), §42).
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Examples relating to waiver
No waiver simply because it appears party not following legal advice
“The alleged inconsistency is the fact that the council is now in its submissions before the court departing from its legal advice. Even if that were…it would be no more than a 'jury point' in support of the claimants' case. It should not, in our judgment, influence the Tribunal's assessment of the merits of the GMF defence at all.” (Brennan v Sunderland City Council [2009] ICR 479, §72, Elias J)
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Waiver where party alleged compromise agreement void due to lack of advice from solicitor
“ Peter-Clark J determined [in National Centre for Young People with Epilepsy v Mrs S Boatang UTEAT/0440/10/CEA that Mrs Boatang had waived privilege because her case was reliant on the alleged failure on the part of the solicitor in order to resile from the compromise agreement and pursue her claim. The nature of the advice given (to sign the agreement) and reliance on its inadequacy gave rise to a conclusion that there had been waiver. Applying the fairness principle from Brennan it was determined that it would be “manifestly unfair” for the solicitor not to be given the opportunity (by being released from the bound of privilege) from putting his position in order that the Tribunal could then determine the efficacy of the compromise agreement and thereby the strike out application.” (D Cash and Carry Ltd v. HMRC [2017] UKFTT 732 (TC), §48).
Waiver by revealing details of conversations that led to a change of story
“Mr Hayden now accepts that the Mother did waive that privilege because her witness statement could not be said to make only "glancing reference" to the conversations with counsel and solicitors. Mr Hayden was absolutely right to make that concession. The Mother had revealed not merely that she had been given advice but also the nature of that advice. Thus she revealed how the questioning "made it easy to tell them what had happened and I demonstrated what I saw on a doll". The solicitor asked her "lots of questions to clarify the order of events". It was "with the support of my legal team and their assurances that there are things that can be done to protect me" that she agreed to "tell the court everything I know". She has undoubtedly waived the privilege that would ordinarily leave the advice she was given and the manner in which her statement was extracted from her sacrosanct and inviolate.” (D (A Child) [2011] EWCA Civ 684, §17, Ward LJ – no waiver if simply say acting on advice - §24).
Relying on lack of advice to justify late appeal
“Mr Dhami by his witness statement and the Appellant in its amended grounds supporting it’s out of time appeal have not simply referenced the interaction with Altion they have described the nature of the discussion and the absence of advice. Their whole case for an out of time appeal is predicated on that lack of advice so as to excuse their failure to act within the statutory time limits…Given the contradictory evidence as between the initial grounds and first witness statement of Mr Dhami and the documents served on 22 August 2017 the integrity of the basis of the application must fall under scrutiny. For the application to be fairly and justly considered the role played by Altion and establishing the true position for the delay needs to be established and that will be achieved only through information and documentation held by Altion. As was the case in both Boatang and D the question of fairness requires that HMRC be entitled to cross examine Mr Dhami as to the veracity of the case he presents on behalf of the Appellant for why the appeal was not made in time. To do so HMRC need access to evidence of the communications between Mr Dhami and Altion.” (D Cash and Carry Ltd v. HMRC [2017] UKFTT 732 (TC), §§53…54, Judge Amanda Brown).
Waiver and joint privilege
Jointly obtained legal advice requires joint waiver
“The general rule is of course that, where solicitors have been retained by clients jointly, a single client cannot waive privilege unilaterally.” (Birdseye v. Roythrone & Co [2015] EWHC 1003 (Ch), §28).
Trustees waiving privilege (must act together)
“The law relating to executors thus differs in this respect from that relating to trustees, who have to act together. It is not even possible for a majority of (non-charitable) trustees to bind a minority…”(Birdseye v. Roythrone & Co [2015] EWHC 1003 (Ch), §32).
Executors waiving privilege (act of one binds all if intended to do so irrespective of concurrence)
“When Calthrops sent Mossop & Bowser the file, they were clearly acting for Mr Doubleday [one executor], and they did not claim that Mr Pola [the other executor] had assented to disclosure. That being so, there is, I think, no reason why the general rule that “the act of one joint representative is regarded as the act of all and is binding” should not operate.” (Birdseye v. Roythrone & Co [2015] EWHC 1003 (Ch), §37).
“The son [one personal representative] did not purport to bind the estate of the deceased without the concurrence of the widow [the other personal representative]. He purported to bind the state for himself, as one administrator, and as the authorised agent of the widow as his co-administrator. He bound himself as one of two administrators and he warranted that he had authority to bind the other administrator, the widow. He did not bind himself to sell without the concurrence of the widow. It was really the reverse. He bound the estate of the deceased only on the assumption, which he warranted to be correct, that he had authority to sign as agent for the widow. That assumption having been falsified, there is no contract to be enforced in relation to the … property. All that may be sued upon is the warranty of authority given by the son.” (Fountain Forestry Ltd v. Edwards [1975] Ch 1, at 15).
Jointly obtained legal advice not privilege as between clients
“Parties who grant a joint retainer to solicitors of course retain no confidence as against one another: if they subsequently fall out and sue one another, they cannot claim privilege. But against all the rest of the world, they can maintain a claim to privilege for documents otherwise within the ambit of legal professional privilege; and because their privilege is a joint one, it can only be waived jointly, and not by one party alone.” (Hellenic Mutual War Risks Association (Bermuda) Ltd v. Harrison [1997] 1 Lloyd’s Rep 160 at 165).
Trustees and beneficiaries
Legal advice to trustees is privileged vis-à-vis beneficiaries if taken to defend a claim against beneficiaries but not if taken in the course of administering the trust
“It is well established that a trustee cannot always assert privilege against a beneficiary of the trust. Thus, in Talbot v. Marshfield (1865) 2 Dr & Sm 549, while beneficiaries were denied access to advice that the trustees had received on how to defend a claim, they were held to be entitled to see advice that the trustees had taken on the exercise of a power.” (Birdseye v. Roythrone & Co [2015] EWHC 1003 (Ch), §19).
Privilege can be maintained against a beneficiary with no more than an arguable claim
“The authorities indicate, however, that privilege can be maintained against a person who has no more than an arguable claim to be a beneficiary.” (Birdseye v. Roythrone & Co [2015] EWHC 1003 (Ch), §21).
Executors and legatees
Treated the same as trustees and beneficiaries
“To my mind, however, it must remain the case that a person must, at least normally, establish as a minimum a prima facie case that he is a beneficiary before there can be any question of the Court requiring a trustee or executor to disclose documents which would be protected by privilege if the applicant were not a beneficiary.” (Birdseye v. Roythrone & Co [2015] EWHC 1003 (Ch), §24 – simply being named in the will insufficient).
Procedure where privileged waived
Redact material that is not relevant
“The issue between the parties in the present application is not whether there has been a waiver of privilege, which there clearly has been, but whether what has been released represents the whole of the material relevant to the issue in question, namely the issue in relation to which it has been disclosed. In particular whether there is a risk of injustice through the real weight or meaning of what has been disclosed being misunderstood…The instructions to counsel are clearly on the face of what has been disclosed relevant to technical aspects of the scheme, rather than the mechanism of assessment. There is simply nothing to suggest that they might contain material relevant to the assessment procedure.” (Burnikell v. HMRC [2018] UKFTT 140 (TC), §§41…45, Judge Cannan).
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First order production of documents
“The Tribunal is not prepared, at this stage to require a witness summons for Ms Hudson. To date, as a consequence of the assertion that privilege had not been waived, Ms Hudson has not been in a position to provide any information and documentation…However, at this stage the Tribunal considers the correct course of action is to issue an order requiring Altion to provide information and documentation as particularised in the annex to this judgment.” (D Cash and Carry Ltd v. HMRC [2017] UKFTT 732 (TC), §57, Judge Amanda Brown).
Client given opportunity to see documents before disclosure to suggest redactions
“In view of the risk that documents containing evidence of communication between Altion and the Appellant may contain material not pertinent to the question of whether and if so what advice was given to the Appellant in connection with the need to appeal and the time limit for doing so the Tribunal has determined that to the extent that Altion consider redaction appropriate the suggested redactions will be provided for review and determination by the Tribunal. This protects the Appellant and should assuage the concerns of HMRC.” (D Cash and Carry Ltd v. HMRC [2017] UKFTT 732 (TC), §60, Judge Amanda Brown).
Then consider witness summons
“It may be the case that once such information and documentation has been provided neither side require the attendance of Ms Hudson at the hearing of the out of time application. Equally it may not.” (D Cash and Carry Ltd v. HMRC [2017] UKFTT 732 (TC), §57, Judge Amanda Brown).
Statutory override: express words or necessary implication required
[4] "It was established by R (Morgan Grenfell & Co Ltd) v Special Commissioner of Income Tax [2002] UKHL 21, [2003] 1 AC 563 ("Morgan Grenfell") that the provisions of section 20 could not be invoked to force anyone to produce documents to which LAP attached. Lord Hoffmann at paras 7 and 9 said that a statute could only remove such "a fundamental human right" if it "expressly stated" that it was doing so, or if the intention "appear[ed] by necessary implication", and, as Lord Hobhouse emphasised at para 45, "[a] necessary implication is a matter of express language and logic not interpretation". (R (oao Prudential Plc) v. Special Commissioner of Income Tax [2013] UKSC 1)
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"[7] Two of the principles relevant to construction are not in dispute. First, LPP is a fundamental human right long established in the common law. It is a necessary corollary of the right of any person to obtain skilled advice about the law. Such advice cannot be effectively obtained unless the client is able to put all the facts before the adviser without fear that they may afterwards be disclosed and used to his prejudice. The cases establishing this principle are collected in the speech of Lord Taylor of Gosforth CJ in R v Derby Magistrates Court, Ex p B [1996] AC 487. It has been held by the European Court of Human Rights to be part of the right of privacy guaranteed by article 8 of the Convention (Campbell v United Kingdom (1992) 15 EHRR 137; Foxley v United Kingdom (2000) 31 EHRR 637) and held by the European Court of Justice to be a part of Community law: A M & S Europe Ltd v Commission of the European Communities (Case 155/79) [1983] QB 878.
[8] Secondly, the courts will ordinarily construe general words in a statute, although literally capable of having some startling or unreasonable consequence, such as overriding fundamental human rights, as not having been intended to do so. An intention to override such rights must be expressly stated or appear by necessary implication. The speeches of Lord Steyn and myself in R v Secretary of State for the Home Department, Ex p Simms [2000] 2 AC 115 contain some discussion of this principle and its constitutional justification in the context of human rights. But the wider principle itself is hardly new. It can be traced back at least to Stradling v Morgan (1560) 1 Pl 199." (R (Morgan Grenfell & Co Ltd v. Special Commissioner of Income Tax [2002] UKHL 21)
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Check for HRA 1998 compatibility
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"[39] It is of course open to Parliament, if it considers that the revenue require such powers, to enact them in unambiguous terms. But there is also the Human Rights Act 1998 to be borne in mind. The appellants put forward an alternative submission that, if your Lordships agreed with the construction given to section 20(1) by the Court of Appeal, you should make a declaration that it was incompatible with the right to privacy under article 8 of the Convention for the Protection of Human Rights and Fundamental Freedoms (1953) (Cmd 8969). In the circumstances it is unnecessary for your Lordships to pronounce upon the point. It is however the case, as I have mentioned, that the European Court of Human Rights has said that LPP is a fundamental human right which can be invaded only in exceptional circumstances: see Foxley v United Kingdom (2001) 31 EHRR 25 p 647, para 44. Mr Brennan said that the public interest in the collection of the revenue could provide the necessary justification but I very much doubt whether this is right. Nor is it sufficient to say simply that the power is not used very often. That is no consolation to the person against whom it is used. If new legislation is passed, it will have to be seen whether it is limited to cases in which the interference with LPP can be shown to have a legitimate aim which is necessary in a democratic society." (R (Morgan Grenfell & Co Ltd v. Special Commissioner of Income Tax [2002] UKHL 21)
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