Careless talk costs … privilege

23 December 2020

Background

There has been much case-law recently on the question of legal professional privilege – its precise scope and the identity of those entitled to claim it. “Privilege” is essentially a right to withhold certain materials from the other party as part of the process of disclosure: they are “privileged” from disclosure. One such privilege is legal professional privilege, the idea that whatever passes between a client and his lawyer is “privileged” such that it need never be revealed. The purpose is to enable any person to get the right legal advice without fear that anything he or his lawyer says might become public knowledge.

Privilege can be lost and one circumstance in which it can be lost is where the client waives it. Unfortunately, this is often done unwittingly. A client may intend to show what a good case he has be disclosing to the other side a limited part of the legal advice he has received without disclosing the other parts of the advice which might well undermine his case. Doing so is risky indeed: the court may well order the disclosure of the entirety of the advice so that the other side gets a balanced view of what the totality of the advice was.

Recent case-law

This came up recently recently in Guest Supplies Intl Limited v South Place Hotel [2020] EWHC 3307 (QB) (3rd December 2020). The background to the dispute was that the claimant supplied branded amenities products to hotels. The claimant asserted that there was an exclusive deal for five years reached as part of an oral agreement in February 2016. The claim was that the defendant had breached the contract leading to its termination by the claimant.

A director of the claimant reduced this oral agreement to writing some months after the meeting and sent it to the defendant, which never countersigned or returned it. However, the claimant lost the draft when the laptop and USB stick it was on were stolen. The upshot was that the director some three years later recreated from memory the text of the agreement and sent it to his then current solicitors to show what the 2016 agreement would have looked like. It was his intention to amend the claim to make this clear as there appeared to be a misunderstanding on his former solicitors’ part concerning the nature of the recreated agreement which had made its way into the original pleading.

The director related this in a witness statement, stating the above facts “without waiving privilege”. However, had he in fact waived privilege? The defendant applied for disclosure of the remaining communications between the claimant and its solicitors (including original metadata) which demonstrated the creation, existence or provenance of the disputed document.

Decision

This is a fairly common scenario and the law was considered recently in PCP Capital Partners v Barclays Bank [2020] EWHC 1393 by Waksman J. Essentially, the inquiry is directed to whether in fact there was a waiver and whether it is fair to order disclosure of the remaining legal advice. The idea is that a party should not be able to “cherry pick” the favourable bits of advice he has received while maintaining privilege in the remaining, unfavourable, advice. The other party should be entitled to get a fair impression of all the advice. The enquiry is whether a party has tried to advance or support its case by referring to legal advice that it has received: the reference to that legal advice must be sufficiently specific.

The judge found that the reference to sending the recreated agreement to his solicitors was a sufficiently specific reference. Adding that this was “without waiving privilege” made no difference: either privilege had been waived or it had not and this was for the court to decide. In the judge’s decision, it was also “fair” that the defendant should have access to the remaining communications emanating both from the director and from the solicitors (as the solicitors may well have sought clarification from the director as to what the document was).

Thoughts

The matter comes up so frequently that everyone should be aware of the risk. The point made clear in this case is that adding some words seeking to maintain privilege (“without waiving privilege”) made no difference.

The lesson is clear: when in a dispute, avoid making reference to parts of the legal advice you have received as there is a significant risk that you may end up being ordered to disclose the rest of the advice.

Richard Stephens, 23 December 2020

This note is a general update on the law and reliance should not be placed on it in a specific situation without seeking professional advice first.